Intrepid Mines Limited
TSX : IAU
ASX : IAU

Intrepid Mines Limited

May 17, 2011 08:00 ET

Intrepid Mines Limited: 17 May 2011 AGM

Chairman's Address

BRISBANE, AUSTRALIA--(Marketwire - May 17, 2011) - By any measure the 2010 financial year was outstanding for Intrepid Mines Limited (TSX:IAU)(ASX:IAU) and its shareholders. The year concluded with an attributable metal inventory of 8.3 million ounces of gold, 64 million ounces of silver and 3.7 billion pounds of copper. Treasury funds on the balance sheet totalled US$181 million and there was no debt, and no commodity or foreign exchange contracts. Our business was positioned in rapidly price appreciating metal commodities, which in parallel with exploration success, delivered a top tier share price appreciation and a US$1 billion market capitalisation.

In the current year, we have already grown the overall attributable gold inventory to 13.1 million ounces and the copper inventory to 7.0 billion pounds. We have also markedly advanced the value of the near surface oxide resource.

Focusing on the near surface oxide resource at the Tumpangpitu area first.

A month ago, we released the Preliminary Economic Assessment for a potential open pit heap leach gold mine on the oxide resource. There, we have an Inferred resource containing an estimated 2.4 million ounces of gold and 80 million ounces of silver. The PEA was prepared by Kappes Cassiday, of Reno, Nevada, widely recognized as one of the leading specialists on heap leach mining. Based on conservative assumptions, the PEA demonstrated a life of project average annual production of 143,000 recovered ounces of gold for 9 years at a cash cost – net of silver credits – of US$376 per ounce, and for a capital outlay of only US$213 million. The waste to ore strip ratio is only 1.1 to one.

An economic evaluation of the project, even on a seriously risk adjusted basis for both the gold price (using US$1,050 per ounce) and heavily discounted post tax cash flows (using a 10 percent discount rate), reveals an IRR of 31% and a value estimated at US$180 million. Whilst at closer to the current precious metal prices, US$1,450 per ounce for gold and US$38 per ounce for silver, and with no time value discount for post-tax cumulative cash-flows, the value increases to US$942 million with an IRR of 54%. On an attributable basis this is equivalent to $1.42 per share.

Where do we see upside? The silver credit used to calculate the gold cash cost was based on a silver price of US$16.50 per ounce whereas the current spot price is twice that level and has been higher in recent times. The calculation also assumes a silver recovery of only 18 percent. Test work will investigate the selective milling of the plus 100 g/t silver fraction of the heap leach feed with an expectation that the recovery will double. We also see the potential for the resource to grow beyond the current 130 million tonnes.

The programme going forward will see 36,000 metres of drilling to progress the Inferred resource to largely Indicated but with a portion in the Measured category. The prefeasibility study will include further metallurgical test work, geotechnical assessments and engineering and infrastructure design. The precise cost is still being evaluated, but is likely to be approximately US$16 million.

The technical and financial studies will be conducted in parallel with advancing the forestry approval process. Although this latter element will take time, the Company is encouraged to have recently been granted the permit to explore and drill in the northern half of our tenement where there are two untested, but geologically interesting, near surface porphyry targets. These targets are Salakan and Salakan East. Receipt of the permit to explore and drill was a consequence of representations by our Indonesian partners and the willingness of the regulatory authorities to support our development.

Focusing now on the copper-gold porphyry resource, which is below the surface oxide resource, at Tumpangpitu.

Last week, the Company released the first upgrade to the resource. This was based on Independent Consultants Hellman and Schofield's estimate of 990 million tonnes at 0.40% copper and 0.45 g/t gold, using a cut-off grade of 0.2% copper or 0.2 g/t gold. The total metal inventory is 8.8 billion pounds of contained copper and 14 million ounces of contained gold. This represents an approximate doubling since the previous estimate eight months ago. To be clear, this resource is exclusively in the Tumpangpitu prospect and covers an area approximately 2.4 kilometres by 1.4 kilometres with mineralisation down to more than 1 kilometre. In addition, according to Hellman and Schofield, we have geological potential to add a further 800-850 million tonnes to this estimate with additional targeted drilling.

