roseby copper project

Roseby Copper Project

Executive Summary

Definitive Feasibility Study

April 2008

Roseby Copper Project Definitive Feasibility Study

Executive Summary

File: 01-01 Roseby Copper DFS - Executive Summary Rev 1 .doc of 38

1 Introduction.............................................................................................................................. 3 1.1 Project Summary Conclusions........................................................................................... 3 1.2 Project Concept.................................................................................................................. 4 1.3 DFS Contributors ............................................................................................................... 5 1.4 Project Location and Existing Infrastructure ..................................................................... 5 1.5 Project Description............................................................................................................. 6 1.6 Land Ownership and Access............................................................................................ 11

1.6.1 Mining Lease Application Process .......................................................................... 14 1.6.2 Mining Lease Applications ...................................................................................... 14 1.6.3 Native Title .............................................................................................................. 16

2 Cashflow and Financial Analysis.......................................................................................... 18 2.1 Revenue............................................................................................................................ 19 2.2 Cashflows and Metrics..................................................................................................... 19 2.3 Capital and Operating Costs ............................................................................................ 20 2.4 Taxation and Royalties .................................................................................................... 21 2.5 Cashflow and KPI Metrics Analysis................................................................................ 22 2.6 Sensitivity Analysis ......................................................................................................... 24 2.7 Risk Analysis ................................................................................................................... 24 2.8 Range Analysis ................................................................................................................ 24 2.9 Probability Analysis......................................................................................................... 26

3 Engineering............................................................................................................................. 27 3.1 Capital Cost...................................................................................................................... 27 3.2 Operating Cost Estimate .................................................................................................. 28

4 Metallurgy .............................................................................................................................. 29 4.1 Copper Recovery ............................................................................................................. 29 4.2 Comminution ................................................................................................................... 30 4.3 Flotation Processing......................................................................................................... 30

5 Geology.................................................................................................................................... 32 5.1 Mineral Resources ........................................................................................................... 32 5.2 Ore Reserves .................................................................................................................... 33 5.3 Tenements ........................................................................................................................ 34

6 Hydrogeology.......................................................................................................................... 36 7 Environmental........................................................................................................................ 38


Executive Summary


1 INTRODUCTION

This report of the Roseby Copper Project (RCP) Definitive Feasibility Study (DFS) is an interdisciplinary collaborative document with most components of the DFS compiled for Universal Resources Limited (URL or Universal) by Como Engineers Pty Ltd (Como) and other independent consultants. Each consultant’s report is included in its entirety and the executive summaries of those reports have been included in this overall Executive Summary of the project.

1.1 Project Summary Conclusions

Based on the assumptions made, and the inputs developed for the Roseby Copper Project during the DFS, the project is:

• Both technically and financially viable.

• Insensitive to capital and operating cost variations.

• Sensitive to copper recovery, copper price and exchange rate.

The “Base Case” model which is derived from forward curve values for exchange rate, copper price and gold price is robust and indicates the following values over an initial minelife of 12.5 years:

• Net cashflow of $715 million.

• Net operating surplus of $1,037 million.

• NPV at 8.5% discount rate of $319 million

• IRR of 36%

• C1 costs of US$1.24 per pound of copper.

• Maximum working capital of $200 million

• Pay back from commencement of production of 2.2 years.

• Breakeven recovered grade of copper of 0.32%.


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• At the DFS recovered grade of copper, the breakeven price for copper, including capital cost, is US$1.92 a pound.

1.2 Project Concept

The following concept was developed by Universal for the RCP and is the basis of this DFS to examine:

• An initial 4 million tonnes per annum (Mtpa) mining and processing operation (Phase 1) with both capital and operating costs estimated to an accuracy of +/-15%;

• Mill feed based on a blend of oxide (native copper) and sulphide ores; • Initial capital costs minimised, with desirable but non-essential items of equipment

installed at a later date and paid for out of operating cash flows; • Accomodation village supplied by a third party on an own and operate basis; • Mining undertaken by contractor; • Power provided from the Mt Isa local area grid via a powerline from Chumvale

(near Cloncurry) to the Plant-site at Roseby; • An estimate of costs based on hired on-site power generation should grid power not

be available on time for commissioning of the plant; • A scoping study, with capital and operating costs estimated to an accuracy of +/-

30%, to be undertaken on the basis of expanding the operation up to approximately 8 Mtpa (Phase 2) following assessment of orebody and operating plant performance in the first six months of operations.

