26 may 2014 asx release - oz minerals · 5/26/2014 · looking west . isometric, looking northwest...

01

26 MAY 2014

ASX Release Initial 202Mt at 0.6% copper Resource for Khamsin

This announcement should be read in conjunction with the appended Khamsin Mineral

Resource Statement.

OZ Minerals is pleased to announce the initial Mineral Resource estimate for the Khamsin

Iron Oxide Copper Gold (IOCG) deposit, located 10 kilometres north-west of Carrapateena

in South Australia (see Figures 1 and 2). OZ Minerals has undertaken an exploration and

Resource delineation drilling program at the Khamsin deposit since it was discovered in

late 2012.

OZ Minerals is currently undertaking a Pre-Feasibility Study for the Carrapateena IOCG

project and also undertaking additional exploration drilling at the nearby Fremantle Doctor

prospect.

The initial Mineral Resource for Khamsin is based on 30 holes (including eight wedged

holes) drilled since the discovery and is summarised in the table below. Holes were

diamond drill holes spaced approximately 100 metres apart.

Table 1: Summary Mineral Resource for the Khamsin deposit1

Classification Tonnes

(Mt)

Cu

(%)

Au

(g/t)

Ag

(g/t)

U

(ppm)

Density

(t/m3)

Cu

(Mt)

Au

(Moz)

Ag

(Moz)

Inferred 202 0.6 0.1 1.7 86 3.05 1.1 0.9 11 1Cut-off - The estimated Mineral Resource has been reported based on the assumption that

block caving is the most likely mining method. Within the Mineral Resource outline no

selectivity has been assumed and consequently no cut-off grade has been applied, however

the outline of the Mineral Resource has been constructed in order to maximise the amount of

material above 0.4% copper within a potentially caveable shape.

The Mineral Resource classification has taken into consideration the robustness of the

underlying conceptual geological model, quality of informing data, robustness of the

interpretation, data arrangement and data density with respect to the continuity of key

variables and consideration of the ‘reasonable prospects test’ in compliance with JORC

2012.

250514_ASX RELEASE KHAMSIN RESOURCE 02

A scoping study will be conducted over the remainder of the year, to consider, at a high

level, the potential feasibility of integrating the Khamsin deposit into the Carrapateena

project.

Exploration drilling has now recommenced at the Fremantle Doctor prospect, located only

two kilometres northeast of Carrapateena, to the southeast of Khamsin. Numerous, narrow

copper mineralised intervals, similar in nature to those found peripheral to the

Carrapateena deposit have been intersected, commencing at approximately 960 metres

below surface. Results are awaited. This latest drilling continues to highlight the potential

for further copper mineralisation near the main Carrapateena deposit.

Figure 1 Location of Carrapateena


Figure 2 Location of Carrapateena, Khamsin and other exploration prospects

The information in this announcement that relates to the Khamsin Mineral Resource as at

23 March 2014 is extracted from the report entitled “Khamsin Mineral Resources

Statement as at 23 March 2014” which is appended to and forms part of this

announcement and is also available to view on

www.ozminerals.com/operations/resources--reserves.html. The Company confirms that

the Competent Person has agreed to the form and context in which the information above

appears.

Competent Person Statement

The information in this Announcement that relates to Mineral Resources is based on and

fairly represents information compiled by Stuart Masters, a Competent Person who is a

Member of The Australasian Institute of Mining and Metallurgy (108534) and a Member of

the Australian Institute of Geoscientists (5683). Stuart Masters is a full time employee of

CS-2 Pty Ltd and has no interest in, and is entirely independent of, OZ Minerals. Stuart

Masters has sufficient experience that is relevant to the style of mineralisation and type of

deposit under consideration and to the activity being undertaken to qualify as a

Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting

of Exploration Results, Mineral Resources and Ore Reserves’ (JORC 2012). Stuart Masters

http://www.ozminerals.com/operations/resources--reserves.html


consents to the inclusion in the report of the matters based on his information in the form

and context in which it appears.

Stuart Masters BSc (Geology), CFSG, has over 28 years of relevant experience as a

geologist including 11 years in Iron-Oxide-Copper-Gold style deposits. Stuart Masters has

visited Carrapateena site (where Khamsin exploration is conducted from) on nine

occasions since OZ Minerals acquired the project. Stuart Masters has also visited Khamsin

whilst drilling activities were being conducted there.

For further information please contact

Investors

Natalie Worley

T 61 3 9288 0345

M 61 0409210462

[email protected]

Media

Rachel Eaves

T 61 3 9288 0252

[email protected]

OZ Minerals Limited Khamsin Mineral Resource Explanatory Notes As at 23 March 2014

Khamsin Mineral Resource Explanatory Notes

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KHAMSIN MINERAL RESOURCE STATEMENT – 23 MARCH 2014

This Statement is the first Resource estimate for the Khamsin iron oxide copper gold deposit (IOCG) in South Australia. The Khamsin deposit, which was discovered in late 2012, is located 10 kilometres northwest of the Carrapateena IOCG deposit which is currently the subject of a Pre-Feasibility Study by OZ Minerals. Since the discovery in 2012, OZ Minerals has undertaken an exploration and Resource delineation drilling program.

