Mineral Deposits Limited
TSX : MDM
ASX : MDL

Mineral Deposits Limited

July 31, 2008 09:56 ET

Mineral Deposits Limited: Quarterly Report for the Period Ended 30 June 2008

MELBOURNE, AUSTRALIA--(Marketwire - July 31, 2008) - Mineral Deposits Limited (TSX:MDM)(ASX:MDL) -

HIGHLIGHTS

- Sabodala Gold Mine Construction - 95% mechanical equipment on site

-- Construction of the Sabodala mine and processing plant is over 70% complete.

-- Approximately 95% of mechanical equipment for the processing plant is on site or in port.

-- All of the structural steel has been committed and the majority is on site.

-- Project start-up remains on schedule for commissioning in the December 2008 quarter. Approximately 168,000 ounces of gold is expected to be produced in calendar 2009.

-- The construction of the 30 megawatt power station and village facilities are nearing completion. The CIL tanks are erected and the installation of the crusher and two large grinding mills has commenced.

-- The new mining fleet of drills, face shovels and trucks are on site and working.

-- Phase 1 open pit development work is down to 710RL, with over 1.5 million tonnes of waste being mined. The mining of ore for stockpiling at the plant has begun.

- Sabodala Drilling

Numerous significant intercepts have been received from the resource development drilling completed at Sabodala, Sutuba and Niakafiri West.

- Corporate

-- The company concluded a private placement of 63 million ordinary shares at an issue price of A$0.77 each. These were placed outside of Canada and the United States to institutional clients of GMP Europe and Euroz Securities Limited of Australia. The funds are being directed towards the completion of the Sabodala mine and process plant construction.

-- As of late July, the US$70 million Macquarie Bank project finance facility was undrawn.

-- Cash at end of quarter, A$41.1 million.

SABODALA GOLD PROJECT

90% through operating company Sabodala Gold Operations SA ("SGO")

10% Government of the Republic of Senegal

Background

The Sabodala Gold project is located in Senegal, some 650 kilometres east of the capital Dakar within the Birimian belt and about 90 kilometres from major gold discoveries in Mali. The Sabodala and Niakafiri deposits lie within a 20.3 square kilometre mining concession and together currently contain a global gold resource of 2.74 million ounces and a mineable gold reserve of 1.406 million ounces, with potential for extensions of the pit and underground potential identified.

Mine Development Progress

Significant efforts were focused on the construction of the processing plant & power station and open pit development at the Sabodala gold mining operation, which is about 70% complete as at the end of July (Attachments 1, 2 and 3 respectively). Approximately 95% of mechanical equipment for the processing plant is on site or in port. All of the structural steel has been committed and the majority is on site.

Phase 1 mining also began and is on schedule for commissioning in the December 2008 quarter. The quarter has been a productive one with the following notable achievements:

Sabodala Open Pit

The main mining fleet has arrived on site, including two Pantera drill rigs and ten 100 tonne Komatsu trucks. Two Komatsu face shovels, a grader and two bulldozers are currently also in operation. During the period, the efforts of the SGO site team on the mining fleet workshop and service area have enabled its rapid construction to 95% complete.

Mining of ore has commenced stockpiling prior to production in the December quarter. Over 1.3 million tonnes of waste rock has been excavated and used to build the run-of-mine ("ROM") pad adjacent to the crusher station. This is on schedule to deliver 500,000 tonnes of ore to the ROM pad prior to start-up of the processing plant later this year.

The phase 1 open pit development is now down to 710RL as shown in Attachment 4.

Process Plant

Construction of the two million tonne per annum gold processing plant is advancing well. Installation of the ball and semi-autogenous grinding ("SAG") mills has commenced, with mechanical components on site and being assembled, while the crusher superstructure is nearly completed. Erection of the nine CIL tanks is almost finalised with tank welding 80% complete.

Power Station

Work at the 30 megawatt power station under construction by Wartsila was very productive. The bulk of the civil works is nearly complete with the mechanical and electrical aspects progressing well. This is on track for load testing in August and handover in mid-September.

