Sayona Mining Ltd.: 2016 Annual Report to Shareholders

Brisbane - Sayona Mining Ltd. (ASX:SYA) (OTCMKTS:DMNXF) is pleased to provide its 2016 Annual Report to shareholders.

The Company

The Company's strategy is to change the world and power the future by sourcing and developing the raw materials essential for lithium-ion battery production.

The Company's focus is on sourcing and developing projects capable of supplying the raw materials required to construct lithium-ion batteries for use in the rapidly growing new and green technology sectors.

This was achieved by:

- the acquisition of the Authier lithium project in Canada;

- securing a package of lithium prospective exploration tenements in Western Australia; and

- the entry into the large flake graphite market by securing a large ground position in the East Kimberley region of Western Australia.

The coming year will see the Sayona entering into a new era of growth, by completing the:

- Authier pre-feasibility study and drilling;

- Western Australian lithium exploration;

- East Kimberley graphite drilling; and

- Active corporate development initiatives.

OPERATIONS

Authier Project

On 1 May 2016, the Company entered into a binding term sheet with Glen Eagle Resources Inc. to acquire 100 per cent of the Authier project in Quebec, Canada for CAD$4 million. The acquisition was completed on 20 July 2016, following a successful $7.1 million capital raising.

The key attractions of the Authier lithium project acquisition, include:

- Extensively drilled - mineralisation hosted in a spodumene-bearing pegmatite intrusion with more than 15,000 metres of drilling in 123 holes;

- Simple deposit - 825 metres long with an average thickness of 25 metres dipping at 40 degrees, amenable to low-cost, open-cut mining techniques;

- Defined resources (see figure in the link below), with the potential for expansion through further drilling;

- Simple metallurgy - extensive metallurgical testing and flowsheet designed to produce a 5-6% Li20 concentrate at an 85% metallurgical recovery;

- Well studied - a NI43-101 Technical Report - Preliminary Economic Assessment - completed in 2013, demonstrated the technical and commercial viability of developing the deposit, and selling lithium concentrates;

- Excellent infrastructure - situated 45 kilometres from mining support services, and links to road and rail networks, including the Quebec export port; and

- Large sunk cost - significant investment in drilling, geophysics and development studies.

Subsequent to the end of the financial year, an independent JORC Mineral Resource estimate, totalling 9.12 million tonnes containing 87,302 tonnes of Li2O was reported, assuming a 0.5% Li20 cut-off grade.

The Company's strategy going forward, includes:

- Explorations and further drilling to target expanding the existing mineral resources;

- Identifying other resources in the tenement package and in the surrounding district to potentially expand the scale of the project; and

- Studying options for including, metallurgical optimisation and downstream processing options.

Planned Activity

- A metallurgical study to provide new data for process engineering studies;

- A process engineering study to identify enhancements and optimisation of the process flow-sheet, and to estimate the capital and operating costs;

- A resource definition and extension drilling program, including an updated JORC mineral resource estimate;

- Commence work environmental and mining lease permits; and

- Preparation of a Pre-Feasibility Study.

Western Australian Lithium

The Company has secured a package of lithium prospective exploration tenements in Western Australia. The projects have excellent regional infrastructure, and are close to the Asian markets for downstream processing and battery manufacturing.

Pilbara Lithium Project, Pilgangoora district

The project area comprises one granted exploration licence and seven applications. The areas host tantalum mineralisation within complex rare metal pegmatites. This class of fractionated pegmatite includes prospective lithiumcesium-tantalum ("LCT") pegmatites, and especially albitespodumene pegmatites, the target for the Company's high grade lithium exploration strategy.

The projects have had little or no past lithium focussed exploration and the Company is encouraged that its initial reconnaissance work has been positive, identifying lithium minerals and geochemistry indicative of fractionated rare metal pegmatites.

Mount Edon Project

The project area comprises two granted exploration licences. They cover the southern portion of the Paynes Find greenstone belt, South Murchison, which are host to an extensive swarm of pegmatites. The pegmatites have not previously been assessed for their lithium potential but have been variably prospected and mined for tantalum, mainly within an excised mining lease.

The Company is exploring the project for its potential to host the albite - spodumene class of rare metal pegmatite, similar to other greenstone hosted occurrences in the Yilgarn.

Over 70 pegmatites have been identified during reconnaissance mapping, spread out over a 4km zone. Others are present further to the north and west but outcrop in these areas is poor and these systems are poorly defined at present.