Mineral Resource

The estimated Mineral Resource for the Khamsin deposit is shown in Table 1. The Mineral Resource has been reported in accordance with JORC, 2012. This Mineral Resource is based on data from 30 drill holes, including eight wedged holes, having a total of 17,493 metres of sampling in the interpreted mineralisation, out of 38,667 metres total drilling which took place from September 2012 to February 2014. The estimated Mineral Resource has been reported based on the assumption that block caving is the most likely mining method. Within the Mineral Resource outline no selectivity has been assumed, and consequently no cut-off grade has been applied. The outline of the Mineral Resource was constructed in a way that aimed to maximise the amount of material above 0.4percent copper (Cu) within a potentially caveable shape.

Table 1: Summary Mineral Resource for the Khamsin deposit

Classification Tonnes (Mt)

Cu (%)

Au (g/t)

Ag (g/t)

U (ppm)

Density (t/m3)

Cu (Mt)

Au (Moz)

Ag (Moz)

Inferred 202 0.6 0.1 1.7 86 3.05 1.1 0.9 11

Geology and geological interpretation

The Khamsin copper-gold deposit is an iron oxide copper-gold (IOCG) deposit located in central South Australia on the eastern margin of the Gawler Craton (see Figure 1). Mineralisation is hosted within the Khamsin Breccia Complex. The Khamsin Breccia Complex is a polymictic granite-hematite-carbonate breccia which is surrounded by altered granite and some dykes and is overlain by approximately 460-680 metres of mostly sedimentary cover. Mineralisation occurs as copper sulphides chalcopyrite, bornite and minor chalcocite. Copper sulphides mostly occur as either disseminations in the breccia matrix or within clasts. For modelling and estimation, the deposit was divided into domains based on sulphide and gangue mineralogy. Domains included the main mineralised zone, bornite zones, high hematite zones, and leached zones.


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Figure 1. Location of Khamsin, South Australia

Drilling techniques

Drill holes were inclined from surface and were diamond cored using a combination of PQ, HQ and NQ2 core sizes with the exception of a single vertical hole which also used some mud-rotary drilling in the cover. The drill holes have been drilled in a variety of directions and so the spacing between holes is not uniform. The drill hole spacing is mostly approximately 100 metres within the Mineral Resource, becoming wider at depth and at some of the margins of the mineralisation. The distribution of drill holes is shown in Figure 2.


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Plan

Looking north

Looking west

Isometric, looking northwest

Legend 500m Grid

Modelled Khamsin Breccia Complex

Mineral Resource limits

Drill hole

Figure 2. Drill holes traces, modelled Khamsin Breccia Complex (red) and limits of estimated Mineral Resource (purple)


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Sampling and sub-sampling techniques

All basement samples consist of diamond drill core (NQ2 and HQ) cut with an automatic core saw and sampled as half core, except for field duplicates, where quarter core was sampled. The sampling interval is generally 1 metre but respects geological contacts in places. Entire samples were crushed then pulverised to a nominal 90 percent passing 75 microns.

Sample analysis methods

Samples were analysed at either Bureau Veritas Adelaide or Intertek Genalysis Adelaide. Copper grades at both laboratories were determined using a multi-acid digest with ICP-OES finish. Gold grades were determined by 40g fire assay with ICP-OES finish (Bureau Veritas) or by 25g fire assay with ICP-MS finish (Intertek Genalysis). Specific gravity was determined on-site using the immersion method.

Estimation methodology

Grades of 40 metre x 40 metre x 40 metre blocks were estimated independently for Cu, Au, Ag, U, F, Fe, SG and weight loss on drying using Ordinary Kriging of sample data composited to 4 metre intervals. Dry density was derived from estimated SG and weight loss on drying on a block by block basis. Domain boundaries were treated as hard boundaries during estimation. Some of the domains used in the estimation are shown in Figure 3.


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Figure 3. Khamsin Geology Section

Mining and metallurgical methods and parameters and other material modifying factors considered to date

No mining or geotechnical studies have been carried out at this time. The rock mass at Khamsin is somewhat massive, but the dimensions of the Mineral Resource are sufficiently large that it has been assumed that it will cave. Metallurgical test work conducted on a single composite sample suggests that Khamsin material is similar in milling and flotation properties to Carrapateena material, and could be processed by a conventional crushing, grinding and flotation circuit. Copper recoveries of 90 percent at 35 percent copper in concentrate and gold recoveries of 75 percent with 10g/t in concentrate were achieved to date in the test work and which are compatible with more detailed test work outputs from Carrapateena. The Khamsin deposit is located on a Retention Lease which has been approved for the development of a decline at Carrapateena. The Khamsin deposit is not expected to present substantially different environmental challenges from the Carrapateena deposit.


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Cut-off grade

Block caving has been assumed to be the most likely mining method for Khamsin due to the low operating costs of this mining method and due to the grade and interpreted geometry of the deposit. No cut-off grade has been applied within the Mineral Resource limits due to the non-selective nature of this mining method. Estimated total operating costs, inclusive of mining, processing and site G&A, for block caving are A$23 per tonne, based on studies for the nearby Carrapateena deposit. This corresponds to a cut-off grade of about 0.3 percent Cu using the economic assumptions listed in Table 2. However, the Mineral Resource limits were constructed to avoid taking in significant volumes of material having estimated grades below 0.4% Cu, because material having a grade between 0.3 percent and 0.4 percent Cu is currently considered unlikely to justify the capital costs associated with its extraction.

