Mineral Resource Explanatory Notes Carrapateena Project - …...EW section and isometric views...

OZ Minerals Limited

Mineral Resource Explanatory Notes

Carrapateena Project

As at 31 October 2012

Carrapateena Mineral Resource Explanatory Notes

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CARRAPATEENA MINERAL RESOURCE STATEMENT – 31 OCTOBER 2012

The Carrapateena 2012 Resource Statement relates to an updated resource estimate for the Carrapateena Copper Gold deposit. This deposit is located in central South Australia on the eastern margin of the Gawler Craton (see Figure 1).

Figure 1. Location of Carrapateena, South Australia Since the previous statement (April 2011) OZ Minerals has undertaken an extensive infill drilling program at Carrapateena and data from this program, in combination with findings from ongoing geological studies, has been used by OZ Minerals and its consultants to remodel the deposit and re-estimate the Resources.

Mineral Resource

The estimated Mineral Resource for the Carrapateena deposit is tabulated below. The Mineral Resource has been reported in accordance with JORC 2004. This Resource is based on data from 93 holes totalling 57,257 metres intersecting the interpreted mineralisation.


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Economic Assumptions

The 2012 Resource estimate for Carrapateena is based on OZ Minerals’ life-of-mine (LOM) economic assumptions, these are shown below.

Assumptions Unit LOM Copper US$/lb 3.00 Gold US$/oz 1,200 Silver US$/oz 17.60 Exchange Rate AUD/USD 0.80 Estimated Mine Life Years 20

Table 1. Summary Mineral Resources for the Carrapateena deposit at various Cu cut-off grades (COGs)

Classification COG % Cu

Volume (Mm3)

Tonnes (Mt)

Density (t/m3)

Cu %

Au g/t

CuEq %

U ppm

Ag g/t

Indicated 0.3 115 392 3.41 0.97 0.39 1.20 165 4.2 0.5 82 282 3.44 1.20 0.48 1.48 197 5.2 0.7 59 202 3.45 1.43 0.56 1.77 227 6.2 Inferred 0.3 108 368 3.40 0.58 0.21 0.71 120 2.3 0.5 56 193 3.43 0.76 0.26 0.91 144 2.8 0.7 26 90 3.43 0.96 0.30 1.14 162 3.6 Total 0.3 223 760 3.41 0.78 0.30 0.96 143 3.3 0.5 138 475 3.43 1.02 0.39 1.25 175 4.2 0.7 85 292 3.44 1.29 0.48 1.58 207 5.4

Note: • There are currently no Measured Resources defined for Carrapateena. • CuEq is defined as Cu + 0.6 * Au. • Test work suggests metallurgical recoveries of around 85-90% and 75-80% are achievable for copper

and gold respectively (see Table 1 for further details). These figures are consistent with OZ Minerals’ experience at its nearby Prominent Hill copper-gold mine.

• OZ Minerals is of the opinion that all elements in the metal equivalent calculation (i.e. copper and gold) have a reasonable potential to be recovered and sold.

• The use of two significant figures for Cu and Au, and one for Ag, for reporting Inferred Resources does not imply precision but are used to enable better understanding of the combined resources.

• Rounding errors occur.

Approximately 46% of the Inferred Resources at a 0.7% Cu COG are deemed to be extrapolated. However, the definition of extrapolation used here (Relative Kriging Variance > 0.72) is considered to be quite strict and 80% of blocks with Cu grades estimated by extrapolation are within 97 metres of an informing composite.


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For the purposes of comparison only the following table shows the results if a CuEq cut-off grade is applied.

Table 2. Summary Results for the Carrapateena deposit at various CuEq COG’s

Classification COG % CuEq

Volume (Mm3)

Tonnes (Mt)

Density (t/m3)

Cu %

Au g/t

CuEq %

U ppm

Ag g/t

Indicated 0.3 132 450 3.41 0.87 0.39 1.10 157 4.1 0.5 98 336 3.43 1.06 0.46 1.34 184 4.8 0.7 75 260 3.44 1.25 0.52 1.56 206 5.5 Inferred 0.3 125 426 3.40 0.53 0.21 0.66 115 2.2 0.5 79 270 3.42 0.66 0.25 0.81 136 2.5 0.7 43 147 3.44 0.82 0.29 1.00 157 3.0 Total 0.3 258 876 3.40 0.71 0.30 0.89 136 3.1 0.5 177 606 3.43 0.90 0.38 1.13 162 3.8 0.7 118 407 3.44 1.12 0.45 1.39 188 4.6

The following table compares these resources to those previously quoted at a 0.7% Cu COG.

Table 3. Summary of Current (2012) and Previous (2011) Mineral Resources for the Carrapateena deposit at 0.7% Cu COG

Classification Estimate Tonnes

(Mt) Cu

% Au g/t

CuEq1 %

U2 ppm

Ag g/t

Indicated 2011 0 2012 202 1.43 0.56 1.77 227 6.2 Inferred 2011 203 1.31 0.56 1.65 229 6.0 2012 90 0.96 0.30 1.14 162 3.6 Total 2011 203 1.31 0.56 1.65 229 6.0 2012 292 1.29 0.48 1.58 207 5.4

The following tables show a breakdown of where the additional tonnages above 0.7% Cu COG in the 2012 estimate have come from. The Common area is approximately the volume covered by the previously quoted Inferred Resource; the Northern area is all material north of 6,543,250mN and above 3,600m RL3 (which was the area where most of the previously reported Exploration Potential occurred); and the Deeps refers to the volume below 3,600m RL, and which is now tested by several OZ Minerals drill holes.

