Cash Minerals Ltd.
TSX VENTURE : CHX

Cash Minerals Ltd.

November 15, 2006 08:00 ET

Cash Minerals Confirms Positive Feasibility Study on Division Mountain Coal Project by Norwest Corporation

Study Confirms Viability of Constructing An Open Pit Coal Mine Providing An Internal Rate Of Return 'IRR' of 28.5%

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 15, 2006) - Cash Minerals Ltd. (TSX VENTURE:CHX) today announced the completion of the feasibility study on the potential Division Mountain coal mine located approximately 90 kilometres northwest of Whitehorse in the Yukon Territory. The feasibility study finds that it is technically and economically feasible to develop an open pit mine producing 240,000 tonnes of unwashed coal per year over a 20 year period, with the product being sold to a potential 50 MW (net) mine-mouth power station located adjacent to the Division Mountain property. The mine feasibility study was completed by Norwest Corporation, a leading North American coal and energy engineering consultancy based in Salt Lake City, Utah.

According to the feasibility study, the mine generates an estimated net present value (NPV) of $21.88M at a discount rate of 5%, which represents an internal rate of return (IRR) of 28.5% . A payback period of 4.4 years is estimated for the initial capital investment of $14.51M.

"The feasibility study confirms that Division Mountain has the potential to be developed into an economically viable mine," said Basil Botha, President and Chief Executive Officer of Cash Minerals Ltd. "With this positive outlook it is management's intention to continue to pursue the Division Mountain project. In this regard, we will continue discussions with various stakeholder groups and develop a strategy to move the project forward."

Over the 20 year period on which the feasibility study is based, the average strip ratio is 2.2 bank cubic metres of waste (BCM) per tonne of run of mine (ROM) coal produced. The coal is a high volatile bituminous "B" coal, with average ROM quality parameters for the unwashed product including calorific value of 4,997 kcal/kg and sulphur of 0.44%.

While the feasibility study finds that current conditions do not support the development of a mine to serve the export coal market, it does identify the upside potential of Division Mountain. Potential developments which could lead to an increased project value may include:

- More cost effective operations as a result of more detailed information and detailed mine planning.

- Increase in production to meet increased industrial demand in the region.

- Discovery of further reserves of PCI and/or metallurgical grade coal. This could lead to additional markets.

The Updated NI 43-101 Report dated December 21, 2005 by T. C. Becker, B.Sc., P.Geo. of Norwest Group (filed with SEDAR on January 10, 2006) confirmed coal resources at Division Mountain of 52.5 million tonnes entirely in the Measured category. The total delivered coal over the twenty year period of the feasibility study is 4.98 million tonnes. Adding an assumed coal loss of 10%, the total resource mined is approximately 5.5 million tonnes, which represents only 10.5% of the confirmed coal resource at Division Mountain.

In conjunction with the Division Mountain mine feasibility study, Cash Minerals also commissioned a preliminary pre-feasibility study on the potential mine-mouth coal-fired electricity generating plant located adjacent to the mine. The study estimates an operating cost of 12.2 cents per kWh (2006 cost basis). This compares with Yukon Energy's 2005 Residential rate of 13.74 cents per kWh and 2005 General Service rate of 15.39 cents per kWh, which were reported in Yukon Energy's 2005 Annual Report.

"Unless there is sufficient power in the Yukon there will be no industrial development of any significant size. The electricity generation cost from the Division Mountain project of 12.2 cents per kWh compares very favorably with the price of electricity in the Yukon, and is less than half the cost of diesel generation, which is currently over 25 cents per kWh. It makes economic sense to utilize the Yukon's abundant coal resources to generate electricity, rather than continuing to generate electricity from imported diesel. A coal-fired power station at Division Mountain would utilize state of the art technology to ensure that best environmental practices are followed. The power station would generate electricity at a reasonable cost to the consumer without the need for subsidies. This will ensure that the projections for future growth in the Yukon will in fact take place," said Mr. Botha. "With its wealth of mineral resources, the Yukon has the potential to become a major mining region. The large confirmed coal resource at Division Mountain, located only 20 kilometres from the main Yukon electricity grid, positions us very well to be part of the future prosperity and growth of the Yukon through the generation of affordable, clean and reliable electricity from coal."

The preliminary power station pre-feasibility study was conducted by SNC-Lavalin, one of the world's leading groups of engineering and construction companies. One specialty area in which SNC-Lavalin provides services is in thermal power projects, including coal-fired generating plants. SNC-Lavalin's Thermal team has successfully completed over 90,000 MW of thermal power projects worldwide.

According to SNC-Lavalin's study, for a one-unit coal fired electric generating plant with a nominal gross capacity of 60 MW delivering a nominal net 50 MW to Yukon Energy's 138 kV grid, it is anticipated that initially 240,000 tonnes per year of run-of-mine coal would be required from Division Mountain. It is proposed that the generating plant would utilize circulating fluidized bed combustion ("CFB") technology. These modern units utilize crushed limestone as the sulphur absorbent and are characterized by their low emissions.

