DYNASTY PROVIDES UPDATE ON ECUADOR
GOLD PROJECTS
Vancouver, BC, August 18, 2009
- The management of Dynasty Metals & Mining Inc. (TSX: DMM,
"Dynasty" or the "Company") has recently completed a
thorough review of its operations and hereby provides the following update to
shareholders.
Zaruma Gold Project
The Zaruma Gold Project comprises 46 concessions located in the El Oro
Province of southwestern Ecuador.
The Company has mine development and plant operating permits to mine and
process materials from several concessions on which the Company conducted
exploration activities, the results of which are included in the gold
resources estimate (see Table 1). The Company will make application for
additional mining permits in the area as required and as new resources are
identified through exploration activities.
Processing Plant Commissioning
The Company has successfully commissioned all sections of its gold processing
plant at Zaruma, with the exception of the carbon stripping section where
gold, which has been absorbed into the carbon, is stripped and separated from
other constituent metals. Once the level of gold absorbed in the carbon has
reached capacity, the Company will commence the carbon stripping process and
pour its first gold bar, which is expected in the near future.
The plant is currently operating one eight hour shift during the day and is
processing lower grade material mined during the development of the declines
(see "Zaruma Mine Development Activities") in order to train a
sufficient number of employees in the operation of the plant so that it may
be operated twenty four hours a day. Training is being supervised by Trevor
McLoughlin, who was recently appointed the Project's new Plant Manager. Mr.
McLoughlin has 25 years of experience mining, commissioning and operating
gold plants and currently resides in Ecuador.
Minor completion and testing delays from previously announced time estimates
were primarily the result of a mechanical problem with the main power
generator, which has been resolved. Two additional generators are now installed
and operating which can be used to provide a back-up power source. The
Company is also reviewing several options to determine the most cost
effective way in which the plant can be connected to the main power grid.
Although the Company's current target for commercial production is 300,000
tonnes per annum ("tpa"), the installed capacity of the crushing
and conveying sections is in excess of one million tpa, the capacity of the
milling section is 800,000 tpa and the capacity of the wet (carbon absorption
and carbon stripping) section is approximately 400,000 tpa.
The design of the plant is such that additional tanks may be added in the
future to expand the wet section capacity firstly to 800,000 tpa and then to
one million tpa, while the modular design of the milling section allows for
the addition of a third ball mill to increase the milling section capacity to
one million tpa. The current estimated capital cost to upgrade the wet
section to 800,000 tpa is approximately US$2.5 million and to upgrade the
entire plant to one million tpa is less than US$5 million.
Robert Washer, the Company's President and Chief Executive Officer,
commented: "The Company's gold plant at Zaruma is a world class
processing facility, which was constructed on budget in a country that lacks
an infrastructure for large scale mining and a familiarity with modern plant
construction. We are extremely proud of this achievement."
Photographs of the Zaruma Gold Project will continue to be updated and are
available on the Company's website at www.dynastymining.com.
Zaruma Mine Development Activities
The Company continues with the construction of three declines, which are
approximately 15
kilometres or less from the processing plant, and is
carrying out further exploration activities to identify sites for new
declines. As expected, the material mined during the construction of the
declines is of lower average grade than the average grade set out in our
resources estimate. Such average grade should increase as Dynasty drives
closer to targeted resources, which reside at deeper levels.
The Company has implemented measures to address normal course start-up
challenges as well as certain extraordinary circumstances, including the
introduction of new mining legislation (see "Exploitation
Contract"), which have delayed the commencement of commercially viable
mining operations at Zaruma. Specifically:
- The Company has built its
own equipment repair and refurbishment workshop, which currently employs
approximately ten mechanics and fifteen other employees. Anthony
Cadorette, a US
citizen with thirty years experience repairing and refurbishing
underground mining equipment recently moved to Ecuador
and is now in charge of the workshop. The Company was required to do
this since there are no modern underground mining equipment workshops or
a sufficient amount of suitably qualified mechanics in Ecuador
who are able to adequately service the Company's underground mining
equipment.
- The Company has opened the
Dynasty School of Mines to train employees since there is a shortage of
qualified personnel to operate specialized underground mining equipment.
- The Company is now
accumulating larger inventories of commonly used mining supplies and
equipment spares as well as securing additional sources of supply to
avoid future delivery delays from outside the country.
- The Company has made recent
changes to its labour scheduling and mining procedures to increase
efficiency, which was affected by recent changes to the labour laws in Ecuador.
The Company's President has been in
Zaruma for the last month re-organizing the mine operations and has addressed
each of these problems. In addition, the Company recently hired Robert
Anderson, who has moved to Ecuador,
as project manager to oversee mine development. Mr. Anderson has in excess of
40 years of underground mining experience including fifteen years as the
owner-manager of an underground mining development contracting company based
out of Australia that
managed projects in Western
Australia and throughout the world. During this
time Mr. Anderson acted as lead manager on numerous underground mining
projects, the largest of which mined up to one million tonnes of material per
annum using narrow vein technology.
