Rumble Resources Ltd

Initiating Coverage Searching for another Nova

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 north east 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 3,260km2.

Certified mineral resources have yet to be defined within the portfolio.

EXPLORATION RESOURCE RESERVE

Catalysts: Following a $1.6million placement at $0.045/share, Rumble

Resources is scheduled to commence a maiden drilling program at its

Zanthus licenses, 18km East of Nova. Zanthus is adjacent to Windward

Resources (WIN.ASX) Fraser Range North license which is currently the

subject of drilling. The value of Rumble Resources two year tenement

accumulation period has been signalled by the recent emergence of

Vale SA as adjacent license holder to its Big Red tenements, and

subsequent 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. Maiden

drilling of multiple EM conductors at Zanthus followed by a second round

at Big Red have potential to yield a major re rating in the event of a

‘Nova like’ discovery. Whilst exploration risks are elevated, given the

potential value impact of these activities, we are initiating coverage on

Rumble Resources.

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Price: $0.095

CORPORATE SUMMARY

TICKER RTR.ASX

INDUSTRY Mining

SHARES ON ISSUE 187.7m

OPTIONS ON ISSUE 44m 8c, Jun 2015

15m 35c – 45c, Oct 2015

1.7m 4.1c, Jun 2016

17.3m 8c, Jun 2016

2.2m 8c, Apr 2017

4.5m 8c Jul 2018

MARKET CAP $17.8m

CASH $2.2m

ISSUED CAPITAL $11.9m

ASSET OVERVIEW

TITLE Fraser Range Projects

LOCATION Western Australia

STATUS Exploration

ORE RESOURCE -

METAL INVENTORY -

BOARD OF DIRECTORS

CEO Shane Sikora

EXEC DIRECTOR Terry Topping

NON EXEC DIRECTOR Andrew McBain

NON EXEC DIRECTOR Matthew Banks

NON EXEC DIRECTOR Michael Smith

SHAREHOLDERS

MANAGEMENT 7%

TOP 20 26%

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COMPANY BACKGROUND

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 north east of

Norseman. Rumble Resources’ license holdings in the Fraser

Range stand at 3,260km2. Certified mineral resources have yet to

be defined within the portfolio.

Rumble Resources listed on the Australian Securities Exchange in

July 2011 after raising $2.5million at $0.20/share. Issued capital

currently stands at $11.9million, or $0.063/share.

The Fraser Range Projects consist of six exploration licenses and

five exploration license applications in the Fraser Range region of

Western Australia. Spanning 3,260km2, the licenses were acquired

between 2013 and 2014, and represent a grass roots exploration

asset currently absent of certified mineral resources.

Rumble Resources holds a 100 per cent equity interest in ten of the

licenses, and is earning a 75 per cent interest in the basement

mineral rights of E69/2506 via a Joint Venture with Blackham

Resources Ltd (“Blackham JV”).

The Blackham JV required issuance of 2million shares for an initial

20 per cent interest, which rises to 75 per cent following cumulative

project expenditures of $2.5million over four years and vendor

payments of $0.75million.

Blackham will be free carried to completion of a bankable feasibility

study in relation to the Project, at which point if Blackham decides

not to contribute in proportion to its interest in the Project, its

interest will dilute by an industry standard formula, to a minimum

10% before reverting to a 2% net smelter royalty.

ASSET OVERVIEW – FRASER RANGE PROJECTS

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Fraser Range Licenses

Area License Number Status

Thunderstorm

406km2

EL28/2268 Granted

ELA 28/2472 Application

ELA 28/2471 Application

ELA 28/2382 Application

Big Red

1491km2

E28/2322 Granted

E69/3190 Granted

E29/2499 Application

E29/2500 Application

Zanthus

1363km2

EL 69/2506 Granted- Blackham JV

ELA 28/2464 Application

ELA 28/2466 Application

3 May 2015

Fraser Range

land holding

3,260km2

Table 1: Details of Rumble Resources Fraser Range

licenses. Source: Rumble Resources

Figure 1: Map of Rumble Resources’ license holdings. Source: Rumble Resources

Australia hosts around one third of the world’s economic nickel

resources, and 90 per cent of the nation’s nickel endowment is

contained in Western Australia.