1 The CuEq was not stated in 2011 but has been calculated as CuEq = Cu + 0.6 * Au 2 U was originally quoted as its U3O8 equivalent value but here is quoted as U 3 Australian Height Datum = 5000m RL


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Table 4. Summary of Mineral Resources by Area at 0.7% Cu COG

Classification COG % Cu

Volume (Mm3)

Tonnes (Mt)

Density (t/m3)

Cu %

Au g/t

CuEq %

U ppm

Ag g/t

Common with Previous (Teck) Inferred Area

Indicated 0.7 50 175 3.47 1.49 0.59 1.84 248 6.4

Inferred 0.7 8 27 3.46 1.09 0.42 1.35 206 3.5

Total 0.7 58 202 3.47 1.43 0.57 1.78 242 6.0

North of Teck Area (Previous Exploration Potential Area)

Indicated 0.7 8 28 3.31 1.08 0.36 1.29 96 5.2

Inferred 0.7 10 33 3.32 0.97 0.20 1.09 83 4.5

Total 0.7 18 60 3.31 1.02 0.27 1.18 89 4.8

Below Teck Area

Indicated 0.7 - - Inferred 0.7 9 30 3.54 0.82 0.30 1.00 208 2.7

Total 0.7 9 30 3.54 0.82 0.30 1.00 208 2.7

All references to Teck are to Teck Australia Pty Ltd.

Drilling and sampling

Ninety three (93) holes, including wedges, have been drilled at Carrapateena totalling approximately 113,630 metres. Of this total, approximately 57,257 metres intersected the mineralised part of the deposit, with the remaining 56,373 metres intersecting the cover rocks or country granite.

Drill testing the spatial extent of the prospect started with a 200 metre x 200 metre grid sequence, with 100 metre x 100 metre infill drilling commencing in September 2006. Two infill holes with four additional wedges were drilled to 50 metre spacing (North-South) in the bornite zone in the south west of the deposit. Since late 2011, OZ Minerals has drilled non-vertical holes with the intention of better defining the limits of the copper mineralised zones. The holes have been drilled in a variety of directions and so the spacing between holes is not uniform. The spacing is mostly less than 50 metre in the upper northern part of the south-western copper-mineralised zone, becoming wider at depths below 4,000mRL and south of 6,543,250mN.

Mining and Geotechnical

Block caving has been identified as a potentially technically and economically viable mining method for Carrapateena. Further work is underway to confirm this premise; however for the basis of this statement it is assumed that this method of mining will be suitable for Carrapateena. Estimated total operating costs for block caving are A$22 per tonne, this is based on the economic assumptions mentioned above and industry measures. This corresponds to a cut-off grade of about 0.3% Cu including gold credits. Within the Mineral Resource there is a sufficient volume of contiguous mineralisation above a cut-off grade of 0.3% Cu to support a block cave mine.

Preliminary geotechnical studies have indicated that the Carrapateena deposit should cave and that fragmentation early in the mine life will be coarse. Pre-conditioning by hydro-fracturing and blasting may be used to improve fragmentation and hence the build-up in ore production. Sediments which overlie the mineralisation will fragment more finely and contribute dilution to the caved ore mass. Dilution will increase as the caved mass is drawn down.


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Processing

Metallurgical test work conducted over the last 12 months from samples selected via a geometallurgy study to ensure representativeness has shown that a conventional crushing, grinding and flotation circuit is suitable for copper extraction from the mineralisation with concentrate grades of 30 to 35 percent copper at 85 to 90 percent recovery achievable. Gold is recoverable by flotation at a concentrate grade of 10 grams per tonne with 75 percent recovery achieved with a potential further 5 percent recoverable by gravity techniques. Further metallurgical test work will be carried out during the Pre-Feasibility Study stage of the project. Concentrate grades and recoveries are averages from specific material type testing within the footprint suggested by geotechnical and mining studies. These material types are expected to account for the bulk of the mineralisation within this footprint.

Environment

A preliminary environmental baseline study has been conducted as part of the retention lease activities, and will continue to be built upon for more detailed risk assessments.

Mining the Carrapateena Deposit will require the development of appropriate waste rock and tailings storage facilities and location and design for these facilities will be considered as part of the Pre-Feasibility Study.

Comparison to Previous Estimate

The changes in the resources between this (2012) and the previous (2011) estimate are attributable to several factors as described below.

Data

• OZ Minerals has drilled and assayed 33 holes, including nine wedges, since acquiring the project. • All OZ Minerals holes have been angled to provide much better boundary definition than was

possible with the Teck drill holes, which were mainly sub-vertical to vertical. • OZ Minerals holes have been drilled in a number of planes (East–West (EW), North–South (NS) and

other) to further improve definition of key boundaries.


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The following figures show the traces of Teck (blue) and OZ Minerals (red) drill holes in plan, NS section, EW section and isometric views respectively, as well as the topographic surface and interpreted base of cover / top of basement surfaces.

Figure 1. Plan, cross-sectional and isometric views of drill hole traces from Teck (blue) and OZ Minerals (red) drilling. Also shown are the topographic and top of basement surfaces and the interpreted Hematite Breccia envelope (which hosts the mineralisation) The following figure shows drill traces of Teck (blue) and OZ Minerals (red) in isometric and plan views.

