next phase of drilling commences at prospective nickel project

7/31/2019 Next Phase of Drilling Commences at Prospective Nickel Project

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INVESTMENT HIGHLIGHTS

Hannans Reward (ASX Code: HNR) is a WA-based nickeland gold explorer, with three projects at an advanced

stage of exploration. These are the Forrestania Project,the Lake Johnston Project and the Queen Victoria RocksProject. In addition, the companys Jigalong Project haspotential to host economic deposits of manganese and

is located in the East Pilbara Manganese Province.

The flagship project, Forrestania, contains a number ofgreenfield tenements that are highly prospective fornickel and are adjacent to projects owned by WesternAreas NL and Kagara Ltd. The companys explorationactivities at Forrestania are aimed at identifying aneconomic nickel deposit of >30kt (internally-generatedtarget) of contained nickel characterised by nickel

sulphides. Nickel sulphides are highly sought afterbecause they do not require intensive processing, unlikenickel laterites.

HNR retain a high-quality exploration team, is well

funded and its shareholding in Atlas Iron provides thecompany with a valuation base.

At present, the market is attributing little value toHNRs exploration portfolio; at under 4 cents per share(HNRs current cash level plus its shareholding in AtlasIron Ltd equates to 22.1 cps compared to the currentshare price of 26 cps), which does not appear toadequately reflect the quality of HNRs explorationassets, especially the discovery of a high-grade nickelsulphide deposit at Forrestania.

Forrestania Project in Highly Prospective Nickel Area

The discovery of Western Areas Spotted Quoll deposit in October2007 reflects the potential for discovery of an additional high-grade nickel sulphide deposit at Forrestania. At the time of theSpotted Quoll discovery, results from a 4.6 metre zone of primarysulphides produced an average grade of 4% nickel with values upto 9% nickel.

There has already been over 25 nickel occurrences discovered inthe Forrestania region. The primary discovery at Forrestania,Flying Fox, is one of the highest grade nickel deposits in the worldand has now been in production for two years. Western Areasplans to develop five mines at the Flying Fox project from 2011,for a targeted production around 35ktpa of nickel. Flying Fox mineis now in full production. In its first full year of production it

HANNANS REWARD LTD (HNR)

NNeexxttPPhhaasseeooffDDrriilllliinnggttooCCoommmmeenncceeaattPPrroossppeeccttiivveeNNiicckkeellPPrroojjeecctt

SPECULATIVE

4 February 2011

Share Trading Info

ASX Code HNR

Current Share Price (cps) 26.0

Trading Low /High (Rolling Year) 15.5c - 28.5c

Mkt Captalisation (undiluted) $m 34.2

Net Cash Dec 2010 $m 5.6

Value of Lis ted Inv es tments $m 24.3

Issued Capital (m)

Total Ordinary Shares 131.6

Unlisted Options* 7.3

Total Diluted Securities 138.9

* 4.95m of these options are out-of-the-money

Board of Directors *

Richard Scallan Non Executive Chairman

* Further details on Page 21

Major Shareholders

Mr William Hicks 9.2%

JP Morgan Nominees Ltd 8.5%

Project Summary Area

Forrestania Nickel & Gold 1,153km2

Lake Johnston Gold 380km2

Queen Victoria Rocks Nickel 395km2

Jigalong Manganese 2,589km2

William Hicks Non Executive Director

Jonathan Murray Non Executive Director

Damian Hicks Managing Director

0

500

1,000

1,500

2,000

2,500

15.0

17.0

19.0

21.0

23.0

25.0

27.0

29.0

4-Feb13-Jan20-Dec29-Nov8-Nov18-Oct27-Sep6-Sep16-Aug

Price (cps)Volume ('000)

HNR 6-month Price Chart

Price

Volume


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Hannans Reward (HNR)

Page 2 of 22

produced 200,597 tonnes at 4.05%, containing 8,118 tonnes ofnickel in concentrate.

HNR have received Government approval for the next phase of RC

drilling (4,200 metres, 16 holes) at Stormbreaker (10 holes to testnickel sulphide and gold targets) and Lucy Rocks (six holes to testa conceptual ultramafic target).

