Pacific Minerals advances 217

Vancouver — Pacific Minerals (PMZ-V) has launched a mine development scoping study for the 217 Gold Project in China’s Inner Mongolia region.

The junior has hired the Chinese Design Institute to provide an independent assessment of the economic potential of the project and to determine a range of capital and operating costs modelled on a 10,000-tonne-per-day open-pit mining operation.

Using a 0.6 gram gold cut-off, a March estimate gave the project a measured and indicated resources of 35 million tonnes grading 0.85 grams gold per tonne for 953,000 contained oz. of gold. The study pegged the inferred resource at 85 million tonnes grading 0.93 grams gold for another 2.5 million oz of gold. The in-pit measured and indicated resource, using a 2:1 strip ratio and a cut-off grade of 0.5 gram gold, comes in at 26.6 million tonnes grading 0.96 gram gold with 11 million tonnes grading 1 gram gold in the inferred section.

SGS Lakefield Research Canada is currently testing the heap leachability of the mineralization as part of the scoping study. Additional, bulk heap-leach tests will be conducted in China later this year to increase the level of confidence in gold recoveries. Preliminary metallurgical tests performed earlier this year by SGS Lakefield achieved overall gold extraction exceeding 95% for both the oxide and sulphide mineralization using simple gravity separation and cyanidation. The scoping study will determine the optimal processing method between heap leaching and conventional milling and flotation.

Assay results for the latest 6,000-metre drilling program will be in by the middle of the month.

Pacific Minerals has a 55% interest in the 217 project and has the right to acquire a further 41.5% by making staged payments of US$2.75 million. Ivanhoe Mines (IVN-T) can acquire a 60% interest in the project by completing a production feasibility study by July 1, 2006, and maintaining the schedule of payments to the Chinese partner. Upon completion of the production feasibility study, Ivanhoe will have six months to acquire an additional 16.5% effective interest in the project by arranging financing on or before July 1, 2007, to take the property into production.