Minefinders Corporation Ltd.
TSX : MFL
AMEX : MFN

Minefinders Corporation Ltd.

June 28, 2005 09:02 ET

Minefinders Receives Positive Feasibility and Initial Optimization Studies for Dolores Gold and Silver Project in Mexico

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - June 28, 2005) - Minefinders Corporation Ltd. (the "Company") (TSX:MFL)(AMEX:MFN) is pleased to announce receipt of a positive bankable feasibility study and an initial optimization study of its 100% owned Dolores gold and silver deposit in Chihuahua, Mexico.

The bankable feasibility study (the "Base Study") represents an unoptimized, technically feasible design and is the basis of the initial optimization study undertaken for the Company by Kappes Cassiday & Associates ("KCA"). Both studies assume a large scale, open pit mine, with three-stage crushing, and conventional sodium cyanide extraction on a heap leach pad, followed by the Merrill-Crowe process for metal recovery.

Based upon the results of these studies, the Company's directors have authorized management to proceed with detailed engineering and optimization of the Dolores mine plan, leading to construction in the fourth quarter of 2005.

Company President, Mark Bailey, commented: "The Base Study and the initial optimization study are the culmination of several years of intensive engineering work. Minefinders is delighted to have received this endorsement of the feasibility of the Dolores Project. We look forward to optimizing the final mine plan and to putting into production one of the best development stage gold and silver projects in North America."

The Base Study

The Base Study estimates an open pit gold and silver deposit containing proven and probable reserves (the "Reserves") of approximately 1.95 million ounces of gold and 104 million ounces of silver in 78.7 million tonnes of ore, using a gold price of $375/oz and a silver price of $5.75/oz (see Table 1). Total gold and silver production over a nine year mine life is estimated to be approximately 1.44 million ounces of gold and 53.1 million ounces of silver (or 2.23 million ounces gold and gold-equivalent silver ("AuEq") using prices of $400/oz gold and $6/oz silver for the purposes of conversion).

The study contemplates a production rate of 25,000 tonnes of ore per day ("tpd"), or nine million tonnes per year, at a life of mine strip ratio of 3.3:1, with average annualized production of approximately 160,000 ounces of gold and 5.8 million ounces of silver (247,900 ounces AuEq per year).



Table 1 Proven and Probable Reserves (25,000 tpd Base Study)
---------------------------------------------------------------------
Tonnes Gold Silver Gold Silver
Category (000s) g/t g/t oz oz
---------------------------------------------------------------------
Proven 48,206 0.797 41.8 1,235,209 64,782,597
---------------------------------------------------------------------
Probable 30,472 0.729 40.1 714,183 39,284,959
---------------------------------------------------------------------
Proven & Probable 78,678 0.77 41.1 1,949,392 104,070,000
---------------------------------------------------------------------
Some numbers may not match due to rounding


Initial project economics for the Base Study (pre-tax) estimate direct capital costs of $136.9 million with additional indirect capital costs, including EPCM, commissioning, owners cost and contingency of $35.3 million. Sustaining capital over the life of the mine is estimated to be $37 million (capital costs estimates are plus or minus 15%). Operating costs are $5.97 per tonne of ore and total cash operating costs are estimated to be $111/oz gold, net of silver credits at a $6/oz silver price , or $214/oz AuEq. Total estimated production costs (pre-tax and before depreciation) are estimated to be $230/oz AuEq, producing an unoptimized pre-tax internal rate of return of 13.5%.

Initial Mine Plan Optimization

Concurrently with the completion of the Base Study, in March 2005 the Company engaged KCA to study its initial optimization on a smaller-scale mine plan. KCA has now provided the Company with an 18,000 tonnes per day plan (6.48 million tonnes per year).

The KCA study is predicated upon minimization of capital costs through reduction of daily production quotas, additional phasing, optimization of mine facilities, and the acquisition of more conventional and readily available mine fleets and equipment.

