Pahtohavare (Cu-Au) Project

Project History
Project Geology
Recent Activities
JORC Resource Estimate
JORC Exploration Target
Planned Activities

The Pahtohavare project is located 8km south-west of Kiruna, a full-service mining town in Norrbotten County, northern Sweden. The project is also very well positioned with regard to major infrastructure; including sealed roads, power and open-access railway.

Pahtohavare provides Shareholders with a unique investment opportunity - a high grade copper-gold project located close to modern infrastructure and first class mining services, in a low sovereign risk, mining friendly country.

The compelling attributes of the Pahtohavare Project are:

Project History

Copper mineralisation was first discovered at Pahtohavare in 1984 by the state-owned exploration company Swedish Geological AB and later mined by Finnish mining company, Outokumpu in 1984. Three Pahtohavare Project is currently comprised of three separate deposits namely;

Mineralisation has also been identified in an area referred to as the Eastern Zone.

Figure 1: Simplified geological map of Pahtohavare showing the different deposit locations and historic drilling.

Following the discovery, production took place between 1989 and 1996 where Outukumpu mined a total of 1.7Mt @ 1.9% Cu and 0.9g/t Au from the Southern and South-Eastern deposits through open-cut and underground mining.

Ore mined from Pahtohavare provided satellite feed to Outukumpu's processing facility at the Viscaria Copper Mine (located <10km to the north of Pahtohavare). The Viscaria Mine operated between1982 to 1996. Operations ceased due to the low copper price at the time (cA$1.00/lb) and a strategic decision to exit most of its mining operations and move into downstream mineral processing.

Hannans acquired the Pahtohavare permits from Anglo American Exploration BV and Rio Tinto Mining & Exploration Ltd as part of a broader package of tenements prospective for iron, copper and gold in 2010.

Hannans main focus since the acquisition of these permits has been on exploring the iron potential at the Rakkuri deposits (~3km to the east). A broad technical review of Hannans project portfolio was conducted in late 2012 and has since identified the significant potential for additional Cu-Au mineralisation at Pahtohavare.

Project Geology

The Pahtohavare deposits have been classified as epigenetic copper-gold deposits hosted in Proterozoic aged, Kiruna Greenstone Group rocks comprised of basic lavas and intrusions, basic tuffs and tuffites and acid volcanics. Locally, the majority of mineralisation is hosted in a hydrothermally-altered package of albite-quartz, along with graphite schist. At Central the mineralisation is oxidised to an approximate depth of 100m whereas at Southern and South Eastern the mineralisation is fresh sulphide mineralisation, namely chalcopyrite. Spatially the three deposits are located on the limbs and in the hinge position of a kilometre-scale antiform.

Recent Activities

In late 2012 Hannans initiated a high-level technical review of the Pahtohavare Project this included compiling, digitising, validation and interpretation of historical datasets. Several immediate geophysical targets were identified from historic airborne EM datasets and in early 2013 Hannans completed a ground-based fixed-loop EM survey over the targets. In mid-2013 SRK Consulting completed a detailed review of the Pahtohavare Project which resulted in a 3D geological model being developed and a maiden drill programme to be designed.

During the summer field season in 2013 Hannans completed 8 RC drillholes at the Central Zone deposit; the drilling was designed to test shallow, high potential targets where drilling by previous explorers was in-effective due to their failure to penetrate through a shear zone located above the ore zone. In addition to testing high potential targets, the infill component of the RC program was designed to decrease the profile spacing from 50 metres (the current spacing) down to 25 metres and this is expected to assist in resource definition.

The maiden drilling campaign at Pahtohavare was met with many technical difficulties including insufficient compressed air, broken ground (at depth) and the wet and boggy surface which made moving the heavy drill equipment between holes difficult. As a consequence the drill programme was ended prematurely and the deeper EM targets were not tested. Despite the reduced programme and technical difficulties the drilling did intercept some excellent high-grade copper-gold intercepts from the Central Zone; significant intercepts included:

PARC13008

PARC13002/PARC13002B (Same collar position)

PARC13005

Please refer to the Company's Website (www.hannansreward.com) for ASX announcements pertaining to the results listed above.

Figure 2: Drill Profile 5 from the Central Zone deposit. Holes coloured orange are Hannans drillholes completed in 2013.

