Minefinders advances Dolores (January 19, 2004)

Vancouver — The long-awaited feasibility study for the Dolores gold-silver project in Mexico is closer to completion following a 59,400-metre program of delineation drilling by Minefinders (MFL-T).

The company expects to have an updated resource estimate in hand before April, and this too will be incorporated into the feasibility.

M3 Engineering & Technology has been working on the study for nearly a year. The results will utilize the findings of several other consulting firms, including McClelland Labs, Hazen Research and SGS Lakefield Research, which are carrying out metallurgical studies. Tests include additional column leaching, bottle rolls, and all necessary hardness, abrasion, and mill work index tests required for final mine design and costing. Initial results suggest flotation will increase recoveries, especially of silver.

Golder Associates has completed initial rock mechanics and pit slope stability studies for the pit design, tailings dam, leach pad, stockpiles and plant site facilities. Roscoe Postle Associates is focusing on the mineral resource estimate.

Final environmental surveys were launched in November 2003, which is when work began on the environmental impact study (EIS). These are to be completed in the second quarter.

The property has a long mining history, with placer operations starting in the 1860s. By 1898, hard rock mining had begun, mostly from underground stope mining operations developed along three main, subparallel structures. The mill was destroyed by a fire in 1929, esentially stopping production.

Exploration activity in the 1990s induced Minefinders to focus on the 2.2-km long Dolores Main zone.

Last year, engineering firm Pincock, Allen & Holt (PAH) verified that Dolores holds an overall resource of 72.74 million tonnes grading 1.27 grams gold and 60 grams silver, using a 0.6-gram gold cutoff. Some 50.8 million tonnes grading 1.26 grams gold and 61.4 grams silver lie in the measured and indicated category.

On the back of the resource estimate, BMO Nesbitt Burns pegged the 10% net asset value for the project in production at $10.81 per fully diluted, financed share. Minefinders recently traded at $12.65 per share in a 52-week range of $6.30-12.71.

Along with the open-pit resource, the latest drill results continue to show potential for an underground operation beneath the current open-pit mine plan. Hole 193, the deepest hole completed on the property and some 100 metres below the proposed bottom of the open pit, intersected 34 metres grading 5 grams gold per tonne, including a 1-metre section grading 119.9 grams gold and 227.5 grams silver.

The higher-grade shoots have been intercepted throughout the Dolores deposit, with good continuity, extending from the surface to more than 600 metres deep and 200 metres below the previously announced block-modeled resource.

The latest highlights include:

— hole 260, which yielded 6.7 metres grading 10.92 grams gold and 135.7 grams silver;

— hole 266, which returned several intercept ranging up to 15.35 grams gold and 22 grams silver over 10 metres; and

— hole 269, which returned 94 metres grading 1.27 grams gold.

So far, the deep drilling holds the potential to add up to 500,000 oz. gold to the overall resource. However, more deep drilling is required to determine the economics of an underground operation. Once Minefinders completes the open-pit feasibility study, a scoping study will begin evaluating the potential for developing and mining underground concurrently with the open-pit operation.

Situated in northern Chihuahua state, the wholly owned project will again be subjected to a major drill program. Minefinders is set to resume drilling later this month, with three rigs testing both stepout holes and new targets.