Water

As at end of July, with three months of the wet season remaining, there are 781,000m(3) stored and water levels are steadily rising as a result of good rain so far this year.

Mine Site Accommodation Village

The accommodation village is now in operation and sleeping 390 people. At present, site occupancy is almost 800 people inclusive of contractors housed at the new village and the existing exploration camp. When the processing plant commences operation in the December 2008 quarter, the mine village will be capable of catering for up to 600 employees. MDL anticipates that, when in full production, about 450 people will be employed on site.

Site Training and Development

A diverse range of training programmes is underway including general induction, vehicle driving, first aid and safety management.

Staff numbers have dramatically increased in recent months, including the number of Senegalese professionals and local regional employees. Appropriate training programmes have been provided and highly competent and skilled workers are supporting all aspects of the construction operation.

Sabodala Drilling Update

During the period, drilling continued on exploration/resource definition in the environs of the Sabodala gold project. Significant intercepts were received during the quarter from Niakafiri West, Sabodala and Soukhoto (Attachment 5).

Niakafiri West

Drilling at Niakafiri West continued to define broad zones averaging 0.5 -1.0g/t gold with isolated higher grade zones within. The host rocks are intensely sheared with banded carbonate-quartz aligned with the strike orientation of the units. Quartz veining is common with varying orientation from steeply dipping to flat.

The significant intercepts are summarised in Attachment 5. The results are encouraging and indicate that the area has good potential, warranting further drilling.

Drilling is continuing into the September quarter with several diamond holes to be completed from the surface to better define the constraints on mineralisation.

Sabodala

Early in the quarter, a drilling programme was completed inside the Main Flat mineralised zone at Sabodala. Assay results confirm that the zone continues to extend southward. The data will be incorporated into a revised geological model prior to upgrading the resource estimation later this year.

A further six infill RC holes were drilled inside the main Sabodala designed pit area in June to fill the gaps existing from the previous drilling. Assay results from these holes are pending.

Soukhoto

A limited drill programme comprising five infill RC holes was completed in this area to confirm the mineralisation reported from a high grade intercept drilled previously. Assay results are pending.

Oromin Explorations' Gold Resource Announcement

The company has been highly encouraged by Oromin Explorations' recent announcement (24 July 2008) of inferred resources at the Masato, Golouma West and Golouma South deposits totalling 25.2 million tonnes grading 1.73g/t gold for 1.4 million ounces contained gold. This initial resource, prepared by SRK Consulting, is NI 43-101 compliant. The deposits are located within approximately 10 kilometres of the Sabodala mining concession and confirm the potential of the area for further discoveries.

REGIONAL EXPLORATION

In addition to its granted Sabodala mining concession, MDL, through its 100% subsidiary Sabodala Mining Company SARL ("SMC"), has four gold projects covering over 900 square kilometres. These comprise the company's regional gold exploration programme. Massakounda, Dembala Berola and Makana are the subject of 80% joint ventures and, at Bransan; SMC is earning a 70% interest. All four properties are within 10-40 kilometres of the Sabodala mine lease.

Bransan Project

During the quarter, geochemical drilling and sampling programmes continued on the Bransan Exploration Permit which covers an area of some of 353 square kilometres. Numerous prospects were tested and their locations are shown in Attachment 6. The total project RAB drilling statistics stand at 454 holes for 18,671 metres on 25 lines.

At the Soungoutou Kouro prospect, a RAB drilling programme was completed for a total of 14 holes for 591 metres. This prospect consists of a number of low grade gold anomalies which lie in a largely laterite-covered area between two major regional NNE trending structures. Assays for 3,375 samples submitted for laboratory analysis are pending.