A total of 95 pegmatite rock samples have been collected during reconnaissance work and have returned a peak assay of 1.57% Li2O.

Planned Activity

- Completion of a tenement wise mapping and sampling program;

- Channel sampling of identified pegmatite systems;

- Drilling of targets

East Kimberley Graphite Project

The project area comprises one granted exploration licence and three separate tenement applications, subject to two option-to-purchase agreements.

The project area is located within the East Kimberley region of Western Australia, 240 kilometres south of Wyndham Port and 220 kilometres south-south-west of the regional centre, Kununurra.

The project covers 278 km2 and prior to the Company commencing work, had not previously been explored for its graphite potential.

The East Kimberley project offers an attractive entry into the graphite market:

- Proven district for high carbon purity, large flake graphite;

- The Kimberley region is a proven province for high purity, large flake graphite.

- The significant scale (up to 20 kilometres strike extent) of the Corkwood graphite target identified from geological and geophysical anomalies, and initial RC drilling program;

- Situated in a well-established mining district, 240 kilometres south of an export port at Wyndham;

- The region has excellent infrastructure including roads, airports, and labour;

- First world country with stable tax and royalties, and mining law; and

- Low cost entry via tenement applications and option-to-purchase agreements.

During the year, the Company drilled 33 reverse circulation holes totalling 2,949 metres in six prospect areas within the Corkwood tenements. Every hole intersected visual flake graphite mineralisation, with significant zones of over 50 metre downhole widths in several holes.

The drilling program identified graphite mineralization over 7 kilometres within the 25 kilometre strike extent of the Corkwood geochemical and geophysical anomaly.

Highlights from the drilling program, included:

- Delineation of broad zones of shallow flake graphite mineralisation, including;

-- 16m @ 5.03% Total Graphitic Carbon (TGC) from 13m in SKRC006, Windrush,

-- 22m @ 3.8% TGC from 9m in SKRC008, Windrush,

-- 36m @ 3.39% TGC from 7m in SKRC015, Snowbird,

-- 54m @ 3.05% TGC from14m in SKRC016, Snowbird,

-- 109m @ 1.84% TGC from 22m in SKRC017, Flying Ant,

- Mineralisation is open at depth and along strike;

- Assays up to 12.2% TGC;

- Mineralisation from surface, with shallow dip and good geometry, characteristics amenable to low cost open-cut mining; and

- Visible coarse graphite - graphite study underway to help characterise the quality of the mineralisation.

Planned Activity

- Diamond drilling to obtain metallurgical information and to provide graphite concentrate for off take evaluation;

- Drill testing of priority targets identified from VTEM survey over application areas;

- Identification of those areas with larger graphite flake size - high purity and or grade/ thickness; and

- Further test work to determine the grade, recovered flake size, purity of the graphite and its suitability for high technology use.

Itabela Project

In August 2015, the Company signed an optionto-purchase contract with Brasil Grafite S.A. ("Brasil Grafite") for the Itabela graphite project in Brazil. The Itabela graphite project, comprises 13 exploration permits with a total area of 13,316 hectares.

During the initial option period, the Company's due diligence activities confirmed the potential for Itabela to be established as a near-term, globally competitive, low capital and operating cost development opportunity. However, the Company concluded that further drilling was required to validate historical drilling data to complete a resource estimate and scoping study.

The Company subsequently agreed to amend the option-to-purchase terms in December 2015. The new agreement extended the option period to 30 June 2016 and provided for an exercise payment of US$1.5 million on exercise of the option and further payments based on delineating JORC resources. The new agreement provided a closer alignment of resource definition success with the future payment schedules.

Following an extensive exploration program in early 2016, drilling was unable to define a resource of sufficient scale to meet the Company's financial return objectives. Coupled with the moderation in graphite concentrate prices, the Company was not able to negotiate suitable new contractual terms to justify extending the purchase option. The Company withdrew from the project in August 2016.

To view the annual report, please visit:
http://abnnewswire.net/lnk/A3I40M0P


About Sayona Mining Ltd:

Sayona Mining Ltd. (ASX:SYA) is a company focused on sourcing and developing the raw materials required to construct lithium-ion batteries for use in the rapidly growing new and green technology sectors. Please visit us as at www.sayonamining.com.au


Contact:

Sayona Mining Ltd.
Corey Nolan Chief Executive Officer
Phone: +61-7-3369-7058
Email: info@sayonamining.com.au
www.sayonamining.com.au