AFTER transitioning from explorer to producer in 2016 Havilah Resources is not resting on its laurels and intends to transform into a sizeable copper producer, supported by continued production of gold as well as other minerals including cobalt, molybdenum, tungsten and tin. Havilah’s clearly articulated Copper Growth Strategy is a blue-print for how the company plans to progressively develop its impressive suite of copper projects in South Australia. This strategy is underpinned by Havilah’s large JORC resource metals inventory, its proven exploration prowess, its operational success with partner Consolidated Mining and Civil (CMC), cash flow from Portia, and now with strong interest from a major Chinese company.
|The open pit at the Portia Gold Project, northwest of Broken Hill.|
Production is continuing at Portia, northwest of the traditional mining centre of Broken Hill, while planning is well advanced to mine the adjoining Portia North copper-gold deposit and Havilah is also making plans to develop the Mutooroo copper-cobalt deposit southwest of Broken Hill.
However, the company maker will be the large Kalkaroo project around 20km south of Portia which contains at least 1.4 million tonnes of copper and 3.3 million ounces of gold as well as significant quantities of molybdenum, cobalt and sulphur.
The story doesn’t end there with the company having recent exploration success at copper-gold and IOCG targets close to Portia, the copper skarn deposit at Croziers midway between Portia and Kalkaroo, and tin prospects at Prospect Hill in the northern Flinders Ranges.
Havilah’s managing director Chris Giles says while gold is presently a good high margin business, supported by a lower Australian dollar, copper is a solid long-term story backed by increasing consumerism in developing economies along with the impending boom in electric vehicles and renewable energy.
“New copper mining developments have slowed at the time when usage is expanding with the highly copper intensive renewable energy generation and storage revolution, not to mention electric vehicles (EVs) and antimicrobial applications.
“The metal still has its traditional uses, which put it in great demand in the emerging economies of China, India and South-East Asia, while the rapidly growing EV and renewable energy markets use a lot of copper. The average EV uses about 80kg of copper as opposed to around 20kg in conventional vehicles.”
He says the company’s copper story is enhanced by cobalt as there are appreciable quantities of the ‘energy metal’ in Havilah’s copper resources, particularly at Kalkaroo and Mutooroo.
“I believe this will be the decade of copper and the strong fundamentals for cobalt demand, will add icing to our copper cake.”
Kalkaroo no longer a pipe-dream
A resource estimate completed this year at Kalkaroo saw contained copper metal increase by more than 80% to 1.14 million tonnes and contained gold by more than 60% to 2.77 million ounces, excluding a 550,000-ounce higher grade gold cap.
The resource now stands at 232.5 million tonnes at 0.49% copper and 0.37 grams/tonne gold for a copper equivalent of 0.79%, using a 0.4% copper equivalent lower cut-off. The estimate does not include significant unquantified credits of molybdenum, cobalt and sulphur or the gold cap.
The deposit, which represents one of Australia’s largest undeveloped copper-gold deposits, remains open at depth and along strike, with considerable scope for expansion. Kalkaroo hosts a potentially large cobalt resource with substantial zones containing more than 500ppm cobalt. It is estimated that it contains 5-10 million tonnes of cobaltian pyrite ranging from 1-3% contained cobalt.
The new estimate includes data from an additional 74 holes and extensive re-interpretation, block modelling and re-estimation by an experienced, independent resource geologist. Substantial additional inferred resources underscore the potential to considerably extend mine life.
Havilah has always held high hopes for its major project and Chris Giles says the resource upgrade has added to expectations, but the size of the project and the costs involved with developing it are challenging for a junior company. However, Havilah believes a new agreement with China’s Wanbao Mining, a substantial international copper and cobalt producer, could change this.
Following several months of due diligence by Wanbao on Kalkaroo and the resource upgrade, the two parties signed an MOU in late May covering the completion by Wanbao of a pre-feasibility study (PFS) on the project. At Wanbao’s expense, it has engaged independent consulting firm RPMGlobal to manage and complete the PFS drawing on RPM’s extensive combined Chinese and Australian experience and expertise.
The objective of the PFS, which was expected to be completed by the end of 2017, was to provide sufficient information for Wanbao to make a decision on future participation in project financing and development. The MOU is non-binding in terms of further investment beyond the PFS and Havilah has granted Wanbao an exclusivity period for the duration of the PFS and an additional two months, until about the end of February 2018.
Chris Giles says, “We are delighted to have formed a co-operative relationship with Wanbao, which is a well-respected and successful Beijing based off-shore copper and cobalt producer with sizeable mining operations in Myanmar and the Democratic Republic of Congo (DRC).
