August 23, 2011

Mediterranean - Çorak and Taç Gold/Base Metals Project Positive Preliminary Assessment On Development Of Mine And Mill

Vancouver, B.C., Mediterranean Resources Ltd. (TSX: MNR; Frankfurt: MHM1) ("Mediterranean" or the "Company") has filed on SEDAR the final report for its Preliminary Assessment ("PA") study on the development of the Çorak and Taç deposits at its Yusufeli project in North-eastern Turkey. This study (which is compliant with National Instrument 43-101 and can be accessed in full at, has been prepared by SRK Consulting (Canada) Inc. ("SRK") of Vancouver, British Columbia. The Company had previously announced the initial release of key details from this study on June 14th 2011, which is accessible at:


Due to the recent advancement of the Arkun Hydroelectric Dam (see our release of August 19, 2011), upstream from the Yusufeli project, the Company and the consultants preparing the PA became aware that there would be a significant lowering in electricity costs to the project. Electrical power is estimated to account for 20% of processing and G&A; costs. Every $0.01/kwh reduction in power cost improves base case PT-NPV5% by $2.7M. Thus, in this full version of the PA, the lower cost of US$ 0.15 cts/kwh was incorporated and resulted in a meaningful increase in the Net Cash Flow of the project compared with the data presented in the initial press release of June 14, 2011.



  • Net Present Value (before tax and interest) of US$366 M and US$256 M using one year and two year historic metals prices respectively
  • Net Present Value (before tax and interest) of US$157 M and US$87 M using three year historic and base case metals prices respectively
  • In-pit, contained resources of 14.4 Mt, 905,000 oz gold, 104 Mlb of zinc, and 32 Mlb of copper and 40 Mlb of lead using metal prices of US$1,000/oz gold, US$2.75/lb copper, US$0.85/lb lead, $0.90/lb zinc and US$16.00/oz silver for the base case optimization
  • Two stage mining with Çorak pit being exploited first followed by the Taç deposit
  • Initial Capital Expenditure of $125 M (including a 25% contingency)
  • Projected mine life of 7.2 years and average annual production over mine life of 94,500 oz Au.
  • Project 100% owned by Mediterranean Resources
  • Located in a favorable mining jurisdiction
  • Extensive unexplored territory near the project

Potential cash flow model outputs are shown in the following table:

ParameterUnitCase A
Base Case
Case B
3-year Ave
Metal Prices*
Case C
2-year Ave
Metal Prices*
Case D
1-year Ave
Metal Prices*
Gold PriceUS$/oz1,0001,0941,2071,346
Silver PriceUS$/oz16.0019.0021.9627.36
Copper PriceUS$/lb2.753.063.413.84
Zinc PriceUS$/lb0.90.860.971.00
Lead PriceUS$/lb0.850.891.001.06
Net Cash Flow - undiscounted
and before tax and interest
Net Present Value - before tax
and interest (5% Discount rate)
Internal Rate of Return - before tax
and interest
Pre-production Capital
Payback Period
Production Years32.51< 1
Payable Goldoz680,000
Payable Silveroz115,000
Payable CopperMlb29
Payable ZincMlb88
Payable LeadMlb33

*As at May 31, 2011 calculated from LME monthly averages

The economic results summarized in the Preliminary Assessment are only intended to provide an initial, high-level review of the project potential. The PA mine plan and economic model include the use of inferred resources which are considered to be too speculative to be used in an economic analysis except as allowed for in preliminary assessments. There is no guarantee that inferred resources can be converted to indicated or measured resources and, as such, there is no guarantee that the project economics described herein will be achieved.

Background and Discussion of the Preliminary Assessment Study (PA)

The Çorak deposit is predominantly a gold deposit with strong zinc and lead components (and a small amount of silver), while the Taç deposit is largely a gold deposit with a strong copper component. Both are amenable to open pit mining.

The objective is to first mine and mill the higher-grade (and lower stripping ratio) gold and base metals of the Çorak deposit producing a Pb/Zn flotation concentrate on-site for shipment to an international smelter. This first phase will last for approximately four years. The second phase will be the mining of the Taç deposit producing a gold-rich copper flotation concentrate.

Daily throughput of the mill is proposed to be 5,500 tonnes per day ("tpd") (approximately two million tonnes per annum "Mtpa").

As the town of Yusufeli is located only 6 km from the project, there will be no requirement for a permanent camp. Mining will be undertaken by a Turkish firm on a contract basis, thus minimizing the capital requirements for mine equipment.

