Palladon Ventures Ltd.

Palladon Ventures Ltd.

October 24, 2005 14:43 ET

Palladon Ventures Ltd. Files Updated Technical Report on Iron Project

SALT LAKE CITY, UTAH--(CCNMatthews - Oct. 24, 2005) - Palladon Ventures Ltd. (the "Company") (TSX VENTURE:PLL) announces that it has filed a Technical Report compliant with NI 43-101 on the Comstock/Mountain Lion iron project near Cedar City, Utah. The technical report was prepared by Mr. Rick Russell, MSc., Geology, and is expected to be available on SEDAR by October 25. The report cites an historic iron resource estimate of 114,097,000 metric tonnes (mt) at an average grade of 40.8%. This total combines: historic estimates by Geneva on the Comstock/Mountain Lion area (25,031,000 mt at an average grade of 47% Fe) and the Rex deposit (89,066,000 mt at an average grade of 39.0% Fe with a 6.02 to 1 stripping ratio).

The most recent historic resource estimates reported by Geneva Steel determined that the measured iron resource in the Comstock/Mountain Lion portion of the district was estimated at 17,961,137 mt of iron-bearing rock averaging 53.4% Fe, and 7,070,000 mt of 'lean ore' averaging 31.3% Fe, with a total of 7,536,000 cu. meters of waste rock requiring removal in order to access all of the iron mineralization. The total of this occurrence is 25,031,000 mt averaging 47.1% Fe with a stripping ratio is 0.30 m3 to one. The precise date of this calculation is not known nor the system used to calculate it.

The most recent estimate performed on the Rex deposit was calculated in a 1991 study by Pincock, Allen & Holt for Cyprus Minerals. Originally drilled by CF&I between 1949 and 1962, a total of 203 vertical core holes were drilled, aggregating 60,000 m of which 14,300 m were chemically analyzed.

The author recommends that the Company perform the following activities over the next twelve months:

- Perform NI 43-101 compliant estimates to update and verify historic resource estimates on the Comstock/Mountain Lion and Rex iron deposits.

- Complete a series of 1-year and 5-year mining plans for the Comstock/Mountain Lion deposit and define areas in the deposit that will require additional drilling to validate, upgrade or possibly add iron resources for future extraction;

- Survey and sample various stockpiles of iron-bearing material on the property to delineate potential NI 43-101 compliant resources, and determine their economic viability.


These historic estimates by Geneva Steel and its predecessors do not conform to modern NI 43-101 standards and have not been verified by Palladon. Although Palladon believes the estimates to be reliable, the estimates are mentioned for reference only, and should not be considered reliable or accurate until updated studies and estimates are performed.

Mining Plan

A resource estimate completed by NorWest Mine Services, Inc. ("NorWest") in November, 2001, for Geneva Steel, estimated that the Comstock/Mountain Lion area contains 20,337,297 short tons averaging 51.6% Fe, not including any stockpiles. The author was not involved in the preparation of this study but considers the estimate to be reasonably accurate. The study was completed after February 1, 2001, the date on which NI 43-101 standards and guidelines were enacted, but is not included in historic resource calculations.

After reviewing the NorWest resource estimate, Mr. Russell used the study as the basis for a 12-month mining plan involving the planned extraction of a portion of the materials therein; approximately 1,300,000 mt of 55.33% Fe (Russell, 2005). The materials to be extracted in the mining plan are pre-stripped and lying in open benches in the open pit and have a minimal strip ratio. Mining costs, processing costs and shipping costs have all been quoted from reputable contractors and providers, along with port costs, and a contract to sell one million metric tonnes over the next 12 months has been executed. The mining plan is detailed in the Russell technical report.

Initial production will involve the mining of up to 1.3 million mt of iron-bearing material which will be processed into iron ore concentrates grading 68% iron. The mining plan described in the technical report defines blocks to be extracted in whole or in part during initial production. Palladon has selected Gilbert Development Corp ("Gilbert") of Cedar City, Utah, as the mining contractor at the Comstock/Mountain Lion iron deposit. Gilbert was the contract mining company for Geneva Steel for over 12 years before suspension of operations in 1995.

