+++++++++++++++++++++++++ The board of Dioro Exploration NL is pleased to advise that following the completion of the final feasibility study of the Frog's Leg gold mine, the Mungari East joint venture partners (Mines and Resources Australia Pty Ltd 51% and Dioro Exploration NL 49%) have unanimously agreed to proceed with the development of the Frog's Leg Gold Mine.
A Notice of Intent (NOI) will now be lodged with the Department of Mines and Petroleum Resources, with mining scheduled to commence in late March 2003 and milling scheduled to commence in the second quarter of 2003.
KEY POINTS OF THE OPEN PIT FEASIBILITY STUDY
* Open pit production estimated to recover 108,500 ounces (535,000 tonnes @ 6.64 g/t) from two pits developed over the central and southern zones at Frog's Leg to a depth of 95m and 105m respectively.
* After the open pit mining phase, the project will continue underground. Based on the current open ended project resource envelope, 8 years of underground mining is envisaged.
* Gross revenue of $59.6 million (Dioro Share $29.2 million) from open pit mining over a 22 month period.
* Cashflow of $25.7 million from open pit development (Dioro Share $12.6 million) after royalty and before capital expenditure and development costs.
* Capital expenditure and development costs of $3 million (Dioro Share $1.47 million) - these costs are at the low end for open pit developments in Australia.
* The cashflow estimate is based upon a gold price of only A$550, and only includes proven and probable reserves. No allowance has been made for inferred resources which are recoverable as part of the mining process.
* Sensitivity studies indicate the inferred resources could add up to 8% to the cashflow, and a gold price of A$600 could add up to 19% to the projected cashflow.
* The total resource at Frog's Leg remains 786,000 ounces and is open at depth and along strike.
* Campaign-based milling is planned to commence in the second quarter of 2003. Flexibility is available to the joint-venture with arrangements in place between the operator and Three Mile Hill facilities owner, and advanced discussions are underway for the joint venture to consider utilising other local milling facilities.
* Metallurgical testwork has determined all ore types are simple free milling with no specific metallurgical issues. Testwork recoveries were between 94% and 98% and an average 95% was used as mill recovery in pit optimisations and cashflow analyses.
* The underground scoping study has indicated mining should commence on the central pit to allow early placement of the in-pit underground decline to access underground ore from the central and northern zones of Frog's Leg. Additional underground resource drilling will commence in the first quarter of 2003 with an underground feasibility study to follow.
Pre-mining pit dewatering, site preparation and grade control drilling will commence immediately approvals have been received from the various state government departments.
The possible options to increase the production rate, optimise early cashflow, and thereby reduce the overall time of the open pit phase of mining and maximise return, are currently being reviewed by the joint venture partners.
D McArthur DIRECTOR
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