Table 2: Economic Assumptions

Assumptions Unit LOM Copper US$/lb 3.15 Gold US$/oz 1,200 Silver US$/oz 20 Exchange Rate AUD/USD 0.83

Mineral Resource classification criteria

The Mineral Resource classification has taken into consideration the robustness of the underlying conceptual geological model, quality of informing data, robustness of the interpretation, data arrangement and data density with respect to the continuity of key variables and consideration of the ‘reasonable prospects’ test.

To assess what part of the Khamsin deposit has reasonable prospects of eventual economic extraction, it was assumed that block caving would be the most likely mining method. A range of options for potential block cave shapes were assessed. Within each shape, no cut-off grade was applied. The tonnages and grades of these options relative to the option used for reporting (option 3) are shown in Figure 4. The largest, lowest grade option targets material above a grade of 0.3 percent Cu. The smaller, higher-grade options exclude progressively more material which was estimated to have low Cu grades at the margins of the deposit. Options 1 and 2 contain a large amount of material in the southeast of the deposit which has an estimated grade only marginally above 0.3 percent Cu, and it was considered that some of this material may not have sufficient grade to justify the capital cost of an expanded cave footprint at the assumed Cu and Au prices. Consequently options 1 and 2 were dismissed. Option 4 had the highest average estimated Cu grade but had a smaller tonnage and was considered less likely to warrant the capital expenditure to develop it, and so it was also dismissed. Option 3 was selected as the limit for the estimated Mineral Resource. A significant amount of mineralisation has been intersected by drill holes outside the limits of the assessed options, but has been excluded from the estimated Mineral Resource because it has been assumed that it does not currently have reasonable prospects of eventual economic extraction under the assumptions listed in Table 2.


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Figure 4. Relative tonnage and grades to option 3 of assessed options for Mineral Resource limits * Option 3 was selected as the limit of the estimated Mineral Resource. Values implied by the chart for Options 1, 2 and 4 are not Mineral Resources but are included to demonstrate the potential under different price assumptions. The considered time frame for the extraction of the Khamsin deposit may be several decades, and would need to be considered in conjunction with the time frame for the extraction of the Carrapateena deposit.

-0.09

-0.06

-0.03

0.00

0.03

0.06

0.09

-75%

-45%

-15%

15%

45%

75%

Opt

ion

1

Opt

ion

2

Opt

ion

3 (b

ase)

Opt

ion

4

Diff

Gra

de (%

for C

u, g

/t fo

r Au,

bot

h ab

solu

te)

Diff

Tonn

es (r

elat

ive,

%)

Differences in Tonnage and Mean Grades to Option 3

Tonnes (%, rel)

Cu (%, abs)

Au (g/t, abs)


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Key points relating to the Mineral Resource Estimate

Section 1 Sampling Techniques and Data

Criteria Comments Sampling techniques

All basement samples consist of diamond drill core (NQ2 and HQ) cut with an automatic core saw and sampled as half core, except for field duplicates, where quarter core was sampled. The method of sampling is considered to be of an acceptable quality for the estimation of Mineral Resources.

Predominantly 1m samples were obtained, but lengths range from 0.5 metre to 1.5 metre if adjusted to geological or major alteration boundaries. All available basement drill core was sampled.

Entire samples were crushed then pulverised to a nominal 90 percent passing 75 microns. The resulting pulps were analysed using a variety of methods which included multi acid digest with ICP-OES determination for Cu and fire assay with ICP-OES or ICP-MS finish for Au (40g or 25g charge). Sub-sampling, sample preparation, assay methods and assay quality are discussed in the criterion Sub-sampling techniques and sample preparation below.

Drilling techniques

Drill holes were diamond cored from surface using a combination of PQ, HQ and NQ2 core sizes with the exception of DD13KMS024 which used some mud-rotary drilling in the cover. Holes were inclined and core was oriented using an ACT core orientation tool, with the exception of DD13KMS024 which was vertical and not oriented.

Drill sample recovery

Length-based core recovery was measured from reassembled core for every drill run. The data were recorded in a SQL Server database via a GBIS front end. Average core recovery was high with more than 99 percent recovered through the mineralised zone.

The style of mineralisation and drilling methods employed lead to very high sample recovery, so no further effort was considered necessary to increase core recovery.

Scatterplots of grade and core recovery do not suggest any relationship. The very high core recovery means that any effect of such losses would be negligible if such a relationship were to exist.

Logging All core samples were geologically logged by geologists and are considered to have been logged in appropriate detail to support Mineral Resource estimation, mining studies and metallurgical studies. Basic geotechnical logging of RQD was completed by field technicians. Detailed geotechnical logging was completed by geologists on five holes (7,707 metres).

Core logs were qualitative and quantitative in nature. Lithology and alteration were logged qualitatively; mineralisation, structure and geotechnical data were logged quantitatively. Core was photographed both dry and wet after metre marking and orientation.

All recovered core in the mineralised zone (17,493 metres, 100 percent) was logged.

