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Blue Note Mining Reports First Quarter Results - Caribou Mines on Schedule
Thursday May 17, 1:31 pm ET

http://biz.yahoo.com/cnw/070517/e_bluenote_1stquarres.html?.v=1

Symbol & Exchange: BN-TSXV Shares outstanding: 271 Million
MONTREAL, May 17 /CNW Telbec/ - Blue Note Mining Inc. is reporting its unaudited financial results for the period ending March 31, 2007. During this quarter, the Company incurred a net loss of $2,656,435 ($0.01 per share) compared to a net loss of $259,966 ($0.02 per share) for the same period last year.

The company is also pleased to announce that it has signed an engagement letter for private placement of flow-through common shares for proceeds of up to $2,500,000, subject to the approval of the regulatory authorities having jurisdiction over the securities of the Company.

Each common share of the Company will be issued at a price of $0.60 per common share on a flow-through basis. The flow-through common shares issued under the private placement will be subject to a four-month hold period and offered only to accredited investors. The gross proceeds will be used for exploration of Blue Note's properties in Canada.

Blue Note also reports an increase in its capital budget for the refurbishment and restoration of the Caribou underground mine and mill and Restigouche open pit mine. Capital costs for the project have risen by C$24 million from $60 to $84 million. These additional capital investments were critical to delivering the project as planned and on schedule in order to capitalize on robust metals prices.

The bulk of the capital budget increases stem from three areas, namely, mill rehabilitation ($10.9 million), mine dewatering and rehabilitation ($9.8 million) and capitalized operating costs ($3.5 million).

The significant hike in costs of goods and services, across the board, due to a boom in the mining and construction industries, played a major part in the budget increases. For instance, the piping and pipe fittings purchase price was found to have increased by up to 70% over the original budget price.

In the mill, it was discovered that more piping was required than was previously anticipated due to the poor condition of the existing piping. This, combined with the associated increased cost of materials and labour, accounted for an additional $5.3 million in capital expenditures.

There was also an additional $4 million investment in electrical and instrumentation infrastructure including the associated increased labour costs. Blue Note was not able to undertake the physical inspection of much of the mill's electrical gear until 2007 and thus was unable to foresee the extent of the deterioration of the existing equipment. This necessitated either costly repairs and/or modifications, or in some cases, complete replacement. Elevated instrumentation costs, while in part related to increased cost of materials and labor were due to a strategic increase in the degree of automation installed in the mill.

Upon the completion of the Caribou mine dewatering, sections of the mine were found to require more ground re-conditioning than previously anticipated. As well, management made the strategic decision to undertake some aspects of mine development earlier than scheduled to ensure meeting the projected start-up date. The combined total amount invested for these purposes was $7.3 million.

At Restigouche, the water treatment plant which was modified to handle the increased volume of water to be treated during the pit dewatering operation was found to be inadequate to achieve this site's regulated stringent discharge requirements. Additional consultants and contractors were engaged to modify and operate a re-engineered process. This required an increase in capital investment of $2.5 million.

In the present market conditions, more new equipment than anticipated had to be acquired as a result of the unavailability of good condition used equipment. This will, however, have the benefit of lowering our operating and maintenance costs over the long term.

The start-up of the mine is on schedule and with the recently closed C$25 million debt financing, the Company is fully funded through start-up of production.

Blue Note Mining is a mineral exploration and mine development company with properties in New Brunswick. The company's shares trade on the TSX Venture Exchange under the symbol BN.

Forward-Looking Statements

This news release contains discussion of items that may constitute forward-looking statements within the meaning of securities laws that involve risks and uncertainties. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurances that its expectations will be achieved. Factors that could cause actual results to differ materially from expectations include the effects of general economic conditions, actions by government authorities, uncertainties associated with contract negotiations, additional financing requirements, market acceptance of the Company's products and competitive pressures. These factors and others are more fully discussed in Company filings with Canadian securities regulatory authorities.

The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this news release.

For further information

Lorne Woods, Vice President, Investor Relations, Blue Note Mining, [phone], [e-mail], www.bluenotemining.ca


Source: Blue Note Mining Inc.