To date, the state’s nickel mining industry has focused on a 500km

belt stretching from Wiluna to Kambalda known as the Kalgoorlie

Terrane. The region has hosted a nickel metal endowment

exceeding 10million tonnes spread amongst more than 100

individual deposits.

Most of these mines were discovered more than four decades ago

amidst the nickel boom of the late 1960’s – early 1970’s. The most

substantial discovery since this time is the Nova Bollinger deposit

currently being developed by Sirius Resources Ltd (“Sirius”).

Hosting a minable nickel inventory of 285,000tonnes, Nova stands

as Australia’s largest greenfield nickel discovery in at least twenty

years, and its geographical position relative to existing mines and

deposits elevates its status to the most significant of our generation.

Nova’s positioning within a geological setting known as the Albany-

Fraser Orogen is unique to any other nickel deposit in Australia and

could potentially herald the beginning of a new nickel district for the

surrounding area which is known as the Fraser Range.

Recognising the significance which Nova could spell for the

surrounding Fraser Range, Rumble Resources has spent the past

two years accumulating exploration assets in the district. Spanning

3,260km2, its tenement position now represents one of the largest

and most proximal to the Nova deposit amongst exploration

companies focused on the area.

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Figure 2: Map showing geological setting of the Nova

deposit relative to exiting nickel mines in WA.

Source: Sirius Resources, wise-owl

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BACKGROUND

Nova is the most prolific nickel discovery Australia has

witnessed in decades

Australia’s Major Recent Nickel Sulphide Discoveries

Deposit Discovery Initial

Inventory

Cumulative

Inventory

Nearest

Nickel Mine

Emily Anne 1993 39,500t ~60,000t 200km

Silver Swan 1995 61,000t 374,000t 100km

Cosmos 1997 29,000t 650,000t 50km

Spotted Quoll 2007 39,000t 116,000t 10km

Nova 2014 285,000t ? 200km

Table 2: Nova represents the largest nickel sulphide discovery in Australia for at

least 20 years. Source: wise-owl

3 May 2015

Existing

Nickel Belt

As the Fraser Range Projects are presently absent of certified

resources, Rumble Resources is currently focused on exploration

aimed at the identification of commercially extractable nickel

resources.

The Company’s exploration program is being led by Terry Topping,

whom is credited with delineation of the original orebody supporting

the Paulsen’s Gold Mine currently operated by Northern Star

Resources Ltd (NST.ASX).

Rumble Resources’ exploration strategy utilises intelligence gained

from Nova and work conducted by previous license holder Teck

Australia Pty Ltd on its ‘Big Red’ licenses.

Whilst Nova represents a ‘blind’ deposit with little to no surface

expression, two previous drill holes conducted by Teck Australia Pty

Ltd in 2010 indicated bedrock underlying the Big Red licenses to be

of similar age and characteristics to that hosting the Nova deposit.

Nova’s discovery followed a shallow and broad spaced, 120 hole

aircore drilling program which identified weathered, sub economic

nickel and copper mineralization within 50 metres of surface.

Subsequent ground based electromagnetic (“EM”) surveys provided

impetus for deeper drilling, identifying three conductive targets

representing possible sources of the near surface mineralization.

Sirius targeted the largest EM conductor (1000 metres by 220

metres) for its deep drilling program, in which the third hole marked

the Nova discovery, confirming the EM target to host massive

magmatic nickel and copper sulfide mineralization.

Rumble Resources’ exploration strategy is therefore focused on

identification and drill testing of EM targets that could represent

mineralised sulphide deposits.

