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HIGHLIGHTS
• A successful entitlements issue to shareholders raising $9.4 million that will be applied to progressing the Portia trial open pit and advancing the Kalkaroo feasibility study.
• 28% increase in size of Kalkaroo copper resource including the West Kalkaroo mineralization to over 100 million tonnes.
• Feasibility study drilling at the Mutooroo project returns excellent grades of copper and cobalt over wide intervals
• Confirmation of high grade bedrock gold mineralisation at Portia from washing of more drill samples from the floor of the proposed trial open pit.
• Decision to proceed with field leach trials on Curnamona Energy’s Oban uranium deposit (Havilah 50.6%)
REVIEW OF OPERATIONS
CAPITAL RAISING
Havilah Resources NL (Havilah – ASX:HAV) is pleased to announce that its current capital raising of $9.4 million, planned to close on 28 February, has been well supported by shareholders. There has been strong demand for shortfall shares by shareholders and the issue is likely to be fullysubscribed. The funds will be put to work immediately on the main purposes outlined in the Prospectus, namely advancing the Portia trial open pit and the Kalkaroo feasibility study, plus testing various regional exploration targets
KALKAROO COPPER GOLD PROJECT (Havilah 100%)
Some of the best ever drilling intersections were reported from the West Kalkaroo prospect during the quarter, including 102 metres of 0.83% copper and 1.6 g/t gold in KKRC 136 and 81 metres of 0.48% copper and 1.6 g/t gold in KKRC 127. It is notable that the West Kalkaroo resource is
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now over 600 metres long and still remains open to the west and at depth on all drill sections, with the most westerly hole, KKRC135, yielding excellent gold and copper assays and terminating in ore (14 metres of 0.81% copper and 1.7 g/t gold). Thus there is good scope for future step out drilling to continue increasing the resource base. In addition, much of the West Kalkaroo resource is oxidised ore and at shallower depth than the main Kalkaroo resource and would therefore be expected to have more favourable mining economics, although mining scoping studies are yet to be carried out.
Havilah has incorporated all drilling results from West Kalkaroo into an updated resource model for Kalkaroo, resulting in a 28% increase in the total resource, from 85 million tonnes (measured) to 108 million tonnes (measured and indicated) of combined copper, gold and molybdenum mineralisation. The additional resource at West Kalkaroo is of indicated status at this stage because further drilling is required to improve sample quality, confirm geological interpretations and thereby more confidently constrain the ore envelope.
Using a A$20 per tonne ore value cutoff, this resource translates to 85 million mineable tonnes at a grade of 0.51 g/t Au and 0.45% Cu within a conservative optimized open pit model. Compared with the previous Kalkaroo resource announced 12 months ago (Kalkaroo line in the following table), this represents a 21% increase in the open pit mineable tonnes with a corresponding 13% increase in gold grade and a marginal change in the copper grade. The expanded resource was achieved with 25 RC drillholes completed over a two month period for a net outlay of approximately $ 400,000 or roughly 2.7 cents per resource tonne. The drilling programme was partly supported by a PACE grant from the South Australian Government.
Mineable Ore Envelope
Million
Tonnes
Au g/t
Cu %
Mo ppm
Au g/t equiv
Cu %
equiv
A$ per tonne
Cu tonnes
Au
ounces
Kalkaroo
70
0.46
0.47
124
2.28
0.86
62
329K
1.04M
W Kalkaroo
15
0.76
0.42
1.87
0.71
51
63K
0.37M
Total
85
0.51
0.45
101
2.19
0.83
59
392K
1.41M
A$ prices
730 /oz
6250/t
110/kg
current
K=1000
M=million
The A$ metal prices used to define the A$20 per tonne cutoff are listed in the bottom row of the table and are lower than current metal prices. The A$ per tonne ore values listed in the table are indicative only and are based on roughly current spot metal prices. It is notable that the total contained gold of 1.41 million ounces has climbed 36% in the current resource reflecting the important contribution of higher gold grades at West Kalkaroo. In gold terms, Kalkaroo has the equivalent of over 6 million ounces.
With the additional funds from the entitlements issue now in hand, Havilah has commenced a detailed feasibility study on the Kalkaroo deposit that is being managed by experienced senior resource geologist, Mr Peter Leah. Peter worked for 12 years for Rio Tinto in the Cobar district and brings with him important resource evaluation, metallurgical and mine operating experience that Havilah believes will be crucial to the proper economic evaluation of Kalkaroo and its ultimate development. The feasibility study will address the key issues of orebody metallurgy and more precise resource definition in order to better determine likely open pit limits. This will involve significant amounts of diamond drilling, including some large diameter core to obtain ore samples suitable for comprehensive metallurgical testing.
