Source Filing Services Canada
Date10/26/2006 §
Time§05:24:24 AM
Company§ ORIENTAL MINERALS INC.
Title§ORIENTAL MINERALS ACQUIRES WORLD-CLASS MINERAL PORTFOLIO IN SOUTH KOREA
CDNX Symbol: OTL
Press Release
NEWS TRANSMITTED BY FILING SERVICES CANADA
FOR: Oriental Minerals Inc.
TSX SYMBOL: OTL
Thursday, October 26, 2006
FSC / Press Release
ORIENTAL MINERALS ACQUIRES WORLD-CLASS MINERAL PORTFOLIO IN SOUTH KOREA
Vancouver, British Columbia CANADA, October 26, 2006 /FSC/ - Oriental Minerals
Inc. (OTL - TSX Venture), is pleased to announce acquisitions, and an option
agreement, that dramatically expand its world-class mineral portfolio. In
addition to agreeing to acquire what was one of the largest tungsten mines in
the world, the Sangdong tungsten-molybdenum mine in South Korea, OTL has
secured South Korea's largest (historically) producing gold mine and additional
tungsten-molybdenum and gold exploration projects. The size and quality of
Oriental Minerals' portfolio demonstrates the excellent geological
prospectivity of the Korean peninsula.
Highlights include:
TUNGSTEN - MOLYBDENUM
SANGDONG: Formerly one of the world's largest tungsten mines
* reported tungsten historical "remnant reserve" of 189 million lbs of tungsten
oxide (WO3) from 17 million tonnes grading 0.5% WO3 per tonne.
* extensions to tungsten deposit - prospective strike length of at least 10
kilometres,
* above ground ore stockpiles, and reported molybdenum deposit beneath the
tungsten mine workings, with a historical resource of 140 million lbs of MoS2
from 16 million tonnes grading 0.40% MoS2 per tonne (or 8.8 lbs MoS2 ) and an
additional 199 million lbs of MoS2 from 104 million tonnes grading 0.0.087%
MoS2 per tonne (or 1.9 lbs MoS2).
CHONGYANG:
* former molybdenum-tungsten mine, closed in 1977,
* bulk open-pit potential.
GOLD - SILVER
MUGUK: Formerly South Korea's largest gold producing mine
* epithermal gold-silver style,
* reported by KORES to contain a measured resource of 332,712 oz of gold and
1,915,962 oz of silver from 713,610 tonnes grading 14.5 g/t gold and 83.5 g/t
silver just prior to mine closure. An additional inferred resource was
reported of 283,508 oz of gold and 1,408,472 oz of silver from 705,370 tonnes
grading 12.5 g/t Au and 62.1 g/t Ag.
GASADO:
* epithermal gold-silver project,
* robust gold-silver exploration upside
OPTION AGREEMENT
Option to acquire a portfolio of 22 advanced mineral projects;
A qualified person has not done sufficient work to classify any of these
historical resources as current mineral resources. The issuer is not treating
any of the historical estimates as current mineral resources and the historical
estimates should not be relied upon. Historical resource and reserve estimates
are also subject to independent confirmation as to whether categorization is NI
43-101 compliant.
PROJECTS
TUNGSTEN-MOLYBDENUM
1. SANGDONG
- FORMERLY ONE OF THE WORLD'S LARGEST TUNGSTEN- MOLYBDENUM MINES.
The Sangdong Mining titles cover the Sangdong tungsten-molybdenum mine, one of
the largest in the world when it was closed in 1992 due to low metals prices.
Tungsten prices have increased from US$4 per pound in 1992 to $70 per pound
currently, while molybdenum prices have increased from less than US$2 per pound
in 1992 to a high of $38 per pound now.