Figure 2. Isometric and plan views showing blocks colour coded by Resource Classification, Interpreted Hematite Breccia envelope (light red) and Drill hole Traces (blue denotes Teck drilling, red denotes OZ Minerals drilling).


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The following table summarises the data available for this estimate.

Table 5. Summary of data available for this estimate

Item Teck OZ Minerals Total

Number of holes informing the resource estimate (includes wedges as separate holes). Only includes holes that intersect at least one of the mineralised domains.

60 (including 12 wedges)1

33 (including 9 wedges)

93 (including 21 wedges)

Number of metres informing the resource estimate (includes intervals from wedges). Only includes intervals in mineralised domains.

31,588 24,785 56,373

Number of metres from holes informing the resource estimate (includes intervals from wedges). Includes all intervals whether in mineralised or ‘barren’ (i.e. Cover, Country Granite) domains.

69,655 43,975 113,630

1 this includes two drill holes drilled by RMG Services. Note that these tables exclude data from 26 Teck drill holes (20,925 metres) that only intersected cover or country rock (granite).

The following table summarises the data bulk density available for this estimate.

Table 6. Bulk Density measurements available for this estimate

Measurements Metres

Campaign Inside

Mineralisation

Country rock / Cover Total

Inside Mineralisation

Country rock / Cover Total

OZ Minerals 29,799 7,704 37,503 29,619 7,697 37,317 Teck 13,698 11,426 25,124 13,692 11,458 25,150 Total 43,497 19,130 62,627 43,311 19,155 62,466

Interpretation

• The additional data, combined with several geological studies undertaken since the previous estimate, has provided OZ Minerals geologists with a better understanding and interpretation of the deposit.

• Key differences and similarities between OZ Minerals and Teck interpretations include: − The overall interpreted Hematite Breccia envelope has not materially changed in a lateral sense

although deeper drilling has allowed OZ Minerals to extend it at depth. − OZ Minerals has updated the interpretation of the original shape of Teck’s two major interpreted

higher-grade Bornite zones. The two zones are now interpreted to represent one single body of bornite mineralisation with continuity defined along the north-western edge of the main copper mineralised zone.


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− The eastern and western parts of the deposit show different tenor of mineralisation with respect to Cu, Au and U as well as sulphide mineralogy. OZ Minerals has used a hard boundary when estimating grades in these areas.

− The upper and lower areas of the western part of the deposit show different tenor of mineralisation with respect to Cu, Au, and U as well as sulphide mineralogy. OZ Minerals has used a hard boundary when estimating grades in these areas.

− OZ Minerals has interpreted a gold-only rim on the northern end of the western Cu domain that extends into the Barren Hematite. As this rim is immediately adjacent to the Cu zone it has been included in the resources.

− The size, location and influence of the Barren Hematite domain with respect to the distribution and speciation of copper sulphides is better understood.

− OZ Minerals has updated the interpretation of the Leached zone (at the top of the basement but below the cover) and this has been used as a control during estimation.

Estimation

• The data from the recent OZ Minerals infill drill program (including several holes ‘twinned’ for metallurgical test work) combined with the Teck drilling data has allowed for a more detailed and robust assessment of grade continuity.

• The resulting improved variogram models have allowed for optimal search neighbourhoods to be better defined.

• OZ Minerals has not used the Bornite zones as a hard boundary during grade estimation (as Teck did) as recent data suggests that high Cu grades often continue outside of the Bornite zones into the Chalcopyrite zone (having said this the higher estimated block Cu grades show a clear spatial association with the interpreted Bornite zone).

• Domains have been interpreted separately for each key grade variable (Cu, Au, U, Ag, Fe, Si and F), as well as for bulk density. However, in most instances the domains defined for Cu were sufficient for controlling the estimates of these other variables.

Classification

• The latest Resources have been classified after taking the following issues into account: − Robustness of the underlying conceptual geological model. − Quality of informing data (location, logging, sampling, sample handling and preparation, assaying,

density and data management). − Robustness of the interpretation (and specifically whether any plausible, but materially different

interpretations are possible). − Data arrangement and data density with respect to the continuity of:

− Grade of key variables (Cu, Au, U) − Density; and − Geology.

− Relevance of estimation methods and parameters. − Checks that the modelling was implemented as intended. − Checks to ensure estimated grades and density adequately matched the inputs. − Checks on wireframe volumes vs. block volume for each domain. − Contiguity of the mineralisation around the likely economic cut-off grade (~0.3 % Cu). − Reasonable prospects (see detailed comments below).


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• Classification has been undertaken by the Competent Person, who has taken into account advice from OZ Minerals’ geologists and its external consultants specifically regarding the: − Quality of the data − Interpretation of geological domains and grade domains; and − Quality of the estimated block grades and density.

Reasonable Prospects:

• Mining studies suggest Block Caving to be the most likely mining method in areas where the mineralisation is wide and contiguous.

• A review of this model within that context and economic assumptions reveals that a cut-off grade of 0.3% Cu is currently appropriate for defining resources in areas where the mineralisation is wide and contiguous.

• Given the likely mining method the classification also accounts for the expected contiguity of material above cut-off grade.

• Metallurgical test work to date indicates that a saleable concentrate can be produced. • Preliminary geotechnical studies have indicated that the deposit is amenable to block caving.

