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VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 26, 2011) - Hana Mining Ltd. (News - Market indicators)(FRANKFURT:4LH) (the "Company") is pleased to provide an update on the progress of the Banana Zone.
Following a recent board of directors meeting, Company management concluded on the following:
- That the 43-101-compliant resource model that was released in December 2010 may underestimate copper and silver grades at the Banana Zone. The Company is currently in the process of remodeling the resource estimate.
- The Company is carrying out an aggressive 50,000 metre infill drilling program, which is expected to be completed by the end of 2011. Management, in consultation with the Company's board of directors, believes that the next iteration of a 43-101-compliant resource estimate should include the results of this drilling program.
- The Company has decided that it would be prudent to postpone the completion of the PEA until a new updated 43-101-compliant resource estimate is completed for the Banana Zone. Work on the metallurgy at the Banana Zone, the Environmental Impact Assessment and regional exploration will continue.
Discussion of Management's Decisions:
On December 20, 2010 the Company released an updated resource estimate on the Banana Zone. At a copper cut-off grade of 0.30%, the Indicated mineral resources, all of which are at the Banana Zone, had an average grade of 0.93% copper and 13.39 g/t silver. Also, at a copper cut-off grade of 0.30%, the Inferred Resources at the Banana Zone had an average grade of 0.65% copper and 8.14 g/t silver. At a copper cut-off grade of 0.75% the Inferred Resources at the Banana Zone had an average grade of 1.10% copper.
For comparison, the April 2010 Inferred resource estimate at the Banana Zone had an average grade of 1.10% copper and 14.05 g/t silver, at copper cut-off 0.30%. At a copper cut-off grade of 0.75%, the Banana Zone had an average grade of 1.47% copper and 19.44 g/t silver. Therefore, the December 2010 Inferred Resource estimate had a copper grade which was 42% and 25% lower than the April 2010 Inferred Resource estimate at copper cut-off grades of 0.30% and 0.75%, respectively (Tables 1 and 2).
Table 1. Change in Copper Grade of Inferred Resources
|| Inferred Resource Estimate
|| Change in Cu Grade |
Table 2. Change in Silver Grade of Inferred Resources
|| Inferred Resource Estimate
|| Change in Ag Grade |
Given the significant difference in the copper and silver grades of the two resource estimates, the Company both internally, and through a third-party consultant, completed an extensive review on the December 2010 resource model. The consultant recently submitted the findings of this audit to the Company. The audit concluded that many of the parameters used in the December 2010 resource estimate may have not been appropriate. Therefore, based on this audit, management believes that it would be prudent that a new resource model be developed using parameters more suitable to the geometry of the Banana Zone deposit. Based on the results of this audit, it is the opinion of the Company that the actual copper and silver grades of the new resource estimate could be materially different from the December resource estimate.
Therefore, given that management has decided to calculate a new resource estimate, which will incorporate all of the results from the 2011 drilling campaign, the Company, in consultation with its board of directors, has concluded that it would be prudent to suspend the PEA until an updated resource estimate is calculated. This resource would be used to formulate a mine plan that maximizes the economics of the PEA.
Management believes that by postponing the PEA it can more fully assess all the mineralized areas within the Banana Zone. The current infill drilling program is focusing on the New Discovery, Northeast Fold and South Limb areas of the Banana Zone. The drilling program will also encompass drilling along strike and at depth so as to further evaluate the viability of underground mining.
Hana Mining's CEO and Chairman, Marek Kreczmer, commented as follows:
"Now that we have a better understanding of the geological model, going forward with the inclusion of the 50,000 metre infill drilling program, our expectations are of a positive, more accurate, resource model which reflects the unique geometry of the deposit more closely."
About Hana Mining's Ghanzi Copper-Silver Project in Botswana:
The Ghanzi Project is located in the center of the Kalahari Copper Belt in northwestern Botswana. The Ghanzi property covers 2,149 square kilometres, and contains sediment-hosted copper-silver deposits with a demonstrated cumulative tested strike length of 70 kilometres. This favorable geology extends over an estimated strike length of 600 kilometres. Hana Mining released results of its most recent NI 43-101 compliant resource estimate for the Ghanzi Project on December 20, 2010, announcing an Indicated mineral resource of 762 million pounds of copper and 16 million ounces of silver from 37.4 million tonnes at a grade of 0.93% copper and 13.4 g/t silver. All of the Indicated resources are from the Banana Zone. There are also Inferred resources of 5.6 billion pounds of copper and 85.4 million ounces of silver from 423.9 million tonnes. This Inferred mineral resource estimate consists of 225.4 million tonnes grading 0.64% Cu and 8.1 g/t Ag in the Banana Zone, 20.7 million tonnes grading 1.23% Cu and 8.7 g/t Ag in Zone 5, 16.7 million tonnes grading 0.86% Cu and 4.0 g/t Ag in Zone 6, and 161.1 million tonnes grading 0.45% Cu and 3.6 g/t Ag in the Chalcocite Zone; all at a cut-off grade of 0.30% Cu.
The Banana Zone exhibits certain areas of higher grade Cu and Ag mineralization, particularly between sections 49700 to 52000 on the North limb and sections 63000 to 71000 on both the North and South limbs, which represent an opportunity to locate starter pits and mine initial tonnages at higher than average grades. These higher grade pockets tend to be well within open pit depth parameters and represent opportunities to improve early cash flow and overall returns in development.
The project will benefit from proposed rail and power infrastructure expansions, along with proximity to local population centers and workforce. A feasibility study is currently underway (funded by the World Bank and the governments of Botswana and Namibia) to support completion of a rail line link that would connect Botswana with the Namibian port of Walvis Bay, on the Atlantic coast. The closest existing railhead to port is at Gobabis, in Namibia, approximately 550 km from our property. Construction has begun on the 600MW expansion of the government-owned Moropule Power Plant, having secured US$825 million project funding in May 2009. The Ghanzi Copper-Silver Project is currently accessed by the paved Trans-Kalahari highway, which passes within 15 km of the property.
The Ghanzi property is one of Africa's premier future copper-silver resources.
Statements in this press release, other than purely historical information, including statements relating to the Company's future plans and objectives or expected results, may include forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in resource exploration and development. As a result, actual results may vary materially from those described in the forward-looking statements.