Drilling Looms at Zanthus

Overview: Rumble Resources Ltd ("Rumble Resources, "the Company") is an Australian minerals exploration company focused on Western Australia. Its primary asset is a portfolio of exploration licenses located in the Fraser Range, approximately 150km northeast of Norseman. The Fraser Range represents a potentially new nickel district focused around Sirius Resources’ Nova deposit, which is the largest nickel sulphide discovery Australia has seen in at least twenty years. Rumble Resources’ license holdings in the Fraser Range stand at 3,260km 2 . Certified mineral resources have yet to be defined within the portfolio.

Catalysts: 18km East of Nova at the Zanthus license, results of a gravity survey have added impetus to a maiden drilling program. Drilling is scheduled to commence in the coming weeks following a successful $1.6million placement in April. Subsequent funding requirements have the potential to be met via existing option tranches and recent engagements with Nathan Tinkler & EAS Advisors LLC. In our opinion, these appointments enhance Rumble Resources access to capital markets, elevating focus on its exploration activities.

Hurdles: Rumble Resources is reliant on external capital and ongoing availability of finance beyond near-term programs is not assured. Whilst initial drilling of its Big Red licenses confirmed the presence of a mineralized conductor, economic intercepts were not encountered and there is no guarantee subsequent exploration can delineate a commercially recoverable base metal deposit.

Investment View: Rumble Resources provides speculative exposure to the potential for Western Australia’s Fraser Range to emerge as a new nickel mining district. We are attracted to the magnitude of its land package, recent corporate activity, and near-term value drivers. Whilst exploration risks are elevated, we have ascribed a valuation of $0.155/share based on the current market value of its Fraser Range assets. The valuation assumes outstanding 8c option tranches lapse and represents a premium of ~103 percent to a recent trade.

VALUATION

As certified resources have yet to be delineated across Rumble Resources mineral assets, we have utilized a comparables approach for appraising the Company’s potential worth. Our appraisal is focused on Rumble Resources’ Fraser Range portfolio and ascribes no value to its other mineral interests.

Our comparables approach is based on a universe of more than a dozen listed companies with exploration assets in the Fraser Range district. To date, no company from the universe has delineated certified mineral resources on their assets. Those primarily focused on the Fraser Ranges with little other interests were selected for further appraisal. Within this benchmark group, we appraised each company’s market capitalization relative to the quantity and quality of tenure.

All of the benchmarks held assets within 200km of Nova. Per equity unit of exploration ground, valuations range from $4,000/km 2 to over $17,500/km 2 . Evidence of nickel sulphide mineralisation is associated with valuations higher up the valuation curve. Rumble presently trades at the lower end of this valuation curve despite encounters of nickel sulphide mineralisation at its Big Red license.

To arrive at a valuation for Rumble Resources Fraser Range assets, we have therefore applied a multiple of $9,000/km 2 to its current ground position, which equates to a market capitalization of $29million.

To arrive at a per-share figure, we have assumed presently out of the money option tranches lapse, yielding a shared base of 189million and a valuation of $0.155/share. There are 68.5million $0.08/share options on the issue that mature between June 2015 and July 2018. If all are exercised, the valuation adjusts to $0.114/share.

THE BULLS AND THE BEARS

• Sirius Resources’ Nova deposit has opened up the Fraser Range as a potentially new nickel mining district
• Rumble Resources 3,260km 2 tenement position represents one of the largest in the Fraser Range
• Exploration to date has confirmed that bedrock underlying Rumble Resources licenses to be similar to that hosting the Nova deposit
• April placement provides funding for near term drilling of the Zanthus licenses which could confirm whether identified EM conductors contain economic mineralisation
• Our valuation represents a significant premium to recent trade

• To date, Nova remains the only commercial mineral deposit to be identified within the Fraser Range
• Rumble Resources Fraser Range licenses are presently absent of defined mineral resources and there is no guarantee that commercially recoverable resources are hosted within the licenses
• The initial four-hole drilling program at Big Red did not encounter economic intercepts despite the presence of suitable bedrock and an EM target
• Rumble Resources will require additional capital following the next round of exploration and there is no guarantee additional financing will be available
• Valuation does not incorporate downside risk in the event of disappointing exploration results