Dimensions

• The maximum extents of the Hematite Breccia envelope, which hosts mineralisation, are approximately 750 metres (X) x 950 metres (Y) x 1,700 metres (Z). However the deposit geometry is generally pipe-like whose lateral extent reduces with depth

Dimension Minimum Maximum Extent (metres)

Easting 737,600 738,350 750 Northing 6,543,000 6,543,950 950 RL 2,950 4,650 1,700


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Key points relating to the Resource Estimate

The following key points relate to the resource estimation. Comments relating to items prior to OZ Minerals’ acquisition of Carrapateena are presented in italics, whereas comments related to items subsequent to OZ Minerals’ acquisition of Carrapateena are presented in non-italics font. Sampling Techniques and Data

Criteria Explanation Comments Sampling techniques

Nature and quality of sampling (e.g. cut channels, random chips, and measures taken to ensure sample representivity

All samples consist of diamond core which is cut with a manual core saw and sampled over 1m intervals. All basement drill core 1/2 cut with a saw and sampled over 1m intervals regardless of geology. Intervals of cover material were less frequently sampled and assayed

All samples consist of diamond core which is cut with an automatic core saw and is sampled as half core, except for PQ core, metallurgical holes and field duplicates, where quarter core is sampled. Sampling interval is generally 1m but respects geological contacts in places.

Drilling techniques

Drill type (e.g. core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka , sonic etc.) and details (e.g. core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).

Combination of RC and mud-rotary was used for precollars. HQ was used through to top of basement and NQ through basement to EOH.

Diamond holes were cored from surface using a combination of PQ, HQ and NQ2 core sizes.

70% of drill holes were vertical to sub-vertical. 2 holes were angled from surface, 11 holes were wedges off a sub-vertical parent hole.

All drill holes were angled with collar angles between 55 to 76 degrees and had end-of-hole depths ranging from 1,000 metres to over 2,000 metres.

Data informing the resource model come from approximately 18,871 predominantly 1-metre samples within the mineralised domain from vertical to sub-vertical NQ diamond core drilling

Core is orientated using an ACE core orientation tool.

Drill sample recovery

Whether core and chip sample recoveries have been properly recorded and results assessed.

Length-based core recovery measured from reassembled core for every drill run.

Length based core recovery is measured from reassembled core for every drill run. The data is recorded in a GBIS database.

Average core recovery was very high (99.2%) throughout the mineralised rock.

Average core recovery was high with (99.03%) recovered through the mineralised zone.


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Criteria Explanation Comments Measures taken to maximise sample recovery and ensure representative nature of the samples.

n/a - style of mineralisation and drilling methods employed lead to very high sample recovery.

n/a - style of mineralisation and drilling methods employed lead to very high sample recovery.

Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.

n/a due to very high recovery

There is no significant relationship between sample recovery and grade for either Teck or OZ Minerals drill holes. The very high core recovery means that any effect of such losses would be negligible if such a relationship even existed.

Logging Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.

Core samples geologically and geotechnically logged by geologists.

Core samples are geologically and geotechnically logged by trained geologists and geotechnical engineers and are considered to be in appropriate detail to support Mineral Resource estimation, mining studies and metallurgical studies.

Whether logging is qualitative or quantitative in nature. Core (or costean, channel etc.) photography.

Core logs were qualitative and quantitative in nature. Lithology and alteration was logged qualitatively. Mineralisation, structure, and geotechnical data was logged quantitatively. All core was photographed wet and dry following metre marking.

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

Sub-sampling techniques and sample preparation

If core, whether cut or sawn and whether quarter, half or all core taken.

Drill hole samples were prepared and assayed by accepted industry standard methods. All core was cut with a manual core saw at 1m lengths into 1/2 core for normal sampling, and 1/4 cut for field duplicates.

All core cut with automatic core saw in a way that preserves the bottom of hole reference line. 1/2 core for normal sampling, 1/4 for field duplicates. Predominantly 1m in length, but may also range from 0.5m to 1.5m if adjusted to geological or major alteration boundaries.

If non-core, whether riffled, tube sampled, rotary split etc. and whether sampled wet or dry.

n/a

n/a For all sample types, the nature,

quality and appropriateness of the sample preparation technique.

Industry standard for this style of mineralisation

Industry standard for this style of mineralisation.


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Criteria Explanation Comments Sub-sampling techniques and sample preparation

Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

No documentation of quality control procedures for sub-sampling stages is available. Where possible, the same 1/2 of the drill core was sampled downhole.

Controlled copies of SOP's (Standard Operating Procedures) and sign-offs for all sampling steps, all staff were adequately trained. Calibration checks on the SG scales were conducted with certified weights 3 times per day. Checks by geologist on sampling prior to loading data into database.

Measures taken to ensure that the sampling is representative of the in situ material collected.

Core cut in half with manual core saw and the same half was sampled (where possible). No further documentation of Teck procedures available.

Core cut along bottom of hole reference line, same half is always sampled - the half with the reference line is retained and the other half is sampled. Comparison of assays from 1/4 core and 1/2 core samples suggests sample size is appropriate.

Whether sample sizes are appropriate to the grain size of the material being sampled.

1 metre Samples were sent to Amdel and / or Genalysis laboratories and were dried, crushed and pulverised to 90% passing -75 microns. Analysis of field duplicate data indicates the sample sizes are appropriate to the grainsize.

Samples were dried, crushed and pulverised to a nominal 90% passing -75 microns. Analysis of field duplicate data indicates the sample sizes are appropriate to the grainsize.

Quality of assay data and laboratory tests

The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.