Based on: • Current Mineral Resources and Ore Reserves; • Mining and metallurgical studies undertaken; and • The results of previous feasibility studies of the Project


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1.3 DFS Contributors

The following consultants and individuals have contributed to the DFS:

DISCIPLINE CONSULTANT/COMPANY Geology, drilling and assaying Universal Resources Limited (URL) (M W H Hoyle) Mineral Resource estimations McDonald Speijers Pty Ltd (MS) Ore Reserve estimations Arbitrage Consulting Pty Ltd (Arbitrage) Hydrology and hydrogeology KH Morgan and Associates (KHM) Geotechnical assessment George Orr and Associates (GOA) Mine design Arbitrage Consulting Pty Ltd (Arbitrage) Mine scheduling Cutback Consulting Pty Ltd (Cutback) Metallurgy NeoProTec Pty Ltd (NPT)

Mineral Engineering Technical Services Pty Ltd (METS)

Statistical analysis (recovery algorythm)

Geostats Pty Ltd (Geostats)

Engineering design and cost estimates

Como Engineers Pty Ltd (Como)

Powerline route and costs H M A Consulting (HMAC) Environmental assessment Australasian Resource Consultants Pty Ltd (AARC) Mining Lease approvals URL (M W H Hoyle) Land access and compensation URL (M W H Hoyle) Financial and cashflow modelling

Southern Mining Consultants Pty Ltd (SMC)

1.4 Project Location and Existing Infrastructure

The project is located in north western Queensland, about 65 km north north-west of Cloncurry (76 km by road), a town of about 5,000 inhabitants and about 95 km (194 km by road) from Mt Isa, the regional mining centre, which has about 22,000 inhabitants. Figure 1 shows the project location in relation to other deposits in the region. The Burke Development Road, running north from Cloncurry to Burketown and Normanton on the Gulf of Carpentaria, passes within 10 km to the east of the proposed operations area and is full width and sealed for the entire distance to Cloncurry, where it meets the Barkly Highway running between Townsville and Mt Isa. Cloncurry is located


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on the railway line to Townsville and has container handling facilities, an airport capable of receiving commercial aircraft and a regional fuel depot. Quamby, located approximately 50 kilometres north of Cloncurry on the Burke Development Road, is a tiny hamlet with a roadhouse and a Telstra communications tower. The railway line which used to run south through Quamby to Cloncurry is now a disused easement still owned by Queensland Transport, however, it shows on maps of the area as extant.

Figure 1 Project Location

1.5 Project Description

Over 10 copper deposits are included in the RCP. These are all located within a 25 km north to south corridor. Blackard, Little Eva and Scanlan are the three largest deposits and are the subject of this DFS. Blackard and Scanlan are deposits where the major economic copper species is native copper. These deposits are generally termed “oxide” deposits. Little Eva has a shallow oxide component with only minor economic mineralisation. Its


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major economic copper mineral is chalcopyrite, a sulphide of copper and iron, and is therefore characterised as a “sulphide” deposit. Blackard and Little Eva are located in the northern third of the project area, while Scanlan is located further south. The process plant will be located between the Blackard and Little Eva pits, which are the main sources of ore for the majority of the mine life and to the south of the water pipeline (Figures 2 and 3). The tailings storage facility will be located against the side of the hill immediately behind the plant. An accommodation village will be located to the north of the access road and east of hills separating the village from the operational areas.


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Figure 2 Project Area Tenements


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A general view of the location of the proposed plant site is shown in Figures 3 & 4, in which the view in Figure 4 is from the Green Hills, looking south west towards the Knapdale Range. The water pipeline from Lake Julius to the Ernest Henry mine, owned and operated by SunWater, crosses the lease area from west to east, seen in the foreground of Figure 4. No permanent rivers or streams cross the site. The Dugald River to the east and southwest of the operations area is the major watercourse and flows after rains. Similarly, Cabbage Tree Creek in the northwest also flows after rains. Numerous other minor ephemeral water courses cross the operations area.


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Figure 3 Rose Copper Project General Site Plan


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Figure 4 View of the Proposed Plant Site

1.6 Land Ownership and Access

The area covered by the RCP covers an area of 1,648 sq km held under a variety of titles including EPM’s, ML’s, MDL’s and MF. Five Mining Leases applied for by Universal within the RCP are the subject of this DFS and cover an area of 143 sq km (Figure 5). Access to the site is from the sealed Burke Development Road via a turn-off to an unsealed gravel road running NW to the various copper deposits and the proposed plant site. The current turn-off is located approximately 11 km northerly of Quamby. Future access to the village and plant site will be via a new access road (formed but not sealed) turning to the west off the Burke Development Road from a point just north of the Dugald River crossing. The area has historically been held under various tenures by a number of exploration and mining companies, including CRA Exploration Pty Ltd (CRAE), now part of the Rio Tinto group. The RCP was sold to Pasminco Australia Limited (now Zinifex Limited) in 1998.

Plant Site


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Universal acquired the Project from Zinifex in August 2001 and on-sold a 50% interest to Bolnisi Logistics Pty Ltd (Bolnisi), a wholly owned subsidiary of Bolnisi Gold NL. A two part joint venture was established, but in December 2004 Universal bought Bolnisi from Bolnisi Gold NL, thereby giving Universal an effective 100% ownership of the tenements.


