Aussie gold backs Intrepid’s growth plans

Vancouver — With the merger between Intrepid Minerals (IAU-T, ITDXF-O) and NuStar Mining (NMC-A) moving closer to its final stages, surviving entity Intrepid Mines will soon have the benefit of production cash flow to advance its core exploration and development projects in Argentina and El Salvador.

The production cornerstone of the “new” Intrepid will be the high-grade Paulsens mine in Western Australia, which NuStar placed into production in June 2005. The underground operation is expected to produce an average of 80,000 oz. gold annually for the next five years, based on current reserves to a depth of 300 metres. The mine life could be extended assuming exploration defines additional resources at depth.

Intrepid’s most advanced asset is the Kamila gold-silver project at the Casposo project in San Juan province, Argentina. A feasibility study is under way for a proposed open-pit mine expected to produce an average 65,000 oz. gold and 1 million oz. silver annually, starting in 2007. Existing resources amenable to open-pit mining techniques are sufficient for about five years of production, with potential to extend the mine life through drill programs below or near the proposed pit limits, or at potential satellite deposits.

Once Kamila comes on-stream, Intrepid’s production would increase to 145,000 oz. gold and 1 million oz. silver by 2007-08. Total cash costs of production (post-merger) are estimated at less than US$200 per oz., after silver credits.

The indicated resource at Kamila stands at 1.87 million tonnes grading 5.04 grams gold and 127 grams silver per tonne, with another 439,000 tonnes at 1.9 grams gold and 91 grams silver classed as inferred.

The “potentially minable” portion of the indicated resource is estimated at 1.53 million tonnes averaging 5.75 grams gold and 127 grams silver, along with 145,000 tonnes grading 2.4 grams gold and 87 grams silver in the inferred category.

The proposed processing plant would be a combination of gravity concentration and cyanidation at a moderate grind size. A Merrill Crowe recovery process would be incorporated into the mill circuit. Recoveries of 94% for gold and 80% for silver are anticipated, based on average head grades of 5.5 grams gold and 123 grams silver.

Intrepid is also exploring the nearby Julieta prospect at Casposo. The prospect is situated about 4 km from the Kamila deposit, and is thought to be a related structure.

A first-phase drill program conducted earlier this year generated highly encouraging results, up to 68 grams gold and 246 grams silver over 1.2 metres, and broader mineralized intervals of up to 6.4 grams gold and 32 grams silver over 8.45 metres. The 10-hole, 960-metre drill program targeted exposed portions of the Julieta vein system at 10 to 40 metres vertical depth.

Based on vein textures, the low silver-to-gold ratio and fluid inclusion studies, Intrepid believes that Julieta represents a low-sulphidation epithermal system at a very high level. The prospect will be further tested by a deeper drill program later this year.

El Salvador

Elsewhere in Latin America, Intrepid recently completed a first-phase program at its wholly owned San Jacinto prospect in eastern El Salvador. The project lies within the San Cristobal district, which Intrepid has been exploring since 1997. The company holds four exploration licences covering 120 sq. km in the region.

The early stage San Jacinto prospect is situated about 5 km south-southwest of Intrepid’s Oro Nuevo project, and consists of a north-trending vein system that can be traced on surface for 1 km.

A trenching program carried out earlier this year tested the Main San Jacinto vein over a strike length of 1.5 km. Of the 27 trenches, 11 returned gold values of more than 1 gram, with notable results being 1.15 grams gold over 18.8 metres, 2.4 grams gold over 13.5 metres, and 5.11 grams gold over 8 metres, from three of the best trenches.

The prospect will be further tested with a preliminary drill program consisting of five holes drilled to depths of up to 150 metres.

Intrepid has other exploration prospects in El Salvador, along with other prospects that are yet to be tested at Casposo in Argentina. The company also has 19 other properties in San Juan province, covering extensive low and high-sulphidation systems.

The companies had hoped to complete the merger by late March, but the expected closing has been delayed until June. Once the merger is formally concluded and approved by regulators, the new Intrepid Mines will have 131.9 million shares issued and outstanding. NuStar and Intrepid shareholders will own 62.6% and 37.4%, respectively, of Intrepid Mines, which will apply for a listing on the Toronto Stock Exchange and retain an Australian listing.