Lake Johnston ProjectHNR believe that the Lake Johnston Project has the potential toinclude a 300,000 oz (yet to be confirmed) gold deposit. The aimof the recently-completed drilling program was to confirm thepresence of high-grade gold mineralization at the HardcoreProspect and to increase the potential resource.

The project now includes over 25 kilometres of granted tenements

with high grade gold occurrences recorded at a number of

prospects within the project. Exploration for gold within theproject remains sparse and HNR considers the project area to behighly prospective for the discovery of additional high grade goldmineralisation.

Highly Experienced Exploration Team

In July 2010, HNR appointed Mr Don Huntly as ExplorationManager, an experienced Geologist having previously held seniorexploration positions with Xstrata Nickel (Chief ExplorationGeologist), Jubilee Mines (Regional Exploration Manager),Goldfields - South Africa (Exploration Project Manager) and WMCResources (Leinster Nickel operation).

Mr Huntly is seen as the driving force behind HNRs nickel sulphide

exploration projects at Forrestania, Lake Johnston and QueenVictoria Rocks. Prior to his appointment, he had been consulting tothe company since January 2010 on its nickel exploration strategyand part of an Exploration team with senior technical experience.

Atlas Iron Ltd Shareholding a Major AssetHNR retains a shareholding in ASX-listed company Atlas Iron Ltd(ASX Code: AGO), with 6.4 million shares that are currentlyvalued at $23.5 million (or 17.8 cents per share in value for HNR).

The value ofHNRs investment in Atlas Iron accounts for ~70% ofHNRs current market capitalisation and has risen significantly inrecent times, as AGOs share price has risen from around $2.09 to$3.67 over the last six months. Over this timeframe, HNR has notsignificantly reduced its holding in AGO. (HNR sold 598,000 AGOshares in the September 2010 quarter and more shares in theDecember quarter as part of a selldown that has now halted). Inaddition to its investment in AGO, the company has listed

investments currently worth ~$0.8 million.

Adequate FundingHNR is very well funded to advance its exploration activities, with$5.583 million in cash as at 31 December 2010. The balance sheetis debt free. As such, there is no requirement for a capital raisingin the short to medium term to help fund its exploration activities.

Capital Structure

HNR retains a tight capital structure. The share register is notwidely dispersed. As at 28 September 2010, the top 20shareholders accounted for ~40% of the ordinary shares on issue.In addition, HNR has 1,701 shareholders, of which 200 held an


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Page 3 of 22

unmarketable parcel of shares, representing less than 340,000shares. Notably, there is a strong alignment of interests with thecompanys directors and shareholders, with directors collectivelyholding over 12% of the ordinary share on issue.

Table 1: HNR Capital Structure

HNR Projects

Million Expiry

Date

Total Ordinary Shares 131.6

Unlisted Options

- Exercise Price 80c 2.25 30-Jun-11





- Exercise Price 20c 0.30 20-Jul-13

- Exercise Price 75c 0.30 20-Jul-13

- Exercise Price $1.00 0.30 20-Jul-13

Total Unlisted Options** 7.25

Total Issued Securities 138.9

** Out-of-the-money options 4.95

Shares/Options on Issue


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Page 4 of 22

11.. KKEEYY PPRROOJJEECCTTSS

1.1 Forrestania Nickel and Gold Project

1.1.1 Overview

The Forrestania Project comprises ground in JV and wholly ownedtenements. Part of the project is owned 100% by HNR and part is inJV with Cullen Resources Ltd, where HNR owns 80% and is free-carrying Cullen at 20%. The Project is located in the Forrestania nickelbelt and adjoins ground owned by Western Areas and Kagara. Thecompany has steadily increased its ground holding from 14.3km2 in2006 when it first entered the area, to 1,153km2 presently.

Known nickel sulphide mineralisation within the Forrestania nickel belt

occurs in a variety of geological settings above and below BIF

horizons, as well as on mafic (Digger Rocks and Cosmic Boy) andfelsic (Flying Fox, Spotted Quoll, Beautiful Sunday) substrates.

HNR have classified the Forrestania Project into three differentprospects: Stormbreaker, Skeleton Rocks and Lucy Rocks. All threeare at different stages of the exploration cycle, with Stormbreaker the

most advanced.

