PROGRESSING HAVILAH’S ADVANCED PROJECTS …2008/08/29 · 63 Conyngham Street Glenside 5065 South Australia phone 61 8 8338 9292 fax 61 8 8338 9293 email [email protected]

63 Conyngham Street Glenside 5065 South Australia

phone 61 8 8338 9292 fax 61 8 8338 9293

email [email protected] HAVILAH RESOURCES NL ABN 39 077 435 520

ASX Release 29 August 2008

APPENDIX 5B – FOURTH QUARTER ACTIVITIES AND CASH FLOW REPORT

PROGRESSING HAVILAH’S ADVANCED PROJECTS

HIGHLIGHTS • Sulphuric acid production emerges as an important driver for Mutooroo

project. Continuing good feasibility drill results. • Feasibility study resource delineation drilling largely completed at Kalkaroo

with good drilling results to date. • Further round of drilling completed at Prospect Hill tin project. • Curnamona Energy awarded retention lease over Oban uranium deposit. • Geothermal Resources about to commence an 1800 metre deep hole on its

Frome Project

REVIEW OF OPERATIONS PROGRESS ON COPPER STRATEGY Havilah Resources NL’s (Havilah – ASX:HAV) stated ambition is to achieve an annual copper and gold production of 55,000 tonnes and 100,000 ounces respectively, within the next three years from its advanced projects. Feasibility study work continues on track to achieve this. Given the present great uncertainty in world markets caution is required in going forward, especially in managing project risk. Havilah will attempt to de-risk its projects to the maximum extent possible by involving major non-bank funding partners and following lower risk development strategies such as exploiting the shallower oxide resources at all deposits. This will reduce start up capital costs and also plant operating costs as well as expediting the commencement of production.

www.havilah-resources.com.au

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MUTOOROO SULPHURIC ACID PROJECT (Havilah 100%, sulphuric acid-copper-cobalt) Sulphuric Acid Production Apart from its valuable copper and cobalt, the Mutooroo deposit is quite unique in its high sulphur content and also its location adjacent to a transcontinental railway line. Metallurgical test results show that it is feasible to roast the sulphide ore and produce sulphuric acid in a conventional acid plant. It is a relatively straightforward process to then leach the copper and cobalt from the resultant oxidized solid residue or calcine. Moreover, the reaction is quite exothermic and the surplus heat produced in such plants is often used to generate electricity. Sulphuric acid presently commands a high price owing to a world wide shortage, and with high projected future demand in South Australia at Olympic Dam, various in situ leach uranium mines (eg Beverley and Oban) and possible rare-earth and phosphate treatment plants it is expected that all sulphuric acid production could be absorbed locally. Sulphuric acid production is therefore an important driver for the Mutooroo project. New Drilling Results Havilah has completed more than 9000m of drilling or about 100 holes during the 2008 resource delineation drilling programme at Mutooroo. A major proportion of the drilling during the quarter comprised shallow RC holes that targeted an oxide copper resource in the first 20-25 metres below the surface. This drilling outlined good widths and grades of oxidized copper mineralization on most sections, with some of the better oxide results summarized below: Hole No From To (m) Interval Cu% Comments MTRC 33 8 29 21 0.71 Oxide ore zone MTRC 137 10 24 14 1.04 Oxide ore zone MTRC 164 1 14 13 1.03 Oxide ore zone MTRC 207 1 37 37 1.34 Oxide ore zone MTDD 170 12 23 11 0.87 Oxide ore zone MTDD 172 13 23 10 0.87 Oxide ore zone

Three large diameter core holes were also drilled in order to obtain representative copper bearing oxidized samples for column leach testing at AMMTECH metallurgical testing laboratory in Perth (see assay results for MTDD170 and MTDD 172). Preliminary bottle roll tests indicate approximately 40% copper recoveries. Further work is in progress to determine if the oxide ore recoveries can be improved. The attached drill section demonstrates the good continuity of ore lenses down dip from the surface oxide zone (intersected in drillholes MTRC69, MTRC210 and MTDD172) to the deepest RC hole drilled on this section line (drillhole MTRC118). Economic widths of sulphide mineralization continue to be intersected in the deeper parts of the deposit, including some exceptional results as in drillhole MTDD 128, which has a combined sulphide intersection of over 30 metres (approximately true width) including 22 metres of 2% copper and 0.23% cobalt. Better results in the deeper RC drilling and diamond core tails received during the quarter are as follows : Hole No From To (m) Interval Cu% Co% S% Comments MTRC 216 128 146 18 1.9 0.21 21.2 RC drillhole in sulphide MTRC 219 188 198 10 2.06 0.25 25.7 RC drillhole in sulphide MTDD 125 229.5 240.4 10.9 1.32 0.13 14.1 Cored hole in sulphide and 257.8 260.7 2.9 2.18 0.31 30.3 MTDD 128 258.8 280.9 22.1 2.03 0.23 20 Cored hole in sulphide and 289.6 298 8.4 1.67 0.19 21