Palladon can cite no current mineral resources or mineral reserves on the project and has not performed a feasibility study. The Company has solicited a bid from NorWest, and is contemplating soliciting bids from other engineering firms, for the cost of updating and expanding the NorWest 2001 cost study, including the cost of updating the resource estimate in conjunction with a feasibility study which will provide more accurate data for long-term mine planning.

Palladon has chosen to commence production activities in order to generate cash flow during the present period of high iron ore prices. Palladon intends to perform additional work in the future to more fully delineate the iron deposit, and provide current resource figures compliant to modern NI 43-101 standards. Palladon also plans to build inventories with conforming materials to keep several years ahead of production.


Developing mineral deposits is dependent on a number of criteria, including the technical skill of the management team. The commercial viability of a mineral deposit is dependent on a number of factors including size, grade, and proximity to infrastructure, as well as metal prices. Palladon believes that the grade and quantity of iron ore on the project is sufficient to justify resumed mining and production, and states that risks include having inadequate materials of sufficient grade to mine, and that processing and recovery methods may not be successful.

Processing Plan

Metallurgical tests performed by Dawson Metallurgical Laboratories Inc. ("Dawson") of Salt Lake City have demonstrated the amenability of the iron ore to grinding and magnetic separation processing to produce a concentrate meeting customer specifications. Most of the assay work verifying the quality of the product was performed by Lerch Brothers Inc., of Hibbing, MN. Results of these tests conclude that a magnetite product containing at least 67% total iron may be produced from the relatively high-grade ore. Additional test work on this material has been recommended to determine the dewatering characteristics of the final concentrate and tailings. Dawson's study is presented in more detain in the Russell Technical report.

Moving Ahead

Palladon is moving ahead with efforts to put the Comstock/Mountain Lion iron deposit into production, fully aware of the risks of commencing production without a current feasibility study or updated resource estimate. The mining contractor has mobilized to prepare for full mining operations. Palladon has made arrangements with the port of Richmond, CA for loading of concentrates into its customer s ships, and is in final negotiations with Union Pacific Corp. to secure a transportation contract. Palladon is preparing pad sites for the new mill and magnetic separator, upgrading rail lines and power substations, and finalizing the new material handling facilities. Palladon plans to start production at the Comstock/Mountain Lion iron deposit in early 2006. The Company intends to provide an update to shareholders on progress with the project, to discuss parameters, risks, and capital requirements in advancing the project towards commercial production.

Palladon entered into a sales agreement with Chemetals Inc. on July 15, 2005, in which Palladon has agreed to sell Chemetals 1 million metric tones of upgraded iron concentrate grading 67% Fe during the next 12 months. As per the sales contract, the terms of the sale are confidential. Palladon expects that financial terms of agreement will provide for a significant operating margin to generate a cash flow during the first year of operation.

Qualified Person and Quality Assurance and control

Mr. R. H. Russell, M.Sc, Geology, who has over 36 years experience in the mining industry, is a Licensed Geologist in the State of Washington (#205), and is a member of S.E.G, is acting as the qualified person as defined in National Instrument 43-101 for the purpose of the technical release of information contained herein. Mr. Russell is an independent consultant and does not have any ownership or financial interest in Palladon Ventures Ltd.


Don Foot, President & Chief Operating Officer, Director

This summary is derived from the qualifying report prepared by Rick Russell, M.Sc, Geology, who served as the Qualified Person responsible for the preparation of the Technical Report as defined in National Instrument 43-101, Standards of Disclosure for Mineral Projects. Mr. Russell has consented to the information presented herein.

Some of the statements contained in this release are forward-looking statements, such as estimates and statements that describe Palladon's future plans, intentions, objectives or goals, including words to the effect that Palladon or management expects a stated condition or result to occur. Since forward- looking statements are not statements of historical fact and address future events, conditions and expectations, forward-looking statements involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated.

The TSX Venture Exchange has not reviewed and does not take responsibility for the adequacy or accuracy of the contents hereof.

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