Yukon Energy released its 20 Year Resource Plan in June, 2006. The total generating capacity in the Yukon is currently 127.4 MW, which includes 49.9 MW diesel and 76.7 MW hydro. The plan states that Yukon Energy is facing a shortfall today in generation capacity to meet winter peak loads. Reasons for this shortfall include the pending retirement of some diesel units and load growth. New development, including the Minto and Carmacks copper mines, will place additional demand on the Yukon's energy infrastructure. While Yukon Energy's plan includes the refurbishment of diesel generators to meet near term electricity demand, coal energy supply options offer substantial opportunities to produce power over the long term at a lower cost than diesel generation. The plan addresses longer-term development opportunities, including other new mines that would require the generation of power over the long term at costs that are lower than diesel generation. The 2005 Yukon Mineral Advisory Board Report states that there were 69 exploration projects underway in the Yukon, many of them at an advanced stage. According to the 2004 Yukon Mineral Property Update, the electricity demand for individual projects would range from 2 MW to 38 MW. The Yukon Mineral Advisory Board Report emphasizes that appropriate forward planning for electrical needs is required as exploration projects transition to mine development and production.

Division Mountain's coal resource currently occupies only 5% of Cash Mineral's coal properties in the area. In addition to coal leases at Division Mountain, Cash Minerals holds other Coal Exploration Licences in the Braeburn to Carmacks areas which total 360,000 hectares. In 2006, exploration drilling was conducted at a number of targets in this area. Coal bearing stratigraphy was confirmed at Cub Mountain (adjacent to Division Mountain) and Tantalus Butte (northeast of Carmacks). A number of very encouraging coal intersections were achieved at the Corduroy Mountain property, which is located 10 kilometres east of Division Mountain. Four holes were completed, with total lengths ranging from 109.50 metres to 221.65 metres. All holes intersected multiple seams, with intersections ranging from 0.50 metres to 5.65 metres. The 5.65 metre intersection was achieved in hole 06-99. Coal quality analyses from the four coal intersections from this hole are reported in Table 1.



Table 1: Data from Hole 06-99, Corduroy Mountain
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Inter- Inter- Ash, Fixed Mois- Mois- Volatile
section section Width AD Carbon ture ture Sulfur Matter Kcal/Kg
From (m) To (m) (m) % AD % AD % Total % AD % AD % AD
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74.42 75.83 1.41 19.02 49.27 0.99 3.43 0.49 29.24 5959
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76.02 77.43 1.41 24.54 45.57 1.15 3.51 0.42 27.50 5464
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96.26 101.91 5.65 23.13 44.09 0.58 2.67 0.54 30.67 5608
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105.16 109.50 4.34 18.93 49.83 0.56 2.49 0.48 29.29 6026
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Note: AD is Air Dried


The Qualified Person for the 2006 coal exploration program is Mr. R.C. Carne, P.Geo. of Archer, Cathro & Associates (1981) Limited.

"The positive economics of the Division Mountain mine coupled with the positive economics of the potential mine-mouth power station would establish a very strong base for the development of Cash Minerals' coal assets in the Yukon," continued Mr. Botha. "Cash Minerals looks forward to advancing the Division Mountain project, which will involve discussions with potential stakeholders, including Yukon Energy, mining and exploration companies, power station developers and operators, electricity distributors, First Nations and the Yukon Government. The project has the potential to generate long term benefits for the Yukon, including high quality employment opportunities for First Nations citizens. Cash Minerals is very keen to pursue this project and to be part of the Yukon's development through the generation of reliable and affordable electricity. In addition, the encouraging results of the 2006 coal exploration program indicate that additional economically viable coal reserves could exist in the vicinity of Division Mountain."

To view the detailed Division Mountain feasibility study, please follow the link http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00005620.

About Cash Minerals Ltd.

Cash Minerals (www.cashminerals.com) is an emerging publicly listed energy company focused on uranium, coal and alternative fuels (synfuels). Under an agreement with joint venture partner Twenty-Seven Capital Corp., Cash Minerals has the optional right to earn a 75% interest in any of the Wernecke District uranium prospects located in the Yukon. These highly prospective prospects include numerous IOCG, structurally-controlled and unconformity-related uranium targets. In 2006, Cash Minerals conducted an extensive exploration program in the Wernecke District, which included 2,600 of drilling at the Lumina property and 3,000 metres of drilling at the Igor property. Initial drillhole assays for Lumina (Jack Flash Showing) were released on September 6, 2006, with very positive results including an intersection of 55.01 m of 0.103% (U)3(O)8(, (including 27.01) m of 0.203% (U)3(O)8().) Assays from Igor in 2005 included an intersection of 14.5 m of 4.79% Cu and 0.215% (U)3(O)8(.) Cash Minerals is awaiting assays for the remaining drillholes from the 2006 exploration program.

The Company is also engaged in exploring and developing coal properties in southwest Yukon Territory. The Division Mountain coal project comprises of five coal leases measuring 776.4 hectares and 30 territorial coal exploration licenses covering some 360,000 hectares in coal-bearing stratigraphy. The Division Mountain NI 43-101 report of December 21, 2005 states a measured resource of 52.5 million tonnes of high Volatile "B" Bituminous coal for the property, which occupies less than five percent of Cash Mineral's total coal leases in the Yukon. The potential exists to export coal through the Port of Skagway, Alaska, as well as providing feedstock for mine-mouth power station.

Cash Minerals is also pursuing the development of a coal mine in China which would provide feedstock to an adjacent coal-to-liquids (CTL) plant, which would utilize the Fischer-Tropsch process to convert coal into clean-burning fuel.

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