Mustang Minerals Corp.
TSX VENTURE : MUM

Mustang Minerals Corp.

January 23, 2007 08:30 ET

Mineral Resources Increased at Maskwa; Preliminary Assessment Outlines Profitable Open Pit Mine With 9 Year Mine Life

TORONTO, ONTARIO--(CCNMatthews - Jan. 23, 2007) - The Board of Directors of Mustang Minerals Corp., (TSX VENTURE:MUM) today announced the results of a National Instrument 43-101 compliant Preliminary Economic Assessment for the Maskwa Property located 150 km northeast of Winnipeg Manitoba. The report was authored by Micon International Limited, an independent consulting firm, and included an updated resource estimate based on a grade-block model prepared by Scott Wilson Roscoe Postle. The projects' economic character was deemed "robust" by Micon and Mustang has subsequently initiated work geared towards completion of a feasibility study.

Several of the key findings of the Preliminary Assessment by Micon are:

- An increased total mineral resource to over 9 million tonnes enabling a 9 year mine life

- average annual nickel production of 10.4 million pounds of nickel and 2.4 million pounds of copper in concentrate

- average annual revenues projected to average C$88 million over the 9 year mine life forecast

- estimated initial capital cost of C$64.5 million

- projected total cash flow forecast over the 9 year project life of C$290 million on a pre-tax basis and C$194 million on an after-tax basis

- base case assumed nickel price at US $7 and copper price US $2 per pound

- a forecast life-of-mine open pit strip ratio of 3.7:1

- projected NPV at 10% discount rate of C $90 million

- a projected 2 year payback of invested capital using all pricing scenarios

- utilization of conventional flotation technology

- assumed life-of-mine cash operating cost per pound of nickel was US $2.62 per pound.

Mustang is extremely encouraged by the results of the preliminary assessment. Robin Dunbar President of Mustang stated that "The Micon report clearly establishes Maskwa as a potentially significant nickel project in Canada. Our operating focus for Mustang in 2007 will be to advance the project toward production. In addition Mustang is also making a renewed commitment to exploration to further enhance the project economics". Mustang announced on January 16 that a drill program is underway at the Maskwa Project.

Conceptual Model

All production outlined in the preliminary economic assessment was to be mined by open pit methods at a processing rate of approximately 1 million tonnes per annum. Material would be hauled to a new concentrating plant and milled by means of a conventional flotation circuit. Concentrates would be sold to a smelter on a toll basis. The Net Present Value and Internal Rate of Return for the project are outlined in chart form below.



Net Present Value - Internal Rate of Return for Maskwa Project

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PROJECT ECONOMICS AFTER TAX PRE TAX
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PROJECT IRR 43% 54%
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NPV 10% 2007 CDN$000 $90,473 $142,042
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NPV 5% 2007 CDN$000 $131,941 $201,728
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Note: The preliminary assessment includes inferred mineral resources
that are considered to speculative geologically to have the economic
considerations applied to them that would enable them to be
categorized as mineral reserves, and there is no certainty that the
preliminary assessment will be realized.


Substantial Increase to Open Pit Resource

A comparison of the tonnages between the Scott Wilson RPA 2005 Whittle pit shell and the economic pit shell calculated by Micon using the Lerchs-Grossman open pit optimization algorithm contained within the Surpac Vision software package is contained below. Micon attributed the changes in the pit shell (ie the mineralization that can be profitably mined) to its including inputs from platinum and palladium and cobalt, using a $7 nickel price (vs. $6 by RPA) and the utilization of a steeper wall angle that lowered the strip ratio.

Micon also assessed the effect of reducing metal prices to US$6/lb nickel and US$1.30/lb copper. The total tonnage of mineralization reduced but by less than 500,000 tonnes to 8,589,700 tonnes at 0.63% nickel and 0.13% copper when US$6/lb nickel and US$1.30/lb copper were used.



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Material Tonnes %Ni %Cu % Co Pt (g/t) Pd (g/t)
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Scott Wilson Roscoe
Postle Feb 2005
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Indicated Resources
- Open Pit 5,230,000 0.68 0.15 -- -- --
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Inferred Resources
- Open Pit 320,000 0.54 0.09 -- -- --
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Micon International,
January 2006
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Indicated Resources,
Ni-Cu - Open Pit 8,055,700 0.64 0.13
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Inferred Resources,
Co-Pt-Pd - Open Pit 8,055,700 0.02 0.16 0.60
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Inferred Resources
- Open Pit 992,500 0.46 0.09 0.02 0.09 0.36
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Total, Potentially
Mineable Material 9,048,200
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Waste 33,160,800
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Stripping Ratio 3.7:1
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The definitions for resource categories used are consistent with Canadian
Institute of Mining, Metallurgy and Petroleum (CIM) standards as of August,
2000 which is incorporated by reference in Ni 43-101.