Both Mr. Anderson and Mr. Washer are working together to revise systems and
procedures to increase production and expedite development using existing
assets.
Mr. Washer further commented: "We believe it is only a matter of time
before we establish commercially viable operations. All of the prerequisites
are now in place and the remaining issues before us are well understood. We
are very pleased that Mr. Anderson has joined the Company as project manager
to help current management expedite and supervise the implementation of our
mine development plans."
Exploitation Contract
The Ecuador government continues to advise that the regulations, under which
the new Mining Act will be governed, are due for release in the near future. It
remains Dynasty's understanding that the regulations will set out the
framework in which exploitation contracts will be settled. As a result of
ongoing dialogue with members of the mining ministry and other government
officials, the Company is developing a discussion paper for presentation to
the government in order to expedite contract negotiations once the
regulations have been enacted.
Dynasty continues to work closely with government officials and regularly
apprise them of its progress and plans with respect to the Zaruma Gold
Project. The Company has not received any indication that such plans are at
risk as a result of probable government intervention or policy.
Cash on Hand
The Company currently has approximately $10 million on hand. Management
believes that such amount is sufficient to meet its primary objective, which
is to establish commercial production at Zaruma. The Company will require
additional cash resources in the future, either from future cash flows or
from financing, to meet other business objectives including the development
of other principal properties.
Other Projects
In addition to the near production Zaruma Gold Project, the Company owns the
advanced-stage Jerusalem Project, and a highly prospective exploration
project, the Dynasty Copper-Gold Belt, which includes the Dynasty Goldfield.
The combined resources estimate for the Company's three Projects is as
follows:
Table 1 - Combined Total Resources Estimate for
Dynasty Metals & Mining Inc.
Estimated
Gold
Resources
|
Tonnes
(000)
|
Grade
(g/t)
|
Measured
(ounces)
|
Tonnes
(000)
|
Grade
(g/t)
|
Indicated
(ounces)
|
Tonnes
(000)
|
Grade
(g/t)
|
Inferred
(ounces)
|
Dynasty
Goldfield
|
3,155
|
4.6
|
470,000
|
3,516
|
4.8
|
544,300
|
7,652
|
4.7
|
1,151,700
|
Zaruma
|
1,568
|
13.9
|
702,100
|
915
|
13.9
|
408,100
|
3,382
|
12.7
|
1,383,400
|
Jerusalem
|
602
|
12.6
|
239,730
|
864
|
12.5
|
345,370
|
1,927
|
11.5
|
710,000
|
Total
|
5,325
|
8.2
|
1,411,830
|
5,295
|
7.6
|
1,297,770
|
12,961
|
7.8
|
3,245,100
|
|
|
|
|
|
|
|
|
|
|
Estimated
Silver
Resources
|
Tonnes
(000)
|
Grade
(g/t)
|
Measured
(ounces)
|
Tonnes
(000)
|
Grade
(g/t)
|
Indicated
(ounces)
|
Tonnes
(000)
|
Grade
(g/t)
|
Inferred
(ounces)
|
Dynasty
Goldfield
|
3,155
|
35
|
3,560,200
|
3,516
|
38
|
4,340,000
|
7,652
|
34
|
8,337,000
|
Zaruma*
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
Jerusalem
|
602
|
90
|
1,760,400
|
864
|
95
|
2,627,000
|
1,927
|
101
|
6,276,470
|
Total
|
3,757
|
44
|
5,320,600
|
4,380
|
49
|
6,967,000
|
9,579
|
47
|
14,613,470
|
*No silver (Ag)
analyses were done for Zaruma.
For further information regarding resources estimates for the individual
Projects, readers are referred to the technical report entitled
"Independent Geological Evaluation, Dynasty Goldfield Project" by
AJ Maynard, MAIG MAus IMM dated October 30, 2007; the technical report
entitled "Independent Preliminary Assessment, Jerusalem Project, Zamora
Chinchipe, Ecuador" by WJ Holly, MAusIMM FFin and AJ Maynard, MAIG MAus
IMM effective February 27, 2006 (revised January 21, 2007); and the technical
report entitled "Independent Preliminary Assessment, Zaruma Project, El
Oro Province - Ecuador" by WJ Holly, MAusIMM FFin and AJ Maynard, MAIG
MAus IMM dated August 21, 2006, all of which are available on SEDAR.
