Malaga Inc.
TSX : MLG

Malaga Inc.

May 31, 2011 07:00 ET

Malaga Announces a $1.5 Million Diamond Drilling Campaign in the Consuzo Zone at Its Pasto Bueno Tungsten Mine

MONTREAL, QUEBEC--(Marketwire - May 31, 2011) - Malaga Inc. (TSX:MLG) is pleased to announce that the Company has begun its previously announced $1.5 million drilling campaign on its 100% owned Pasto Bueno property (see Press Release dated February 7th, 2011). The drilling campaign began in early May and Malaga intends to drill 12 short and long range holes for a total of 6,300 meters. The two main objectives are: 1) to explore the deeper extensions of the Loreto vein; and 2) to explore in depth for the first time the four Manto structures in the southern part of the property.

The Consuzo Zone

This older zone of the Pasto Bueno mine was the main mining area in the 1970s when a 1,000 tonne/day plant was in operation. The most important mineralized structure in this zone is the Loreto vein, located in granitic rock. Its composition varies from quartz monzonite to granodiorite and the average thickness varies from 2 to 10 meters. The historic production from this vein was estimated to be 1.95 million tonnes of mineral grading 0.95% WO3.

2010 Exploration Results

In 2010, Malaga partially reopened the old mine at the Consuzo zone and extracted more than 1,000 tonnes at an average grade of 1.5% WO3. Malaga also drilled an exploratory hole HDD 02 10 in this zone which was 390.8 meters long and intersected the northern extension of the Loreto vein, 250 meters below the level corresponding to the Pelagatos river which runs alongside the old Consuzo mine and plant. This hole intersected a section containing 1.83% WO3 over a width of 1.03 meter (see Press Release dated February 7th, 2011).

2011 Drilling Campaign

The data from the above-mentioned 2010 exploratory drill hole demonstrated that high-grade tungsten veins can be found at depth close to the old Consuzo mine. The Company thus decided to further explore this area and is currently drilling two long range drill holes.

Immediately after drilling these two holes the Company will start drilling the four manto structures: Maciste, Gossan, Candelaria and Santa. Malaga plans to drill 10 holes adding up to a total of 4,900 meters in these very promising structures. The Manto Santa is particularly interesting since it is the thickest manto structure and a channel sample taken in 2010 found a grade of 1.17% WO3 over 6.8 meters. It will be one of the focal exploration points during the 2011 drilling campaign that should be completed by the end of the year.

All drilling results will be reported as soon as they are available.

Pierre Monet, Malaga's President recently commented that "Malaga is gearing up for an active exploration year in 2011. The Company will explore both the Consuzo area and four very promising mantos in the southern part of the property, which were not accesible until now. In order to be able to explore and drill the mantos, Malaga has built 6.5 km of roads over the last 12 months. Heavy drilling equipment needed to start the drilling campaign can now be readily brought on site.

I am very confident that we will discover new areas of WO3 mineralization during our 2011 exploration program and that this will enable Malaga to significantly increase its tungsten resources at Pasto Bueno. At present there are 79 known tungsten mineralized veins including the newly discovered Sorpresa vein on the Pasto Bueno property, of which only four are in production."

Finally, the Company will invest $ 3 to 4 million in 2011 in ongoing underground development work in the Huaura and Huayllapon sectors that are currently being mined. The objective of this underground development is to replenish the mined reserves and define new additional reserves and resources.

This Press Release has been read and approved by Alonso Sanchez, P. Eng. and Chief Geologist for Malaga Inc. He acts as the qualified person ("QP") for the Company and is a geologist affiliated to the American Institute of Professional Geologists (AIPG).

Map showing the Consuzo zone and the 4 Manto structures that are the targets of the 2011 drilling campaign available at the following address: http://media3.marketwire.com/docs/MLG_Pasto_Bueno_0531.pdf

ABOUT MALAGA

Malaga Inc. owns and operates a mine in Peru and is one of the few companies outside of China that produces tungsten. Malaga is a low cost producer due to the availability of hydroelectric power at its Pasto Bueno property in Peru and has a current production capacity of 500 tpd. Future plans are to increase production and thoroughly explore the property to increase reserves and resources.

FORWARD-LOOKING INFORMATION

Certain statements in the foregoing may constitute forward-looking statements which involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Malaga or industry results to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statements. These statements reflect management's current expectations regarding future events and operating performance as of the date of this news release.

Contact Information

  • Malaga Inc.
    Jean Martineau,
    Exec.Chairman and CEO
    514-288-3224

    Pierre Monet,
    President
    514-288-3224

    Investor Relations Nicole Blanchard
    Sun International Communications
    Nicole.blanchard@isuncomm.com
    450-973-6600