Table 2: Summary of Forrestania Prospects

Stormbreaker Lucy Rocks Skeleton Rocks

Product/s Nickel Nickel Nickel & Gold

Key Features 8km of strike similar in geologyto Flying Fox, New Morning &

Daybreak (Western Areas

tenements)

Area includes BeautifulSunday to the north

Trends NNW tow ards EdnaMay Gold Project (known to

have nickel sulphide

mineralisation)

Work Completed RC drilling, geochemical

sampling (tw o high-priority

targets identified from VTEM

data interpretation)

VTEM processing (tw o

anomalies identified); soil &

auger survey

Data compilation & review .

New gold prospect identified

and secured to NW

Upcoming Activities In-fill auger sampling; RC drilling

(10 holes) targeting northern

extension to Western Areas

Nickel Deposits to commence in

early Feb 2011; Surface TEM

(March 2011)

RC drilling (6 holes) ~2km

w est of Beautiful Sunday to

commence in early Feb 2011;

RAB/AC drilling to commence

1Q2011

Field reconnaissance,

geological interpretation &

surface geochemistry in

1Q2011. Clearances for RC

drilling expected in Feb 2011

ProspectForrestania Prospects (1,153km 2)


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Figure 1:Outline of Forrestania Projects


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1.1.2 Stormbreaker Prospect

The Stormbreaker Nickel Sulphide Prospect is located in theForrestania region of WA, approximately seven kilometres north ofWestern Areas Flying Fox nickel sulphide deposit and immediatelyalong strike from existing high-grade nickel sulphide mines. Thecompany has significantly increased its tenement holding over thenorthern extension of the prospective stratigraphy which is host to the

Flying Fox and Spotted Quoll nickel deposits.

The Stormbreaker Prospect is interpreted to contain over an eightkilometres strike length of the same ultramafic units that host WesternAreas NLs Flying Fox, New Morning and Daybreak Nickel Deposits,approx. 12 kilometres to the south. Both the commissioning of theSpotted Quoll nickel deposit and the discovery of extensions to theNew Morning nickel deposit by Western Areas highlights theopportunity for discovery of high-grade nickel sulphide deposits within

the Forrestania region.

1.1.3 Lucy Rocks Prospect

The Lucy Rocks Prospect covers an area of approximately 25km2 ofgreenstone which has not been previously explored for nickel sulphides.The area also contains the conceptual target referred to as BeautifulSunday West. The aim of HNRs exploration activities at Lucy Rocks isto determine whether the unit hosting Western Areas Beautiful Sundaynickel deposit folds to the west and continues in a southern directionthrough the Lucy Rocks Prospect, approximately two kilometres west ofthe Beautiful Sunday nickel sulphide deposit.

Work completed at Lucy Rocks includes final VTEM processing and thecompletion of orientation soil and auger surveys and gravity surveys.Recent exploration has identified extensive BIF outcrop in the northernpart of the prospect.

1.1.4 Skeleton Rocks Prospect

The Skeleton Rocks Prospect trends NNW towards the Edna May goldproject, which is known to have nickel sulphide mineralisation in theultramafic units proximal to the gold.

The work completed at Skeleton Rocks by HNR includes a partial VTEMcoverage and historical data reviews that confirm the presence ofultramafic lithologies on the NE flank of the Skeleton Rocks Prospect.

Planned activities in the 1st qtr of 2011 include field reconnaissance,geological interpretation and surface geochemistry.

In addition, the company recently generated iron targets in the areawith geological characteristics similar to the Cazaly Resources-ParkerRange iron projects located approximately 50 kilometres to the north.

HNR hope to advance these targets in the first half of 2011.


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Figure 2:Geology of Skeleton Rocks Prospect

1.1.5 Acceleration of Exploration Activities

In early 2010, HNR assembled an expanded technical team thatenabled the company to advance exploration activities at Forrestania,including a RC drilling program that commenced in March 2010 andadditional surface/regolith sampling planned to identify areas of

interest.

The expanded team included Geologist Don Huntly (employed as aconsultant prior to his appointment as Exploration Manager in July2010), Ben Jones (Geophysicist) and Dr Nigel Brand (Geochemist).Both Mr Huntly and Mr Jones were previously employed by Xstrata andprior to that, both worked with Dr Brand in his role as consultant toXstrata and Jubilee.

