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COPERNICUS NICKEL MINE

The Copernicus Nickel Mine is located in the East Kimberley region of Western Australia approximately 35 kilometres south of the Savannah Nickel Mine. The project is a joint venture between Thundelarra (40%) and Panoramic Resources Ltd (60%).

Mineral Resources & Ore Reserves

Copernicus hosts a resource of 852,000 tonnes grading 1.24% nickel, 97% of which is classified as Measured or Indicated and is situated within 300 metres of the surface.

Copernicus Mineral Resource Estimate (Undiluted, 0.5% Ni Cut-off)

In September 2008, 34 reverse circulation grade control holes totalling 1,821 metres were drilled from the 355 mRL bench to the planned base of the pit at 310 mRL. The deposit was subsequently remodelled in order to more accurately define ore blocks for mining. A comparison of the grade control model with the resource model demonstrated very good correlation. The grade control work indicated a marginally higher ore tonnage and metal content and negligible variation in grade, confirming that no adjustment of the published resource estimate was required.

A Probable Mining Reserve of 784,000 tonnes grading 1.1% nickel has been estimated for a combined open pit and underground development. The reserve incorporates allowances for ore loss and dilution that are considered appropriate for the proposed mining method. The reserve tonnage is included within the reported resource.

Copernicus Probable Mining Reserve
(Open Pit 0.5% Ni Cut-off, Underground 0.8% Ni Cut-off)

The Copernicus resource remains open at depth with limited deep drilling carried out in 2007 intersecting ore grade mineralisation including hole CORC093 which returned 13 metres at 1.84% nickel, 1.03% copper and 0.05% cobalt approximately 400 metres below surface.

Eleven reverse circulation (RC) holes were drilled during the year to further test for down plunge resource extensions. Deviation of the deeper holes was a significant problem and resulted in a number of the holes not intersecting target and the program being terminated before all of the planned 16 holes had been drilled. Six holes intersected significant mineralisation with the best result being 6 metres at 1.59% nickel, 0.81% copper and 0.05% cobalt from hole CORC094.

Project Development

In November 2007 the Copernicus Co-Existence Agreement was signed by the Copernicus Joint Venture partners and the Malarngowem People, Traditional Owners of the Copernicus region. The agreement paved the way for development of the Copernicus deposit to proceed whilst ensuring the values and rights of the Traditional Owners were recognised and respected.

In December 2007 a State Deed was executed with the Western Australian Government which facilitated the granting of the Copernicus Mining Lease on 8 January 2008. Final statutory approvals for open pit mining operations at Copernicus were obtained in May 2008 and construction commenced that month.

The most significant component of predevelopment work at Copernicus was construction of a 23 kilometre long haul road linking the site to Great Northern Highway to enable ore to be hauled to the Savannah plant for processing. This was completed to a very high standard by Riverlea Corporation Pty Ltd.

At Savannah additional accommodation units were installed to accommodate the Copernicus workforce, the ore pad was upgraded to accept road trains and a Guar facility was added to the processing plant by GR Engineering Services Pty Ltd. Guar is a reagent that improves nickel recovery and concentrate quality for Copernicus ore.

Mining Operations

The open pit mining contract for Copernicus was awarded to Brierty Limited with Westdrill Pty Ltd subcontracted for blast hole drilling. Synegex Holdings Pty Ltd were contracted to supply bulk explosives to the project. Open pit mining commenced in July 2008. Mining has progressed well with budgeted productivity levels achieved or exceeded.

Ore processing commenced in November 2008 when a small parcel of transitional (partially oxidised) ore was put through the Savannah plant. Nickel-copper-cobalt concentrate from Copernicus will be hauled by road train to the port of Wyndham from where it will be exported to Jinchuan Nickel in China.

There were no lost time injuries at Copernicus during construction and mining operations to date.

Suspension of Operations

At the time that a commitment to Copernicus was made, statutory approvals were obtained and development commenced, nickel was trading in a price range of US$12 to US$14 per pound. However, shortly after construction got underway the nickel price deteriorated and by November 2008 had fallen to approximately US$4.50 per pound. A weakening Australian dollar aided cash costs at Copernicus, but the cash margin had diminished to the point it was considered prudent to suspend operations and place the mine on care and maintenance.

Industry analysts are forecasting nickel to return to a long term price range at which Copernicus would operate profitably. It is intended to preserve the resource until such time as it can be exploited to generate an acceptable financial return. The mine and associated infrastructure have been fully developed and left in a state that would enable mining to recommence at short notice.