“The PFS is primarily addressing development implications of the recently upgraded resource, and will increase confidence in the final processing circuit and associated capital and operating costs for an expanded operation. At this time a large portion of the PFS evaluation work has been completed and results, including validation of the resources estimate, are consistent with Havilah’s past work.”
Havilah has taken care of the groundwork in purchasing the pastoral property on which Kalkaroo is situated and has reached agreement with the Native Title Claimants for the compensation and other terms of a Native Title Mining Agreement (NTMA).
The compensation arrangement takes a fair and balanced approach where Havilah will have protection in a low metals price environment, while the claimants would see the benefit in a higher metals prices environment, thus sharing in the upside. This approach supports Havilah’s ability to raise development finance for the project.
The agreement also focuses on important non-financial benefits such as employment, training and business development opportunities for the claimants over the life of the mine. Chris Giles says it is an important milestone because execution and finalisation of the NTMA paves the way for the regulators to finalise the Mining Lease Application.
Moving ahead on Mutooroo
Due to positive developments in the copper and cobalt markets, Havilah has moved the Mutooroo project to the front of its development agenda aided by the proximity of infrastructure, including the Transcontinental rail line and the regional city of Broken Hill.
“We are moving ahead on the higher grade Mutooroo project,” Chris Giles says, “with a pre-feasibility study and permitting approval work under way. We hope to have this work largely complete in about 12 months and will be looking at financing options for development, which could include advance sales of copper concentrates.”
|The traditional mining centre of Broken Hill is not far from Havilah’s projects within the Curnamona Craton.|
To this end, the company has commenced drafting a mining lease proposal for submission to the Department of Premier and Cabinet of South Australia. It has also made a preliminary approach to the Native Title Claimants with the view to initiating negotiations on the possible terms of a native title mining agreement for the area.
The company intends to utilise a 500,000 tonnes/annum conventional grinding and flotation circuit that will recover copper concentrate and pyrite concentrate for cobalt.
“If all elements fall into place, it is a great project,” he says. “We have brought it forward due to the buzz around copper and cobalt, and because we have longer term solutions to deal with the excess sulphide.”
The deposit is marked by consistent wide copper and cobalt intersections in massive sulphide ore, including 13 metres from 36 metres at 2.20% copper and 0.29% cobalt, 27 metres from 130 metres at 1.75% copper and 0.22% cobalt, and 27 metres from 84.5 metres at 2.26% copper and 0.25% cobalt.
There is an estimated JORC measured and indicated sulphide resource of 5.9 million tonnes at 1.31% copper and 0.14% cobalt within a total sulphide estimate of 12.5 million tonnes at 1.53% copper for 192,000 tonnes of copper and 17.54 million kg of cobalt, along with 92,700 ounces of gold. There is scope to materially increase the resource as only a portion of the known 2.1km strike has been drilled to JORC resource status.
|Havilah’s projects lie in South Australia’s northeast, not far from the rail line that links Sydney with Perth.|
There are two main options to recover cobalt from the cobaltian pyrite – leaching, including acid leach or bacterial oxidation; and roasting and acid plants, which also produce by-product sulphuric acid and iron ore.
Chris Giles says the roasting alternative produces the best revenue stream but is capital intensive while leaching is less capital intensive and should produce saleable cobalt salts. Basic leaching experiments show that an extremely acid solution, which can be generated from oxidation of the ore, is moderately effective in leaching the pyrite and releasing cobalt.
Havilah’s pre-feasibility study will include:
- Completion of a detailed mining plan and design to initially mine the high-grade massive sulphide south pod;
- Design and costing of a standard copper concentrator to recover copper sulphide concentrate and pyrite concentrate;
- Leaching tests for cobaltian pyrite to determine the best recovery method; and
- Studies on roaster and acid plant design and costing to determine the feasibility of roasting massive sulphide ore.
- “Another plus is that Mutooroo is only 40 minutes outside Broken Hill,” he says, “which means no need for a camp as it will be a convenient bus trip at the start and end of shifts, and it is only 16km from the rail line, making it easy for mine logistics.”
Portia’s golden future is in copper
Portia has seen Havilah become a gold producer after years of exploring a suite of projects and the transformation is primarily due to a unique partnership with CMC. The arrangement with the Broken Hill-based company headed by Steve Radford has seen CMC remove 70 metres of overburden, set up a camp and mine infrastructure, mine the gold-bearing ore, and assist with optimising the processing facilities. For this CMC receives a half share of revenue from the operation.
