Cerro Resources NL
ASX : CJO
TSX VENTURE : CJO

Cerro Resources NL

November 01, 2011 10:50 ET

Cerro Resources NL Reports Quarterly Activities and Files Financial Statements for the Period Ending September 30, 2011

LONGUEUIL, QUEBEC--(Marketwire - Nov. 1, 2011) - Cerro Resources NL (ASX:CJO)(TSX VENTURE:CJO) ("Cerro" or "the Company") is pleased to release a summary of the Company's quarterly activities, and report significantly higher silver recoveries from the HPGR test work at Cerro Del Gallo. The detailed Quarterly Report which includes the financial statements and discussions, for the period ending September 30, 2011, has been filed on www.sedar.com and on the Company's website, www.cerroresources.com.

QUARTERLY HIGHLIGHTS

Management focused during the quarter on advancement of the Company's three projects: Cerro del Gallo, Namiquipa and Mt Philp; advancement to acquisition of the new Espiritu Santo Jalisco project; and completion of the statutory audit plus preparation and publication of the annual report to stakeholders.

Cerro del Gallo

Near final assessments of the crushing and processing plant were made at quarter end having taken advantage of time delays with third party design of plant, pad and pond designs. These have been momentarily delayed to allow some further site assessment in order to ensure the site layout can accommodate the potential increase in open pit heap leach resource due to potentially increased metal recoveries and longer term higher metal prices. The additional site assessment work is due to take place mid-November, which will allow finalisation of the pad and pond design and costing as the last of the outstanding inputs to the bankable feasibility study (BFS).

Meanwhile the time has been useful for running further recovery tests to improve confidence and de-risk the project. The high pressure grinding rolls (HPGR) were reported upon last quarter and the recovery levels have been confirmed this quarter (Table 1). Details of the change in production forecasts from these increased recoveries are shown in Table 2.

Table 1: HPGR Gold/Silver Recoveries

Previous Study HPGR New
Test Work Recoveries
Recoveries* Results for Study
Weathered (heap leach)
Gold Recovery (%) 75 73 75
Silver Recovery (%) 40 59 50
Oxidised (heap leach)
Gold Recovery (%) 55 65 65
Silver Recovery (%) 30 69 50
Fresh (for CIL processing)
Gold Recovery (%) 78 - 78
Silver Recovery (%) 20 - 20

Table 2: Metal Production

Previous Study New Production Change in
Production
Recoveries* for BFS Forecast
Weathered (heap leach)
Gold (koz) 228 228 -
Silver (koz) 3,536 4,420 884
Oxidised (heap leach)
Gold (koz) 395 464 69
Silver (koz) 3,621 6,035 2,414
Fresh (for CIL processing)
Gold (koz) 503 503 -
Silver (koz) 2,891 2,891 -

* As previously reported in the NI43-101 technical report titled "Feasibility Study and Preliminary Assessment Cerro del Gallo Project Guanajuato, Mexico" and lodged 26 May 2011.

The actual HPGR test work recoveries for silver are significantly higher than previously. For cash flow projections, more conservative recoveries are being used for the base case since silver mineralogy and therefore recoveries by cyanidation can be more variable. For the design work we use the higher silver recoveries to ensure an adequate allowance for the potential increased amount of silver metal. Merrill-Crowe test work was investigated and has been discounted due to the presence of copper. This process is not the optimum hence design parameters have now been determined for the use of carbon for metal recovery from heap leach solutions (CIL), where the presence of copper is more easily managed. These parameters are being reconfirmed with the higher silver levels present.

The HPGR laboratory trials have been completed allowing the HPGR unit to be sized and costed by Polysius. The test work has confirmed the production of material of the required size distribution from HPGR crushing (80 per cent passing 4.4mm). This is finer than the originally targeted 6.3mm by conventional and will give greater confidence that recoveries achieved by the column tests can be realised in practice. To ensure the heap leach will have the required permeability with the fine crush size, further agglomeration test work using cement has been completed and two additional column leach tests have commenced. The columns are 6 metres high and are filled with the HPGR crushed material with the 80 per cent passing 4.4mm crush size. These tests are confirmatory tests to provide additional support information for the BFS.

