PRELIMINARY ASSESSMENT REPORT RECOMMENDS
FINAL FEASIBILITY ON JERUSALEM GOLD PROJECT
Vancouver, BC, March 6, 2006 - Dynasty Metals & Mining Inc. (TSXV: DMM, the "Company") has received a positive Independent Preliminary Assessment on its Jerusalem Gold Project, in Ecuador.
The Independent Preliminary Assessment (the "Preliminary Assessment"), dated February 27, 2006, by W. J. Holly, MAustIMM FFin, concludes that there is potential for the development of a profitable mining operation at Jerusalem and recommends the commencement of a bankable feasibility study. Mr. Holly is an independent "qualified person", as defined in the Canadian Securities Administrators' National Instrument 43-101 ("NI 43-101").
Company President, Robert Washer, commented: "We are delighted that this independent assessment has found the Jerusalem project to be so financially robust. Our intention is to complete a feasibility study, including all required environmental assessments, and put the project into production as quickly as possible. This is the first of two such studies that we commissioned last year. We expect to receive a preliminary assessment on our Zaruma gold project shortly."
Preliminary Assessment Highlights
The Preliminary Assessment contemplates a two-stage mining operation. The treatment plant will comprise a gravity circuit to produce gold and a floatation circuit to produce a saleable, base-metal-rich concentrate with a Merrill Crowe or carbon-in-pulp plant.
In Stage 1 it is estimated that 964,798 tonnes of ore, currently classified as "measured and indicated" project resources, will be recovered through a combination of open pit and underground mining over an initial mine life of four years. The preliminary estimate of mineable resources represents 66% of the Company's total estimated measured and indicated resources (see Table 1, below). Further development and planning may justify the inclusion of additional project resources in the Stage 1 mine plan.
Highlights of the Stage 1 operation are:
- total mined resources: 964,798 tonnes
- total metal recovered: 406,632 ounces ("oz") gold ("Au"); 3,522,000 oz silver ("Ag"); 39,653 tonnes zinc ("Zn"); and 14,069 tonnes lead ("Pb")
- total direct capital costs: US$25,000,000, including site preparation and mine development, 300,000 tonnes per annum ("tpa") mill and treatment facility, and mining equipment
- cash operating cost per gold-equivalent ounce*: US$195 (open pit and underground combined)
- cash flow before taxes and royalty (undiscounted): US$150,000,000
In Stage 2 it is estimated that an additional 1,156,560 tonnes of ore will be recovered from 60% of the current project "inferred" resource and that the life of the mine will be extended by 4.5 years. Further exploration and development work will be required in order to confirm the Stage 2 mineable resources.
Highlights of the Stage 2 operation are:
- total mined resources: 1,156,560 tonnes
- total metal recovered: 427,619 oz Au, 3,755,610 oz Ag, 22,784 tonnes Zn, 4,858 tonnes Pb
- cash operating cost per gold-equivalent ounce*: US$181
- cash flow before taxes and royalty (undiscounted): US$147,000,000
* Gold-equivalent ounces are based on Au @ $500/oz, Ag @ $7.50/oz, Zn @ $1500/tonne, and Pb @ $900/tonne - all U.S. dollars.
Although it is not possible to determine project taxation at this time, the current Ecuadorian corporate income tax rate is 25%. There are no federal or province mineral royalties.
As required by NI 43-101 of the Canadian Securities Administrators, it should be noted the estimates contained in this news release are preliminary, and that inferred resources, in particular, are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. As such there is no certainty that the estimates contained in the Preliminary Assessment will be realized.
Details of the Preliminary Assessment
The Jerusalem Gold Project comprises a 100% Company-owned concession covering a total of 225 ha in the south-east of Ecuador, near the Peruvian border. The concession is located in the Sierra del Condor of the Ecuadorian Amazon region and is centred at latitude 04º 02' south and longitude 78º west. The concession is subject to a 1% net smelter royalty.
Project Resources
Initial Jerusalem resource estimates were completed by Allen J. Maynard BAppSc(Geol), MAIG MAusIMM, who is an independent "qualified person", as defined by NI 43-101 - see reports (collectively, the "Maynard Reports") by Mr. Maynard dated October 29, 2004 and December 22, 2004, filed on SEDAR and available for viewing at www.sedar.com.
Table 1, set out below, is a summary of the Maynard Reports.
Table 1
Estimated Mineral Resources at Jerusalem
| Category |
Tonnes |
Au
g/t |
Au
ozs |
Ag
g/t |
Ag
ozs |
Pb
% |
Pb
t |
Zn
% |
Zn
t |
Measured
| 602,300
| 12.4
| 239,730
| 90
| 1,760,400
| 0.66
| 3,940
| 2.79
| 16,810 |
 |
Indicated
| 864,400
| 12.4
| 345,370
| 95
| 2,627,700
| 0.55
| 4,690
| 2.57
| 22,210 |
|
Inferred
| 1,927,600
| 11.5
| 710,130
| 101
| 6,276,470
| 0.42
| 8,050
| 1.97
| 37,840 |
Following receipt of the Maynard Reports, the Company commissioned Mr. Holly to prepare a preliminary assessment of the mining and treatment of the mineral resources of the Jerusalem Gold Project, contained within the high-grade gold veins in the porphyries of the Sierra del Condor metamorphics.
