Kaili Resources Finalizes Aircore Drilling at Coodalya Rare Earth Element Project in South Australia

Coodalya Project Location and Rare Earth Element Deposit Characteristics

Kaili Resources' Coodalya exploration tenement lies about 200 kilometres east of Adelaide, South Australia, within the Murray Basin and atop the Loxton/Parilla Sands geological formation. The tenement targets rare earth elements concentrated in the fine clay fraction of Tertiary-aged strandlines, representing an ionic clay deposit style typical for the region. The company holds granted exploration tenements across three key Murray Basin areas: Lameroo, Karte, and Coodalya, with current rare earth element exploration focused on the Coodalya licence.

The regional geological setting has demonstrated commercial viability through exploration by other operators. Australian Rare Earths Limited (ASX:AR3) has reported success within adjacent tenements in the same basin and released a pre-feasibility study for its Koppamarru Rare Earths Project, confirming the region hosts deposits with promising economics. This context places Kaili Resources' exploration in a geologically prospective area where ionic clay rare earth element mineralisation has shown potential at neighbouring projects.

Overview of Completed Aircore Drilling at Coodalya

The drilling program, announced on 28 July 2026, completes work outlined in a 16 July 2026 company update. It comprised 16 Aircore drill holes totaling 261 metres, with hole depths ranging from 12 to 18 metres. Drilling concentrated in the northeast corner of Coodalya EL 6978, strategically following up on results from October 2025 and March 2026 campaigns. The drilling was conducted over two days: 14 holes on 22 July 2026 and 2 holes on 23 July 2026.

Drill collar data indicates hole locations within GDA94 Zone 54 coordinates ranging from easting 404643 to 414493 and northing 6131080 to 6137172. The holes reached targeted depths aligned with geological objectives to test elevated rare earth element zones previously identified in the northeast tenement area. This focused drilling advances the company’s exploration strategy by refining understanding of rare earth element distribution based on prior seasons’ geological insights.

Sample Processing and Analytical Procedures

All samples from the 16 drill holes have been prepared and delivered for portable X-ray fluorescence (pXRF) scanning. This preliminary analysis identifies samples of interest before proceeding to formal laboratory assays, enabling cost-effective prioritisation of samples for detailed testing. The scanning results will determine which samples undergo subsequent laboratory assay.

The company has not specified timelines for pXRF results or final laboratory assay releases. According to the Principal Geologist’s statement, results will be announced upon receipt, reflecting a standard multi-stage analytical approach in rare earth element exploration that guides sample selection for in-depth laboratory characterisation.

Building on Previous Drilling and Elevated Rare Earth Oxide Findings

This drilling campaign builds on earlier exploration data, including pXRF scanning of historic South Australian Government drill hole samples and assaying of fresh granite outcrops at the Lameroo tenement. These initial efforts led to a widespread Aircore drilling program along Lameroo road verges in February 2024 to identify targets for infill drilling, guiding subsequent priorities across the portfolio.

Follow-up drilling in 2025 and early 2026 focused on Karte and Coodalya tenements, delineating elevated total rare earth oxide concentrations at Coodalya. These elevated grades motivated the July 2026 drilling, representing a systematic effort to better understand and potentially expand the rare earth mineralised zone. Full JORC tables and detailed hole results from previous campaigns have been disclosed in updates dated 25 March 2024, 20 October 2025, 6 March 2026, and 16 July 2026, ensuring transparency of the exploration dataset.

Strategic Targeting of Northeast Coodalya Tenement Extension

The July 2026 drilling focus on the northeast corner of Coodalya reflects a targeted strategy informed by prior drilling and geological interpretation. The Principal Geologist highlighted the program’s design to build on 2025 and early 2026 drilling in this area, concentrating efforts on a promising, defined portion of the tenement rather than dispersing resources broadly.

Drill collar and tenement boundary data indicate the company is systematically testing a geological zone of interest within granted exploration ground. The northeastern drilling location and plans to consider further drilling on adjacent private land suggest rare earth mineralisation may extend beyond current boundaries. This reconnaissance approach is typical in early-stage rare earth exploration, where detailed work on granted tenements precedes access negotiations for adjacent properties to test mineralisation continuity and resource expansion potential.

Exploration Strategy and Potential for Future Drilling Expansion

The Principal Geologist stated that results from the completed drilling will guide decisions on further drilling campaigns on adjacent private land around Coodalya. Kaili Resources is actively evaluating opportunities to expand its exploration footprint beyond granted tenements based on systematic drilling outcomes. Securing access to private land could significantly enhance the company’s ability to test the lateral extent of rare earth mineralisation identified within Coodalya EL 6978.

This staged exploration approach—from initial testing through infill and focused drilling—demonstrates disciplined capital allocation. Rather than large-scale drilling without supporting data, the company has progressively built its exploration case. Upcoming analytical results will underpin management’s decisions to either escalate exploration via expanded drilling on private land or maintain a conservative approach pending additional data to justify larger capital expenditures.

Competent Person Verification and Geological Expertise

The exploration information was compiled by Mark Derriman, Consultant Geologist for Kaili Resources and a member of The Australian Institute of Geoscientists (membership number 1566). Under the 2012 Australasian Code for Reporting of Exploration Results, Derriman qualifies as a Competent Person with relevant experience in the deposit style and exploration activities. He has consented to the inclusion of exploration information in the company update as presented.

Appointment of a qualified Competent Person ensures compliance with Australian securities exchange rules and industry standards, providing investors with confidence that exploration data and interpretations are prepared by a professional with appropriate expertise. This verification enhances the credibility and reliability of the company’s disclosed exploration findings.

Regional Geological Context and Ionic Clay Rare Earth Deposits

The Murray Basin hosts rare earth element mineralisation within fine clay fractions of Tertiary-aged strandlines, representing ionic clay deposits formed through natural weathering and deposition over millions of years. These deposits date from approximately 65 million to 2.5 million years ago and are overlain by Loxton/Parilla Sands formations targeted by Kaili Resources.

Ionic clay deposits have gained global interest due to lower processing costs and reduced environmental impact compared to hard rock ores. The regional precedent set by Australian Rare Earths’ pre-feasibility study on the neighbouring Koppamarru project confirms the economic potential of such deposits in the Murray Basin. Kaili Resources’ activities across Coodalya, Karte, and Lameroo tenements aim to identify similar mineralisation styles and grades, potentially creating a pipeline of rare earth projects within the basin.

Market Impact and Investor Outlook

The completion of the Coodalya drilling program and forthcoming analytical results mark a significant milestone for Kaili Resources as it advances its rare earth exploration portfolio. Elevated total rare earth oxide concentrations from earlier drilling, combined with targeted follow-up drilling, strengthen the company’s geological case. Investors will monitor pXRF and laboratory assay outcomes to evaluate grade consistency and mineralisation extent, which will influence further capital investment decisions.

With global demand for rare earth elements rising due to energy transition and defence needs, companies with early-stage exploration in prospective basins have favorable prospects. However, progressing from drilling to resource definition and development requires consistent execution, capital raising, and regulatory compliance. Investors should consider Kaili Resources’ drilling track record, geological team expertise, financial capacity, and South Australian licensing environment when assessing the company’s potential.