Luzon Minerals Ltd.
TSX VENTURE : LZN

Luzon Minerals Ltd.

September 26, 2005 13:43 ET

Luzon Minerals Ltd.: Successful Technical Visit by Financiers to the Company's Bolivian Properties

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Sept. 26, 2005) - Luzon Minerals Ltd. ("Luzon") (TSX VENTURE:LZN) is pleased to report that Willie McLucas, Chairman of Luzon, accompanied the directors of Republic Gold Limited ("Republic Gold") on a field trip to Luzon's properties in Bolivia. Republic Gold, who are providing financial support for the business, was very impressed with the Luzon properties; the political situation and the investment climate in Bolivia.

In addition to the technical visits to the properties, Luzon held a number of meetings with Bolivian Government officials, including the Minister for Mines, and others involved in the mining industry in Bolivia.

Amayapampa Gold Project

Following receipt of the NI 43-101 geological report, the Board has decided to treat the report as a scoping study and to move forward to produce a Bankable Feasibility Study, as the visit highlighted several areas of the study where further work is required. As previously described, the Amayapampa project is an advanced proposal for open pit mining, recovering 355,000 ounces at a cash cost of production of $229/oz (US$176/oz), within a significantly larger resource.

Following this technical visit, and the studying of a number of feasibility study documents, Luzon, together with the technical team from Republic Gold, can see a variety of areas where the extensive work carried out by Luzon, and the previous owner of the Amayapampa Gold Project, Vista Gold Corporation ("Vista Gold"), can be enhanced resulting in the production of a bankable feasibility study. These include the following: -

- A programme of metallurgical testwork by Gekko Systems of Australia aimed at improving the average metallurgical recovery of the project from 84% to nearer 90%

- Open pit optimisation work at the current gold price of approximately US$450 per ounce as opposed to the current optimisation that used US$375 per ounce

- A new open pit design to follow-on from this optimisation, which is considered necessary

- A reappraisal of the proposed treatment plant capacity and design if a positive improvement flows from the Gekko testwork. This will result in a subsequent update to the plant design and capital costing

- The completion of an adequate geotechnical report and the utilisation of the results of this report in a new open pit design. Based upon the information given to Luzon, all the work to write this report has been completed

- The adequate documentation of the duplicate sampling programme carried out by Vista Gold

- A review of the acid mine drainage implications of mineralised waste

- A review of the current estimate of 500,000 tonnes of ore removed from the mineral resource to account for old workings, which is considered to be a conservative treatment of this aspect

- A review of the mining titles at Amayapampa, concurrent with a review of the current World Bank environmental standards to ensure the project permitting matches world's best practice and the transfer of the environmental permits from Vista Gold to Luzon.

As a consequence of the close working relationship between the Republic Gold and Luzon; Republic Gold personnel will be involved in these developments.

Liphichi Gold Project

Liphichi is located approximately 160 kilometres by road to the north-west of La Paz. The initial third of the trip is on bitumen highway, with the remainder being on well-formed gravel roads. The site at Liphichi is mountainous meaning that full-scale operations at Liphichi will most likely be underground. A number of sampling results achieved by either drilling or channel sampling indicate that there are grades of sufficient tenor to support an underground operation if sufficient high grade intersections can be encountered. An interval of 39.5 metres at 4.69 g/t Au in the first cross-cut is an example of the intersections that have been encountered. Some intersections are much higher grade but also much narrower.

Liphichi is being operated as an underground exploration project, with four cross-cuts having been developed, with a fifth currently being developed.

A clear understanding of the structural controls on mineralisation at Liphichi will be vital in developing any gold resource at the project. The footwall and hanging wall faults are approximately 100 metres apart. This total width is variously mineralised. Within this zone are a number of more discrete and higher grade zones.

The geological controls on the higher grade zones are not well understood by the Luzon technical staff and a project is being undertaken to enable these to be more adequately understood. Further work will be required by experienced structural geologist to give Luzon a better understanding of the property. It is likely that Australian expertise can contribute significantly to this.

The underground mining cost structure at Liphichi is very low. Due to the low pay rates quoted above, the cost of underground driving or cross-cutting is only US$150 per metre. This is marginally more that the cost of one metre of diamond drill core. Hence, the concept of sampling the mineralisation by underground development makes eminent sense as the additional cost of the development is more than off-set by the increased geological information the underground development provides over diamond drilling.

The next option payment on this property of US$250,000 is due January 23, 2006.

The trip also provided an opportunity to discuss a number of other properties in the region, of which, at least one will is the subject of further due diligence.

The Politics of Bolivia

While the Australian media focussed on civil unrest earlier this year, which resulted in the resignation of President Carlos Mesa, the reality is that Bolivia presents less sovereign risk challenges than countries favoured for Australian mining investment such as Vietnam, China or Laos. Bolivia is a transparent democracy, where the rule of law operates with more certainty than in the aforementioned countries, which are all dictatorships.

On December 4 this year, Bolivia will hold elections to elect the country's President. Two of the leading candidates are perceived to be, and their policies are presented as, market friendly. A third leading candidate is politically aligned with the left. Based upon extensive discussions held in La Paz with key political observers and international institutions based in Bolivia, it is the Board's view that there will be no adverse changes for the mining industry in Bolivia if any of these three candidates is elected.

The development of the mining sector is regarded by the political and bureaucratic establishment in Bolivia as being critical to the country's aim of lifting its living standards. The key to the successful development of mining projects in Bolivia is the capacity of project proponents to work successfully with local communities to ensure that the economic and social benefits from mining are shared as equitably as possible within that community and that after the mining project finishes, the economic sustainability of the community is not threatened. From the evidence presented to Luzon, the villages of Amayapampa and Koka Millipaya at Liphichi both want their respective projects to proceed on this basis.

Inward Investment in Bolivia

The Government of Bolivia has an inward investment agency, Ceprobol, whose mandate is to attract foreign investment into Bolivia. Due to the importance of the mining industry to the country there is a Director level official responsible for the mining industry. Ceprobol arranged a number of meetings for both Republic Gold and Luzon.

Importantly, Luzon was also able to meet with the Minister of Mines.

Ceprobol also indicated that, as is commonly the case with inward investment agencies, it is prepared to enter into agreements with companies to attract capital into Bolivia. This includes "tax holidays" and advice and assistance in dealing with all levels of Government.

The Company expects to carry out much of this work in the current quarter and will report as information is available.

Additionally, on August 20, 2005, James (Jim) Currie tendered his resignation as a director.

This release contains certain "forward-looking statements". All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future, are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", and "intend" and statements that an event or result "may", "will", "can", "should", "could" or "might" occur or be achieved and other similar expressions. These forward-looking statements reflect the current internal projections, expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are subject to a number of risks and uncertainties, including those detailed from time to time in filings made by the Company with securities regulatory authorities, that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, the Company.

BY ORDER OF THE BOARD

Willie McLucas, Chairman


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