Brilliant Mining Corp.
TSX VENTURE : BMC

Brilliant Mining Corp.

May 25, 2006 20:43 ET

Brilliant Closes Acquisition of Donegal Resources Pty Ltd.; Gains 25% Interest in Operating Lanfranchi Nickel Mine, Western Australia

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 25, 2006) -

Not for dissemination in the United States or for release to U.S. newswire service.

Brilliant Mining Corp. (TSX VENTURE:BMC) ("Brilliant" or the "Corporation") has closed the acquisition of Donegal Resources Pty Ltd ("Donegal"), a private Australian company. Donegal holds a 25% interest in the Tramways Tenements, host to the producing Lanfranchi Nickel Mine, located in the world-class Kambalda Nickel District in Western Australia.

"With the completion of this acquisition, Brilliant has graduated from a grassroots explorer to become one of Canada's newest nickel producing companies. At Lanfranchi, an accelerated mine plan is currently under development to boost production and increase cash flow. This will allow us to take full advantage of elevated nickel prices and optimize returns" states John Robins, Chairman, Brilliant Mining Corp.

Brilliant has acquired all of the issued and outstanding shares of Donegal, from Ian Junk and Leigh Junk (collectively, the "Vendors"), both of whom are residents of Kambalda, West Australia and are at arm's length to Brilliant. Donegal indirectly owns a 25% interest in the Lanfranchi Joint Venture ("Lanfranchi JV"). The remaining 75% interest in the Lanfranchi JV is owned by Sally Malay Mining Limited, an Australian public company that is at arm's length to both Brilliant and the Vendors. The Lanfranchi JV, through its wholly owned subsidiary, Lanfranchi Nickel Mines Pty Ltd, owns the Lanfranchi Nickel Mine and project, together with the associated infrastructure, mining leases and mineral claims located in the Tramways area of the Kambalda Nickel Province in the southern Goldfields Region of Western Australia.

The Acquisition was effected pursuant to the terms of a letter agreement between the Corporation and the Vendors dated January 27, 2006 and a definitive Purchase Agreement dated May 18, 2006. In addition to a C$150,000 break fee and C$200,000 deposit, Brilliant paid the Vendors at closing the sum of C$4,800,000 cash and issued:

(a) 10,500,000 units of Brilliant ("Units") at a deemed price of $0.80 per Unit. Each Unit consisted of one common share of Brilliant ("Common Share") and one-half of a share purchase warrant ("Warrant"). Each whole Warrant entitles the holder to acquire one additional Common Share within 3 years of issuance at a price of $1.00 in the first year and $1.25 in the second and third years; and

(b) a C$5,000,000 unsecured convertible debenture (the "Debenture"), bearing interest at 10% per annum and maturing 3 years from the date of issuance. Interest is payable in quarterly installments and the principal amount outstanding is convertible at the option of the holder, in whole or in part and from time to time, into Common Shares at a conversion price of $1.00 in the first two years and $1.10 in the third year. Brilliant can prepay the Debenture, in whole or in part, at any time upon 30 days written notice (during which time the holder can elect to exercise its right of conversion).

No finder's fee was paid in connection with the Acquisition.

The cash portion of the purchase price was funded from proceeds raised under a brokered private placement ("Private Placement") of an aggregate of 12,902,750 subscription receipts of Brilliant ("Subscription Receipts") at a price of $0.80 per Subscription Receipt, for gross proceeds of $10,322,200. The closing of the Private Placement was announced by Brilliant in a press release dated May 11, 2006. Pursuant to the terms of the Agency Agreement dated May 10, 2006 between Pacific International Securities Inc., Canaccord Capital Corporation and Dundee Securities Corporation (collectively, the "Agents") and the Corporation, the proceeds from the Private Placement were held in escrow pending the closing of the Acquisition at which point the Subscription Receipts were deemed exercised for no additional consideration into units of Brilliant (the "Financing Units"). Each Financing Unit consisted of one common share and one-half of a share purchase warrant (each whole warrant, a "Warrant"). Each Warrant entitles the holder to acquire one additional common share at a price of $1.05 for a period of two years from the closing of the Private Placement.

As a result of the Acquisition and the issuance of the Financing Units, the Corporation has an aggregate of 46,257,892 Common Shares issued and outstanding (73,911,761 Common Shares on a fully diluted basis). The Vendors each own an aggregate of 5,250,000 Common Shares (10,375,000 Common Shares assuming exercise of the Warrants and full conversion of the principal amount of the Debenture). The Acquisition is not considered a "reverse take-over" pursuant to policies of the TSX Venture Exchange (the "Exchange") as the Vendors have entered into a Voting Trust Agreement with the Corporation whereby the Vendors have agreed to cause their Common Shares not to be voted unless voted in favour of proposals of Management of Brilliant. The Vendors will be released from the Voting Trust Agreement upon the earlier of: (a) approval of the disinterested shareholders of Brilliant to the change in control; (b) the aggregate holdings of the unrelated Directors of Brilliant of Common Shares on a fully diluted basis exceeding the aggregate holdings of the Vendors of Common Shares on a fully diluted basis; or (c) consent of the Exchange.