The first notable outcome by the new exploration team was theidentification of 10 new EM anomalies at Forrestania1, including:

1Subsequently referred to as the Phase Two EM Targets. These 10 EM targets were in addition to 13 EM targets

(PhaseOne Targets) identified in December 2009.


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Page 8 of 22

1. Four EM anomalies at Stormbreaker, identified from a reviewof historical ground EM surveys and two high-priority targetsfrom the VTEM data interpretation.

2. Two new EM anomalies at both Skeleton Rocks and Lucy Rockswere identified from VTEM data interpretation

RC drilling of Phase One Targets (nickel) commenced in May 2010 andtested discrete nickel sulphide targets approximately eight kilometresnorth of the high-grade Flying Fox/Lounge Lizard nickel sulphidemines.

An RC drilling program (2,446 metres; 12 holes) was completed inJuly 2010, targeting coincident VTEM and surface TEM anomaliesknown to be BIF units.

At the Stormbreaker Prospect:

RC drilling tested a number of priority targets that ultimatelyproved to be conductive BIF and chert units.Drilling confirmed that the stratigraphy over the westernultramafic corridor is complex and similar to that which is hostto the Digger Rocks and Cosmic Boy nickel sulphide depositswithin the eastern ultramafic corridor.

The historical surface geochemical sampling has beenprocessed over the central ultramafic unit, generating anumber of anomalies. Moving loop TEM traverses have beencompleted over the geochemical anomalies within the centralultramafic corridor.

1.1.5.1 Next Phase of Drilling - Stormbreaker and Lucy Rocks Prospects

HNR have received Government approval for the next phase of RCdrilling (4,200 metres, 16 holes) at Stormbreaker (10 holes to testnickel sulphide and gold targets) and Lucy Rocks (six holes to test aconceptual ultramafic target).

Drilling is scheduled to commence in early February 2011 and willinclude:

10 drill holes at Stormbreaker along the western ultramaficcorridor. Drilling is targeting the northern extension of theprospective stratigraphy north of the Western Areas nickelsulphide deposits more specifically some geochemicalanomalies along the western ultramafic corridor that weregenerated from a recent in-fill auger sampling program.

Assay results received from this program generated five nickelanomalies and a number of gold anomalies. Two of the fivenickel anomalies are discrete with a limited strike extent and

are located on the western most contact of the ultramafic unit.

Six drill holes at Lucy Rocks approximately two kilometreswest of Western Areas Beautiful Sunday nickel deposit. Atpresent, this is purely a conceptual drilling programundertaken with a view to increasing the nickel prospectivityof the Lucy Rocks Prospect. Specifically, the drilling is

designed to assess whether the ultramafic unit folds aroundBeautiful Sunday West.


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Figure 3:Proposed Drilling at Stormbreaker and Lucy Rocks Prospects


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1.2 Lake Johnston Project

1.2.1 Overview

The Lake Johnston Project (formerly Maggie Hays South) is located inthe Lake Johnston region, approximately 100 kilometres west of

Norseman, WA. The site adjoins ground owned by Russianmining giant, Norilsk, and is approximately 50 kilometres south of theEmily Ann and Maggie Hays nickel mines. The project has potential fora gold and nickel sulphide styles of mineralisation. All tenements andapplications are 100% owned by Hannans Reward Ltd or are in jointventure (90% HNR).

HNRs current activities at Lake Johnston are focused on three goldProspects: Ernest, Hardcore and Richard. High grade goldmineralisation has been identified in rock chip sampling at Ernest, in RCpercussion drilling at Hardcore and in RAB drilling at the Richard

Prospect.

The Project area (illustrated in Figure 4below) has the potential to hostsignificant narrow, high-grade gold mineralisation along a 25 kilometrecorridor of prospective ground, located along a large-scale NW to SWtrending structure. There is a major structure (15 kilometres in length)covering the three Prospects, with minimal exploration undertaken inbetween.