Preliminary Jerusalem Mine Plans
The economic evaluation contained in the Preliminary Assessment is based on mine plans prepared principally by Brian Speechly, a director of the Company, who is a Fellow of the Australasian Institute of Mining and Metallurgy and a "qualified person" as defined in NI 43-101, and mill designs prepared by Keith Dodd & Associates, who are mechanical engineers and independent "qualified persons", as defined in NI 43-101.
The evaluation of total mineral resources in Jerusalem, using over 100 bench and level plans, resulted in the planning of three open pits - the Teniente, Macas and Loayza pits. Two successive mining stages are planned, with Stage 1 expected to run approximately four years and Stage 2 for an additional 4.5 years. Stage 2 depends on the successful upgrading of a minimum of 60% of the known project inferred resource.
The principal components of the two stages of the mine plans are as follows:
Stage 1
Mine and treat 964,798 tonnes of ore from open pits and underground at an approximate production rate of 250,000 tpa from the following resources:
- Open Pit Mining Resources (measured and indicated) of 379,000 tonnes at an average grade of 9.9 g/t Au, 143 g/t Ag, 1.01% Pb and 3.35% Zn; and
- Underground Mining Resources (measured and indicated) of 585,798 tonnes at an average grade of 15.2 g/t Au, 94.5 g/t Ag, 1.7% Pb and 4.6% Zn.
Stage 2
Mine and treat 1,156,560 tonnes of ore from underground over 4.5 years at a production rate of 250,000 tpa from 60% of the inferred resources given in Table 1, above.
The Preliminary Assessment recommends that exploration drilling and sampling continue in order to determine potential new resources from veins in the northern sector of the property and from extensions of known veins. No such additional resources are included in the economic evaluation.
Preliminary Estimated Jerusalem Project Economics
Stage 1 Open Pits
The basic economics for the Stage 1 Jerusalem open pit mining, as estimated in the Preliminary Assessment, are set out in Table 2 below. It has been assumed that a dilution factor of 15% of the ore tonnage will occur during open pit mining. For the purposes of the Stage 1 open pits basic project economics assessment, this dilution has been added to "Treatment" and "Administration" costs, as shown below.
Table 2
Basic Economics of Jerusalem Stage 1 Open Pit Resources
(all amounts in U.S. dollars)
Estimated Revenue - Open Pits |
Ore Tonnage
| 379,000
|
|
Grade Gold (g/t)
| 9.9
|
Ounces Gold
| 120,632
|
Recovery % Au
| 87
|
Gold Revenue @ $500/oz
| $52,475,000
|
|
Grade Silver (g/t)
| 143
|
Ounces Silver
| 1,742,000
|
Recovery % Ag
| 68
|
Silver Revenue @ $7.50/oz
| $8,887,000
|
|
Grade Zinc %
| 3.35
|
Tonnes Zinc
| 12,697
|
Recovery % Zn
| 65
|
Zinc Revenue @ $1500/tonne
| $12,379,000
|
|
Grade Lead %
| 1.08
|
Tonnes Lead
| 4107
|
Recovery % Pb
| 65
|
Lead Revenue @ $900/tonne
| $2,403,000
|
|
TOTAL REVENUE
| $76,140,000
|
|
Estimated Costs - Open Pits
|
|
Mobilisation & Site Establishment
| $5,000,000
|
Mining @ $5/bcm
| $28,495,000
|
Treatment @ $12/t ore (plus 15% dilution)
| $5,230,000
|
Administration @ $10/tonne of ore (plus 15% dilution)
| $4,359,000
|
|
TOTAL COSTS
| $43,080,000
|
|
OPERATING SURPLUS - Stage 1 Open Pits (before taxes and royalty, without discount)
| $33,000,000
|
|
Stage 1 Underground Mine
The basic economics of the underground mine are estimated in Table 3. It has been assumed that 15% dilution of the ore at zero grade will be incurred during mining. For the purposes of the Stage 1 basic underground mine economics assessment, this dilution has been added to "Mining", "Treatment" and "Administration" costs, as shown below.