OZ Minerals received data quality reports and data, including Certified Standards, which indicated the raw data were suitable as a basis for Resource estimation. Samples sent to Bureau Veritas' Adelaide Laboratory had Cu and Ag grades determined by IC3E, with 'ore grade' Cu (>1%) undergoing reanalysis by MET1. Au grades were determined via FA2. Samples sent to Genalysis had Cu grades determined by four acid digest and ICP-OES, with 'ore grade' analysis (Cu >1%) determined by modified four acid digest and AX/OES. Au at Genalysis was determined by Fire Assay finished by flame AAS.

Cu grades were determined using a modified aqua regia digest with ICP-OES determination at Bureau Veritas Adelaide Laboratory. Au grades were determined by 40g Fire Assay FA1 at Bureau Veritas Adelaide Laboratory (Amdel).


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Criteria Explanation Comments Quality of assay data and laboratory tests (continued)

Nature of quality control procedures adopted (e.g. standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established.

Assay data quality was determined through submission of field and laboratory standards, blanks and repeats which were inserted at a nominal rate of 1 each per 20 drill samples.

Assay data quality was monitored through submission of standards and blanks every 25 samples, quarter core field duplicates and lab coarse crush and pulp duplicates every 50 samples.

Coarse rejects and pulps were sent to an Umpire laboratory. Comparison of results did not reveal any significant problems.

Two batches of check assays were each submitted to two umpire laboratories. Comparison of the results between laboratories did not reveal any significant problems. Quarterly QAQC reports commenced from the June 2012 quarter.

Verification of sampling and assaying

The verification of significant intersections by either independent or alternative company personnel.

No such verification has been documented although OZ Minerals’ Senior Project Geologist – Carrapateena was on the Teck team at the time and confirms that this was undertaken, albeit not documented.

No such verification has been done, however the mineralisation appears to be reasonably continuous and is not dominated by any one significant intersection. Furthermore the tenor of Cu is visually predictable. The assay data for all Teck holes were imported from source lab text files into the OZ Minerals database by an external company (Expedio), and the results were compared with the database supplied by Teck.

The use of twinned holes.

Several Teck holes were wedged providing close-spaced data from which to assess short scale variability.

Several holes around Teck drill hole CAR050 were drilled by OZ Minerals to confirm grade and geological continuity. Two pairs of twin holes were drilled through the Mineral Resource for Metallurgical testing. A review of data from these holes reveals very strong correlation of geology and grades.


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Criteria Explanation Comments Location of data points

Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

Drill hole collars were surveyed by DGPS and downhole surveyed (about every 30m) by multiple methods including Ranger Multi-Shot survey tool, Wellnav SRG (surface recording gyro) and Eastman Camera surveys.

All survey data is stored in a GBIS database. Collar locations were determined by DGPS. All drill holes have magnetic downhole surveys taken at 30m intervals using digital 'single-shot' Reflex EZ-Trac equipment. An azimuth adjustment of +8.4 degrees was applied for the conversion from magnetic to MGA94 Grid north. Completed holes were gyro surveyed using a conventional Reflex Gyro E537 tool. An APS GPS-based system was used to determine the reference azimuth at the collar. Due to difficulties with establishing the collar reference azimuth, some OZ Minerals holes use as a reference azimuth a calculated "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, generally two runs up to June 2012, and four runs from that date onwards. Some holes were surveyed by Surtron Pty Ltd using a north-seeking gyroscope.

Quality and adequacy of topographic control.

DGPS of collars and DTM was flown by Teck.

Collar locations were determined by DGPS. DTM was flown by OZ Minerals in April 2012.

Data spacing and distribution

Data spacing for reporting of Exploration Results.

Previously reported Exploration Results were supported by drilling on patterns of ~200 x 200 metres down to 100x100 metres.

No Exploration Results are reported in this statement. Additional drill hole data acquired in 2011/2012 has improved OZ Minerals’ understanding of the geology to such a degree that OZ Minerals now has sufficient confidence in its interpretation to upgrade the previously reported exploration results area to both Inferred and Indicated Resource status (refer table 4).

Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

Yes, especially in the south-west area where geological and grade continuity are good.

Yes - data spacing and distribution is sufficient to establish geological and grade continuity appropriate for the Mineral Resource estimation.


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Criteria Explanation Comments Data spacing and distribution (continued)

Whether sample compositing has been applied.

No No

Orientation of data in relation to geological structure

Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

The Hematite Breccia that hosts the mineralisation is generally 'massive' (at the scale of interest) with little internal structure. The deposit is interpreted as steep on the south and west sides, with recent infill drilling now adequately defining the locations of these boundaries.

The eastern edge of main deposit is now reasonably well constrained (the original Teck drilling was mostly vertical but OZ Minerals recent infill drilling program consisted of deep angled holes to better define the boundaries of the steeply dipping ‘pipe’ mineralisation.

Structures and mineralisation boundaries through the deposit mostly appear to be sub-vertical. Angled drill holes have been used to intersect these boundaries. Within the mineralised zone anisotropy appears to be minor. A variety of drill hole orientations have been used to minimise the possibility of bias being introduced by drill hole orientation. The mineralisation occurs mostly as disseminated sulphides and does not show a strong structural fabric at drill-core scale.

If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

No. 900 metre+ intersections repeated across numerous holes 100m+ spaced - vertical and wedges.

Recent angled drilling by OZ Minerals has not highlighted any orientation-specific sampling biases (however the orientation still means that the location of internal domain boundaries are not always well defined).

Audits or reviews

The results of any audits or reviews of sampling techniques and data.