The following is a summary of relevant financial information derived entirely from the audited financial statements of Donegal for the year ended June 30, 2005 and the unaudited consolidated financial statements of Donegal for the six months ended December 31, 2005 (collectively, the "Donegal Financial Statements"). The Donegal Financial Statements have been reconciled to Canadian GAAP.



------------------------------------------------------------------------
Six months ended Year ended
Dec. 31, 2005 Jun. 30, 2005
(Q2) (Q4)
C$ C$
------------------------------------------------------------------------
Current assets 14,120,219 9,833,026
------------------------------------------------------------------------
Mineral interests 7,314,912 7,118,964
------------------------------------------------------------------------
Capital assets 2,221,760 1,870,133
------------------------------------------------------------------------
Total Assests 30,021,765 30,512,024
------------------------------------------------------------------------
Current liabilities 14,879,171 9,323,140
------------------------------------------------------------------------
Share capital 2 2
------------------------------------------------------------------------
Revenue from continuing operations 1,491,605 1,057,064
------------------------------------------------------------------------
Net loss from continuing operations (1,094,804) (349,774)
------------------------------------------------------------------------
Basic and diluted loss per share from
continuing operations (547,402) (174,887)
------------------------------------------------------------------------
Weighted average shares 2 2
------------------------------------------------------------------------


As a condition of the Acquisition, the Vendors provided a National Instrument 43-101 compliant technical report dated March 17, 2006 prepared by Golder Associates Pty. Ltd. of Perth, Western Australia ("Golder"), entitled "Lanfranchi Nickel Project, Western Australia" (the "Technical Report"). The Technical Report can be viewed at www.sedar.com.

The Lanfranchi Nickel Project encompasses the Tramways Tenement package consisting of 37 mineral leases over 50 km2 and host to the producing Lanfranchi Nickel Mine. The Tramways Tenements are located in the world-class Kambalda Nickel District in Western Australia that has produced over 1,000,000 tonnes of nickel metal (35Mt @ 3% Ni) with the Lanfranchi Mine being one of the most significant, producing around 10% of the total nickel metal from the district. Historic production at the Lanfranchi Mine has totaled 3.17Mt at an average grade of 3.18% Ni (100,900 tonnes of nickel metal) over 14 years of underground mining from 1987 to 2002.

The current Lanfranchi Project Mineral Resource includes an Indicated Mineral Resource of 2.43 million tonnes at 2.2% Ni (54,127 tonnes of nickel metal) and an Inferred Mineral Resource of 1.24 million tonnes at 1.6% Ni (19,370 tonnes of nickel metal) which are detailed in the following table.



------------------------------------------------------------------------
Deposit Indicated Resource Inferred Resource
------------------------------------------------------------------------
Tonnes Grade Tonnes Grade
------------------------------------------------------------------------
(000's) (%) (000's) (%)
------------------------------------------------------------------------
Helmut South (1) 729 2.9 55 1.4
------------------------------------------------------------------------
Lanfranchi (2) 226 2.5 35 4.3
------------------------------------------------------------------------
Winner (3) 89 4.6 13 3.6
------------------------------------------------------------------------
Schmitz (2) 98 4.1 10 4.9
------------------------------------------------------------------------
Helmut 100 1.5 87 1.4
------------------------------------------------------------------------
Martin (3) 44 3.9 6 3.5
------------------------------------------------------------------------
Edwin 33 4.8
------------------------------------------------------------------------
Ham 73 1.2
------------------------------------------------------------------------
Cruikshank (2) 866 1.3 489 1.3
------------------------------------------------------------------------
Gigantus (3) 273 1.7 442 1.3
------------------------------------------------------------------------
Total 2,425 2.2 1,243 1.6
------------------------------------------------------------------------

(a) Mineral Resource estimates, being based on a reasonable expectation
of economic exploitation, are dependent upon risk factors including
metallurgical, economic, sovereign-risk, mineral-title,
socio-economic, legal, taxation, marketing and permitting in the
long term.

(b) Note that the Helmut South Mineral Resource is as at March 2005, all
other resources are as at January 2005.

(1) Mineral Resources were estimated using an internal cut-off grade of
3% Ni and an external cut-off grade of 1% Ni. High grade zones were
constrained during the interpolation process. Samples were
composited to 1 metre intervals and then interpolated using an
ellipsoid search orientation in conjunction to plunge direction.
Wireframes were used as hard boundaries in the interpolation model.