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Figure 5 Mining Lease Applications and Copper Deposits


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CRAE spent over $10 million on exploration and mining studies at Roseby and outlined a total resource base of over 60 million tonnes of primarily native copper mineralisation grading 0.75% copper and 8 million tonnes of mainly sulphide copper-gold mineralisation grading 0.79% copper. Zinifex undertook a modest amount of exploration, including some drilling at the Lady Clayre deposit.

Universal has subsequently carried out an extended drilling programme as part of this DFS. In March 2005, Universal entered into an agreement with Mt Isa Mines Limited (Xstrata Copper) pursuant to which Xstrata Copper may, in certain circumstances, earn into and/or acquire a 51% interest in the RCP.

1.6.1 Mining Lease Application Process

Granting of a Mining Lease commences with the submission of Mining Lease Applications (MLAs) and requires the satisfactory completion of a number of legal processes which are currently well advanced.

1.6.2 Mining Lease Applications

Universal Resources applied to the Department of Natural Resources and Mines on 1 April 2005 for 5 mining leases as detailed in Table 1.

Table 1 Mining Lease Applications

Tenement Number

Tenement Name

Holder Applicant

50/50

Date Applied For

Area Hectares

Area

Sq Km

MLA 90162 Scanlan URL/BOL 01 April 05 2097.0 21.0

MLA 90163 Longamundi URL/BOL 01 April 05 1411.3 14.1

MLA 90164 Blackard URL/BOL 01 April 05 5131.1 51.3

MLA 90165 Little Eva URL/BOL 01 April 05 5030.0 50.3

MLA 90166 Village URL/BOL 01 April 05 616.1 6.2


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The Roseby ore-bodies are situated in MLAs 90162 to 90165 as shown in Figure 5. MLA 90166 has been applied for as the site for infrastructure such as the village. The whole of the Roseby project therefore will be located within these leases including pits, treatment plant and infrastructure, except for the access road from the Burke Development Road. The 5 MLAs total 143 sq km and are situated across 2 pastoral land holdings, these being Roseby Station (belonging to Mr H McMillan) Coolullah Station (belonging to the North Australian Pastoral Company (NAPCO)). In addition to these there are several other lots, easements and reserves.

Roseby Station

All five of the Universal MLAs impact on the Roseby Station pastoral holding. Universal is at an advanced stage of negotiating a package of compensation payments and other matters that would allow mining on the property and would result in the owners not objecting to the ML applications or the grant of the EA. A compensation assessment has been made of the Roseby Station, as summarised in Table 2. However, it is likely the negotiated compensation package will exceed this amount by around $1 million.

Table 2 Roseby Station Compensation Valuation

Item Amount $ Basic compensation per valuation 808,800 Statutory Premium (10%) 80,880 Additional Premium (50%) 404,400 Pastoralists Professional Fees 35,000 Owner’s Time 10,000 Miscellaneous 50,000 Total $1,389,080

Coolullah Station

The mining leases encumber the extreme south eastern corner of Coolullah Station adjacent to the unsealed road to Kajabbi and cover Cabbage Tree creek paddock. Compensation assessment for this station has been estimated on the same basis as the Roseby station as shown in Table 3.


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Table 3 NAPCO Compensation

Item Amount $ Basic compensation per valuation 149,580 Statutory Premium (10%) 14,958 Additional Premium (50%) 22,437 Total $186,975

Lot 37

Lot 37 was part of a deceased estate for which the owners could not be traced. Universal has acquired the title to this lot through an arrangement with the former Lands and Resources Tribunal (LRT) as Trustee of the Lot.

1.6.3 Native Title

Universal successfully negotiated an agreement with the Kalkadoon People whose native title claim area included the area of the MLAs. A deed of the type required under Section 31 of the NTA (Section 31 Deed) and an ancillary agreement were signed by URL and appropriate representatives of the Kalkadoon People on 15 June 2006. The State of Queensland executed the Section 31 Deed on 29 June 2006. Arbitration was not required. The ancillary agreement covers a number of obligations on the part of URL and the Kalkadoon People and sets out the commercial arrangements. The ancillary agreement includes 3 important components of benefit to the Kalkadoon People:

• It provides monetary compensation for the effect of the Mining Leases and the mining lease activities on the native title of the Kalkadoon People.

• It provides a compensation structure for ongoing cultural heritage services.

• It contains a Cultural Heritage Management Plan which defines the protocols for cultural heritage surveys and protection within the lease area.

• It contains a commitment to provide job training and employment opportunities for Kalkadoon People as well as commitments to positively encourage the engagement of Kalkadoon entities in any future mining operations and associated activities at the RCP.


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URL benefits from the arrangements in the following ways: • The Kalkadoon People consent to the grant of the Mining Leases.

• The Kalkadoon People agree and consent to the continued exploration, development, construction and ongoing operation of the RCP.

The execution of the Section 31 Deed and the ancillary agreement and the provision of the documents to the NNTT mean that the native title processes required for the grants of the Mining Leases have been completed.


