Mega Precious Metals Inc.
TSX VENTURE : MGP

Mega Precious Metals Inc.

March 28, 2014 11:33 ET

Mega Files Updated NI 43-101 Technical Report for the Gold Resources at the North Madsen Project in Red Lake, Ontario

THUNDER BAY, ONTARIO--(Marketwired - March 28, 2014) - Mega Precious Metals Inc. (TSX VENTURE:MGP) ("Mega") announces that, further to the news release of February 13, 2014, it has filed the National Instrument 43-101 Technical Report entitled "Technical Report and Updated Resource Estimation on the North Madsen Property, Red Lake, Ontario" dated March 27, 2014, on SEDAR at http://www.sedar.com. The report has also been posted on the Company's website at http://www.megapmi.com. There is no material differences between the results of the Technical Report filed today and the disclosure provided in the February 13, 2014 news release.

The resource estimate has been completed by WSP (formerly GENIVAR). The new resource at USD $1,200 per ounce gold demonstrates significant improvements in the metallurgical recoveries, confidence and grade distribution from the previous resource estimate which used a gold price of USD $1,400 (see news release dated September 21, 2011). Mega's North Madsen gold deposits are adjacent to the Madsen and Buffalo Gold mines, which are the subject of a recently announced proposed acquisition by Laurentian Goldfields Ltd. from Claude Resources Inc.

Highlights:

  • Surface/near surface (<250m from surface) Measured and Indicated Resources of 0.9 M Ounces of Gold at 1.2 g/t Au
  • Surface/near surface Inferred Resources of 0.38 M Ounces of Gold
  • All resources are open along strike and at depth
  • 91-95% Metallurgical Recoveries
  • Over 40,000 meters in 327 drill holes were incorporated into the geological model and includes over 25 new holes totaling 8,200 m of drilling since the previous resource update
  • Improved confidence in the deposit with 70% of the resource in the Measured and Indicated categories
  • Robust resource using a gold price of USD $1200 USD per ounce ($200 less than previous resource)
  • Approximately 7 kms trucking distance from Madsen Mine Mill being acquired by Laurentian Goldfields Ltd. and Goldcorp Inc.'s Red Lake Mill
Zone Category Tonnes Au Grade
(g/t)
Ounces
11 (Buffalo Diss) Measured 0 0.00 0
Indicated 122,800 1.07 4,244
M&I Subtotal 122,800 1.07 4,244
12 (Buffalo Qtz-Tourm) Measured 0 0.00 0
Indicated 1,622,100 0.97 50,528
M&I Subtotal 1,622,100 0.97 50,528
21 (Laverty Dyke) Measured 996,830 1.67 53,520
Indicated 303,500 1.33 13,014
M&I Subtotal 1,300,330 1.59 66,534
22 (Laverty Granodiorite) Measured 477,670 0.98 15,091
Indicated 422,600 0.91 12,360
M&I Subtotal 900,270 0.95 27,452
41 (Main) Measured 15,253,810 1.26 617,279
Indicated 3,759,600 1.02 122,716
M&I Subtotal 19,013,410 1.21 739,995
All Zones Measured Total 16,728,310 1.28 685,891
All Zones Indicated Total 6,230,600 1.01 202,862
All Zones Total M&I 22,958,910 1.20 888,752
Zone Category Tonnes Au Grade
(g/t)
Ounces
11 (Buffalo Diss) Inferred 613,000 1.32 25,947
12 (Buffalo Qtz-Tourm) Inferred 1,489,000 1.15 54,896
21 (Laverty Dyke) Inferred 676,000 1.52 32,929
22 (Laverty Granodiorite) Inferred 1,669,000 0.84 45,172
31 (South) Inferred 272,000 1.25 10,939
41 (Main) Inferred 4,526,000 1.31 190,928
51 (Central) Inferred 893,000 0.81 23,126
All Zones Total Inferred 10,138,000 1.18 383,936
Note: due to rounding, some totals may not appear to total properly
Current resource calculation used USD $1,200 per ounce of gold
Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant issues.
All composites have been capped where appropriate. Cut-off grades are based on a price of USD $1,200 per ounce of gold and a number of operating cost and recovery assumptions (see details below).

Sensitivity Analysis

The Updated Resource Estimates represents a rigorous evaluation of the drilling, channel sampling and surface mapping completed to the end of December 2013. The most notable difference from previous estimates is the increase in overall ounces of the deposit at multiple cut-off grades (see sensitivity table below) and the continuing definition of the higher grade Buffalo Extension, South and Central Zones. Furthermore, the infill drilling program was successful at converting additional Inferred material into the Indicated category.

The resource remains open along strike and at depth with the deepest hole drilled to date of 290 vertical meters. The recent discovery at the South and Central deposits are estimated to contain an Inferred Resource of 34,000 ounces of gold averaging 0.91 g/t Au, at a 0.6 g/t Au cut-off grade.

The updated resource estimate, which meets the guidelines for reporting mineral exploration programs as set out in National Instrument 43-101, was based on 327 diamond drill hole totaling over 40,000 metres and 52 channel samples that tested five deposits across our claims and to a vertical depth of over 250 m and at drill spacing of 5 to 75 m. For the purpose of this news release, the resource estimate is reported at a cut-off grade of 0.6 g/t Au. The cut-off was chosen to better represent the higher-grade core to the mineralized zone and to provide continuity for future resource estimates when and if the Mega deems it appropriate.

The sensitivity table below presents the tonnes and grades from the block model used for the updated Mineral Resource Estimate at a range of cut-off grades in order to demonstrate the sensitivity of the estimates. The analysis indicates the robust nature of the overall resource and potential to optimize the grade and maximize margins.

