Minco PLC Regulatory News (MIO)

7 Mar 2006 07:02

Minco PLC07 March 2006 Minco Plc 1. NEW SILVER, ZINC, & COPPER PROJECT OPTIONED 2. LAGUNA PROJECT UPDATE 3. SAMPLING RESULTS FROM MINERA SISA LONDON: 7 March 2006: Introduction AIM quoted precious and base metals explorer and developer Minco plc ("MIO") ispleased to announce that it has entered into an option and joint ventureagreement with Shoshone Mexico, S.A. de C.V. ("Shoshone") to acquire up to a 75%interest in the Bilbao silver, zinc and copper deposit located in the PanfiloNatera mining district, approximately 56 kilometres southeast of the city ofZacatecas in central Mexico. The Company is further pleased to provide anupdate on its Laguna and Minera SISA projects. Bilbao Project The Bilbao Project is the subject of a pre-feasibility study prepared by KilbornInc. in 1995 and subsequently updated in 1997. The Kilborn study was based onan inferred resource estimate prepared by Watts, Griffis and McOuat to JORCstandards and metallurgical test work completed by Lakefield Research. Thehistorical calculations of 2.44 million tonnes at an average grade of 92.3g/tsilver, 0.39% copper, 3.73% zinc, 3.30% lead together with cadmium by-product,all within the oxide deposit, are in the inferred category of resources. As suchthey are considered speculative and cannot have economic considerations appliedto them. Minco has not yet undertaken any independent investigation of theresource estimate nor has it independently analysed the results of the previousexploration work in order to verify the classification of the resources, andtherefore the historical estimates should not be relied upon. However, Mincobelieves that these historical estimates provide a conceptual indication of theoxide potential of the property and are relevant to ongoing exploration. The Kilborn study recommended the development of a small scale mining operationbased on the existing oxide resource by open pit mining with a strip ration of2.6:1 at the rate of approximately 700 tonnes per day (250,000 tonnes perannum). The processing method for the oxide resources proposed by Kilbornincluded initial acid vat leaching with recovery of dissolved copper throughcementation followed by zinc recovery using solvent extraction andelectro-winning to produce zinc metal plus a by-product of cadmium. A 1997addendum report also prepared by Kilborn/SNC-Lavalin proposed a revised economicanalysis with an estimated capital expenditure of $17.6m which produced a DCFRORof 47.1% and payback within 2 years. Metal prices and operating costs havechanged significantly since 1997. Under the terms of the Shoshone agreement, Minco has been granted three options. The first option grants Minco (upon payment of $100,000 to Shoshone and theissue of 1.2 million Minco shares) an exclusive right to carry out explorationand development work for a minimum amount of $500,000 for a period of sixmonths, to include the preparation of an updated pre-feasibility study on theBilbao property. The second option grants Minco (upon a further payment of$300,000 to Shoshone) an exclusive right to carry out further exploration anddevelopment work, for a minimum of $500,000 over a period of a further twelvemonths during which time a feasibility study will be completed. The thirdoption grants Minco (upon electing to proceed with a bankable feasibility study)an undivided 75% working interest in the property. Upon the exercise of thethird option, Minco and Shoshone will form a new corporation to operate a jointventure. Initial exploration work suggests the presence of copper-rich sulphide bodiesbeneath the oxide deposits. During the first option period, Minco willundertake an initial 1,500 metres of drilling to evaluate the primary sulphidepotential adjacent to and below the open pit and plans to update the WGMresource report and the Kilborn pre-feasibility study report. Laguna Update On 10 February 2006, Minco hired Mr. John Scott, P.Eng., as Director ofOperations for the Laguna Project based in Minco's Zacatecas offices. Mr. Scotthas extensive experience in engineering design and construction and projectmanagement in mining. He has worked with large engineering firms where he hasmanaged construction and commissioning of mining projects in North and SouthAmerica, Europe and Africa. Mr. Scott's first priority is to reassess the tailings disposal system andupdate the resulting environmental baseline and impact studies. In addition,metallurgical test work is continuing with a view to improving metallurgicalrecoveries and reducing capital cost of the process plant. Other capital costsavings are also being investigated for the infrastructure and tailings disposalareas. It is anticipated that answers to these issues will be available in June, whenfinal decisions can be made with respect to project start up. In the meantime,alternate project finance negotiations continue with a view to minimising equityfunding requirements. Santa Cruz (Miner SISA) Exploration Project, Durango On the Santa Cruz property of Minera SISA (Minco 50%) following refurbishment,underground sampling has been completed on two levels of the Jesus Maria vein.The lowest exposure of the Zambranena vein set occurs at an elevation of 1,400metres above sea level in the rugged western portion of the property. The veintrends roughly northwest-southeast and is contiguous with the Zambranena, LaPerla and El Carmen veins along strike to the northwest. Channel sampling wasundertaken across the vein at intervals of 5m. This sampling has returnedsignificant gold, silver, lead and zinc values over widths of one metre andconfirms historic reported assay values. The mean grade of the whole vein inthe Main Adit is 1.58g/t gold with 132g/t silver and in the Upper Level 2.31g/tgold with 375g/t silver. Shorter sections of the vein return higher values withan average of 2.47g/t gold and 196g/t silver measured along a vein length ofover 50 metres in the Main Adit and 3.86g/t gold and 885g/t silver measuredalong a vein length of some 50 metres in the Upper Level. The precious metal values within the Jesus Maria vein are erraticallydistributed. Grade variation for gold varies from parts per billion to a highof 21.9g/t gold and for silver from almost zero to over 2kg/t silver. Thedisposition of the higher precious metal values suggests that a richer shoot mayoccur on the main vein with a trend of NNW-SSE. Development on the lower levelcontinues for a distance of 150 metres. The vein is faulted and slightly offsetin places. Au g/t Ag g/t Main Level Total 0.85 91.0 Main Level Shoot 1.42 126.0 Upper Level Total 2.31 375.0 Upper Level Shoot 2.72 395.0 Summary of vein grades at the Jesus Maria Prospect Minco has developed a programme of further underground sampling, additionalunderground development and diamond drilling to be carried out at Zambranena, aswell as at the San Pablo and the Orozco-La Fragua prospects, located further tothe east. This exploration programme will be deferred until the later part ofthe year when sufficient water becomes available for drilling activities to beconducted. Commenting on the new project, Minco's Chairman, Roger Turner, said, "The Bilbaoproject provides Minco with a second opportunity for near-term silver and basemetal production within the Zacatecas area. We believe that the project hasvery significant upside potential for the discovery of new sulphide as well asoxide resources in addition to the historic resources. Our strategy will be toinvestigate the known mineralisation in depth and search for additional bodiesof mineralisation in the surrounding area. Within the next six months, we willbe in a position to prioritise the Bilbao and Minera Sisa projects within ourproject pipeline. At Laguna, we believe that significant capital savings may beachieved through a different approach in tailings disposal and plant design.The objective is to minimise the equity element of the construction capitalcosts and to finalise the relevant changes and additions to the environmentalstudies as quickly as possible." 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, CEO & Chairman +44 (0)7739 92 813Danesh Varma, CFO +44 (0)20 7397 8154 / (0)7740 932 766Terence McKillen, Exploration & Business Director +1 416 362 8243 / +1 416 362 6686Martin Eales, Collins Stewart +44 (0)20 7523 8350Alex Buck, BuckBias +44 (0)7932 740 452 This information is provided by RNS The company news service from the London Stock Exchange