Primary Metals Inc.
TSX VENTURE : PMI

Primary Metals Inc.

January 11, 2007 09:30 ET

Primary Metals Reports Progress at Panasqueira Tungsten Mine

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 11, 2007) - Primary Metals Inc. ("Primary" or "Company") (TSX VENTURE:PMI) is pleased to report technical developments and improved mine output at its Panasqueira tungsten mine in Portugal. Operations have been progressing as scheduled at Panasqueira and include the delivery of additional new low profile mining equipment.

Four major new pieces of low-profile mining equipment were delivered to the Panasqueira Mine in the final weeks of 2006. A low profile load-haul-dump underground mining unit ("LHD") arrived on November 27, and was in operation by December 4; a low profile jumbo drilling rig arrived on December 15 and a second LHD and low profile drill rig were delivered on December 22. The new equipment was all in operation on Level 3 of the mine by January 6, 2007.

There are now six low-profile LHDs and five low-profile jumbo drill rigs operating on Level 3, which will now be mined exclusively using this equipment. This will minimize dilution of the tungsten ore with waste rock. The replaced mining equipment will be used to continue production from Level 2, where tungsten ore is transported out of the mine by conveyor without need for use of the internal mine hoist.

A record daily mine output of 3,523 tonnes of ore was achieved on November 7, 2006 with a daily average of 3,078 tonnes for the month and a daily average of approximately 3,012 tonnes for December. Monthly run of mine output has also improved in recent months. After averaging approximately 58,500 tonnes over the previous five months (excluding August when the mine was shut down for the annual summer vacation), monthly mine output was also increased with 66,762 tonnes of ore mined in October 2006; 64,636 tonnes in November 2006; and 54,223 tonnes in the three operating weeks of December 2006 when the mine was shut down for the normal scheduled holiday period from December 23 to January 6, 2007.

Underground development work at the Panasqueira Mine has continued with the excavation of the D9 ramp to access new zones of indicated tungsten resources between operating Levels 2 and 3. The ramp intersected seven tungsten veins and underground development to mine these areas began this month and will continue until mid-summer 2007. It is expected that stoping of the zones will commence by June.

Overall production of concentrates totalled approximately 26,300 MTUs for October, November and December (1 MTU equals 1 metric tonne unit or 10 kilograms of WO3, tungsten trioxide). The run of mine ore grade has not changed significantly and remained fairly consistent with the previous quarter averaging approximately 0.17% WO3. Mined ore grade has been impacted by some marginal grade material resulting from the excavation of the D9 ramp. Improvements are expected in due course with the introduction of the new low profile mining equipment and access to the new mining areas. Tungsten prices have remained strong between US$245 and US$255 per MTU for European APT (ammonium paratungstate) on which the Company's sales contract is based.

The Knelson concentrator is now fully operational in recovering additional ultra fine tungsten minerals in the process plant. Tungsten recovery in the slimes circuit in November showed an approximate 10% improvement over the average recovery of tungsten slimes for the previous six operating months, reflecting an overall improvement of at least 1% in tungsten recovery. Further improvement is expected with the installation of additional equipment including a new hydrosizer and an additional four Duplex tables in the slimes circuit later this month.

Primary Metals Inc. owns a 100 percent interest in the Panasqueira tungsten mine in Portugal and is currently producing wolframite concentrates containing some 100,000 MTUs of tungsten trioxide per annum with further improvements underway. The Panasqueira mine has a long history of production of high-quality wolframite concentrates and is the dominant producer of high-grade tungsten concentrates outside China. Further information is available at www.sedar.com and on the Company's website at www.primarymetals.ca.

On Behalf of the Board of Directors,

James Robertson, P. Eng., Director

James Robertson, P. Eng., is a Qualified Person for Primary and has reviewed and approved the information contained in this News Release.

Certain of the statements made and information contained herein is "forward-looking information" within the meaning of the Ontario Securities Act or "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 of the United States. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation the company's expectations as to the results of planned work programs, potential mineralization, resources, reserves, mine production levels and future tungsten prices. Such statements are based on certain assumptions, including continued demand for tungsten, availability of capital, equipment and personnel to carry out and complete the planned work programs and accuracy within a reasonable range of reported exploration and development results, and involve various risks and uncertainties, including global economic factors, future commodity prices, lack of availability of equipment or personnel, and results of exploration and development. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Other important factors that could cause actual results to differ materially from the Company's expectations are disclosed under the heading "Risk Factors" and elsewhere in the Company's documents filed from time-to-time with regulatory authorities and on www.sedar.com.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release.

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