TORONTO, Aug. 25, 2011 /CNW/ - Anaconda Mining Inc. ("Anaconda" or "the Company") - (TSX: ANX) is pleased to provide an update on the performance of the Pine Cove mine, located on the Baie Verte Peninsula, Newfoundland, for the months of June and July. Pine Cove sold nearly 1,900 ounces generating over $2.8 million in revenue and nearly $514,000 in EBITDA. The following table summarizes selected operating and financial results for the two-month period.

President and CEO, Dustin Angelo, stated, "The Pine Cove mine is generating cash on a consistent basis and the Company expects this trend to continue. For June and July, we have already sold nearly 1,900 ounces and we expect to have another record quarter for gold sales volume and revenue. The rising price of gold has been beneficial, especially in August where we have sold our production at $1,650 to $1,850 per ounce. Near term plans are in place to increase recovery, which will continue to drive down unit costs, further increasing cash flow. With operations now performing consistently, attention has been turned to exploration activities. Our recently announced drill program exceeded expectations. We have engaged a geophysical consultant and a structural geologist to advance the significant exploration potential that exists at Pine Cove in an effective and methodical manner."

The financial results above are not presented on a consolidated basis to include activities in the subsidiaries associated with the Chilean iron ore assets. The amounts only represent activities accounted for at the Pine Cove and corporate level.  All amounts are in Canadian dollars unless stated otherwise. The financial and operating results are unaudited and subject to adjustment.

Overall mill recovery:

During June and July, overall mill recovery was in the mid 70% range primarily due to mechanical difficulties with the No. 1 drum filter. In May, the Company ordered two new, refurbished drum filters from Tristar Ltd. in Buffalo, New York. The 2.5m X 3.0m rotary vacuum drum filters provide the first filtration step associated with the solids/solution separation that is required for the Merrill Crowe type gold processing. The current drums are wood over steel construction and have been used since Pine Cove began operating. During the past several months, the drum filters have been hampered by mechanical or operational availability. As a result, they have not been able to operate consistently in series to provide a re-wash for the slurry.  When operating in series, drum filtration can achieve recovery rates as high as 98% to 99%. Because the drum filter units had to be operated in single stage for periods of time during June and July, the average drum filter recovery was 91%.

Anaconda expects the new drum filters to be shipped by the end of August, 2011 and installed during the first two weeks of September. In addition to the drum replacements, the operations and maintenance staff are finalizing plans to use the one week, scheduled down-time to make other operational changes and maintenance repairs, which are not capital intensive, including;

• Modifications to the leach tanks, which include larger baffles and up-comer piping.
• Incorporate a fourth, existing leach tank into the leach circuit to allow for greater retention.
• Fabricate and install new pregnant solution tank with internal baffles to help fines settling.
• Replace liners and lifters in the primary grinding mill. These liners and lifters have been designed to serve a primary grind application versus the configuration currently in use, which is more suitable for a secondary grinding application.

The Company anticipates that the circuit changes and maintenance items will enable the Pine Cove mill to achieve recovery and throughput targets of 80% and 1,000 tonnes per 24-hour day, respectively, on a regular basis going forward.

Grade:

The average feed grade through the mill for June and July was 1.41 grams per tonne ("g/t") versus a projected feed grade of 1.78g/t. The variance can be attributed, in part, to pit dewatering activities. Pine Cove experienced higher than average rain fall during the months of June and July exceeding pumping capacity. The pit design allows mining to take place in the upper areas of the deposit during these situations but, as was the case in these particular months, the grade that was mined was lower than plan due to the distribution of the grade within the blocks. The implementation of additional dewatering capacity was fast-tracked providing additional protection in the future. These items include larger pumps, portable mine MCC with additional capacity and large diameter de-watering lines.

During the first half of August, feed grade increased approximately 4% (1.58 g/t) compared to July, which was 1.52 g/t. The pit area described in the paragraph above has been dewatered and partially excavated. The most recent feed grades in the last few days have been recorded at slightly above and below 2.00 g/t.

In addition to implementing increased dewatering capacity, mine technical staff continues to evaluate improvements in excavation techniques to maximize grade delivered to the mill. The initiatives include:

• A review of the actual mining sequence and geological structure control that may be present and identifiable.
• A series of tests to monitor blast movement in an effort to predict actual ore displacement within a particular blast and to compensate for such displacement.
• An evaluation of tools that can effectively determine actual ore location within a particular blast hole such as visual equipment and IP equipment.

The Company's budget for grade for fiscal year 2012 is 2.19 g/t and it was projected to rise steadily from 1.78 g/t at the beginning of the fiscal year to 2.64 g/t at the end. From June until October, it was budgeted to be no higher than 2.04 g/t at a weighted average of 1.95 g/t. Although Pine Cove is currently approximately 20% below planned feed grade for the first two months of the fiscal year, it expects to achieve its overall budget for the fiscal year.

Despite recent lower grades being realized, the Pine Cove mine has excavated more ore (confirmed by percussion blast hole assays) than its block model projected for the past seven months. For the period from January through July 2011, the blast hole assays suggest a 23% increase in gold content at a 7% less grade as compared to the block model.

Exploration update:

The Company continues to evaluate options to further its recent exploration success at the down dip extension to the north of Pine Cove's current operating pit. Because delineation of this new discovery requires a better understanding of the orientation of the zone (both its dip and strike) to plan additional drilling, geophysical and structural geologists have been engaged. The geophysical evaluation will include a review of archival data for this area of the mining lease followed by a plan to perform an IP survey. The structural geological evaluation, on the other hand, will focus on the existing deposit areas to look for and identify features that may help explain the physical location of this new zone and its likely orientation.

In addition, plans are being finalized to extract a sample from the other targeted gold zone in the area - Romeo & Juliet. The gold within this area is associated with quartz veining and has limited sulfide content so it is unlikely to need or benefit from flotation during processing.  Consequently, it requires metallurgical testing to determine the optimal processing methodology. The Company has initiated discussions with metallurgical consultants on a scope of sampling and testing required.

ABOUT ANACONDA

Headquartered in Toronto, Canada, Anaconda is a mining and exploration company focused on operating the Pine Cove gold mine located on the Baie Verte Peninsula in Newfoundland, Canada and advancing the exploration and development of its iron ore portfolio in Chile with its joint venture partner, Inversiones SBX Limitada.

FORWARD LOOKING STATEMENTS

This document contains or refers to forward-looking information. Such forward-looking information includes, among other things, statements regarding targets, estimates and/or assumptions in respect of future production, mine development costs, unit costs, capital costs, timing of commencement of operations and future economic, market and other conditions, and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to: the final approval of the private placement by the Toronto Stock Exchange; the grade and recovery of ore which is mined varying from estimates; capital and operating costs varying significantly from estimates; inflation; changes in exchange rates; fluctuations in commodity prices; delays in the development of the any project caused by unavailability of equipment, labour or supplies, climatic conditions or otherwise; termination or revision of any debt financing; failure to raise additional funds required to finance the completion of a project; and other factors. Additionally, forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as "plans," "may," "estimates," "expects," "indicates," "targeting," "potential" and similar expressions. These forward-looking statements, including statements regarding Anaconda's beliefs in the potential mineralization, are based on current expectations and entail various risks and uncertainties. Forward-looking statements are subject to significant risks and uncertainties and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and we assume no responsibility to update them or revise them to reflect new events or circumstances, except as required by law.