Rio Narcea inks deal to finance Tasiast

Vancouver – With the El Valle and Carles gold mines in northern Spain scheduled for closure by year-end, Rio Narcea Gold Mines (RNG-T, RNO-X) has completed a US$42.5-million financing to develop the Tasiast gold project in northern Mauritania, West Africa.

The Tasiast mine is under construction and expected to begin production in mid-2007. Once up and running, the open-pit operation is projected to produce an average an average of about 105,000 oz. gold annually at an average cash cost of about US$240 per oz.

Measured and indicated resources (including proven and probable reserves of 9 million tonnes) stand at 12.1 million tonnes grading 3.06 grams gold per tonne, containing an estimated 1.18 million oz. gold, sufficient for about eight years of production. The deposit has an additional inferred resource containing about 900,000 oz. gold. Mineralization is primarily hosted in an altered banded iron formation. The rocks and mineralization are of Archean age, with geological similarities to gold districts in northwestern Ontario.

Tasiast is Rio Narcea’s first development project outside of Spain. The company notes that its recent financing is one of the first debt arrangements for a foreign mining company in Mauritania. The project will replace production from the company’s producing gold mines in northern Spain, both nearing depletion.

Remaining funds for the US$63.5-million Tasiast mine will come from cash on hand and contributions from the company’s producing Aguablanca nickel-copper-platinum group metals mine in southern Spain. Rio Narcea has hedged 280,000 oz. of forward gold production from Tasiast until March 31, 2012, at a strike price of US$600 per oz. and a call strike price of US$795 per oz.

Tasiast is an environmentally benign project situated in an isolated desert region about 162 km east-southeast of the port city of Nouadhibou, and 300 km north of the capital city of Nouakchott.