Copper Hill Focus on Resource Enhancement

Golden Cross Resources has conducted a series of assessment studies into the economics of the Copper Hill copper-gold deposit. These exercises have investigated a range of possible production rates detailing the various capital costs, operating costs and revenue streams likely to be achieved for each scenario.

Using metal prices at, or close to, current spot prices for copper and gold, the assessments demonstrated that mining and mill throughput rates of between 5 and 8 million tonnes per year provided the best returns. The company most recently modelled a scenario with a production rate of 8 million tonnes of ore processed per year for a mine life of 7 years, yielding a concentrate grading 25% copper and 22 g/t gold. At this scale, the project model demonstrates positive cash flow, but at rates of return that are unlikely to attract finance from conventional Western sources.

Project economics improve if additional mineral resource tonnes can be mined and processed, adding to the mine life. Similarly, increased grade would significantly benefit project cash flows. Drilling at Copper Hill in the past 5 years, focusing on the main deposit, has increased the JORC-resource to 153 million tonnes at grades of 0.32% copper and 0.28 g/t gold using a 0.2% copper cut-off grade. This program materially increased the known tonnage, but copper and gold grades remained relatively unchanged. Importantly, the Company has not identified a higher grade core of sufficient size to sustain a smaller-scale start-up operation.

Other targets within GCR’s Molong Exploration Licence, being outside the quantified mineral resource, were considered of lower priority at the time. Accordingly, drilling of these areas was placed on hold. The relatively high-cost programs of deep drilling below Buckley’s Hill, Copper Hill and Wattle Hill were included in this deferral.

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