Tiomin Resources Inc.

Tiomin Resources Inc.

January 10, 2005 08:40 ET

Tiomin Resources Options Large Copper Deposit in Peru: Drilling Underway


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: TIOMIN RESOURCES INC.

TSX SYMBOL: TIO

JANUARY 10, 2005 - 08:40 ET

Tiomin Resources Options Large Copper Deposit in Peru:
Drilling Underway

TORONTO, CANADA--(CCNMatthews - Jan. 10, 2005) - Tiomin Resources Inc.
(TSX:TIO) is very pleased to announce it has entered into a 49/51% joint
venture agreement with Compania Minera Milpo S.A.A. (Milpo) for the
exploration of the Pukaqaqa copper/gold deposit located on a 3,150
hectare (31.5 km2) land package situated some 10 km northwest of
Huancavelica and 230 km southeast of Lima. A 2,000 meter drilling
program is already in progress.

Milpo, the project operator, is a Peruvian mining company listed on the
Lima Stock Exchange, and a well known operator of copper, zinc and lead
mines. It has an excellent track record in the development and
operation of low cost mines, such as the El Porvenir mine in Cerro de
Pasco, the Chapi copper project and Cerro Lindo polymetallic project and
the Yvan copper mine in Chile.

The Pukaqaqa deposit was first discovered by Rio Tinto Mining and
Exploration Ltd. (RT) in 1996. By 2000, approximately US$7 million had
been invested in an exploration program which included geological
mapping, geochemistry, trenching, geophysics, 17,590 meters of diamond
drilling in 91 drill holes and metallurgical studies including flotation
and leaching. The property was subsequently optioned to Milpo in October
2001, during a period of low commodity prices, for cash payments of
US$0.5 million in 2005, US$1.5 million on October 1, 2006 and $2 million
on October 1, 2007. RT retains a 1.0% NSR.

Tiomin can earn 49% of Milpo's option interest in the property by
contributing a total of US$2.0 million, consisting of US$1.0 million in
exploration expenditures of which US$300,000 is to be contributed in the
first year of the agreement, and an additional $700,000 before October
1, 2007. In addition Tiomin will make US$1.0 million in cash payments
consisting of US$100,000 in January 2005 and US$400,000 in July 2005 as
per the agreement between Milpo and RT, and US$300,000 towards the
purchase of the Jupiter claim on behalf of the JV, with the remaining
$200,000 to be applied towards either the balance of property payments
to RT or on further exploration work at its discretion.

Once Tiomin has earned in 49% of the option interest, it will share the
balance of payments owed to RT equally with Milpo on a pro-rata basis.
Effectively, Tiomin's pro-rata share of future property payments will
then be US$700,000 payable on October 1, 2006 and US$1.0 million on
October 1, 2007. The total acquisition cost to Tiomin for its 49%
interest in the Pukaqaqa deposit is US$3.6 million which includes $1.0
million in new exploration drilling.

Tiomin President, Jean-Charles Potvin, highlights the acquisition in
view of the Company's plans to expand and diversify its asset base: "We
are bullish on the long term fundamentals for commodities, including
copper. This exceptional property presents a solid foundation to expand
our focus into growth markets and with relatively little capital
requirement in the early stages. The Pukaqaqa deposit is accessible by
existing roads and benefits from excellent infrastructure in an
established mining camp. Its proximity to Huancavelica, a town of
35,000 inhabitants, provides access to water, a national electrical
grid, roads and railway linking it to a large smelter and the port in
Lima. Combined with the Kwale titanium project in Kenya, the cornerstone
of our growth, we intend to build significant value for our shareholders
through such value adding acquisitions."

Mr. Potvin first became familiar with the Pukaqaqa property in 1998 when
Pangea Goldfields, where he served as President, and RT were jointly
exploring the adjacent Huancavelica property which was eventually
acquired by Barrick Gold through its takeover of Pangea.

(A conference call will be held at 2:00 p.m. eastern standard time today
- see details below to participate)

RESOURCE AND GEOLOGY

The Pukaqaqa deposit is estimated by RT to host a resource of 2.4 Mt @
1.04% in the measured, 65.3 Mt @ 0.90% in the indicated category, in
addition to an inferred resource of 18.5 Mt @ 0.94% Cu.(1) The
discovery hole, PND-001, intersected 127 meters grading 1.26% Cu and 0.3
g/t Au and ended in mineralization. The deposit appears to be open at
depth, increasing in grade which highlights the potential for a deep
high grade resource (e.g. hole PND-21 intersected 87.5m at the -300
meter level grading 1.7% Cu, 0.44g/t Au, including 35.7m @ 3.0% Cu,
0.73g/t Au).



