VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 1, 2012) - Magellan Minerals Ltd. (News - Market indicators)(OTCQX:MAGNF) ("Magellan") is pleased to announce the results of a positive Preliminary Economic Assessment ("PEA") on the Coringa gold project in northern Brazil. The PEA was prepared by Global Resource Engineering Ltd. ("GRE") and is based on the updated resource defined in the National Instrument ("NI") 43-101 compliant technical report dated May 2012.

Highlights

• PEA indicates an internal rate of return (IRR) of 33% for the project and a net present value (NPV) of $109.9 M at a 5% discount rate and assuming a gold price of $1,350 per ounce (all figures presented on an after-tax basis)
• Low initial capital cost of $64.5 M with a Life of Mine (LOM) total including sustaining capital of $115 M, and projected operating costs of $106/tonne milled
• Average gold production of 50,885 oz/yr at steady state, with LOM average cash cost of $531/oz, and a full cost including capital of $819/oz, over LOM
• Project payback of 2.9 years and LOM of 8.5 years from 750t/d underground gold mine with a process recovery of 93.5%
• Project economics using a current gold price of $1,720 per ounce indicate a project IRR of 52% and a NPV of $206.1 M at a 5% discount rate (all figures presented on an after-tax basis)
• The study was based on the May 2012 NI 43-101 compliant updated mineral resource estimate compiled using a 1g/t gold cut-off which outlined Measured & Indicated resources containing 561,000oz gold (3.2Mt @ 5.5g/t gold) and Inferred resources 534,000oz gold (5.5Mt @ 3.0g/t gold)
• The PEA included current Measured and Indicated resources and limited Inferred resources which will be upgraded in early 2013 through a planned drilling program in conjunction with a planned feasibility study. Typical mining dilution and recovery of 5% and 94% respectively were estimated and a 4gpt cut-off was used to produce a mine plan
• Given the robust economics of the PEA, the Company will commence a feasibility study and drill program in order to make a construction decision during Q4 2013.

MINERAL RESOURCES

The Coringa project is a shear-vein system, hosted in volcanic rocks from the Salustiano Formation (1.87 Ga), and in granites from the Maloquinha suite (1.86 to 1.88 Ga), located in the Tapajos Gold Province. The Mineral Resource estimate for the project was completed independently by GRE (see press release dated 22nd March 2012) using Magellan's exploration database available up to the 20th of December 2011.

The National Instrument 43-101 compliant resource estimate for each zone and category are summarised in Table 1 and 2.

Table 1: Coringa Mineral Resources, 1g/t Gold Cut - Off Grade (Undiluted)

Table 2: Coringa Mineral Resources, 2g/t Gold Cut - Off Grade (Undiluted).

NOTE: Mineral resources that are not reserves do not have demonstrated economic viability. An Inferred Mineral Resource is that part of a mineral resource for which quantity and grade can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. An Indicated Mineral Resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit.

I. MINING, PRODUCTION AND PROCESSING PLAN

The Coringa deposit is a narrow steeply dipping series of gold veins, located near good infrastructure, making it amenable to proven U/G mining and processing methods.

The overhand cut and fill mining method was selected for the PEA due to its ability to provide a high degree of grade control and lower pre-production development requirements. The method also allows for the backfilling of stopes throughout the mine life with a hydraulic tailings product, reducing surface tailings facility storage requirements.

A conventional Merrill Crowe milling circuit is the most attractive method for treating the Coringa ores. Metallurgical test work performed as part of the previous PEA on composite samples from the Serra and Meio blocks demonstrated that the ore is free milling producing laboratory gold recoveries of 99.0% and 97.7% respectively using this approach. For study purposes, assumed recoveries were 94% and 93% respectively.

II. OPERATING COSTS

Operating costs for the mine were based on cycle time calculations using Brazilian labour and productivities calculated by GRE. The mining method using slushers and stoper drills in the stope is somewhat labour intensive on a $/tonne basis, but benefits significantly from low dilution and high mining recovery on a $/oz basis. Plant operating costs were factored based on the plant design and GRE sources in Brazil. The calculated average mine operating cost was $106/tonne, which included mining, milling and G&A. Details are shown in the table below.

III. CAPITAL COSTS

The basis of the capital cost estimate was a 750 tpd Merrill Crowe plant operating in close proximity (22 km) to a paved road and a 138kV power line, with locally sourced material and labour where practical.

GRE developed the costs for each area shown in the table below, using a combination of equipment lists, design criteria, and equipment quotes, and included costs for indirect costs, contingency, owner's costs and working capital to determine the funding requirements for a commercial operation.

On this basis, the project requires $64.5M of preproduction capital expenditure, followed by $50.6M of sustaining capital for a LOM total capital cost of $115M.

IV. FINANCIAL ANALYSIS

Cost estimates for construction and operation of the project were based on estimates made in Q2 2012 Brazilian Reals and US dollars. Conversions were made using an FX rate of 2.03 R/US$. Estimates do not include inflationary factors or fluctuations in gold price or currency exchange.

