Key Highlights

• Killi has added a second drill rig at Lodestone in Western Australia.

• The aim is to turn a maiden inferred resource into a larger one more quickly.

• Magnetite iron ore is the focus of the project.

• Drilling results will determine whether the resource grows.

Killi Resources (ASX:KLI) has added a second drill rig at its Lodestone magnetite iron ore project in Western Australia because the company wants to turn a maiden inferred resource into a larger one more quickly. An announcement at the start of October 2026 said a reverse circulation rig had arrived and started drilling alongside the diamond core rig already on site, with both prioritising extensions to the north, the south and at depth.

A small explorer with a new focus

Killi Resources (ASX:KLI) Limited has been quoted on the ASX since 10 February 2022 and is classified by the exchange within the Materials sector. It is a Mining explorer with several projects in both Western Australia and Queensland.

Lodestone, in Western Australia's Mid-West, is the newest and, on the company's own emphasis, the most important. Killi agreed on 11 June 2026 to acquire 80 per cent of the project through Yukon Resources Pty Ltd. The consideration is 92,727,273 Killi shares, valued in the Annual Report at a deemed A$0.22 each, or about A$20.4 million, plus a 2.5 per cent gross Revenue royalty.

What the resource shows

The initial Lodestone estimate is now 110 million tonnes in the JORC Inferred category, at 33 per cent Davis Tube Recovery mass recovery. The magnetite concentrate grades 69 per cent iron, with 3.9 per cent silica and 0.08 per cent alumina.

Those concentrate grades matter because magnetite concentrates with high iron and low impurities can be sought after in steelmaking. They are laboratory-style measures, however, not a substitute for a processing flowsheet, mining study or cost estimate.

The estimate covers only about 5 kilometres of a magnetite system of about 25 kilometres. That gap is the reason for the rigs. A 20,000-metre programme of reverse circulation and diamond drilling is planned across roughly 15 kilometres of the system, and Killi has said it expects several resource updates over coming quarters as assay results arrive.

The financial position

Killi's annual report for the year to 30 June 2026 shows a net loss of A$1,817,849, down from A$2,298,751 a year earlier. Exploration expense fell to A$670,345 from A$1,551,190, and the loss per share was 1.19 cents.

Cash at 30 June 2026 was A$14,683,619, compared with A$1,509,766 twelve months earlier. After year end, a second Tranche of a Placement issued 19,108,235 shares at A$0.22 on 20 August 2026, raising about A$4.2 million.

The directors' Going Concern note says the Cash Flow forecast shows sufficient cash for twelve months after raising further capital. A reader should note that wording: drilling on this scale is likely to consume cash faster than the past year's quiet exploration did.

Other projects and management

Killi also holds Mt Rawdon West and Ravenswood North in Queensland, both 100 per cent owned, and West Tanami in Western Australia, which is subject to an option and joint venture with Gold Fields. The Queensland Government has approved a grant of up to A$275,000 towards drilling at Mt Rawdon West.

A new non-executive chair joined on 1 April 2026, and Hamish Halliday was appointed managing director on 24 August 2026.

Risks and what to watch

Inferred resources carry the lowest geological confidence under the JORC Code, and further drilling can enlarge, shrink or reclassify them. Magnetite projects also face large Capital requirements, processing and transport questions, and exposure to iron ore prices.

The 80 per cent interest was subject to a Shareholder vote scheduled for 14 August 2026. Additional Equity raisings could dilute existing holders. The company announced on 2 October 2026 the date of its Annual General Meeting and the closing date for director nominations.

The next measurable signals are the assay results from the new drilling and any updated resource estimate, followed by metallurgical test work on diamond core samples.