Cerro Resources NL
ASX : CJO
TSX VENTURE : CJO

Cerro Resources NL

January 31, 2012 10:42 ET

Cerro Resources NL Reports Quarterly Activities and Files Financial Statements for the Period Ending December 31, 2011

QUEENSLAND, AUSTRALIA--(Marketwire - Jan. 31, 2012) - Cerro Resources NL (ASX:CJO)(TSX VENTURE:CJO) ("Cerro" or "the Company") is pleased to release a summary of the Company's quarterly activities. The detailed Quarterly Report which includes the financial statements for the period ending December 31, 2011, has been filed on www.sedar.com and on the Company's website, www.cerroresources.com. The Company's cash position was $11.3M as of December 31, 2011.

MEXICO

Cerro del Gallo

Work on the definitive feasibility study (DFS) by Sedgman Metals for heap leaching at Cerro del Gallo advanced over the quarter with the completion of the site investigation work, high pressure grinding roll (HPGR) trials and subsequent unit sizing, commencement of additional metallurgical test work and completion of larger scale agglomeration and permeability test work for the HPGR material.

The additional metallurgical test work is for the inclusion of a circuit to remove copper from the heap leach solution prior the recovery of the gold by activated carbon whilst regenerating cyanide for reuse in the heap leach. The test work to date has shown that a high grade copper precipitate (>50 per cent copper), containing over 95 per cent of the leached silver, can be produced for sale. In addition, the cyanide consumed by the copper in the heap leach can be recovered and reused. This is known as the S.A.R.T. process (sulphidisation - acidification - recycle - thickening). Further larger scale testing of the S.A.R.T. process has been completed with analytical results and data analysis following for final design of the plant and to allow determination of the costs and economic benefits for inclusion in the DFS. The addition of the S.A.R.T. circuit will increase the capital requirements by several million dollars but it is expected this will be recovered early in the operations due to the operating cost savings associated with the cyanide regeneration.

The inclusion of HPGR in the crushing circuit and the application of the S.A.R.T. process enhance heap leaching at Cerro del Gallo by reducing process risks associated with fine crushing and interference by copper and improving the economics via improved metal recovery and reduced operating costs.

The DFS is currently on schedule for completion during the March quarter.

Namiquipa

The Namiquipa Project in Chihuahua, Mexico has advanced since acquisition in March 2011 to a drill project where 60 core holes have been completed for a total of 22,633m.

Initial work involved assembling and digitising historic hard copy data from the previous mining operations. Data compilation was followed by a large scale ground geophysical program consisting of IP and magnetics which identified several targets.

Based on the results from the first core drilling assays, previously reported in August 2011, the drill program was expanded from 10,000m to 20,000m. The core program which has targeted the main vein systems at the historic La Venturosa Mine has successfully continued to intersect broad zones of both silver as well as lead and zinc mineralization, highlighted by 16m of 921g/t AgEq including 1m containing 12,261g/t Ag, along with 26.97% Pb and 6.06% Zn (refer press release of 25 October 2011).

By the end of the quarter of the 60 drill holes completed, 45 of the holes had been cut, sampled and shipped to ALS for analysis.

Drill Targets

The main targets of the 2011 drill program were the extensions of the mineralization along the Princesa and Mexico Vein systems. The principal reasoning for targeting the Princesa and Mexico systems was that the America Vein was mined to 250m while the Princesa Vein was only mined to 100m, although drilling did intersect some mine workings to 150m level as evidence by drill results in NAM-008. The Mexico Vein was much less exploited and represents a prime exploration target.

The Princesa Vein was intersected by several of the initial drill holes within a few metres of the planned targets. Additional veins and or splays were also intersected, that were not always readily assigned a "known" mineral vein name such as "Princesa, Esmeralda, Mexico etc". The vein systems will be remodelled as results are received.

View link: http://media3.marketwire.com/docs/Long_Section_and_2d_View_of_Long_Section_With_2011_Peirce_Points.pdf

Princesa and America Veins Northern Extensions

Four exploration drill holes were completed north of the historic La Venturosa mine (NAM-022, NAM-025, NAM-027 and NAM-028) in an attempt to identify the Princesa and America Vein extensions.

The basis for drill targeting in the Northern Extension was a combination of the geophysics survey (ground magnetic) and geological mapping. Results from the geophysical program exhibit a sharp contrast between high and low total magnetic values on the Princesa and America structural trend.

Geological mapping in this area located the presence of thin quartz veining (<10cm) extending north in a "horse tail" vein pattern. The rocks in this area generally show strong fracturing, oxidation and abundant local faults with gouge. The faulting is closely associated with interpreted tectonic/hydrothermal breccia-veins cemented by banded calcite and quartz ("sachraroid" sugar texture) without sulphides.

Geologically the area exhibits favourable characteristics typical of upper levels of an epithermal system. The area is considered to have strong potential to host a Princesa/America Vein in a deeper system.

Detailed geological mapping is intended northeast of Cerro La Mina (SW of Cerritos de Enmedio town) and is also part of the northeast magnetic lineament that corresponds with Princesa/America structural trend. This is some 1.5km north of the northern most historic workings.

Southern extensions

In the southern extension area five drill holes (NAM-048, NAM-050, NAM-051, NAM-054 and NAM-056) were completed. Drill hole targeting was based on the surface geology and the geophysical data. The geophysical data shows a north-south alignment that could correspond with Mexico and Esmeralda vein trends. There are also a number of very shallow workings (prospect pits) along the main trending veins.

Drill holes targeted quartz breccia-vein outcrops and float where the quartz has textures indicative of originating from a low temperature source. Three main structural trends were targeted during the drilling; the NS structure, a NW trending zone and a 210° trending structure that company geologists have referred to as the "210" and finally a feature on the geophysical map that was interpreted as along the margin of a graben feature.

At end of quarter none of the southern area drill holes had been cut or shipped for analysis and will be cut and submitted during first quarter 2012.

Espiritu Santo Jalisco

Site access, camp set-up and planning dominated the work for the quarter as most personnel remained focused to complete the Namiquipa pre-Christmas drill program. First quarter 2012 will see mapping, soil and rock chip sampling with the objective of some drilling in the first half of 2012.

AUSTRALIA

Mt Philp

Drilling was completed December 31, 2011. A resource estimate has been completed in the first quarter 2012, with a NI 43-101 report to follow. A LIDAR (Laser Imaging Detection and Ranging) survey was flown during the quarter to capture accurate topographic data over the project area.

Kalman Joint Venture

The Company's joint venture partner, Syndicated Metals (SMD) reports in its Quarterly Report on work undertaken on the joint venture area during the quarter. SMD is earning an interest of up to 80% in the joint venture area. For more information, refer to Syndicated Metals website.

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.

Additional information about the Company is available on the Company's website at www.cerroresources.com and on SEDAR.

Competent Person/Qualified Person

The information in this report 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 Chartered Professional and 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.

Contact Information