Mountain Lake tallies up Bobby’s Pond

Consultants Roscoe Postle Associates (RPA) have pinned a National Instrument 43-101-compliant resource estimate on Mountain Lake Resources‘ (MOA-V) Bobby’s Pond exploration project, near Buchans, Nfld.

RPA pegs indicated resources in lenses 6, 7, and 8 at 380,000 tonnes running 0.85% copper, 4.73% zinc, 0.28% lead plus 16 grams silver and 0.02 gram gold per tonne. Inferred resources contained in all 8 known lenses amount to 550,000 tonnes averaging 0.8% copper, 4.12% zinc, 0.51% lead, 16.1 grams silver, and 0.02 gram gold.

RPA says mineralization in lenses nos. 6 and 8, two of the larger lenses, remains open at depth.

The new estimates are based on a minimum width of 2.5 metres and a cutoff grade of 2% copper equivalent. Also employed were data from 1,181 metres worth of drilling in 5 holes by Mountain Lake, supplemented with 14,495 metres in 64 holes by Inco (N-T, N-N) between 1988 and 1996.

An historical (pre National Instrument 43-101) resource estimate by Inco totalled 1.2 million tonnes grading 1.06% copper, 0.71% lead, 6.91% zinc, plus 16.8 grams silver and 0.2 gram gold per tonne.

RPA recommends a10-hole, 1,800-metre infill drilling program aimed at boosting the inferred resources to the indicated category. That would be followed up by 10 to 12 holes totalling 3,000 metres designed to test for additional mineralized zones along the northeastern and southwestern extensions of the deposit.

The consultant concludes that there is “good potential” for additional discoveries to the northeast, southeast, and southwest, with several targets exhibiting similar geological and geophysical characteristics to the known mineralization.

RPA’s proposed plan also includes metallurgical test work to determine the optimum recovery processes in anticipation of a scoping study.

Late last year, Mountain Lake began “constructive discussions” with Aur Resources (AUR-T) regarding the possible toll milling ore from Bobby’s Pond at Aur’s proposed Duck Pond mill, 30 km away via an existing all-weather road.

Aur expects to have the Duck Pond copper-zinc mine up and running at the end of 2006. The mine is scheduled to produce around 41 million lbs. (18,600 tonnes) of copper and 76 million lbs. (34,500 tonnes) of zinc annually for up to 8 years.

Earlier this year, Aur hedged 75% of the planned byproduct zinc production from Duck Pond at a weighted-average price of US$1,580 per tonne or US71.6 per lb. The contract runs from July of 2007 through the end of 2011, with prices falling from US84.2 per lb. in 2007 to US63.2 per lb. in 2011. In all, some116,300 tonnes of zinc will be delivered in equal monthly instalments.

Aur says the revenue from the sales contract will cover around 70% of the project’s $92-milliion price as outlined in the feasibility study. The funds are expected to exceed total mine operating costs, meaning that all copper and precious metal sales will generate free cash flow.

Aur ended 2005 with record earnings of US$142.3 million (US$1.49 a share), 47% better than in 2004. Revenue between the two periods increased by around 33% to US$446.9 million, while cash flow jumped by 53% to a record US$249.8 million.

The increase comes compliments of higher copper prices and production from the Quebrada Blanca and Andacollo mines in Chile. The company realized an average of US$1.83 per lb. for the year, compared with the London Metal Exchange average price of US$1.67 per lb.

Aur holds a 76.5% stake in Quebrada Blanca; Inversiones Mineras and Chilean state agency Empresa Nacional de Minera (Enami) own 13.5% and 10% interest, respectively. Aur’s stake at Andacollo is 63%, with Compaa Minera del Pacfico owning 27%, and (Enami) at 10%.

Aur forecasts its 2006 net earnings at around US$138 million (or US$1.43 a share), with revenue figured at US$464 million and cash flow at US$247 million.The company employed a copper price of US$2 per lb. for its 2006 outlook.

At the end of 2005, Aur had US$361.3 million in cash, up from US$206.5 million at the end of 2004.