Sub-sampling techniques and sample

All sampled core was cut with an automatic core saw in a consistent way that preserved the bottom of hole reference line, where present. Half core was used for normal sampling and quarter core for field duplicates. Samples were mostly


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Criteria Comments preparation

1 metre in length, but also ranged from 0.5 metre to 1.5 metre if adjusted to geological or major alteration boundaries.

Only core samples were used in basement.

Sample preparation included drying, crushing, and pulverising in full to a nominal 90 percent passing 75 microns. This is considered industry standard for this style of mineralisation.

Controlled copies of SOPs (Standard Operating Procedures) and sign-offs exist for all sampling steps, and all staff were adequately trained in these. Checks were made by geologists on sampling prior to loading data into database.

Sample representativity was assured by taking field duplicates, lab coarse crush, and pulp duplicates every 50 samples. Sizing data was collected for one in every 40 pulverised samples by the laboratory analysing the samples. Analysis of these results indicates that the sampling is representative.

Analysis of duplicate data from a variety of scales, from quarter core to crushed core to pulp duplicates, indicates the sample sizes are appropriate to the grain size of the material being sampled.

Quality of assay data and laboratory tests

Two laboratories were used for analysis: Bureau Veritas Adelaide (for 14,697 metres or 84 percent of samples in the mineralised zone) and Intertek Genalysis Adelaide (for 2,796 metres or 16 oercent of samples in the mineralised zone). Copper grades at both laboratories were determined using a multi-acid digest with ICP-OES finish. Gold grades were determined by 40g fire assay with ICP-OES finish (Bureau Veritas) or by 25g fire assay with ICP-MS finish (Intertek Genalysis). Samples were analysed for a suite of 57 elements (Bureau Veritas) or 59 elements (Intertek Genalysis) using a combination of multi-acid digest, borate fusion and fire assay with ICP-OES and ICP-MS finishes. In addition to this, for samples analysed by Bureau Veritas, fluorine was analysed for one in every four samples using fusion and selective ion electrode.

The techniques are considered to be total for all relevant elements, with the exception of sulphur which is considered to be near-total. Review of QAQC results confirms that the quality of the data is acceptable.

Geophysical measurements of magnetic susceptibility and radioactivity were taken on drill core but these data have not been used to determine any element concentrations.

Assay data quality was monitored through submission of certified standards and blanks every 25 samples, quarter core field duplicates and lab coarse crush and pulp duplicates every 50 samples. Analysis of results from these samples showed that levels of bias, precision and contamination are within limits that are considered acceptable.

Minor differences exist in the accuracy and precision of data between laboratories, but the differences are not considered to be significant, and the results are considered to be acceptable.

Verification of sampling and assaying

Documented verification of significant intervals by independent personnel has not been done, however the mineralisation is not dominated by any one significant intersection and the tenor of Cu is visually predictable.

No twin holes have been drilled because the focus to date has been on defining the limits of the mineralisation. However, some drill holes were wedged, providing


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Criteria Comments some closely-spaced data between drill holes.

Primary data is stored both in its source electronic form, and, where applicable, on paper. Assay data is retained in both the original certificate (.pdf) form, where available, and the text files received from the laboratory. Data entry, validation and storage are discussed in the database integrity criterion in the section on Estimation and Reporting of Mineral Resources below.

Where assay results are below detection limit, a value of half the detection limit has been used. No other adjustments were made to assay data used in this estimate.

Location of data points

All collar locations were determined by DGPS.

All drill holes had magnetic down hole surveys taken at nominal 30 metre intervals using digital Reflex EZ-Trac equipment. Completed holes were gyro surveyed using a conventional Reflex Gyro tool. The collar reference azimuth for most holes was calculated using a "best-fit" with EZ-Trac (magnetic) surveys in non-magnetic ground in the cover sequence. To minimise the effect of drift of azimuth measurements with the conventional gyro, an average of multiple runs was normally used, typically four runs. Two holes were partially surveyed by ABIM Solutions Pty Ltd using a north-seeking gyroscope. The difference in interpreted volume of mineralisation due to drill hole position uncertainty is considered to be immaterial for the purpose of reporting Mineral Resources.

The grid is MGA94 zone 53. Local elevations have been used, where 5000mRL is equal to Australian Height Datum.

A DTM was flown by OZ Minerals in April 2012. Differences between the 2012 DTM and the DGPS collar pickups (±2.4 metres maximum difference) were not considered to be material for the estimated Mineral Resource.

Data spacing and distribution

No Exploration Results are reported in this statement.

Drill holes at Khamsin were drilled in a variety of directions and the spacing between holes is not uniform. Drill hole locations are shown in Figure 2.

Within basement, holes were mostly spaced at approximately 100 metres within the mineralised zone at depths above 3900mRL (up to 1200 metres below surface). Below 3900mRL and at the margins of the mineralisation, spacing varies but is generally wider than 100 metres.

The data spacing and distribution is considered sufficient to establish geological and grade continuity appropriate for the Mineral Resource estimation and classification.

Compositing of samples to 4 metre lengths is discussed in Estimation and modelling techniques, below. No physical compositing of samples has occurred.

