Minco PLC Regulatory News (MIO)

15 Mar 2007 08:49

Minco PLC21 March 2007 MINCO PLC Completion of Pre-Feasibility Study substantiates the economic viability of a Zinc Lead Silver Operation at bilbao London, 15 March 2007 - Minco plc (MIO), the London AIM quoted precious and basemetals exploration and development company announces the completion of anindependent pre-feasibility study on the development of zinc, lead, copper andsilver sulphide resources at its Bilbao Project in the state of Zacatecas inMexico. Highlights • NPV $47.7 million, using conservative metal prices and a 10% discount rate • Project IRR of 37% at a rapid payback of 2 years and 2 months • 8 year life-of mine operation • Deposit remains open to the south and west • Nearby exploration licences provide possibilities for life extensions Chairman's Comment Commenting on the announcement, Roger Turner, Executive Chairman and CEO ofMinco said "I am delighted that our exploration team has brought the Bilbaoproject to a pre-feasibility study only 12 months after we acquired our interestin the property and drilling which commenced in April. In Bilbao, Minco has aproject which can be brought rapidly to production using established mining andprocessing techniques. The project is clearly robust at conservative commodityprices and our priority now is to bring it in to production as soon as possible." Key Project Information The following table summarises the principal assumptions and conclusions of thestudy, which is available, in full, on the Minco website at www.minco.ie. underthe " Latest News" tab. Base Case Pessimistic Case Optimistic CaseMetal PricesZinc US$/lb 1.25 1.00 1.50Lead US$/lb 0.60 0.40 0.80Silver US$/oz 11.00 8.00 14.00 Production Rate tonnes/year 330,000 330,000 330,000 Metal Production (in concentrate)Zinc (tonnes 11,660 11,660 11,660Lead (tonnes) 7,300 7,300 7,300Silver (oz) 745,000 745,000 745,000 Operating Cost US$/tonne treated US$35.40 US$35.40 US$35.40 Capital Cost US$43.3m US$43.3m US$43.3m Net Present Value (10% discount) US$47.65m US$10.60m US$84.70m Internal Rate of Return 37.3% 16.7% 56.0% Payback (Years) 2.1 4.0 1.3 The pre-feasibility study was completed under the direction of an independentconsulting engineer, Mr Al Summers, a former Vice-President of Operations forHecla Mining Inc with extensive mining experience in Mexico. The study addresses only the sulphide part of the resource which, as thefollowing table, extracted from the full report shows, represents only around40% of the combined oxide and sulphide resource of approximately 5.8milliontonnes. The resources have been prepared by independent consultants. The "mixedand sulphide" resource has been generated, by Mining Exploration and GeosystemAssociates (MEGA), using "Datamine" software and manually cross-checked by afurther independent expert. Tonnes Zn % Cu % Pb % Ag g/tOXIDE RESOURCES (Kilborn & MEGA) 3,670,384 3.28 0.34 2.61 85.0MEGA MIXED & SULPHIDE RESOURCES 2,117,079 4.25 0.25 2.75 86.3TOTAL RESOURCE 5,787,463 3.64 0.31 2.66 85.4 Metallurgical and mineralogical test-work is continuing in order to firm up thecharacteristics of the sulphide mineralisation and to establish the optimumflowsheet for treatment of the oxide resources, which would be amenable toopen-pit mining. The study uses current international smelter contract terms and assumes thatconcentrates are shipped by road to local smelters in Mexico. The Bilbao siteis strategically located approximately 50 km east of the city of Zacatecas andsome 5 km from the main highway between San Luis Potosi and has ready access tothe electricity supply grid. Oxide Resource Work by Kilborn Engineering in 1997 on behalf of previous owners of the propertyexamined open pit mining of 2.44 million tonnes of oxide ores, however, it onlyenvisaged recovering zinc and copper. Minco commissioned Behre Dolbear toreview and update this report and this review recommended a series of testworkprogrammes to determine the method for the recover of the silver and lead. Theseprogrammes are part of Minco's ongoing work programme. Project Economics The project is economically robust and in the "Optimistic Case" economicanalysis, base metal prices are below the current market prices for lead andzinc. If these prices were realized during the life of the mine the projectpayback period would be 1.3 years and the net present value would be US$84.7million. Analysis shows that the project is most sensitive to revenue with a20% change generating a 60% change in the NPV discounted at 10%. Changes of 20%in either capital or operating costs result in changes in NPV of approximately20%. Future Timetable The report recommends a further 10-12 month programme of drilling to upgrade andincrease the oxide and sulphide resources and an 18 month period of constructionduring which time a 1.5 km long access ramp will be excavated to provideunderground access to the sulphide ore zones. QUALIFIED PERSON The above information has been reviewed and verified by Mr. Roger Turner, CEOand Chairman of Minco, for the purposes of the Guidance Note for Mining, Oil andGas Companies issued by the London Stock Exchange in March 2006. Mr. Turner,with 40 years of mining engineering, management and consulting experience,graduated as a mining engineer from the Camborne School of Mines, has an M.Sc.degree in Economic Geology from Leicester University and is a member in goodstanding with the Institute of Materials, Minerals and Mining and a UK CharteredEngineer. About Minco: Minco PLC is an AIM quoted precious and base metals exploration and developmentcompany with silver projects in Mexico and zinc exploration in Ireland. For further information, www.minco.ie or contact:Roger Turner: Executive Chairman +44 (0)20 7397 8155Terence McKillen: Director of Exploration & Business Development +1 416 362 8243/6686Simon Beardsmore: Commercial Manager +44 (0)20 7397 8159Chris Rollason: (UK NOMAD) Collins Stewart +44 (0)20 7523 8350Nick Bias: (UK IR & PR) BuckBias +44 (0)7887 920 530Tom McCormack (Ireland PR) ConneXions +353 (0)1 230 3015 This information is provided by RNS The company news service from the London Stock Exchange