Table 3: Summary of Lake Johnston Prospects

Ernest Hardcore Richard Mt Gordon

Product/s Gold Gold Gold Gold

Key Features Gold & silver

mineralisation open to

the north

Mineralisation

associated w ith flat-

dipping shear and a

felsic porphyry unit

High-grade gold

mineralisation

intersected in

historical RAB drilling

Significant anomaly

(~2.5km in strike)

generated from

historic geochemical

sampling

Work Completed Follow -up RC drilling;

in-fill gravity survey

10 holes drilled -

assays received for 5

holes (best intervals

include 1m @ 14.4g/t

Au and 1m @ 1.71g/t

Au)

Data compilation Data compilation;

geochemical sampling

Upcoming Activities Geological & technicalreview from drilling

Geological & technicalreview from drilling

RC drilling tocommence in 2Q2010

Gravity survey & infillauger sampling during

1Q 2011; RC drilling

2Q 2011

ProspectLake Johnston Prospects (380km 2)


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Figure 4:Lake Johnston Project Outline


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1.2.2 Ernest Prospect

Assay results from earlier RC drilling at the Ernest Prospect returnedhigh-grade, coincident gold and silver mineralisation within a narrow(80 metres) was also encountered within a quartz-sericite schist unit. Gold and silver mineralisation at Ernest is open tothe north.

During the December 2010 quarter, RC drilling at Ernest (2,580metres; 11 holes) was completed to test possible extensions to thenorth of gold mineralisation intersected in previous drilling by HNR in2009. Best intervals returned include 4m @ 2.57g/t Au, 4m @ 1.0g/tAu, 4m @ 0.95g/t Au and 1m @ 0.97g/t Au.

An in-fill gravity survey between the Ernest and Hardcore Prospects hasalso been completed and has highlighted areas along strike of known

mineralisation that require follow-up geochemical sampling and drilling.While the drilling remains wide-spaced, there is no additionalexploration activity planned for the Ernest Prospect in the short tomedium term.

1.2.3 Hardcore Prospect

Some of the most significant mineralisation identified at Lake Johnstonhas been at the Hardcore Prospect. Best historical results include:

8m @ 5.09 g/t Au from 106 metres5m @ 3.2 g/t Au from 112 metres3.5m @ 11.06 g/t Au from 127 metres3m @ 5.08 g/t Au from 127 metres3m @ 17.69 g/t Au from 124 metres

The mineralisation at Hardcore is associated with a flat-dipping shearand a felsic porphyry unit sitting above the shear. Previous drilling hasbeen relatively shallow (to a maximum depth of 200 metres belowsurface) and has not closed off mineralisation down dip or to the north.

In November 2010, RC drilling commenced at Hardcore (1,349 metres;six holes) to test potential extensions to the Hardcore mineralisationdown dip and along strike, as well as test high-grade mineralisationintersected in previous exploration. This drilling program has recentlyconcluded. Out of the 10 holes drilled, HNR have received assays forfive holes and the best intervals returned to date include 1m @ 14.4g/t

Au and 1m @ 1.71g/t Au.


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Page 13 of 22

Figure 5:Cross Section of Hardcore Prospect (looking NE)

1.2.4 Current Focus

1. Following the completion of the RC drilling programs at both the Ernestand Hardcore Prospects, HNR is expected to progress towardsundertaking a drilling program (RAB and aircore) at the Mt GordonProspect further to the south-east, with a gravity survey andgeochemical sampling being planned.

2. Significant high-grade gold mineralisation has been intersected inhistorical RAB drilling at the Richard prospect as well as RC drilling atthe Charles Prospect.

3. Recent data compilation and interpretation of the surface geochemicalsampling at the Mt Gordon Prospect area has confirmed the prospectivenature of the area for the discovery of economic gold mineralisation.

Historical geochemical sampling was completed on a 400 x 100 metregrid spacing and has generated a significant anomaly over an area of2.5 kms in strike with peak values of 421 ppb Au at the Charlesprospect and 327 ppb Au at the Elizabeth Anomaly (See Figure 6below). The large anomaly has had wide spaced regolith drilling andvery limited RC percussion (8 holes) completed to date. Best historical

gold intervals from RC drilling include 2m @ 6.97 g/t Au and 2metres @ 3.85 g/t Au (Charles prospect).


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4. It is considered that there is significant potential to discover additionalhigh grade gold mineralisation in the area, and the prospect areawarrants additional surface sampling as well as follow up regolith and

RC drilling at the Mt Gordon Prospect, HNR intend to undertake a

detailed review of the historical drilling data as well as a gravity surveyin order to develop a geological interpretation ahead of in-fill augersampling and drilling planned during the 2nd quarter of 2011.