Orientation of data in relation to geological structure

At Khamsin, a variety of drill hole orientations have been used to minimise the possibility of bias being introduced by drill hole orientation. The interpreted shape of the mineralisation is a massive body with localised high grade sub-vertical and shallow-dipping zones. Within the low-Cu-grade zone that makes up the bulk of the Mineral Resource, the mineralisation does not seem to be particularly anisotropic in either its texture or Cu grade. Some uncertainty exists in the interpreted shape of some high-Cu domains, and the direction of drilling may have influenced the interpreted position of some domain boundaries, but these high-Cu domains make up a relatively small part of the Mineral Resource.


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Criteria Comments The orientations of drill holes are sufficiently varied that drilling orientation is not considered to have introduced a significant sampling bias.

Sample security Samples were sent via road transport from Carrapateena Exploration Site to the laboratories in Adelaide. Despatches listing samples were sent electronically to the laboratory. Any discrepancy between listed and received samples was communicated back to site staff for resolution.

Audits or reviews An external audit of Bureau Veritas Adelaide laboratory was undertaken by ioGlobal in October 2012. OZ Minerals geologists conducted two inspections of Bureau Veritas Adelaide during 2013. Minor issues were noted on both the audit and inspections but were not considered to be material overall.

Drilling and core processing at Khamsin are conducted using the same facilities and protocols as for the Carrapateena deposit. AMC Consultants Pty Ltd undertook a review of the data collection and sampling procedures during an audit of the Carrapateena Mineral Resource estimate between 30 September and 3 October 2013. AMC formed the view that the data collection procedures were industry standard practice, with the exception of the monitoring of the quality control samples, which did not appear to be being undertaken on a batch by batch and continuous basis. OZ Minerals accepts AMC’s view, but does not believe that this issue has had a material effect on the quality of the data, as the systematic monitoring of quality control samples occurred on a periodic basis prior to modelling in any case.


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Section 2 Reporting of Exploration Results

Criteria Comments Mineral tenement and land tenure status

The Khamsin deposit is located in South Australia in Exploration Licence 4903 which is held by OZ Minerals Carrapateena Pty Ltd(34%) and OZM Carrapateena Pty Ltd(66%), both wholly owned subsidiaries of OZ Minerals Limited.

The tenement sits within the Kokatha Uwankara Native Title Claim.

EL4903 is currently in good standing. No known impediments exist to obtaining a licence to operate in the area.

Exploration done by other parties

From 1977 to 1983, Carpentaria Exploration Co Pty Ltd and Australian Selection Pty Ltd drilled several holes on gravity and/or aeromagnetic highs at a prospect named Salt Creek, near the Khamsin deposit, and intersected granite and hematite altered granite breccia. In 2007 under a joint venture between RMG Services Pty Ltd and Teck Cominco Australia Pty Ltd, two holes were drilled on the eastern and northern margin of the Khamsin Prospect. They intersected altered granite and hematite altered granite breccia but failed to intersect significant mineralisation.

Data from historical drill holes have guided the geological interpretation but have not directly affected the estimated Mineral Resource because the drill holes do not intersect any modelled mineralised domains.

Geology The Khamsin Prospect is located within the Olympic copper gold (Cu-Au) Province on the eastern edge of the Gawler Craton. It is hosted within Donington Suite granite and is unconformably overlain by approximately 460m to 680m of Mesoproterozoic and Neoproterozoic sediments. Mineralisation and alteration is in the form of that seen at other large South Australian iron oxide copper gold (IOCG) deposits including Prominent Hill, Carrapateena and Olympic Dam.

Drill hole Information

No Exploration Results have been reported in this release, therefore there is no drill hole information to report. This criterion is not relevant to this report on Mineral Resources.

Data aggregation methods

No Exploration Results have been reported in this release, therefore there are no drill hole intercepts to report. This criterion is not relevant to this report on Mineral Resources.

Relationship between mineralisation widths and intercept lengths

No Exploration Results have been reported in this release, therefore there are no drill hole intercepts to report. This criterion is not relevant to this report on Mineral Resources.

Diagrams No Exploration Results have been reported in this release, therefore no exploration diagrams have been produced. This criterion is not relevant to this report on Mineral Resources.

Balanced reporting

No Exploration Results have been reported in this release. This criterion is not relevant to this report on Mineral Resources.

Other substantive exploration data

No Exploration Results have been reported in this release. This criterion is not relevant to this report on Mineral Resources.

Further work Further drilling this year will be aimed at infilling areas with limited data to increase the confidence in location of mineralisation boundaries and in grade


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Criteria Comments continuity. Further drilling at Khamsin will be then put on hold while ongoing pre-feasibility studies on the Carrapateena deposit are finalised. Further geophysical surveys are proposed at Khamsin to enable potential imaging of basement hematite zones that have not been adequately drill tested.


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Section 3 Estimation and Reporting of Mineral Resources

Criteria Comments

Database integrity Data is stored in a SQL Server database and is entered via a GBIS front end. Assay data were loaded from text files supplied by the laboratory directly into the database without manual transcription. Core logging was directly into the database using Toughbooks. Automated data capture was used for weight measurements for density determination. Core length measurements for recovery were made on paper prior to entry into the database. Whenever records are added or modified, the database records the time, date and the identity of the user entering or changing the data. Different user profiles and security settings exist to minimise the possibility of inadvertent modification of data.

