Tungsten

[Tackler]

Primary Metals' Panasqueira production increases by 25%

2006-01-20 14:17 ET - News Release

Mr. James Robertson reports

TUNGSTEN MINE OUTPUT INCREASES TO 3,000 TPD AT PANASQUEIRA

Primary Metals Inc. has provided recent progress at its wholly owned Panasqueira tungsten mine in Portugal where new underground mining equipment has been introduced and a refurbishment program is under way. Mine output has increased significantly to 3,000 metric tons per day (tpd) from previous levels of 2,400 tpd, an increase of 25 per cent. A record daily production of 3,185 tonnes was recorded earlier this month and management believes that these higher production levels can be maintained.

The increase results from improved efficiencies in the mine and the introduction of new, low-profile mining equipment including three new Atlas Copco ST 600 LHD (load/haul/dump) units and three new jumbo boom underground drill rigs. Another low-profile LHD unit has been ordered for delivery at the end of March of this year. A new dumper unit, as well as a refurbished unit, is also operating in the mine. The underground mine hoist was refurbished last fall and is performing well.

General refurbishment is under way at the mill. The heavy media plant continues to operate well and a new Knelson concentrator has arrived and will be installed in February in the slimes circuit. A small but important increase in tungsten recovery is expected from the use of the new equipment. The mill is now operating 5.5 days per week as a result of the increased mine output.

Mine development and exploration

Underground mine development has been proceeding as planned and 541 linear metres of new development galleries to access new ore have been completed during the three months ended December, 2005. Several of these development galleries have been driven in wolframite veins and have provided ore above the cut-off grades in preparation for accessing new faces and higher grade material. The use of the new low-profile equipment results in less dilution of tungsten vein material with waste rock. Further development work remains to be completed over the next several months, which will allow the mine to significantly improve selectivity of mining areas and subsequently to increase the grade of the feed material to the process plant.

A program of surface and underground drilling has been under way since last November. The program is designed to identify additional tungsten resources outside the known mine areas and to confirm areas for continuing mine development in mine levels 3 and 4. A previously untested greisen zone in the mine appears visually favourable and will be sampled with drilling planned for March. The total program includes seven holes drilled from surface and approximately 20 holes drilled underground. It should be completed by the end of April.

Results to date appear very favourable and it is expected that information from the drilling program, the underground development work and existing mine data, will be used to prepare new reserve and resource estimates. Mine management prepares internal estimates twice a year and this spring, an independent estimate will be prepared in accordance with Canadian National Instrument 43-101. Results will be reported when available.