The mill is planned to be constructed above the high-water mark of the projected Yusufeli dam. Dry-stacked tailings would also be placed above the dam's high water mark.

Mining Study

SRK has completed a mining study and has estimated mineable resources for the Çorak and Taç deposits. SRK has also produced a mine schedule for the mineable resources constrained inside a US$1,000 gold, US$2.75/lb copper, US$0.85/lb lead, US$0.90ct/lb zinc and US$16.00/oz silver optimized pit shell for the two mines.

SRK completed the pit optimization and design incorporating geotechnical recommendations in regard to pit slope geometry and mineable resources estimated by SRK. The optimization inputs for the mining study work were based on known test work parameters and metal price historic/future prices at the time (May 2011).

Qualified Persons

The information in this release that relates to Exploration Results, Mineral Resources, and Metallurgy is based on information compiled in the Technical Report on the Yusufeli Property prepared by SRK in May 2009 (the "2009 Report"). The wireframe model for Taç and the resource estimation work for both Taç and Çorak were completed by Abolfazl Ghayemghamian under the supervision of Marek Nowak, Principal Geostatistician, who also oversaw the data verification and resource validation. The wireframe model for Çorak was created by Wayne Barnett. Chris Bonson is responsible for the sections of the 2009 Report dealing with geology, deposit types and mineralization. Mike Redfearn was responsible for the metallurgical testing and mineral processing section of the 2009 Report. The 2009 report was reviewed by Dr. Jean-François Couture. By virtue of their education, membership to a recognized professional association and relevant work experience, each of Mr. Ghayemghamian, Mr. Nowak, Dr. Bonson, Dr. Barnett, Mr. Redfearn and Dr. Couture is an Independent Qualified Person as defined by National Instrument 43-101.

The Preliminary Assessment was prepared by an integrated engineering team led by SRK as the primary author of the PA. The following Qualified Persons were involved in the development of the Preliminary Assessment, and have reviewed and approved the contents of this news release:

  • Overall management and cost estimate preparation for the Preliminary Assessment was led by Gordon Doerksen, P.Eng. of SRK
  • Process plant design was led by David Brimage MAusIMM of Ausenco Solutions Canada Incorporated and reviewed and signed off by SRK
  • Mining studies were completed by Dino Pilotto, P.Eng. of SRK
  • Engineering design and costing of the tailings management facility, waste dump and surface water management infrastructure were the responsibility of Maritz Rykaart, P.Eng. of SRK
  • Pit geotechnical design parameters were provided by Bruce Murphy of SRK, a Fellow of the South African Institute of Mining and Metallurgy

Each of the aforementioned, excluding Mr. Brimage, is an Independent Qualified Person under National Instrument 43-101, and has reviewed and approved the technical information in this release for which he was responsible.

Signed on behalf of the Board of Directors

For further information please contact:

Christopher Ecclestone
Chief Executive Officer

Forward-Looking Information

This news release contains "forward-looking information" under Canadian securities law. Any information that expresses or involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words such as "expect", "anticipate", "believe", "plans", "estimate", "scheduling", "projected" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking information. Forward-looking information relates to, among other things: the price of silver and gold; the accuracy of mineral resource and mineral reserve estimates; the ability of the Company to finance its operations and capital expenditures; future financial and operating performance including estimates of the Company's revenues and capital expenditures and estimated production. Forward-looking information are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking information, including, without limitation, risks relating to: fluctuating commodity prices; calculation of resources, reserves and mineralization and precious and base metal recovery; interpretations and assumptions of mineral resource and mineral reserve estimates; exploration and development programs; feasibility and engineering reports; permits and licenses; title to properties; recent market events and conditions; economic factors affecting the Company; timing, estimated amount, capital and operating expenditures and economic returns of future production; operations and political conditions; environmental risks; and risks and hazards of mining operations. This list is not exhaustive of the factors that may affect any of the Company's forward-looking information. Forward-looking information about the future are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking information due to a variety of risks, uncertainties and other factors. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Accordingly, readers should not place undue reliance on forward-looking statements or information. The Company's forward-looking information are based on the assumptions, beliefs, expectations and opinions of management as of the date of this press release, and other than as required by applicable securities laws, the Company does not assume any obligation to update forward-looking statements and information if circumstances or management's assumptions, beliefs, expectations or opinions should change, or changes in any other events affecting such statements or information. For the reasons set forth above, investors should not place undue reliance on forward-looking information.

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