ECR Minerals Regulatory News (ECR)

20 Jun 2007 07:00

Mercator Gold PLC20 June 2007 Mercator Gold PLC ("Mercator Gold" or the "Company") MINING RESOURCE TO RESERVE STATEMENT Mercator Gold Plc has finalised mining and metallurgical studies on itspreviously reported resources of Bluebird, Surprise, Prohibition and Vivian -Consols, all located in the Meekatharra region of Western Australia. The Company is pleased to announce: • Probable reserves of 432,000 ounces of gold; • First production from the Surprise Open Pit scheduled late June 2007; • Yaloginda processing plant on track to treat initial ore 1 July 2007; • All key personnel to manage the Meekatharra Gold Operations have been sourced; • Mining contract awarded to Mining and Civil Australia. Managing Director, Patrick Harford, commented: "The Reserve base underpins our decision to recommence production at Meekatharrawith 432,000oz of Reserves. In addition, the ongoing Resources to Reserve workcurrently being undertaken at a number of locations will further strengthen thecompany's growth platform. We look forward to a truly profitable and sustainablefuture." Table 1 OPEN PIT PROBABLE RESERVES TONNES GRADE OUNCESBluebird 1,461,000 2.53g/t 119,000Surprise 827,000 2.35g/t 63,000Subtotal 2,288,000 2.46g/t 182,000UNDERGROUND PROBABLE RESERVESProhibition 1,372,000 4.06g/t 179,000Vivian - Consols 233,000 9.54g/t 71,000Subtotal 1,605,000 4.85g/t 250,000 TOTAL 432,000 Grade is grammes per tonne. Ounces are Troy ounces. Small numeric differencesmay occur due to number rounding. This applies throughout this release. Table 2---------------- ---------- --------- --------CURRENT RESOURCE TONNES GRADE OUNCESINDICATED & INFERRED--------------- ---------- --------- ---------Mudlode 446,000 5.46g/t 78,000(3.0 g/t cut-off)--------------- ---------- --------- ---------Fatts 180,000 3.65g/t 21,000(3.0 g/t cut-off)--------------- ---------- --------- ---------TOTALS 626,000 99,000--------------- ---------- --------- --------- Note: Mudlode and Fatts remain in the Resource category pending further accessand stope design. MINING OPEN PIT Surprise The Surprise open pit lies within 800 metres of the Yaloginda Carbon in Leach(CIL) processing plant. Pit Optimisations were conducted on the resource modelsresulting in the pit being deepened from 55 metres to 120 metres. Geomechanical studies were conducted by Coffey Mining to determine wall slopedesigns. As this open pit lies in close proximity to a major arterial highway,statutory requirements necessary to ensure wall stability integrity ismaintained have resulted in a reduction of ounces mined from previously reportedreserves. A mining contract has been awarded to Mining and Civil Australia, which hasmobilised a fleet of equipment ready to commence mining within the next fewweeks subject to DOCEP (Department of Consumer and Employment Protection)approvals. A grade control program has been completed for the first 30 metres and hasreturned positive variance to the reserve model. Bluebird The Bluebird open pit has been optimised to a total depth of 180 metres, whichextends the existing pit 100 metres below floor. The proximity of Bluebird tothe Yaloginda processing plant (less than 1,000 metres) and the proximity toideal waste dump locations have had positive impacts on mining costs. Detailedgeomechanical studies have been completed by Coffey Mining to determine wallslope design parameters, which become more critical with the open pit beingextended a further 100 metres in depth. Mining costs have been received from Mining and Civil Australia utilisinglarger, higher capacity earthmoving equipment for this larger open pit. Thelarger equipment reduces the unit mining costs, whilst ensuring the productivityrates required to meet the overall schedule. Table 3 OPEN PIT PROBABLE RESERVES TONNES GRADE OUNCESBluebird 1,461,000 2.53g/t 119,000Surprise 827,000 2.35g/t 63,000 TOTAL 182,000 Mining Schedule Open pit mining commences with Surprise. Low grade ore will be used first tobuild up gold inventory over the initial three-month period, followed by highergrade ore over the ensuing six months. Pre-stripping of the Bluebird open pitwill commence once final approvals have been received from the statutoryauthorities (expected timing of three to four months). Bluebird ore would thenbe blended with Surprise to smooth monthly gold outputs. Subject to the scheduling of the open pits, ore production from Bluebird andSurprise over an 18 month period will rise to an annualised gold