Huakan International Mining Inc.
TSX VENTURE : HK

Huakan International Mining Inc.

May 17, 2011 08:00 ET

Huakan International Mining Inc.: Updated Mineral Resource Estimate Significantly Increases Main Zone at J&L

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 16, 2011) - Huakan International Mining Inc. (TSX VENTURE:HK) -

  • Measured and Indicated Mineral Resource of:
    • 2.37 million tonnes grading 6.81 g/t Au, 67 g/t Ag, 6.37% combined Pb-Zn
    • 518,500 ounces gold, 5.1 million ounces silver
  • Inferred Mineral Resource of:
    • 4.54 million tonnes grading 5.19 g/t Au, 68 g/t Ag, 5.15% combined Pb-Zn
    • 757,500 ounces gold, 9. 9 million ounces silver

Huakan International Mining Inc. (TSX VENTURE:HK) (the "Company") is pleased to announce that P&E Mining Consultants Inc. ("P&E") has completed an independent NI 43-101 compliant mineral resource estimate on the Company's 100% owned J&L property located near Revelstoke, British Columbia. The updated mineral resource estimate replaces the 1991 historic mineral resource estimate for the gold-silver-lead-zinc bearing Main Zone.

The updated mineral resource of 2.4 million (M) tonnes in the Measured and Indicated Categories and 4.5 M tonnes in the Inferred Category is a significant increase over the 1991 historic* reserve of 3.6 M tonnes.

The updated mineral resource contains 0.52 M oz Au in the Measured and Indicated Categories and 0.76 M oz Au in the Inferred Category compared to 0.84 M oz Au in the 1991 historic* reserve.

The updated mineral resource contains 5.1 M oz Ag in the Measured and Indicated Categories and 9.9 M oz Ag in the Inferred Category compared to 9.4 M oz Ag in the 1991 historic* reserve.

* The reader is cautioned that historic resources have not been verified, are not NI 43-101 compliant and cannot be relied upon.

The J&L Main Zone mineral resource follows the recently completed 7,897 metre underground drill program and is presented below at a $110/tonne in-situ NSR cut-off value:

ClassificationTonnesAu
(g/t)
Au
(ozs)
Ag
(g/t)
Ag
(ozs)
Pb
(%)
Zn
(%)
Measured1,202,0006.71259,20069.02,664,6002.404.46
Indicated1,165,7006.92259,20064.92,432,1002.013.86
Measured & Indicated2,367,7006.81518,40066.955,096,7002.214.16
Inferred4,538,1005.19757,50067.89,887,8002.162.99
  1. Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
  1. Confidence in the estimate of Inferred Mineral Resources is insufficient to allow the meaningful application of technical and economic parameters. There is no guarantee that all or any part of a mineral resource can or will be converted into a mineral reserve.
  1. The mineral resources in this estimate were calculated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.
  1. The following parameters were used to derive the NSR block model values:
    • April 30/11 US$ two year trailing av'g. metal prices of Pb $0.99/lb, Zn $0.95/lb, Au $1,183/oz, Ag $21/oz
    • Exchange rate of US$0.95US = $1.00CDN
    • Process recoveries of Pb 80%, Zn 72%, Au 92%, Ag 88%
    • Smelter payables of Pb 95%, Zn 85%, Au 96%, Ag 91%
    • Refining charges of Au US$15/oz, Ag US$0.50/oz
    • Concentrate freight charges of C$65/t and Smelter treatment charge of US185/t
    • Mass pull of 5% and 8% concentrate moisture content.
  1. The NSR cut-off of CDN$110 per tonne was derived from $75/t mining, $25/t processing and $10/t G&A

Fred Brown, CPG of P&E is the independent Qualified Person responsible for preparing the updated mineral resource estimate. The mineral resource estimate involved 3D modeling methods and parameters, and statistical and grade continuity analyses. Gemcom GEMS modeling software was used for the 3D block model and subsequent grade estimates. Grade capping was used to restrict the influence of statistical outliers during Inverse Distance Squared (1/d2) interpolation of block grades. A total of 266 drill holes have been completed on the property. The resource estimate utilized a total of 427 bulk density measurements determined by on site by the Company utilizing the wet immersion technique.

The 2010/2011 60 hole drill program was under the supervision of Paul Cowley, P.Geo., the Company's Qualified Person and VP Exploration. BQTW-sized core samples were cut in half and sent to Eco Tech Laboratory Ltd. (Stewart Group) in Kamloops, BC. Samples were assayed for gold by fire assay (50 gram charge) as well as assayed for silver, lead and zinc. The Company inserted standards, blanks and duplicate samples throughout the sample sequence as quality control checks.

