Inter-Citic Minerals Inc.
TSX : ICI

Inter-Citic Minerals Inc.

July 06, 2009 09:30 ET

Inter-Citic Minerals Inc. Announces Positive Scoping Study and Updated Resource Estimate at Dachang Gold Project

Annual gold production averaging in excess of 165,000 ounces per year with potential to generate attractive internal rates of return and net present values.

TORONTO, ONTARIO--(Marketwire - July 6, 2009) - Inter-Citic Minerals Inc. (TSX:ICI) ("Inter-Citic" or the "Company") is pleased to announce the results of a positive Scoping Study and Preliminary Economic Assessment ("PEA", or "Scoping Study") as defined by NI-43-101 based on the latest resource estimate update for the Company's Dachang Gold Project located in Qinghai Province in the People's Republic of China.

James Moore, President and CEO of Inter-Citic, said, "This Scoping Study demonstrates that with only a small portion of the property fully explored, our Dachang Gold Project already has the capacity to become a significant gold producer and a project that can be placed into production in a short time frame. We are also very pleased with our conversion rate of Inferred resources to Measured and Indicated. As a result of our work last year, we are confident that further infill drilling along the DMZ should result in further conversion of our current Inferred resource estimate. Our focus during 2009 will be to fulfill requirements under Chinese law to allow us to advance Dachang to a full permitting status as soon as possible."

SCOPING STUDY

The Scoping Study has been prepared based upon the mineral resource update reported below and uses the results derived from a programme of preliminary process testwork, conceptual mining schedules and cost forecasts. The Scoping Study has been prepared by qualified, experienced, independent engineering consulting groups, working under the direction of Mr. Patrick Gorman, M.Sc., C.Eng., Eur.Ing., MIOMMM, acting in his capacity as ICI's project development manager.

The preferred case reported in the Scoping Study comprises of an open pit mine delivering 2 Million tonnes per year of ore to a fully integrated flotation, Biox® and CIL circuit which produces Dore.

Highlights of the preferred case reported in the Scoping Study includes:

- At a gold price of US$750/troy ounce the Dachang project is estimated to generate an after tax internal rate of return (IRR) in excess of 40% and an after tax project Net Present Value (NPV5) at a 5% discount rate in excess of US$198 million.

- At a gold price of US$800/troy ounce, the after tax IRR increases to 47% and NPV5 exceeds US$241 million.

- Total gold production of approximately 1.5 million ounces is forecast to be generated during a mine life of approximately 9 years

- Estimated minesite cash operating costs average US$404/oz and project capital cost is forecast to be US$104 million.

The scoping study economic model is based upon conceptually scheduling an estimated 17.8 Million tonnes of mineral resources at an average grade of 3 grams gold/tonne. This was derived from pit optimizations generated from using the resource model prepared to update the mineral resource estimate for the Dachang Main Zone ("DMZ") as reported below. It does not include resources contained in areas such as Placer Valley.

The Company cautions that the results of this Scoping Study are preliminary in nature and includes mineral resources that are not mineral reserves and do not have demonstrated economic viability as defined by NI 43-101. The preliminary economic assessment includes inferred mineral resources that are considered to be too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized. There is no certainty that the preliminary assessment will be realized as presented since certain engineering parameters related to construction, operating, environment, geotechnical and other technical and cost factors will require further systematic assessment and validation during the pre-feasibility study phase. The results of the Scoping Study are considered to have an accuracy of +/- 30%.

MINERAL RESOURCE UPDATE

The Company is also pleased to report an update to its inventory of mineral resources for Dachang, as follows:

- Estimated Measured and Indicated mineral resources of 12.4 million tonnes grading 3.37 g/t Au (1.34 million ounces contained gold) retaining over 90% from the original Inferred mineral resource estimate.

- Estimated Inferred mineral resources of 11.9 million tonnes grading 3.00 g/t Au (1.14 million ounces contained gold) for the Dachang Main Zone ("DMZ"), and 2.4 million tonnes grading 4.82 g/t Au (0.37 million ounces contained gold) for the NR-2 and other areas, for a total Inferred mineral resource estimate of 14.3 million tonnes grading 3.31 g/t Au (1.52 million ounces contained gold).

- These estimates of mineral resources are not affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant issues.



