Primary Metals Inc.
TSX VENTURE : PMI

Primary Metals Inc.

March 29, 2007 19:12 ET

Primary Metals Announces Increased NI 43-101 Resource Estimates for Panasqueira Tungsten Mine

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 29, 2007) - Primary Metals Inc. (TSX VENTURE:PMI) ("Primary" or the "Company") is pleased to announce the completion of new resource estimates for its 3,000 tonne per day Panasqueira tungsten mine operating in Portugal. The 2007 figures result in an increase in reserves and resources and an increase in grade compared to the 2006 estimates (see News Release dated June 23, 2006 and Technical Report filed on www.sedar.com in August 2006).

The total Proven and Probable Reserve estimate has increased to 2.43 million tonnes with a grade of 0.243% WO3 (tungsten trioxide) compared to the 2006 estimate of 1.39 million tonnes with a grade of 0.233% WO3. This shows an increase of one million tonnes together with a small increase in the tungsten grade of the reserves. The Proven and Probable Reserves estimates combined with the Indicated Resource estimates total 5.13 million tonnes, an increase from the 4.65 million tonnes estimated in 2006. The proven and probable reserves are sufficient to provide feed to the process plant for four years at the current operating rate of 600,000 tonnes per year, assuming tungsten prices near current levels or higher and the indicated resources, if converted to reserves, would provide a further 4.5 years of plant feed. All of the reserves are accessible from existing workings; some of the resources will require additional mine development for access.

Estimated Proven and Probable Reserves total 2,430,000 tonnes at a grade of 0.243% WO3 (containing 590,000 MTU tungsten) with additional Indicated Resources of 2,700,000 tonnes at a grade of 0.277% WO3 and containing a further 748,000 MTU tungsten (1 MTU equals One Metric Tonne Unit or 10 kilograms of contained WO3. The mean quoted European price for tungsten is currently US$260 per MTU of WO3). In addition, there are a further 1.8 million tonnes of Inferred Resources with a grade of 0.224% WO3, as well as additional exploration potential.

Together, the Proven and Probable Reserves and Indicated Resources total 5,130,000 tonnes with a grade of 0.261% WO3 and contain 1,340,000 MTUs of tungsten trioxide.

"We have recently completed our new D9 development ramp between mine Levels 2 and 3 to start opening up the new reserves. The additional information resulting from this work has enabled upgrading of nearly one million tonnes of indicated resources to the Probable Reserve category," said Lewis Black, Chairman of the Company. "These new estimates, together with our recently announced plans to reduce mine costs and increase revenues, confirm our confidence in continuing to invest in the long term future of the Panasqueira mine. The presence of wolframite in the newly-developed D9 area of the mine opens a large under-explored area of Levels 2 and 3 from D9 all the way to the northern PanDeep area of the Panasqueira mine," he stated. "We also anticipate continued strength in tungsten prices."

These estimates are based on data available on January 1, 2007 and are compliant with National Instrument (NI) 43-101. They were prepared in conjunction with mine staff by David Gunning, P. Eng. of OreQuest Consultants Ltd. OreQuest is an independent consulting firm based in Vancouver, British Columbia with over 20 years of experience specializing in minerals exploration, production and evaluation and with extensive experience in all aspects of NI 43-101.

The reserve and resource estimates are summarized as follows:



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CIM STANDARD RESERVE CLASSIFICATION 2007
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RESERVE AND RESOURCE Contained
CLASSIFICATION Level Tonnes % WO3 WO3 (MTU)
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RESERVES
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Proven Reserves L2 113,461 0.262 29,701
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L3 354,871 0.254 90,043
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TOTAL PROVEN RESERVES 468,332 0.256 119,744
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Probable Reserves L3 D15 South 1,007,000 0.225 227,000
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L3 D15 North 954,000 0.255 243,000
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TOTAL PROBABLE RESERVES 1,962,000 0.239 470,000
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TOTAL PROVEN AND PROBABLE
RESERVES 2,430,000 0.243 590,000
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RESOURCES
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Measured Resources
(low grade) L2 17,000 0.090 1,500
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L3 153,000 0.095 14,500
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TOTAL MEASURED RESOURCES 170,000 0.095 16,000
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Indicated Resources L2 D15-D1 1,218,000 0.241 294,000
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L3 D15-D1 201,000 0.256 51,000
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PanDeep 1,280,000 0.315 403,000
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TOTAL INDICATED RESOURCES 2,700,000 0.277 748,000
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Inferred Resources L2 D15-D1 275,000 0.307 84,500
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PanDeep 305,000 0.218 66,500
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L4 1,230,000 0.207 254,000
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TOTAL INFERRED RESOURCES 1,810,000 0.224 405,000
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Notes:

