Cambridge Mineral Resources plc
AIM : CMR

Cambridge Mineral Resources plc

August 13, 2008 02:01 ET

Cambridge Mineral Resources plc: Rasuhuilca Silver-Gold Feasibility Study Shows Positive Project Parameters

Overview - Rasuhuilca silver-gold project feasibility study completed - Potential to yield 1,000,000 ounces of silver and 15,000 ounces of gold over the five year initial planned mine life, which the Company plans to extend - Silver anticipated to be produced on a full capital depreciated cost of under US$8 per troy ounce - Potential to expand and convert additional Resources to minable Reserves, adding significant benefits to the Project's overall economics

LONDON, UNITED KINGDOM--(Marketwire - Aug. 13, 2008) - Cambridge Mineral Resources plc (AIM:CMR)('CMR' or 'the Company'), the AIM listed mining exploration and production company primarily targeting precious metals in South America, has completed a feasibility study in relation to its Rasuhuilca silver-gold ('Ag/Au') project ('Rasuhuilca' or 'the Project') in Peru. This has been conducted by the Company's own technical team in tandem with a team of international consultants including CYC Ingenieros, Wardell Armstrong International and Edwilde Yoplac Castromonte.

The study utilises spot prices as at the time of the study - silver US$ 14.50/oz, and gold US$ 900/oz. Current prices- silver US$14.50, and gold US$815.

The study concluded that the Rasuhuilca mine can produce silver at a net cost of circa US$6 per troy ounce or on a full capital depreciated cost of less than US$8 per troy ounce. The operation is expected to yield circa 1,000,000 ounces of silver and 15,000 ounces of gold to generate after tax profits of approximately US$9 million. The feasibility study indicates that mine development would be completed within 12 months.

Located on the Patacancha Permits in the Lucanas District, Ayacucho Province in southern Peru, Rasuhuilca comprises an intermediate epithermal system within an east-west, steeply dipping fault zone and comprises three principle mineralized zones. The feasibility study has estimated that the Main and two Western Zones contain a total Resource of 321,100 tonnes @ 185.2 g/t Ag (252g/t Ag equivalent) and 2.15 g/t Au, at a 75 g/t Ag equivalent cut off (JORC Standard). Additional potential to expand these resources exists to the west within two additional zones, Rasuhuilca North West and Rasuhuilca South, around the 4,941 metre level. Within this Resource, a Proven & Probable Reserve to JORC Standards of 168,700 tonnes @ 216 g/t Ag (368 g/t Ag Equivalent) 3.05 g/t Au, has been defined in a mining plan for the Main Zone. Only this Reserve has been considered in this study and the potential exists for the conversion of additional resources to minable reserves within the overall resource.

The mining plan envisages the blasting of 50,300 tonnes as sub-level and stope development ore and a mere 2,500 tonnes of waste development due to the extent of a pre-existing mine workings.

Metallurgical testwork completed by CYC Ingenieros (Lima, Peru) and Wardell Armstrong International (Cornwall, England), has indicated that the average gold recovery will be circa 85%, whilst the average silver recovery will be circa 65%. The Mill design was completed by Edwilde Yoplac Castromonte, Consulting Engineer (Lima, Peru). Mineral processing will involve crushing, grinding and classifying followed by agitated cyanide-leach to extract the precious metals. The gold and silver will then be precipitated out of the solution via the Merrill-Crowe Process and the resulting filtrate will be sold under contract to a precious metals smelter and refinery in Nazca, some 150km from the mine site.

It is anticipated that run-of-mine ore will have a net payable recoverable precious metal value per tonne of US$139.39 (at spot prices as at the time of the study - silver US$ 14.50/oz, and gold US$ 900/oz) with total costs averaging US$51.40 per tonne over the life of mine.

On the basis of the financial model within the report, the development of the Project is expected to require a capital spend of circa US$3.1 million over a five month period.

The study concludes that the Rasuhuilca deposit is justified and offers a small but rewarding return on investment. The Company is currently examining various options to advance the project.

Importantly, and additionally, a number of small resources already inferred by the previous title holders, Buenaventura, have been estimated to total 387,300 tonnes grading 5.31 g/t Au, 286 g/t Ag. These resources are at various stages of exploration and are not to JORC standards of reporting and therefore require additional evaluation. There is also a very good chance that additional resources will be located on the Patacancha Permits and these could be processed through this plant. If any of these prospective resources are confirmed, significant benefit would be added to the overall economics of Rasuhuilca.

CMR Managing Director Colin Andrew said, "The feasibility study confirms our belief that Rasuhuilca provides an excellent opportunity for rapid mine development and will serve as an additional profit stream to augment revenues expected to commence at the end of the year from our Quintana gold mine development in Colombia. Whilst being a relatively small mine in size, having a plant in this area offers CMR tremendous opportunities for additional deals and further mine development."

The full feasibility study can be downloaded from the Company's website www.cambmin.co.uk.

Colin J. Andrew BSc ARSM MIMMM FGS CEng, Managing Director of Cambridge Mineral Resources plc, and a Qualified Person as defined by the 'Guidance Note for Mining, Oil and Gas Companies, March 2006' of the London Stock Exchange, has reviewed the information contained herein.

For further information, visit www.cambmin.co.uk.

