Mr. Rob Washer reports

DYNASTY COMPLETES FIRST SHIPMENT OF GOLD FROM ECUADOR TO CANADIAN REFINERY

Dynasty Metals & Mining Inc. has delivered its first shipment of gold dore, containing approximately 2,400 troy ounces of fine gold, with an approximate value of $3-million (U.S.), produced from its Zaruma gold project in Ecuador, to a refinery in Canada. Subsequent to the sale of this gold, the company will have approximately $9-million (U.S.) in cash in its treasury.

To date, the company has processed approximately 5,300 ounces of gold at its plant in Zaruma, including the 2,400 ounces delivered to the refinery. Of the remaining 2,900 ounces, 1,400 ounces will be extracted in due course and 1,500 ounces will remain as a work in progress contained in the carbon-stripping section of the plant. In addition, the company has processed in excess of 19,000 ounces of silver, which it expects to sell locally.

Robert Washer, president and chief executive officer of Dynasty, commented: "The first exportation and upcoming sale of gold is a significant milestone for the company, particularly in a time when gold prices are near an all-time high. The processing plant at Zaruma is fully operational, and with the tonnage of material being mined increasing each month, we expect to be cash flow positive for the remainder of the year."

Zaruma mining operations

The company continues to develop its three declines, Cabo de Hornos, Barbasco and Ayampamba, with in excess of 250 employees working in shifts to advance the declines and develop the resource 24 hours a day. To date, the company has developed over 3.5 kilometres of tunnels to vertical depths ranging from 100 to over 250 metres, depending on the decline.

Mining of the resource at the main decline, Cabo de Hornos, has commenced. Recently the combination of the resource together with the other lower-grade development material mined has resulted in the delivery of approximately 250 tonnes per day at an average head grade of 6.4 grams per tonne gold to the mill. As the company continues to develop this resource it is expected the tonnage of material mined will continue to increase.

The company has now reached the resource at Barbasco and is on track to reach the resource at Ayampamba later in the third quarter. The company expects to have sufficiently developed and commenced mining these resources to begin its delivery to the plant in the fourth quarter.

While the company continues to see improvement with its overall mine development and operations activities, progress has been much slower than expected over the last six months. In addition to the company having to address the previously reported mining start-up challenges, the company's inability to secure a timely exploitation contract with the Ecuadorian government and the time it has taken for the transition to the regulations of the new mining law have caused management to defer making certain capital investment decisions, directly impacting mine development progress.

After positive meetings with the new Minister of Non-Renewable Natural Resources during the last quarter, the company hired 30 additional local employees to work at the mines; purchased a significant amount of additional mining equipment; continued to train local workers for skilled positions; and hired additional experienced Australian mine managers to facilitate increased future production and the overall efficiency of its mining operations. The company currently expects that some time within the first quarter of 2011, it will be mining and delivering to the Zaruma plant 800 tonnes of material per day, or the approximate annual equivalent of 300,000 tonnes of material.

Zaruma processing plant

The processing plant is fully commissioned, with gold recovery averaging 90 per cent to date. To maximize the recovery of silver, the company has commenced the construction of a flotation system, which is scheduled to be operational in the fourth quarter of this year.

Exploitation contract

The company continues to have constructive dialogue with Wilson Pastor, Ecuador's Minister of Non-Renewable Natural Resources, and his ministry with respect to formulating an exploitation contract that will set out the specific terms for mining operations, including the royalty payable to the state on the sale of the metals. Throughout this dialogue, the company has kept the ministry apprised of the status of its operations and its future plans, and the ministry, in turn, has assigned a person to assist the company and report back to the ministry on the company's progress. The company would like to thank the ministries for their continuing assistance and co-operation.