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Geotechnical studies carried out on four cored holes drilled especially for the purpose, indicate that the wall rock is extremely competent and will be able to support quite steep pit wall angles. This will have a positive impact on mining economics, in reducing the amount of waste removal. Feasibility Study and Permitting The feasibility study is progressing according to schedule and is expected to be completed in the first quarter of 2009. The study is also addressing critical strategic issues, including the best location for the sulphuric acid plant and financing. Running in parallel are the permitting and environmental assessment tasks, to be incorporated into the Mining and Rehabilitation Plan (MARP), which is required for the grant of a Mining Lease by PIRSA. Havilah remains confident that it will achieve its stated objective of outlining sufficient economic grade sulphide mineralization to support an open pit mining operation for at least ten years at Mutooroo. Currently, the project looks extremely profitable based on copper, cobalt and sulphuric acid production, with the added possibility of electricity and iron ore as by-products. Havilah is in the fortunate position of owning the project 100% and can therefore consider the option of selling some project equity and/or offtake rights in exchange for project financing if it so chooses, following the Kalkaroo model. The current status of the project is summarized in a recent broker presentation by Havilah’s Chairman, Dr Bob Johnson,that is posted on Havilah’s website. KALKAROO FEASIBILITY STUDY (Havilah 100%, copper-gold-molybdenum) Havilah has now completed almost 200 drillholes as part of the Kalkaroo feasibility study drilling and continued to report wide economic grade drill intersections during the quarter as follows:

* new result, not previously reported

Hole No From To Interval m Cu % Au g/t Comments KKDD222 89 167 78 0.56 1.8 Kalkaroo West quartz breccia KKDD246 90 176 86 0.64 1.4 Kalkaroo West quartz breccia KKDD238* 130 169 39 1.03 0.71 Kalkaroo West quartz breccia KKDD231* 100 152 52 0.94 1.33 Kalkaroo West quartz breccia KKDD233A* 117 148 31 1.7 1.13 Kalkaroo West quartz breccia KKDD155A 165 229 64 0.51 0.43 Main zone sulphide ore also 208 233 25 757 ppm Mo KKDD168 116 189 73 0.85 Main zone oxide/sulphide ore also 137 189 52 0.57 also 149 174 25 683 ppm Mo KKDD170 134 203 69 0.74 Main zone oxide/sulphide ore KKDD182 120 186 66 0.97 Main zone also 151 170 19 719 ppm Mo KKDD186A 172 237 65 0.60 0.48 Main zone sulphide ore

Drilling results to date have shown that :

• Economic gold and copper grades continue to at least 200 metres down dip on most drill sections, which is the nominal base of the planned open pit (see attached section)

• Many Main Zone drillholes contain intervals of elevated molybdenum mineralization (eg 16m of 1236 ppm Mo in KKDD200).

• Kalkaroo West continues to produce wide copper and gold intersections in most drillholes, in highly broken rocks along a major fault zone. In general, gold values are typically in the 0.7 – 2 g/t range, or roughly 2-4 times higher than in the Main Zone (see results for KKDD222 and 246 above).


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All sections typically show an enriched oxidized upper part of the orebody (coloured green on the attached section) lying above the primary sulphide zone (red) that continues beyond the depth of current drilling. The oxidized ore contains predominantly native copper (or copper metal), chalcocite (a rich form of copper sulphide) and free gold. It is proposed to treat the oxidized ore initially because it is nearest the surface and will require significantly lower capital and operating costs to process. The resource delineation drilling for the feasibility study is now largely complete and work has commenced on an updated JORC resource model, which will be progressively refined as additional assay results come to hand over the next few months. Other work required for the feasibility study, including geotechnical, hydrology and environmental baseline studies are in progress. To date, all results from the feasibility study have been extremely positive, given current metal prices, and the study is on track for completion by the end of 2008 BENAGERIE PROJECT (Havilah 100%, copper-gold-molybdenum) The Benagerie Project incorporates the Portia and North Portia deposits that will be developed as one project. Two large diameter core holes to provide samples for metallurgical testing of North Portia oxidized copper ore have been completed. Resource drill out of the oxide copper resource will be completed before the end of the year, at a time when Havilah’s RC drill rig is available. PROSPECT HILL (Havilah earning 85%, tin) Havilah completed a 24 hole, 2231 metre RC drilling programme at the Prospect Hill tin project in the northern Flinders Ranges during the quarter. The drilling programme followed up promising tin intersections reported from Havilah’s October 2007 drilling campaign, that included : 2.5 metres (true width) of 4.85% tin in drillhole PHRC03 6.8 metres (true width) of 0.98% tin in drillhole PHRC04 The aim was to expand the presently known tin mineralization beyond its current limits to an economically viable size for an open pit operation. In this respect, the drilling programme successfully intersected the tin lode in most holes and may have extended the lode to the west and east. Verification is awaiting receipt of assay results from the laboratory. The next round of work is likely to include diamond core drilling to obtain representative samples for comprehensive metallurgical testing, which will be used as the basis for process flow sheet design. CURNAMONA ENERGY LIMITED (Havilah 45.4% ownership) Curnamona Energy’s considerable efforts in satisfying PIRSA’s stringent documentary requirements over the last fifteen months was rewarded with grant of a 248 Ha Retention Lease over the Oban uranium deposit during the quarter. This clears the path for Oban Energy to lodge a mining and rehabilitation program (MARP) with PIRSA for conducting the proposed field leach trial, many aspects of which have already been covered in the application for the Retention Lease. Curnamona Energy was granted a further highly prospective Exploration Licence immediately north of Oban during the quarter, and took delivery of a fully refurbished drilling rig that will enable it to better access the sandy terrain in this region