Jerusalem Project
The Jerusalem Project comprises one 100% owned concession, located in the
Zamora Chinchipe Province of southeastern Ecuador, about 40 kilometres east
of Zamora and immediately south of Kinross Gold Corporation's Fruta del Norte
project. The Company has presented applications to, and is awaiting a
response from, the Ecuador government for both mining and plant operating
permits at the Jerusalem Project. These applications were submitted prior to
the introduction of the Mining Mandate, which suspended the processing of all
such applications.
The proposed plant for Jerusalem will initially be designed to produce
approximately 100,000
ounces of gold annually and, although smaller in size,
will include similar processing methodologies as those employed at Zaruma.
The Company has already purchased the ball mills and crushers for the
proposed plant. The timing of the commencement of construction at Jerusalem
is currently uncertain and will primarily depend upon the issuance and terms
of the yet to be released mining regulations, the timing of the issuance of
permits, the economics of the exploitation contract the Company concludes
with the Ecuador government and the availability of capital.
Readers are cautioned that a feasibility study has not been completed on the
Jerusalem Project and there is no certainty the proposed operations will be
economically viable.
Dynasty Goldfield
The Dynasty Copper-Gold Project lies within a mineralized corridor,
approximately 90
kilometres long and 20 kilometres wide,
in the Loja Province of southwestern Ecuador. To date, the Company has
identified eight mineralized porphyry-style alteration zones within this
corridor, each associated with a system of gold and silver vein swarms. The
total Project area covers 980 square kilometres and consists of 52 100% owned
concessions. To date, the drilling and resources have been concentrated in
the Dynasty Goldfield, which is one of the eight zones.
In addition to the approvals to undertake exploration and drilling at the
Dynasty Goldfield, the Company has also received approval to open two
declines and mine the materials at these concessions. Given the proximity of
the Dynasty Goldfield to the Zaruma Gold Project, the Company is currently
evaluating the economics of mining and transporting materials from the
Dynasty Goldfield to Zaruma for processing in the future.
Julian McDermott, a member of AUSIMM (Australian Institute of Mining and
Metallurgy) and a "qualified person" within the definition of that
term in National Instrument 43-101, has supervised the preparation of the
technical information contained in this news release.
About Dynasty Metals & Mining
Dynasty Metals & Mining Inc. is a Canadian based mining company involved
in the exploration and development of mineral properties in Ecuador.
The Company has the near production Zaruma Gold Project, the advanced-stage
Jerusalem Project, and a highly prospective exploration project, the Dynasty
Copper-Gold Belt, which includes the Dynasty Goldfield.
Dynasty Metals & Mining Inc.
Robert Washer, President and CEO
For further information please visit the Company's website at www.dynastymining.com, or please contact:
This news release includes "forward-looking information", as
such term is defined in applicable securities laws. Users of forward-looking
information are cautioned that actual results may vary from forward-looking
information contained herein. The forward-looking information includes,
without limitation, plans to apply for additional mining permits, the timing
of commencement of mining operations and the future production capacity at
the Zaruma plant, the identification and construction of declines, the
potential size and grade of resources, the finalization of mining regulations
in Ecuador and the completion of an exploitation contract with the Ecuadorian
government, the sufficiency and availability of cash, the proposed construction
of a plant at the Jerusalem Project and the commencement of production, the
availability of an adequate power source at the Zaruma plant, the timing and
ability of the Company to mine and deliver material to the Zaruma plant and
other similar statements concerning anticipated future events, conditions or
results that are not historical facts. In certain cases, forward-looking
information was developed using the material factors or assumptions stated
herein. Such factors and assumptions include, amongst others, the effects of
general economic conditions, the price of gold, changing foreign exchange
rates and actions by government authorities, uncertainties associated with
legal proceedings and negotiations and misjudgements in the course of preparing
forward-looking information. In addition, there are also known and unknown
risk factors which could cause the Company's actual results, performance or
achievements to differ materially from any future results, performance or
achievements expressed or implied by the forward-looking information. Known
risk factors include, among others, risks and uncertainties relating to
exploration and development; the ability of the Company to obtain additional
financing; the Company's limited operating history; uncertain mining
legislation; the need to comply with environmental and governmental
regulations; political and economic instability and general civil unrest in
Ecuador; potential defects in title to the Company's properties; fluctuations
in currency exchange rates; fluctuating prices of commodities; operating
hazards and risks; competition; and other risks and uncertainties, including
those described in the Company's Annual Information Form dated March 25, 2009
filed with the Canadian Securities Administrators and available at
www.sedar.com. Although the Company has attempted to identify important
factors that could cause actual actions, events or results to differ
materially from those described in forward-looking information, there may be
other factors that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that forward-looking
information, or the material factors or assumptions used to develop such
forward looking information, will prove to be accurate. Accordingly, readers
should not place undue reliance on forward-looking information. All
statements are made as of the date of this news release and the Company is
under no obligation to update or alter any forward-looking information except
as required by law.
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