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2 CASHFLOW AND FINANCIAL ANALYSIS

Three cashflow models have been produced by Southern Mining Consultants at the request of URL; the “Base Case” is based on a forward curve for the price of copper, gold and foreign exchange. The average life of mine price of copper for the forward curve is US$ 2.76 per pound. The “Lowest Price” case has an average life of mine copper price of US$ 2.50. The “Upside Price” case has an average life of mine copper price of US$ 3.50. SMC relied on data inputs from reports provided by various consultants specifically for the Roseby Copper Project to the standard of a definitive feasibility study (DFS) with capital and operating costs estimated to an accuracy of ± 15%. The cashflow model is based on reserves from the Blackard and Scanlan native copper deposits, also referred to as “oxide” copper deposits, and the Little Eva sulphide copper deposit. There are seven additional resources located within the Roseby tenement area that have not yet been converted to Ore Reserve status and therefore not included in the DFS cashflow model.

Ore Reserves, Waste and Strip Ratio

Blackard Scanlan Little Eva Feed Tonnes Ore (Million) 22.854 9.618 15.456 47.927 Tonnes Pre-Strip & Overburden 34.763 8.651 8.044 51.458 Tonnes Waste (Million) 35.188 12.764 48.885 96.837 Strip Ratio (W : O) 1.54 1.33 3.163 2.02 Strip Ratio (W + OB : O) 3.06 2.23 3.68 3.09 Recovered Copper Grade 0.427% 0.442% 0.746% 0.533% Gold Head Grade(g/t) 0.131 g/t 0.042 g/t

The seven satellite resources located within the Roseby tenement area as well as potential to develop resources at the three included mines either along strike or at depth are expected to provide additional feed to extend the mine-life or allow for an increase to the plant throughput. Como has prepared a capital and process operating expenditures and construction programme for a plant to process 4 million tonnes of feed per annum (Mtpa). The ore feed


Executive Summary


that has been scheduled is 2.9 Mtpa oxide ore and 1.1 Mtpa of sulphide ore for a total of 4.0 Mtpa with a scheduled mine-life of 12.45 years. At the feed blend of 72.5% oxide ore and 27.5% sulphide ore the concentrate copper grade is 32.1% which produces 0.804 million tonnes of concentrate. The gold grade of the concentrate is 2.30 grams of gold per tonne. The concentrate contains 562 million pounds of copper and 59 thousand ounces of gold.

2.1 Revenue

Revenue received for each of the pricing scenarios studied after smelter costs are listed below:

Gross Revenue LME Copper Price / lb US$ 2.50 US$ 3.50 Base Case Fwd

Curve Gold Price / oz US$ 800 US$ 800 Fwd Curve Exchange Rate Au$/US$ 1.25 (0.80) 1.25 (0.80) Fwd Curve NSR Value of Copper $ Million $ 1,610 $ 2,288 $ 1,941 NSR Value of Gold $ Million $ 32.9 $ 32.9 $ 60.0 Total NSR Value $ Million $ 1,643 $ 2,321 $ 2,001

2.2 Cashflows and Metrics

The following table summarises the cashflows, NPV’s, payback year and IRR. The working capital is the maximum negative cashflow and indicates the total cash to be covered by equity or borrowings.

Cashflows, NPV, Payback Year and IRR

All $ Values in millions US$ 2.50 / lb US$ 3.50 / lb Base Case Fwd

Curve Cash Inflow $ 1,654.590 $ 2,332.228 $ 2,012.120

Cash Outflow $ 1,278.725 $ 1,308.016 $ 1,296.635 Net Cashflow $ 375.865 $ 1,024.212 $ 715.485

Operating Cashflow $ 697.837 $ 1,346.184 $ 1,037.457 Working Capital $ 199.649 $ 199.649 $ 199.649

NPV @ Discount 8.5% $ 117.930 $ 464.402 $ 319.432 10.0% $ 92.159 $ 406.498 $ 277.950 12.0% $ 63.342 $ 340.933 $ 230.801 14.0% $ 39.686 $ 286.266 $ 191.322


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Payback Year 4.7 2.0 2.2 IRR 19% 43% 36%

Year Ending

2.3 Capital and Operating Costs

Total pre-production capital required to complete construction of the plant, camp, infrastructure, grid power connection and pre-strips is $195.690 million including a contingency of $18.217 million. The timing of expenditure of the Pre-Production Capital is:

$ Million

Year -2 $ 41.229

Year -1 $ 154.461

Total production capital over the life of mine is $ 118.327 million.


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Mining costs have been based on a schedule provided by an independent mining contractor and the processing costs are based on a schedule generated by Como and minor contractors. Operating Costs

Average LOM $/Tonne Cost

Mining Ore $ 3.50

Mining Overburden $ 1.99

Mining Waste $ 2.37

Total Processing + Others $ 10.09

Total Cost / Tonne Ore $ 18.29

An allocation of $0.650 million per annum has been made for mining lease annual rates and rents, once granted.