- REPORTED REMAINING TUNGSTEN RESOURCES IN THE OLD MINE
Approximately half of the identified original historical tungsten resources are
reported to remain with extensions of the mineralization to the east and to the
west. The reported "remnant ore reserve" is estimated at 15.6 million tonnes
at 0.5% WO3 in the "Main ore body" and 1.4 million tonnes at 0.55% WO3 in the
"East ore body". Total strike length of horizon with known tungsten
mineralization is at least 10 kilometres. Tungsten mineralization occurs as
three individual stacked stratiform manto skarn horizons.
- ABOVE GROUND ORE STOCKPILES
The former mine stockpiles represent attractive early development ore at
current market prices.
- REPORTED MOLYBDENUM DEPOSIT BENEATH THE TUNGSTEN MINE WORKINGS
The molybdenum deposit reported beneath the existing tungsten mine workings was
drill tested by KORES, the Korean government mining organization from 1980 to
1987. Drilling was carried out from the historical underground Tungsten mine
workings, with 24 diamond holes completed.
Work undertaken by the Korea Engineering Co. estimated the deeper high grade
molybdenum deposit at Sangdong contains a historical resource of 140 million
pounds of molybdenum sulphide from 16 million tonnes grading 0.40% MoS2 per
tonne (or 8.8 lbs MoS2). An additional resource of 199 million pounds from
104 million tonnes grading 0.087% MoS2 per tonne (or 1.9 lbs MoS2) is also
reported. This unmined high grade historical molybdenum resource is hosted
within quartz vein stockworks above a granite intrusion.
A qualified person has not done sufficient work to classify these historical
"reserves"/resources as current mineral "reserves"/resources. The issuer is not
treating the historical estimates as current mineral resources and the
historical estimates should not be relied upon. As the historically reported
"reserve" is not yet accompanied by operating permits or positive economic
modeling, the estimate should be considered as a historical resource.
An extensive database of technical information is being reviewed by Oriental,
as well as the preparation of a technical report compliant to National
Instrument 43-101.
The Company has a multi-pronged evaluation strategy at Sangdong, as follows:
- review the deeper high-grade molybdenum deposit.
- determine potential for early cash flow from the former operating mine ore
stockpiles.
- consider remaining ore blocks in the tungsten mine workings.
- consider potential for open pit mining on existing tungsten-molybdenum
resources.
- examine the significant exploration potential along strike.
2. CHONGYANG
FORMER TUNGSTEN MINE
The portfolio also includes the Chongyang tungsten mine, which ceased
production in 1977. Consisting of a sheeted quartz-sericite-pyrite "greisen"
system hosted in a porphyritic granite stock, the Chongyang vein system is 200m
wide by 400m long, and can be traced over a 1400m strike length. Oriental will
initiate an evaluation of the bulk tonnage open pit potential of this deposit
by drill testing.
GOLD-SILVER
1. MUGUK
- HISTORICALLY SOUTH KOREA'S LARGEST GOLD PRODUCER
Historically, Muguk was South Korea's largest gold producer, with recorded
production of 8.15 tonnes of gold mined between 1934 and 1972 and resumed
production at a rate of 200 tonnes per day from 1987 to 1998, all from the No.
2 vein. The previous explorers identified more than 20 separate sub parallel
vein systems, with at least 6 individual vein systems traceable over 1.3 - 2.2
km strike lengths. Individual veins are 0.1 to 3.0m wide and are hosted in
Cretaceous granite. Individual shoots within the No.2 vein have been exploited
down to 750m depth, with mill recoveries historically averaging 95.7%.
- EPITHERMAL GOLD-SILVER DEPOSIT.
In 1998, Muguk was reported by KORES to contain a measured resource of 332,712
oz of gold and 1,915,962 oz of silver from 713,610 tonnes grading 14.5 g/t gold
and 83.5 g/t silver just prior to mine closure. An additional inferred
resource was reported of 283,508 oz of gold and 1,408,472 oz of silver from
705,370 tonnes grading 12.5 g/t Au and 62.1 g/t Ag. These historical resources
were estimated using a polygonal longitudinal method.
