15 February 2005 - 80 Million Tonne Copper-Gold-Molydenum Resource At Kalkaroo
Havilah is pleased to announce that it has completed a resource and mine plan evaluation study based on drilling completed in 2004 at its 100% owned Kalkaroo copper-gold-molybdenum project. Important conclusions arising from this study are:
Kalkaroo contains a Measured Resource of 80 million tonnes at a copper equivalent grade of 0.9%, calculated in accordance with the JORC Code. Converted to gold equivalent terms at current metal prices, this equates to a gold deposit of approximately 5.2 million ounces at a grade of 2 g/t.
Within this Measured Resource envelope the current open pit mine design captures 56 million tonnes at a copper equivalent grade of 1.04% (2.4 g/t gold grade equivalent).
This resource is sufficient to maintain a mining operation for a period of at least ten years at an annual production rate of approximately 25,000 tonnes copper, 78,000 ounces gold and 680,000 kg molybdenum.
Based on initial estimates of expected capital and operating costs for the preliminary mine plan, the mining operation can generate an operating surplus of approximately $90 million per annum at current metal prices. This translates to an NPV for the Kalkaroo deposit of $237m at a 10% discount rate.
The favourable economics are a function of the soft overburden (not requiring blasting), the relatively low waste
re ratio of 1.4:1 (cubic metres of waste per tonne of ore) and the almost 2 km length of the orebody that lends itself to low cost coal mining methodologies where the waste is dumped in the open pit behind the advancing mine face.
There is excellent scope to expand this resource for minimal additional cost because currently it remains open along strike and down dip.
The mineralisation and host geology is remarkably continuous between drillholes and Havilah’s drilling results are very comparable with those of earlier explorers, namely Placer, Newcrest and MIM. It is for this reason that the resources have been placed in the highest category, namely that of a Measured Resource, as it is unlikely that further drilling within the currently defined Measured Resource will markedly alter the size or grade parameters.
The following key factors are relevant to the resource and mining model:
The modelling, carried out by external mining engineering consultants, is geologically based, relying on detailed geological interpretations supplied by Havilah geologists.
Geological resource and mining models were constructed using VULCAN 3D mining software, applying grade cutoffs of 0.4% copper equivalent and a density of 2.7.
Block grade estimation was aligned parallel with the deposit and oriented down the dip of the mineralisation.
Internal waste was assigned where the cutoff was below 0.4% copper equivalent.
The resource is quoted in simplified copper equivalent terms since this is a polymetallic deposit with variable grades of copper, gold and molybdenum throughout the deposit
Drill sections are spaced 100 metres apart along the strike of the deposit, with usually two or three drillholes per section line. There is good continuity of mineralisation and host rock geology between drillhole sections and between drillholes on each section line.
Data for 56 Havilah holes and 39 earlier drillholes (including diamond drillholes) that lay within the ore envelope were used for the resource calculations.
All drillholes were carefully logged in order to permit meaningful geological correlations and were sampled as 3 metre composites.
Drill samples are of an acceptable standard, with generally good recoveries of mostly dry sample, which was only achieved after considerable experimentation with a powerful multipurpose drilling rig. This was an important technological achievement for Havilah since drilling at Kalkaroo in the past has proven extremely difficult with often sub-standard sample recoveries from underpowered aircore drilling rigs.
Havilah has verified assay data quality as far as possible by use of its own internal standards, blanks and duplicate samples, and by employing a range of assay methods.
Over the next few months Havilah will be addressing various forward planning issues including ore metallurgy, geotechnical studies, refining capital and operating cost estimates, permitting and infrastructure development all with the view to commencing a mining operation as rapidly as possible. To this end Havilah has formed a new 100% owned development and operating company, namely Kalkaroo Copper Pty Ltd, to develop the Kalkaroo project.
Synchronous with this Havilah will continue exploration at several of its other promising mineral projects, including the geologically similar North Portia prospect, since any further economic discoveries in the district will have significant planning implications for the location of a milling site and related infrastructure developments.