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Mutooroo Copper-Cobalt Project

Summary

Mutooroo is a unique high sulphide lode copper-cobalt deposit. It offers a potential bonanza for Havilah if all of its valuable components, namely copper, cobalt, sulphuric acid and iron ore, which are all trading at record prices, can be extracted. Havilah’s initial exploration objective of 10 million tonnes of viable open pit ore, sufficient for a 10 year mine life, appears achievable based on current feasibility study results. The deposit is open at depth along strike, and there is high potential to expand the deposit by several multiples with further drilling.

History

The Mutooroo copper mine was worked in the period between 1887-1914, with reported production of some 6,000 tonnes of mostly hand-picked oxidised material, including 2,557 tonnes of 6.58% copper and a parcel of 218 tonnes of 19.3% copper.

More than 30 diamond drillholes were completed by Broken Hill South in the 1970s into the deeper sulphide bearing portion of the lode zone resulting in a sulphide copper resource estimate of 8.7 million tonnes of 1.9% copper. This historic resource figure may not comply with current JORC reporting standards, but is considered to be reliable in light of the number of diamond drillholes that it is based on.

Since that time the prospect had lain largely dormant until Havilah commenced exploration in 2005. Havilah’s initial objective was to drill the largely untested top 200 metres of the lode system for an open pit deposit.

Geology

The copper mineralisation is hosted by a major, roughly north-northeast trending shear zone that can be traced on the surface for over 2 kilometres.

The target lode dips roughly 45-50 degrees west and is predominantly composed of coarse-grained pyrrhotite, pyrite (containing cobalt), chalcopyrite (containing copper) and quartz. In detail, the sulphide lode system is complex, consisting of a main lode and various footwall and hanging-wall lodes, that in aggregate may vary from a few metres to over thirty metres thick.

The top 20-30 metres of the sulphide lodes are oxidised, and consist of gossanous material with secondary copper and cobalt minerals, including abundant malachite, that attracted the attention of the early miners.

2006 Scoping Study

Since commencement of drilling in 2005, Havilah has targeted the largely undrilled top 200 metres of the lode zone in the search for an open pit copper resource. Surprisingly good copper and cobalt grades were intersected at comparatively shallow depths in the sulphide lodes as follows:

• 13 metres of 2.2% Cu and 0.29% Co from 36-49 m in drillhole MTRC01
• 31 metres of 1.71% Cu and 0.18% Co from 78-109 m in drillhole MTRC044
• 26 metres of 1.55% Cu and 0.18% Co from 101-127 m in drillhole MTRC045

A preliminary mining scoping study was completed in 2006 based on 45 Havilah RC holes drilled along about one third, or approximately 700 metres strike of the known lode and 35 earlier drillholes. This showed that an optimised open pit to 250 metres depth would incorporate approximately 11.5 million tonnes of 1.1% copper and 0.1% cobalt. On this basis, a 1 million tonne per annum mining operation would produce around 11,000 tonnes of copper and 1000 tonnes of cobalt per annum, and appeared to be economically viable based on metal prices about half of those currently.

The scoping study identified that there was good potential to expand the deposit both at depth and along strike. It also took no account of the 1 million tonnes of oxidised copper ore that formed the top 20 metres of the orebody from the surface.

A major positive factor is the favourable logistics of the Mutooroo project, being located roughly 60 kilometres west of Broken Hill and about 16 kilometres south of the main east-west railway line to Port Pirie.

2007 -2008 Feasibility Study

Havilah commenced a detailed feasibility study on the Mutooroo deposit in mid 2007, and since then has completed over 100 additional resource delineation drillholes as well as some large diameter diamond core holes to obtain samples for metallurgical testing from both the sulphide lodes and their oxidised near surface equivalents. The diamond drilling confirmed the earlier percussion drilling results as follows:

• 13.3 metres of 2.58% Cu and 0.26% Co from 42.2-55.5 m in drillhole MTDD112
• 27 metres of 2.26% Cu and 0.25% Co from 84.5-111.5 m in drillhole MTDD113

The resource delineation drilling to date is supportive of the geological model, and significant widths of new footwall lode mineralisation have been intersected in many drillholes, which will add appreciably to the mineral resource. Given the currently high cobalt prices (more than 10 times copper), the cobalt component in the ore is worth more than the copper, and the current metal value in ore containing 2% copper and 0.2% cobalt exceeds A$400/tonne.

Metallurgical test results on sulphide drill core reported by Optimet metallurgical laboratory are favourable and show that:

1. Energy requirements for crushing and grinding the sulphide ore are relatively modest.
2. The sulphide ore grade can be upgraded though removal of the silicate minerals (mostly quartz) by comparatively simple gravity beneficiation methods.
3. A high grade copper concentrate can be produced by conventional flotation methods.
4. Leaching of the roasted sulphide ore yields comparatively high copper and cobalt recoveries (96% copper and 90% cobalt for 4 hour leach of 0.25 mm feed material) with the possibility of producing sulphuric acid as a saleable by-product. The residue remaining is a high grade, pure iron ore product containing 63% Fe.

Based on these results, the processing route currently being investigated and costed in detail involves roasting the high sulphur ore off-site to produce sulphuric acid, which is commanding record high prices. The copper and cobalt would be leached from the remaining residue, leaving potentially saleable high grade iron ore.

Recent RC percussion drilling has been systematically testing the oxidised copper resource in the top 20-30 metres of the deposit. Column leach tests are also being conducted on core samples of oxidised ore to determine whether an initial copper leach operation is feasible for the > 1 million tonnes of oxidised material that lies above the sulphide ore.