War Eagle Mining Company Inc.

War Eagle Mining Company Inc.

July 14, 2010 09:30 ET

War Eagle Proposed Investment in Chihuahua Project

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 14, 2010) - War Eagle Mining Company Inc. (TSX VENTURE:WAR) ("War Eagle" or the "Company") announced on June 30, 2010 that it had closed the first tranche of a private placement; the second tranche is expected to close on or about July 15, 2010. This news release provides more information concerning the primary use of proceeds of the private placement. As previously disclosed in the Company's June 17 and 30, 2010 news releases, War Eagle intends to acquire a minority interest in a private company that has negotiated the acquisition of a Chihuahua, Mexico-based mineral property.

The private company, Andromeda Resources Inc. ("Andromeda"), which is at arm's length from War Eagle, has negotiated an agreement to purchase the Terrazas zinc-copper property ("Terrazas") for cash consideration of US$5,000,000 payable in installments over two years and a 2.0% NSR, sliding up to 3.0% at $2.00/lb zinc. The Terrazas zinc-copper property is located near Chihuahua city in Mexico.

The Terrazas property was previously optioned to Constellation Copper Corporation ("Constellation"), but ownership reverted to the underlying owner in 2008. The following summary about Terrazas is based on information obtained from Constellation's public filings, which are available at www.sedar.com under Constellation's profile. War Eagle cautions that it has not verified the information contained in these filings and the information in such filings is noted for reference only and does not form part of War Eagle's disclosure record.

Over an eight-year period, Constellation expanded and improved the categorization of the geologic resource and in 2005 published an NI 43-101 technical report that defined an overall resource consisting of measured and indicated resources of 85.6 million tonnes at 1.24% zinc and 0.32% Cu. More significantly, the technical report identified a discrete high grade zone, known as Cerro Verde within that resource that consists of measured and indicated resources of 24.6 million tonnes at 2.97% zinc and 0.28% Cu; an inferred resource of 3.5 million tonnes of 5.0% zinc underlies the Cerro Verde high grade zone. All resources are almost entirely comprised of oxide minerals of zinc and copper.

Andromeda plans to expand on Constellation's work, which Andromeda considers to be of high quality. Andromeda expects, over a period of two to four years, to generate a feasibility study and to advance the project toward production. In addition to the resource at Terrazas, there are several oxide zinc and smelter slag resources in Chihuahua and neighbouring states that could benefit from the presence of a treatment plant at Terrazas, not the least of which is War Eagle's Tres Marias project. Compatibility of other ores with the proposed process at Terrazas has not yet been examined. The project site, close to the city of Chihuahua, has extensive infrastructure in place including railway, power, water and a nearby four lane-highway. It is expected that this will allow for the low cost transport to site of other ores and slags together with the raw materials for the possible manufacture of low cost acid on site. 

War Eagle has invested $1,000,000 in Andromeda and currently owns approximately 17% of Andromeda, although it may be diluted if Andromeda raises money from other sources. Readers are cautioned that there is considerable risk associated with the investment in Andromeda and Andromeda's plans to finance and construct a processing plant at the Terrazas project.

About War Eagle

War Eagle Mining Company Inc. is an experienced mineral exploration company publicly traded since 1987 and listed on the TSX Venture Exchange under the symbol WAR. The Company is in the exploration phase of the Tres Marias zinc-lead project in Mexico. Tres Marias is a former producing high-grade zinc and germanium mine that first produced ore in 1949.

This news release was prepared by management of War Eagle, which takes full responsibility for its contents.

Legal Notice Regarding Forward Looking Statements

This disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control including: the impact of general economic conditions in the areas in which the Company operates, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with mining operations, therefore the Company's future results, performance or achievements could differ materially from those expressed in these forward-looking statements will transpire. All statements included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include references to a future drill program and related plans. These statements are based on assumptions made by the company based on its experience, perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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