Gold Hawk Resources Inc.

Gold Hawk Resources Inc.

October 31, 2005 09:26 ET

Gold Hawk Signs a Letter of Intent to Acquire the Tamboraque Mine in Peru

TORONTO, ONTARIO--(CCNMatthews - Oct. 31, 2005) - Gold Hawk Resources Inc. (the "Company" or "Gold Hawk") (TSX VENTURE:CGK) is pleased to announce that it has signed a letter of intent to purchase all of the shares of Larizbeascoa & Zapata SAC (L&Z), a private Peruvian company, for cash consideration of US $5.0 million. The US $5.0 million is payable as follows:

- US$ 2.0 million on signing a formal agreement regarding the
- US$ 1.5 million six months after signing the formal agreement.
- US$ 1.5 million twelve months after signing the formal agreement.

Gold Hawk has 45 days from the signing of the letter of intent to conduct due diligence and, if satisfied with the due diligence, to make the initial payment of US$2.0 million. The owners have agreed to deal exclusively with Gold Hawk during this period. Completion of the transaction will also be subject to the receipt of regulatory approval.

L&Z's only asset consists of a 13 year lease, from a Peruvian bank, covering the mining concessions, the surface rights and the physical plant for the Tamboraque Mine. The mine is located 90 kilometers due east of Lima, the capital city of Peru. The mining concessions cover an area of 3,162 hectares. The mine is equipped with a modern 600 tpd crushing plant and flotation mill with a state of the art Biox circuit. The flotation part of the plant produces zinc, lead, pyrite and arsenopyrite concentrates when in operation and is also equipped to produce a copper concentrate. The arsenopyrite concentrate, which contains 75% of the gold, is treated in the Biox circuit to liberate the gold from the arsenopyrite and the gold is later recovered in a leach circuit. The mine has 37 developed stopes and the mill is equipped and can be ready to operate within a three to four month period from a production decision. The original capital cost to place the mine and mill into production in 2002 was in excess of US$ 30 million. Local infrastructure includes a paved highway and railway line to the plant gate, water supply, a permitted tailing pond, a private hydro electric generating plant within 300 meters of the plant and a major power line, tied in to the national grid, which runs through the property. The population of the town of San Mateo, located a few kilometers from the mine, is anxious for the mine to resume operation and has presented to the government a petition supporting the resumption of operations. In addition, the mine is located within 70 kilometers of two smelters, La Oroya, which treats zinc, lead, copper and mixed sulphide concentrates, and the Cajamarquilla zinc refinery which treats zinc concentrate.

The Tamboraque mine is a typical mine of the Central mining camp of Peru and consists of 15 narrow (0.4 to 1.0 meter) polymetallic sulphide veins which extend up to one kilometer along strike and at least 800 meters at depth. The bulk of the known historical reserves and resources are contained in two veins, the Wellington and Constancia veins. The deposits have been known for over 100 years and past production has been estimated at 1.3 million tonnes averaging 0.154 oz./t gold, 5.5 oz./t silver, 3.4% zinc, 2.9% lead and 0.4% copper. The most recent production was in 2002 when 109,772 tonnes averaging 0.124 oz./t gold, 4.53 oz./t silver, 1.88% zinc, 1.51% lead and 0.20% copper were mined and milled.

Since 2000, historical reserves and resources have been calculated by three independent mining engineering consulting firms. The latest estimate (Nov. 2003) calculated proven and indicated reserves of 652,000 tonnes averaging 0.21 oz./t gold, 6.46 oz./t silver, 3.85% zinc, 3.18% lead and 0.44% copper. The inferred resources were estimated at 3.9 million tonnes averaging 0.17 oz./t gold, 8.40 oz./t silver, 3.88% zinc, 2.56% lead and 0.35 % copper. These reserves and resources were estimated above the 3500 meter elevation and there is another 400 meters of depth extension where the veins are visible but for which no resources were assigned. The historical estimates of reserves and resources were made in accordance with applicable standards in effect at the time, but such estimates are not compliant with National Instrument 43-101 and Gold Hawk has not done the work necessary to verify the classification of the reserves and resources. Gold Hawk intends to do what is necessary to bring the deposits into compliance with the requirements of National Instrument 43-101 once a final agreement is signed. Gold Hawk has not verified the above historical reserve and resource estimates and is not treating them as a National Instrument 43-101 defined reserve and resource verified by a Qualified Person. The above historical estimates, although compiled by what management considers to be a competent mining engineering consulting firm, should not be relied upon at this time.

The mine and mill were shut down in 2002 after only six months of operation due to low metal prices, excessive dilution, poor metallurgical recoveries and several acts of sabotage on the only power line.

Gold Hawk's President and CEO, Gordon Bub states: "We are very pleased to make this agreement with the owners of L&Z and intend to develop a plan for reopening the mine for the benefit of all stakeholders, which includes the people of the local communities."

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

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