Pukaqaqa RT Resource Model (0.5 % cutoff) (1)

M t Cu% Au g/t Ag g/t
------------------------------
Measured: 2.4 1.04 0.17 2.75
Indicated 65.3 0.90 0.15 1.70
------------------------------
67.7 0.90 0.15 1.74

Inferred 18.5 0.94 0.10 2.00
------------------------------


The potential to further expand the resource base at depth, laterally
and elsewhere on the property is excellent with indications of
mineralization having been found over a 20 km long corridor hosted in
Cu-Au and Zn-Pb-bearing skarn type formations over the 3,150 hectare
property. In addition, several IP targets provide potential for
additional shallow resources as satellite bodies close to the deposit.

The Pukaqaqa deposit includes a steeply dipping tectonized primary
exoskarn and extensive secondary enriched zone. The exoskarn is more
than 1,000 m long, 10-30m thick (locally greater than100m thick) and is
characterized by friable pyrite-chalcopyrite breccia (20-70% sulphide).
It occurs at the contact between limestone and porphyry. The enriched
zones include the Northern Blanket (1,000 X 800m) where the IP anomaly
is substantially larger than its marked limits, and the Southern Blanket
(600 X 200m). The blanket mineralization is 60 to 130 m thick, mostly of
chalcocite, comprising a secondary enrichment beneath a leached cap
formed entirely in intrusive breccia.

Preliminary flotation tests completed by RT suggest the high sulphide
breccia is amenable to processing using a simple reagent and coarse
grind to produce a clean concentrate grading up to 29% copper. These
tests reported 90-95% recovery for copper and 70%-85% for gold. Leaching
tests completed on the secondary copper minerals found in the blanket
zones showed nearly complete recovery of the leachable copper (55% of
total contained copper) within 77 days. The blanket and primary breccia
mineralization are soft and friable, suggesting little blasting would be
required in a mining operation.

More drilling is required to expand and further define the high grade
portions of the deposit and confirm resource categories. The various
zones remain open laterally and at depth. The deposit has potential for
both open-pit and underground mining.

Tiomin also holds interests in four large titanium-bearing mineral sands
deposits along the coastal Province of Kenya. A bankable feasibility
study has been completed on the Kwale deposit located south of Mombasa
which is fully permitted. Tiomin is finalizing the fiscal terms and
conditions necessary to proceed with the Kwale project construction. In
addition, Tiomin has commenced early stage exploration at the recently
announced hard rock ilmenite/rutile deposit in Guatemala where trenching
is ongoing.

(1) Disclosure of Historical Estimates: The resources mentioned in this
release were calculated by RT in September, 2001 with analyses having
been carried out by the Bondar Clegg Laboratory Group. They have not
been verified by Tiomin Resources Inc. and should not be regarded with
undue reliance until further work has been performed by Tiomin on the
property. Dr. Nathalie Ross, a consulting geologist for Tiomin
Resources, has confirmed the resource estimate to be relevant and
reliable as defined in the CIM standards.

Certain of the information contained in this news release constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements, including but not limited to those with respect to the
prices of rutile, zircon and ilmenite, estimated future production,
estimated costs of future production, the Company's sales policy and
permitting time lines, involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the
actual prices of rutile, zircon and ilmenite, the factual results of
current exploration, development and mining activities, changes in
project parameters as plans continue to be evaluated, as well as those
factors disclosed in the Company's documents filed from time to time
with the Ontario Securities Commission.

Conference Call Invitation

A conference call will be held at 2:00 p.m. today (Toronto time) which
will feature a presentation to be delivered by Jean-Charles Potvin,
President & CEO. To participate in the call, please dial 416-695-5261;
or toll-free 1-877-461-2816 at least 5 minutes prior. A question and
answer period will follow. Please note that a visual presentation will
be available for viewing concurrent with the conference call, by
accessing the website www.tiomin.com/i/pdf/puka.pdf.

An archived recording of the call will be available thereafter - please
refer to the posting on the Company's website, www.tiomin.com.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Tiomin Resources Inc.
    Jean-Charles Potvin
    President
    (416) 350-3776, ext. 227
    or
    Tiomin Resources Inc.
    Ian MacNeily
    CFO
    (416) 350-3776, ext. 232
    or
    Tiomin Resources Inc.
    Donna Yoshimatsu
    (416) 350-3776, ext. 222
    www.tiomin.com