(2) Samples in the drill hole database were flagged with a zone code
using the wireframe model and not composited but were length
weighted during the interpolation process. Ni grades and density
were interpolated using inverse distance squared weighting.

(3) Same as (2) whereas at least two east-west lines of drill holes were
utilized for each block.


As at 31 December 2005 the Probable Mineral Reserves at the Lanfranchi Mine are estimated at 576,500 tonnes grading 3.3% Ni for a contained 19,100 tonnes of nickel metal across three ore bodies as listed in the table below.



Probable Mineral Reserves (at 31 Dec 2005)
------------------------------------------------------------------------
Orebody Tonnes Grade (% Ni)
------------------------------------------------------------------------
Helmut South (4) 358,200 3.4
------------------------------------------------------------------------
Lanfranchi (5) 119,600 2.5
------------------------------------------------------------------------
Winner (6) 98,800 4.0
------------------------------------------------------------------------
Total 576,500 3.3
------------------------------------------------------------------------


(a) Mineral Reserve estimates are based on the same risk factors as
mineral resources but are impacted by those factors in the immediate
to short term together with additional engineering risk factors.

(b) The Mineral Reserve estimates were prepared using an average
life-of-mine nickel price of USD$5.47/lb

(c) The Probable Mineral Reserves are derived from and included in the
relevant Mineral Resource estimates.

(4) The Mineral Reserve cut-off grades were estimated to be 2.1% for
ore that required capital development and 1.4% for ore in previously
developed mining areas and was estimated by slicing the resource
into flitches and establishing mining shapes that corresponded to a
minimum mining width of 3.5m and a maximum width of 4.5m. Forty
metre high stoping blocks were adopted with the stope outlines
wire-framed and incorporated with the geological block model to
estimate the tonnes and grade for each stope. Dilution was
estimated at zero grade on the footwall and lower grade disseminated
ore on the hangingwall. Ore will all be mined by development using
conventional bogging, thereby incurring no ore loss.

(5) The Lanfranchi ore body will be mined using T-bone slotting or
random room and pillar slot stoping airleg methods with a minimum
mining width of 2m. Dilution has been included at a grade of 0% for
material mined outside of the resource. Ore loss has been included
due to pillars remaining and varies from 16-29%.

(6) The mining method selected for this orebody was airleg development
and leading stoping, with minimum mining widths of 2.5m and 2.0m
respectively for the lower lens. Jumbo development and long-hole
stoping with minimum mining widths of 4.5m and 2.5m respectively was
selected for the upper lens.


The first ore was delivered from the newly developed high-grade Helmut South ore body in September 2005 with production 'ramp up' currently on track to attain target levels. Along with the increase in production from Helmut South, the Lanfranchi JV composed of Donegal 25% and Sally Malay Mining Ltd. (SMY:ASX) 75%, has commenced work on a detailed mine plan, optimum mining method and costing studies to potentially access ore from two additional deposits. The proposed ore material sourced from the Winner ore body and Schmitz Extension resource if developed could see nickel production levels from the Lanfranchi Nickel Mine increase significantly from as early as the second half of 2006 onwards.

The Winner reserve is up plunge from the high-grade Schmitz (783,562 tonnes at 4.56%) and Skinner (297,781 tonnes at 4.87%) ore bodies that produced a combined total of 50,280 tonnes of Ni. Additional stope definition drilling on the currently delineated ore reserve is in progress and as the ore body is close to the surface, several geotechnical holes will also be drilled to test for a possible portal location, which could enable quicker access to the ore body rather than from inclining up from the Schmitz incline. This could provide a means of early production from Winner should the drilling, technical and financial studies prove positive.

Recent drilling on the down dip extension of the Schmitz ore body indicates a continuation of high grade nickel 330 metres down-plunge of the lowermost production level. All seven holes of the 2006 program, to test the down-plunge extension of the past producing Schmitz ore body, have returned significant intersections of high grade nickel mineralization with Hole SMT-107 returning 8.39% nickel over 1.93 metres. The drill results are summarized in Table 1.



Table 1: Schmitz Extension 2006 Drill Results
-----------------------------------------------------------------
True
From To Interval Thickness
Drill Hole (m) (m) (m) (m) Ni (%)
-----------------------------------------------------------------
SMT-103 187.60 189.24 1.64 1.54 6.60 (ii)
-----------------------------------------------------------------
SMT-104 190.00 190.90 0.90 0.84 4.80 (i)
-----------------------------------------------------------------
SMT-105 188.76 190.39 1.63 1.51 6.60 (i)
-----------------------------------------------------------------
SMT-106A 216.31 218.44 2.13 1.40 6.07 (iii)
-----------------------------------------------------------------
SMT-106A 240.41 244.03 1.62 1.00 5.35 (iii)
-----------------------------------------------------------------
SMT-107 208.53 210.46 1.93 1.25 8.39 (iii)
-----------------------------------------------------------------
SMT-108 244.62 248.00 3.38 2.10 2.61 (iii)
(including) 245.43 248.00 2.57 1.60 3.09 (iii)
-----------------------------------------------------------------
SMT-109 308.10 310.49 2.39 1.30 3.43 (iii)
-----------------------------------------------------------------

(a) Previously released holes as reported on (i) Feb. 23, 2006 and
(ii) March 02, 2006 (iii) March 30, 2006.