Namiquipa

Drilling commenced late May 2011 and at the end of June 8 holes for a total of 2,800m of diamond core had been completed. During the September quarter a second drill rig was added and a further 26 holes for a total of 9,300m of drilling was completed with very encouraging drill intercepts. The program was extended from 10,000m to 20,000m minimum and the intention is to continue the program beyond that level. The drill results to date indicate the mineralized system continues at depth along the Princesa vein system with the geological setting suggesting significant potential for high grade material to be hosted in additional vein spurs/shoots.

The second core rig has focused on exploration of possible extensions of the known systems as well as testing for new systems to the north, south and to the east of the known vein systems. The program has confirmed its significant potential and since quarter end results for an additional 11 drill holes drilled during the quarter have been released. The Namiquipa vein systems are 'blind' in that they are not all evident at surface. The early success and encouraging drill results is however sufficient for management and shareholders to be encouraged.

Espiritu Santo Jalisco

The Espiritu Santo Jalisco project was secured at the end of the quarter and announced on 7th October, 2011. The project is in Jalisco State in central western Mexico and was targeted because of the historic workings in the broader region of Jalisco State and also given no modern exploration has been undertaken following historic soil and rock-chip sampling. Historic rock-chip sampling confirmed the presence of gold and silver in numerous epithermal veins.

Mt Philp

It remains the Company's intention to complete the resource drilling over the Mt Philp Project total strike length, make the resource estimate and consider a range of commercial options available.

About Cerro Resources

Cerro Resources is a precious and base metals exploration and development company. The Company is currently focused on Mexico where it is developing the Cerro del Gallo gold/silver project in the central state of Guanajuato, Mexico, actively exploring the Namiquipa silver project in northern Mexico, and commencing exploration on the Espiritu Santo gold/silver project in Jalisco. It also maintains an active working focus on the Mt Isa, Queensland, region where it is exploring the Mt Philp haematite project and it holds an interest in the Kalman molybdenum, rhenium, and copper project.

Competent Person/Qualified Person

The information in this release that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr John Skeet (as it relates to process related material), who is a Member of the Australasian Institute of Mining and Metallurgy; Mr Bill Fleshman (as it relates to the San Anton, Namiquipa, and Espiritu Santo Projects), who is a Fellow of the Australasian Institute of Mining and Metallurgy; and Mr Trevor Leahey (as it relates to the Mt Philp Project), who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Skeet is the Chief Operating Officer of Cerro Resources NL. Mr Fleshman and Mr Leahey are consultant to Cerro Resources NL. They have sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2004 edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and "qualified persons" as this term is defined in Canadian National Instrument 43-101 ("NI 43-101"). Mr Skeet, Mr Fleshman and Mr Leahey consent to the inclusion in the report of the matters based on their information in the form and context in which it appears.

Forward-Looking Information

This quarterly report contains "forward-looking information" under Canadian securities law. Any statement that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words such as "expect", "anticipate", "believe", "plans", "estimate", "scheduling", "projected" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking information. Forward-looking information relates to, among other things: the results of exploration programs, the interpretation of such results, the potential of the projects, the planned continuation of a drilling program, the accuracy of mineral resource and mineral reserve estimates, the ability of the Company to finance its operations and capital expenditures, future financial and operating performance including estimates of the Company's revenues and capital expenditures and estimated production.

Forward-looking information is subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking information, including, without limitation, risks relating to: fluctuating commodity prices; calculation of resources, reserves and mineralization and precious and base metal recovery; interpretations and assumptions of mineral resource and mineral reserve estimates; exploration and development programs; feasibility and engineering reports; permits and licences; title to properties; recent market events and conditions; economic factors affecting the Company; timing, estimated amount, capital and operating expenditures and economic returns of future production; operations and political conditions; environmental risks; and risks and hazards of mining operations. This list is not exhaustive of the factors that may affect any of the Company's forward-looking information. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. The Company's forward- looking information is based on the assumptions, beliefs, expectations and opinions of management as of the date of this quarterly report, and other than as required by applicable securities laws, the Company does not assume any obligation to update forward-looking statements and information if circumstances or management's assumptions, beliefs, expectations or opinions should change, or changes occur in any other events affecting such statements or information. For the reasons set forth above, investors should not place undue reliance on forward-looking information.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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