Positive economics at Inmaculada for International Minerals and Hochschild

Vancouver – A preliminary economic assessment of the Angela Vein deposit, part of the Inmaculada gold-silver project in southern Peru, has returned promising numbers for joint-venture owners International Minerals (IMZ-T) and Hochschild Mining (HOC-L).

For a capital investment of just US$168 million, International Minerals and Hochschild could develop an underground mine tapping into the Angela Vein deposit at a rate of 3,000 tonnes per day to produce 117,000 oz. gold and 4 million oz. silver annually for 7.5 years.

The silver credits at Angela Vein would more than cover the cost of producing gold, which means the operation would be able to produce an ounce of gold for negative US$94. Based on a gold price of US$1,000 per oz. and a silver price of US$17 per oz., the mine should generate a 41% pretax internal rate of return and carries a net present value of US$434 million (using a 5% discount rate).

During its almost eight years of operation the mill and flotation facility would process 8 million tonnes of ore carrying an average grade of 3.8 grams gold per tonne and 137 gram silver per tonne. The flotation plant is expected to recover 88% of the ore’s gold and 83% of its silver to a single concentrate.

The underground mine would employ long hole stoping, an effective mining method for a deposit like Angela Vein that has good continuity of mineralization along strike and an average vein width of 6 metres. A main development decline will head straight into the vein footwall; a series of spiral ramps off the decline will provide assess to the mining blocks.

International Minerals has already earned a 51% stake in Inmaculada. The company is working to increase that stake to 70% by completing a feasibility study before September 2013 and issuing 200,000 shares to Hochschild in staged payments. International Minerals intends to fast track its earn-in by completing the feasibility study before the end of 2011.

The two companies are already partners at an operating mine: Hochschild owns 60% of the Pallancata silver mine, also in Peru, and International Minerals holds the other 40%. The mine had a good second quarter, producing 2.53 million oz. silver at a cash cost of US$5.47 per oz. (net of gold credits).

Even after using cash flow to finance its portion of the capital expenditures at Pallancata, which are expected to total US$46 million this year, International Minerals still expects to receive US$22 million in cash dividends from the mine.

On news of the Inmaculada study International Minerals’ share price gained 3¢ to close at $4.43. The company has a 52-week trading range of $3.50 to $4.70 and has 115 million shares outstanding.