This alternate mine plan estimates production of 72.5 million tonnes of ore reserves at a slightly higher grade (0.84 g/t gold and 44.5 g/t silver) than that of the Base Study, with a slightly higher strip ratio of 3.7:1, placing approximately 1.95 million ounces of gold and 103.6 million ounces of silver on the heap leach pad and recovering 1.445 million ounces of gold and 53.2 million ounces of silver (2.25 million ounces AuEq) over a 12 year mine life.

Initial project economics (pre-tax) for the 18,000 tpd mine plan estimate total direct capital costs of $97.6 million with additional indirect capital costs of $33.5 million for total capital costs of $131.1 million. Estimated sustaining capital over the life of mine is an additional $32.2 million (capital costs estimates are plus or minus 20%). Total cash operating costs are estimated to be $94/oz gold, net of silver credits at a $6 silver price, or $203/oz AuEq. Total production costs (pre-tax and before depreciation) are estimated to be $218/oz AuEq, producing estimated pre-tax cash flow having a net present value at 0% discount of $257.9 million, and an unoptimized internal rate of return of 20.5%.

Although the KCA study contains some, initial, mine plan optimization, project economics are expected to be further enhanced as additional optimization and detailed engineering proceeds.

Dolores Resources

Total audited Measured and Indicated Resources at Dolores (which include the Reserves) are 2.73 million ounces of gold and 132.7 million ounces of silver, contained in 101 million tonnes grading 0.84 g/t gold and 40.8 g/t silver, at a cutoff grade of 0.3g/t Aueq (see Table 2). An additional 696,000 ounces of gold and 25.3 million ounces of silver, in 28.1 million tonnes, are classified as Inferred Resources. It is expected that additional resources that are currently outside the proposed mine plan will be converted into underground and/or surface mineable reserves with further drilling.



Table 2 Measured and Indicated Resources in Base Study
----------------------------------------------------------------
Tonnes Gold Silver Gold Silver
Category (000s) g/t g/t Ounces Ounces
----------------------------------------------------------------
Measured 53,413 0.89 43.7 1,485,000 72,599,000
----------------------------------------------------------------
Indicated 47,652 0.78 37.5 1,161,000 55,580,000
----------------------------------------------------------------
Total 101,065 0.84 40.8 2,726,000 132,698,000
----------------------------------------------------------------


Sensitivity Analysis

Under both the 25,000 tpd and the 18,000 tpd plans, reserves were calculated using prices of $375/oz gold and $5.75/oz silver and cash flow analyses were calculated using prices of $400/oz gold and $6/oz silver. The project is highly leveraged to gold and silver prices and to capital and operating cost fluctuations.

Table 3, below, presents sensitivities for the 18,000 tpd operation at plus or minus 10% or 20% of the study's economics. Any of these parameters in combination with another will provide additional sensitivity (see Figure 1).

Base Study Engineering

Minefinders engaged M3 Engineering & Technology Corporation ("M3") and other contractors to develop the technical information to support a bankable level feasibility study for the Dolores project. M3 prepared the process and infrastructure design and capital and operating costs and integrated the work of other independent consultants, including: Golder Associates, Inc. (heap leach pad design and geo-technical), Independent Mining Consultants, Inc. (mine scheduling), Roscoe-Postle Associates (resource / reserve audit), McClelland Laboratories, Inc. (metallurgy), SGS Lakefield Research Ltd. (metallurgy), Hazen Research (rock mechanics), Metso Minerals (abrasion testing), Pocock Industrial, Inc (flotation studies), Mine and Quarry Engineering Services, Inc. ("MQes") (process plant), with input from the Minefinders technical team.

Moving Forward

The Company is proceeding with final optimization and detail engineering design for the Dolores conventional, open pit, heap leach operation. This work will include the study of quaternary crushing and mill options that could benefit present ore reserves and any additional resources that may be developed through underground mining operations or future surface expansion.

The development of Dolores will proceed in a typical Engineering Procurement and Construction Management ("EPCM") format, with the involvement of a lead contractor followed by construction, commissioning, start-up and full production, expected to be achieved in the second quarter of 2007.