2.4 Taxation and Royalties

Universal Resources Limited believes they will pass the continuity of ownership tests during the income years in which the project will generate income, to allow carried forward revenue losses to be included in the consolidated taxation base. The Company will be taxed according to the mining provisions and general provisions of the Income Tax Assessment Act as it stands for the relevant year of income. Royalties on minerals are paid yearly to the state government through the Department of Natural Resources and Mines on an ad valorem (value) basis with various costs being allowed as a deduction from sales value.


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Royalty Payments

Mineral % of Value

Copper Ad valorem Fixed rate of 2.7% or variable rate from 1.5% to 4.5%

Gold Ad valorem Fixed rate of 2.7% or variable rate from 1.5% to 4.5%

Royalties are to be paid to the Queensland government, vendors and indigenous people. The total royalties paid are tabled below.

Royalties US$ 2.50 / lb US$ 3.50 / lb Base Case

Fwd Curve Total Royalties Paid $ 68.658 million $ 97.948 million $ 84.078 million

2.5 Cashflow and KPI Metrics Analysis

The breakeven recovered grade and breakeven copper price are based on full capital recovery as well as operating costs.

Breakeven Recovered Copper Grade

US$ 2.50 / lb US$ 3.50 / lb Base Case

Fwd Curve Recovered Grade Cu 0.53% 0.53% 0.53% Breakeven Grade Cu 0.39% 0.28% 0.32%

At a constant recovered grade of copper of 0.53% the breakeven price of copper is US$1.92 per pound (including capital expenditure).


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Value per Tonne of Ore Processed

US$ 2.50 / lb US$ 3.50 / lb Base Case Fwd Curve

Value of Metal $ 34.28 $ 48.42 $ 41.74 Cash Cost $ 19.72 $ 20.34 $ 20.10 Total Cost $ 26.68 $ 27.29 $ 27.05

Cost Per Equivalent Pound of Copper


Cash Cost AU$ $ 1.65 $ 1.71 $ 1.66 Total Cost AU$ $ 2.23 $ 2.29 $ 2.24

Brook Hunt Methodology Costs US$ 2.50 / lb US$ 3.50 / lb Base Case

Fwd Curve C1 US$/lb $ 1.37 $ 1.37 $ 1.24 C2 US$/lb $ 1.82 $ 1.82 $ 1.66 C3 US$/lb $ 1.92 $ 1.97 $ 1.78

The forward curve case varies from the two fixed price cases because the exchange rate varies over time whereas the exchange rate is fixed for the life of the mine in the fixed price cases.


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2.6 Sensitivity Analysis

A sensitivity analysis was performed on all of the significant variables; the breakeven column in the table below indicates the change to the variable that is required to bring the net cashflow to $0.000. The elasticity indicates the rate of change a variable will have on the net cashflow. For 1% change in the variable it will induce the elasticity metric change on the net cashflow.

Sensitivity Analysis US$ 2.50 / lb US$ 3.50 / lb Base Case

Fwd Curve Breakeven Elasticity Breakeven Elasticity Breakeven Elasticity

Recovered Grade Cu -26% 3.86 -48% 2.07 -40% 2.47 Price of Copper -24% 4.22 -45% 2.20 -37% 2.70 Foreign Exchange -24% 4.10 -45% 2.15 -38% 2.66 Pre-Production Capex 0.49 0.18 0.26 Production Capex 0.05 0.02 0.03 Mining Cost 98% 1.02 0.38 0.54 Processing Cost 80% 1.26 0.47 0.68

2.7 Risk Analysis

A risk analysis or Monte Carlo Simulation was performed on the cashflow model where all of the major variables were updated for each year by a randomly selected percentage between two risk limit range values. A total of 10,000 iterations were performed and all of the generated net cashflow values were statistically analysed.

Statistical Values

All $ Values in millions US$ 2.50 / lb US$ 3.50 / lb Base Case Fwd

Curve Mean Net Cashflow $ 279.886 $ 913.189 $ 605.083 Minimum Net Cashflow $ 159.910 $ 766.746 $ 485.921 Maximum Net Cashflow $ 399.928 $ 1,058.894 $ 729.268

2.8 Range Analysis

Given the large number of values generated in the risk analysis a range analysis was performed on the mean values for the net cashflows at a 99.7% confidence level. This


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analysis reproduces the anticipated real life scenario and predicts the minimum and maximum values that can be expected from each case.

Range for the Mean Net Cashflow


Minimum Maximum Minimum Maximum Minimum Maximum $ 190.817 $ 368.955 $ 800.030 $ 1,026.349 $ 503.062 $ 707.104


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2.9 Probability Analysis

A probability analysis was undertaken to calculate the probability that the project would have any particular net cashflow value with the following results.

