GOLD STUDY: Spanish Mountain PEA outlines annual production rate near 200,000 oz

BRITISH COLUMBIA - The preliminary economic assessment (PEA) for Vancouver-based Spanish Mountain Gold's wholly owned project near the village of Likely outlines a mine that could produce almost 200,000 oz of gold per year. Output for each of the first five years would average 213,800 oz and over the remaining life of the project 172,400 oz/y.

The PEA chose a gold price of US$1,100/oz and an exchange rate of US$1.00 to C$1.10 to support the project outline. The study examines an open pit mine with a 10-year life and a 40,000-t/d mill. Initial capital costs are expected to be C$447 million. Average total cash costs during the first five years are estimated to be US$670/oz, and over the life of the project they would be US$625.

The PEA also indicates that the project would generate a pre-tax undiscounted cumulative net cash flow of C$411 million, a pre-tax net present value at a 5% discount of C$209 million, and a pre-tax internal rate of return of 14.7%. The payback period would be five years from the start of milling.

The Spanish Mountain deposit has measured and indicated resources of 77.4 million tonnes grading 0.55 g/t Au and an inferred resource of 39.5 million tonnes grading 0.48 g/t.

Next year the company will continue drilling including the recently acquired Cedar Creek property, review the options for the tailings area, conduct additional metallurgical tests, and prepare to advance to a feasibility study. The project description will also be submitted to the provincial government as the first step in the permitting process.

The results of gravity concentration and flotation tests on Spanish Mountain ore are available at www.SpanishMountainGold.com.