Mundoro Mining Inc.
TSX : MUN

Mundoro Mining Inc.

June 14, 2005 08:42 ET

Mundoro Completes Pre-Feasibility Study for Development of China's Largest Gold Mine

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - June 14, 2005) - Mundoro Mining Inc. (TSX:MUN) -

Highlights include:

- NPV at 0% discount rate of US$ 244 million and IRR of 18%

- Average production for first six years of 364,000 ounces of gold per year with average cash cost of US$175/oz

- Ongoing drilling expected to significantly expand scope of project for final feasibility

- Pre-feasibility results conference call scheduled for June 15, 8 am PST

Mundoro Mining Inc. ("Mundoro" or "the Company") is pleased to announce that AMEC Americas Limited ("AMEC") has completed a pre-feasibility study ("the Study") on the Zone 1 deposit of the Maoling Gold Project in Liaoning Province, China. The Study, dated June 8th 2005, together with all reserve and resource estimates were prepared in accordance with the standards and definitions of National Instrument 43-101. The executive summary, together with maps and presentation materials will shortly be available on the Company's website at www.mundoro.com.

The Study has considered only Maoling's Indicated Resources of 120 million tonnes grading 1.0 gram gold per tonne (using a 0.50 gram gold per tonne cut-off grade) located in the northern half of Zone 1. The Company expects to further expand the scope of the project for the final feasibility study by upgrading some of the total Inferred Resources of 183 million tonnes grading 0.9 grams gold per tonne for 5.1 million gold ounces (0.50 grams gold per tonne cut-off grade) already defined on the project.



PRE-FEASIBILITY HIGHLIGHTS (100% basis)(i)

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Indicated Resource (0.50 g/t cut-off) 120.0 Mt @ 0.98 g/t equals
3.8 M oz
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Probable Reserve 88.8 Mt @ 0.99 g/t equals
2.8 M oz
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Metallurgical Recovery 93%
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Mill Capacity - Years 1 - 2 7.3 million tonnes per year
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Year 2 - 8 12.8 million tonnes per year
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Overall Strip Ratio 1.36 to 1
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Mine Life 8 years
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Gold Production Cash Cost per Oz Gold ounces per year
Years 1-2 US$ 168 292,000
Years 3-6 US$ 179 401,000
Years 6-8
(stockpile) US$ 256 219,000
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Pre-Production Capital US$ 235 Million
Expansion Capital US$ 63 Million
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Unit Operating Cost US$ 5.54 per tonne ore
Total Cash Operating Cost US$ 187 per ounce gold
Total Production Cost US$ 271 per ounce gold
IRR (pre-tax and ungeared) 18%
Net Present Value @ 0% discount US$ 244 Million
Net Present Value @ 5% discount US$ 134 Million
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(i) Mundoro funds 100% of development costs of the project, has
rights to 79% of profits after an accelerated payback of
development costs in a Sino-Foreign Joint Venture with a
company wholly-owned by the province of Liaoning.

Note: The Study assumes US$ 400 per ounce gold


Mining

The Study envisions developing Maoling's Zone 1 deposit as a large open-pit mining operation with a declining cut-off grade. Under this plan, years 1 and 2 are mined using a cut-off grade of 1.0 gram gold per tonne; years 3 and 4 using 0.75 and thereafter using 0.5 grams gold per tonne cut-off grades. The average grade treated in years 1 and 2 is 1.33 grams gold per tonne. Low-grade ore, between 0.5 and 1.0 grams gold per tonne, will be stockpiled for treatment in the final years of the mine's life.

Mining will be performed by shovels and trucks, following drilling and blasting. A pre-strip of 11 million tonnes of rock will be used in the construction of roadways and the tailings dam. The life-of-mine strip ratio is 1.36:1.

Processing

Metallurgical testing has demonstrated that the Zone 1 ore is free-milling with excellent recoveries at a coarse grind. This study uses a conservative 93% metallurgical recovery rate.

Run-of-mine ore will first be crushed in a gyratory crusher, then ground in a semi-autogenous grinding mill (SAG mill) followed by secondary grinding in a ball mill. Milled ore will then be put through a process based on a conventional CIP gold plant flowsheet operating 365 days per year, 24 hours per day. The processing plant will be constructed to enable a seamless expansion of capacity from an initial throughput of 20,000 tonnes per day to 35,000 tonnes per day after the first 2 years of production.

Tailings and Waste Rock

Tailings will be treated in a detoxification circuit before being pumped into a zero-discharge tailings impoundment located approximately two kilometers from the mine site. Process water will be reclaimed from the tailings dam for re-use in the mill. To form the tailings impoundment, a rock-filled dam with a compacted concrete core will be constructed in two phases with an ultimate capacity of approximately 100 million tonnes.

The plant, process and tailings site impoundment facility are designed for compliance with Chinese environmental protection regulations (updated in 2003) and international environmental protection standards. A comprehensive Environmental Impact Statement for the project will be prepared later this year.

Infrastructure

The Maoling Project is located in the highly industrialized Liaoning province in Northeastern China, and boasts a high level of existing infrastructure. Access to the property is straightforward by means of existing paved highways and roads. Water, power and communications services are also readily available from nearby sources. Because of the additional power and transportation requirements of the mining project, the Study has accounted for the building of an 18 kilometre 66kV high-tension power line from the nearest electrical sub-station together with road upgrades close to site.