Probability Analysis

US$ 2.50 / lb US$ 3.50 / lb Base Case

Fwd Curve Value Probability Value Probability Value Probability

$ 221.000 97.5% $ 838.000 97.6% $ 537.000 97.6% $ 250.000 84.1% $ 875.000 84.2% $ 571.000 83.8% $ 270.000 63.0% $ 900.000 63.7% $ 593.000 63.5% $ 280.000 50.0% $ 913.000 50.0% $ 605.000 50.0% $ 310.000 15.9% $ 951.000 16.2% $ 639.000 16.2% $ 339.000 2.5% $ 989.000 2.4% $ 673.000 2.4%


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3 ENGINEERING

URL requested Como Engineers Pty Ltd (Como) to prepare a Definitive Feasibility Study to estimate the capital cost of the design, procurement and construction of a 4 Mtpa copper ore treatment facility, with provisions to upgrade to 8 Mtpa and including related infrastructure, at their Roseby Copper Project. In addition to this, an estimate for the ongoing operating costs of the facility was required.

3.1 Capital Cost

The overall capital cost estimate for the process plant including all direct and indirect costs is estimated at $161.5 million.

Capital Cost Estimate Summary (1st QTR 2008)

The capital costs were obtained from a definitive feasibility study carried out by Como Engineers in February 2008. Cost estimates for the definitive feasibility study were based on vendor supplied quotations, estimates compiled from drawings, electrical estimate from single line diagrams, data from similar projects on the Como Engineers data base. The

AREA DESCRIPTION Materials Labour Freight Sub Total Contingency TOTAL

TOTAL GLOBAL 2,808,309$ -$ -$ 2,808,309$ 421,246$ 3,229,556$

TOTAL SITE EARTHWORKS 10,844,670$ -$ -$ 10,844,670$ 1,626,700$ 12,471,370$

TOTAL BUILDINGS 3,045,677$ 149,100$ 353,280$ 3,548,057$ 669,686$ 4,217,743$

TOTAL CIVILS 11,606,191$ -$ -$ 11,606,191$ 1,944,367$ 13,550,557$

TOTAL ELECTRICALS 10,105,422$ 3,325,219$ -$ 13,430,641$ 2,014,596$ 15,445,237$

TOTAL STRUCTURAL STEELWORK 4,369,907$ 1,547,166$ 314,640$ 6,231,712$ 1,168,984$ 7,400,697$

TOTAL PLATEWORK 2,416,991$ 1,150,635$ 213,035$ 3,780,661$ 702,008$ 4,482,669$

TOTAL PIPEWORK 2,589,320$ 1,728,850$ 129,000$ 4,447,170$ 1,111,792$ 5,558,962$

TOTAL EQUIPMENT SUPPLY + INSTALLATION 42,105,685$ 3,016,678$ 1,435,416$ 46,557,779$ 4,026,303$ 50,584,081$

TOTAL FIRST FILLS 1,161,377$ 18,460$ 36,000$ 1,215,837$ 242,244$ 1,458,081$

SUB TOTAL - Cons. Directs (Excluding Camp) 91,053,548$ 10,936,107$ 2,481,371$ 104,471,026$ 13,927,928$ 118,398,954$

TOTAL CAMP SERVICES 9,104,955$ 5,560$ 33,120$ 9,143,635$ 1,797,126$ 10,940,761$

SUB TOTAL - Cons. Directs (Including Camp) 100,158,503$ 10,941,667$ 2,514,491$ 113,614,661$ 15,725,054$ 129,339,715$

TOTAL EPCM 17,202,287$ -$ -$ 17,202,287$ -$ 17,202,287$

ALLOWANCES 12,457,553$ -$ -$ 12,457,553$ 2,491,511$ 14,949,064$

SUB TOTAL - Cons. Directs 29,659,840$ -$ -$ 29,659,840$ 2,491,511$ 32,151,351$

GRAND TOTAL 129,818,343$ 10,941,667$ 2,514,491$ 143,274,501$ 18,216,564$ 161,491,066$


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contingency applied varies based on the source of the estimated costs, but averages to approximately 13.8%.

3.2 Operating Cost Estimate

Grid Power Supply The processing operating costs estimates have been determined on the basis of the design criteria, grid power costs, labour, FIFO and accommodation for the Roseby Copper Project. The cost estimate includes costs from feeding the crusher to on-site storage of final concentrate; the estimate includes costs of on-site management and administration. The costs have been calculated at 4.0mt/a treating a blend of 72.5% Blackard oxide and 27.5% Little Eva sulphide ore with an estimated recovery of 74.1% at that blend. The operating costs estimates for both the grid power and on-site diesel generated power options have been calculated on the same basis except for the change in power costs. The operating cost for the grid power option has been estimated to be $8.48 per tonne of ore treated to an accuracy ±15%. This figure includes an operating contingency of 15% which equates to $1.11 per tonne of ore treated which results in a pre contingency operating cost of $7.38 per tonne. Using a 0.69% Copper head grade and a 74.1% recovery, 20,598 tonnes of copper metal will be produced to concentrate per annum at a cost of $1,648 per tonne.

Diesel Powered Electrical Generation

The operating cost has been estimated to be $13.92 per tonne of ore treated to an accuracy ±15%. This figure includes an operating contingency of 15% which equates to $1.82 per tonne of ore treated which results in a pre-contingency operating cost of $12.11 per tonne. The cost of the diesel generated power has been calculated for a minimum period of 2 years, additional costs will be incurred for shorter lease periods.


