Rose Petroleum plc

Resource Investor

21-February-2005

Vane Minerals Sees First Gold Output from Mexico Project in March

/images/press/resource investor logo.jpgBy Stephen Clayson LONDON

Vane Minerals, the London Alternative Market listed precious metals explorer is continuing to implement its avowed strategy of securing early cash flow from its small projects to fund its search for a true leviathan deposit. The company expects to be receiving full production from its Diablito project in Mexico by the middle of March this year, and the auguries are good for a similar eventuality at its Mina Charay licence, also in Mexico.

Diablito has always been earmarked as Vane?s early exploitation project, and the company is ?ahead of schedule? in achieving this objective according to Commercial Director Matthew Idiens. The company has put the finishing touches to the development plan for Diablito, and the relevant documents are simply awaiting the signature of the chosen mining contractor before development work can begin in earnest.

Approximate projected output from Diablito is 50t ore per day, requiring the actual mining of 70t of material and yielding 0.39oz gold and 43.5oz silver per tonne. Ore from the project will be trucked to an existing smelter for refining.

Vane?s [VML.L] second source of early cash flow is likely to be found in the Mina Charay project. The company has just obtained a very encouraging set of drill results for Mina Charay, with metal grades as high as 1.074oz/t gold and 20.6oz/t silver encountered. Between 5 and 10 holes of further drilling as well as seismic surveying is planned on the concession, after which a definitive decision can be made on whether to develop the project. To allow for this Vane has extended its exploration licence until July, and assuming that approval is given for development then Mr Idiens believes production to be achievable within 12-18 months. Though metal grades are not expected to be as high as those found at Diablito, the potential of Mina Charay is clearly still significant as a low initial investment revenue stream.

If Mina Charay were to come on stream in around 12 months time then Mr Idiens says that this would synchronise rather nicely with the requirement for ?serious spending? at Vane?s Paraguayan exploration licences, which were acquired in November. The company is conducting a wide ranging programme of stream sampling on the licences in order to identify targets for drilling, with chemical analysis being undertaken in neighbouring Brazil. Vane?s exploration team have reportedly attained a wide variety of success earlier in their careers in identifying sizable deposits through basic but well conducted stream sampling.

Vane is about to commence a 22 hole drilling programme at its Guadalcazar concession in Mexico. This is the company?s ?first potential elephant? in terms of absolute resource size, and is said by Mr Idiens to have ?blue sky? potential of 1moz gold plus. There are 8 identified targets so far at Guadalcazar, and Vane hopes to have at least preliminarily defined a resource on the concession after the conclusion of the upcoming programme. If this is attained then the company will be liable for a $5m dollar payment to acquire the licence, and this will necessitate a rights issue as the £3.8m that Vane raised in its June 2004 AIM flotation will be insufficient for company wide capital requirements in addition to the cost of securing Guadalcazar.