(b) The diamond drilling utilized LTK 60mm rods.

(c) The sampled lengths were determined by geology with a maximum
interval of 1 metre.

(d) The program was supervised by Lanfranchi Nickel Mines Pty. Ltd.
personnel with the core analysed at a recognized assay lab;
Kalgoorlie Assay Laboratories, Kalgoorlie, Western Australia.
The Company has not independently verified the lab certification.


The reserves and mine plan are currently being established for the Schmitz Extension with a view to having a detailed mine plan and financial model prepared by mid year. If the study is positive as expected and the Joint Venture agrees to develop the Schmitz Extension, it could be in production during the next financial year. Access to the Schmitz Extension will be via the continued development of the existing Schmitz decline. The Lanfranchi JV management committee is planning to convene in June to review the Schmitz Extension feasibility study. It is only through the approval of the mine plan, selection of the mining method and completion of a positive costing study can the timing and budget for the development of the Schmitz Extension be established.

Following the closing of the Acquisition, Leigh Junk was appointed a director of the Corporation. It is the intention of Management to nominate both Ian Junk and Leigh Junk for election as directors of the Corporation at its next annual shareholders meeting.

Ian Junk graduated from the West Australian School of Mines in 1991 with a Bachelor of Engineering degree. He commenced his professional career in 1990 with WMC Resources Ltd., progressing to Mine Manager at several mines until his departure in 2000. From 2000 to 2003, he was an operations manager with Mincor Operations Pty Ltd. Mr. Junk has gained a reputation in the mining industry for his excellent technical knowledge and of being a systematic, thorough mine manager. He is also a non-executive Director of Reed Resources Ltd (ASX - RDR) and a Director of Committee Bay Resources Ltd. (TSXV - CBR).

Leigh Junk graduated from the University of Ballarat in 2000 with a Graduate Diploma of Mining and obtained a Diploma of Surveying from Wembley Technical College in 2000. He is currently studying towards obtaining a Masters in Mineral Economics and an MBA from Curtin University. Mr. Junk commenced his professional career in 1992 as a Surveyor, progressing to Senior Mining Engineer with several mining companies throughout Western Australia, including Pilbara Manganese Pty Ltd, WMC Resources Ltd. and Mincor Operations Pty Ltd. He is a specialist in the area of mine planning involving feasibility studies, project evaluation, production scheduling and mine design. Mr. Junk is a Director of the Goldfields Credit Union and a Member of the Australian Institute of Mining and Metallurgists.

The project is supervised by John Williamson, P.Geol., of Edmonton, AB, CEO and a Director of Brilliant and is the Qualified Person as defined in National Instrument 43-101, has read and approved the news release. Peter Onley, BSc, MSc, MBA, CP, a Geologist and Principal of Golder, is a qualified person as defined by National Instrument 43-101 and is the senior author responsible for the overall compilation of the Technical Report. The sections in the Technical Report pertaining to the geological interpretation, geological modeling, Mineral Resource estimation and Mineral Reserve estimation was prepared by various contributing authors (Paul Payne, BAppSc (Hons - Geol), Grad Dip Min. Ec.; Gavin Woodward, BE (Mining), MBA; Alan Miller, BSc (Hons - Geol.); Darryl Mapleson, BSc (Hons - Geol.)) all defined as a Qualified Persons for the purpose of NI 43-101. The deposits were modeled and interpolated separately based on their individual geometry, mining methods, dilution parameters and mining costs.

Brilliant Mining Corporation (BMC:TSXV) is focused on the identification, exploration, and development of nickel opportunities world wide. Brilliant currently has 3 active nickel projects in Canada including the Michikamau property in western Labrador.



On behalf of the Board of Directors

"Mike Sieb"

Mike Sieb, B.Sc., MBA - President
Brilliant Mining Corporation


View Brilliant's filings at www.sedar.com.

This news release contains certain forward-looking statements. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential mineralization, resources and reserves estimates, exploration results, exploration and development results and the future plans and objectives of Brilliant are forward-looking statements that involve various risks and uncertainties. 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. Readers are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. Brilliant undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other factors which affect such statement, except as required by law.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.


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

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