To date, ground EM surveys have identified multiple targets across

its Zanthus and Big Red licenses. Whilst the targets are of similar

scale to that which represented the Nova deposit, the primary risk

factor and goal of drilling is to appraise whether they are

mineralised.

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Strategy is to identify and drill EM targets Figure 3: Core from drilling at Big Red indicating similar

bedrock to that hosting the Nova deposit.

Source: Rumble Resources

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3 May 2015

Fraser Range EM Targets

Area Target Status

Big Red 2000m EM conductor

4 hole program confirms

disseminated sulfides

Zanthus

Multiple

1000m – 2000m

EM conductors

EM nearing completion

Maiden drilling pending

Thunderstorm N/A Need to conduct EM

Vale adjacent license holder

Table 3: Rumble Resources has identified multiple EM targets for drilling

Source: wise-owl

DEVELOPMENT STRATEGY

To date, further investigation of the EM targets has been limited to

the Big Red conductor. Big Red is adjacent to tenements recently

acquired by Vale SA and represents the most distant of Rumble’s

licenses from Nova – located between 250-300km to the north east.

With a strike length of 2km, Rumble Resources regards it as the

largest conductor identified in the Fraser Ranges thus far. A four

hole Mud Rotary/Diamond drill program designed to test the Big

Red conductor was completed in late 2014 to depths of up to

400metres below surface.

Whilst economic mineralization was not encountered, the presence

of broad disseminated sulphide zones containing anomalous

copper and nickel indicate the Big Red conductor to represent

significant mineralized system.

A downhole EM survey has been completed to determine the strike,

dip and depth of the conductive bodies. Results to date indicate the

conductive zone to be present at depths of 300-420 metres below

surface. Further drilling of the Big Red conductor is scheduled to

follow an imminent maiden drilling program at Zanthus.

Zanthus is the most proximal of Rumble Resources licenses,

located 18km east of Nova, adjacent to licenses held by Windward

Resources Ltd (WIN.ASX). The Zanthus program is scheduled to

consist of five Reverse Circulation drill holes for 1200 metres to

appraise five EM targets identified within the licenses.

As certified resources have yet to be defined at Rumble Resources

Fraser Range Projects, direct appraisal of their economic potential

is limited.

At a district level, the circa 50-120 metre layer of sediment covering

host rocks containing the Nova deposit indicates that future mining

developments in the Fraser Range are likely to also be

underground operations. Elevated grade is therefore an important

economic driver for future discoveries, although development of the

Nova mine significantly reduces barriers to entry.

Nova is currently under construction after procuring development

capital totaling $473million. The deposit’s ore reserve stands at

13.1Million tones (Mt) grading 2.1% Ni, 0.9% Cu, and 0.07% Co. A

1.5Mt pa concentrator and 16 megawatt diesel power plant is being

constructed to support an initial ten year mine life.

We estimate the operation could generate a Net Present Value

(5%, pre tax) in the order of $1billion at current metal prices, rising

to $2billion utilizing three year average metal prices.

Project economics at Nova are greatly assisted by the presence of

significant payable by-products and the deposit’s commencement

within 40metres of surface. However fixed investments associated

with its development means that future discoveries in the district

needn’t possess equivalent characteristics.

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Vale is Rumbles

new neighbour at

Big Red

Nova reduces

barriers for

other deposits

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ECONOMICS

3 May 2015

As Rumble Resources mineral assets are of exploration status, the

Company does not presently generate revenue and is reliant on

external capital to advance their development. To date Rumble

Resources has financed operations primarily through equity

issuances, complimented by Government drilling grants.

Its latest equity issuance was completed this month, raising

$1.68million via a private placement of 37.5million shares at

$0.045/share. Participants in the offer were granted listed options

on a one for two basis, exercisable at $0.08/share prior to 30 June

2016.

The raising expanded shares on issue by 25 per cent and also

coincided with several significant advisory appointments. Nathan

Tinkler has been engaged as Strategic Corporate Advisor, whilst

EAS Advisors LLC has been engaged as North American Corporate

Advisor.