Four RC holes were also drilled at the Goumbou Gamba prospect. The best intercepts to date include:

- BSRC004 - near continuous gold anomalism from 32 to 146 metres (EOH) with a gradual increase in grade near the end of the hole to 0.66g/t gold (143-146 metres);

- BSRC005 - seven metres @ 0.88g/t gold (from 64 metres) and two metres @ 2.24g/t gold from 105 metres with numerous other wide, but lower grades, of mineralisation in the same hole; and

- BSRC019 - 16 metres @ 0.61g/t gold from 19 metres.

Attachment 7 shows the location of these drill holes.

A termite mound sampling programme was completed over the Diadiako prospect. Partial results received to date indicate a narrow but continuous gold anomaly following the northern limb of the fold. The remainder of the sampling results are awaited prior to finalising a diamond drilling programme to test part of the hinge zone at this prospect.

Further drilling programmes are planned for the September quarter at Goumbou Gamba and Soungoutou Kouro prospects in order to better understand the geology and the structures controlling the gold mineralisation in the targets.

Dembala Berola Project

Work focused largely on the Goundamehko prospect trenching and completion of the regional soil sampling grid. A total of 2,657 samples were collected over regional gold anomalous trends previously defined by SAMAX Resources Limited.

Trench sampling on the Goundamehko prospect was completed with the total number standing at 19 for 1,038 metres. A total of 1,082 samples was collected and sent to the laboratory for gold analysis. Encouraging results are being received and these are being evaluated.

A geological and structural interpretation of the Dembala Berola based on stereo imagery was successfully completed. The objective was to define targets for follow-up geochemical sampling and drilling.

Massakounda Project

Geochemical sampling on a 400 metre by 100 metre grid is nearing completion at the Massakounda permit. A total of 3,838 soil samples has been collected during the campaign. These will be submitted for laboratory analysis.

Makana Project

Field checking of previous Randgold data and validation of the soil geochemical commenced during June, with 196 soil samples collected on a 200 metre by 50 metre grid spacing. Results are expected in the next quarter.

GRANDE COTE MINERAL SANDS PROJECT

90% through operating company Grande Cote Operations SA

10% Government of the Republic of Senegal

Background

The Grande Cote Mineral Sands Project is located some 100 kilometres north of the capital city Dakar, which has an excellent deep water port. The project lies within a 446 square kilometre mining concession (100 kilometres by 4.5 kilometres).

Mine Planning

Work continued during the quarter on the detailed computer modelling and optimisation process to finalise the detailed mine plan. This task is expected to be completed later this year.

Ilmenite Project

As has been noted previously, volumes of ilmenite in excess of 700,000 tonnes per annum will be extracted along with the zircon as part of the dredging operation. The improving titanium market has resulted in an opportunity to potentially sell large volumes of ilmenite, substantially improving project returns. Accordingly, during the quarter the process of re-optimising metallurgical recoveries for both zircon and ilmenite, rather than just zircon, has been continuing.

The new testwork reported in the last quarter to reoptimise the recoveries of zircon and ilmenite has produced encouraging results. Plans are now underway to rework the development plan and feasibility study to incorporate ilmenite.

Other Work

Large capacity hydrological test wells are being completed to evaluate make-up water supplies for management of the dredge pond levels. The target is within the Maestrictien sandstones, located some 460 metres below surface.

CORPORATE

Private Placement of Ordinary Shares Completed

During the quarter, the company completed a private placement of 63 million ordinary shares in MDL. The issue price for each ordinary share was A$0.77, with the closing of the offering taking place on 27 June 2008.

The funds raised under this private placement, together with the company's previously announced approved banking facilities, will be used to complete the Sabodala Gold Project and for general working capital purposes.

The ordinary shares were placed outside of Canada and the United States to institutional clients of GMP Europe and Euroz Securities Limited of Australia. Sales were not made to US or Canadian persons.

Cash and Debt Position

At the end of the quarter, cash at bank was A$41.1million. The company also drew down on the US$35 million working capital facility provided by RMB Australia Holdings Limited and Macquarie Bank Limited to fund further construction and development of the Sabodala Gold Project. MDL has negotiated a US$70 million project finance facility which is yet to be drawn.

