Havilah Resources : Quarterly Activities/Appendix 5B Cash Flow Report

ASX MEDIA RELEASE

30 May 2022	ABN 39 077 435 520

For personal use only

Havilah Resources Limited (Havilah or the Company) (ASX: HAV) is pleased to present its Activity Report for the 3 months ended 30 April 2022 (quarter).

Significant Events for the Quarter

• Senior management activities were focused on finalising the terms of the Proposed Transaction (Kalkaroo Option and Strategic Alliance) with OZ Minerals Limited (ASX: OZL), which was announced subsequent to the end of the quarter.
• The revised West Kalkaroo gold open pit (West Kalkaroo) PEPR document was essentially completed but will not be re-submitted to DEM at this time in light of the Proposed Transaction.
• Evaluation of existing geological, geophysical and geochemical data for the Mutooroo Project Area has identified many robust copper-cobalt exploration targets that will be followed up during 2022.
• Commencement of 2022 resource expansion drilling program at the Mutooroo copper-cobalt deposit.
• Planning and logistical preparations are in hand for additional shallow reverse circulation drilling program at the Grants Basin and Grants iron ore projects.
• Interim Financial Report for the financial half-year ended 31 January 2022 was released.

Advanced Project Activities

Kalkaroo Copper-Gold-Cobalt Project (HAV 100% ownership)

Subsequent to the end of the quarter, Havilah announced that it had signed a conditional binding Terms Sheet with OZ Minerals Limited (OZ Minerals) in relation to a Proposed Transaction comprising an up to 18 month option to purchase the Kalkaroo copper-gold project (Kalkaroo Option) and for a Strategic Alliance in the copper-rich Curnamona Province of northeastern South Australia (refer to ASX announcement of 17 May 2022) (Figures 1 & 2). The intention is that OZ Minerals will apply its expertise and innovative approaches to unlock value in Kalkaroo during the Study Program, while providing Havilah the opportunity to apply its extensive exploration experience across its large tenement holding to identify new copper deposits. The full executed Terms Sheet is attached in Appendix 1 to the above announcement.

Overall, the Proposed Transaction could provide substantial benefits for Havilah shareholders over time, as summarised in the following chart.

Figure 1 Summary chart of two main pillars of the Proposed Transaction and the possible benefits that could flow to Havilah, subject to shareholder approval of the Kalkaroo Transaction and exercise of the Kalkaroo Option by OZ Minerals.

Havilah Resources Limited Activity Report for the 3 Months Ended 30 April 2022

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The Board's view on the Proposed Transaction was summarised by the comments of Havilah's Technical Director, Dr Chris Giles:

"Exercise of the Kalkaroo Option by OZ Minerals would result in monetisation of Kalkaroo and provide what we believe is a fair return for our shareholders without Havilah taking on the longer-term development and financing risks inherent in a large new mining project at this time.

"Funding provided under the Strategic Alliance would allow us to accelerate exploration for new copper deposits in the region that could potentially be additive to Kalkaroo, as well as advancing our other promising mineral projects south of the Barrier Highway.

"We see the Proposed Transaction as the first important step in our strategy of realising the value of Havilah's multi-commodity minerals portfolio by either production, sale or farm-out with suitable well-funded partners, as stated in the Letter from the Board of Directors in the 2021 Annual Report."

Havilah will seek shareholder approval for the grant and exercise of the Kalkaroo Option (Kalkaroo Transaction) at a Shareholder Meeting, planned to be held during August 2022 (subject to any agreed extension). Notice of meeting documents will be provided to shareholders ahead of the Shareholder Meeting.

The Proposed Transaction is conditional on Havilah shareholder approval of the Kalkaroo Transaction within 90 days from signing the Terms Sheet, an independent expert appointment and opinion that the Kalkaroo Transaction is in the best interests of Havilah shareholders, entry into formal definitive binding agreements based on the Terms Sheet, and none of the Havilah Board members changing their recommendation or voting intention.

The Directors unanimously recommend the Kalkaroo Transaction to Havilah shareholders and it is their intention to vote all shares they hold or control in favour of the Kalkaroo Transaction, in the absence of a Superior Proposal and subject to the independent expert opining that the Kalkaroo Transaction is in the best interests of shareholders.

During the quarter the revised Program for Environment Protection and Rehabilitation (PEPR) document required for the Department for Energy and Mining (DEM) West Kalkaroo permitting approval was essentially completed. In light of the Proposed Transaction, the PEPR document will not be re-submitted to DEM as planned, pending the results of the OZ Minerals Study Program and whether it decides to exercise the Kalkaroo Option.

About the Kalkaroo copper-gold-cobalt project

Havilah's 100% owned Kalkaroo copper-gold-cobalt deposit contains JORC Mineral Resources of 1.1 million tonnes of copper, 3.1 million ounces of gold and 23,200 tonnes of cobalt. It has an open pit JORC Ore Reserve of 100.1 million tonnes of which 90% is in the Proved category (see JORC tables below). Kalkaroo is one of the largest undeveloped open pit copper-gold deposits in Australia.

Havilah has secured the required mining permits for the Kalkaroo project (Mining Leases and Miscellaneous Purposes Licences). It also owns the surrounding Kalkaroo Station pastoral lease, a non-mineral asset on which the Kalkaroo project is located, thus reducing land access risks for the project.