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GEOTHERMAL RESOURCES LIMITED (Havilah 63.6% ownership) Planning and permitting was progressed for drilling of a diamond core hole, namely Frome 12, to a target depth of 1800 metres on the Frome project. This hole will be located 3 km west of Frome 3, with the objective of confirming continuity of the high temperature gradient at depth. CORPORATE Canopus Resources Limited During the quarter Havilah entered into an agreement with Canopus Resources Limited for the farm in on seven of Havilah’s tenements in the Curnamona Province. The key terms of the agreement signed on 6 June 2008 are as follows :

1. Canopus may earn a 60% interest in any mineral deposits it discovers on Havilah’s tenements by completion of an industry standard bankable feasibility study. Thereafter, Havilah may elect to contribute its 40% share of development expenditure or revert to a 1.5% net smelter royalty.

2. Havilah will be allotted 17.4% of the issued capital of Canopus at the time of listing on the ASX, which is planned to occur as soon as practically possible via an IPO in order to raise funds to explore these properties.

3. Under a priority offer Havilah shareholders will be entitled to subscribe for a maximum of 1 new Canopus share for every 4 Havilah shares. This means that those Havilah shareholders who wish to retain an interest in these properties other than through Havilah's 17.4% shareholding in Canopus, may do so by taking up a priority offer of shares in Canopus.

The tenements involved have good exploration potential for iron ore (EL 3519), hardrock uranium (EL 3895 – immediately adjacent to Radium Hill, and EL 3419) and ironstone hosted copper –gold deposits and limestone hosted lead-zinc deposits (EL 3299 and part EL’s 3178 and 3694). This decision is consistent with Havilah’s determination to focus on implementation of its copper strategy, through development of its advanced projects at Kalkaroo, Mutooroo and Benagerie. Canopus’s exploration will be driven by three of South Australia’s most respected and experienced geologists, namely Mr John Roberts, Mr Colin Brooks and Mr Lindsay Curtis, all of whom have been involved in major discoveries during their careers. They will be joined by experienced mining engineer, Mr John Harrison. Curnamona Energy in specie distribution At Havilah’s annual general meeting on 19 December 2007, shareholders voted in favour of the proposed capital reduction and in specie distribution of Curnamona Energy Limited shares. To Director’s knowledge there are no impediments to rollover relief, however advice is still awaited in writing from the Australian Taxation Office before proceeding. FINANCE As at 31 July 2008 the Company had available funds of approximately $16.5 million. Of this amount roughly $6.1 million is joint venturer’s funds to be allocated to the Kalkaroo project. The great majority of the $3.55 million expenditure during the quarter was for the Kalkaroo resource delineation drilling and associated costs including assaying and supervision. It is expected that total expenditure on Havilah’s own account in the next quarter will be lower than the current quarter as the Kalkaroo feasibility study drilling programme winds back, and is replaced by less expensive activities. Feasibility study drilling will continue at Mutooroo and new rounds of drilling will be funded on the Benagerie and Prospect Hill projects.


