Donner Metals Ltd.

TSX VENTURE : DON
FRANKFURT : D4M


Donner Metals Ltd.

July 05, 2012 14:32 ET

Donner Metals Ltd.: Higher Production at Bracemac-McLeod

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 5, 2012) - Mr. Harvey Keats, Chief Executive Officer of Donner Metals Ltd. ("Donner") (TSX VENTURE:DON)(FRANKFURT:D4M), reports positive changes recently made to the development plan for the Bracemac-McLeod Mine as advised to the Company by partner and project operator Xstrata Canada Corporation-Xstrata Zinc Canada Division ("Xstrata Zinc"). Following on Xstrata Zinc's objective to continuously optimize the development plan at Bracemac-McLeod, the mine design is being revised to allow production at a rate of 3,000 tonnes per day during the first two years of operation, compared to an average of 2,250 tonnes per day in the feasibility study. The mill will also be modified by the addition of a ball mill to allow production at 3,000 tonnes per day in the first two years. It will also provide for continued production at that rate to handle any incremental tonnage identified in and around Bracemac-McLeod. The additional mining and milling rate will increase cash flows in each of the first two years of operation.

Construction at the Bracemac-McLeod mine has successfully transitioned from single-face development in the main access ramp to multi-face development. Even though advancement has yet to reach the targeted rate, the number of mining fronts is increasing and should reach 10 or 11 fronts in July. Total advancement now stands at 4,304 metres. Development continues and initial production is still scheduled to begin in the first quarter of 2013.

The fill raise has been completed and will be used shortly as temporary ventilation. The pilot hole for the vent raise is in progress, and the vent raise is scheduled to be in service by the end of 2012.

PURCHASE DEPOSIT

The Company has received US$5 million from Sandstorm Energy Ltd. ("Sandstorm"). This payment is the final upfront purchase deposit pursuant to the metal purchase agreement announced July 13, 2011. In addition, the Company has issued to Sandstorm 7,431,759 common shares at a deemed price of CDN$0.19 per share, in satisfaction of an obligation to issue US$1.4 million of Company common shares upon receipt of final upfront purchase deposit. These shares have a hold period expiring October 30, 2012.

PROJECT OVERVIEW

The Company is a fully vested partner with Xstrata Canada Corporation in the extensive Matagami base metal camp located in the Abitibi region of Québec. This joint venture partnership covers six joint venture areas governing 4,737 square kilometres of prime stratigraphy, which has yielded high-grade base metal production since 1963. Xstrata Zinc is the project operator for the Matagami Project, including the Bracemac-McLeod Mine. Additional information is available at www.donnermetals.com.

Normand Champigny (President) is a Qualified Person for Donner Metals Ltd. and is responsible for the technical information reported in this news release.

ON BEHALF OF THE BOARD OF DONNER METALS LTD.

Harvey Keats, Chief Executive Officer

Cautionary Statement:

Certain phrases in this news release are "forward-looking statements". Forward-looking statements are identified by wording such as "will", and "is scheduled". Such statements are applicable specifically to the Bracemac-McLeod Mine in relation to: 1) the possible future completion of development as scheduled under the current development plan, 2) mining/production in relation to the current mining plan, and 3) future planned exploration activities. Such statements also pertain to the completion of the project within context of the budget as defined in the feasibility study completed by Xstrata Canada Corporation - Xstrata Zinc Canada Division and Genivar Limited Partnership in 2010. With respect to future production, and the commencement thereof, from the Bracemac-McLeod deposit, the forward looking statements are in the context of the feasibility study completed by Xstrata Canada Corporation - Xstrata Zinc Canada Division and Genivar Limited Partnership in 2010 as posted under the Company's profile at www.sedar.com. "Forward-looking statements" involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. This press release also refers to information about historical production from land covered by, or adjacent to, the Matagami Project. Investors are cautioned that mineral deposits on other properties and/or historical production on lands under option are not necessarily indicative of characteristics of new mineral deposits discovered on the Matagami Project or future discovery potential. Further discussion of "forward looking statements" and "future oriented financial information" and the risks inherent to mineral exploration and development, in relation to Donner's activities, can be found on the Company's website at www.donnermetals.com. The reader is cautioned not to place any undue reliance on any forward-looking statement, reference to other properties or historical production from the Matagami Project area.

Neither the 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 news release.

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