The information in this report that relates to Exploration Results is based on information compiled by MDL's Mining Operations Manager, Bruce Van Brunt MSc Mining Engineering, who is a member of The Australasian Institute of Mining and Metallurgy and is also a registered professional geologist in the State of Washington, USA. Mr Van Brunt has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity undertaken. He is qualified as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and as defined in NI43-101. Mr Van Brunt has consented to the inclusion of this information in the form and context in which it appears in this report.

To view "ATTACHMENT 1 - Processing Plant", please visit the link below:

http://media3.marketwire.com/docs/7mdm731.pdf

To view "ATTACHMENT 2 - Power Station", please visit the link below:

http://media3.marketwire.com/docs/8mdm731.pdf

To view "ATTACHMENT 3 - Mining Fleet", please visit the link below:

http://media3.marketwire.com/docs/9mdm731.pdf

To view "ATTACHMENT 4 - Phase 1 Open Pit", please visit the link below:

http://media3.marketwire.com/docs/10mdm731.pdf



ATTACHMENT 5 - Significant Drilling Intercepts

------------------------------------------------------------------------
Hole No. Northing Easting From (m) To (m) Interval (m) Gold (g/t)
------------------------------------------------------------------------
Sabodala
------------------------------------------------------------------------
SBRC903D 20690 9781 394 399 5 1.4
------------------------------------------------------------------------
SBRC245D 20530 9770 294 298 4 5.8
------------------------------------------------------------------------
SBRC1058 20390 10231 46 51 5 1.3
------------------------------------------------------------------------
SBRC1059 20391 10270 38 48 10 3.4
------------------------------------------------------------------------
SBRC1060 20391 10293 14 19 5 4.9
------------------------------------------------------------------------
SBRC1062 20390 10111 24 28 4 2.2
------------------------------------------------------------------------
SBRC1062 20390 10111 65 71 6 2.7
------------------------------------------------------------------------
SBRC1062 20390 10111 76 81 5 1.6
------------------------------------------------------------------------
SBRC1004 20349 10036 1 6 5 1.3
------------------------------------------------------------------------
SBRC1004 20349 10036 15 23 8 2.8
------------------------------------------------------------------------
SBRC994 20250 10201 41 55 14 5.8
------------------------------------------------------------------------
SBRC993 20230 10070 1 5 4 3.3
------------------------------------------------------------------------
SBRC993 20230 10070 8 21 13 2.8
------------------------------------------------------------------------
SBRC738D 20209 9900 161 167 6 3.1
------------------------------------------------------------------------
SBRC924D 20210 9960 139 143 4 3.9
------------------------------------------------------------------------
SBRC924D 20210 9960 163 168 5 3.6
------------------------------------------------------------------------
SBRC992 20210 10120 16 20 4 2.3
------------------------------------------------------------------------
SBRC992 20210 10120 28 50 22 7.1
------------------------------------------------------------------------
SBRC992 20210 10120 53 58 5 15.7
------------------------------------------------------------------------
SBRC990 20190 10120 0 10 10 1.5
------------------------------------------------------------------------
SBRC990 20190 10120 15 24 9 3.2
------------------------------------------------------------------------
SBRC990 20190 10120 30 52 22 3.9
------------------------------------------------------------------------
SBRC736D 20170 9900 161 165.3 4.3 3.5
------------------------------------------------------------------------
SBRC922D 20167 9955 142 146 4 5.1
------------------------------------------------------------------------
SBRC923D 20170 9830 171 183 12 2.4
------------------------------------------------------------------------
SBRC731D 20090 9740 223 228 5 4.6
------------------------------------------------------------------------
SBRC926D 20090 9960 113 119 6 1.7
------------------------------------------------------------------------
SBRC927D 20090 9820 182 186 4 1.7
------------------------------------------------------------------------
SBRC977 20070 10120 14 19 5 2.6
------------------------------------------------------------------------
SBRC691D 20054 9814 185 191 6 2.4
