Drilling Production Update

22 Feb 2006 07:00

22nd February 2006 INDEPENDENT FEASIBILITY STUDY FOR CONGO PROJECT SHOWS 67% IRR WITH COPPER PRODUCTION OF 54,000 TPA STARTING IN 18 MONTHS FROM HIGH-GRADE KINSENDA DEPOSIT (5.3% COPPER) ON WHICH DEWATERING HAS COMMENCED COPPER RESOURCES CORPORATION ("CRC") Mineral Engineering Technical Services Pty Ltd ("METS"), a Perth-based miningengineering consultancy firm, has completed a Feasibility Study for the restartof underground copper mining operations at the Company's Kinsenda copperproject located in Katanga Province of the Democratic Republic of Congo("DRC"). CRC holds a 75% interest in the project through its subsidiary,MiniĬre de Musoshi et Kinsenda SARL ("MMK").The Feasibility Study, which is based on MMK's Pre-feasibility Study and onMETS's own work, concludes that operations at Kinsenda can be restarted within18 months at an estimated capital cost of US$38 million. The projectedfinancial return to CRC is highly favourable with an estimated IRR of 67% andNPV of US$143 million, at an assumed long term copper price of US$1.25/lb and adiscount rate of 10%. The high financial rate of return reflects the extremelyhigh grade of Kinsenda's reserves (5.3% copper) coupled with the project's lowcapital costs.The METS Feasibility Study assumes an annual treatment of 1.2 million tonnes ofore, resulting in production of 54,000 tonnes per annum of contained copper inthe form of a rich, 45% concentrate at an average cash operating cost ofUS$0.68/lb.The project is based on production of copper concentrates from the undergroundKinsenda mine using a conventional flotation process, and includes thefollowing elements: * dewatering, already underway, and then refurbishing the flooded mine; * refurbishing and relocating parts of MMK's existing concentrator equipment from Musoshi, another MMK property, to Kinsenda, a distance of 40 km; and * adding new equipment where required to complete and modernise the Kinsenda concentrator, which at full capacity will operate at the rate of 100,000 tonnes per month. On the basis of the currently planned configuration, the METS Feasibility Studyestimates total capital expenditure for the project in 2006-2007 at US$38million, of which US$23 million is for the Kinsenda concentrator. The capitalexpenditure is relatively low because the area has extensive infrastructureincluding roads, water, staff accommodation and power. The power infrastructureincludes a 220/110 kVA line to both Kinsenda and Musoshi; there is also asubstation at Musoshi and Kinsenda with diesel generators for back up ifrequired.In the feasibility study METS has developed a revised flowchart and recommendsthat CRC and MMK consider the implementation of semi-autogenous grinding (SAG)with process control as an alternative comminution circuit, which would havethe benefit of simplifying the processing circuit and reducing the capitalexpenditure as well as operating costs. CRC and MMK are currently reviewingthese possibilities to reduce project cost and increase efficiency.The Kinsenda and Musoshi deposits were mined from 1968-1983 by a Japanesemining consortium, then by Canadian management on behalf of the Zairiangovernment from 1983-1987, and subsequently by Gecamines, a Congolese statemining company. Kinsenda and Musoshi are both currently flooded and requiredewatering prior to restarting operations. A third property, at Lubembe, is agreen field exploration play with high potential.The remaining 25% of MMK not owned by CRC is held 20% by SODIMICO, a statecompany, and 5% by the Forrest Group, the largest private business in Katangaand one of the largest in the DRC with diversified operations includingmining, engineering, construction, and cement. Operating successfully in theDRC since 1922, the Forrest Group has extensive operational and managementexperience in the country that will support and facilitate CRC's effort indeveloping the properties.The Kinsenda deposit has 15 million tonnes of ore containing 840,000 tonnes(1.9 billion pounds) of copper, which will permit 13 years of operations atfull capacity based on the currently known resource. However, the mine is openat depth and additional drilling is expected to yield more proven resourcesthat will extend the life of the mine considerably.Mitchell Alland, CRC Executive Vice Chairman, stated: "The Kinsenda project isextremely attractive to CRC not only because of its high return but alsobecause it transforms us into an imminent copper producer, and provides thebasis for further expansion of our DRC production from our other high-gradedeposits at Musoshi and Lubembe. We can look forward to CRC becoming asignificant producer in the Congo that will increasingly contribute to thecountry's economy and to that of Katanga Province."METS is an independent mining engineering consultancy that is not a shareholderin CRC or any associated party. The Feasibility Study has been prepared on aprofessional basis using qualified and experienced engineers working inaccordance with CRC's scope of work. METS's studies are recognized and acceptedby financial institutions working in the resource sector.- ENDS -Further information: Copper Resources Nabarro Wells & Co. Westhouse GTH Corporation Securities Communications Mitchell Alland Keith Smith Richard Morrison Toby Hall Executive Vice Chairman +44 (0) +44 (0) +44(0) +44 (0) 77 4801 8690 20 7710 7400 20 7601 6100 20 7153 8035 COPPER RESOURCES CORPORATION