East Asia Minerals Corporation

East Asia Minerals Corporation

May 12, 2008 19:50 ET

East Asia Minerals Signs Heads of Agreement With Austindo Resources for Majority Interest in Cibaliung Gold Project, Indonesia

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 12, 2008) - East Asia Minerals Corporation (TSX VENTURE:EAS) is pleased to announce it has signed a Heads of Agreement to earn-in a 71.8% equity interest in PT Cibaliung Sumberdaya (the "Transaction") from Austindo Resources Corporation N.L. ("ARX"). PT Cibaliung Sumberdaya is currently owned 89.75% by ARX and 10.25% by PT Antam TBK ("Antam") and owns a 100% equity interest in the Cibaliung Joint Venture (the "CSD JV"). The main asset of the CSD JV is the Cibaliung Gold Project, a soon-to-be-commissioned gold mine located in Banten Province, Java, Indonesia.

To earn-in a 71.8% equity interest, EAS has agreed to spend US$35 million on the Cibaliung Gold Project. It is currently anticipated that US$33 million is required to complete the construction and commissioning of the plant (currently 80% complete) and the underground development of the mine and to provide working capital through to positive cash flow. Anticipated first gold production is currently scheduled for the second half of 2008. Another US$2 million is earmarked for exploration on prospective targets within the CSD JV. The earn-in is expected to occur over 3 tranches:

- US$5 million on execution of a definitive agreement (the "Definitive Agreement") (anticipated for the end of May 2008);

- US$20 million upon completion of the Transaction (anticipated for end of June 2008);

- US$10 million on an as needed basis but no later than December 31, 2008.

It is anticipated that the Definitive Agreement will be entered into between EAS and ARX during the month of May with completion of the Transaction occurring approximately 45 days later. EAS will be deemed to have earned-in its 71.8% equity interest in the CSD JV upon completion of the Transaction, and having completed the first two tranches of the earn-in and committed to the third tranche. Completion of the Transaction is subject to certain conditions including EAS Board approval, ARX shareholder approval, stock exchange approvals (TSX Venture Exchange and Australian Stock Exchange), Indonesian regulatory approvals, waiver or expiry of Antam's pre-emptive rights in the CSD JV and restructuring of current CSD JV debt facilities and hedge contracts.

"The successful acquisition of a 71.8% equity interest in the Cibaliung Gold Project provides an excellent step in the rapid growth of our company in a region where the Company has an established and respected presence as a premier explorer. The project provides immediate value to our shareholders, and near-term access to cash flow with high potential for long mine life," stated Michael Hawkins, President and CEO of East Asia Minerals. "The previous operators of the project had some cost and time over-runs due primarily to ground condition problems in the development decline, and these have been recently resolved. EAS benefits from the learning curve of the previous operator, and now has the opportunity to participate in the project at great discount and at the right point on the risk curve. Furthermore, Cibaliung is significantly under-explored and when compared with the discovery histories of similar epithermal gold fields, the likelihood for substantial increases in resources and reserves during the life of the mine are considered very high. This project also provides a good addition to the existing strong gold portfolio where we are progressing well towards defining National Instrument 43-101 ("NI 43-101") compliant resource estimates at the Binebase-Bawone gold project in North Sulawesi, and Abong gold project in North Sumatra."

About the Cibaliung Gold Project and the CSD JV

The Cibaliung Gold Project is located 150 kilometres southwest of Jakarta (Indonesia's capital) within the Banten Province near the western tip of Java Island, Indonesia. The project site is accessible by sealed all-weather road from Jakarta and local infrastructure (power, water and labour) is already all in place for completion of project development.

A Bankable Feasibility Study ("BFS") on the Cibaliung Gold Project was completed in 2004 and has been updated on two occasions in September 2005 and March 2007. ARX, as the project manager, engaged Mining One to complete the latest update of the BFS in March 2007. Key development and production parameters for the Cibaliung Gold Project are:

- Two shoot epithermal vein-gold deposit;

- Initial mine life of 6 years under JORC Code, including initial mine life of approximately 4.5 years on measured and proven reserves and a production rate of 240,000 tonnes per annum(FN1);

- Recovery of gold and silver by a conventional CIL process plant;

- Mining by conventional underground cut and fill stoping with decline access;

- Recoveries are expected to be 92% for gold and 81% for silver;

- Annual production of approximately 70,000 ounces of gold equivalent;

- Operating costs estimated at US$123 per tonne of ore (cash operating costs of approximately US$415 per ounce pre-silver credits and US$340 per ounce net of silver credit)(FN2).

