Kuniko Silica Hill Drilling Extends High-Grade Mineralised System by 100 Metres

Kuniko Extends High-Grade Silica Hill Mineralised System by 100 Metres in Phase 2 Drilling

Kuniko Limited (ASX: KNI) has reported an encouraging early result from its Phase 2 diamond drilling programme at the Silica Hill prospect, confirming that the Kuniko Silica Hill drilling extends high-grade mineralised system by 100 metres beyond previously known boundaries. Two completed diamond holes, CMKNI007 and CMKNI008, have together demonstrated approximately 100 metres of up-dip to down-dip continuity across the Silica Hill system, with all three holes in this sequence, including Phase 1's CMKNI004, sitting entirely outside the existing mineralised block model.

According to the announcement, this development is significant because it signals that the current Mineral Resource Estimate (MRE) at Silica Hill may not yet capture the full extent of mineralisation, and that the upcoming Project MRE update carries potential for expansion. Assays for both new holes are pending, with results expected in September 2026. Until those results arrive, the geological observations reported by the company provide the basis for early interpretation.

What Phase 1 Established and Why Phase 2 Matters

To understand the significance of Phase 2, it is worth revisiting what Phase 1 delivered. Hole CMKNI004, reported in May 2026, intersected 3.4 metres at 50 g/t gold equivalent (AuEq) from 227.5 metres depth, including 4.1 g/t gold, 2,947 g/t silver, 0.3% lead and 0.6% zinc.

Within that interval, a 0.5 metre massive sulphide vein returned 347 g/t AuEq, including 20,603 g/t silver and 27 g/t gold. These are high-grade intersections for a polymetallic epithermal system, according to the company. Phase 2 was consequently designed to test whether this mineralisation had lateral and depth continuity, and the early geological evidence from the two completed holes is consistent with that objective being met.

Inside the Drill Results: What Is the Geology Showing?

Neither CMKNI007 nor CMKNI008 has returned assay results yet, however the visual geological observations from both holes are reported to be consistent with the mineralised system seen in CMKNI004. The table below summarises the key sulphide zones intersected, based on the company's preliminary logging.

Key observations reported across both holes include:

• Both holes intersected alteration, disseminated sulphides and sulphide-bearing stringer and stockwork veining consistent with mineralisation observed in CMKNI004
• Mineralisation is hosted within silica-sericite altered rhyolite porphyry, the same host rock as the Phase 1 high-grade intercept
• Sphalerite-rich and sphalerite-galena-rich zones appear in the deeper portions of both holes, suggesting base metal zoning consistent with the company's geological model
• Proustite, a silver sulphosalt mineral often associated with high silver grades, appears in multiple intervals across both holes
• Both holes crossed the interpreted reverse fault, supporting the company's geological interpretation that mineralisation has been displaced downward across this structure

The company has cautioned that visual estimates of mineral abundance should not be treated as a substitute for laboratory assay results, particularly where grade is the factor of principal economic interest.

"The first two holes of our Phase 2 drilling program have delivered an encouraging start at Silica Hill, with both holes intersecting the targeted zones of alteration, disseminated sulphides and stringer-vein mineralisation. Importantly, drilling has now demonstrated approximately 100m of continuity across CMKNI007, CMKNI004 and CMKNI008, with all three holes located outside the existing mineralised block model. This provides a compelling opportunity to expand the known Silica Hill mineralised footprint. With assays pending, the potential for these extensions to add scale and high-grade mineralisation to the Silica Hill system is an important near-term catalyst for Kuniko as we progress towards an updated Project MRE." — Managing Director Maja McGuire

Understanding Gold Equivalent (AuEq): Why Does It Matter Here?

One term that appears throughout Kuniko's reporting is gold equivalent (AuEq), a normalisation method that allows geologists and investors to compare polymetallic mineralisation on a single, standardised basis.

Because the Silica Hill and Commonwealth deposits contain gold, silver, zinc, lead and copper, reporting grade in terms of a single metal alone would understate the combined value of each intercept. Furthermore, AuEq converts all metals into a gold-equivalent figure using prevailing commodity prices and estimated recovery rates.

What Price and Recovery Assumptions Does Kuniko Use?

For context, Kuniko's AuEq calculations use the following price and recovery assumptions:

According to the company, these prices are set at a discount to spot prices as at 25 May 2026, approximately 23% below spot for gold and 38% below spot for silver, which the company describes as conservative rather than optimistic assumptions.

The practical implication is that when Phase 1 hole CMKNI004 returned 347 g/t AuEq in a 0.5 metre massive sulphide vein, much of that figure was driven by the silver content of 20,603 g/t silver. For context, many economic silver mines globally operate on grades measured in tens to low hundreds of grams per tonne, making that single interval a notable data point within the reported results.

