Dynasty Receives Positive Preliminary Assessment Report On Zaruma Gold Project

Dynasty Receives Positive Preliminary Assessment Report On Zaruma Gold Project

July 12th, 2006

Vancouver, BC, July 12, 2006 - Dynasty Metals & Mining Inc. (TSXV: DMM, the “Company”) has received a positive Independent Preliminary Assessment on its Zaruma Project, in El Oro Province, Ecuador.

The Independent Preliminary Assessment (the “Preliminary Assessment”) by W. J. Holly, MAustIMM FFin, concludes that there is potential for the development of a profitable mining operation at the Company’s 100% owned Zaruma Gold Project 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”).

Highlights from the Preliminary Assessment are summarized in Table 1, below, and include a one year payback, and pre-tax undiscounted cash flow of US$467 million, yielding an annualized internal rate of return of approximately 116% over a 14.5 year mine life. Annual gold production is expected to be approximately 100,000 ounces.

Table 1 - Highlights of Mining Operations (Stages 1 and 2 Combined)

Gold Price Used


Gold Recovered

1,534,305 ounces

Total Mined Resources (undiluted)

4,084,700 tonnes

Mine Life

14.5 years

Total Direct Capital Costs*


Approximate Payback Period

1 year

Annual Production (15% dilution)

250,000 tonnes

Metallurgical Recovery (gold)


Operating Cost Per Gold Ounce


Operating Cost Per Tonne of Ore (15% dilution)


Total Revenues


Total Operating Cost (15% dilution)


Operating Surplus**


Internal Rate of Return**


*Includes site preparation and mine development, a 250,000 tonnes per annum (“tpa”) mill and treatment plant and infrastructure.

**Undiscounted, before taxes, and after a 3% royalty in the approximate aggregate amount of US$23 million (the Company recently announced that it has secured an option to purchase this royalty for US$6 million). 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 provincial mineral royalties.

As required by NI 43-101, it should be noted the estimates contained in this news release are preliminary, and that inferred gold resources of 691,600 ounces shown as recovered in Stage 2 mining operations, 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.

Company Comment

Company President, Robert Washer, commented: “The results of the Preliminary Assessment are very encouraging. We intend to complete a feasibility study and put the project into production as soon as possible.

“It should be noted that the resources used in the Preliminary Assessment underlie less than 3% of the project’s surface area. We believe there is good potential to discover additional resources along strike and down dip.

“We have now received positive preliminary assessments on two of our principal projects in southern Ecuador. In addition, we recently announced an initial estimate of resources at a third. Ecuador is an under-explored, mineral-rich country, as evidenced by our discoveries and those recently made by Aurelian Resources Inc. and others. To the best of our knowledge, we are the largest concession holder in southern Ecuador. We will continue our aggressive exploration and development activities to realize the full value of our holdings.”

Preliminary Assessment Overview

The Preliminary Assessment contemplates underground mining in two stages, using a flotation concentrator with a Merrill Crowe or carbon-in-pulp plant.

In Stage 1 it is estimated that 2,393,700 tonnes of ore, currently classified as “measured and indicated” project resources, will be recovered using an uphole bench retreat, narrow vein mining method over an initial mine life of 10.5 years. The preliminary estimate of mineable resources represents 96% of the Company’s total estimated measured and indicated resources (see Table 2, below). It should be noted that the Company’s initial metallurgical studies indicate the presence of silver, copper and lead and it is expected that these metal credits will make a contribution toward mining costs, although no such contribution is included in the Preliminary Assessment.

In Stage 2 it is estimated that an additional 1,691,000 tonnes of ore will be recovered from 50% of the current estimated project inferred resource and that the life of the mine will be extended by four years. Further exploration and development work will be required in order to confirm the Stage 2 mineable resources. Highlights of the operation (Stages 1 and 2 combined) are set out in Table 1, above. The basic economics for the individual stages are set out in Appendix A to this news release.

Details of the Preliminary Assessment

The Zaruma Project comprises 44 concessions covering a total area of 10,273.07 hectares in a readily-assessable region of southern Ecuador. The project is located in the cantons of Zaruma and Portovelo, Province of El Oro, Ecuador and is centred at 03º 41’20” south latitude and 79º36’31” west longitude. A majority of the concessions are subject to a 3% royalty that the Company has the right to purchase for $US6 million (although the full cost of the royalty is reflected in the Preliminary Assessment).

Project Resources

Initial Zaruma resources estimates were completed by Allen J. Maynard BAppSc(Geol), MAIG, MAusIMM, who is an independent “qualified person”, as defined by NI 43-101. Mr. Maynard’s report (the “Maynard Report”), dated October 21, 2005, has been filed on SEDAR and available for viewing atwww.sedar.com. Table 2, set out below, is a summary of the Maynard Report.

Table 2 - Estimated Mineral Resources at Zaruma



Measured Resource





Indicated Resource





Inferred Resource





Following receipt of the Maynard Report, the Company commissioned Mr. Holly to prepare a preliminary assessment of the mining and treatment of the mineral resources of the Zaruma Project.

Preliminary Zaruma Project Mine Plan

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 Zaruma, using detailed development plans and slices at approximately 15 vertical intervals, was incorporated with old development plans and long sections of the ore bodies, which resulted in the planning of an underground mine using an uphole bench retreat, narrow vein mining method. Two successive mining stages are planned, with Stage 1 expected to run approximately 10.5 years, and Stage 2 an additional four years. Stage 2 depends on the successful upgrading of a minimum of 50% of the known project inferred resource.

The principal components of the two stages of the mine plan are as follows:

Stage 1 Mining

Mine and treat 2,393,700 tonnes of ore from underground over 10.5 years, at a production rate of 250,000 tpa, from the measured and indicated resources shown in Table 2, above.

Stage 2 Mining

Mine and treat 1,691,000 tonnes of ore from underground over four years, at a production rate of 250,000 tpa, from 50% of the inferred resources shown in Table 2, 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 Zaruma Project Economics

The basic economics for the Stage 1 Zaruma underground mine, as estimated in the Preliminary Assessment, are set out in Appendix A to this news release. It has been assumed that 15% dilution of the ore at zero grade will be experienced 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 in Appendix A.

The Preliminary Assessment also endorses an estimate by Brian Speechly that approximately 50% of the project inferred resources (see Table 3, 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 10.5 year plan and extending the mine life by four years (see Appendix A).

Table 3 - Inferred Resources


50% Inferred Resource





Quality Control and Assurance

A technical report, complying with the requirements of NI 43-101, in respect of the Preliminary Assessment will be filed and available for inspection shortly at www.sedar.com. The preparation of the technical information contained in this news release was supervised by Greg Whitfield, the Company’s Exploration Manager and a “qualified person” as defined in NI 43-101.

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.

About the Company

Dynasty Metals & Mining Inc. is a Canadian-based mining company involved in the exploration and development of mineral properties in Ecuador. The Company has two advanced-stage projects, Jerusalem and Zaruma, and a highly prospective exploration project, the Dynasty Copper-Gold Belt, which includes the Dynasty Goldfield.

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.