Horseshoe Lights was, in its heyday, one of Australia's major sources of copper, and might still be if the price of the metal had not plunged in the 1980s and 90s.

When the last copper was produced at Horseshoe Lights in 1994 it was selling for about US65c a pound, a fraction of the current price of around $US4.10/lb.

The higher price is one reason why the mine's latest owner, Horseshoe Metals, is confident that it can breathe fresh life into a project with a history dating back to its discovery some 140 kilometres north of Meekatharra in 1946.

Other factors which point to the revival of the mine, and a reason for investors to follow Horseshoe Metals are:

- An existing resource in and around the original pit which represents almost as much copper as that mined in total by a series of previous owners.

- Exploration, starting with drilling close to the historic workings, with data flowing into an expanded JORC-code compliant resource scheduled for release later this year.

- The potential to find more copper, and possibly gold, on Horseshoe's 297 square kilometre tenement package in one of Australia's hottest exploration locations, which has become even hotter thanks to the rich Doolgunna discovery of Sandfire Resources.

For Horseshoe Metals managing director Neil Marston this latest phase of work at Horseshoe Lights is both a fresh challenge and a trip down memory lane.

"I've been involved with the mine twice before," Marston said.

"I worked for Barrack Mines when Horseshoe Lights was part of its stable and later with Sabminco [now Grange Resources] back in 1992-1994 when we reopened the mine and made the goodbye-cut to take the open pit down to the 383 metre level [215m below the surface]."

It was out of Grange that Horseshoe Metals was floated in June last year, without causing too much of a splash until earlier this year, when its shares popped sharply higher on the back of some high-grade copper drilling intersections to a peak price of 82.5c in late January, retreating more recently to trade around 24c.

The share price decline, when coupled with the expected news flow over the rest of 2011 as a fourth phase of drilling gets underway, followed by the fresh resource statement, could signal an opportunity for investors with an eye on a stock with a mine development in its sights and exploration potential to follow.

But, before anyone talks about redeveloping a once prominent mine located just 75km north-west of Doolgunna, Horseshoe Metals has a number of targets to hit. The most important of those is to establish a resource of around 100,000 tonnes of copper in and around the old mine, with a possible contribution from another historic copper project it owns at Kumarina, 120km to the northeast.

As it now stands, the resource inventory at Horseshoe Lights is 48,000t contained in 4.9Mt of 1% copper ore (using a 0.25% cut-off grade).

This starting point is just short of the estimated 54,800t extracted over multiple mining campaigns by earlier miners which produced both copper and gold. Most of that gold was located in discrete parts of the orebody and it is not expected to factor prominently in the next phase of production.

From a historic perspective, production from Horseshoe Lights looks like this:

- Gold: 219,000 ounces from 1.6Mt of ore grading an average of 4.2 grams per tonne - plus another 94,000oz of gold produced in association with copper ore.

- Copper: 54,800t from 1.7Mt of ore grading 3.2% copper, including super-high grade direct shipping ore known as chalcocite - the same material Sandfire plans to use as the launch pad for Doolgunna.

By present mining standards ore at 4.2gpt gold and 3.2% copper is regarded as very high grade.

To understand what's happening at Horseshoe Lights it's worth starting with a little exploration history (and accompanying geology) to get a better feel for the recent work, and Horseshoe Metals' current aims.

Geologically, Horseshoe Lights is located in a broad deformation zone about 600m wide, near the contact between the Bangemall group of rocks and the Narracoota volcanics - Doolgunna's host rock unit.

Gold in the mineralised structure was the target of the first miners in 1946, who pulled out 27.8 kilograms in small workings based on near-surface gossans (intensely weathered rock).

The US company Asarco, then parent of Mt Isa Mines (MIM Holdings), was the first corporate miner, working the site between 1949 and 1955, also for gold. In 1964, EZ Industries cranked up work on the copper side of the deposit, followed by a sequence of owners, including Planet Metals, Amax Iron, Samantha Mines, Barrack Mines, Sabminco/Grange, and now Horseshoe Metals.

With such a mixed history of ownership and production it is easy to dismiss Horseshoe Lights as a mine which has seen its best days.

But this time around, there are the advantages of:

- Strong global demand for copper, especially from China, which has pushed the price to new heights.

- Improved exploration technology, and

- A major revival of interest in the region thanks to the pegging rush which has followed the Doolgunna discovery.

Marston said the focus of exploration work at Horseshoe Lights was a carefully-planned series of drilling programs designed initially to test for depth extensions of the Main Zone on which the existing pitis centred, and to expand the North West Stringer Zone.

Phase 1 drilling (13 holes for 2620m) returned typical Horseshoe Lights grades, such as 14m at 2.2% copper starting at a depth of 95m, including a rich 12.3% of copper over a 1m intersection. This work confirmed that the North West Stringer extends at least 200m to the north of the open pit.

Phase 2 drilling (13 holes for 2632m) added to the data set, with three holes recording high grades of 14m at 3.7% copper from 10m depth; 14m at 3.7% copper from 128m including 3m at 9.8% copper; and 16m at 4.8% copper from 161m including 3m at 11.8% copper. In April, phase 3 drilling (15 holes for 3110m) extended North West Stringer mineralisation another 50m to the north and down dip by another 100m.

Phase 4, which is being planned now, will be the heaviest drilling hit to date with up to 5000m planned - with data from this work important in the planned resource upgrade statement scheduled for later in the year.

Kumarina, the second historic project on the company books, has recently been the subject of a high-resolution airborne magnetic survey, which will help pinpoint drilling targets. If exploration is successful, ore from Kumarina could be easily trucked to Horseshoe Lights for processing, potentially helping lift the total copper inventory beyond the initial target of 100,000t.

As an investment, Horseshoe Metals has the appeal of near-term cash flow from the possible re-evelopment of a historic copper mine at a time of near-record copperprices, with the added potential of discovery in one the hottest copper locations in Australia.

*A version of this report, first published in the August 2011 edition of RESOURCESTOCKS magazine, was commissioned by Horseshoe Metals