Sensitivity of the North Madsen Resource Estimates at Various Cut-off Grades
Measured and Indicated Resources
Cut-off (Au g/t) Tonnes
(000's)
Gold (Au)
Grade (g/t)
Au Ounces
(000's)
0.3 52,879,240 0.76 1,291,518
0.4 38,221,180 0.92 1,128,599
0.5 29,259,900 1.06 999,564
0.6 22,958,910 1.20 888,752
0.7 17,795,260 1.37 781,430
0.8 14,017,640 1.53 690,584
0.9 11,199,400 1.70 613,796
1.0 9,305,570 1.86 556,220
Inferred Resources
Cut-off (Au g/t) Tonnes
(000's)
Gold (Au)
Grade (g/t)
Au Ounces
(000's)
0.3 19,469,000 0.81 509,183
0.4 14,895,000 0.96 458,806
0.5 11,990,000 1.08 416,464
0.6 10,138,000 1.18 383,936
0.7 8,670,000 1.27 353,257
0.8 7,505,000 1.35 325,218
0.9 5,103,000 1.58 259,656
1.0 4,529,000 1.66 242,220

The cut-off value of 0.6 g/t Au was derived using the parameters listed in the table below.

For the Updated Resource Estimate the Company has adopted the same approach that was used in previous estimates by specifically targeting higher-grade mineralization, modelling each of the mineralized domains, applying a conservative assay cap and restricting the search radius for all resources. This allows for a more realistic estimation of contained gold in the deposit and potential enhancement in the projects economic viability.

Parameters and Assumptions used for North Madsen Resource Cut-off Grade
Parameter or Assumption North Madsen Deposit
Date of Data Used December 2013
Number of drill holes and Surface Samples 327 holes and 36027 assays
Long Term Gold Price per Ounce ($/oz) 1,200
Processing $/tonne O/P 17
Mining $/tonne O/P 6
Mill Recovery (%) 92
Assumed O/P Slope Angle 50
Specific Gravity (SG) 2.68
Block Model & Interpolation Software Surpac 6.5.1
Interpolation Method Ordinary Krig
Block Sizes (mxmxm) O/P 10 x 10 x 10 with sub-cell to 2.5 x 2.5 x 2.5
Cap Grade (g/t) Varied by Zone (range from no cap to 46)
Number of Domains 7
All costs are in US dollars with 0.9 exchange rate

The mineral resource estimates used the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by CIM Standing Committee on Reserve Definitions and adopted by CIM Council on November 27, 2010. The mineral resource estimates are classified as "measured", "indicated", or "inferred" as defined by CIM. The Corporation intends to file a National Instrument 43-101 ("NI 43-101") compliant technical report in respect of the updated mineral resource estimate on SEDAR and on the Corporation's website within 45 days of this news release.

According to the CIM definitions, a Mineral Resource must be potentially economic in that it must be "in such form and quantity and of such grade or quality that it has reasonable prospects for economic extraction".

The quantity and grade of reported inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.

The QAQC protocols and corresponding sample preparation and shipment procedures for the North Madsen Project have been reviewed and approved by WSP.

Qualified Person Comments/Quality Control Procedures

This press release has been prepared and revised by Glen Kunz P. Geo., President and Chief Executive Officer (CEO), Mr. Todd McCracken P.Geo. of WSP (formerly GENIVAR) all of which are Qualified Persons under the NI 43-101 guidelines. The resource estimate has been prepared in compliance with National Instrument 43-101 and form NI 43-101F1, which requires that the estimate be prepared in accordance with the "CIM Definition Standards on Mineral Resources and Mineral Reserves as prepared by the CIM Standing Committee on Reserve Definitions and as adopted by CIM Council, December 11, 2005".

Glen Kuntz, P. Geo, President and CEO, is the Qualified Person for the information contained in this press release and is a Qualified Person defined by National Instrument 43-101. Glen was Sr. Resource Geologist at the Campbell Gold Mine and Global Spatial Data Systems Coordinator for Placer Dome, Vice President Enterprise Mining Solutions for Runge Ltd., and most recently, Chief Operating Officer with Mega Precious Metals.

Mega Precious Metals Inc. is a leading Canadian-based exploration company with a high quality pipeline of projects located in the mining friendly jurisdictions of Manitoba, Northwestern Ontario and Nunavut. The Company's significant portfolio includes the flagship Monument Bay Gold Tungsten Project in NE Manitoba as well as the N. Madsen Gold Project in the prolific gold mining district of Red Lake, Ontario. Mega has established a record of delivering rapid growth through their focused and low cost approach to exploration and resource development. The Company's common shares trade on the TSX Venture Exchange under the symbol MGP.

For further information and presentation material, please review the Mega website at www.megapmi.com.

Forward-looking Statements

Certain statements in this press release relating to the Company's exploration activities, project expenditures and business plans are "forward-looking statements" within the meaning of securities legislation. The Company does not intend, and does not assume any obligation, to update these forward-looking statements. These forward-looking statements represent management's best judgment based on current facts and assumptions that management considers reasonable. The Company makes no representation that reasonable business people in possession of the same information would reach the same conclusions. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In particular, fluctuations in the price of gold or in currency markets could prevent the Company from achieving its targets. Readers should not place undue reliance on forward-looking statements. More information about risks and uncertainties affecting the Company and its business is available in Mega Precious Metal's filings which are posted on sedar at www.sedar.com.

There is no guarantee that drill results reported in this news release will lead to the identification of a deposit that can be mined economically, and further work is required to identify a reserve or resource.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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