Vancouver, B.C., March 4, 2011 - Dynasty Metals & Mining Inc. ("Dynasty" or the "Company") (TSX: DMM, OTCQX: DMMIF) provides the following update to shareholders regarding the development of mining operations at Zaruma in southern Ecuador.
Ecuador mining law requires that each company enter into an "exploitation" contract with the Ministry of Non-renewable Resources (the "Ministry") generally before it commences commercial production. The purpose of the contract is to settle the terms under which the Company is permitted to mine and sell its resources and to establish a royalty payable to the government. After months of consultations, the Ministry recently established the protocols by which companies may make application to begin formal negotiations towards a contract settlement.
The application must be accompanied by a number of submissions that include technical, environmental and financial information, among other things, to support a request for exploitation permits. We are among the first to make a formal application and, after a recent meeting with Ministry officials, we are optimistic that our application will be accepted and an agreement may be expedited.
To date the Company has produced in excess of 10,000 ounces of gold and 30,000 ounces of silver in dore form, the majority of which has been exported and sold, since beginning intermittent production in August, 2010. Production from the plant will become more continuous as we advance the development of the mines (see "Mine Operations at Zaruma" below) and as contract settlement negotiations progress with the Ministry. The sales quantity of gold and silver together with the resulting revenues will hereafter be reported quarterly.
Although the Company's operating plans have been slowed during the last 24 months, primarily as a result of fundamental changes made to the mining law in Ecuador, we have managed a number of significant achievements. Most notably, the Company was able to successfully construct the largest gold processing plant and has substantially developed the largest underground gold mines in the history of Ecuador.
Operations at both the plant and the mine are progressing towards steady state production, however, we still categorise the project as development stage. The total capital investment at Zaruma to-date, including the discovery of in situ resources, is approximately US$55 million or only US$22 per ounce of gold contained in the estimate of resources at Zaruma (the Zaruma resources are in the Company's technical report dated August 21, 2006 which was prepared by independent "qualified persons", as defined by National Instrument 43-101 and can be viewed at www.sedar.com).
Until such time when the Company secures a contract with the Ministry, our primary focus will remain on progressing operations at the Zaruma Project. We do, however, have the necessary permits to recommence advanced exploration and development of the Dynasty Goldfields and Jerusalem projects in due course.
Plant Operations at Zaruma
As previously reported, construction of the plant has been substantially completed and stress tested to near capacity. We have been producing gold and silver since the fourth quarter of 2010 while optimizing operations through various testing. Improvements made to the plant include doubling the capacity of our gold stripping circuit and the construction and tie in of an electrical substation (7.5 MW) which should provide continuous electricity and allow for unrestricted expansion capability. Additional improvements are scheduled which will be installed periodically at the plant.
Mine Operations at Zaruma
We have worked hard to overcome enormous challenges over the past 24 months. In particular, the non-existence of modern mining infrastructure and the uncertainty caused by the transition to a new Ecuadorian mining law has adversely impacted mining operations to date. These circumstances forced the Company to develop and rely upon internal technical resources rather than using experienced contract service providers typically engaged to construct declines and service mobile equipment. The development of an affordable local skilled workforce will be of great benefit in the future but has impacted mine development progress.
To date, the Company has driven three 4.5 x 5 meter declines down approximately five kilometres, in aggregate, to depths of over 250 metres and has developed approximately 1.5 kilometres of access drives and development tunnels. Considerable efforts were made, during construction, to ensure that the structural integrity of the declines is sound for worker safety and for staging the underground development of multiple vein access drives so that we may expand and develop resources at Zaruma in the future from underground.
The Company has been concentrating development activities on the main decline, which provides the best access to the in situ resource and where the installation of a 5 MW substation is near completion. A substantial amount of the material mined to date has come from old workings, generally not included in our resource estimates using hand held drilling methods. A mixture of resource and non resource material being processed by the plant has most recently averaged 7 grams per ton.
The Company is currently mining and delivering to the plant an average of 400 tonnes of material per day. Production is expected to increase in the coming months with the introduction of long-hole drilling and long-hole Alimak stoping to supplement hand held drilling methods. We are unlikely to meet our goal of mining 800 tonnes per day by the end of March 2011, however we continue to work diligently towards that end.
Company President and CEO, Robert Washer commented: "I wish to thank you for your continued patience and assure you we are working extremely hard on behalf of shareholders towards securing a mutually beneficial agreement with the government of Ecuador that will result in increased shareholder value."
President & Chief Executive Officer
About Dynasty Metals & Mining
Dynasty Metals & Mining Inc. is a Canadian based mining company involved in the exploration and development of mineral properties in Ecuador.
The Company has the in production Zaruma Gold Project, the advanced-stage Jerusalem Project, and a highly prospective exploration project, the Dynasty Copper-Gold Belt, which includes the advanced-stage Dynasty Goldfield.
For further information please visit the Company's website at www.dynastymining.com, or please contact:
|Dynasty Metals & Mining Inc.|
Tel: (604) 687-0888
|Brisco Capital Partners Corp.|
Tel: (403) 262-9888
This news release contains certain forward-looking statements that reflect the current views and/or expectations of Dynasty with respect to its performance, business and future events, including statements regarding the outcome of the Company's application to the Ministry; the ability to negotiate an exploitation contract on terms satisfactory to the Company; the Company's plans in respect of its Zaruma Project; the Company's production forecasts at the Zaruma mine; and the Company's expectations relating to its processing plant developments. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business and the industry and markets in which the Company operates, including assumptions relating to the Company's ability to successfully negotiate a satisfactory exploitation contract; that all governmental approval and permits will be received; that the terms of the exploitation contract will allow the Company to develop its mining project in accordance with its business plan; that the Company will be able to increase production at its Zaruma mine; and that the Company will be able to complete its planned improvements to its processing plant. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Investors are cautioned that all forward-looking statements involve risks and uncertainties including that the Company will be unable to negotiate an exploitation contract on terms satisfactory to the Company and in the expected timeframe or at all; that the terms and conditions of the final exploitation contract will be restrictive on the Company's business; that the terms and conditions of the exploitation contract will impede the Company's development plans at its Zaruma Project; that the Company will not be able to increase production at its Zaruma mine; that the Company will not be able to complete improvements to its processing plant within the predicted timeframe or at all; and those relating to exploration and development; the ability of the Company to obtain additional financing; the Company's limited operating history; uncertain mining legislation; the need to comply with environmental and governmental regulations; political and economic instability and general civil unrest in Ecuador; potential defects in title to the Company's properties; fluctuations in currency exchange rates; fluctuating prices of commodities; operating hazards and risks; competition; and other risks and uncertainties listed in the Company's public filings. These risks, as well as others, could cause actual results and events to vary significantly. Accordingly, readers should not place undue reliance on forward-looking statements and information, which are qualified in their entirety by this cautionary statement. There can be no assurance that forward-looking information, or the material factors or assumptions used to develop such forward looking information, will prove to be accurate. Dynasty does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.