Magma Metals Limited
TSX : MMW
ASX : MMW

Magma Metals Limited

October 06, 2011 07:45 ET

Magma Exercises Beaver Lake Option

PERTH, WESTERN AUSTRALIA--(Marketwire - Oct. 6, 2011) - Magma Metals Limited (TSX:MMW)(ASX:MMW) ("Magma" or the "Company") is pleased to advise that it has exercised its option to purchase the Beaver Lake claim at its Thunder Bay North (TBN) platinum-palladium-copper-nickel (Pt-Pd-Cu-Ni) project in Ontario.

The Beaver Lake claim (Figure 1) covers the underground mineral resource, the newly defined eastern extension to the underground mineralization (refer Magma ASX announcement of August 30, 2011) and part of the area of the current step-out drilling program (refer Magma ASX announcement of September 29, 2011).

The claim was subject to a five-year option agreement which expires on October 6, 2011 (today). Magma has exercised the option and acquired 100% ownership of the claim for a consideration of C$1 million cash and 200,000 shares in the Company issued to the vendors. The area encompassing the entire Current Lake Intrusive Complex (Figure 1) is now held 100% by Magma, subject to a 3% net smelter return royalty, one third of which can be acquired at any time for C$1 million.

Dr Keith Watkins, Magma's Managing Director, said "Exercising the Beaver Lake option secures 100% ownership of the underground resource and its potential extensions for about 800m to the east and is an important step in the development of this project."

Background

Magma has established mineral resources at the Thunder Bay North project, from drilling completed prior to May 31, 2010, comprising:

Open Pit
Indicated Resource: 8.46 Mt @ 2.13g/t Pt-Eq (1.04g/t Pt, 0.98g/t Pd, 0.25% Cu & 0.18% Ni)
containing 580,000 ounces Pt-equivalent metal
Underground
Indicated Resource: 1.03 Mt @ 3.48g/t Pt-Eq (1.63g/t Pt, 1.51g/t Pd, 0.39% Cu & 0.24% Ni)
containing 115,000 ounces Pt-equivalent metal
Inferred Resource: 0.21 Mt @ 3.00g/t Pt-Eq (1.40g/t Pt, 1.29g/t Pd, 0.34% Cu & 0.23% Ni)
containing 20,000 ounces Pt-equivalent metal

(For further information on these resources, including the calculation of platinum equivalents (Pt-Eq), refer to the Company's announcement dated February 7, 2011.)

An independent positive Preliminary Economic Assessment (Scoping Study) based on a potential open pit mine was completed earlier this year (refer to the Company's announcement dated February 7, 2011).

The strategy going forward is to enhance the project's economics by:

  • Growing the resource base through step-out drilling;
  • Including the underground resources in a proposed mine plan; and,
  • Simplifying the mineral processing flow sheet.

To view Figure 1, please visit the following link: http://media3.marketwire.com/docs/mmw_1006_fig_1.pdf

Technical Information

Additional information on Magma and its projects, including descriptions of its quality control and assurance procedures, is available on its website at www.magmametals.com.au and in technical reports filed under the Company's profile on the SEDAR website at www.sedar.com.

For information on Mineral Resources, please refer to the Company's announcement dated February 7, 2011, available on the Company's website at www.magmametals.com.au.

Competent & Qualified Person Statement

The information in this report that relates to Exploration Results or Mineral Resources is based on information compiled, reviewed or prepared by Dr Keith Watkins, the Managing Director of Magma Metals Limited, who is a Fellow of the Australian Institute of Geoscientists and a Member of the Australasian Institute of Mining and Metallurgy, and is a "qualified person" as such term is defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects. Dr Watkins has sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activities undertaken 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" (the JORC Code). Dr Watkins consents to the inclusion in the report of the matters based on this information in the form and context in which they appear.

Cautionary Statement

Certain information contained in this report constitutes "forward-looking information" under Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", "is expected", "estimates", "intends", 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". Although management believes that the expectations expressed in such forward-looking information disclosed herein are based on reasonable assumptions, these statements are not guarantees of future performance. A number of factors could cause actual results, performance or achievements to differ materially from those in the forward-looking information. Such factors include future metal prices, exploration and evaluation results, future availability of capital and general economic, market or business conditions, government regulation of mining operations, failure of equipment or processes to operate as anticipated, risks inherent in mineral exploration and development including unusual or unexpected geological formations. Descriptions of these risks can be found in the Company's various statutory reports, including its Annual Information Form available on its website at www.magmametals.com.au and on the SEDAR website at www.sedar.com.

ABN 72 114 581 047

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