Cookes Creek Tungsten

Hazelwood’s focus is the Cookes Creek nickel sulphide and tungsten project located near Nullagine in the East Pilbara of Western Australia.

The project is situated approximately 220 kilometres northwest of Newman and 30 kilometres northwest of Nullagine.

History

Tungsten was mined from the historical Cookes Creek mining centre during the 1950’s. The mining activity during that era targeted wolframite vein hosted mineralisation. The project is the largest recorded historic production centre for tungsten in the Pilbara.

At the Big Hill target, extensive diamond drilling, costeaning and preliminary metallurgical testwork was conducted as recently as 1984 by Kalgoorlie Southern Gold Mines NL and Mitsui Mining and Smelting Co. A shallow dipping zone of sheeted vein scheelite – fluorite mineralisation was delineated.

Surface apparent widths of mineralisation at Big Hill of up to 70 metres at 0.28 per cent WO3 were returned from channel sampling. 40 diamond drillholes completed on a nominal 50 metre by 25 metre pattern, confirmed the continuation of significant mineralisation at depth, and the deposit remains open down-dip.

In addition to Big Hill, several other occurrences of scheelite mineralisation were noted, flanking the Cookes Creek Granite, which is considered the source of mineralisation. Rock chip samples of up to 7.6 per cent WO3, stream sediment anomalism and significant drillhole intercepts were returned from a number of localities.

Hazelwood’s Activities

The Company’s tungsten interests at Cookes Creek are held through its wholly owned subsidiary BigHill Resources Limited.

Extensive metallurgical and process flow design work has been undertaken upon bulk deposits and core extracted at the Big Hill Tungsten Project. A sample concentrate has been extracted and confirmation received that it meets specifications of most tungsten concentrate end users. A simple gravity circuit has been confirmed as the appropriate means for the production of tungsten concentrate.

In-fill diamond and RC drilling has been conducted at Big Hill by the Company to provide data to enable a Mineral Resource estimate. The Big Hill deposit had previously been drilled on a nominal 50 metre by 25 metre pattern by previous explorers, and the recent drilling campaigns by the Company have increased the intensity of the drilling, and identified controls on mineralisation. Over 160 holes have been drilled into the deposit.

Scheelite and Fluorite mineralisation at Big Hill is hosted in sheeted veins and fractures within a shallow-dipping layered intrusion. Mineralisation remains open at depth and along strike. Assays received to date from drilling and metallurgical samples indicates an unusual style of mineralisation in that it is free from deleterious elements such as molybdenum and base metals. A reconnaissance drill hole approximately 350 metres south of the main Big Hill deposit confirms mineralisation to be present and to be open at depth. Reconnaissance holes to the east confirm mineralisation 250 metres and 550 metres east of the main area of high intensity drilling.

Historical drilling, costeaning and geochemical sampling at Cookes Creek provides a number of additional tungsten Exploration targets. These targets occur around the rim of the Cookes Creek Granite, identified as a source of mineralisation. The Company has tenure covering the entire Cookes Creek Granite, providing significant Exploration upside.

JORC Resource

Based upon the activities detailed above, Hazelwood completed its estimation of its maiden JORC resource on 21 April 2009. Micromine Consulting Pty Ltd prepared the report and expressed the view that at a cut-off grade of 0.1% WO3, the Big Hill Tungsten Deposit contained a tungsten mineral resource of 8.97 million tonnes at 0.17% WO3 for approximately 1.6 million metric tonne units (mtu) contained tungsten.

Further drilling commenced in June 2009 to evaluate the potential to upgrade the size and category of the resource. A resource upgrade is anticipated to be available in August/September 2009, followed shortly thereafter by an ore reserve estimation.

Metallurgy and Process Flow Design

Significant metallurgical and process flow design testwork was undertaken early in the evaluation of the Big Hill Tungsten Deposit. Whilst prior explorers have demonstrated the ability to process scheelite from a floatation circuit, Hazelwood has pursued processing by a simple gravity circuit. The unique nature of mineralisation from the Big Hill Tungsten Deposit and its coarse grain size enables recoveries in excess of 75% and concentrate grades of up to 71% to be produced from a gravity circuit consisting of spirals and tables. The large liberation size minimises grinding aiding recovery and reducing production costs. Hazelwood is continuing metallurgical evaluation with a view to:

• confirming the final design of the gravity based process flow design
• confirming suitability of the process flow design based upon an analysis of variability that may exist across the deposit and at depth
• confirming the ability to incorporate x-ray ore sorting technology into the plant to reject waste material early in the process at a significant reduction in processing costs.

Prefeasibility, Engineering, Capex and Opex

Hazelwood appointed Micromine Consulting to advise on preliminary pit optimisation. On 28 May 2009 Hazelwood announced that preliminary results suggested:

• less than 1:1 strip ratio for life of mine
• five year operational life on base case tungsten price scenario
• cash flow positive at low tungsten prices
• production of 200,000-220,000 mtu of tungsten per annum
• cash operating costs of less than US$100.00 per mtu.

In June 2009 Hazelwood appointed GR Engineering Services (GRES) to provide engineering for the Big Hill prefeasibility study. GRES is tasked to establish plant Capex and Opex for the prefeasibility study.

Hazelwood is now well advanced in the completion of the prefeasibility study. Successful capital raisings in 2008 and 2009, despite difficult financial market conditions, have provided the Company with sufficient funds to progress the prefeasibility study to completion together with additional drilling to upgrade the initial resource estimate and proceed to ore reserve estimation. Completion of further drilling, metallurgy, engineering, environmental and financial modelling is anticipated over coming months with completion of the prefeasibility study in September 2009.

Post completion of a successful prefeasibility study the Company will progress to a definitive feasibility study (DFS). Discussions are underway with potential strategic partners and investors for funding through DFS, construction and commissioning of the proposed mine and plant. Production of concentrate is anticipated to commence in late 2010/early 2011. Planning focuses upon the mining of 1.5 million tonnes of ore per annum and production of 200,000-220,000 mtu WO3 per annum.