A qualified person has not done sufficient work to classify this historical
resource as current mineral resources, nor confirm that the categorization
conforms to CIM Standards. The issuer is not treating the historical estimate
as current mineral resources and the historical estimate should not be relied
upon.
- MINERALIZATION
Mineralization at Muguk is considered to be a low sulphidation epithermal
system, comprising grey chalcedonic banded veins and stockworks. Higher gold
grades are associated with electrum-bearing sulphide bands on the margins of
these veins.
The Company proposes to evaluate the potential at Muguk to establish a high
grade gold-silver mine or a bulk tonnage low to medium grade gold-silver mine
exploitable by open pit. If established, a central milling complex at Muguk
could potentially exploit additional high grade resources identified in the
surrounding region.
2. GASADO
- EPITHERMAL GOLD-SILVER DEPOSIT
Gasado is an epithermal gold-silver deposit held under 4 Mining Rights on
Gasado Island, 5 km off the south-west coast of South Korea.
Gasado is considered to be a high level, low sulphidation epithermal system
developed over the 7 km long by 3 km wide island. Historical exploration by the
previous operator indicated the existence of robust gold and silver
mineralization 4 to 7 metres wide. Individual vein structures can be traced
over up to 2.5 km strike lengths, with 9 separate mineralised vein systems
identified. The vein systems are hosted within Cretaceous acid volcanic rocks.
Gasado has a reported historical resource estimate of 143,088 tonnes averaging
6 grams per tonne Au, and 434 g/t Ag, (using 6 g/t Au equivalent cutoff)
defined by 55 drill holes. Within the historical resource estimate are
high-grade shoots (greater than 10 g/t Au, 1000 g/t Ag) hosted in banded
epithermal veins up to 9 m wide and surrounding stockwork network veins up to
35 m wide.
A qualified person has not done sufficient work to classify the historical
resource as current mineral resources. The issuer is not treating the
historical estimate as current mineral resources and the historical estimate
should not be relied upon.
TERMS - ACQUISITION AGREEMENT
1. SANGDONG
The Sangdong Acquisition Agreement calls for the following:
a. US$80,000 upon signing (paid), US$8,000 November 8, 2006, and US$16,000
January 7, 2007.
b. US$720,000 cash and $US800,000 in Company stock issued at a deemed price of
the then current 10 day market average at Closing (by February 28, 2007).
c. US$2.4 million cash and US$800,000 in Company stock issued at 6 months after
Closing; same amounts to be paid again 18 and 30 months after Closing.
d. Spend US$800,000 in each of first and second years.
e. Spend US$2.4 million in each of years 3, 4 & 5, except spend at least US$16
million if undertaking commercial production.
f. Oriental is Operator of the project, earns 51% ownership interest at
Closing, 19% by completing pre-feasibility within 5 years, and earns the final
30% by commencing a feasibility study during year 5 and completing the study
within 18 months.
g. As consideration for the payments and share issuances noted in a-c above,
the Vendor shall provide Oriental with clear title to Sangdong free of all
encumbrances in exchange for retaining a 2% net smelter return on all
production from Sangdong.
2. GASADO
The Gasado Acquisition Agreement calls for the following:
a. US$20,000 upon signing (paid), US$2,000 on November 8, 2006, and US$4,000 on
January 8, 2007.
b. US$180,000 cash and US$200,000 in Company stock issued at a deemed price of
the then current 10 day market average at Closing (by February 28, 2007).
c. US$600,000 cash and US$200,000 in Company stock issued at 6 months after
Closing; same amounts to be paid again 18 and 30 months after Closing.
d. Spend US$200,000 in each of first and second years.
e. Spend US$600,000 in each of years 3, 4 & 5, except spend at least US$4
million if undertaking commercial production.
f. Oriental is Operator of the project, earns 51% ownership interest at
Closing, 19% by completing pre-feasibility within 5 years, and earns final 30%
by commencing feasibility during year 5 and completing within 18 months of year
five..
g. As consideration for the payments and share issuances noted in a-c above,
the Vendor shall provide Oriental with clear title to Gasado free of all
encumbrances in exchange for retaining a 2% net smelter return royalty on all
production from Gasado.