ARX reports that the Cibaliung Gold Project contains JORC Code compliant measured and indicated resources of 386,000 ounces of gold and 3.1 million ounces of silver. Within the measured and indicated resource estimate, ARX reports reserves of 341,000 ounces of gold and 2.9 million ounces of silver. In addition, ARX reports inferred resources of 94,000 ounces of gold and 0.9 million ounces of silver. The following table summarizes the Cibaliung Gold Project's resources and reserves estimates as reported by ARX(1,2,3,4):

Au Ag
Tonnes Au Ag Ounces Ounces
(000's) g/t g/t (000's) (000's)
Total Resources
- Measured 497 12.1 87 194 1,396
- Indicated 646 9.2 84 192 1,746
Total Measured and Indicated
Resource 1,143 10.5 85 386 3,142

- Inferred 374 7.8 77 94 923

Ore Reserves (included in above
- Proven 494 11.2 83 178 1,325
- Probable 571 8.9 86 163 1,577
Total Reserves 1,065 10.0 85 341 2,902

1. The reserve and resource estimates shown in the above table are derived from the 2007 Annual Report of Austindo Resources Corporation N.L.

2. The resource and reserve estimates were determined under the Australasian Code for Reporting of Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientist and Mineral Council of Australia, as amended (the "JORC Code").

3. Resources have been reported at a 3 g/t Au cut-off grade. The estimate uses information from 25,140m of diamond drilling in 108 drill holes. Drill hole information in the database has been validated by AMC Consultants Pty Limited ("AMC") by testing against original information sources. Assay quality control data has been evaluated and AMC has concluded that the data are suitable for use in resource estimation. The geological resources estimate is based on ordinary kriging with a top cut applied to gold assays. The information in this table that relates to mineral resources is based on information compiled by Mr. Dean Carville who is a full-time employee of AMC and a Member of the Australasian Institute of Mining and Metallurgy. Mr. Carville has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a "Competent Person" as defined in the 2004 Edition of the JORC Code.

4. The cut-off grade used for ore reserve estimation is 4.9 g/t based on an operating cost of US$123/tonne. The information in this report that relates to the ore reserves is based on information compiled by Mr. Phil Bremner who is a member of The Australasian Institute of Mining and Metallurgy and an employee of Mining One Pty Ltd. Mr. Bremner has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the estimation process undertaken to qualify as a Competent Person.

The mineral resource estimate and the positive economics supporting the reserves were verified internally by Michael Hawkins, M.Sc., MAusIMM, and Lionel Martin, P.Geo of the Company, both QPs as defined in NI 43-101. The reserves are in the process of being independently verified.

Development of the Cibaliung Gold Project began in July 2005 and, as of February 29, 2008, total development expenditure (excluding project exploration and development prior to July 2005) stood at approximately US$72.5 million. It is currently anticipated that an additional US$33 million is required to bring the project to positive cash flow status. The gold processing plant is currently 80% complete and is expected to be commissioned during the second half of 2008. Development of the ore body is now being undertaken on two headings to enable a greater volume of ore to be extracted. The remaining distance to the ore body is less than 65 meters on one heading and 96 meters on the other. It is envisaged that stockpiling of ore will commence during the summer of 2008 and the CSD JV is targeting a stockpile in the order of 10,000 tonnes prior to commencing gold production.

There is significant exploration potential within the CSD JV concession. Given the characteristics of the Cibaliung Gold Project are similar to other high-grade, epithermal gold-silver vein districts in Indonesia (e.g. Pongkor and Gosowong) and elsewhere on the Pacific Rim (e.g. Hishikari, Japan; Pajingo, Australia and Cracow, Australia), the potential for incremental increases in resources during the mine life through "brown fields" exploration is considered very high.