Micon utilized the grade-block model prepared by Scott Wilson RPA in the Mineral Resource Estimate dated February 18, 2005 in which all available drill hole data at the time was utilized. Details of the construction of Scott Wilson Roscoe Postle's grade block model can be found in the Technical Report that is available on SEDAR and are summarized in Mustang press release dated February 24, 2005.

The Resource Estimate notes pursuant to the February 18, 2005 report are also incorporated by reference herein. The Assay Quality Control/Quality Assurance Program from the Scott Wilson RPA February 18, 2005 report are also incorporated by reference herein. Micon completed check assays from drill core as part of its site visit. The samples of quarter core were analyzed by Acme Analytical Laboratories Ltd. (Acme) in Vancouver B.C. Acme determined the nickel copper and cobalt abundances by using a 4 acid digestion followed by analysis of the metal contents ICP-ES. Platinum and palladium values were determined by fire assay using a 30-gram sample fusion with the dore bead dissolved in a solution of aqua regia and the final metal contents determined by ICP.

Economic Analysis

Base case Life-of-Mine operating statistics for Maskwa show gross revenues of $793 million from metal sales with a net smelter return of $649 million. Net operating profit before tax was estimated at $387 million.

Recommendation and Conclusions

Micon concluded that on the basis of the input parameters and estimates presented the "conceptual scope for the Maskwa Project demonstrates a robust economic character". Also "significant justification is present to continue to evaluate the technical and economic viability of the Maskwa Project".

Mustang Proceeding with Feasibility Study

Mustang has anticipated the robust potential of Maskwa and notes that the project;

- relies on open pit extraction for the estimated 9 year mine life

- relies on conventional flotation technology for extracting nickel

- has a low capital cost relative to other nickel projects worldwide

- is located in one of the world's most favourable mining jurisdictions close to existing mining infrastructure

Incentive Options

The Company announces the granting of 1.6 million incentive options, having a term of up to five years, to management, directors and consultants at an exercise price of $0.90 per share subject to the approval of the TSX Venture Exchange.

Ernest J. Marcotte P.Eng. is the Qualified Person for Mustang Minerals Corp. and has reviewed the contents of this press release. Micon's team of professionals responsible for the preparation of the preliminary economic assessment include Mr. Reno Pressacco, P.Geo., Mr. Ian Ward, P.Eng., Mr. Mani Verma, P.Eng., and Mr. Christopher Jacobs, C.Eng., all of whom are qualified persons under the definitions contained within National Instrument 43-101.

To find out more about Mustang Minerals Corp. (TSX-V: MUM) visit our website at www.mustangminerals.com

We seek safe harbour.

This news release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario) (together, "forward-looking statements"). Such forward-looking statements may include the Company's plans for its mineral projects in Manitoba, the overall economic potential of its properties, the availability of adequate financing and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements expressed or implied by such forward-looking statements to be materially different. Such factors include, among others, risks and uncertainties relating to potential political risks involving the Company's operations in a foreign jurisdiction, uncertainty of production and costs estimates and the potential for unexpected costs and expenses, physical risks inherent in mining operations, currency fluctuations, fluctuations in the price of nickel and other metals, completion of economic evaluations, changes in project parameters as plans continue to be refined, the inability or failure to obtain adequate financing on a timely basis, and other risks and uncertainties, including those described in the Company's Management Discussion and Analysis for the nine month period ended September 30, 2006 and Material Change Reports filed with the Canadian Securities Administrators and available at www.sedar.com.

This news release uses the terms "inferred resources", "indicated resources", "measured resources", and "mineral resources". The Company advises investors that although these terms are recognized and required by Canadian securities regulations (under National Instrument 43-101 "Standards of Disclosures for Mineral Projects"), the US Securities and Exchange Commission does not recognize these terms. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In addition, "inferred resources" have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility of pre-feasibility studies, or economic studies except for a Preliminary Assessment as defined under National Instrument 43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

Shares Outstanding: 62,103,845

The TSX Venture Exchange has not reviewed and does not accept responsibility for the contents of this press release.

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