Executive Summary


4 METALLURGY

Since its incorporation in 2002 Universal Resources Limited (URL) has substantially advanced the Roseby Copper Project and performed a series of testwork programs to supplement twenty years of previous work. This has culminated in the latest metallurgical test program included within the larger scoped study termed the Roseby Definitive Feasibility Study (DFS). The project’s flotation knowledge base has developed from the hundreds of batch flotation tests, fifteen locked cycle flotation tests and three pilot plant runs. The comminution knowledge base has developed from the numerous Bond Work Index (BWI), SAG Mill Comminution (SMC) tests, JK Drop Weight tests, Levin tests, and many other specialist tests. From recent testwork an innovative assay technique has been developed to determine native copper values using a warm silver nitrate solution to oxidise the metallic copper, by silver cementation, to solution so the native copper value could be determined. This technique was used to track the performance of the native copper species in the oxidised ore as silver nitrate reactive copper. About three thousand drill-hole and flotation product assays were performed using this technique. This technique allowed the project team to confirm that the flotation of the floatable material was better than initially considered. To obtain samples for the study, URL performed a diamond drilling program on both the Little Eva and Blackard ore bodies. The following major conclusions resulted from the study.

4.1 Copper Recovery

A program of locked cycle flotation tests was performed, using two metallurgical laboratories, to determine the performance of the two major ore bodies and a series of blends of these ore bodies. This data was used to supplement the previous pilot plant and bench scale work performed over the years. The definitive locked cycle test (LCT) results for the individual ore bodies are supplied below.


Executive Summary


Ore type % Copper Grade % Copper Recovery Little Eva Sulfide Ore 28.1 96.4 Blackard Oxide Ore 34.7 60.7

Grade and recovery data on blends of the ores can be treated on a simple weighted means basis. An analysis of the definitive locked cycle test results were performed to allow the circuit to come to a theoretical balance using multiple iterations. The mass balance estimates unmeasurable recycle streams in the locked cycle circuit using the best fit to measure streams. This analysis showed recovery can be expected to increase at the expense of the concentrate grade. This is an expected result.

Ore type % Copper Grade % Copper Recovery Little Eva Sulphide Ore 27.3 95.8 Blackard Oxide Ore 33.5 64.0

4.2 Comminution

The comminution information was supplied to Como Engineers for study by the specialist consultant, Orway Mineral Consultants (OMC). It was decided that a single Stage SAG Mill would be used by the project to process the initial 4 MTPA design tonnage. The Little Eva sulphide ore body comminution energy requirement was found to be lower than previously determined because coarser closing screens were used to represent the coarser grinds. The work performed on the Blackard ore body has confirmed that the ore is soft, in line with previous work.

4.3 Flotation Processing

There is sufficient evidence of improved flotation performance to investigate the use of the AM2 suite of reagents further, if it is an economical replacement for the sulphidising reagent NaSH. A sample of product concentrate was produced from the pilot plant concentrate stocks and tested for concentrate transport properties, dewatering properties by a thickener and a filter


Executive Summary


supplier. This information was sent to Como Engineers for their sizing of the relevant plant equipment. The three tailing samples tested in the analysis are non-acid forming (NAF) materials. They will not generate acid drainage during the storage, when exposed to water and air. They can be treated as regular mining waste and disposed safely following standard tailing disposal method with minimum attention. A brief program to assess the site water was performed. All the flotation tests were performed using site water. A sample of the site water was analysed before and after contact with the ore and process reagents to check for potential operational and environmental concerns. No negative impacts could be determined.


Executive Summary


5 GEOLOGY

The Roseby Copper Project falls within the Proterozoic Mt Isa Inlier, in the North West Mineral Province in Queensland, Australia. Universal Resources Limited (Universal) holds granted tenements in this area totalling approximately 2,633 km2, comprising the Mt Isa regional exploration tenements ( 985 square kilometres) and the Roseby Copper Project tenements comprising 1,648 km2. The latter secure a northerly-trending tract of country of 100 kilometres in strike length, centred approximately 65 km north-west of Cloncurry and 80 kilometres north-east of Mt Isa. The oxide resources comprise native copper and secondary chalcocite mineralisation located within a central 2 - 3 km wide corridor, termed by previous explorers the ‘Roseby Copper Corridor’, with a minimum strike length of 25 km, open at both ends. Additional resources, comprising the copper-gold sulphide mineralisation, are distributed immediately adjacent and peripheral to the corridor. The Mineral Resources within the Roseby Copper Project, total 128.54 Mt @ 0..68% Copper, 0.06 gpt gold as estimated by McDonald Speijers Pty Ltd. The Roseby DFS area, the subject of this report, is located centrally within the Roseby Copper Project area, and incorporates the Roseby Copper Corridor, adjacent resources and infrastructure areas. Five Mining Lease Applications, MLA’s 90162-90166, cover the DFS area (Figure 6).