An internal audit of Teck’s Carrapateena database was conducted in 2008. As part of this study, 5765 failed QAQC samples and an entire hole (CAR051W1) was 1/4 cored and sent along with coarse rejects to Genalysis. Minor contamination issues were concluded to have affected Amdel results but were not deemed to have a significant impact on the data.

An external audit of Bureau Veritas Amdel Adelaide was undertaken by ioGlobal in October 2012 and did not find any material issues. OZ Minerals geologists conducted three audits of Bureau Veritas Amdel Adelaide during the 2011/2012 drilling campaign.


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Mineral Resources

Criteria Explanation Reported Database integrity

Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes.

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 for OZ Minerals holes was directly into the database using Toughbooks. Weight measurements for density were keyed into the database up to 16 March 2012, and then automated data capture was used from that date onwards. Core length measurements for recovery were made on paper prior to entry into the GBIS 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.

Data validation procedures used.

Lookup codes are used to ensure consistency of the way data are recorded and for referential maintaining 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. The Teck historical data loaded from source laboratory files was compared with the database handed over by Teck.

Geological interpretation

Confidence in (or conversely, the uncertainty of) the geological interpretation of the mineral deposit.

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. At deposit scale, the hematite breccia zone appears to be quite continuous, but its limits at depth are not yet well-defined. A subset of the hematite breccia zone contains significant copper mineralisation. Confidence in the boundaries and continuity of the southwest copper-mineralised zone is higher than confidence in the more discontinuous and low-grade zones of mineralisation in the north and east. Confidence decreases significantly with depth as the distances between drill holes becomes wider. Both the hematite breccia zone and the copper-mineralised zones are open at depth.

Nature of the data used and of any assumptions made.

The geological interpretation was based on drill core data, including geochemical data, and core logs and photos. The geological model is interpreted to be a vertical body of hematite dominated breccia hosted within altered granite. Holes drilled by Teck up to 2008 were mostly sub-vertical, and these have in some cases been assumed to be near-parallel to geological and mineralisation boundaries. This interpretation has mostly been confirmed by drilling by OZ Minerals Limited since 2011 using angled drill holes.


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Criteria Explanation Reported Geological interpretation

The effect, if any, of alternative interpretations on Mineral Resource estimation.

Alternative, plausible interpretations are only likely to differ in the nature of the boundaries between domains. Recent work has shown that differences in the estimates due to the way in which these boundaries are treated during estimation are commensurate with the uncertainty implied by the classification.

The use of geology in guiding and controlling Mineral Resource estimation.

Copper sulphide mineralisation is mostly hosted in a hematite breccia zone within altered granite. The deposit is overlain by mostly unmineralised sediments. There is evidence of a leached zone lacking copper mineralisation at the top of the hematite breccia zone immediately below the unmineralised sediments. The mineral resource is restricted to copper mineralisation hosted in the hematite breccia zone, up to the base of the leached zone.

The factors affecting continuity both of grade and geology.

Copper grades are generally highest where bornite is the dominant copper sulphide. Chlorite alteration is present in some parts of the deposit. Where chlorite is abundant, copper and gold grades are generally low. Continuity of zones of chlorite alteration can be quite variable and zones with abundant chlorite have not been modelled separately. Dykes are present within the hematite breccia zone and in the granite, but they are not necessarily barren of copper and are not considered to have a significant effect on the estimated mineral resource. Gold-only mineralisation is present in some parts of the hematite zone where only trace concentrations of copper are present. Copper mineralisation is generally accompanied by gold mineralisation, although Au grades vary.

Dimensions The extent and variability of the Mineral Resource expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resource.

The maximum extents of the Hematite Breccia envelope, which hosts mineralisation, are approximately 750 metres (X) x 950 metres (Y) x 1,700 metres (Z). However the deposit geometry is generally pipe-like whose lateral extent reduces with depth.


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Criteria Explanation Reported Estimation and modelling techniques

The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters, maximum distance of extrapolation from data points.

Estimation of grades for all variables was done using Ordinary Kriging into regular blocks of 10 metres x 10 metres x 10 metres (X, Y, Z). Coding of blocks was carried out in Vulcan software. All geostatistical analysis and estimation was performed in Isatis software.

Estimates are constrained within interpreted and wireframed geological domains. The domains were developed primarily on the basis of geology and took into consideration lithology (the nature of the underlying breccia), alteration and the mineralogy of Fe and Cu along with Cu grade. The suitability of these domains for constraining grades estimates was then carefully assessed.

For Cu, it is clear that the geological domains provide a coherent and reasonable basis for estimation of grade. There are distinct differences in the populations of grades encompassed, and boundaries are generally apparent, either by change in mean grade across contact, or by change in variability.

Cu domains also provide a reasonable basis for estimation of Fe, S, Ba, U, density, hematite and silica.

Given that the geological domains were driven by geology, alteration and mineralogy it is not surprising that these domains provide an acceptable basis for estimation of Cu, the major elements Fe and S and the calculated proportions of hematite and silica. Density was also estimated within the Cu geological domains, although the high grade and low grade copper zones were combined for this variable.

For Au, a thin skin of elevated gold grades within the barren hematite adjacent to the upper high grade copper zone was interpreted by OZ Minerals. The samples and volume relating to this skin were merged with the high grade copper zone for estimation of Au and Ag. Domaining for Ag may require refinement in future.

For F, two small zones of high F were interpreted by OZ Minerals geologists and while these are spatially coincident with Cu domain boundaries, the amount of F data available is as yet insufficient to properly understand the controls on the F distribution. Estimation of F was constrained inside and outside of these zones.

