Mineral Deposits Limited
TSX : MDM
ASX : MDL

Mineral Deposits Limited

April 29, 2009 18:52 ET

Mineral Deposits Limited: Quarterly Report for the Period Ended 31 March 2009

MELBOURNE, AUSTRALIA--(Marketwire - April 29, 2009) - Mineral Deposits Limited (TSX:MDM)(ASX:MDL) -

HIGHLIGHTS

- Sabodala Gold Project Now Producing

-- The first gold pour on 15 March 2009 saw commencement of production from the newly constructed two million tonnes per annum rated Sabodala gold plant. This significant milestone took less than four years since MDL commenced drilling at Sabodala.

-- The Sabodala plant has recorded an excellent start-up recovery of 91.02%, with 10,058 ounces of gold in circuit and 3,534 ounces poured by end March.

-- The plant has successfully ramped up to some 2.6 million tonnes per annum, well above budget and with recoveries of up to 95% also above budget. Gold production for the month of April is anticipated to be approximately 30,000 ounces. Gold output for calendar 2009 is estimated to be 160,000 ounces.

- Grande Cote Zircon and Ilmenite Project

-- Study to incorporate commercial ilmenite production underway.

-- AMC Consultants Pty Ltd estimates a total Measured and Indicated Resource of 334 million tonnes at 2.1% HM for the Diogo-Fass Boye area. This estimate comprises a Measured Resource of 319.3 million tonnes at 2.1% HM and an Indicated Resource of 14.2 million tonnes at 1.9% HM.

- Corporate

-- Full repayment of US$35 million working capital facility provided by RMB Australia Holdings Limited and Macquarie Bank Limited.

-- Successful completion of institutional placement of 63,600,000 ordinary shares at C$0.52 / A$0.62 per share raising C$33.1million.

-- Reduced debt level of US$41 million places the company in a strong financial position.

SABODALA GOLD PROJECT

90% through operating company Sabodala Gold Operations SA ("SGO")

10% Government of the Republic of Senegal

Background

The Sabodala Gold Project is located in Senegal, a democratic country since gaining independence in 1960. The Senegalese government owns 10% of SGO and fully supports the mining operation. Sabodala lies 650 kilometres east of the capital Dakar within the West African Birimian belt and about 90 kilometres from major gold mines and discoveries in Mali and some 24 kilometres from the recently discovered Massawa deposit in Senegal (Attachment 1). The Sabodala and Niakafiri deposits lie within a 20.3 square kilometre Mining Concession. During the quarter, full commissioning of the substantial Sabodala gold plant was completed and, from an in-plant inventory of 10,058 ounces of gold, 3,534 ounces of gold dore were poured (Attachment 3).

Metalor Technologies SA, Sabodala's designated gold refiner, assumes the entire responsibility and risk associated with the regular transport of gold dore from the Sabodala gold room to its refinery at Marin in Switzerland.

Sabodala Project Update

Good safety performance was achieved with construction and commissioning activities completed without serious incident this quarter.

The engineering and construction programme is complete and, during commissioning, the fit out of ancillary items is nearing completion. Performance trials were commenced on 25 March and were successfully completed in early April (Attachment 2).

This period saw the commencement of a significant new gold operation in west Africa with the following notable achievements:

- Sabodala Open Pit Mine/ROM Pad

The new Sabodala pit design shown in Attachment 4 is approximately 1,000metres in length, 600 metres across and 250 metres deep. Total contained material is 142 million tonnes, including 120 million tonnes of waste and 22 million tonnes of ore to be processed.

Since mining commenced in June 2008, approximately 3.5 million tonnes of ore and waste have been mined. Mine production has reached 668,676 tonnes of ore at an average grade of 2.47g/t gold which has been stockpiled on the ROM pad for milling.