Lookup codes are used to ensure consistency of the way data are recorded and for maintaining referential integrity of the database. Assay and density data were reviewed visually for reasonableness and also through using statistical plots. Outliers identified were investigated and corrected as required.

Site visits The Competent Person visited Carrapateena site three times during the period in which drilling at the Khamsin prospect was in progress. The Competent Person found the protocols and practices relating to all stages of resource definition to be acceptable. The Competent Person did not find any issues that would materially affect the Mineral Resource estimate.

Geological interpretation

Confidence in the geological interpretation varies locally, and is dependent on the spacing of drilling as well as the continuity of mineralisation, both of which vary throughout the deposit. Within the main mineralised zone, confidence in the overall continuity of geology and mineralisation is considered to be good. The western margin of the Mineral Resource is somewhat complex and some uncertainty exists regarding the position and orientation of domain boundaries west of 729,160mE. This western zone comprises 13% of the estimated Mineral Resource. Confidence in the geological interpretation, including the material west of 729,160mE, is considered to be sufficient for classification as an Inferred Mineral Resource.

The geological interpretation was based on drill core data, including geochemical data, core logs and photos.

The geological model is interpreted to be a massive breccia body dipping to the north-northeast. Within the breccia body, high-Cu-grade zones are interpreted to be associated increased amounts of hematite, or with zones of bornite-chalcocite mineralisation adjacent to zones apparently leached of Cu on the upper and western margins of the deposit. Copper sulphides may be disseminated or clast-hosted, depending on the location. The deposit is surrounded by altered granite and some dykes, and overlain by unmineralised sediments.

Alternative interpretations could be used to constrain Cu grade estimation differently within the breccia body, which could alter estimated block grade distributions, or it could alter the boundaries of the interpreted mineralisation somewhat. Because no cut-off grade has been applied within the Mineral Resource volume, the effect of any change to local block grade distribution on the total estimated Mineral Resource is likely to be small.


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Criteria Comments

The use of geology in guiding and controlling Mineral Resource estimation is discussed in the Estimation and modelling techniques criterion below.

Continuity of Cu grade is influenced by whether the Cu sulphides are disseminated in a dominantly hematite matrix (better grade continuity), or in clasts or veins (poorer grade continuity). Cu sulphide speciation is also relevant, with zones of bornite mineralisation typically having poorer grade continuity (but higher Cu grades) than chalcopyrite mineralisation. At a large scale, geology (breccia characteristics) within the breccia body appears to be more continuous in zones where siderite is the dominant iron-containing mineral, and less continuous in zones where hematite is dominant.

Dimensions The maximum extents of the Mineral Resource are 720 metres (ESE, along strike) x 390 metres (NNE) x 480 metres (Z). The mineralisation extends beyond these limits to the southeast and at depth but the material outside these limits has been excluded from the Mineral Resource at this time. The deposit at a large scale appears to dip to the north-northeast. The topographic surface over the mineralisation is at approximately 5,075mRL. The depths from surface to the upper and lower limits of the Mineral Resource are approximately 635 metres and 1,115 metres respectively.

Estimation and modelling techniques

Domain definition used a combination of assay data and geology, taking into consideration the characteristics of the breccia, the mineralogy of Cu and Fe minerals, alteration mineralogy, Cu grades and major element grades. Lithological domains include the Khamsin Breccia Complex, high-hematite zones within the Khamsin Breccia Complex, granite, dykes and cover. Mineralisation domains were derived primarily from the lithological domains but modified for the presence of leached zones and differences in copper sulphide mineralogy and grade. Mineralisation domains were used for the estimation of Cu, Au, Ag, U, Co, S and Ba. Lithological domains were used for the estimation of SG, F and major rock-forming elements. The mineralisation domains relevant for the estimated Mineral Resource (including the percent contribution of each domain to the total Mineral Resource tonnage and contained Cu metal tonnage) are:

• Main breccia zone, mostly chalcopyrite mineralisation (79%, 65%) • Eastern high-hematite zone with chalcopyrite (2%, 5%) • Western high-hematite zone with chalcopyrite (3%, 5%) • Western bornite zone (3%, 5%) • Upper bornite zone (10%, 19%) • Western leached zone (4%, 1%) Domain boundaries were treated as hard boundaries for the estimation of all variables. Domain wireframes were constructed using a series of surfaces. Cross-sectional interpretation was not the primary method of wireframe construction due to the irregular drill pattern.

Estimation used Ordinary Kriging. Samples were composited to 4m. Variographic analysis was done using Snowden Supervisor. Domain construction and block model estimation was done using Maptek Vulcan. Up to three search and estimation passes were used. The first pass used search radii equivalent to 100 percent of the modelled variogram ranges. The second pass used twice the modelled variogram ranges. The first (second) pass used a minimum of 6 (3) composites and a maximum of 24 (24) composites. The first pass allowed a


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Criteria Comments

maximum of only 18 composites from a single drill hole, to reduce the number of blocks estimated using composites from only one hole. No octant search was used. The third pass assigned the median composite grade for the relevant domain to unestimated blocks. Of the blocks within the reported Mineral Resource, 99 percent were estimated for Cu on the first pass and the remaining 1 percent were estimated on the second pass.