MUTOOROO COPPER-COBALT PROJECT (Havilah 100%)
Feasibility study drilling completed late last year and funded by Havilah’s partner, Chinese resources group Heilongjiang Resources Limited, has returned excellent results including www.havilah-resources.com.au
27 metres of 1.75% copper and 0.22% cobalt in drillhole MTRC 55.
Current drilling was confined to the southern end of the potential resource and recently received assay results indicate thick sulphide intersections that approximate true widths as follows :
Hole No
From
To (m)
Interval
Cu%
Co ppm
A$/T value*
MTRC050
37.8
45
7.2
1.5
2338
275
MTRC052
66
74
8
1.99
1831
275
MTRC053
86
93
7
2.05
1967
288
MTRC054
111
118
7
2.3
1850
298
MTRC055
130
157
27
1.75
2186
282
MTRC056
73
80
7
1.98
1336
239
MTRC058
112
121
9
1.44
2006
283
*using US$2.60/lb Cu and US$25/lb Co and 0.78 exchange rate
Combining with Havilah’s earlier drilling results it is now apparent that within the overall sulphide lode structure there is a thickened southerly plunging sulphide body with true widths of up to 30m (previously reported in holes MTRC044 and 45) as shown in the attached figure. The A$ per tonne ore values, computed from current copper and cobalt metal prices indicated, give some idea of the potential value of this material and why the option of direct shipping the bulk sulphide concentrate appears attractive and is being pursued by Havilah’s Chinese partner.
The newly defined thicker sulphide zone defined by Havilah’s current drilling lies within the overall potential 11 million tonne resource envelope defined in Havilah’s earlier published mining scoping study and could provide an optimum location for commencement of an open pit. The area drilled in detail thusfar represents only about 350 metres of some 1700 metres strike of Mutooroo copper-cobalt sulphide lode that to date has been drilled on relatively wide spacing. There is thus good scope to discover further thick, plunging sulphide bodies along strike, as already indicated by Broken Hill South’s earlier diamond drilling (eg DDH005 which returned 9 metres of 1.6% Cu and 0.18% Co from 290.8-299.8 metres and 23 metres of 1.2% Cu and 0.20% Co from 306.3-329.2 metres). Up dip continuations of these deeper intersections will be targeted in the next round of drilling.
A primary objective of the feasibility study drilling is to prove up sufficient ore to JORC measured resource status to support an annual production schedule of around 20,000 tonnes of copper and 2,000 tonnes of cobalt. The aim is to achieve this goal over the next six months with closely spaced RC drilling and some twinned diamond drillholes that will in addition provide critical geotechnical and metallurgical data.
PORTIA GOLD PROJECT (Havilah 100%)
Samples from 20 drillholes on a roughly 20m x 20m grid in the floor of the proposed trial open pit continued to be processed in Havilah’s washing and gravity separation plant during the quarter. From the resultant heavy mineral concentrate the visible coarse gold grains are hand picked and weighed. Comparatively high grade gold intersections over significant widths in several drillholes, have now been confirmed by this painstaking process as follows :
PTAC 191 26 metres of 15.4 g/t Au
PTAC 193 13 metres of 33.5 g/t Au
PTAC 197 25 metres of 14.5 g/t Au
PTAC 205 26 metres of 9 g/t Au
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When compared with assays quoted in the previous quarterly report for the same drillholes, the new assays significantly extend the gold mineralized intervals (see table below). This in turn markedly increases the potential tonnage of gold bearing bedrock material.
PORTIA BEDROCK GOLD RESULTS DERIVED FROM WASHING SAMPLES
Hole No
From
To
Interval
Au g/t
Comments
PTAC188
73
76
3
10.5
assaying incomplete
PTAC189
98
104
5
16.5
1m not assayed
PTAC191
75
101
26
15.4
PTAC191
95
101
6
57.4
previously reported
PTAC193
84
97
13
33.5
assaying incomplete
PTAC193
84
95
5
59.8
previously reported
PTAC194
80
82
2
25.5
previously reported
PTAC196
82
94
9
12.5
previously reported
PTAC197
74
99
25
14.5
2m not assayed
PTAC197
74
80
6
55.6
previously reported
PTAC 198
73
78
5
17.4
PTAC 199
75
78
3
8.5
assaying incomplete
PTAC201 BOT
75
77
2
81
previously reported
PTAC204 BOT
72
76
4
5.7
PTAC204
84
90
5
1.2
1m not assayed
PTAC205
76
98
26
9.0
2m not assayed
PTAC205
83
95
12
9.4
previously reported
Note : New assay intervals are shaded. Previously reported assay intervals are unshaded. All samples are from bedrock excepting those marked BOT, which are from the base of Tertiary gold layer. Average gold grades quoted are uncut.