Chlorite (as chamosite) was estimated separately within the surface depletion zone and high grade copper zones, and then within the remainder of the breccia.


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Criteria Explanation Reported Estimation and modelling techniques (continued)

Muscovite was estimated separately within the high grade copper zones, the internal granite, the combined barren hematite breccia and hematite breccia, and the surface depletion zones. Hematite, quartz, chamosite and muscovite were all estimated using mineralogy data which itself were calculated from assay data using an optimisation algorithm based on, and verified with, extensive qXRD analysis. However, none of these variables affect the resource estimates.

Treatment of high grades: High grade composites were controlled within estimation by the use of outlier restriction. In this method, grades above a defined threshold are only used in interpolation if they fall within a specified distance of a block. This has the effect of localising high grade estimates around high grade intercepts, rather than spreading them to the limit of the search. The choice of both grade and distance threshold is guided by geological considerations, in particular the likely geological explanation of the outlier grades. For Cu no outlier restrictions were deemed necessary as variables are not strongly skewed. For Au outlier values were identified in all the estimation domains related to tails in the distributions and subsequently high grade estimation restriction was applied in all the gold domains, the thresholds being defined as equal to the 95th percentile of the 10 metre composite distribution. For U, a restriction was only applied in the barren hematite unit, while Ag had restrictions applied in the high grade and low grade Cu domains as well as the barren hematite. The upper tail of density measurements was also restricted in estimation.

Interpolation Parameters: The choice of interpolation parameters is the most sensitive decision in modelling this deposit, due to the orientation of much of the drilling along, or sub-parallel to, the long (vertical) axis of the deposit. A lot of iteration was required to define the optimal search, in particular to control the presence of negative weights due to screening effect. Key factors in designing the search were

• Choice of composite length (10 metres) • Use of split quadrants • Specification of maximum number of samples (both per

quadrant and per hole.


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For the variables Cu, Au and U, 4 split sectors were used (octants), with a minimum of 4 samples required, and a maximum of 2 samples / sector / line required. This allows up to 4 samples (=40 metres of sampling) to be selected from any individual drill hole, and a maximum of 16 samples (160 metres of sampling) to be used in total. The same parameters were used for the second pass, inside a larger search. For Ag, a minimum of 8 samples, and maximum of 4 samples / sector / line were required for all domains except the low grade Cu domain (2 and 1 respectively). Density estimates required an optimum of 4 per sector and 3 per line.

Estimates were generally run in two passes –first with a small search, then with an enlarged search large enough to fill all blocks in the domain.

95% of blocks with an estimated grade above 0.7% Cu have a maximum anisotropy-weighted distance to samples of 48, 67, and 135 metres for Indicated, Inferred (interpolated) and Inferred (extrapolated) Resources respectively. The corresponding maximum distance to nearest samples for all blocks is 69, 80 and 149 metres respectively.

The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.

No previous mining has been carried out on this deposit. Significant new data has been added to the deposit since the previous Mineral Resource estimate. Geological interpretations and resource estimates represent incremental improvements over previous work.

The assumptions made regarding recovery of by-products.

The current assumption is that revenue will only be obtained from Cu, Au and Ag; however there are potential credits for Fe and REE’s.

Estimation of deleterious elements or other non-grade variables of economic significance (e.g. sulphur for acid mine drainage characterisation).

Mineral species abundances of hematite, quartz, muscovite and chamosite have been estimated from calculated mineralogy data derived from multi-element analyses. Chamosite in particular is believed to be an important consideration in cave-ability.

In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.

Block size used is 10x10x10 metres. This is deliberately relatively small in relation to planned cave dimensions, and to horizontal drill-hole spacing, in order to adequately represent domain geometry without the necessity to account for volume proportions by either block partials or sub-blocking.


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Sample spacing varies widely. In the vertical direction, composites are spaced at 10 metres downhole. In the horizontal plane, the spacing between holes is not uniform. In the higher grade core of the deposit, the spacing is targeted to 50x50 metres, increasing to ~100x100 metres outwards from here. Since holes have been angled to obtain information on lateral controls, the horizontal spacing varies.

The tonnage and grade of block estimates were checked against a theoretical distribution of tonnage and grade for blocks of this size, derived from the Discrete Gaussian model of change of support. These are sufficiently close to make OK estimates a reliable basis for reporting and mine planning.

Any assumptions behind modelling of selective mining units.

The concept of an SMU is a difficult one for a block cave. Of more interest is the position of ore/waste transitions. Blocks in this estimate were made sufficiently small as to provide resolution of domain geometry in the block model.

Any assumptions about correlation between variables.

Strong correlations exist between some variables. Variables have been estimated independently. Other than F, all other 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.

The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available.

Estimates were carefully validated by: visual validation in 3D; checks include that all blocks are filled, that block grades match sample grades logically, that there are no artefacts present for choice of search parameters, 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; comparison of global grade tonnage curve of estimates against grade tonnage curve derived from modelling of change of support (assesses whether smoothing in linear estimation is acceptable).

Moisture Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.

Tonnages are estimated on a dry basis noting that core recovery is very high (>99%), core is competent and of very low porosity.


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Criteria Explanation Reported Cut-off parameters

The basis of the adopted cut-off grade(s) or quality parameters applied.

Block caving has been identified as a technically and economically viable mining method for Carrapateena. Estimated total operating costs for block caving are A$22 per tonne. This corresponds to a cut-off grade of about 0.3% Cu including gold credits. Within the Mineral Resource there is a sufficient volume of contiguous mineralisation above a cut-off grade of 0.3% Cu to support a block cave mine.

