ECR Minerals Regulatory News (ECR)

2 Feb 2007 07:00

Mercator Gold PLC02 February 2007 2 February 2007 MERCATOR GOLD PLC Gold production to start at Meekatharra, Western Australia, in June HIGHLIGHTS • Gold production to start in June 2007 • First year target of 120,000 ounces • Probable ore reserves at Surprise of 75,000 ounces gold • Drill intersections at nearby Prohibition deposit confirm potential • Yaloginda plant refurbishment on schedule for completion in March 2007 LONDON: 2 February 2007 - Mercator Gold Plc ("Mercator" or the "Company")(MCR.L) is pleased to announce that it will start to produce gold in June 2007from the Company's operations near Meekatharra, Western Australia, with a firstyear target of 120,000 ounces of gold. First production will be from the Surprise open pit where the probable orereserve of 75,000 ounces will be mined over a 7 month period. Ore will betransported for treatment to the nearby Yaloginda CIL plant, which has beenre-commissioned by Mercator and has the capacity to treat between 1.2 to 3million tonnes per year of ore, depending on the hardness of the rock. Second stage production will come from the neighbouringProhibition-Vivian-Consols mining area (PVC) which currently contains 380,000ounces of indicated resource. Ongoing drilling and resource modelling of the PVCdeposit has given the company greater confidence in the resource quality andshown the potential for a considerable increase in its size. Patrick Harford, Managing Director, said today "The board believes that theSurprise, Prohibition and Vivian-Consols deposits now form the basis of asustainable future for Mercator. Production of an initial 120,000 ounces in ourfirst full year, coupled with vigorous exploration and development scheduleswill strengthen the production profile of the company." Surprise Resources The resource evaluation, mining optimisations, open pit design and productionscheduling of the Surprise deposit is now complete and has been approved by theBoard. The independent, revised resource evaluation prepared by Cube Consulting Pty Ltdis a 320% increase in gold in the indicated category, now standing at 3.6Mt at1.13g/t for 130,900 ounces uncut (or 108,900 ounces cut). Full details includinga resource statement are included in an accompanying document that will beposted on the company web site. Surprise Production The ore reserve for the optimal open pit, based upon a gold price of A$750 perounce, is 992,000 tonnes at 2.36g/t for 75,300 ounces gold. The open pit willproduce gold at a cash cost of A$ 342/oz.(U.S $260/OZ) The Surprise Pit Optimisations and final Pit design has been based on currentopen pit mining practices. Mining dilution 10% and ore recovery of 95%,Metallurgical test work confirming recoveries of 93% to 95% from ore with BondMill Work Index of 12 to 15 kwhrs /tonne. The optimal open pit at A$750 perounce is 992,000t @ 2.36g/t for 75,293oz. The pit has a strip ratio of 5.6:1 anda net cash cost per ounce of A$342. The Surprise Pit is located within 100meters of a major public highway. As a cut back is required to take this pitdeeper the highway has to be diverted to meet safety codes. Tenders andapprovals from statutory authorities have been received to execute this work. Production from the Surprise pit, taking into account the high nugget effect ofthe Surprise ore body, the cut and uncut grade models and after accounting formining dilution and recovery factors is expected to produce between 60,000 and68,000 ounces of gold. This production should occur over a 6-7 month period. Prohibition Drilling Intersections The fuller potential of the Prohibition area of the PVC deposit is now apparentas the programme of resource definition drilling nears completion. A total of 56 holes have been drilled by Mercator Gold to date, making a totalof 180 drill holes into the mineralised host unit at Prohibition. Several of thelatest drill intersections illustrate and confirm the relatively high grade ofthe Prohibition area, as indicated below: Hole ID Depth Downhole Width Au Collar RL From To (m) (g/t) (m) (m) (m) 06PRRD035A 281 288 7 3.2 52006PRRD042 273 274 1 46.1 51806PRRD046 262 267 5 4.4 52006PRRD048 368 376 8 5.0 51806PRRD050 459 504 45 3.2 518including 459 467 8 5.0 488 497 9 6.106PRRD052 272 275 3 8.4 52006PRRD055A 23 37 14 3.0 47206PRRD055A 252 267 15 8.206PRRD055A 302 311 9 3.106PRRD055A 391 399 8 2.806PRRD055A 425 440 15 4.006PRRD056 35 46 11 3.4 483 Resource estimates for Prohibition and Vivian-Consols are well advanced and aredue to be completed over the next eight weeks. Mining studies and optimisationof the various ore bodies are ongoing and are due for completion in June 2007. Yaloginda Plant Refurbishment The current plant refurbishment programme remains on schedule. Progressivecommissioning of all the plant components, such as crushing and stacking,grinding, leaching, gold elution to bullion, will commence in late March 2007and will place the plant in full readiness for gold production by June 2007. Consent for release Julian Vearncombe BSc (Hons), PhD, FGS, RPGeo, FAIG is a Director of the Companyand consents to the inclusion of the exploration information in the form andcontext in which it appears here. Julian Vearncombe is a Competent Person forthe reporting of these results as defined by the JORC Code 2004 Edition. The independent resource evaluation was completed by Cube Consulting Pty Ltdunder the supervision of Patrick (Rick) Adams BSc, MAusIMM, MAIG, a director ofCube and Ruth Jupp BSc, MAIG, a senior consultant geologist for Cube. Rick Adamsand Ruth Jupp both have sufficient experience that is relevant to the style ofmineralisation and type of deposit under consideration and to the activity thatis undertaken to qualify as the Competent Person as defined in the JORC Code2004 Edition. Mr Denis Geldard Mining Engineer AWASM, MAusIMM, the Company's OperationsDirector, is a competent person as defined under the JORC Code 2004 consents tothe Reserve computations. For further information please contact: Mercator Gold plc Patrick Harford, Managing Director Tel: +44 (0) 20 7929 1010 Email: info@mercatorgold.comWebsite: www.mercatorgold.com Bankside Consultants Ltd Tel: +44 (0) 20 7367 8888 Keith Irons keith.irons@bankside.comSimon Rothschild simon.rothschild@bankside.comOliver Winters oliver.winters@bankside.com AIM: MCR This information is provided by RNS The company news service from the London Stock Exchange