Table 3
Basic Economics of Jerusalem Stage 1 Underground Resources
(all amounts in U.S. dollars)
Estimated Revenue - Stage 1 U/ground |
Ore Tonnage
| 586,000
| |
Grade Gold (g/t)
| 15.2
|
Ounces Gold
| 286,000
|
Recovery % Au
| 87
|
Gold Revenue @ $500/oz
| $124,572,000
|
Grade Silver (g/t)
| 94.5
|
Ounces Silver
| 1,780,000
|
Recovery % Ag
| 68
|
Silver Revenue @ $7.5/oz
| $9,080,000
|
Grade Zinc %
| 4.6
|
Tonnes Zinc
| 26956
|
Recovery % Zn
| 65
|
Zinc Revenue @ $1500/tonne
| $26,282,000
|
Grade Lead %
| 1.7
|
Tonnes Lead
| 9,962
|
Recovery % Pb
| 65
|
Lead Revenue @ $900/tonne
| $5,828,000
|
|
TOTAL REVENUE
| $165,500,000
|
|
Estimated Costs - Stage 1 U/ground
|
|
Mining @ $50/tonne of ore - diluted 15%
| $33,695,000
|
Treatment @ $12/tonne of ore - diluted 15%
| $8,087,000
|
Administration @ $10/tonne of ore - diluted 15%
| $6,739,000
|
|
TOTAL COSTS
| $48,500,000
|
|
OPERATING SURPLUS Stage 1 - Underground (before taxes, and royalty, without discount)
| $117,000,000
|
|
Stage 2 Underground Mine
The Preliminary Assessment also endorses an estimate by Brian Speechly and Greg Whitfield that approximately 60% of the project inferred resources (see Table 4, below) will become reserves as underground mine development proceeds. On this basis, the Preliminary Assessment contains an evaluation of the economics of a Stage 2 underground mining operation, commencing after the initial four year plan and extending the mine life by 4.5 years (see Table 5, below).
Table 4
Inferred Resources
| Resource |
Tonnage (t) |
Gold (g/t) |
Silver (g/t) |
Zinc (%) |
Lead (%) |
Inferred
| 1,927,600
| 11.5
| 101
| 1.95
| 0.42
|
60% of Inferred
| 1,156,560
| 11.5
| 101
| 1.95
| 0.42
|
Table 5
Possible Economics of Stage 2 Inferred Resources
(all amounts in U.S. dollars)
60% of Inferred Resources |
Estimated Revenue - Stage 2
|
|
Ore Tonnage
| 1,156,560
|
|
Grade Gold (g/t)
| 11.5
|
Ounces Gold
| 427,619
|
Recovery % Au
| 87
|
Gold Revenue @ $500/oz
| $186,014,000
|
|
Grade Silver (g/t)
| 101
|
Ounces Silver
| 3,755,610
|
Recovery % Ag
| 68
|
Silver Revenue @ $7.5/oz
| $19,154,000
|
|
Grade Zinc %
| 1.97
|
Tonnes Zinc
| 22,784
|
Recovery % Zn
| 65
|
Zinc Revenue @ $1500/tonne
| $22,215,000
|
|
Grade Lead %
| 0.42
|
Tonnes Lead
| 4,858
|
Recovery % Pb
| 65
|
Lead Revenue @ $900/tonne
| $2,842,000
|
|
TOTAL REVENUE
| $230,200,000
|
|
Estimated Costs - Stage 2 U/ground
|
|
Mining @ $50/t ore - diluted 15%
| $57,828,000
|
Treatment @ USD12/t ore - diluted 15%
| $13,879,000
|
Administration @ USD10/t ore - diluted 15%
| $11,566,000
|
|
TOTAL COSTS
| $83,300,000
|
|
OPERATING SURPLUS - Stage 2 Underground (before taxes and royalty, without discount)
| $147,000,000
|
|
Quality Control and Assurance
Readers are cautioned that inferred resources are too speculative geologically to have economic considerations applied to them that would enable them to be categorised as mineral reserves, and, accordingly, there is no certainty that the Stage 2 underground mining operation, or the economics thereof, contemplated by the Preliminary Assessment will be realised.
A technical report complying with the requirements of NI 43-101 in respect of the Preliminary Assessment will be filed and available for inspection at www.sedar.com. The preparation of the technical information contained in this news release was supervised by Brian Speechly and Greg Whitfield, MSc, the Company's Chief Geologist, both "qualified persons" as defined in NI 43-101.
About the Company
Dynasty Metals & Mining Inc. is a Canadian based mining company focused on the exploration and development of mineral properties in southern Ecuador. It is currently working two development-stage gold projects, the Zaruma and Jerusalem projects, and a large discovery known as the Dynasty Copper-Gold Belt. Both the Zaruma and the Jerusalem gold projects contain independently-estimated gold resources, determined in accordance with the requirements of the Canadian Securities Administrators' National Instrument 43-101.
For further information about the Company, please contact Murray Oliver at (604) 687-0888 or info@dynastymining.com or visit the Company's website at www.dynastymining.com.
Dynasty Metals & Mining Inc.
Robert Washer, President and CEO
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
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