Notes to Editor

Cambridge Mineral Resources plc is an AIM listed mining and exploration company focussed on becoming a producer of precious metals with an output equivalent to 100,000 oz gold per annum. Primarily targeting precious metals in South America, its strategy is to acquire established resources at advanced stage exploration or near term production and develop them to economically mineable reserves through further exploration. It has a strong portfolio of mineral projects at varying stages of commercialisation including its two key projects, the Quintana gold mine in Colombia, which is anticipated to commence production by the end of 2008, and the Rasuhuilca silver-gold mine in Peru. The Company also has a portfolio of assets in Europe, which it is currently in the process of seeking to divest through either joint-venture or sale.

Further Information on the Feasibility Study

The feasibility study was completed using a number of consultants and various in-house staff members.

The resources and reserve estimates were conducted by Colin J. Andrew BSc ARSM MIMMM CEng FGS, a competent person under both the JORC and PERC Codes. Mr. Andrew has over 30 years experience in completing such estimates and has visited the site at Rasuhuilca on several occasions.

Metallurgical Studies were completed by CYC Ingeneros, Lima, a well-respected Peruvian consultancy group and by Wardell-Armstrong UK, an international mining industry consultancy group. Mill design was completed by Sn. Edwilde Yoplac Castromonte, a Peruvian Metallurgical and Mineral Processing Engineer with many years experience in assessing and designing plants to treat ores from the southern Peru mineral districts. Mill capital and operating costs were estimated by Sn. Castromonte.

Mine design was by Sn. Renan Castillo, a Peruvian Mining Engineer, with over 30 years experience in operating mines in southern Peru and with specific experience in small mines. Mine capital and operating cost estimates were completed by Sn Castillo.

The operating environment in Peru with regard to permitting has been advised by the company's legal advisors in Peru, Sn. Cesar Manrique & Associates.

The financial evaluation was based upon the controlling parameters derived from the above studies and reflects normal industry practice.

All assay historical and current CMR assay data was provided from certified laboratories analyzing batches of samples which including blanks, field duplicates and laboratory standards and which were subject to industry standard QA/QC procedures.

Background

The Peruvian interests were acquired by CMR in February 2005 under the terms of an arrangement whereby the company exercised an option to acquire a 50 per cent. equity interest in the Patacancha project for a payment of US$320,000.

On 13th September 2005 the company announced that gold production had commenced at the Marcelita-2 gold mine at an initial production rate planned at 5-10 tonnes per day at a grade of 1/2 oz (15g/t) gold per tonne during the development period.

On 10th January 2007 the Company announced that an option agreement has been signed with its partner in Peru, Minera Argento SAC ("Argento"), to acquire Argento's 50% interest in the joint venture company Minera Sucre SAC. Minera Sucre holds the Patacancha claims, in southern Peru, on which the Rasuhuilca silver-gold mine lies. Under the terms of this Agreement the second instalment of $250,000 was paid on 2nd November to Alberto Leon representing Argento on 5th November 2007 and the transfer of shares completed under Notarial Deed.

Consequently Minera Peru Gold SAC, CMR 100% owned subsidiary, is now the title holder of 100% of the issued shares of Compania Minera Sucre SA.

Project Details

The Rasuhuilca project is located on the northern flank of Cerro Rasuhuilca (5097.6m) at elevations between 4,826m and 4,961m. The lower levels (4,826m, 4,863m and 4,890m level are directly accessible by 4x4 on dirt track to their portals. The higher levels are only accessible on foot.

The Rasuhuilca vein system trends at around 075 - 080 degrees dipping steeply at around 80-85 degrees south to vertical. The vein system and associated alteration is developed within porphyritic andesites has been traced discontinuously at surface and by underground development over 1200m. The mineralized vein zone typically averages 6.0m in width but is seen to vary between 4.0 and 17.0m true thickness in underground workings. The overall shape of the mineralized body is conical in section and widens upwards to a maximum true width approaching 40m near surface. Mineralization extends over a vertical interval of around 210m above the 4800m level.

The underground development on the Rasuhuilca Vein comprises 5 separate levels of varying lengths completed by previous permit-holders in the 1980's. During the period November 2006 to May 2007 CMR reopened all of these levels and completed some 235.1m of vertical and sub-level development in three raises (630, 645 and 650) to connect this pre-existing development on the 4,826m, 4,890m and surface at around 4936m, for sampling purposes to investigate the vertical contiguity of the mineralized body and to establish ventilation connections ahead of future mining plans. CMR also collected a bulk sample of 50 tonnes from this activity which formed the basis of the metallurgical testwork and mill design.

Mining methods envisage a simple downward progressing shrinkage stopes to drawpoints being mucked by narrow vein LHD's direct to the various level portals and then being trucked to a mill constructed immediately below the lowest level of the mine (the 4,826m Level). Mineral processing will be by a simple crush - grind - classify; agitated CN- leach; solid - liquid separation and recovery of Au / Ag via Merrill Crowe Process.

Contact Information

  • Cambridge Mineral Resources plc
    Colin Andrew
    Managing Director
    +44 (0) 20 7663 5618
    Email: candrew@iol.ie
    or
    Cambridge Mineral Resources plc
    Michael Burton
    Finance Director
    +44 (0) 20 7663 5618
    Email: mburton@cambmin.co.uk
    Website: www.cambmin.co.uk
    or
    Ruegg & Co Limited
    Gavin Burnell/Roxane Marffy
    +44 (0) 20 7584 3663
    or
    Hichens, Harrison and Co
    Colin Rowbury
    +44 (0) 20 7382 7771
    or
    Haywood Securities (UK) Limited
    Tom Beattie
    +44 (0) 20 7031 8018
    or
    St Brides Media & Finance Ltd
    Victoria Thomas
    +44 (0) 20 7236 1177