Capital Costs

Pre-Production capital expenditures for the development of the Maoling project are detailed in the following table:



----------------------------------------------------
Total
Area (US$ millions)
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----------------------------------------------------
Direct Costs
Mine 30.1
Mill and Site 95.4
Tailings Facility 16.9
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Total Direct 142.4
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Indirect Costs
Project Indirects 51.7
Owner's Costs 10.0
Contingency (15%) 30.9
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Total Indirects 92.6
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----------------------------------------------------
Total Project 235.1
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Note: According to AMEC classifications this capital
cost estimate has an accuracy of +/- 25%


SENSITIVITY ANALYSIS

An analysis of Study results shows that the project is most sensitive
to the price of gold and the grade. Project sensitivities are
summarized in the following table:

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Pre-tax Pre-tax
Pre-tax NPV @ 0% NPV @ 5%
IRR (%) (US$ millions) (US$ millions)
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Base Case 17.7 244 134
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Gold Price or Grade
+ 10% 24.3 347 210
- 10% 10.7 141 57
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Cash Operating Cost
+ 10% 14.5 195 98
- 10% 20.8 293 169
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Capital costs
+ 10% 14.4 215 107
- 10% 21.6 273 160
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PROJECT OPPORTUNITIES

The Company sees the following opportunities to enhance the economics of the project for the final feasibility study:

Reserve Expansion

- The Study has only considered the tonnes in the Indicated Resource category in Maoling's Zone 1 area as calculated by AMEC in late 2004. In addition, Zone 1 and Zone 4 have an aggregate Inferred Resource of 183 million tonnes grading 0.9 grams gold per tonne (5.1 million ounces) using the 0.50 grams gold per tonne cut-off grade. Since these resource estimates were generated the Company has continued its drilling programs to both convert Inferred to Indicated Resources and to expand the resource base. The potential exists therefore to add significantly to the reserve base of the project.

Operating Costs

- Consumables used in the Study are priced at Chinese, North America and global purchase rates. With additional research, firm Chinese pricing on more of the consumables may be obtained and used to lower operating costs.

- Further metallurgical testing to optimize reagent consumption, metallurgical recoveries and grind size could result in lower processing costs.

- Lower-cost flowsheet options could result from bench scale tailings detoxification testing.

- A re-examination of potential tailings impoundment sites using high-resolution satellite imagery with topographic contouring to within +/-1 metre could result in the identification of a more efficient tailings disposal site.

- On-going geotechnical studies could result in the steepening of the high-wall angle of the pit, thus reducing the amount of waste required to be mined.

Capital Costs

- Peak demand for mining equipment by the project could be met by the use of contract mining. This could reduce the size of the mining fleet required and reduce capital costs accordingly.

- Capital items are priced with a ratio of approximately 40% North American, 40% global and 20% Chinese price levels. With further research, sourcing of a larger percentage of capital items in China could result in reduced capital costs.

- The identification of a tailings impoundment facility closer to the mine site could lead to reduced capital costs of this facility.

DEVELOPMENT PLANS

The Company has already commenced field work for Zone 1 final feasibility studies. The results of the final feasibility study are expected in mid 2006 and will form the basis of a development decision for Maoling.

The Company and its consultants are compiling resource reports in Chinese that will be used by the authorities in the next stage of permitting for Maoling and will shortly commence preparation of the Environmental Impact Assessment.

CONFERENCE CALL

The Company will host a conference call to discuss the results of the pre-feasibility study and its future plans on June 15, 2005 at 8 am PST (11 am EST). The live conference access number is (973) 935-2100 and a recording of the call will be available thereafter until June 22, 2005 by calling (973) 341-3080 and entering code 6166954. The call and its recording will be webcast, accessible through a link from the Company's website at www.mundoro.com.

Reserves in the Study were prepared under the direction and oversight of Mr. Mark Pearson P.Eng. of Vancouver, BC, an 'Independent Qualified Person' as defined by National Instrument 43-101. Resource estimates included in this release were also prepared by AMEC, under the direction and oversight of S. Lomas, P.Geo. of Vancouver, BC, also an 'Independent Qualified Person' as defined by National Instrument 43-101. A full report on the Study will be filed on the SEDAR system within 30 days, and will be available for viewing at www.sedar.com.

About Mundoro Mining Inc.

Mundoro Mining Inc. is a well-financed resource company focused on the exploration and development of the large-scale, pre-feasibility stage Maoling gold deposit in Liaoning Province, China. The Company has a 79% interest in the project through a Sino-Foreign co-operative joint venture with the corporate arm of the Liaoning provincial government, and has been aggressively exploring the 20 square kilometer exploration license area. Thus far, two deposits that outcrop at surface have been outlined at Maoling in which disseminated, free-milling gold mineralization occurs within a sequence of altered phyllitic metapelite to meta-siltstone with 3-5% disseminated sulphide mineralization.

The statements herein that are not historical facts are forward-looking statements. These statements address future events and conditions and so involve inherent risks and uncertainties, as disclosed under the heading "Risk Factors" in the company's periodic filings with Canadian securities regulators. Actual results could differ from those currently projected. The Company does not assume the obligation to update any forward-looking statement.

The pre-feasibility described herein was prepared to broadly quantify the Maoling Zone 1 deposit's capital and operating cost parameters, and to further the development of the project. It was not prepared for use as a valuation of the deposits, nor should it be considered to be a final feasibility study. The information contained in the Study reflects various technical and economic conditions at the time of writing that can change significantly over relatively short periods of time. There can be no assurance that the potential results contained in the Study will be realized.

The TSX has neither approved nor disapproved of the information contained herein.

Contact Information

  • Mundoro Mining Inc.
    Colin H. McAleenan
    Chairman and CEO
    (604) 669-8055
    or
    Mundoro Mining Inc.
    Cyrus Ameli
    Vice President, Communications
    (604) 669-8055
    (604) 669-8056 (FAX)
    info@mundoro.com
    www.mundoro.com