Kalkaroo is projected to be a future source of ethically produced metals vital to modern society, operating under industry best practice ESG (Environmental, Social and Governance) regulations that are mandatory in South Australia. ESG credentials for Kalkaroo can be found on the Company's website.

Rare Earth Element ('REE') Potential at Kalkaroo Project

During the past 2 years Havilah has completed a considerable amount of research on the recovery of REE metals from the West Kalkaroo saprolite gold ore in collaboration with the Future Industries Institute at the University of South Australia. Bastnasite, a REE carbonate-fluoride mineral, has been identified as the primary REE host in West Kalkaroo oxidised copper-gold ore samples (refer to ASX announcement of 3 November 2020). Ongoing laboratory work has focused on how best to integrate bastnasite recovery into the oxidised ore processing flow sheet. Pilot scale separation equipment was set up to facilitate key testwork to address this question. Results to date provide grounds for cautious optimism that a recovery path can be defined that could allow potentially significant revenue to be generated from a REE by-product.

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Figure 2 Location of the Kalkaroo project and the Strategic Alliance Area of Interest exploration licences, currently owned 100% by Havilah. The Curnamona Copperbelt is the primary exploration objective of the Strategic Alliance.

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Mutooroo Copper-Cobalt-Gold Project (HAV 100% ownership)

Mutooroo is Havilah's second advanced stage copper-cobalt project that is located within commuting distance of Broken Hill, and 16 km south of the Transcontinental railway line and Barrier Highway. It contains 195,000 tonnes of copper, 20,200 tonnes of cobalt and 82,100 ounces of gold in Measured, Indicated and Inferred JORC Mineral Resources (see JORC table below). As such, Mutooroo is one of the largest and highest-grade sulphide cobalt deposits associated with copper in Australia. Mutooroo and the surrounding tenements are excluded from the Proposed Transaction with OZ Minerals.

It is proposed to use a portion of the funding under the Strategic Alliance to advance the pre-feasibility study (PFS) on the Mutooroo project, based on current JORC Measured Resources, initially from an open cut mine that transitions to a longer-term underground mining operation.

The primary objective of the current Mutooroo drilling campaign is testing for shallow, open pit copper-cobalt sulphide resources along strike from the existing Mutooroo resource and conceptual open pit design and below the shallow oxidised copper ore that was exploited via several historic mine shafts (Figure 3).

Figure 3 Mutooroo mine long section showing the locations of recent drilling intersections (yellow stars). Drilling currently in progress, is planned to advance progressively southwards at similar depths towards the current Measured Resource and conceptual open pit design (brown).

Grants Basin, Maldorky and Grants Iron Ore Projects (HAV 100% ownership)

Havilah has previously reported an iron ore Exploration Target* at Grants Basin of 3.5-3.8 billion tonnes of 24- 28% iron (refer to ASX announcement of 5 April 2019). The western end of this Exploration Target crops out as a solid body of iron ore at least 270 metres thick from surface.

Havilah plans to implement a shallow reverse circulation (RC) resource delineation drilling program that is designed to convert a portion of the western end Exploration Target to a maiden JORC Mineral Resource, initially targeting at least 0.5 billion tonnes of iron ore. This drilling is planned to commence immediately upon completion of the current Mutooroo drilling.

• Note that the potential quantity and grade of the Exploration Target is conceptual in nature, there has been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource.

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Figure 4 A several thousand metre shallow RC drilling program is planned at the western end of the Grants Basin with the objective of defining a maiden JORC iron ore resource that can form the basis for a mining scoping study. Additional RC drillholes are also proposed to improve confidence in the existing Grants iron ore resource and elevate it to JORC Indicated classification (if feasible).

Exploration Project Activities

One of the Company's important assets is its ~16,000 km2 under-explored tenement holding in the Curnamona Province, that is prospective for a variety of commodities including several strategic and critical minerals such as copper, cobalt, molybdenum, rare earth elements, tin and tungsten. Exploration for new economic discoveries leveraging off Havilah's large prospective tenement holding and utilising the Company's extensive knowledge base is a key objective.

Despite hosting the giant lead-zinc-silver ore deposit at Broken Hill, much of the South Australian portion of the Curnamona Province is under-explored due to extensive sedimentary cover. The geological similarity of the Curnamona Province to the eastern Gawler Craton and the Mount Isa-Cloncurry Block indicates similar prospectivity for major ore deposits. Accordingly, a key Board objective is to maintain an active program of exploration work on projects and prospects that have the most potential for new discoveries. This objective would be greatly assisted by the Strategic Alliance funding under the Proposed Transaction with OZ Minerals.

Mutooroo Project Area (HAV 100% ownership)

Havilah's exploration strategy is to discover additional copper-cobalt-gold resources in the Mutooroo Project Area (MPA) that could support a central mining and processing operation centred on the Mutooroo deposit. Havilah aims to systematically explore the MPA, with an experienced exploration geologist presently dedicated to this task.

The MPA is particularly attractive for exploration owing to the generally thin cover, applicability of surface geochemical sampling methods and electrical geophysical methods, plus the excellent logistics in proximity to Broken Hill, the Barrier Highway and Transcontinental railway line. All known prospects are located within trucking distance of the Mutooroo copper-cobalt deposit and the terrain is generally flat.

It is planned to conduct native title heritage surveys over selected drilling sites on several priority prospects including potentially Mingary Mine, Fallout and Green & Gold (Figure 5). This should allow substantial drilling to be completed during 2022.

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