Miramar grows Hope Bay resource (May 01, 2006)

Vancouver — A significant resource increase at its Hope Bay gold project, in Nunavut, has Miramar Mining (MAE-T, MNG-X) pumped up about possible expanded development of the deposits.

The company has added more than 1 million contained ounces of gold, using the same cutoff grades as in 2004, to its Madrid deposit resource, where it is examining the potential of a large open-pit operation. Modelling of a bulk-mining scenario there led to an increase of over 2.6 million oz. gold, due to lower cutoff grades. Drilling in 2005 extended the Naartok East and West zones at Madrid, which comprise most of the resource boost.

Last year’s infill drilling has resulted in an updated indicated resource of 14.2 million tonnes grading 4.5 grams gold per tonne at Madrid, or about 2 million contained ounces, using a 2-gram gold cutoff. An additional 29.7 million inferred tonnes at 4.1 grams gold was also reviewed at the same cutoff grade, containing 3.9 million oz. gold.

Overall indicated resources for the Hope Bay project (comprised of the Boston, Doris and Madrid deposits) now stand at 17.9 million tonnes grading 6.3 grams gold (3.55 million contained ounces). An additional inferred resource of 36.7 million tonnes at 5.4 grams gold in the three deposits adds a further 5.5 million contained ounces. Reported 2005 resources are up over 40% from the previous year.

With aspirations to become an intermediate gold producer, Miramar plans a multi-phase development plan for Hope Bay. Phase one will see the company place the small-scale Doris North mine into operation. Doris North is a near-surface zone of high-grade, gold-bearing quartz veins. The Doris deposit contains a measured and indicated resource of 763,000 tonnes grading 23.9 grams gold per tonne, plus additional inferred resources of 1.7 million tonnes of 14.7 grams gold. Doris North is scheduled to produce about 155,000 oz. gold annually over two years.

Larger, second-phase development plans reviewed by Miramar include the Doris Central, upper Boston and western Madrid deposits. Higher-grade feed would be likely blended with bulk-tonnage material from Madrid.

This year’s $30-million work program at Hope Bay has the company focused on completing its feasibility study for its phase-2 plans. Modelling of a large pit at Madrid, in lieu of previously planned underground operations, could alter the phased development plan and have the project move directly into large-scale production following Doris North. Miramar anticipates a firmer plan by the end of 2006, upon completion of the feasibility study.

The original phase-2 plan (Doris Central and upper zones of Madrid and Boston) foresees possible annual production of 250,000 to 300,000 oz. gold. This year’s drilling on the northern portion of the Madrid deposit will determine whether it could support the large pit-complex option and feasibly produce 500,000 to 750,000 oz. annually.

Earlier this year, the Nunavut Impact Review Board approved Miramar’s revised environmental impact statement for the initial development of Doris North. The company anticipates starting to ship equipment to Hope Bay in summer 2007, with production beginning in 2008.

With 186 million shares outstanding, Miramar posts an $800-million market capitalization at its recent $4.30-per-share trading level.