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Southern Hemisphere Mining: Size Of High Grade Copper Zone At Llahuin Pave Ways For Resource Upgrade

Southern Hemisphere Mining (ASX: SUH) has delivered further drilling results from its Llahuin Copper Project in Chile which have extended the known size of the higher grade core within the Central Porphyry Zone.

These results will underpin a Resource upgrade, which is scheduled for later this month.

Adding to the potential of the project, the results also support the plan to feed high grade material into the plant in the early stages, boosting the project's economics.

Highlight assays include:

- 326 metres at 0.56% copper equivalent from 70 metres, including 128 metres at 0.8% copper equivalent;
- 254 metres at 0.52% copper equivalent from 168 metres, including 192 metres at 0.57% copper equivalent from 202 metres;
- 366 metres at 0.63% copper equivalent from 102 metres, including 324 metres at 0.66% copper equivalent from 128 metres; and
- 440 metres at 0.75% copper equivalent from 2 metres, including 208 metres at 1.2% copper equivalent from 108 metres.

Trevor Tennant, managing director, said the high grade core was adding substantial value to Llahuin.

"Llahuin's worth is growing rapidly on the back of these increases in the size of the high grade zone.

"The ability to feed high grade material to a plant in the early stages of production will boost the economics of the project significantly, both by increasing production and reducing costs.

"We are looking forward to finalising the resource upgrade, reporting further results from this high-grade zone and advancing the Llahuin project."

Potential material increase to Resource

Llahuin features similar geological characteristics to Teck Resources' (TSX: TCK, NYSE: TCK) nearby 400 million tonne Carmen de Andacollo copper mine.

The current Measured and Indicated JORC Resource for Llahuin is 106 million tonnes at 0.4% copper equivalent (0.3% copper and 0.09 grams per tonne gold) for 318,000 tonnes of contained copper and 307,000 ounces of gold.

Southern Hemisphere's newly acquired Ferrocarril concessions, immediately to the south of the Central Porphyry Zone, could deliver a material increase to the Resource tonnage, with the concessions demonstrating similar geology and footprint to the Central Porphyry Zone.

While the Central Porphyry Zone is where most of the drilling has occurred, Cerro and Ferrocarril appear to be identical to the Central Porphyry Zone.

There is a major opportunity for increasing Resource tonnages at Ferrocarril at a low strip ratio due to the mineralisation being at surface, no oxide zone, and sulphide hypergene right from the surface.

The upgraded Resource is expected to comprise a large number of high grade holes, potentially increasing the grade as well as tonnage.

The Llahuin Ferrocarril Zone is immediately south and adjacent to the Llahuin Cerro de Oro Zone.

Work has progressed in mapping and better understanding the surface expression of the Ferrocarril porphyry.

This porphyry is elongated with a surface foot print in the order of 1,200 metres in length and widths varying from 60 to 20 metres.

Southern Hemisphere plans to gain a better understanding of the copper-gold grade distribution at Ferrocarril by completing an induced polarisation survey followed by a drill program, which will include diamond drill holes to test at depth.

Scoping Study

A Scoping Study at Llahuin is currently underway, with the objective of defining an operation capable of producing between 45,000 and 50,000 tonnes per annum of copper metal plus gold credits.

This is expected to be completed early in the December quarter of 2012.

Analysis

Southern Hemisphere has a market cap. of A$21 million and with cash of $4 million and no debt has an enterprise value of $16 million, which appears slight considering the company has a JORC Resource of 318,000 tonnes of copper and 307,000 ounces of gold, which is likely to see a material increase in tonnage in the September quarter of 2012.

The confirmation of a high grade core at the Central Porphyry Zone and the potential to significantly increase the Resource with the addition of the Ferrocarril concessions should spark investor interest given strong upcoming news flow.

Llahuin's worth is growing rapidly on the back of these increases in the size of the high grade zone. For investors not yet dialled into Southern Hemisphere, current valuation look appealing based on a building resource and plan for early high grade plant feed.

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