Rose Petroleum plc

Increased Gold/Silver Production Results, Mexico

4-July-2011

Higher grade gold/silver production as a result of the Ruiz Brothers Joint Venture

Highlights

  • 24.6% increase SDA mill throughput and increase in gold/silver mill head grades through mining and milling of JV ore:
  • 10,930 tonnes throughput, 2.81 g Au/t, 136gAg/T  compared with 8,773 tonnes, 2.2 gAu/t, 195 gAg/T for September- December 2010 period
  • All gold/silver sold unhedged
  • New areas identified for higher grade mining
  • Construction underway on a cyanide batch leaching and Merrill-Crowe recovery facility at the SDA Mill: expected by the Board to increase revenue following commissioning in Q2, 2011
  • Results govern period 1 January - 30 April 2011

VANE today announces higher grade gold/silver production as a result of the Joint Venture ("JV") the Company formed with the Ruiz Brothers ("Ruiz") in the La Rastra during June of 2010. The results are the first that report the recovery progress from switching feedstock from solely VANE's wholly owned Diablito mine to combining areas owned and mined by Ruiz.

The JV has worked to optimise mining processes across the 172.3 hectares governed by the agreement. The Board of VANE is encouraged by the results for the four month period and anticipates that the Company is on track to achieve its production targets for the 2011 calendar year. Feedstock and recovery results at our San Dieguito de Arriba mill ("SDA Mill") for the period are as follows:  

Month

   Throughput tonnes

% Au/Ag recovery

oz Au/Ag recovered

Jan

2,769

80.5/78.6

136/11,471

Feb

2,579

55.7/51.7

130/5,508

March

3,001

73.1/74.6

110/10,370

April

 

Total (Jan-April 2011)

2,581

 

10,930

64.5/55.8

 

68.8/65.8

276/4,862

 

652/32,863

Total (Sept-Dec 2010)

8,773

73.0/73.0

457/40,156

The area covered by the JV is located in the southern part of the State of Sinaloa, Mexico, approximately 117 km north of the SDA Mill and includes an area of interest of approximately 1,500 square kilometers. Ruiz are responsible for primary mining and transport of the ore from the mines to the SDA Mill. Under the terms of the JV, net profits generated by the JV mines are split on an 80:20 basis in VANE's favour until such time as VANE has recovered 150% of any outlaid development/capital costs incurred by it in connection.

Commenting today, Steve Van Nort, CEO of VANE said: "We are extremely pleased with these first results from our decision to process higher grade ore from the JV area surrounding our SDA mill as the Diablito mine nears the end of its life. I feel we have now secured an important new cash generator through the JV agreement with more production potential than at the single Diablito mine. Our intention is to use funds from our Mexican operations to drive our exploration portfolio in the United States. "

Kristopher K. Hefton, Chief Operating Officer VANE Minerals (US) LLC, BSc Geology, who meets the criteria of a qualified person under the AIM Rules - Guidance for Mining, Oil and Gas Companies, has reviewed and approved the technical information contained within this announcement.