All of the reserves and resources are based on a cutoff grade of 0.165%
WO3. All of the reserves and resources are fully diluted to a historical
mining height of 2.2 metres and are reduced by a factor of 84% which is the
extraction rate using the room and pillar method at Panasqueira. Reserves
in pillars are further reduced depending on the percentage available for
extraction. Areas of influence for drill holes are squares of 100 or 70
metres (with the drill hole at the center of the square) depending on the
vein thickness. Based on experience, indicated resources and probable
reserves defined by drilling are reduced by a factor of 60%, the factor is
40% for Inferred resources. Totals may not add due to rounding. Mineral
resources that are not mineral reserves do not have demonstrated economic
viability based on available information.


The Panasqueira mine has increased throughput dramatically in the last two years to capitalize on increased tungsten prices. This has come immediately after several years with minimal exploration and development in a time of low tungsten prices. The lack of development has resulted in reserves being mined before they are developed and lower than ideal head grades have resulted. In order to alleviate these problems, management initiated development and exploration programs in 2006 to ensure future production forecasts would be met.

Exploration in 2006 was conducted from surface to explore the southwest portion of Level 3 as well as infill underground drilling in the Panasqueira deep area from Level 1. Drilling in both campaigns has been successful in indicating resources. The new resources found in the southwestern part of Level 3 were almost completely extracted during the past year as this area has been the principal production area over the past few years.

Drilling from Level 1 in the northern area of the mine known as Panasqueira Deeps ("PanDeep") was also successful in indicating resources. Eleven holes were drilled vertically to fill gaps in historic data to depths of 60 metres. This program resulted in the expansion of the PanDeep resources from 874,000 tonnes of indicated resources at a grade of 0.267% WO3 with an additional 159,000 tonnes of inferred resources at a grade of 0.181% WO3 to 1.28 million tonnes of indicated resources at a grade of 0.315% WO3 with an additional inferred resource of 305,000 tonnes at a grade of 0.218% WO3.

The summer of 2006 saw the start of development of the D9 ramp, which has been driven from the Level 3 access ramp through to Level 2. A significant indicated resource of 1.16 million tonnes grading 0.283% WO3, was included in the 2006 estimates in this area of the mine in Level 3, most of which has now been converted to the probable reserve category with the exception of 200,000 tonnes which is located below the current ramp access.

About Primary Metals

Primary Metals Inc. owns a 100 percent interest in the Panasqueira tungsten mine in Portugal and is currently producing wolframite concentrates containing some 100,000 MTUs of tungsten trioxide per annum. The Panasqueira mine has a long history of production of high-quality wolframite concentrates and is the dominant producer of high-grade tungsten concentrates outside China. Further information is available at www.sedar.com and on the Company's website at www.primarymetals.ca.

In addition to operating the Panasqueira tungsten mine, the Company is assessing the potential of its nearby Argimela tin deposit and its Quinta/Banjas gold property, also located in Portugal.

On Behalf of the Board of Directors,

James Robertson, P. Eng., Director

David Gunning, P. Eng. and George Cavey, P. Geo. are Independent Qualified Persons for Primary Metals Inc. and have reviewed and approved the contents of this release. In accordance with NI 43-1014.2(1)(j) the estimates do not constitute a material change in respect to the affairs of the Company and there is not an obligation to file a Technical Report in connection with the disclosure herein.

The Panasqueira mine is in full production regularly shipping concentrates of tungsten trioxide to its customers. Specific Quality Control/Quality Assurance ("QC/QA") procedures such as those utilized in base or precious metal mines are not in place at the mine. Instead Panasqueira assesses the performance of the assaying facility and the scales used to measure weights by comparing the mine assays with the check assays completed by their customers. To date the customer assays and company assays have been similar which forms a reliable test of the production procedures related to QC/QA that are in place at the mine.

Certain of the statements made and information contained herein is "forward-looking information" within the meaning of the Ontario Securities Act or "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 of the United States. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation the company's expectations as to the results of planned work programs, potential mineralization, resources, reserves, mine production levels and future tungsten prices. Such statements are based on certain assumptions, including continued demand for tungsten, availability of capital, equipment and personnel to carry out and complete the planned work programs and accuracy within a reasonable range of reported exploration and development results, and involve various risks and uncertainties, including global economic factors, future commodity prices, lack of availability of equipment or personnel, and results of exploration and development. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Other important factors that could cause actual results to differ materially from the Company's expectations are disclosed under the heading "Risk Factors" and elsewhere in the Company's documents filed from time-to-time with regulatory authorities and on www.sedar.com.

The TSX Venture Exchange does not accept responsibility for the adequacy or the accuracy of this release.

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