EAS intends to begin an aggressive US$2 million exploration program upon completion of the Transaction. Key exploration targets include:

- The Cibaliung Fault - host to the two known ore-shoots, which is a major structure mapped over 6 kilometres strike-length in windows of altered volcanic rock within widespread cover rocks. Less than 20% of this feature has been previously drill tested and it is the highest ranked exploration target.

- Fault splays and en echelon faults - related to the Cibaliung Fault, lying partly beneath cover rocks immediately east of the Cibaliung mine area. These were identified from a previous detailed ground magnetic survey.

- Earlier vein targets (Rorah Kadal and Ramada) identified 0.7 to 1.5 kilometres south and southwest of the Cibaliung mine area. Previous scout drilling returned significantly mineralized intersections, including 2.6 metres (true-width) at 21.5 g/t gold and 197 g/t silver at Rorah Kadal.

Any additional ounces discovered would likely result in a possible extension of the life of the mine and/or expansion of the throughput of the plant. The current throughput is forecast to be 240,000 tonnes per annum, although the plant as currently being built will have significantly greater capacity.

The CSD JV currently has a US$15 million project financing facility with the Australian and New Zealand Banking Group Limited ("ANZ") and has a hedge facility of approximately 158,000 ounces of gold at an average exercise price of US$654 per ounce. Both the project financing facility and the hedge facility will be restructured with ANZ prior to completion of the Transaction so to match the revised production profile of the Cibaliung Gold Project. It is anticipated that EAS will be responsible for 100% of the project financing facility and its relative equity interest in the hedge facility following the completion of the Transaction.

CIBC World Markets and Haywood Securities Inc. acted as financial advisors to East Asia; and Kelly & Co. Lawyers, and Fang and Associates Barristers & Solicitors were the legal advisors.

About East Asia Minerals Corporation

East Asia Minerals is an Asian-based, Canadian mineral exploration company with gold and copper exploration properties in Indonesia, and uranium exploration properties in Mongolia. In Indonesia the Company has a 70 to 85% interest in six advanced gold and gold-copper properties located in Aceh Province, Sumatra, and Sangihe Island, North Sulawesi. Two of these, the Sangihe (Binebase-Bawone) and Barisan 1 (Abong) gold projects, are being drilled to define NI 43-101 compliant resources. The Company owns ten uranium properties, including the advanced Ingiin-Nars, Ulaan Nuur and Enger uranium projects, and a 75% interest in the Khok Adar copper oxide discovery in Mongolia. East Asia currently has 55,645,372 shares outstanding. Its shares are listed for trading on the TSX Venture Exchange under the symbol "EAS".

Phil Bremner, Mining Engineer, MAusIMM, the designated QP as defined in NI43-101 has reviewed and approved the content of this release. East Asia Minerals will duly file a NI 43-101 reserve and resource technical report prepared on the Cibaliung Gold Project by an independent qualified person as defined under NI 43-101.

Forward Looking Statements - This News Release contains forward looking information within the meaning of the securities legislation of British Columbia, Alberta and Ontario, which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation, risks and uncertainties relating to the interpretation of drill results and the estimation of mineral resources and reserves, the geology, grade and continuity of mineral deposits, the possibility that future exploration, development or mining results will not be consistent with our expectations, metal recoveries, accidents, equipment breakdowns, title matters and surface access, labour disputes or other unanticipated difficulties with or interruptions in production, the potential for delays in exploration or development activities or the completion of new or updated feasibility studies, the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations (including uranium, fuel, steel and construction items), currency fluctuations, failure to obtain adequate financing on a timely basis and other risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Accordingly, readers are advised not to place undue reliance on forward-looking statements. The words anticipate, believe, estimate and expect and similar expressions, as they relate to us or our management, are intended to identify forward looking statements relating to the business and affairs of the Company. Except as required under applicable securities legislation, we undertake no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

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(FN1) - The initial mine life is based on current reserves as well as the conversion of part of the inferred resource. There is no certainty that such inferred resource will become economically viable.

(FN2) - Cash operating costs per ounce calculated by EAS based on 240,000 tonnes per annum throughput, 10 g/t gold grade, 85 g/t silver grade, 92% gold recovery, 81% silver recovery and US$10 per ounce silver price.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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