- Processing Plant

Successful construction of the new two million tonnes per annum carbon-in-leach (CIL) treatment plant at Sabodala was completed during the quarter and gold first poured on 15 March 2009. On 7 April 2009, "run of mine ore" replaced low grade "commissioning ore" and gold poured during the week ended 18 April 2009 was 108% above budget at 7,908 ounces. Gold production for April is anticipated to be approximately 30,000 ounces.

Subsequently, the plant successfully ramped up to some 2.6Mtpa, greater than nameplate production levels and well above budget and recoveries of up to 95% also above budget.

- Water Supply

By period end, water stored totals remained at 1.7 million tonnes within the site dams, sufficient to support production beyond the end of the wet season given 100% failure of normal rains. Construction of the Faleme River pipeline, to ensure ample process water is available into the future, is underway with all 38 kilometres of pipe delivered on site. Additional water sourced from the Faleme will support production levels in excess of plant design.

- Site Village

The new SGO run site village is operating efficiently and at end March there was a total of 637 personnel accommodated, principally at the new camp, a significant reduction from more than 1,000 during peak construction. Numbers will continue to drop as commissioning programmes are completed. Decommissioning of the old camp began.

- Human Resources

All but a few construction personnel have now departed. SGO will soon have only the operational team of approximately 460 people present on site. There are currently 283 full time employees with 191 on short term contracts plus some 30-40 casuals from nearby villages. MDL is pleased to advise that Senegalese personnel make up approximately 90% of total staff.

Additional Reserve Potential

The proven and probable reserve is 1.63 million ounces. The total resource base is now 3.51 million ounces. Substantial additional potential to expand reserves has been identified. Randgold announced an inferred gold resource of more than three million ounces at its Massawa project located just 24 kilometres south of Sabodala.

Initial results of an underground mining scoping study by Scott Wilson RPA suggest a 3.0g/t gold cut-off grade for bulk mineable stoping as Sabodala. Undiluted Measured and Indicated Resources at Sabodala outside of the ultimate pit design above a 2.0g/t gold cut-off grade stand at 6.7 million tonnes averaging 3.2g/t for 691,000 ounces. This mineralisation sits principally in the down-plunge extension of the NW Shear and Main Flat intersection and is peripheral to the pit in the Main Flat zone, where both zones display good continuity of mineralisation. Attachment 4 shows the extent of this mineralisation beyond the ultimate pit design. A new block model for underground mining is to be constructed.

The Niakafiri deposit remains open at depth and recent drilling results confirm potential for near surface, high grade gold zones within a bulk low grade tonnage to the west of the Niakafiri pit. A follow-up drilling plan for Niakafiri West is scheduled for late 2009, to lead into resource definition.

REGIONAL GOLD EXPLORATION

In addition to its granted Sabodala mining concession, MDL, through its 100% subsidiary Sabodala Mining Company SARL ("SMC"), has four joint ventures covering a highly strategic part of the Birimian greenstone belt in Senegal totalling 1,750 square kilometres. All projects are located within 10-50 kilometres of the granted Sabodala Mining Concession (Attachment 5).

Bransan Project

Geological mapping and termite sampling programmes to help define additional drill targets at the Diadiako and Goumba Gamba prospects are progressing. Priority is now focused on the mostly laterite covered extension of the Sabodala Structural Corridor ("SSC"), identified within the Bransan permit, over a strike length of some 10 kilometres and an approximate three kilometre width. Geological mapping at 1:5,000 scale and geochemical sampling on a 200 x 50m grid is nearing completion prior to RAB drill follow-up.

Dembala Berola Project

This permit is mainly underlain by a sedimentary package likened to the host sequence for Sadiola and Loulu in nearby Mali. Artisanal mining, trench sampling and drilling by previous owners confirm the presence of gold mineralisation. A 20 hole RC programme was completed by SMC at "Sadiola" Hill, Goundamekho North and Goundamekho Central. Assays remain pending.

Regional soil sampling and structural interpretation has so far defined eight prospective areas for detailed geological mapping and geochemical sampling. Prioritised is Berola Hill, some 15 kilometres west of Goundamekho, where geophysical and remote sensing analysis identified an area where subsequent soil sampling has confirmed anomalous gold values (average 124ppb within greater than 50ppb contour) over an area of 600 x 2,000 metres. RAB follow-up drilling is proposed.