Quality Control and Assurance

Conrad E. Huss P.E. of M3 is a "qualified person", as that term is defined in NI 43-101 of the Canadian Securities Administrators ("NI 43-101"), and is responsible solely for the contents of the Base Study. Michael Cassiday, AusIMM Member, of KCA is a "qualified person" and is responsible solely for the contents of the KCA Study. M3, KCA, and Messrs. Huss and Cassiday are not responsible for the contents of this news release. Mark Bailey MSc., P.Geo. is the "qualified person" with overall responsibility for the Dolores Project and is responsible for the contents of this news release. Technical reports summarizing the Base Study and the KCA Study will be filed within 30 days, in accordance with the requirements of NI 43-101 and will then be available for inspection online at www.sedar.com.

Conference Call

The Company will host a conference call tomorrow, Wednesday, June 29, 2005, at 12:00 noon (EDT) to discuss the Dolores feasibility study results and answer questions. Participants may access the call by dialing 1 (866) 440-8938 (North America), 800 4813-1690 (International) or (416) 343-2657 from the Toronto area. When calling please enter the conference ID # 3354011 or ask for the Minefinders Dolores Feasibility Results, Conference Call. A replay of the call will be available until July 9, 2005 by dialing (416) 695-5800 or 1(800) 408-3053.

MINEFINDERS CORPORATION LTD.

Mark H. Bailey

President and Chief Executive Officer

Safe Harbor Statement under the United States Private Securities Litigation Act of 1995: Statements in this release that are forward-looking, including statements relating to the size, and potential growth in size, of the Company's mineral reserves and resources, the economic feasibility of, and commencement of mine construction and mining operations at, the Company's Dolores Project and the timing of the further exploration and development of the Company's mineral projects, are subject to various risks and uncertainties concerning the specific factors identified above and in the company's periodic filings with the Ontario Securities Commission and the U. S. Securities Exchange Commission ("SEC"). Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The Company does not intend to update this information and disclaims any legal liability to the contrary.

Cautionary Note to U.S. Investors: The SEC permits mining companies to disclose only those mineral deposits that can be extracted or produced economically in their filings with the SEC. This news release uses the term "inferred resource" that the SEC guidelines prohibit from inclusion in filings with the SEC.



Table 3 Financial Sensitivity Analysis - 18,000 tpd Operation
---------------------------------------------------------
IRR (pre-tax)
---------------------------------------------------------------------
Percent of Silver Recovery, Gold Recovery, Operating Capital
Base Case or Price or Price Cost Cost
---------------------------------------------------------------------
80% 16.3% 12.4% 26.9% 27.2%
---------------------------------------------------------------------
90% 18.5% 16.5% 23.7% 23.6%
---------------------------------------------------------------------
100% 20.5% 20.5% 20.5% 20.5%
---------------------------------------------------------------------
110% 22.6% 24.4% 17.3% 18.0%
---------------------------------------------------------------------
120% 24.5% 28.2% 13.8% 15.8%
---------------------------------------------------------------------


---------------------------------------------------------
NPV (@0%) US$ 1,000s (pre-tax)
---------------------------------------------------------------------
Percent of Silver Recovery, Gold Recovery, Operating Capital
Base Case or Price or Price Cost Cost
---------------------------------------------------------------------
80% 195,202 146,299 350,765 287,184
---------------------------------------------------------------------
90% 226,472 202,096 304,329 272,483
---------------------------------------------------------------------
100% 257,892 257,892 257,892 257,892
---------------------------------------------------------------------
110% 289,237 313,688 211,455 243,411
---------------------------------------------------------------------
120% 320,582 369,485 165,019 229,040
---------------------------------------------------------------------


Figure 1 IRR Sensitivity Gold/Silver Price Combined

http://www2.ccnmatthews.com/database/fax/2000/mfl0628.doc


Contact Information

  • Minefinders Corporation Ltd.
    Mark H. Bailey
    President and Chief Executive Officer
    1 (866) 687-6263
    (604) 687-6267 (FAX)
    www.minefinders.com