Extrapolated material has been excluded from the Mineral Resource by the application of a bounding shape. Blocks falling outside a tetrahedron defined by four samples within the breccia complex are considered to be extrapolated. Consequently none of the Inferred Mineral Resource is considered to be extrapolated.

The filename of the block model from which the estimated Mineral Resource has been reported is kh_2014_ok_021.bmf.

Check estimates were created using the nearest neighbour and inverse distance squared methods. The inverse distance squared model agreed quite closely with the Ordinary Kriging model. The nearest neighbour model had a significantly different block grade distribution relative to the Ordinary Kriging model, as was expected for the nearest neighbour method given the impact non-uniform data spacing can have on this method and other differences between the two methods.

There has been no historical mine production from the Khamsin deposit.

The current assumption is that revenue will only be obtained from Cu, Au and Ag.

Grades were estimated independently for Cu, Au, Ag, U, F, Fe, SG (as measured), and weight loss on drying. Sulphur, Co and Ba were also estimated using the same parameters as Cu to ensure that the same composites were used with the same Kriging weights as for Cu, because the purpose of estimating these elements was to distinguish the sulphide/sulphate mineralogy. Silicon, Al, K, Mg, and Mn were estimated using the same Kriging weights as Fe.

The block size is 40x40x40 metres. The block size was chosen as being appropriate for the drill hole spacing of approximately 100 metres or more, while still providing an adequate representation of the domain volumes. The first pass search ellipsoid for estimation of blocks in the main mineralised domain is 240x160x160 metres, and for other domains is smaller than this. The block size is considered to be appropriate for the search radii.

Block caving is a bulk mining method and so no selectivity has been assumed within the volume of the Mineral Resource. Within this volume, all blocks have been included, regardless of grade.

Strong correlations exist between some variables. Variables have been estimated independently. Other than F, all variables estimated are fully assayed and estimated using similar domains, methods and parameters, meaning that the data assists to preserve any correlation between the variables at the block scale.

Geological interpretation guided the selection of domains, along with exploratory data analysis. The absence of potassic feldspars was used to define the limits of the Cu-mineralised domains of the Khamsin Breccia Complex, although some Cu mineralisation does exist beyond this. Copper sulphides are typically most abundant in zones of hematite. High-hematite zones were used to constrain


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Criteria Comments

zones of high Cu and Au grades where chalcopyrite is the dominant copper sulphide. The zonation of iron-containing minerals including hematite, siderite, magnetite and chlorite has guided the interpretation of the orientation of high-hematite zones. Bornite zones on the upper and western margin of the deposit were used to constrain zones having locally high Cu and Ag grades. The position of leached zones, lacking significant Cu but still having elevated Au, has guided the interpreted position of bornite zones.

Very high-grade composites were restricted (with a “high yield limit”) in their influence to the limit of the pass one search (and variogram) range. The threshold, if any, for outlier restrictions was assessed independently for each variable for each domain and depended on the grade distribution. Copper grade distribution was not highly skewed and the high yield limit was applied to approximately 0.3 percent of the composites for the main mineralised domain. Deleterious elements and major rock-forming elements were not subjected to high grade limits. Grade capping or cutting was not considered necessary based on a review of composite grade distributions which show very few outliers.

Estimates were validated by: visual validation in 3D; checks including that all blocks are filled, that block grades match sample grades logically, that artefacts are not excessive given the choice of search parameters, and visual assessment of relative degree of smoothing.

Statistical validation by: comparison of input versus output grades globally; semi-local checks using swath plots to check for reproduction of grade trends.

Moisture Tonnages are estimated on a dry basis. Although core recovery is very high (>99 percent) and core is competent and of very low porosity, a small moisture adjustment has been made to measured SG when calculating dry density. Received and dried sample weight measurements were taken at the laboratory during sample preparation. The percentage difference (weight loss on drying) has been treated as a separate variable for estimation. The dry density from which tonnages were estimated was calculated for each block after correcting for the estimated weight loss on drying. Estimated weight loss on drying averaged 0.4 percent.

Cut-off parameters

Block caving has been identified as a plausible mining method for Khamsin. Estimated total operating costs, inclusive of mining, processing and site G&A, for block caving are A$23 per tonne. This corresponds to a cut-off grade of about 0.3 percent Cu including gold credits. Within the Mineral Resource volume, no cut-off grade has been applied because of the non-selective nature of this mining method.

Mining factors or assumptions

No geotechnical studies have been carried out at this time. The rock mass at Khamsin is somewhat massive, but the dimensions of the Mineral Resource are sufficiently large (footprint 181,600m2) that it has been assumed that it will cave. Cave behaviour at Khamsin is expected to be similar to the nearby Carrapateena deposit, for which preliminary geotechnical studies have indicated that it will cave but that fragmentation early in the mine life is likely to be coarse. Pre-conditioning by hydro-fracturing and blasting may be used to improve fragmentation and hence the build-up in mine production. Sediments which overlie the mineralisation will fragment more finely and contribute dilution to the caved mass. Dilution will increase as the caved mass is drawn down.