------------------------------------------------------------------------
SBRC928D 20050 9946 138 143 5 2.9
------------------------------------------------------------------------
SBRC957D 20048 10022 125 129 4 1.7
------------------------------------------------------------------------
SBRC957D 20048 10022 186 190 4 2.0
------------------------------------------------------------------------
SBRC957D 20048 10022 195 200 5 3.5
------------------------------------------------------------------------
SBRC968 20030 10130 7 12 5 1.4
------------------------------------------------------------------------
SBRC730D 20020 9820 201 207 6 3.0
------------------------------------------------------------------------
SBRC1027 19970 9931 52 57 5 4.3
------------------------------------------------------------------------
SBRC1027 19970 9931 76 80 4 7.1
------------------------------------------------------------------------
SBRC931D 19930 9890 191 198 7 1.9
------------------------------------------------------------------------
SBRC933D 19890 9860 189 193 4 2.9
------------------------------------------------------------------------
SBRC1032 19710 9943 8 15 7 3.3
------------------------------------------------------------------------
SBRC1037 19631 9901 15 20 5 2.4
------------------------------------------------------------------------
SBRC1038 19632 9940 7 20 13 4.1
------------------------------------------------------------------------
SBRC1039 19630 9980 0 4 4 4.5
------------------------------------------------------------------------
SBRC1042 19591 9980 5 13 8 3.4
------------------------------------------------------------------------
SBRC1044 19552 9960 25 33 8 1.7
------------------------------------------------------------------------
SBRC1047 19531 9930 26 32 6 3.1
------------------------------------------------------------------------
Soukhoto
------------------------------------------------------------------------
SKRC0001 18461 10166 37 42 5 4.5
------------------------------------------------------------------------
SKRC0001 18461 10166 110 116 6 1.2
------------------------------------------------------------------------
SKRC0001 18461 10166 128 150 22 1.8
------------------------------------------------------------------------
Niakafiri West
------------------------------------------------------------------------
NWRC122 17621 10200 60 64 4 1.4
------------------------------------------------------------------------
NWRC131 17653 10258 76 85 9 1.5
------------------------------------------------------------------------
NWRC132 17657 10232 69 74 5 1.0
------------------------------------------------------------------------
NWRC133 17650 10278 90 97 7 2.3
------------------------------------------------------------------------
NWRC121 17620 10240 33 43 10 1.4
------------------------------------------------------------------------
NWRC123 17580 10340 105 112 7 2.7
------------------------------------------------------------------------
NWRC124 17580 10302 60 67 7 2.4
------------------------------------------------------------------------
NWRC128 17540 10340 140 145 5 2.6
------------------------------------------------------------------------
NWRC119 17501 10487 132 140 8 3.5
------------------------------------------------------------------------
NWRC134 17501 10443 95 102 7 4.1
------------------------------------------------------------------------
NWRC134 17501 10443 139 145 6 1.2
------------------------------------------------------------------------
NWRC080 17460 10243 43 47 4 4.7
------------------------------------------------------------------------
NWRC100 17261 10242 89 98 9 3.5
------------------------------------------------------------------------
NWRC097 17227 10442 67 73 6 2.0
------------------------------------------------------------------------
NWRC092 17184 10402 145 150 5 1.7
------------------------------------------------------------------------
NWRC093 17179 10472 71 77 6 1.1
------------------------------------------------------------------------
- Significant results are defined as minimum 4 metres in length,
including no more than 2 metres continuous internal dilution
(less than 1g/t).

- True widths of the intercepts are unknown.


To view "ATTACHMENT 6 - Bransan Project Prospect Locations", please visit the link below:

http://media3.marketwire.com/docs/12mdm731.pdf

To view "ATTACHMENT 7 - Goumba Gamba Prospect Drill Locations", please visit the link below:

http://media3.marketwire.com/docs/13mdm731.pdf

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