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

The Board’s view of the proposed transaction was summarized by comments from Havilah’s Chief Technical Officer, Dr. Chris Giles:

“The exercise of the Kalkaroo option by OZ Minerals would result in the monetization of Kalkaroo and provide what we believe is a fair return for our shareholders without Havilah assuming the longer-term development and funding risks inherent in a new big mining project right now.

“Funding provided under the strategic alliance would allow us to accelerate exploration for new copper deposits in the region that could potentially add to Kalkaroo, as well as advance our other promising mining projects south of the barrier road.

“We view the proposed transaction as the first important step in our strategy to realize the value of Havilah’s multi-commodity mineral portfolio through production, sale or lease with well-financed partners, as outlined 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 (Transaction Kalkaroo) at a General Meeting, scheduled for the month of August 2022 (subject to any agreed extension). The convening documents will be given to the shareholders before the General Meeting.

The proposed transaction is conditional upon Havilah shareholders approving the Kalkaroo transaction within 90 days of signing the term sheet, appointing an independent expert and providing notice that the Kalkaroo transaction is in the best interests of Havilah stockholders, to enter into formal final binding agreements based on the Terms of Service, and none of the members of the Havilah board of directors change their recommendation or their voting intention.

The Directors unanimously recommend the Kalkaroo Transaction to Havilah shareholders and intend to vote all shares held or controlled by them in favor of the Kalkaroo Transaction, absent a Superior Proposal and subject to that the independent expert believes that the Kalkaroo Transaction is in the best interest of the shareholders.

During the quarter, the revised Environmental Protection and Rehabilitation Program (PEPR) document required for the Ministry of Energy and Mines (DEM) West Kalkaroo permit approval has been substantially completed. In light of the proposed transaction, the PEPR document will not be resubmitted to DEM as planned, pending the results of OZ’s mineral study program and its decision 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 proven category (see JORC tables below). Kalkaroo is one of Australia’s largest undeveloped opencast copper-gold deposits.

Havilah has obtained the mining permits required for the Kalkaroo project (mining leases and licenses for various purposes). It also owns the surrounding Kalkaroo Station Pastoral Lease, a non-mining asset on which the Kalkaroo Project is located, thereby reducing land access risks for the Project.

Kalkaroo is expected to be a future source of ethically produced metals essential to modern society, operating in accordance with industry best practice ESG (environmental, social and governance) regulations which are mandatory in South Australia. ESG credentials for Kalkaroo are available on the Company’s website.

Rare Earth Element (‘REE’) Potential at the Kalkaroo Project

Over the past 2 years, Havilah has carried out a considerable amount of research into the recovery of REE metals from West Kalkaroo saprolite gold ore in collaboration with the Future Industries Institute at the University of South Australia. Bastnasite, an REE carbonate-fluoride mineral, has been identified as the primary REE host in oxidized copper-gold ore samples from West Kalkaroo (refer to the ASX announcement of November 3, 2020). Ongoing laboratory work has focused on how best to incorporate bastnasite recovery into the oxide ore processing scheme. Pilot scale separation equipment has been put in place to facilitate key testing to answer this question. The results to date provide grounds for optimism that a recovery path can be defined that could generate potentially significant revenue from an REE by-product.

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