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Mutooroo Copper-Cobalt Project

Summary

Mutooroo is a lode-style massive sulphide deposit located in South Australia about 60 km west of Broken Hill containing an estimated 13.1 million tonnes of 1.48% copper plus appreciable cobalt, gold and sulphur. Metallurgical studies indicate that a modern roasting / acid plant would be capable of efficiently recovering all valuable products including sulphuric acid, copper, cobalt, iron ore and electricity.

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 has 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 Mutooroo copper-cobalt mineralisation occurs as a series of stacked sulphide rich lodes developed within a 450 west dipping shear zone that is largely confined to an amphibolite sill within Broken Hill age high grade metamorphic rocks. The orebody shows a distinctive vertical zonation caused by weathering and oxidation:

Completely Oxidised (top 25-35 metres) - to an iron oxide-quartz fragment gossan/ironstone with local malachite – atacamite – chrysocolla – cuprite mineralisation.

Transitional (underlying the above) - a variably developed, secondary, supergene pyrite (after pyrrhotite) –chalcocite – covellite - quartz dominant zone.

Primary Sulphide - pyrrhotite dominant – chalcopyrite - pyrite, disseminated and massive sulphide mineralisation. High grade, primary sulphide milled breccia mineralisation is typically composed of pyrrhotite (60%) - quartz fragments (25%) - pyrite (5%) - chalcopyrite (5%) with local fragments of variably altered country rock.

Havilah Exploration

Havilah's drilling initially 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
  

Subsequent diamond drilling has 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

Feasibility Studies

Based on more than 7,000 assayed samples from 250 drillholes, Havilah has estimated an initial JORC compliant combined measured, indicated and inferred resource of 13.1 million tonnes of 1.48% copper. The technical basis for this resource estimation is outlined in the table at the end of this section

Apart from the contained 192,000 tonnes of copper there are also substantial amounts of gold (92,000 oz), cobalt (17,500 tonnes), sulphur (2.5 million tonnes) and iron in the orebody as summarised in the following table

The feasibility study drilling has focussed on comprehensively defining only that part of the resource that was considered directly amenable to open pit mining, based on an open pit shell outlined by earlier scoping studies.Thusfar, only approximately 700 metres of the more than 2000 metres of strike of the mineralised structure has been drilled to resource status.

The resource block model forms the basis for detailed mine design work currently being conducted by an experienced mining engineer.
The objective is to generate an optimum open pit mine design using current estimates of capital and operating costs in order to develop an economic model for mining the Mutooroo deposit.

Future Development Options

Mutooroo contains over 2.5 million tonnes of sulphur and is therefore a potentially significant feedstock source for the production of sulphuric acid. Metallurgical testwork has shown that the sulphide ore can be successfully roasted to produce sulphuric acid , and the copper and cobalt can be leached from the calcine residue, which is actually very pure iron ore. The roasting and acid generation process is highly exothermic and considerable electricity can be generated from the harnessed heat.

A processing flow sheet and indicative costs for a 500,000 tonne per annum roaster and sulphuric acid plant to treat Mutooroo sulphide ore was prepared by an experienced metallurgical consultant. First pass cost estimates show that to construct a roaster and acid plant with electricity co-generation will cost approximately $250-300 million and will require large quantities of high quality water. Given the high projected future demand for sulphuric acid in South Australia, it is likely that all sulphuric acid produced could be consumed locally, which is a major positive factor for the project.

An alternative strategy also supported by metallurgical testwork is to recover the majority of the copper as high grade concentrate by floatation followed by roasting as show in the following flowsheet.

Havilah continues to actively seek a partner with necessary processing expertise to assist with development of the Mutooroo project, either in Australia or overseas.

Resource Assessment and Reporting Criteria

The following table provides a summary of important criteria related to the assessment and reporting of the Mutooroo Copper - Cobalt resource.