June 14, 2012

Higher grade cobalt mineralisation at its Railway Cobalt Prospect in New South Wales has been intersected by Broken Hill Prospecting and has begun a resource assessment using the new data.

The resource assessment of the Railway Prospect near Broken Hill is expected to be completed in late July and planning is also underway for a scoping study to investigate the potential for a 7.5 million tonne per year open cut mine.

This will be capable of producing a pyrite concentrate containing about 7,000 tonnes of cobalt each year.

The study will focus on mining costs and mill to upgrading the cobaltiferous pyrite through gravity and flotation processes and to produce a pyrite concentrate with a grade of about 0.5% cobalt.

Options to process the concentrate will be reviewed to determine optimal and cost effective recovery.

Broken Hill is also planning commercial and marketing studies for cobalt concentrate, cobalt metal as well as by-products such as ceramic grade feldspar, sulphuric acid and high iron residue.

The 20-hole drilling programme was designed to explore for new deposits of economic, near surface cobalt mineralisation to complement the company's existing resources at the nearby Pyrite Hill and Big Hill Cobalt deposits.

While Central African mines account for over 65% of recorded global cobalt production in 2011, the company believes that its deposits; excellent road and rail access; and proximity to mining infrastructure at the town of Broken Hill; places in it a good position to fast track production should growing concerns over future security of cobalt supply lead to upward cobalt price fluctuations.

It also allows the company to investigate several processing options for future mine development.