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Dr K R Johnson CHAIRMAN The information in this report has been prepared by Dr Bob Johnson who is a member of the Australasian Institute of Mining and Metallurgy and Dr Chris Giles who is a member of The Australian Institute of Geoscientists. Drs Johnson and Giles are employed by the Company on consulting contracts. They have sufficient experience which is relevant to the style of mineralization and type of deposit under consideration to qualify as Competent Persons as defined in the JORC Code 2004. Drs Johnson and Giles consent to the release of the information compiled in this report in the form and context in which it appears. Enquiries should be directed to Dr Bob Johnson, Chairman, on (08) 83389292


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Appendix 5B Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001. Name of entity HAVILAH RESOURCES NL

ABN Quarter ended (“current quarter”) 077 435 520 31/07/08

Consolidated statement of cash flows

Cash flows related to operating activities

Current quarter $A’000

Year to date (. 12 months) $A’000

1.1 Receipts from product sales and related debtors

1.2 Payments for (a)exploration and evaluation (b) development (c) production (d) administration

-3549

-251

-9501

-1314 Dividends received 1.4 Interest and other items of a similar

nature received 322 1103

1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material)

Net Operating Cash Flows -3478 - 9712

Cash flows related to investing activities

1.8 Payment for purchases of: (a)prospects (b)equity investments (c) other fixed assets

- 13

- 288 1.9 Proceeds from sale of: (a)prospects

(b)equity investments (c)other fixed assets

1.10 Loans to other entities 1.11 Loans repaid by other entities (PACE) 25 1.12 Other (cash from Kalkaroo JV partner) 14000

Net investing cash flows

-13

13737 1.13 Total operating and investing cash

flows (brought forward) 3491 4025


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Cash flows related to financing activities

1.14 Proceeds from issues of shares, options, etc.

8 35

1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings -31 -104 1.18 Dividends paid 1.19 Other (provide details if material) Net financing cash flows -23 -69

Net increase (decrease) in cash held

-3514

3956

1.20 Cash at beginning of quarter/year to

date 19992 12522

1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter 16478 16478

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

Current quarter $A'000

1.23

Aggregate amount of payments to the parties included in item 1.2

301

1.24

Aggregate amount of loans to the parties included in item 1.10

1.25

Explanation necessary for an understanding of the transactions

The majority of this amount comprises payment for contract drilling to Talager Drilling Pty Ltd, a company associated with one of the directors. Drilling charges are at standard commercial rates as determined by public quotes for comparable equipment, and approved by non-associated directors. Other payments are to companies associated with the directors for management and consulting services in accordance with service agreements previously entered into, and for reimbursement of expenses incurred by directors on behalf of the Company.

Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on

consolidated assets and liabilities but did not involve cash flows

2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

Financing facilities available Add notes as necessary for an understanding of the position.


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Amount available

$A’000 Amount used $A’000

3.1 Loan facilities

3.2 Credit standby arrangements

Estimated cash outflows for next quarter

$A’000 4.1 Exploration and evaluation

2,000

4.2 Development

Total

2,000

Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.

Current quarter $A’000

Previous quarter $A’000

5.1 Cash on hand and at bank 823 677 5.2 Deposits at call 15655 19315 5.3 Bank overdraft 5.4 Other (provide details) Total: cash at end of quarter (item

1.22) 16478 19992

Changes in interests in mining tenements Tenement

reference Nature of interest (note (2))

Interest at beginning of quarter

Interest at end of quarter

6.1 Interests in mining tenements relinquished, reduced or lapsed

6.2 Interests in mining tenements acquired or increased

Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.


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Total

number Number quoted

Issue price per security (see note 3) (cents)

Amount paid up per security (see note 3) (cents)

7.1 Preference +securities (description)

7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions

7.3 +Ordinary securities

81,950,946 79,950,946

7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs

7.5 +Convertible debt securities (description)

7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted


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7.7 Options (description and conversion factor)

120,000 200,000 3,587,768 3,520,000 100,000 200,000 90,000 275,000 100,000 150,000 300,000 1,800,000 1,000,000 500,000 350,000

Employee Employee Listed Directors Employee Employee Employee Employee Employee Employee Employee Directors Unlisted Unlisted Employee

Exercise price 25 cents 102 cents 160 cents 118 cents 106 cents 96 cents 75 cents 178 cents 212 cents 231 cents 218 cents 199 cents 180 cents 225 cents 150 cents

Expiry date 09/10/08 09/05/09 30/04/10 14/08/10 29/08/10 17/02/11 19/10/11 12/02/12 13/04/12 08/06/12 17/12/12 10/01/13 06/03/13 06/03/13 04/04/13

7.8 Issued during quarter

7.9 Exercised during quarter

Exercise price

Expiry date

7.10 Expired during quarter

7.11 Debentures (totals only)

7.12 Unsecured notes (totals only)

Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4). 2 This statement does /does not* (delete one) give a true and fair view of the matters disclosed. Sign here: ................................................... Date: 29 August 2008 (Director/Company secretary) Print name: Dr KR Johnson...... Director / Chairman.................................................... Notes 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.


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2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2. 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.


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Documents

PROGRESSING HAVILAH’S ADVANCED PROJECTS …2008/08/29 · 63 Conyngham Street Glenside 5065 South Australia phone 61 8 8338 9292 fax 61 8 8338 9293 email [email protected]