AXMIN Joint Venture Projects

(Heremakono, Sounkounkou and Sabodala NW Permits)

Detailed aeromagnetic data interpretation and regolith map compilation over the Heremakono and Sounkounkou permits was completed and compiled together with soil gold geochemical data. Seventeen prospect areas were identified mostly located on the Sounkounkou Permit. Detailed geological mapping and rock-chip sampling is proposed to prioritise the target areas. Stand out targets are the "Zone D" and Diegoun North prospect areas, both in the Sounkounkou permit.

Zone D is focused on mineralised quartz veins which are mapped intermittently over a strike length of some 500 metres. Previous limited drill testing of this lode system by AXMIN achieved best intersections of 10.5g/t gold over 1.85 metres and 4.3g/t gold over 4.45 metres. Potential for a near surface stacked system is recognised. Drilling by SMC is proposed.

The Diegoun prospect is located on the eastern boundary of the permit area in the transition zone between the mafic-dominated Mako Group and the sediment dominated Diale-Daleme Group. This same structural zone hosts Randgold's Massawa deposit, approximately 25 kilometres along strike to the southwest. At Massawa, the juxtaposition of soft greywacke and other sediments with more competent intermediate volcanoclastics appears to have played an important role in localising gold mineralisation.

Limited previous RAB drilling across the NNE-SSW trend intersected up to 0.8g/t gold over 38 metres and 1.86g/t gold over 10 metres. In this vicinity, rock chip sampling has returned values up to 80.2g/t gold. Previous drill testing of a NW-SE trending cross-structure returned low grade intersections. Best results were 0.49g/t gold over 12 metres and 1.2g/t gold over eight metres in SKDGD003. SMC will complete detailed geological mapping and rock chip sampling and soil or termite mound sampling to prioritise this highly prospective area for RAB drilling.

Makana Project

Located 12 kilometres south-southwest of Sabodala, the Makana permit covers part of the southern extension of the SSC. Previous drilling was focused on an extension of Randgold's Sophia prospect at and about the southeast corner of the permit. SMC targets structural positions within the SSC further to the west, where there is a general cover of laterite. Geological mapping has found indications of bedrock lithologies in parts of the cover where incised by creeks and this mapping will help locating the proposed RAB geochemical drilling.

GRANDE COTE ZIRCON AND ILMENITE PROJECT

90% through operating company Grande Cote Operations SA

10% Government of the Republic of Senegal

Background

The Grande Cote Zircon and Ilmenite Project, covering a strike length of more than 50 kilometres of continuous mineralisation, is located some 100 kilometres northeast of the capital city Dakar, which has an excellent deep water port. Final approvals were received for this project in November 2007 whereby the company was awarded a 25 year Mining Concession and other fiscal incentives under the executed Mining Convention/Supplementary Deed. Activity on the project was measured during 2008 to enable a corporate focus on Sabodala.

The Inferred mineral resource for the main deposits has been estimated at 1,330 million tonnes averaging 2.0% HM at a cut-off of 1.5% HM.

During the quarter, Measured and Indicated Resources were estimated by AMC Consultants Pty Ltd for the Diogo-Fass Boye area where MDL has completed its infill drilling. The resource estimate is provided at a series of cut-off grades and for a series of depths below the water table applicable to MDL's intention to mine the resources by cost efficient dredging.

The AMC Resource Estimate for the above parameters is 334 million tonnes at 2.1% HM comprising a Measured Resource of 319.3 million tonnes at 2.1% HM and an Indicated Resource of 14.2 million tonnes at 1.9 % HM and extends four metres below the water table. These estimates have been classified according to the JORC Code guidelines (The Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, Joint Ore Reserve Committee 2004).