Mining factors or assumptions

Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It may not always be possible to make assumptions regarding mining methods and parameters when estimating Mineral Resources. Where no assumptions have been made, this should be reported.

Preliminary geotechnical studies have indicated that the Carrapateena deposit will cave but that fragmentation early in the mine life likely to be coarse. Pre-conditioning by hydro-fracturing and blasting may be used to improve fragmentation and hence the build-up in ore production. Sediments which overlie the mineralisation will fragment more finely and contribute dilution to the caved ore mass. Dilution will increase as the caved mass is drawn down.

Metallurgical factors or assumptions

The basis for assumptions or predictions regarding metallurgical amenability. It may not always be possible to make assumptions regarding metallurgical treatment processes and parameters when reporting Mineral Resources. Where no assumptions have been made, this should be reported.

Metallurgical test work conducted over the last 12 months from samples selected via a geo-metallurgy study to ensure representativeness has shown that a conventional crushing, grinding and flotation circuit is suitable for copper extraction from the mineralisation with concentrate grades of 30 to 35 percent copper at 85 to 90 percent recovery achievable. Gold is recoverable by flotation at a grade of 10 grams per tonne with 75 percent recovery achieved with a potential further 5percent recoverable by gravity techniques. Further metallurgical test work will be carried out during the Pre-Feasibility Study stage of the project. Concentrate grades and recoveries are averages from specific material type testing within the footprint suggested by geotechnical and mining studies. These material types are expected to account for the bulk of the mineralisation within this footprint.


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Criteria Explanation Reported Bulk density Whether assumed or

determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples.

Dry Bulk density was determined for almost every second sample using the water immersion method. For OZ Minerals samples the density of the entire metre of core was measured for NQ core samples. OZ Minerals routinely repeated measurements and also had 2 standards each made of aluminium and titanium for QAQC purposes.

Classification The basis for the classification of the Mineral Resources into varying confidence categories.

The basis for resource classification is underpinned by the robustness of the conceptual geological model, quality of data and 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 geological interpretation. Consultants from Quantitative Geoscience provided advice to the Competent Person relating to the confidence in the estimated grades and density. From the perspective of estimation, confidence of estimates is largely governed by distance from samples, and the geometry/spatial distribution of samples contributing to block estimates. A series of parameters relating to sample geometry and estimation confidence were stored in the model. Thresholds based on; 1/ the distance to the nearest samples 2/ number of samples available for a specific search geometry and 3/ Kriging standard deviation of that search were used to store an estimation confidence classification into each block. This was then integrated with information from other sources to arrive at the final confidence classification. The Competent Person also undertook independent checks of OZ Minerals’ and qualified geologists advice to ensure data quality and estimation quality and implementation were satisfactory.

Whether appropriate account has been taken of all relevant factors i.e. relative confidence in tonnage/grade computations, confidence in continuity of geology and metal values, quality, quantity and distribution of the data.

Yes


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Criteria Explanation Reported Classification (continued)

Whether the result appropriately reflects the Competent Person(s)’ view of the deposit.

Yes

Audits or reviews.

The results of any audits or reviews of Mineral Resource estimates.

No independent reviews or audits have been undertaken to date.

Discussion of relative accuracy / confidence.

Where appropriate a statement of the relative accuracy and/or confidence in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors which could affect the relative accuracy and confidence of the estimate.

Consultants from Quantitative Geoscience (QG) undertook a ‘change-of-support’ analysis to assess the likely distortion of the grade-tonnage curve in using OK on relatively small blocks (10x10x10 metres). Given the low level of selectivity available for the proposed mining method (block-caving) and the fact that the blocks would be aggregated for the purposes of planning studies the level of confidence in the estimate was deemed to be commensurate with that implied by the classification of resources.

The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages or volumes, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

The block size of 10x10x10 metres is very small when compared to the proposed mining method of Block Caving for the bulk of the deposit. However, the continuity of mineralisation, drilling grid and estimation methods and parameters employed mean that the estimated grades will be very continuous within a domain. As such it is unlikely that significant quantities of sub-cut-off grade material will sit within the extensive above-cut-off grade material.

These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

n/a


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Competent Person Statement

This Minerals Resource Statement has been compiled in accordance with the guidelines defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code 2004 Edition). The information in this report which refers to Mineral Resources is based on information compiled by Stuart Masters who is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) (108430). Stuart Masters is employed by CS-2 Pty Ltd and is a consultant to OZ Minerals. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. 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 BSc (Geology), CFSG, has over 26 years of relevant experience as a geologist including 9 years in Iron-Oxide-Copper-Gold style deposits. Stuart Masters has visited site on many occasions since OZ Minerals acquired the project. Stuart Masters CS-2 Pty Ltd


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Contributors

• Overall − Stuart Masters, CS-2 Pty Ltd

• Data Quality − Bruce Whittaker, OZ Minerals

• Geological Interpretation − Ryan Pippy, Mick Sawyer, John de Little, Bruce Whittaker, OZ Minerals

• Estimation − Orlando Rojas, Mike Stewart, Quantitative Geoscience

Stuart Masters is solely responsible for resource classification but has relied on, and reviewed, advice from:

• OZ Minerals’ geologists regarding data quality and interpretation; and • Geostatisticians from Quantitative Geoscience (QG) regarding grade modelling.

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Mineral Resource Explanatory Notes Carrapateena Project - …...EW section and isometric views...

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