Overview The Hinoba-an Copper Project is located in the municipality of Hinoba-an in the province of Negros Occidental in the Philippines, approximately 700 km south of Manila. Copper Resources effectively has a 92.5% economic interest in the Hinoba-an Project, subject to a 3% Net Benefits Royalty. The project area covers approximately 2,990 hectares referred to as the Colet Claims and includes two known porphyry copper deposits, the DJ deposit and the A1 deposit. Pre-feasibility studies indicate that the project has approximately 2 billion pounds of recoverable copper which could be profitably mined by open pit and processed in a conventional flotation milling operation to recover copper concentrate and other by-products.

Resources

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Over the years, the Hinoba-an property has been extensively explored including 48,244m of diamond drilling, 10,906m of reverse circulation drilling, metallurgical test work and preliminary engineering and design analysis. Pre-feasibility studies indicate that the deposits are reasonably well drilled and that due attention has been paid to core handling, sampling and assaying. A 1998 scoping study undertaken by International Pursuit (Philippines), Inc., a subsidiary of International Pursuit Corporation at the time, estimated geological resources at the DJ and A1 deposits at various cut-off grades as follows:

The most recent mineral resource calculation was completed by Zinc and Copper Corporation of Australia Limited (ZCCA) in 2001. ZCCA estimated an indicated mineral resource for the two deposits at 240.6 million tonnes at 0.373% copper at a cutoff grade of 0.25% copper, which is equivalent to approximately 2 billion pounds of contained copper.

Preliminary work indicates that there may also be appreciable credits from gold, silver and molybdenum; however, additional drilling and testwork needs to be carried out to determine if their content and recovery can be confirmed and properly quantified.

Scoping Study

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The scoping study undertaken by IPPI in 1998 envisioned a 15 year mine life for the Colet Claims based on a geological resource of 254 million tonnes at 0.46% copper at a 0.30% copper cut-off. The study showed that the deposits could be profitably mined by open pit method with the ore processed in a conventional flotation milling operation to produce approximately 2 billion pounds of recoverable copper and other by-products. Annual production was estimated at 56,000 tonnes of recoverable copper with an average cash cost (including smelting, refining and by-product credits) of $0.48/lb of copper.

The scoping study estimated that the project had a discounted net present value (NPV) of $243 million at a 10% discount rate using a copper price of $1.00/lb. The internal rate of return (IRR) of the project was estimated at 28%.

At the time of the scoping study, IPPI was still evaluating the economics of two satellite deposits. As a result, the project economics included production from these properties, in which the Group no longer has an interest. However, since these deposits were assumed to be mined in the last five years of the proposed 20 year mine life, the Directors believe they have a minimal impact on the results of the study.

Work Programme

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Copper Resources has engaged IMC Mining Solutions Pty Ltd (IMC) of Brisbane (Australia) to manage the completion of a BFS on the Hinoba-an Project in the Philippines. In their initial review, IMC found that interim drilling results from the DJ deposit on which Copper Resources had aimed to base the project would support an operation of less than 10 years at the proposed treatment rate of 15 million tonnes per year. Infill drilling at the A1 deposit at Hinoba-an is recommended to bring it into the BFS programme in order to achieve a minimum mine life of 15 years. IMC also recommended additional infill drilling on the south side of the DJ deposit, as well as additional drilling to identify the potential of supergene enriched copper ore.

IMC indicated that there exists the potential through pit optimisation studies for mining higher grade ore with a lower strip ratio in the earlier years of the mine. Based on earlier mining feasibility studies conducted in 1998 by IPPI, it is expected that a head grade of 0.49% copper in years 1-5 can be achieved, which would be extremely beneficial to the return on the project.

IMC concluded that the best way to proceed would be to complete a new scoping study, which would determine the scope of the infill drilling programmes and help formulate the content of the BFS, in order to optimise project parameters, such as mining and milling throughput rates to maximise project return. The scoping study is expected to be completed by the end of 2007 and the BFS, including the new infill drilling, to be completed 18 months after the scoping study.