At Mboro, a drilling programme comprising some 400 infill holes has been designed to provide data to complete the Measured and Indicated Resources estimate and preliminary mine plan for this area. This area is considered to hold potential for an additional 3-4 years mine life and the work is expected to revise the initial mine plan to incorporate also mining this deposit (Attachment 6).

Ilmenite Project

The development plan and feasibility study to incorporate ilmenite are continuing. During the period, an internal study was undertaken to include the production of ilmenite as a commercial sales product which indicates that this approach is both technically feasible and economically attractive. It is planned to finalise the study in the second quarter of 2009 and include the results in the updated feasibility study which is expected to be completed by end of the third quarter of 2009.

Hydrological Testwork

Deep hydrological drilling was put on hold during the quarter pending selection of suitable pump testing technology for the deep and large volume Maestritchien aquifer.

CORPORATE

Finance Update

MDL has fully repaid the US$35 million working capital facility provided by RMB Australia Holdings Limited and Macquarie Bank Limited.

An institutional placement of 63,600,000 ordinary shares at C$0.52 / A$0.62 per share raising C$33.1million (approximately A$39 million / US$27 million) was completed during the quarter. The net proceeds of this placement were used to repay the working capital facility.

A Share Purchase Plan is progressing allowing eligible shareholders (MDL shareholders with a registered address in either Australia or New Zealand) to purchase up to A$10,000 worth of new MDL ordinary shares at A$0.62 per share. This price is the equivalent A$ price of the institutional placement detailed above and represents an 8.8% discount to the share price prior to the announcement of the Placement and SPP. The offer closes on 4 May 2009.

The second quarterly payment of the Mining Fleet Lease was made to Societe Generale. This finance lease will be repaid by 30 June 2011.

The company is in a strong financial position based on the forecast production of 160,000 ounces of gold this calendar year. During this period, 84,500 ounces of gold are deliverable per hedge commitments at a price of US$846 an ounce. This level of production should allow the company to benefit from any increase in the gold price whilst retaining some price certainly for its commitments. The company also has hedge agreements with respect to oil prices. The agreement consists of 80,000 barrels per annum for four years at a flat forward price of US$70 per barrel. The contracts settle against Nymex Light Sweet Crude closing prices and represent approximately 50% of the Sabodala mine's expected energy consumption during the period.

Forecast operating costs for Sabodala are US$420-US$440 per ounce which compares very favourably with MDL's gold hedge price.

Cash and Debt Position

At the end of the quarter, cash and cash equivalents were A$17.9 million.

The company has drawn US$41 million of the US$52 million Project Finance Facility provided by Macquarie Bank Limited.

The Societe Generale Mining Fleet Lease was outstanding at US$19 million.

The information in this report that relates to Exploration Results is based on information compiled by MDL's Chief Geologist, Chris Young BSc, who is a member of The Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. Mr Young has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity undertaken. He is qualified as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and as defined in NI43-101. Mr Young has consented to the inclusion of this information in the form and context in which it appears in this report.


ATTACHMENT 1

To view Sabodala Regional Setting, please visit the following link:

http://media3.marketwire.com/docs/mdlattachment1.pdf

ATTACHMENT 2

To view SAG Mill in Operation at Sabodala, please visit the following link:

http://media3.marketwire.com/docs/mdlattachment2.pdf

ATTACHMENT 3

To view Mark English, Peter Spivey and Jeff Williams at First Sabodala Gold Pour, please visit the following link:

http://media3.marketwire.com/docs/mdlattachment3.pdf

ATTACHMENT 4

To view Sabodala 2008 New Pit Design, please visit the following link:

http://media3.marketwire.com/docs/mdlattachment4.pdf

ATTACHMENT 5

To view Location of Regional Gold Programmes, please visit the following link:

http://file.marketwire.com/release/mdlattachment5.pdf

ATTACHMENT 6

To view Diogo Mine Plan Showing Dredge Mining Path, please visit the following link:

http://file.marketwire.com/release/mdlattachment6.pdf

ABN 19 064 377 420

Contact Information