A more consistent picture is emerging of the overall gold distribution as more samples are washed and the statistical errors associated with the coarse-grained “nugget” gold sampling problem are reduced. It is apparent, however, that the total gold resource at Portia is greatly influenced by several extremely high grade gold zones, whose dimensions are very difficult to constrain by drilling.
Havilah therefore continues to investigate the feasibility of excavating a trial open pit to obtain a large bulk sample in order to more accurately estimate the grade and distribution of gold within the Portia deposit so that the economics of a full scale gold mining operation can be determined. The trial open pit will not proceed until there is reasonable certainty that the amount of recoverable gold will more than cover the trial mining costs. The above reported results are a positive indication that this will be the case, but this needs to be confirmed with more complete results before a final decision is made.
In the meantime, funds raised from the current entitlements issue will be used to complete various tasks in advance of commencing the trial open pit, such as obtaining all permitting, building all required infrastructure, dewatering and geotechnical studies, and diamond drilling.
CURNAMONA ENERGY LIMITED (Havilah 50.6% ownership)
Curnamona Energy has reported that its wholly owned subsidiary, Oban Energy Pty Limited, has pegged a Mineral Claim over its 100% owned Oban uranium project, located 60 kilometres north of the Honeymoon uranium deposit. Oban Energy plans to commence a field leach trial on the Oban deposit in order to conclusively determine the amenability of the resource to in situ leach extraction methods.
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Drilling in the second half of last year at Oban returned numerous economically significant uranium intersections within coarse-grained palaeochannel sands, including a well mineralized area covering some 100,000 square metres (average Grade Thickness of 0.2 m% eU3O8). The in situ value of gamma-indicated uranium in this small area is over $70 million at current spot uranium prices, with the potential for a tenfold increase in the immediate vicinity.
Subject to obtaining required approvals from PIRSA and other relevant government agencies, field leach trials are permitted on a Mineral Claim, but product cannot be sold. Curnamona Energy’s immediate objective is to secure all necessary permitting and to proceed with construction of the required processing plant on site. Assuming the field leach trial is successful, Oban Energy would obtain a mining licence and upgrade the field leach trial pilot plant to a full scale operation
In the meantime, exploration drilling at Oban is planned to re-commence early in March, following completion of maintenance and repairs to the Company’s drilling rig and construction of a semi-permanent camp near Oban that will service both the drilling and field leach trial personnel.
GEOTHERMAL RESOURCES LIMITED (Havilah 63.6% ownership)
Geothermal Resources has announced that it will commence the first round of shallow geothermal gradient drilling at its Frome Project in March. Havilah has agreed to expedite the drilling of these holes by offering the use of two drilling rigs that it has on permanent contract for its mineral exploration work. Precollar holes will be drilled and cased with a percussion drill rig and a then a diamond drill rig will be used continue the holes to the planned minimum depths of 500 metres.
HAVILAH VALUATION AND STRATEGY
Following completion of the successful entitlements issue, and $9.4 million raising, the second plank in Havilah’s future growth strategy is in place. These funds will allow Havilah to progress the trial open pit at Portia, with the aim of establishing a sustainable gold mining operation and Havilah’s first mining cashflow.
The funds will also be applied to feasibility study work at Kalkaroo that will address the main outstanding metallurgical, geotechnical and resource definition issues. It is expected that this work will add substantial value to Kalkaroo, leading to its financing and development.
Havilah’s investments in other listed companies continued to do well, amounting to approximately $40 million, based on market values at the time of writing, versus a total market capitalisation of Havilah of roughly $100 million.
FINANCE
As at 31 January 2007 the company had available funds of $1.04 million, of which the majority is held in a term deposit. This will be supplemented by the successful $9.4 million raising, bringing cash on hand to almost $10.5 million. Total exploration expenditure by the company during the quarter was approximately $755,000 of which drilling and related expenses, including assaying and field costs, accounted for more than 80%. More than $100,000 of drilling and related costs expended on behalf of the Mutooroo joint venture and included in the above expenditure figure will be reimbursed to Havilah during the next quarter.
It is expected that total exploration expenditure in the next quarter will be significantly less than that in the current quarter due to the summer break in field activities. Havilah also expects to receive reimbursement of $100,000 drilling costs relating to West Kalkaroo, from a PACE grant during the next quarter.
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