The progress from mining of first gold-bearing ore in early March 2016, to completion of the processing plant in April and first gold pour in May was achieved ahead of schedule. There have been challenges, including pit wall stability issues in the soft overburden, periods of heavy rainfall, groundwater inflows and processing plant issues, but Chris Giles says these have all been overcome by the CMC and Havilah partnership.
Mining of the originally defined deposit was completed by the end of 2016 but further ore in the underlying bedrock and further mineralisation in the southern part of the pit and beyond, will see mining continue into 2018. Portia continues to return spectacular grades in the floor of the open pit including 6 metres at 34.84 g/t gold, 3 metres at 29.37 g/t, 6 metres at 17.95 g/t, and 10 metres at 8.62 g/t, indicating further life yet.
However, the long-term future lies in the much larger adjoining North Portia copper-gold open pit, planning for which is well advanced by CMC. At a minimum, this project would add another six years of mining on the Portia lease with a 1 million tonne gold cap running at 1.5 g/t and an underlying 4 million tonne enriched copper-gold zone grading 1.2 % copper equivalent captured in the initial open pit design. Beneath this lies an impressive grade primary sulphide ore body, which is not included in the six-year mining plan.
The Portia gold mining exercise, while a modest operation by normal standards, has been of immense value in solving many of the unknown issues around mining in this area, and will greatly reduce the mining risk for North Portia and then Kalkaroo. In addition, much of the infrastructure built for Portia, including the processing plant, will be utilised for processing North Portia ore. Chris Giles says that even the Portia open pit, once completed and allowed to fill with groundwater, will be an asset in providing a reservoir of processing water and a place to safely dispose of sulphide tailings and waste material.
|The distinguishing features of Havilah Resources, which has a suite of projects around the border of South Australia and New South Wales.|
Exploration is in Havilah’s corporate DNA judging by the number of minerals deposits discovered. Chris Giles says, “Every ounce of gold and every tonne of copper and other metals we have found and delineated ourselves with our own drill rig and crew. The region is highly prospective, with our very own equivalent of the Central African copper belt contained within our tenement holding, and we reckon on finding a lot more copper.”
Drilling this year confirmed an exciting new copper-tungsten discovery at Croziers. There were 17 RC holes drilled for 1462 metres over the copper-bearing magnetite skarn with best results of 5 metres at 0.9% copper from 69 metres, 20 metres at 0.54% copper from 75 metres and 15 metres at 0.45% copper from 83 metres. Economic grades of associated tungsten mineralisation were also revealed.
“We have found shallow dipping copper mineralisation over a down-dip extent of potentially more than 400 metres, confirming our original exploration thesis. The copper horizon is sufficiently thick to be of economic interest for an open pit mine in the upper parts and the tungsten mineralisation is potentially significant when combined with the copper. Given the 50 metre-wide spacing of holes and lack of previous RC drilling there is plenty of room for a sizeable copper-tungsten deposit, which we will follow up with further drilling.
“Croziers is about 10km north of Kalkaroo and within short trucking distance, which enhances its development prospects even for a modest deposit, given the shallow cover in this area.”
There are excellent IOCG targets in the region. At the Bassanio IOCG prospect a single 325 metre diamond hole intersected highly brecciated ironstones, which given the 1.5km long by 820 metre target zone, definitely warrants follow up drilling.
A more intriguing IOCG target was identified by recent University of Adelaide magnetotelluric (MT) surveys 30km north of the Portia mine. The MT method is able to distinguish zones of varying electrical conductivity in the earth’s crust to depth of more than 20km. A prominent vertical low resistivity feature rising to the surface, comparable with that observed beneath the giant Olympic Dam ore body, was identified by the MT survey. Chris Giles said, “The Jupiter MT anomaly, as we have called it, is an amazing geophysical feature and warrants further exploration work to see if indeed it is pointing us towards a major mineralised system as for Olympic Dam.
On the road to success
|The value steps for Havilah as it progresses its projects.|
Although Havilah’s share price has suffered recently, Chris Giles says Havilah remains in a very good place with its large copper, gold and cobalt JORC resources situated in a mining supportive jurisdiction. “Fundamentally nothing has changed except the company has moved closer to achieving its expanded mining objectives as the copper outlook only continues to improve.
“We cannot change the share price, but we can certainly strive to deliver on our Copper Growth Strategy and so establish Havilah credentials as an emerging copper-cobalt producer.”
Havilah’s association with CMC has given the company more confidence that it can get its other projects going, especially lower capital projects like Mutooroo. It looks increasingly likely that Havilah’s hard-won exploration achievements will mature into profitable copper-gold-cobalt mining operations at a time when there is unprecedented demand for these commodities.