output of120,000ozs at an expected process rate of 1,250,000 tonnes per annum. Mining Underground The Prohibition orebody will be accessed and serviced by a 5.0m x 5.5m decline.The mining methods will be predominantly large mechanised sub level open stopes.Geomechanical studies of the rock types, conducted by Peter O'Brien andAssociates have confirmed the methods proposed and identified the supportmechanisms for decline and stope development. Red Rock Engineering, a specialist underground mining consultant has providedall decline access and stope design, inclusive of schedules, operating andcapital costs. Prohibition lies within 250 metres of the Eastern line of lodes known asVivian-Consols and Mudlode. These lodes were historically mined as narrow veinhigh grade orebodies. Access and services to these lodes will be shared withProhibition. Ventilation and second egress will be provided from an existingthree-compartment shaft that lies within 400 metres of the Decline Portal. Initial access will target Prohibition to 300 metres below surface andVivian-Consols to 250 metres below surface. Reserve development from the identified resources at Mudlode and Fatts will benotified following the completion of the detailed stope design presently beingundertaken. The Prohibition, Vivian - Consols and Mudlode orebodies remain open along strikeand at depth. The Company believes that considerable Resources and thereafterReserves remain to be delineated once access to drilling locations has beenestablished. The table below outlines the stoping profiles expected over the initialdevelopment phases before additional underground drilling programs areundertaken. Table 4 STOPING LOM OUNCESProhibition tonnes 1,372,000 tonnes @ 4.06g/t 179,000Vivian-Consols tonnes 233,000 tonnes @ 9.54g/t 71,000 TOTAL 250,000 Metallurgy A number of metallurgical studies have been conducted on the projects specifiedabove by highly regarded metallurgical consultants AMMTEC, Bateman Minerals andMetals and Orway Mineral Consultants. Since the Yaloginda CIL plant previouslytreated some of the ore types represented above and was designed to treatvariable ore types no new circuits are required in the initial production phasesother than the addition of a gravity circuit. The following table highlights the respective ore characteristics identifiedfrom metallurgical test work. Table 5------------ ---------- --------- ----------- ---------PROJECT NAME BOND MILL GRAVITY GOLD CIL GOLD LEACH Work Index kwhrs/t % rec % rec hours ------------ ---------- --------- ----------- ---------Surprise 12 to 15 14.5 to 34 93.5 12 to 24------------ ---------- --------- ----------- ---------Bluebird 12 to 15.3 14 to 40 93.5 to 98 12 to 48------------ ---------- --------- ----------- ---------Vivian 15 to 18 19.7 97.9 24------------ ---------- --------- ----------- ---------Consols 15 to 18 53 93.6 24------------ ---------- --------- ----------- ---------Prohibition 18 to 23 25 83.5* 24------------ ---------- --------- ----------- --------- *Prohibition ore requires additional flotation and ultra-fine grinding toliberate gold. Recoveries of 90 to 95% are then achievable. Testwork wasundertaken by Bateman Minerals and Metals. Competent Persons Report - Consent for release The information in this report, which relates to the Surprise, Bluebird,Prohibition, and Vivian - Consols Ore Reserves, is based on information compiledby Alan Coles and Denis Geldard. Alan Coles and Denis Geldard are full time employees of Mercator Gold AustraliaPty Ltd and are Members of the Australasian Institute of Mining and Metallurgy. Alan Coles and Denis Geldard have sufficient experience which is relevant to thestyle of mineralisation and type of deposit under consideration and to theactivity which they are undertaking to qualify as Competent Persons as definedin the 2004 Edition of the "Australasian Code for Reporting of ExplorationResults, Mineral Resources and Ore Reserves". Alan Coles and Denis Geldard consent to the inclusion in the report of thematters based on this information in the form and context in which it appears. For further information please contact: Mercator Gold plcTerry Strapp, Chairman Tel: +61 (0) 412 228 422Patrick Harford, Managing Director Tel: +44 (0) 20 7929 1010 Email: info@mercatorgold.comWebsite: www.mercatorgold.com Bankside Consultants Ltd Tel: +44 (0) 20 7367 8888Simon RothschildKeith IronsOliver Winters AIM: MCR This information is provided by RNS The company news service from the London Stock Exchange