Based on the cost inputs shown in the previous tables and the financial inputs shown in the table below, Coringa exhibits the strong financial characteristics of a robust project in a low political risk jurisdiction.

In terms of sensitivities to major project assumptions, the project is very robust and is still economic under any one of the following scenarios: either a gold price of US$1,000/oz, a capital cost increase of 50%, or an operating cost increase of 50%. The project NPV rises to $206M assuming a current gold price of $1,720 per ounce.

Sensitivity to gold price

Sensitivity to Operating and Capital Costs

V. FORWARD PLANNING

The PEA notes that, "The vein system is open both at depth and along strike. It is highly probable that the main vein system comprised of the three resource blocks used in the study is more or less continuous between areas. It is probable that this vein system also continues along strike beyond the extents of the current resource blocks. There is also good potential to encounter additional parallel vein structures within the exploration area held by Magellan as demonstrated by the Serra resource block."

Kevin Gunesch, Principal Mining Engineer with GRE and one of the main authors of the PEA, has advised Magellan that, "The results for the Coringa PEA study are excellent and that the 33% IRR compares favorably with other gold projects at a similar stage of development, especially in view of the significant contingencies included within the Coringa study."

John Kiernan, P.Eng., Magellan's VP Project Development, stated, "The robust economics shown in the PEA, indicate that Coringa is a project of merit and worth advancing expeditiously. The project has good margins, is located near infrastructure and in a mining friendly jurisdiction, and has the potential to generate significant cash flow and earnings for Magellan's shareholders in the near term."

Based on the results of the PEA, Magellan plans to advance the project through a feasibility study, which will include a drilling program to upgrade resources and condemnation drilling at the chosen plant infrastructure and tailings sites. A decision regarding construction/production will be made at the conclusion of the feasibility study, currently targeted for Q4 2013.

Full details of the Coringa PEA in the form of a National Instrument 43-101 technical report will be filed on SEDAR within 45 days.

Qualified Person

The Coringa preliminary economic assessment was prepared under the supervision of Mr. Kevin J. Gunesch a registered Professional Engineer in the state of Alabama (27448) and Principal Mining Engineer of Global Resource Engineering Ltd. (GRE), Christopher K. Chapman a registered Professional Engineer in the State of Colorado (40679) and Principal Mining and Civil Engineer of GRE and Daniel Duché a registered Professional Engineer in the State of Ohio (71889) and Senior Mining Engineer of GRE.

Mr. Gunesch is an "independent" and "qualified person" as such terms are defined in NI 43-101. Mr. Gunesch has reviewed and approved the comments of this press release.

John Kiernan P.Eng, Magellan's VP Project Development and a "qualified person" within the definition of that term in NI 43-101, has reviewed the technical information contained in this news release.

Magellan Minerals (News - Market indicators)(OTCQX:MAGNF) is a TSX Venture Exchange listed exploration and development company with two advanced gold properties in the Tapajos Province of northern Brazil. The Cuiu Cuiu project contains 100,000oz of gold in the Indicated category (3.4Mt @ 1.0g/t gold) and 1,200,000oz of gold in the Inferred category (31Mt @ 1.2g/t gold). The Coringa project contains Measured and Indicated resources of 561,000oz of gold (3.2Mt @ 5.5g/t gold) and Inferred resources of 534,000oz of gold (5.5Mt @ 3.0g/t gold).

Cautionary Statements

This preliminary assessment is preliminary in nature. It includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the results of the preliminary economic assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates:

This press release uses the terms "measured resources", "indicated resources", and "inferred resources" which are defined by the Canadian Institute of Mining, Metallurgy and Petroleum, and are required to be disclosed in accordance with Canadian National Instrument 43-101 (NI 43-101). The disclosure standards in the U.S. Securities and Exchange Commission's (SEC) Industry Guide 7 normally do not recognize information concerning "measured mineral resources", "indicated mineral resources" or "inferred mineral resources" or other descriptions of the amount of mineralization in mineral deposits that do not constitute "reserves" by U.S. standards in documents filed with the SEC. In addition, resource that are classified as "inferred mineral resources" have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an "inferred mineral resource" will ever be converted into reserves. Under U.S. standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Disclosure of "contained ounces" in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute "reserves" by SEC standards as in-place tonnage and grade without reference to unit measures. The requirements of NI 43-101 for identification of "reserves" are also not the same as those of the SEC, and reserves reported by the Company in compliance with NI 43-101 may not qualify as "reserves" under SEC standards. Accordingly, information concerning mineral deposits set forth herein may not be comparable with information presented by companies using only U.S. standards in their public disclosure.

This news release contains forward-looking statements. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. Particular risks applicable to this press release include risks associated with achieving production on the project within the parameters identified in the economic assessment, the ability of the project to generate significant cash flow to the company and earnings to the shareholders of the company. These statements are subject to risks due to regulatory, technical, economic and other factors. In addition there is no guarantee that additional exploration work will result in significant increases to resource estimates. The reader is referred to the Company's most recent annual and interim Management's Discussion and Analysis for a more complete discussion of such risk factors and their potential effects, copies of which may be accessed through SEDAR at http://www.sedar.com.

News Release #2012-18