Interestingly, in the recently completed drilling which was incorporated into the new resource, we recorded the best intercept to date: Hole 190 returned an intersection of 628 metres at 0.73g/t Au, 0.50% Cu and 142ppm Mo. To put this in some perspective, hole 139, that had eight major mining companies calling us last year, returned 374metres at 1.03 g/t Au and 0.5% Cu. The intrinsic value of the Tumpangpitu resource should not be underestimated. At the current grades Tumpangpitu can be regarded as either a gold or a copper deposit. I note that we have recently seen one of the world's major gold producers, Barrick Gold Corporation, bid for copper producer, Equinox, no doubt in part because the bidder cannot find long life gold projects to replace their depleting inventory.

For the balance of the year, shareholders can expect to see momentum increase with the current seven rigs on site increasing to eleven rigs and with first time programmes on the other porphyries on the tenement. We will continue to expand and test the oxide areas as well as the deeper Tumpangpitu porphyry zone. We have already initiated a first pass drilling programme on the Candrian porphyry target, and we are gearing up to conduct first pass drilling at the Salakan prospects and at Gunung Manis later on in the year.

Colin G Jackson, Chairman

Forward-looking statements

This announcement contains certain forward-looking statements, relating to, but not limited to Intrepid's expectations, intentions, plans and beliefs. Forward-looking information can often be identified by forward-looking words such as 'anticipate', 'believe', 'expect', 'goal', 'plan', 'intend', 'estimate', 'may' and 'will' or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future outcomes, or statements about future events or performance. Forward-looking information may include reserve and resource estimates, estimates of future production, unit costs, costs of capital projects, and timing of commencement of operations and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, failure to establish estimated resources and reserves, the grade and recovery of ore which is mined varying from estimates, capital and operating costs varying significantly from estimates, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and other factors. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied.

Shareholders and potential investors are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. Intrepid undertakes no obligation to update publicly or otherwise revise any forward-looking information whether as a result of new information, future events or other such factors which affect this information, except as required by law.

Statements relating to gold resource estimates are expressions of judgment, based on knowledge and experience and may require revision based on actual production experience. Such estimates are necessarily imprecise and depend to some extent on statistical inferences and other assumptions, such as gold prices, cut-off grades and operating costs, which may prove to be inaccurate.

Forestry Activities

The Indonesian Forestry Law restricts non forestry activities within protected forests and prohibits mining using an open pit method in protected forest areas. The area of the Porphyry copper-gold resource estimate, and the Zone A, Zone B and Zone C oxide resource estimate areas fall within a protected forest area. Intrepid's Alliance partner, PT IMN, is working with relevant Indonesian authorities regarding a potential review of forest land status. There is no assurance that the forestry reclassification will take place in this instance.

Qualified Person

The information in this announcement that relates to exploration results is based on information compiled by or under the supervision of Malcolm Norris, who is a full-time employee of Intrepid Mines Limited. Mr. Norris has sufficient experience which is relevant to the style of mineralisation 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 "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and a Qualified Person as defined in the Canadian National Instrument 43-101 (standards of Disclosure for Mineral Projects). Mr. Norris consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this address that relates to mineral resources at Tujuh Bukit is based on information compiled by or under the supervision of Dr Phillip Hellman, who is an independent consultant to Intrepid Mines Limited and a Director of Hellman &Schofield. Dr Hellman has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as an Independent Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and an Independent Qualified Person as defined in the Canadian National Instrument 43-101 (Standards of Disclosure for Mineral Projects). Dr Hellman consents to the inclusion in the address of the matters based on his information in the form and context in which it appears. A 40 x 40 x 15metre block model was used for the quoted estimates. If smaller selective mining units are considered it is estimated that an approximate 10 to 20% lift in grade may result. In future, increasing the drilling density in areas of higher gold grades is anticipated to achieve a higher grade outcome.

ABN: 11 060 156 452

Contact Information