Ann: Llahuin Resource Positioned for Significant Expansion, page-3

From MST Financial in Dec, recent drilling would have only added to it

Southern Hemisphere (ASX:SUH)
Only Scratching the Surface | Strike Extended - Grade Improving - MonsterTarget Delineated

Drilling indicates that Southern Hemisphere (SUH) is just scratching the surface at the Llahuin Copper Gold-Moly Project in Chile. Strike is extending, New mineralisation trends identified, grades increasing at depth, and MT results validate the monster potential of the Curiosity target. Everything the Majors would want to see.

There are still another 13-14 holes to report from the program, along with the potential for a significant resource upgrade in 1H CY25. This is one you need to own.

Key Highlights

New Discovery South of Ferro

• RC drilling south of the Ferro deposit has defined a high-grade zone, with the strike extended by 300m to 2.2km. Notable results include:

• • 81m @ 0.49% CuEq, including 48m @ 0.58% CuEq.
  • 122m @ 0.41% CuEq, including 58m @ 0.49% CuEq.

• Holes 24LHRC047 and 24LHRC048 ended in mineralisation, with grades increasing at the end of both holes, highlighting the potential for further resource expansion at depth.
• Mineralisation remains open at depth and along strike, warranting further drilling.
  Source: Company announcement (13 Dec. 24)

Cerro Feeder Zone identified for deeper drilling

• Drilling at Cerro, including holes 24LHRC054 and 24LHRC055, has intersected near-surface mineralisation, extending the western boundary of the deposit. RC drilling successfully identified a feeder zone, with diamond tails planned for next year to test depth extensions.
• This validates SUH's exploration approach and confirms that grades are improving at depth

The Curiosity Target at the Southern Porphyry

• The MT work to date has confirmed previous geotechnical and geophysical findings, validating the presence of a large Curiosity copper target south of the Ferro deposit. This reinforces the strategic importance of this target and highlights its potential for significant mineralisation at depth.
• Reminder: It was Filo’s monster hit of 1,270m grading 0.92% copper equivalent from a depth of 298m, including 624m at 1.13% copper equivalent, that forced BHP's hand in acquiring them for C$4.1 billion. Filo’s deep target has strong similarities to SUH's Curiosity target, but it took Filo six attempts to achieve this result. SUH is doing the work to de-risk their deep drill hole and ensure they maximise the chance of drilling success.
• Any success here would significantly re-rate the company, and we could instantly expect the share price to rerate to multiples of the current price.

Water Availability – A Critical Advantage:

• Water is typically a key challenge for the development of South American Chilean projects, as arid conditions force many miners to pump seawater to the projects, which adds significant opex and corrodes the plant.
• Drilling at Llahuin intersected water at 40-60m in all holes, offering a potential on-site water source for mine operations. Having an on-site water source reduces reliance on costly desalination plants or pipelines, improving project viability.
• This will be looked on favourably by corporates.

SUH Investment Thesis

The strategy for SUH is straightforward: expand the existing copper resource from 169Mt to 250Mt-300Mt and sell it at a multiple of the current share price to a major. The SUH team has thoroughly re-analysed prior management’s extensive drilling activities, relogging hundreds of assays, and believe that reaching this target is feasible. A 300Mt deposit would support a 20-25 year mine life, making it highly attractive to major players—especially as copper prices are expected to rise further.

Based on our analysis of 20 pre-production copper explorers and developers, we calculate an average EV/CuEqT multiple of $73/CuEqT. Applying this to Southern Hemisphere Mining's (SUH) 2013 JORC resource estimate of approximately 680kt CuEq, we derive an implied valuation of $49.9 million, representing a 118% premium to SUH's current market capitalisation.

It is important to note that this valuation is based solely on the 2013 resource (169Mt). Since then, SUH has significantly advanced the project, adding thousands of metres of new drilling and relogging hundreds of historical drill cores. We anticipate that the updated JORC resource,scheduled for release in H1 CY25, will demonstrate a substantial increase incopper tonnage and provide the foundation for a meaningful rerating of thestock.

Conclusion

It's not a matter of if the Llahuin project will become a mine; it's a matter of when.
The market is currently short on copper discoveries, and with its scale and promising results, there is no doubt that the Llahuin project will eventually transition into a producing mine. Its extensive resource, open-pit mining potential, and strategic location in a copper-rich region position it as a key future contributor to the global copper supply.