Mr Tinkler has a record of identifying under developed mineral

resource assets in Australia, playing important roles in the

acquisition, financing, and development of the Middlemount Coal

Mine in Queensland and the Maules Creek Coal Mine in New South

Wales.

EAS Advisors LLC has a record of capital procurement for natural

resource ventures involving ASX listed entities. The engagement

with Rumble Resources enhances our confidence in the Company’s

capacity to attract ongoing funding.

Following the April private placement, we estimate issued capital to

be $11.9million, or $0.063/share. Exercise of the Company’s

$0.08/share option tranches would provide additional funding of ~

$6million.

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FINANCIAL PERFORMANCE

April placement

provides

exploration funds

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Rumble Resources Financial Summary

Cash $2.2m

Issued Capital $11.5m

Table 4: Rumble Resources April placement provides funding for near term

exploration at its Fraser Range projects. Source: Rumble Resources

3 May 2015

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DRILLING

RESULTS ARE

THE MAJOR

CATALYST

Rumble Resources provides speculative exposure to the potential

for the Fraser Ranges in Western Australia to emerge as a new

nickel mining district. We are attracted to the magnitude of the land

package which Rumble Resources has assembled during the past

two years, recent corporate activity, and the presence of near term

catalysts with the potential to drive value growth.

Rumble Resources tenement portfolio represents one of the largest

dedicated exploration packages in the Fraser Range. Whilst at an

early stage of development, strategic value of these assets is

highlighted by the emergence of Vale SA as adjacent license holder

at Big Red, and recent advisory engagements. In our opinion, the

support of Nathan Tinkler and EAS Advisors enhances Rumble

Resources capacity to access capital markets, elevating the focus

of its exploration activities.

On that front, maiden drilling of multiple EM conductors at the

Zanthus licenses 18km east of Nova, followed by a second round of

drill testing at the Big Red conductor have potential to yield a major

re rating in the event of a ‘Nova like’ discovery. Whilst risks

associated with exploration of this nature are high, recognising their

potential value impact, we are initiating coverage on Rumble

Resources.

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3 May 2015

Figure 5: Vale has emerged as a neighbouring tenement holder to Rumble

Resources Big Red licenses. Source: Rumble Resources

INVESTMENT VIEW

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Technical Risk

Rumble Resources Fraser Range Projects largely represent

greenfield exploration assets requiring significant further technical

appraisal and capital investment. There is no guarantee Rumble

Resources planned exploration activities will successfully delineate

commercially recoverable mineral resources, nor that they exist

within its licenses.

Market Risk

Changes in the price of metals targeted by Rumble Resources at

the Fraser Range can have a major bearing on the market value of

its exploration assets, any future discoveries, and the Company’s

ability to attract financing. The London Metals Exchange Nickel and

Copper prices are presently trading near six year lows and there is

no guarantee against further declines.

Funding Risk

Rumble Resources is reliant on external capital to advance its

Fraser Range assets. Whilst its April equity issue provides sufficient

funding to facilitate near term exploration programs, there is no

guarantee subsequent funding will be available to the Company nor

on favourable terms for existing shareholders.

Scheduling Risk

The more exploration and time required to determine whether

commercially recoverable minerals exist at its Fraser Range assets

may have a negative effect on shareholder value due to the

associated influence on funding requirements and dilution.

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RISKS

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THE BULLS SAY

• Sirius Resources’ Nova deposit has opened up the Fraser

Range as a potentially new nickel mining district

• Rumble Resources 3,260km2 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

THE BEARS SAY

• 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

commercially recoverable resources are hosted within the

licenses

• Initial four hole drilling program at Big Red did not encounter

economic intercepts despite the presence of suitable bed rock

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

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THE BULLS AND THE BEARS

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Mr Shane Sikora CEO

Mr Sikora is a founding member of Rumble, having been General

Manager from 2011 to mid 2013. During that time Mr Sikora has

been instrumental in project acquisitions, operations management

and securing financial partners.

