ME2018: South32 Ltd.

Spun out of BHP Billiton in 2015, South32 Ltd. burst onto the mining scene with a portfolio of high-quality assets producing aluminum, coal, manganese, nickel, silver, lead and zinc.

This Australia-based miner went into business as the world's largest producer of manganese ore and owner of the world's largest silver mine. The company's impressive portfolio also boasts two aluminum smelters and one of the world's leading ferronickel operations.

With mines and smelters in Australia, South Africa and Brazil, South32's entire portfolio was located south of the equator.

This Aussie miner's first reach into the Northern Hemisphere was a US$150 million deal to earn up to a 50 percent interest in Trilogy Metals Inc.'s Upper Kobuk Mineral Projects, a vast land package that blankets most of the renowned Ambler Mining District.

To keep its UKMP option in good standing, South32 agreed to invest US$30 million in exploring the copper-rich land package over a three-year period, starting in 2017.

Arctic, the most advanced UKMP project, hosts 43.04 million metric tons of probable reserves averaging 2.32 percent copper, 3.24 percent zinc, 0.57 percent lead, 0.49 grams per metric ton gold and 36 g/t silver.

A prefeasibility study published earlier this year details plans for an open-pit operation at Arctic expected to produce 1.9 billion pounds of copper, 2.4 billion lb of zinc, 405 million lb of lead, 367,531 ounces of gold and 40.2 million oz of silver over an initial 12-year mine life.

The copper-rich Bornite deposit about 16 miles south of Arctic, however, is where South32 is investing its funds.

Prior to South32 coming on-board, Trilogy Metals had already outlined some 2.7 billion lb of copper in an open-pit resource for Bornite, averaging roughly 1 percent copper and another 3.7 billion lb in a deeper underground resource that averages about 2.9 percent copper.

In addition to the copper, Trilogy had an inaugural resource calculated for the cobalt content at Bornite.

The Bornite open-pit is estimated to contain 124.6 million metric tons of inferred resource grading 0.017 percent (45 million lb) cobalt; and the underground section is estimated to contain another 57.8 million metric tons grading 0.025 percent (32 million lb) cobalt.

Looking to expand this already globally significant copper deposit, South32 invested US$10 million in a 2017 drill program that demonstrated the underground portion of Bornite covers a 1,500- by 2,500-meter area beyond the previously defined resource.

All holes drilled to the target depth in this expansion area tapped copper and cobalt mineralization, indicating a significant increase in both metals but were too widely spaced to calculate a resource for this expansion area.

The wide spacing of the holes was largely due to South32 being more interested in understanding the extent of Bornite mineralization than calculating the resource there.

This year, a US$10.8 million program included roughly 10,000 meters of infill and expansion drilling at Bornite. That work, along with the 8,437 meters drilled last year, will be used to calculate an updated copper-cobalt resource for Bornite.

South32 and Trilogy also initiated a metallurgical study to investigate various methods of recovering both the copper and cobalt at Bornite. Initial results from this work are expected in early 2019, followed by the updated Bornite resource calculation.

Once this information is in-hand, the partners plan to move forward with a preliminary economic assessment aimed at providing the first glimpse of the viability of a combined open-pit and underground mining operation at Bornite.

The explorers expect the PEA to be completed by midyear 2019.

-SHANE LASLEY

South32 Ltd. - ASX/LSE/JSE: S32

Chairman: David Crawford

Chief Executive Officer: Graham Kerr

Manager Corporate Development: Daryl Steane

Level 47,108 St Georges Terrace, Perth, 6000, Western Australia

Tel: +61 8 9324 9000