Glossary of Key Terms

• AuEq (Gold Equivalent): A composite grade figure expressing the combined value of all metals in a sample as if it were entirely gold, based on stated price and recovery assumptions
• VMS (Volcanogenic Massive Sulphide): A deposit type formed by submarine volcanic activity, often hosting gold, silver, zinc, lead and copper together
• Epithermal: A deposit style formed at shallow depths from hydrothermal fluids, often associated with high-grade gold and silver
• Sulphosalt: A group of silver-bearing minerals, such as proustite, often indicative of higher-grade silver zones
• DHEM (Downhole Electromagnetic): A geophysical technique used to detect conductive sulphide mineralisation beyond the immediate drill hole
• MRE (Mineral Resource Estimate): A JORC-compliant estimate of the quantity and grade of mineralisation within a defined volume

The Project Setting: A Position Within the Lachlan Fold Belt

The Commonwealth Project is located approximately 100 kilometres north of Orange, New South Wales, within the Lachlan Fold Belt, a region hosting several established gold and copper operations.

The belt is home to Cadia-Ridgeway, owned by Newmont and described as one of the world's larger gold-copper mines, along with Northparkes and Cowal, both owned by Evolution Mining. In addition, the Commonwealth Project sits immediately along trend from Alkane Resources' Boda-Kaiser porphyry copper-gold deposit, which the company notes contains over 10 million ounces of gold equivalent.

What Deposits Make Up the Commonwealth Project?

Within the Commonwealth Project itself, there are two genetically related deposits located within 200 metres of each other:

1. Commonwealth Main and Commonwealth South — a polymetallic VMS-style system characterised by high-grade gold, silver and zinc mineralisation, including massive sulphide lenses with base metal credits
2. Silica Hill — an epithermal stockwork vein system hosting high-grade silver mineralisation, with silver sulphosalts and broad zones of disseminated and stringer sulphides

The project also includes several untested exploration targets, namely Silica Hill East, Geenobbys and Gladstone, where geophysical and geochemical anomalies remain undrilled. The project is covered by five granted exploration licences spanning approximately 315 square kilometres.

Prior explorer Impact Minerals has previously drawn a geological comparison to Eskay Creek in Canada, a precious-metals-rich VMS-epithermal deposit, as contextual reference for the mineralisation style at Commonwealth. However, Kuniko notes it continues to develop its own geological model specific to the Lachlan Fold Belt setting, and has not independently verified prior resource estimates reported by Impact Minerals.

What Comes Next: A Sequenced Programme of Upcoming Activities

According to the announcement, Kuniko has outlined a sequenced programme of upcoming activities across the Commonwealth Project, creating several potential news flow points for investors over the coming months.

The planned Project MRE update is described by the company as a significant medium-term milestone. With all three CMKNI004/007/008 holes sitting outside the existing mineralised block model, the addition of this 100-metre mineralised corridor, once supported by assay results, has the potential to expand the Silica Hill resource footprint, according to the company.

Additionally, the planned PVC casing of CMKNI007 for future DHEM surveying is intended to test for conductive sulphide mineralisation beyond the immediate drill intercepts, a technique the company notes is suited to identifying massive sulphide bodies of the type observed in Phase 1 drilling.

Company Position: Multiple Targets Across a Developing Drill Programme

Several elements of Kuniko's current position at Commonwealth are worth considering together.

Kuniko's broader asset base extends beyond Commonwealth. The company's Norwegian portfolio, anchored by the Ertelien Nickel-Copper-Cobalt Project, includes a JORC (2012) MRE of 40 million tonnes at 0.25% nickel equivalent, providing a separate asset base focused on energy transition metals across two established mining jurisdictions.

Why Investors Are Watching This Update

Kuniko is progressing a drilling programme at the Commonwealth Project designed to inform an updated MRE, and the early geological results from CMKNI007 and CMKNI008 suggest the Silica Hill system may extend further than the existing resource model currently reflects, according to the company.

The September assay results will provide the first quantitative test of whether the geological continuity observed visually translates into consistent grade. Given the sulphide mineralogy reported, including proustite and sphalerite-galena-rich zones consistent with the host rock of Phase 1's high-grade result, the assay data will be closely monitored by the market.

Beyond Silica Hill, the programme's extension to Main Shaft and Commonwealth South introduces further intercept potential at targets that have already returned notable results in prior drilling. The regional targeting programme adds an additional layer of exploration potential across the broader 315 square kilometre licence package.

Key Takeaway: Where Kuniko Silica Hill drilling extends high-grade mineralised system by 100 metres, the result sits outside the existing resource model, with assay results due in September 2026 representing a near-term catalyst for potential resource expansion. Positioned within the Lachlan Fold Belt, one of Australia's established gold-copper provinces, and with an active drill programme across multiple targets, Kuniko's progress toward an updated Project MRE warrants continued attention from investors monitoring the Commonwealth Project's development.

Want to Know More About Kuniko's High-Grade Discovery at Commonwealth?

With Phase 2 drilling at Silica Hill demonstrating 100 metres of mineralised continuity beyond the existing resource model, and assay results due in September 2026, Kuniko Limited (ASX: KNI) is approaching a significant near-term catalyst for potential resource expansion. From its high-grade polymetallic Commonwealth Project in the Lachlan Fold Belt to its Norwegian nickel-copper-cobalt portfolio, the company offers investors a multi-asset story at an active stage of development. To learn more about Kuniko's projects, drilling programme, and investment case, visit kuniko.eu.