Meekatharra Production to start

MERCATOR GOLD plc
(“Mercator Gold”, “Mercator” or “the Company”)

AIM: MCR

US OTC: MTGDY

 

LONDON: 19 SEPTEMBER 2007

INCREASE IN PROBABLE ORE RESERVES TO 504,000 OUNCES

HIGHLIGHTS

  • Newly commissioned Meekatharra plant currently processing ore at up to 150 tonnes per hour (tph).
  • First commercial gold pour within the next ten days with a target of 120,000oz of production in the first 12 months of operations.
  • 17% increase in Probable Ore Reserves to 504,000oz (previously 432,000oz).
  • Encouraging results from recent drilling at the newly defined Euro Project with best results including 1m @ 94.3g/t, 3m @ 23.8g/t and 10m @ 5.0g/t.
  • Highly experienced international exploration geologist, Mark Csar, appointed as Exploration Manager.

Mercator Gold PLC (AIM: MCR) is pleased to announce that commissioning of the recently refurbished three million tonne per annum (mtpa) treatment plant at its 100%-owned Meekatharra Gold Operations in Western Australia is nearing completion, with full commercial production scheduled to commence within the next ten days.

The carbon-in-leach processing facility – located 15km south of Meekatharra, Western Australia – is nearing a throughput level of 150 tonnes per hour (tph) in preparation for a planned first gold pour this week.

Mercator expects to produce approximately 120,000 ounces of gold in the first 12 months of operations. The majority of initial production will come from the Company’s Surprise Open Pit access ramp, which comprises predominantly low grade ore, whilst higher grades are expected once the open pit reaches the base of previous mining.

The initial Surprise mining operation is based on a Probable mining reserve of 827,000 tonnes at 2.35 grams per tonne (g/t) for 63,000 ounces. After Surprise, production will shift towards the Bluebird Pit, where a much larger reserve of 1.7 million tonnes at 2.44 2 g/t for 133,000 ounces has been identified. The combined ore from Surprise and Bluebird is expected to meet the first 18-20 months of anticipated production with the focus then turning towards the Company’s underground mines.

The underground mines at Meekatharra include the Prohibition, Vivian-Consols and Fatts-Mudlode ore bodies, which are part of the Paddy’s Flat Mining Centre – which has produced approximately two million ounces of gold to date.

 

Increase in Gold Reserves

Mercator is pleased to report a 17% increase in its Probable Ore Reserves to 504,000 ounces (from 432,000 ounces previously) following the completion of positive metallurgical testwork programs.

The increase primarily reflects the conversion of additional Indicated Resources to reserves at the Fatts and Mudlode ore bodies. Metallurgical testwork conducted by Perthbased metallurgical testwork company AMMTEC Ltd has confirmed that suitable gold recoveries can be achieved from both the Fatts and Mudlode ore, with a higher gravity gold component achieved from the Mudlode ore.

The Company’s Mining Engineering Consultant, Red Rock Engineering, has successfully completed the preliminary mine design and costing evaluation for development of both the Fatts and Mudlode deposits and has updated the previously completed underground mine design for the Vivian-Consols and Fatts-Mudlode ore zones. The proposed development of dual access declines will enable mining to proceed both to the north and south over a strike distance of some 700 metres, while at the same time improving the ventilation system and providing a second means of egress.

 

Probable Ore Reserves – Meekatharra Gold Project

 

Tonnes

Grade (g/t)

Oz

Open Pit

Bluebird

1,700,000

2.44g/t

133,000

Surprise 

827,000

2.35g/t

63,000

Sub Total 

2,527,000

2.41g/t

196,000

Underground

Prohibition 

1,372,000

4.06g/t

179,000

Vivians / Consols

256,000

10.13g/t

83,000

Fatts / Mudlode 

362,000

4.00g/t

46,000

Sub Total

1,991,000

4.83g/t

308,000

Total Probable reserves

   

504,000

 

 

 

 

 

 

 

 

 

 

 

 

Significant Exploration Results from Euro Project

Mercator recently completed a four (4) hole diamond drilling program in an area to the East of known mineralisation which had received little exploration attention in recent years. The Company has named the area Project Euro and is pleased to report that it has received very encouraging exploration results to date including near-surface intersections of 1m @ 94.3g/t, 3m @ 23.8g/t and 10m @ 5.0g/t (see table below for further results.)

