H&S Consultants Pty Ltd (“H&SC”) was commissioned by KGL to complete updated mineral resource estimates for the Jervois Project. The target commodity is copper with subordinate silver, lead, zinc and gold.

A total of five deposits comprise the Jervois Project, namely Marshall-Reward (including Reward East and Sykes), Green Parrot, Bellbird including Bellbird North, Rockface and Cox’s Find. The current round of work involved updated resource estimates for most of the lodes including Marshall, Reward, Reward East (two lodes), Sykes (maiden resource), Green Parrot (two lodes), Bellbird (four lodes) and Bellbird North.

The new resource estimates are based on 15,187 one metre composites from the drilling data. Elements modelled included copper, silver, lead, zinc, gold, sulphur, iron, bismuth, cobalt, tungsten, uranium and acid soluble copper. Composite extraction for modelling, used mineral wireframes designed to a nominal 0.1% copper cut-off (and anomalous silver and/or lead) under limited geological control, including litho-geochemical interpretation (where available). Extrapolation of the wireframes beyond the limiting drillholes was generally <25m in strike and <100m in dip. Modelling consisted of Ordinary Kriging using the Micromine or GS3M software with the modelled data loaded into Surpac block models.

Modelled gold grades have been included as part of the Marshall-Reward and Bellbird (including Bellbird North) resource estimates. The amount of historical gold data is limited and as a result, the gold resource estimate is classed as Inferred. A global gold Inferred Resource for the two deposits stands at 21.4Mt at 0.16 g/t totalling 113,000 oz for a copper cut-off of 0.5%.

Exploration Potential* exists peripheral to the new resource estimates within the current interpreted mineral wireframes. The Exploration Target for the combined Bellbird and Marshall-Reward zones for a 0.5% Cu cut-off is of the order of 4 – 8 Mt at 0.8 – 1.2% Cu, 7 – 15 ppm Ag for 40,000 to 100,000 tonnes of copper and 1.5 – 3.5Mozs of Ag (Table 2). The lodes are open at depth, and there are additional possibilities along strike from the deposits based on isolated drill hole information and from interpretations of the geophysical surveys.

* The potential quantity and grade of the Exploration Target is conceptual in nature and there has been insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource.

Table 2. 2015 Jervois Resource estimate (these tables may contain rounding errors).

Ore reserves

The Indicated Resource material within the pit designs has been classified as a Probable Ore Reserve. There are also significant Inferred Resources nearby that are likely be upgraded to Measured and Indicated Resources before KGL commit to developing the Jervois Project.

The Project Ore Reserves are included in Tables 3 and 4. Due to the processing recovery and processing costs varying for each element, a single, overall economic cut-off cannot be calculated. Block model reports using a range of economic cut-offs were run to determine which best represented the outputs from the optimisations; these were then applied to the Ore Reserve designs.

A 0.35% Cu cut-off was selected for the Marshall / Reward and Bellbird Resources, and a 0.5% Pb cut was used for the predominantly Pb/Zn Resources to calculate the Reserves. Mining recovery of 95% has been applied as well as 5% ore losses. The following two tables contain the Copper Ore Reserves and Lead-Zinc Ore Reserves respectively. All Ore Reserves are classified as Probable.

Table 3. Copper Ore Reserves

Table 4. Lead / Zinc Ore Reserves

The above Ore Reserve numbers include mining dilution and recovery. Ore Reserve estimates are not precise calculations. Reporting of tonnage and grade estimates should reflect the relative uncertainty of the estimate by rounding off to appropriately significant figures.

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