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Criteria Comments

Metallurgical factors or assumptions

Metallurgical test work conducted on a single composite sample suggests that Khamsin material is similar in milling and flotation properties to Carrapateena material, and could be processed by a conventional crushing, grinding and flotation circuit. Copper recoveries of 90 percent at 35 percent copper in concentrate and gold recoveries of 75 percent with 10g/t in concentrate were achieved to date in the test work which are compatible with more detailed test work outputs from Carrapateena.

Environmental factors or assumptions

The Khamsin deposit is located on the same Retention Lease as the Carrapateena deposit. Retention Lease 127 has been approved for the development of a decline via Tunnel Boring Machine including the construction of necessary onsite ground water supplies, surface facilities, camps, airstrips, access roads and waste rock storage facilities. Baseline studies commenced as a part of the development of the Retention Lease proposal and have been continued since granting of the lease expanding the regional knowledge for any future approvals work. Areas for focussed studies have included, but not been limited to, groundwater, surface water, flora, fauna, social aspects and air quality and radiation.

The incorporation of the Khamsin deposit into the Carrapateena project ,as being defined by the prefeasibility study, may change some of the configuration and layout of planned infrastructure, but is not expected to present substantially different environmental challenges from the Carrapateena deposit.

Bulk density The water immersion method was used for density determination. In basement, density was determined for the entire length of every metre for NQ2 core, or a representative sample from every metre of HQ or PQ core.

OZ Minerals routinely repeated measurements and also had 2 standards each made of aluminium and titanium alloy for QAQC purposes.

The mineralised material is not significantly porous. Moisture has been estimated as described in the Moisture criterion in this table.

The lithological domains were considered to be suitable for use as domains for density estimation.

Classification The basis for Mineral Resource classification is underpinned by the robustness of the conceptual geological model, quality of data and the continuity of geology and grade relative to the arrangement of data. OZ Minerals provided advice to the Competent Person relating to: the quality of the data and the confidence in the interpretations of geology and mineralisation; the quality of the estimation of grades and density, including, but not limited to, the number of composites, slope of regression, sum of negative weights and weight of the mean for each block estimate; those parts of the model which are likely to satisfy the ‘reasonable prospects test’ on the basis of having sufficient grade within a plausibly caveable shape; and the differentiation of estimates based on interpolation and extrapolation. The Competent Person has checked, reviewed and integrated all of this information and subsequently: assigned a classification of Inferred Mineral Resources to the estimates; and excluded parts of the model that do not to satisfy the ‘reasonable prospects test’ from the Mineral Resource.

Appropriate account has been taken of all relevant factors (i.e. relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of


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Criteria Comments

geology and metal values, quality, quantity and distribution of the data)

The result appropriately reflects the Competent Person’s view of the deposit. Audits or reviews. The Khamsin Mineral Resource estimate has not been audited. Whilst the

modelling and estimation have been undertaken by OZ Minerals geologists the Competent Person has provided guidance to OZ Minerals on all relevant matters and reviewed the results.

Discussion of relative accuracy / confidence.

Accuracy and confidence level of the Mineral Resource is deemed to be commensurate with that implied by the Inferred classification. The quality of the variogram models varied between domains, and for the smaller domains variogram ranges and sills were in some cases assumed based on domain geometry rather than derived from experimental variogram data. Any geostatistical assessment of accuracy or confidence should be considered in this context. Nevertheless, geostatistical estimation performance variables including slope of regression were reviewed and taken into consideration when assessing accuracy and confidence.

The estimated Mineral Resource is intended as a global estimate, but constrained to a volume within which there are considered to be reasonable prospects of eventual economic extraction. Several constraining volumes around the expected economic cut-off grade of 0.3 percent Cu were designed but the reported Mineral Resources do not relate to the highest-tonnage design. The estimation parameters chosen were a compromise between providing a block model which to some extent honours the grade distribution of the source data, such that grades are not excessively smoothed, while at the same time providing an acceptable quality of estimation at a block (local) scale.

There has been no production from the Khamsin deposit for comparison with the estimated Mineral Resource.


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Competent Person Statement

The information in this report that relates to Mineral Resources is based on and fairly represents information compiled by Stuart Masters, a Competent Person who is a Member of The Australasian Institute of Mining and Metallurgy (108534) and a Member of the Australian Institute of Geoscientists (5683). Stuart Masters is a full time employee of CS-2 Pty Ltd and has no interest in, and is entirely independent of, OZ Minerals. Stuart Masters has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC 2012). Stuart Masters consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Stuart Masters CS-2 Pty Ltd

Contributors

• Overall − Stuart Masters, CS-2 Pty Ltd

• Data Quality & Geological Interpretation − Ian Anderson, Bruce Whittaker, Mick Sawyer, John de Little, Camla Rochat, Paul Hehuwat,

Ryan Pippy, Mitchell Neumann, Melanie Middleton, Jorge Benavides, OZ Minerals • Estimation

− Bruce Whittaker, OZ Minerals

Stuart Masters is solely responsible for Mineral Resource classification but has relied on, and checked and reviewed, data and advice from OZ Minerals’ geologists regarding data quality, interpretation and estimation.

26 may 2014 asx release - oz minerals · 5/26/2014 · looking west . isometric, looking northwest...

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