Figure 3: Plan map of Central Zone showing historic drilling (black dots), Hannans 2013 drilling (red stars) and proposed drillholes (red dots)

JORC Resource Estimate

In August 2013 Hannans released a maiden JORC Mineral Resource Estimate for the Pahtohavare Project. The estimate was undertaken to reconcile historic pre-mining resource calculations and post-mining close-out reports. The JORC Mineral Resource Estimate was completed by independent consultants, SRK Consulting Sweden AB (SRK) in accordance with the principles of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2012 Edition (JORC 2012). (Hyperlink to ASX Announcement dated 31st January 2014)

Copper mineralisation wireframes were generated using a 0.4% Cu cut-off to produce a block model. SRK subsequently undertook a Whittle analysis and high-level evaluation of possible underground mining scenarios on the block model in order to determine the potential for eventual economic extraction from open pit and underground mining methods. The open pit JORC Inferred Mineral Resource is restricted to all material falling within a Whittle pit shell, and above a CuEq1 cut-off grade of 0.56% for oxide material, and 0.43% for sulphide material. The underground JORC Inferred Mineral Resource is restricted to all sulphide material underneath the Whittle shell above a CuEq1 cut-off grade of 1.48%. The Whittle analysis and optimisation for the mineralisation at Pahtohavare produces a JORC Inferred Mineral Resource of 2.3Mt @ 1.74% Cu, 0.6g/t Au, 2.31% CuEq1.

Area Resource
Category
Mt Cu (%) Au
(g/t)
Cu Eq
(%)
Mining Scenario Material
Central Inferred 1.4 1.8 0.6 2.4 Open Cut Oxide
Southeast Inferred 0.8 1.7 0.5 2.1 Open Cut + Underground Sulphide
South Inferred 0.1 1.3 0.6 1.9 Underground Sulphide
COMBINED Inferred 2.3 1.7 0.6 2.3

Table 1: JORC Inferred Resource-Pahtohavare Project. (Open pit resources calculated using a Whittle optimised cut-off grade of 0.56% CuEq1 for oxide material and 0.43% CuEq1 for sulphide material. Underground resources calculated using a 1.48% CuEq1.)

Figure 4: Open pits in relation to underground workings (25 m grid), Southern (left) and South Eastern (right).

JORC Exploration Target

In addition to the JORC Inferred Mineral Resource, SRK also generated a JORC Exploration Target (see Table 2 below) for the Eastern Mineralisation. This is a result of the historic drilling being on a sparse and variable grid, and due to lack of historic drill core re-assaying.  SRK estimated grades and tonnages to provide an analysis of the potential. As a result, SRK has delineated an Exploration Target of between 2?4Mt of material grading between 0.3?0.7% Cu (with negligible Au grades) for the Eastern area, based on blocks within the digitised mineralisation wireframes, but not reported above a cut-off grade. The potential quantity and grade is conceptual in nature and there has been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource. Based on the copper equivalent cut-off grades used to report the Resources in the Resource statement, only a minor portion of the currently outlined Eastern area would be above the cut-off grade used for Resource reporting. However, this material may have elevated Zn and Pb grades, which were not taken into account during the Resource estimation process.

Area Category Mt Cu (%)
Eastern JORC Exploration Target 2 - 4 0.3 - 0.7

Table 2: JORC Exploration Target-Pahtohavare

Planned Activities

Hannans believes additional value at Pahtohavare can be obtained by completing first-pass metallurgical testwork on the high grade copper-gold oxide material from the Central Orebody, testing for a continuation of the copper sulphide mineralisation and completing geochemical sampling along the untested contact that hosts the known copper mineralisation.

Hannans has engaged Independent Metallurgical Operations Pty Ltd (IMO) to complete Stage 1 of testwork on the oxide ore at the Central Orebody. Stage 1 has comprised a review of historical testwork reports and preparation of a testwork flowsheet for the oxide material. Quotes are being obtained to complete the laboratory testwork as defined in the flowsheet. The laboratory testwork will be split into two stages; Stage 1 will include sample receipt and preparation and initial ore characterisation tests. The results of the ore characterisation testwork will enable IMO to refine a budget for Stage 2 which will include laboratory testwork and reporting on the flotation and leaching performance of the oxide ore.

Subject to satisfactory results of metallurgical testwork including development of an environmentally and socially acceptable processing route, there may be potential for early cash flow from the near surface high grade copper-gold deposit. An alternative option is to assess whether the oxide and sulphide material can be mined and transported by rail to a nearby processing facility.

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