Previous to Rumble Mr Sikora acquired over 10 years corporate

experience in business development, strategic planning and project

management. Mr Sikora has been involved across many aspects of

the exploration industry including capital raisings, IPO’s, project

acquisitions, joint ventures, tenement management and corporate

governance.

Mr Terry Topping EXECUTIVE DIRECTOR

Mr Topping has over 18 years of experience in the management of

listed public companies on ASX and TSE. Mr Topping has

experience in corporate finance, mergers and acquisitions and also

as an exploration geologist in Australia and overseas.

Mr Topping was a founder of Taipan Resources NL, which listed as

a gold exploration company in 1993 and which Mr Topping

remained a director until 2002. During this time he was integral in

the discovery of the high grade Paulsens gold deposit now mined

by Northern Star Resources Ltd. Since 1985, Mr Topping has

gathered experience as an exploration geologist searching for gold,

diamonds, base metals and recently in the uranium sector as the

founder of Scimitar Resources Ltd now Cauldron Energy Ltd.

Mr Andrew McBain NON EXECUTIVE DIRECTOR

Mr McBain has significant corporate and business management

experience having successfully developed a number of start-up

businesses over the past 10 years. Mr McBain successfully founded

and developed the largest grain production business in Australia,

AACL Holdings Ltd (ASX code: AAY), in addition to founding and

being a key developer of the most successful carbon sequestration

business in Australia, Carbon Conscious Ltd (ASX code: CCF). The

capital raised for these ventures has been in excess of $250 million

since 2005.

Previously Mr McBain was a director and founding shareholder of

Scimitar Resources Ltd (now Cauldron Energy Ltd – ASX code:

CXU) and is currently a director of ASX listed Carbon Conscious

Ltd. Mr McBain has experience in capital raising, business

management and business development.

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MANAGEMENT

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MANAGEMENT

Mr Michael J Smith NON EXECUTIVE DIRECTOR

Mr Smith is a director of Smith Feutrill and is a Chartered

Accountant with over 25 years experience in the accounting,

business and taxation advice sectors. He is a Fellow of the Taxation

Institute of Australia, a member of the ICAA’s Forensic Accounting

Special Interest Group and was Chief Executive of a division of a

publicly listed national financial services consolidator for five years

overseeing significant growth in that time.

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Mr Matthew Banks NON EXECUTIVE DIRECTOR

Mr Banks has over 10 years experience specialising in marketing

and public relations and more recently in finance. During that time

Mr Banks has developed strong relationships with a number of

leading public and private companies as well as with high net worth

individuals from across a number of industries. Since 2005 Mr

Banks has been involved in raising capital for a number of listed

exploration companies and is currently working with a leading

finance business based in Melbourne.

3 May 2015

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MANAGEMENT

GLOSSARY

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ANALYST

TIM MORRIS

timm@wise-owl.com

1300 306 308

www.wise-owl.com

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Buy Increasing value of established business operations is likely to yield

share price appreciation

Spec Buy Increasing value of a new or developing business operation is likely to

yield share price appreciation.

Hold There exists an even balance of risks.

Sell There is elevated risk of share price depreciation.

Stop

JORC

Our recommended, pre determined sell price, to be executed if the

share price fails to appreciate

Joint Ore Reserves Committee. A body sponsored by the Australian

mining industry and its professional organisations, which sets

minimum standards for the measurement and reporting and mineral

reserves and resources.

Exploration A category of companies that have yet to define resources beyond

the 'inferred' category according to JORC standards

Resource A category of companies that have defined resources classified as

'measured' and/or 'indicated' according to JORC standards.

Reserve A category of companies that have defined mineral reserves

according to JORC standards.

3 May 2015

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RUMBLE RESOURCES LTD (RTR.ASX)

MAY-15 Initiating Coverage

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