Dachang Mineral Resources at July 6, 2009

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Tonnage Grade Gold
Category ('000) (g/t Au) ('000 oz)
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Measured (DMZ) 4,500 3.65 520
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Indicated (DMZ) 7,900 3.21 820
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Total Measured & Indicated (DMZ) 12,400 3.37 1,340
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Inferred (DMZ) 11,900 3.00 1,140
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Inferred (NR-2) 1,300 5.81 240
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Inferred (Exploration) 1,100 3.68 130
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Total Inferred 14,300 3.28 1,510
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(Cut off grade for the above table is 0.6 g/t Au)


MINERAL RESOURCES ESTIMATE DETAILS:

In 2008, drilling on the DMZ was designed to test continuity of mineralization of the fault structures along the 3.5 km strike length defined in 2007. This testing occurred over drill sections spaced from 20 to 80 meters apart. 268 holes totalling 39,563 meters were drilled on the DMZ in 2008. Drilling was successful in confirming grade and continuity of the mineralization and extended strike of both the eastern and western limits of the DMZ such that the fault is now defined along a 4 km strike.

Drilling was also undertaken in 2008 in the Placer Valley anomaly approximately 1 km south of the DMZ on anomalous soil and trench results with some coincident IP targets, consisting of 51 holes totalling 6,573 meters.

Finally, limited drilling was undertaken on IP targets north of the DMZ with no significant mineralization detected.

DMZ mineral resources were estimated using a block model with block dimensions of 10 m x 5 m x 5 m and 3-D mineralized wireframes defined with a cut-off of 0.5 g/t Au. Outlier samples were top cut to 40 g/t Au and assays within the mineralized zones were composited to 1 m. Block model grades were interpolated using Ordinary Kriging. The tonnage and grade at different cut-off grades were calculated using a selective mining unit (SMU) of 2.5 m x 2.5 m x 2.5 m with Uniform Conditioning. A bulk density of 2.7 t/m3 was used to convert volume to tonnage.

Blocks within 20 m of a drill hole and for which a minimum five sample composites from at least 2 drill holes were used to calculate the gold grade were defined as Measured mineral resources. Blocks within 40 m of a drill hole and for which a minimum three sample composites from at least 2 drill holes were used to calculate the gold grade were defined as Indicated mineral resources. Blocks remaining within the mineralized envelope that did not meet the Measured or Indicated criteria were categorized as Inferred mineral resources. An economic cut-off grade of 0.6 g/t Au was used for mineral resource reporting.

For NR-2 and other exploration areas, mineral resources were estimated using a cross-sectional polygonal method. Polygons were drawn using a cut-off grade of 0.5 g/t Au and projected half the distance to adjacent sections to generate a mineralized volume. A bulk density of 2.7 t/m3 was used to convert volume to tonnage. Polygon gold grades are the average of all sample assays inside the polygon. Mineral resources estimated using polygons were assigned to the Inferred category. The resource estimate for the NR-2 Anomaly was not further tested in 2008, and remains unchanged as described in the Company's press release of December 12, 2005.

The Company will file a new independent technical report within 45 days of this release.

The updated mineral resource estimate for the DMZ and other exploration areas were prepared for the Company under the supervision of Stanley C. Bartlett, P.Geo., of Micon International Co Limited, an independent "Qualified Person" as that term is defined under National Instrument 43-101. The estimate complies with the CIM mineral resource definitions referenced in National Instrument 43-101. Mr. B. Terrence Hennessey, P.Geo., a Qualified Person under the requirements of National Instrument 43-101, has also reviewed a copy of this press release.

OPTION GRANT:

Mark R. Frederick, Chairman of Inter-Citic, also announces that the Company will seek board approval for the issuance of 2,460,000 options to directors and employees on Thursday, July 9, 2009. If approved, these options will be priced as at market close on Wednesday, July 8, 2009 and will be for a five year term under the Company's Stock Option Plan. The issuance of these options has been delayed by the Company pending the release of the above resource update and Scoping Study. Of the 2,460,000 options to be approved, 1,325,000 are to replace director and employee options that expired earlier this year unexercised and out of the money.

On Behalf of the Board:

James J. Moore, President & CEO

ABOUT INTER-CITIC:

Toronto-based Inter-Citic Minerals Inc. is an exploration and development company with properties in the People's Republic of China, including its Dachang Gold Project in Qinghai Province. Inter-Citic is listed on the TSX under the symbol ICI. Inter-Citic's website is www.inter-citic.com.

Investors are encouraged to review "Risk Factors" associated with the Dachang project as outlined in the Company's 2008 Financial Statements and Annual Information Form, and quarterly updates, available on the SEDAR website at www.sedar.com. The statements herein that are not historical facts are forward-looking statements. These statements address future events and conditions and so involve inherent risks and uncertainties, as disclosed under the heading "Risk Factors" in the company's periodic filings with Canadian securities regulators. Actual results could differ from those currently projected. The Company does not assume the obligation to update any forward-looking statement.

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

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