TERMS - OPTION AGREEMENT
Option to acquire a portfolio of 22 advanced mineral projects
Terms for exercise of the Option are (a) US$10,000 upon signing the Option
(paid), (b) US$50,000 cash and US$50,000 in Company stock issued at the then
current market average, upon Closing, (c) US$1 million cash and US$1 million in
Company stock issued at the then current market average, upon commencement of
commercial production, and (d) reservation of 2% net smelter return royalty in
favor of the vendor.
Oriental has given immediate notice of exercise of its Option right on the
Muguk gold-silver project and the Chongyang tungsten project.
REGULATORY APPROVALS
The Acquisition and Option Agreements and Option exercises referenced above are
all subject to regulatory approval and the approval of the TSX Venture Exchange.
FUTURE KOREAN EXPLORATION STRATEGY
A comprehensive exploration program is being initiated in Korea involving:
- Continued acquisition of additional identified molybdenum-tungsten,
gold-silver and copper-lead-zinc properties of high merit.
- Application for mining rights has commenced over large areas highly
prospective for base metal skarns.
- Helicopter-borne magnetometer geophysical survey over the base metal skarn
properties.
- Mapping, sampling and delineation of drill targets on the acquired properties.
- Drill testing of acquired properties.
- Pre-feasibility studies on the Sangdong molybdenum deposit.
Oriental Minerals will take advantage of technical staff seconded by the
vendor, consultants such as Bob Skrzeczynski from Longview Technical and
in-country geological expertise such as Mr. Kim Wanjoong (12 years experience)
and Mr. Christopher Sennitt (26 years experience), both with specific South
Korean expertise. Bob Skrzeczynski has particular expertise in tungsten from
his involvement in the discovery of the Watershed Tungsten deposit in Australia
with the former Utah Development Company and is the former Commercial Manager
for BHP Minerals Exploration in the Australasian region.
The Company's Co-Chairman, Damien Reynolds, said, "I am very excited that
Oriental has capitalized on its current advantage as the only Western company
involved in mineral exploration in Korea. The remaining resources at Sangdong
alone represent an enormous opportunity for the Company and we think there is
considerable potential to add to the historical resource base at each of the
projects. We look forward to working closely with the vendor, Mr. Jae Youl Sim
to maximize the value of these projects."
APPOINTMENT OF CFO
OTL has appointed Tom Needham as Chief Financial Officer. Mr. Needham is a
financial executive with over 15 years experience working with public companies
in mineral exploration and oil and gas sectors, including companies with
multi-national operating subsidiaries.
QUALIFIED PERSON
The qualified person for the purposes of this release is Mr. Mark Dugmore.
About Oriental Minerals Inc.
Oriental Minerals is a Canadian-based exploration company exploring for
world-class mineral deposits in South Korea. The Company's current projects
include tungsten-molybdenum, base metals and gold-silver properties with
significant known mineralization and excellent regional potential.
South Korea is an independent country with strong ties to the USA and key
trading partner with Canada and Australia. The country has an excellent
infrastructure, established and workable Mining Laws, and available trained
mining workforce. These factors combined with an in-country bi-lingual team,
assists OTL in capturing a first class country wide, diversified minerals
portfolio.
On behalf of the Board of Directors,
Damien Reynolds
Director and Co-Chairman
Statements in this news release, other than purely historical information,
including statements relating to the Company's future plans and objectives or
expected results, constitute Forward-looking statements. Such statements are
based on numerous assumptions and are subject to all the risks and
uncertainties inherent in the Company's business, including risks related to
mineral exploration and development. Consequently, actual results may vary
materially from those described in the forward-looking statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Oriental Minerals Inc.
Damien Reynolds
Director and Co-Chairman
Phone (604) 681-5755
www.orientalminerals.com
The TSX Venture Exchange does not accept responsibility for the adequacy or
accuracy of this release.
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