 

Table: Main intersections from the diamond holes drilled at Euro 1

Hole ID

From

To

Width (m)

AU (ppm)

07EURD011

79

80

1

6.3

07EURD011

89

90

1

1.2

07EURD011

96

102

6

3.0

07EURD011

116

126

10

5.0

07EURD011

130

131

1

1.6

07EURD011

136

137

1

2.9

07EURD011

187

188

1

2.0

07EURD011

190

191

1

1.4

07EURD011

217

218

1

2.3

07EURD011

221

227

6

5.1

07EURD019A

98

99

1

1.2

07EURD019A

115

116

1

1.1

07EURD019A

117

121

4

3.1

07EURD019A

127

128

1

3.3

07EURD019A

144

148

4

2.3

07EURD019A

159

160

1

2.7

07EURD019A

182

183

1

1.4

07EURD020

38

39

1

8.6

07EURD020

73

74

1

2.5

07EURD020

76

77

1

1.1

07EURD020

82

83

1

2.3

07EURD020

95

96

1

7.0

07EURD020

103

106

3

1.7

07EURD020

110

115

5

3.8

07EURD020

120

126

6

1.6

07EURD020

129

131

2

1.3

07EURD020

133

139

6

2.2

07EURD020

145

147

2

3.1

07EURD020

150

152

2

1.8

07EURD020

155

156

1

8.0

07EURD020

159

160

1

1.1

07EURD020

168

171

3

3.2

07EURD020

176

177

1

1.0

07EURD020

187

188

1

1.1

07EURD021

65

70

5

1.7

07EURD021

79

80

1

94.3

07EURD021

84

85

1

2.1

07EURD021

98

100

2

1.3

07EURD021

102

105

3

23.8

07EURD021

106

107

1

1.4

07EURD021

109

110

1

1.5

07EURD021

127

129

2

2.6

07EURD021

132

133

1

2.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

While the results to date have resulted in a significant reinterpretation of the orientation of geological structures hosting the mineralisation at Project Euro, it is important to note that the aim of initial drilling was to prove up the structural formation of the new zone, rather than to provide a detailed assessment of the zone itself. Furthermore, the orientation of the drilling was such that depths indicated in the table of results above are not representative of the actual depth of the intersections themselves due to the drilling angle utilised.

Previous drilling was based on an interpretation of typical North-South structures, requiring drilling to be oriented in an East-to-West direction or vice versa. The diamond core drilling results received to date suggest that the structures are in fact oriented in an East-West direction and dip to the south.

Remodelling the legacy data with the revised structural controls has identified a potential ore-bearing zone some 500 metres long, 300 metres wide and 120 metres deep.

The Company plans to commence a diamond and Reverse Circulation (RC) drilling program to delineate a JORC compliant resource at the Euro Project in the short term. The delineation of additional reserves in this area, because of its strategic location, could have a significant impact on the Company’s future operational strategies.

 

Appointment of Exploration Manager & Summary

With its imminent move into gold production, Mercator is also pleased to announce the appointment of highly experienced international exploration geologist, Mr Mark Csar, to the role of Exploration Manager. Mr Csar brings a wealth of exploration and geological experience in a range of Western Australian-based gold and nickel operations. Prior to his appointment, Mr Csar was Exploration Manager – USA for the Iluka group.

Commenting on Mercator’s progress to date, the Company’s Chairman, Mr Terry Strapp, said: “The imminent gold pour represented a significant milestone for the Company as it entered the ranks of Australian gold producers.”

“This month marks our official transition into production and is a testament to the hard work and commitment of everyone involved with the Company,” Mr Strapp said. “We are now positioned for an exciting period of growth, building on the strong production base established at Meekatharra.”

Mercator’s Managing Director, Mr Patrick Harford, said: “We have recently completed the commissioning of the plant and, with the commencement of commercial gold production only days away, Mercator is set to join the ranks of international gold producers at an exciting time for the gold sector,” he added. “In addition to our move into commercial production, the increase in probable reserves announced today and the promising new gold discoveries at the nearby Euro project highlight the potential for the Company to build on its strong production base and significantly expand its gold operations and reserve position.”

“I would also like to take this opportunity to welcome Mark Csar to the Company,” Mr Harford added. “The appointment of such a highly regarded and skilled exploration manager further cements the Company’s position as a significant player in Australia’s world-class gold mining industry.

Competent Persons Report – Consent for release

The information in this report is based on information compiled by Alan Coles and Denis Geldard.

Alan Coles and Denis Geldard are full time employees of Mercator Gold Australia Pty Ltd and are Members of the Australasian Institute of Mining and Metallurgy.

Alan Coles and Denis Geldard have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.

Alan Coles and Denis Geldard consent to the inclusion in the report of the matters based on this information in the form and context in which it appears.

 

For further information please contact:

Mercator Gold plc    
Patrick Harford, Managing Director Tel: +44 (0) 20 7929 1010
Email:This email address is being protected from spambots. You need JavaScript enabled to view it.    
   
   
   
Bankside Consultants Ltd Tel: +44 (0) 20 7367 8888
Simon Rothschild    
Keith Irons    
Oliver Winters    

 

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