Kuniko Phase 2 Holes Push Silica Hill Past Block Model Limits

Two diamond drill holes completed. Zero assay results back. And yet Kuniko Limited’s (ASX: KNI) Phase 2 program at Silica Hill may already have changed the shape of the resource. On 14 August 2026, the company announced that its first two Phase 2 diamond holes at the Commonwealth-Silica Hill Gold-Silver Project in New South Wales have intersected alteration, disseminated sulphides, and stringer-vein mineralisation at positions both up-dip and down-dip of the previously reported Phase 1 discovery hole. All three holes now sit outside the boundaries of the existing mineralised block model.

What follows covers what the geological intersections mean for the scale of the Silica Hill system, why the pending assays represent a binary near-term catalyst, and what investors should understand about the risk-reward profile of a company carrying a market capitalisation of approximately A$4.296 million.

Phase 2 drilling extends Silica Hill mineralisation well beyond known boundaries

Every hole that matters is now outside the fence. The three reference holes used to establish system continuity, CMKNI007, CMKNI004, and CMKNI008, all sit beyond the boundaries of the current mineralised block model. That means the drilling-defined mineralised envelope has moved into territory the existing resource estimate does not capture.

The spatial relationships between the holes establish directional scale:

• CMKNI007 was drilled approximately 60 m down-dip of CMKNI004
• CMKNI008 was drilled approximately 40 m up-dip of CMKNI004
• Together, the three holes demonstrate mineralised continuity across roughly 100 m in the up-dip to down-dip direction

The two Phase 2 holes, CMKNI007 and CMKNI008, account for a combined 724 m of drilling out of a planned program of approximately six holes for 1,340 m across Commonwealth Main Shaft, Commonwealth South, and Silica Hill. The program commenced in July 2026.

Critically, the system remains unconstrained in multiple directions. Up-dip, down-dip, and lateral extensions have not been closed off by drilling, meaning the mineralised footprint could grow further as the remaining four holes are completed.

Managing Director Maja McGuire described the pending assay results as a significant near-term catalyst for potential scale and high-grade additions to the system.

What the geological observations tell us before the grades arrive

Both CMKNI007 and CMKNI008 intersected alteration zones, disseminated sulphides, and stringer-vein mineralisation consistent with the existing Silica Hill system. These are visual observations from drill core, not assay-confirmed grades, but they carry weight in context.

The geological style at Silica Hill, established during Phase 1, consists of stockwork arsenopyrite, pyrite, and proustite stringer veins hosted within sericite-altered rhyolite porphyry. The presence of analogous textures in Phase 2 holes at structurally consistent positions raises the probability that assays could confirm economic grades. It does not guarantee it.

What the observations cannot tell the market is whether these intervals carry the same tenor as Phase 1. That distinction matters, because the gap between “visible sulphides” and “economic grade” is where exploration risk lives.

Phase 1 as the geological reference point

Phase 1 set a high bar. Across six holes for 1,239 m, the program achieved a 100% sulphide hit rate. At Silica Hill, assay highlights included 84 m at 2.6 g/t AuEq from 226 m, with a high-grade interval of 3.4 m at 50 g/t AuEq.

The standout result was a 0.5 m interval grading approximately 347 g/t AuEq, a bonanza-grade intercept. A separate 0.5 m massive sulphide vein returned 20,603 g/t Ag and 27 g/t Au, interpreted as a feeder-style structure.

Phase 1 hole CMKNI004 intersected up to approximately 70 m of disseminated and stringer sulphides, and it too sat outside the prior block model footprint. That precedent, Phase 1 holes outside the model returning high-grade assays, is the benchmark against which Phase 2 results will be measured.

Understanding the Silica Hill project and why the block model matters

A mineralised block model is the three-dimensional volume that geologists use to estimate the quantity and grade of mineral resources at a deposit. It defines, in effect, where the known resource sits. Drilling outside its boundaries, if confirmed by assay, would directly contribute material that falls outside the current resource estimate, expanding the base for an updated Mineral Resource Estimate (MRE).

The existing JORC (2012) Inferred resources at Commonwealth-Silica Hill stand at approximately 89,000 oz gold and 3.3 million oz silver. These are a starting point. The Inferred classification reflects a lower level of geological confidence than Indicated or Measured categories, meaning additional drilling that confirms grade continuity could both expand and upgrade the resource.

The project sits within the Lachlan Fold Belt, one of Australia’s most prolific base and precious metal provinces. Kuniko holds a 51% ownership interest in the project as of 11 August 2026.

For a company valued at approximately A$4.3 million, the gap between the current Inferred resource and a materially larger one is the core re-rating argument. Understanding how block model extensions feed into updated MREs is essential for evaluating that case.

Assay results and the MRE update form a two-stage catalyst window

The next four months present two distinct catalysts, and investors should understand what each one tells the market.

Phase 2 assay results, expected around September 2026, will convert geological observations into grade and thickness data. “Positive” in this context means grade continuity matching or exceeding Phase 1 intercepts across the up-dip to down-dip corridor, confirmation of high-grade shoots, and the potential for additional bonanza-style intervals. The updated MRE, targeted for H2 2026, is the event that resizes the resource. It is expected to incorporate both Phase 1 and Phase 2 drilling results.

These are sequential, not simultaneous. Assays confirm grade. The MRE confirms scale. Two of approximately six planned Phase 2 holes have been completed as of 14 August 2026, leaving four holes still to be drilled and assayed.

Beyond the core deposits, Kuniko has outlined a district-scale pipeline that provides additional optionality:

• Mobile MT geophysics has defined a ~4 km prospective corridor beyond Commonwealth and Silica Hill
• Regional targets within 1-2 km of the core project have been earmarked for near-term drill testing
• Regional follow-up programs are planned following Phase 2

What Kuniko’s micro-cap scale means for risk and potential reward

A market capitalisation of approximately A$4.3 million against already demonstrated high-grade mineralisation creates asymmetric potential if assays confirm economic grades. The upside case rests on specific foundations:

• Phase 1 delivered a 100% sulphide hit rate across six holes, including bonanza-grade intervals
• Phase 2 has confirmed the block model extension geologically across three holes
• A ~4 km prospective corridor provides district-scale exploration optionality
• Two sequential catalysts (assays and MRE) create a concentrated news flow window

The risks are equally specific:

• Bonanza veins are narrow by nature; grade can vary sharply over short distances, and averaged grades over mineable widths may differ materially from peak assays
• Inferred resources carry higher geological uncertainty than Indicated or Measured classifications
• The expanded resource may remain too small or discontinuous to support economic development at this stage
• Assay and MRE catalysts are binary in nature; outcomes are not guaranteed
• Micro-cap liquidity can amplify price movements in both directions

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions. Past performance does not guarantee future results.

Silica Hill drilling positions the project for a resource reckoning in H2 2026

Phase 2 drilling has established that the Silica Hill mineralised system extends beyond the current block model in multiple unconstrained directions. The geological foundation, visible sulphides at structurally consistent positions across three holes spanning roughly 100 m of continuity, gives Kuniko a credible basis for a resource upgrade conversation.

The conversation, however, remains incomplete. Assay results expected around September 2026 will determine whether the geological extension carries economic grades, and the updated MRE targeted for H2 2026 will determine whether the resource grows materially. The geological work has been done. The market now awaits the numbers that will confirm or qualify the case.

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