mumbwa project update, page-2

Interesting to look back at broker comments on the scoping study from this time last year. There's a couple of reports on BTR's website. The following is extracted from Patersons main comments. Interesting that they saw significant upside in an underground operation and we are now seeing further high grade results in the core being targeted for this type of operation. Their valuation of over $2 has to be discounted for current conditions but still ......

Blackthorn Resources (BTR) has released the results of its
scoping study into the development of its 100% owned Kitumba Copper deposit (part of the Mumbwa copper project) in Zambia.

The study looked at an open pit only scenario for a 13.5 year mine life producing between 55kt to 75ktpa of copper. Start up capital was US$377m at cash costs of US$1.49/lb. Copper grades range from 0.78-1.69% Cu. BTR has now commenced a pre-feasibility and underground studies on Kitumba considering that higher grades are confirmed at depth. The scoping study is comparable to other global copper projects (Figure 1).

We continue to rate BTR a Buy with a $2.35/sh price target.

? Robust Feasibility Study – Comparable to Other Global
Copper Projects: Based on our modelling the study demonstrated the potential for a robust project. At decision to mine we estimate a project NPV@8% of $256m, if we discount back to today’s dollars then the NPV reduces to $139m which is inline with our previous estimate of $130m for the Kitumba project based on pounds in the
ground. We believe these numbers justify moving to prefeasibility and underground studies which could add further value.

? Upside from Underground Feasibility and By-products: We
believe there could be significant upside from underground studies considering that it has been confirmed there is higher grades which could make this quite attractive. In addition, the recovery of byproduct credits (ie. Gold) could add further value.

? Drilling Continuing at Kitumba: Drilling is underway with a 16,000m program planned at Mumbwa with 3 rigs onsite and a 4th on its way. Assays are awaited on the previously announced intercept of high tenor copper mineralisation outside the current 1% resource envelope. Therefore there is good potential to expand the
higher grade parts of the resource.