5.1 Mineral Resources

The total Mineral Resources for the Roseby Project at April 2008 are summarised below. These Mineral Resources are inclusive of the Ore Reserves.


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Roseby Mineral Resources at April 2008

5.2 Ore Reserves

Ore Reserves have been estimated by Arbitrage Consulting Australia Pty Ltd and are summarised below.

Deposit Ore Tonnes Copper Ore

Grade Copper Recovered

Grade Gold Grade

Blackard 22,853,573 0.664% 0.427% Scanlan 9,617,516 0.712% 0.442% Little Eva 15,456,057 0.746% 0.719% 0.131 g/t Total 47,927,146 0.700% 0.533% 0.042 g/t


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5.3 Tenements

Current exploration tenements constituting the RCP are listed below. These surround the various ML’s, MDL’s and MLA’s.

Last Updated 4 March 2008

Underlying Tenure Tenement Number

Grant Date Expiry Date Area Hectares

Exploration Permit EPM 8506 26 Nov 91 25 Nov 08 11,277.0 Exploration Permit EPM 10266 20 Oct 94 31 Dec 09 25,800.0 Exploration Permit EPM 14822 10 Mar 06 9 Apr 11 4,191.2 Exploration Permit EPM 11611 9 Mar 06 8 Mar 11 2,899.8 Exploration Permit EPM 12121 9 Mar 06 8 Mar 11 966.6


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Figure 6 Roseby Mining Lease Applications and Copper Deposits


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6 HYDROGEOLOGY

A phased mining programme is to be initiated on the Blackard copper-oxide resources and the Little Eva copper-gold resource. This programme has an estimated replaceable annual water requirement of 2.5 million kilolitres to provide for milling, dust suppression and potable water needs. Annual rainfall at Roseby, approximately 470 millimetres, falls mainly in the summer months of December to March often in short duration intensive storm events. Potential annual evaporation of 3700 millimetres exceeds rainfall by a factor of nearly eight times, limiting the use of shallow surface water facilities Topography is a subdued eroded plateau with wide valleys and steep escarpment faces ranging in elevation from 157 metres at Little Eva to 356 metres at Mt Maggie on the Knapdale Range which forms a central spine through the Project area The principal rivers and creeks within the Roseby Project: Dugald River, Cabbage Tree Creek and Pinnacle Creek have their northerly courses strongly controlled by regional rock structures. These drainages join the main rivers: the Leichardt River and Cloncurry River, which flow into the Gulf of Carpentaria Intensive, short duration storm events are a characteristic of the summer season and can result in rapid generation of stream runoff from escarpment slopes and provide groundwater recharge of low salinity groundwater. Rivers and streams flow only for short durations (hours to weeks) following rain, after which river beds become dry or contain only isolated pools Groundwater within the regolith in the Roseby Project is present in the following geological structures:

• fractured crystalline rock • oxidised and leached crystalline rock with storage and hydraulic conductivity developed

in palimpsest structures of the crystalline rock


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• Phanerozoic sedimentary graben on the western side of the Project, bounded by the Pinnacle and Coolullah faults; and

• shallow alluvial deposits along water courses

Groundwater in the lower lying land occurs at depths 2 to 20 metres below ground level. Yields from fractured rocks are generally low (0.1Ls-1 to 5Ls-1) and yields from saprolite and alluvial deposits are also very low, usually less than 0.5Ls-1. Salinity ranges from 45mgL-1 to 3160mgL-1 total dissolved solids. The waters are hard, high in calcium, magnesium and bicarbonate, typical of immature water close to recharge sources. The principal impact of the Project on the groundwater system will be from pit dewatering, initially from Blackard and Little Eva resources The rate of removal of water by pit dewatering is estimated to be 712m3d-1 to 4400m3d-1. . Pits will be dewatered to depths up to 200 metres below ground level or to the base of the aquifers, approximately 90 metres below ground level, within two years of commencement of dewatering pumping. Country rocks have low to very low water transmissive properties, resulting in a steep dewatering gradient with little or no impact on the groundwater system at a distance beyond 500 metres from a dewatered pit. Complete water level recovery in the pits is unlikely due to low groundwater inflow rates and high evaporation. Pit dewatering will have a highly localized effect on the regional groundwater system; effects will be confined to within the Roseby Project area. Pit dewatering will not impact on local water requirements and will not have an effect on recharge to the Great Artesian Basin.


Executive Summary


7 ENVIRONMENTAL

An environmental Impact Statement (EIS)) has been prepared for the Roseby Copper Project, according to the requirements of the Environmental Protection Act 1994. As part of this process, the baseline environmental conditions of the Project site were studied and described. Potential impacts on the environment due to construction and operation of the Project were assessed, and appropriate mitigation strategies outlined to minimise environmental harm. The EIS was submitted in April 2007 and has been advertised for public comment. Responses to public submissions have been submitted to finalise the EIS process.

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