Minco PLC Regulatory News (MIO)

1 Feb 2006 16:29

Minco PLC01 February 2006 CORRECTION: In the announcement released earlier today at 7 am under the RNS number 7267X the final sentence of the second paragraph, which read:"The project showed a baseline IRR of 46% based on a base case silver price 50% lower than its current levels."; should have read:"The project showed a baseline IRR of 46%. The current silver price is 50% higher than that used in the Micon base case." A correct version of the announcement follows. Laguna Silver Project Update LONDON: 1 February 2006: AIM quoted precious and base metals explorer anddeveloper Minco plc ("MIO") wishes to update shareholders on the LagunaZacatecana Silver Project ("Laguna" Project) following a detailed review of theOctober 2005 feasibility study, completed by Micon International of Toronto. The Micon feasibility study estimated the project could be put into productionfor US$29 million; pre-production capital cost of US$22 million, US$3 million ofworking capital and a further US$4 million for additional tailings facilitiesfunded from cash flow in the first year of operation. The project showed abaseline IRR of 46%. The current silver price is 50% higher than that used inthe Micon baseline case. As a result of the detailed review of the bankable feasibility study, Minco iscurrently investigating the method of the tailings disposal and the location ofthe process plant in order to further reduce capital requirements and operatingcosts. The review will take some time and production is now likely to commencein 2007. Additional land within a 3 to 5 km radius of the Laguna site will berequired for the processing plant and tailings disposal sites, involving thetransportation of tailings from the suction dredge in the lake to the processingplant by pipeline. In ongoing discussions with banks regarding debt financing of the Lagunaproject, Minco has already received indicative term sheets from more than onelender for an approximate US$20 million project finance facility, which includesa US$3 million working capital facility, and which are subject to a number ofconditions. Discussions continue with banks and other international lendingagencies and the Company anticipates concluding financing of the Laguna projecton the satisfactory completion of the tailings disposal review. A pilot-scale test of the processing methodology in Zacatecas is underway toobtain 'industrial scale' estimates of expected metal recoveries. In parallel,additional environmental work will be undertaken to ensure that the project isfully documented to meet World Bank and Equator Principal Standards - althoughas a remediation project, the project's green credentials are widely recognisedand already meet Mexican environmental requirements. The project management team in Zacatecas has been strengthened with theappointment of Sr. Alejandro Alaniz Segundo, who is a qualified CPA and holds anMBA, as Director of Administration and Finance. Commenting on the status of the Laguna project Roger Turner, Chairman and CEO,said, "The detailed review of the Laguna Project, and in particular the tailingsdisposal facility, has indicated that we can make considerable capital savingson the project. While this will take a little time and puts back the productionstart date to 2007, we believe the delay will be more than offset by an improvedproject economics and the reduction in equity capital requirements. Ourdiscussions with banks and lenders have been positive and we continuenegotiations in order to secure the best financing deal for our shareholders.The outlook for silver remains very positive, with the silver price currently50% higher than the base case used in the feasibility study". For further information: Roger W. Turner +44 (0)7739 092 813Terence N. McKillen +1 416 362 8243 or 416 362 6686Martin Eales, Collins Stewart +44 (0)207 523 8320Alex Buck, Buck Bias PR +44 (0)207 384 0503 This information is provided by RNS The company news service from the London Stock Exchange