Bear Creek updates Prefeasibility Study progress at Corani silver deposit

Bear Creek Mining provide an update on the Prefeasibility Study on the Corani silver-lead-zinc deposit located in southern Peru. Preliminary design criteria have been defined, field engineering test work has been initiated and the Study is on track for completion in early 2009.

Andrew Swarthout, Chief Executive Officer, states “We are very pleased with the positive advances from our prefeasibility team and we remain very confident that Corani will become one of the world’s top silver producers. The Corani Scoping Study completed in January 2008 demonstrated a very robust silver project at throughput rates of 30,000 tonnes per day at an average annual silver production of 17 million ounces per year over a 12.5 year life (see news release 18 January, 2008). The realities of the commodities and capital markets have since changed considerably. Yet, Corani presents several highly attractive development alternatives which directly address these changes in market conditions while maintaining a very robust project that represents value far beyond the Company’s current market capitalization. The Corani deposits hold the critical advantage of being able to optimize design throughput at 15,000 tonnes per day while focusing on the higher-grade starter pits having very low stripping ratios and which contain ores demonstrated to yield the highest recoveries. Importantly, capital expenditures can also be reduced by as much as 30% thereby significantly reducing the upfront investment required and mitigating a broad concern in our industry, mainly exposure to capital overruns on very large mining projects. The Prefeasibility Study criteria have been optimized to take full advantage of these alternatives in preparation for commencement of a full feasibility study in 2009.”

The grade-tonnage curves, mine sequencing, and metallurgical mapping have been analyzed within the context of the latest resource and financial models. Through a series of exercises in conjunction with our prefeasibility engineering group, Samuel Engineering, Independent Mining Consultants and RDI, a preliminary mining sequence and processing plan have been formulated which optimizes IRR and capital requirements at various throughput ranges. The resulting design criteria for the Prefeasibility Study are expected to:

– Adopt a 15,000 tonne per day flotation process plant focusing on processing the higher grade and high recovery sulfide ores early in the mine life
– Target the average head grade at 70g/t Ag, 1.1% Pb and 0.6% Zn , equivalent to 127 g/t Ag, for life of the project
– Schedule higher-grade pits yielding silver production of 10-14 million ounces per year during the first 7 years
– Focus on the 90 to 100 million tonnes of the resource that contains 210 million higher grade ounces within mining pits having a low strip ratio (1.4:1)
– Establish cash costs per ounce silver (net of base metals) of less than $3/ounce in the first 7 years of operation based on current metal prices
– Provide the opportunity to increase future silver production with limited additional capital by either mine expansion and/or longer mine life for processing the remaining 150 million ounces in resource, thus capturing benefits of potential metals price increases

The financial results will depend on detailed mine planning, metals prices and updated capital expenditure requirements and operating cost estimates produced during the course of the Prefeasibility Study. The selected approach, namely focusing on Corani’s flexibility in development plan alternatives and initial higher silver production, are expected to confirm a very positive financial performance.

Metallurgy – previous metallurgical tests and metallurgical mapping demonstrates that the Type I and II sulfide ores, which represent the majority of ore types, respond very well to conventional flotation with recoveries expected to be 80% silver, 60% lead and 75% zinc. These ore types represent 65% to 70% of the material to be processed during the first 7 years of mining. Therefore, continued optimization of metallurgical recoveries of these materials will form an integral part of the Prefeasibility Study in order to further enhance performance of the project economics. Much of the existing test work meets prefeasibility-levels, and the Company and its outside consultants remain confident that continued testing will provide a strong platform for completion of a bankable feasibility study.