Figure 6:Gold Geochemistry at Mt Gordon Area


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1.3 Queen Victoria Rocks Nickel Project

Table 4: Summary of Queen Victoria Rocks Prospects

1.3.1 Overview

The Queen Victoria Rocks (QVR) Project is located 30 kilometres SW ofCoolgardie, in the Goldfields region of WA. The project adjoins groundin joint venture with Mincor Resources NL. All tenements are 100%owned by HNR.

Historically, nearly all of the nickel exploration completed by HNR andothers has focused on an area less than 5km2 known as the SpargosProspect. Exploration undertaken by Vale Exploration Australia in 2009involved a surface TEM survey, drilling (three RC percussion holes andthree diamond holes) north of the Spargos Prospect.

This work was undertaken by Vale as part of a JV agreement with HNR.HNR now have 100% equity in the QVR project, as Vale has sincereturned the project to HNR.

Results from a ground electromagnetic survey undertaken last yearhave confirmed the presence of coincident geophysical, geochemicaland geological anomalies prospective for nickel sulphide mineralisation.

Previous exploration in the area has outlined a number of coincidentnickel and copper anomalies from auger sampling and regolith drilling.

An RC drilling program subsequently commenced in September 2010within the Benari Prospect area to test 12 nickel sulphide targets thatwere selected following i) RAB and aircore drilling by previous explorersas well as ii) airborne and ground geophysics conducted by HNR.Previous RC drilling had not effectively tested the ultramafic unit, the

auger anomalies or historical TEM anomalies.

Benari Horseshoe Spargos

Product/s Nickel Nickel Nickel

Key Features TEM conduc tors

intersected in drilling;

ultramafic lithologies

confirmed

- Focus of historical

nickel exploration by

Vale in 2009 as part

of JV w ith HNR

Work Completed RC drilling (6 holes) ;

assays received for

all holes (no significant

Ni and Au assays

received as yet)

1,175 auger samples

collected; assays

pending

Surface TEM survey,

drilling (3 percuss ion

holes & 3 diamond

holes)

Upcoming Activities Aircore dr illing to

follow up geochemical

anomalies to

commence 2Q2011

Surface TEM and

commencement of RC

drilling (2Q 2011)

Surface TEM and in-

fill geochemical

sampling in 1Q2011;

Drilling to commence

in 2Q2011

ProspectQueen Victoria Rocks Prospects (395km 2)


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Figure 7:Queen Victoria Rocks Project Outline

A total of six holes were RC drilled at the Benari Prospect for 1,455metres. RC drilling targeted a number of Moving Loop TEM conductorsand intersected mafic, komatitic and granitic lithologies. Assays havebeen received for all holes, with no significant assays for nickel andgold received. In Figure 8 below, the RC drill holes labeled 6,8,9 & 10

intersected sulphidic sedimentary units which have been interpreted tobe the source of the TEM anomalies.


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Figure 8:Auger, VTEM and Moving TEM Anomalies at Benari Prospect

Follow up work at other prospects with QVR include:

Surface TEM and commencement of RC drilling at theHorseshoe Prospect (expected in 1st half of 2011) to followup and test any significant Nickel anomalies. To date, 1,175auger samples have been collected using a 50x20 metre gridspacing. The assays have been received, with one significantnickel-copper anomaly generated from the sampling

Surface TEM and in-fill geochemical sampling within theSpargos Prospect (and further to the north) to commence inFebruary 2011, to be followed by drilling.


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1.4 JIGALONG PROJECT

1.4.1 Overview

The Jigalong Project has potential to host economic manganesedeposits. HNR retain all non-iron rights (which are owned by Atlas Iron

Ltd). There is significant potential for a manganese resource at the Hill616 Prospect, however further exploration and technical studies arerequired.

The project area is located in the East Pilbara Manganese Province, inproximity to the Balfour Downs Manganese Project (~45 kilometres tothe north) and further south of a cluster of manganese projects

situated in the northern area of the East Pilbara Manganese Province.Please refer to Figure 9.

The Hill 616 Prospect is similar in style to the Booginia Hill Prospect at

Balfour Downs, which is now in full production. Recent rock chipsampling at Hill 616 returned encouraging manganese grades (ranging

from 29.4% Mn to 32.5% Mn) and confirmed the high grade nature ofthe mineralisation.

