Ferrets Stock To Watch: HAVILAH RESOURCES NL 09:36, Monday, 4 December 2006
BROKEN HILL REGION IS RECEIVING A NEW LEASE OF LIFE
Sydney - Monday - December 4: (RWE Aust Business News) ******************************************************
OVERVIEW ********
Mining has been the life blood of the city of Broken Hill and is synonymous with the development of the Australian mining industry.
What has excited mining analysts in the last few months has been the progress of Adelaide-based junior Havilah Resources NL (ASX:HAV) which is settling for a distinctive gold zone rather than the big base metals targets.
This seems to be the most economic and conservative way of establishing the first commercial hard rock mine in the Curnamona Basin that spans South Australia and part of the far west of New South Wales.
This basin, that has the Beverley mine and planned Honeymoon uranium mines on its northern margins, has long been a magnet for explorers.
Ross Louthean of the Mining Journal, who attended a conference related to the project, says the governments of South Australia and New South Wales are prodding explorers to find new mines to maintain the infrastructure of the famous city of Broken Hill.
Havilah Resources has come up with what may be the first Curnamona mine with its large, low-grade Kalkaroo copper-gold-molybdenum deposit, he believes.
Last Friday market analysts appeared vindicated in showing interest in the mining explorer after the company released gold drill results at its Portia gold project near Broken Hill, which showed a defined significant high-grade mineralisation.
Havilah - which wholly owns the project - is now planning a trial open pit mining operation.
The drill results returned from an area proposed as the floor of Portia's initial open pit included 6 metres of 55 g/t gold and 6 metres of 57 g/t gold.
Havilah's chairman, Dr Bob Johnson, said, "We are confident of the accuracy of the high gold grades as the assays in this case have been obtained by the painstaking process of washing the entire 10-20 kg drill samples and physically picking out and weighing the coa rse gold,"
"The Portia project structurally is a very challenging, nuggety gold deposit, but the laborious process of weighing out the gold grains from samples has at last generated solid and consistent results that we can believe," Dr Johnson said.
"We expect therefore to continue identifying comparable gold grades as we complete the washing program on the remaining drill samples.
"This decision to wash all samples to obtain accurate gold values will mean some difficulty in achieving a JORC-compliant gold resource estimate within a reasonable time frame.
"However, Havilah is gaining the necessary confidence from these strong first drill outcomes to believe that there is sufficient bedrock gold to more than cover the expected mining costs for a trial open pit several times over."
Dr Johnson said because of this the company is assessing how best to rapidly develop such a pit in the richest part of the potential resource envelope, which will also allow a large bulk sample to be taken for processing with the primary objective of estimating the grade and distribution of gold within the project area.
"Our modelling already suggests Havilah potentially has several million tonnes of similar free digging material, enough for Portia to be mined for many years if we can prove that the gold grades are adequate, he said."
SHARE PRICE MOVEMENTS *********************
Havilah shares eased 1c to $1.05 on Friday. Rolling high for the high is $1.15 and low 52c. The company has 72.5 million shares on issue with a market cap of $76.2 million.
From Mr Louthean's viewpoint and observations the company is now looking to proving up the source of detrital gold in the Portia area to the north as the start-up mine.
This could be commissioned more quickly than Kalkaroo and would be minus the time-consuming metallurgical and other studies to exploit both the oxide and sulphide ore at Kalkaroo.
Native copper in the oxides is seen as an added challenge for the metallurgists.
Executive director Dr Chris Giles told Mining Journal that in recent months Havilah has identified basement mineralisation at Portia as a source of a resource of an estimated 70,000 ounces of detrital gold grading about 5 grams/tonne found in the base of the Tertiary.
Dr Giles told the Broken Hill Exploration Initiative late last month that a bedrock deposit "would be a major prize - over 30 kilometres prospective strike to explore with many gold hits."
A test open pit was feasible at current gold prices.
Meanwhile, Havilah has accumulated a resource at Kalkaroo of 70 Mt grading 0.47pc copper, 0.46 g/t gold and 124 ppm molybdenum, using an 0.3pc copper cut-off grade.
Dr Giles said that without any expansion Kalkaroo could operate for 11 years to produce annually 31,000 tonnes of contained copper, 95,000 oz gold and 820,000 kilograms of molybdenum.
Though there are no mines in the immediate area, regional infrastructure is good - a natural gas grid is 60 kilometres away, the railway 40-60 km distant, and arterial roads are close with Broken Hill a 1.25 hours drive and Adelaide 5.5 hours.
Kalkaroo is open at both ends, and recent drilling of the dome perimeter has shown that South Kalkaroo has promise where wide intercepts has copper-gold but no molybdenum, while drilling of North Portia has prompted Havilah to accelerate work to generate a JORC Code resource.
The target here, Dr Giles said, is a 20 Mt resource in the grade range of 0.7pc Cu, 0.6 g/t Au and 250 ppm Mo.
North Portia has shown up some higher grade copper-gold zones such as intercepts of 38m @ 3pc Cu and 0.66 g/t Au and 36m @ 1.6pc Cu and 1 g/t gold.
Dr Giles believes the regional quest will also show up new gold potential as extensive veining, shearing and alteration creates the ideal setting for major gold deposits, and the Benagerie Dome has more than 30 km of strike with gold hits, including Portia.
Dr Johnson told the ASX on Friday that the experience learned in washing the whole drill samples - a unique exploration process in Australia's hard rock gold sector - meant the company was confident of recovering "just about all of the gold in a conventional gravity separation plant, greatly reducing the complexity and capital cost of a future mining operation at Portia".
The percussion drill samples which returned the strong results were obtained at shallow depths of around 100 metres or less within high grade gold zones patchily developed and characterized by abundant coar se-grained primary gold.
The gold has been deposited by mineralising fluids emanating from buried granitic rocks, along the contact of a carbonaceous shale formation.
"The important implication of work completed to date is that Portia's gold mineralisation could potentially extend to significant depths below the zone of current drilling," Dr Johnson said.
Havilah has lodged a mineral claim over the Portia gold resource in preparation for a mining lease application. Native title negotiations have also commenced.
"If Portia proves its worth, the longer term upside for Havilah is applying the knowledge gained at this project to the search for additional bedrock gold mineralisation in similar geological settings elsewhere on the Benagerie Dome," Dr Johnson said.
"The Dome is host to known high grade bedrock gold mineralisation from earlier drilling for over 15 kilometres of strike of the prospective formation - for example, at the Shylock and Lorenzo prospects - but there has never been any follow up exploration on these targets."
BACKGROUND ----------
Havilah Resources NL joined the Australian Stock Exchange list on March 21, 2002.
The company is an exploration company focused on the Curnamona Craton region in northeastern South Australia.
Havilah Resources holds a strategic ground position in the Curnamona Craton where it is actively exploring for a variety of commodities including gold, copper, molybdenum and zinc.
It has a 50.6 per cent stake in Curnamona Energy Ltd, which has sole rights to explore for uranium deposits hosted by tertiary sediments on certain of Havilah's Curnamona Craton tenements.
Portia's gold nuggets were originally discovered by the Werrie Gold/Pasminco joint venture in the 1990s.
Inconsistent results caused by the erratic sampling of the nuggety gold, deterred these early workers from proceeding.
In other assets,the company owns 63 per cent of Geothermal Resources Ltd, a specialist geothermal exploration and development company.
Havilah holds one tenement in the Gawler Craton - Red Metal is currently farming in to the Pernatty project to earn a 70 per cent interest.
It has a 10 per cent stake in Monax Mining Ltd by sale of three Gawler Craton tenements in 2005.
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