Company VP Exploration, Paul Cowley, P.Geo. said, "The updated mineral resource estimate greatly exceeds our expectations and establishes credibility for the deposit and new metrics to value the Company. This vaults us into 'the 1 million ounce gold' club with the contained gold, and further, there is additional value in the silver and base metals."

For comparison, a historic mineral resource was prepared by Equinox Resources Ltd. in 1991 as "Proven and Probable Ore Reserves" of 1.7 million tonnes grading 7.38 g/t gold, 75.9 g/t silver, 2.64 % lead and 4.43 % zinc and "Possible Ore Reserve" of 1.9 million tonnes grading 7.12 g/t gold, 85.5 g/t silver, 3.32 % lead and 3.48 % zinc. Huakan and P&E did not prepare nor confirm this historic mineral resource estimate and as it pre-dates National Instrument 43-101, it does not comply with NI 43-101 requirements for mineral resource estimation. Huakan did not treat these historic numbers as a current mineral resource on the property and the historic resource should not be relied upon, but remains a historic figure. Mr. David Makepeace, P.Eng. prepared an NI 43-101 geological report for Merit (now Huakan) dated April 13, 2007. In Mr. Makepeace's report, the historic "Proven and Probable Ore Reserve" category would likely be equivalent to an "Indicated Mineral Resource" category and the historic "Possible Ore Reserve" category would likely be equivalent to an "Inferred Mineral Resource" category under the current CIM classification.

J&L Exploration and Deposit Expansion Program

The J&L project is the Company's flagship property which it continues to aggressively advance. The drilling to date demonstrates that the Main Zone continues for a strike length of at least 1.2 kilometres and in the down dip direction for at least 800 metres. There remains good potential for additional mineral resources on the Main Zone, which Huakan believes remains open in the down dip direction and along strike to the northwest and southeast. An inclined longitudinal section of NSR value multiplied by true thickness is posted on the Company website to demonstrate current drilling coverage and where Huakan believes the deposit is open to expansion. P&E will make recommendations for additional in-fill and exploration drilling for the Main Zone in their technical report. The Company will be furthering metallurgical test work to enhance the recommended processing flowsheet.

The contents of this press release have been reviewed and approved by Eugene Puritch, P.Eng. and Fred Brown, CPG of P&E and Paul Cowley, P.Geo. for the Company. The J&L Main Zone mineral resource report will be filed on SEDAR within 45 days of this press release.

Paul Cowley, P.Geo., VP Exploration of Huakan International Mining Inc., is the Qualified Person as defined in the National Instrument 43-101, who has reviewed and approved the technical content of this news release.

CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING INFORMATION

Certain of the statements made and information contained herein may contain forward-looking statements or forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or forward-looking information include, but are not limited to, statements concerning: the J&L Main Zone deposit resource estimate and the Company's exploration plans. Forward-looking statements or information include statements regarding the expectations and beliefs of management. Often, but not always, forward-looking statements and forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or the negatives thereof or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements or information include, but are not limited to, statements or information with respect to known or 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 or information.

Forward-looking statements or information 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 or information, including, without limitation, risks and uncertainties relating to: completion of announced transactions, history of losses; requirements for additional capital; dilution; loss of its material properties; interest rates increase; global economy; limited history of production; speculative nature of exploration activities; periodic interruptions to exploration, development and mining activities; environmental hazards and liability; industrial accidents; failure of processing and mining equipment; labour disputes; supply problems; commodity price fluctuations; uncertainty of production and cost estimates; the interpretation of drill results and the estimation of mineral resources and reserves; legal and regulatory proceedings and community actions; title matters; regulatory restrictions; permitting and licensing; volatility of the market price of common shares; insurance; competition; hedging activities; currency fluctuations; and loss of key employees. 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 or information. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information. The Company disclaims any intent or obligation to update forward-looking statements or information except as required by law, and you are referred to the full discussion of the Company's business contained in the Company's reports filed with the securities regulatory authorities in Canada.

Neither the TSX Venture Exchange nor its Regulations 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

  • Huakan International Mining Inc.
    Paul Cowley, P.Geo
    (604) 694-2344

    Huakan International Mining Inc.
    Jeffrey Ren
    Chief Financial Officer
    (604) 694-2344