Aside from manganese, there is the potential for the Jigalong projectto host a diverse range of minerals, as the project area is located onthe eastern edge of the Sylvania Dome, an area known to host iron,gold and copper-lead-zinc.

HNR has commenced a detailed technical review of the knownmanganese mineralisation in the area and has also commenced fieldreconnaissance.

1.4.2 Recent Work Completed

An auger sampling program was recently completed in tenementE46/780 using a 800 x 100 metre grid spacing. Assays have also beenrecently received for the sampling and will require processing andinterpretation. In addition, 12 manganese occurrences were confirmedby a helicopter survey completed in December 2010. All of themanganese occurrences were associated with an extensive Balfour

Shale2 unit within the project area, and appeared to be of variablegrade and quality.

The highest concentration of higher-grade manganese mineralisationis located along the Hill 616 to Burranbah corridor (20.9% Mn @

surface; max 23.2% Mn in aircore at the Burranbah Prospect). Thiscorridor includes a large proportion of residual mangeniferous shaleand covers a strike extent of approximately 25 kilometres.

2The Balfour Shale is a member of the Manganese Group of sediments in the region and has the highest potential to

host manganese deposits. It is also host to the Booginia Hill deposit at Balfour Downs to the North.


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Figure 9:Jigalong Project Tenements showing Regional Manganese Deposits and Occurrences


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Figure 10:Location of Manganese Projects in the Pilbara


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22.. BBOOAARRDD OOFF DDIIRREECCTTOORRSS

DIRECTORINTEREST

IN HNRBACKGROUND

Richard Scallan

Non Exec Chairman

0.25m unlisted

options

Mr Scallan is a Mining Engineer extensive experience inunderground and open cut mining, and exploration inSouth Africa, Zimbabwe (Rhodesia) and Australia. Dickwas employed by the Anglo American Corporation ofSouth Africa Limited for 26 years before immigrating toAustralia and joining Renison Goldfields Limited in 1981where he was employed for 21 years.

Mr Scallan held positions as General Manager, KundanaGold Pty Ltd and Paddington Gold Pty Ltd (both ownedby Goldfields Limited) in Kalgoorlie, Western Australiaand General Manager, RGC Limited Renison TinDivision in Zeehan, Tasmania and Eneabba MineralSands, Western Australia.

Damian Hicks

Managing Director

~4.165m ordshares;

3m unlistedoptions @ 80c, exp

30 June 2011

Damian Hicks was appointed to the Board on 11 March2002 and was a founding Director of Hannans RewardLimited.

Mr Hicks, who holds a Bachelor of Commerce(Accounting and Finance) from the University of WA, isadmitted as a Barrister and Solicitor of the SupremeCourt of WA and holds a Graduate Diploma in AppliedFinance & Investment from FINSIA as well as aGraduate Diploma in Company Secretarial Practice fromChartered Secretaries in Australia and is a GraduateMember of the Australian Institute of CompanyDirectors.

William HicksNon Exec Director

~12.063m ordshares;

0.25m unlistedoptions @ 80c, exp

30 June 2011

William Hicks was appointed to the Board on 11 March2002 and was a founding Director of Hannans RewardLimited.

Mr Hicks has been actively involved in the progress anddevelopment of a number of well-known explorationcompanies. He was a director and secretary of Spargos

Reward Gold Mines NL and was instrumental in thelisting on the ASX of both Central Kalgoorlie Gold MinesNL and Maritana Gold NL.

Jonathan MurrayNon Exec Director

391,775 ordshares;

Mr Murray, appointed to the Board on 22 January 2010,is a partner at a Perth-based law firm (SteinepreisPaganin) and has significant experience in advising oninitial public offers & secondary market capital raisings,all forms of commercial acquisitions and divestmentsand providing general corporate and strategic advice.

He has practiced as a corporate lawyer since 1996having graduated from Murdoch University. Mr Murray,who is also a member of FINSIA, joined Steinepreis

Paganin in December 1997 and was appointed as apartner in July 2001.


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DIRECTORY ALPHA SECURITIES

Corporate

George Karantzias

[email protected]

0401 670 620

Research Analyst

John Haddad

[email protected] 219 222

Disclaimer

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next phase of drilling commences at prospective nickel project

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