Mr. Glen Kuntz reports

MEGA PRECIOUS METALS PROVIDES POSITIVE METALLURGICAL RESULTS FOR THE MONUMENT BAY PROJECT

Mega Precious Metals Inc. has released positive results from the continuing metallurgical work being completed by Thibault & Associates Inc. on the conceptual open pit within the Twin Lakes deposit at the Monument Bay project. The metallurgical program results will be included as part of Mega's upcoming maiden gold and tungsten National Instrument 43-101 resource estimate and for future preliminary economic assessment (PEA) work.

The preliminary metallurgical recovery results suggest overall gold recoveries of 90.3 per cent which were achieved using standard conventional milling processes. Further to this, Thibault and Mega have developed very competitive operating costs for the various process scenarios under consideration based on a dynamic economic model (DEM) AACE Class V. These preliminary mill operating costs were defined for extraction of gold mineralization from 5,000-, 10,000- and 18,000-tonne-per-day milling rate scenarios.

Highlights of the preliminary metallurgical process

• Overall gold recoveries of 90.3 per cent which includes recovery from a bulk sulphide concentrate, extraction in pressure oxidation leaching (POX)/cyanidation and recovery of gold in a CIP circuit;
• Bulk sulphide concentrate has a mass pull of 5.4 per cent of the process ore with a small POX circuit, for instance, a small amount of ore creates the concentrate;
• Dynamic economic model (DEM) estimated process operating costs (opex) for gold dore production between $10.10 and $15.35 per tonne.

The company is currently completing additional gold and tungsten metallurgical tests to further optimize gold and tungsten recoveries.

Glen Kuntz, PGeo, president and chief executive officer, stated: "We are pleased to have defined excellent overall gold recoveries that are amenable to well-established milling scenarios. The milling scenarios have been designed to incorporate Manitoba's power costs (currently some of the lowest in North America) of between two and four cents k/hr. The combination of high recoveries and low power costs creates a competitive DEM processing cost model estimate which is quite favourable for the ongoing economic evaluation and optimization work. We are also pleased with the progress we are continuing to make surrounding the tungsten processing and recoveries. The final process and overall tungsten recoveries will be determined after additional metallurgical analysis is completed. These calculations will form the basis for our upcoming technical reports."

The process for the recovery of gold and tungsten is based on the testing completed to date and is illustrated in the overview block diagram on the company's website. The process concept takes advantage of selective mining of the gold-tungsten zone separately such that additional processing requirements for tungsten byproduct recovery are applied to a smaller tonnage size to minimize costs. The gold-bearing, bulk sulphide concentrates are combined and processed for gold recovery in a common process. To maximize recoveries, the process design is based on conventional pressure oxidation of the bulk sulphide concentrate followed by cyanidation and final gold recovery by carbon adsorption, stripping, electrowinning and refining.

Two options are being considered for tungsten recovery. The first option is illustrated in the block diagram whereby tungsten is recovered from bulk sulphide flotation tailings by scheelite rougher flotation with cleaner flotation and acid leaching to upgrade the final concentrate to 65 per cent WO3 grade. An alternative conceptual scenario considered for tungsten production involves the production of a lower-grade (30 per cent WO3) concentrate without acid leaching of impurities, followed by hydrometallurgical processing of the concentrate to produce ammonium paratungstate (APT). The final process and overall tungsten recoveries will be determined after additional metallurgical analysis is completed on both options.

Preliminary metallurgical recovery

Based on the degree of definition of the process to date, the overall estimated recoveries of gold were selected using process test data where available and typical assumptions as required. Bench-scale data are based on composite test samples processed to date. Input parameters were entered into the process flowsheet simulation that calculated the overall recoveries based on a closed circuit operation.

                             GOLD RECOVERY                                                     
                                                                           
Extraction process                 Recovery                             Comments

Recovery to bulk sulphide             95.0%         Based on typical bench-scale
concentrate                                          test results for both zones
Extraction in POX/cyanidation         96.0%         Based on typical bench-scale
                                                      test results for gold zone
Recovery in CIP circuit               99.0%      Typical value -- not yet tested
Overall gold recovery                 90.3%      (95 per cent by 96 per cent) by
                                              (99 per cent) equals 90.3 per cent
       

Preliminary DEM mineral processing operating cost

The conceptual cost assessment to define preliminary process operating costs for the various process scenarios was based on an estimated degree of accuracy of minus 10 per cent to plus 45 per cent, without contingency which is a typical range associated with a preliminary economic assessment. A metallurgical balance was established for the process flowsheet for each case and the process equipment was sized to define preliminary process-specific electrical loads for the processing facility.

All other consumables and labour requirements were defined based on a combination of measured and estimated input parameters. Reagent unit costs were based on budgetary quotations and electricity rates were based on current Manitoba Hydro fee schedules. Further refinement to the operating costs is expected as additional testing is completed to better define input parameters such as comminution circuit indices.

        SUMMARY OF METALLURGICAL PARAMETERS AND RESULTS FOR GOLD           

Parameter                                       Case A     Case B     Case C

Au zone throughput -- TPD                        5,000     10,000     18,000
Gold dore production costs -- dollars 
per tonne                                      
Reagents                                         $4.75      $4.27      $4.06
Concentrator consumables                         $2.68      $2.48      $2.36
Concentrator electrical power and fuel           $1.86      $1.74      $1.68
Labour                                           $4.27      $2.14      $1.19
Maintenance consumables                          $1.48      $0.99      $0.72
Support laboratories cost                        $0.10      $0.05      $0.03
Health and safety                                $0.07      $0.04      $0.02
Technical support/metallurgical and                                         
environmental                                    $0.14      $0.07      $0.04
Total                                           $15.35     $11.78     $10.10
Recoveries                                                                  
Au                                               90.3%      90.3%      90.3%

Qualified person

Tim McKeen, PEng, lead process design engineer of Thibault & Associates Inc., located in Fredericton, N.B., is acting as a qualified person in compliance with National Instrument 43-101 with respect to the metallurgical bench-scale process development test program and process flowsheet design information contained in this release and has reviewed the contents for accuracy.

Glen Kuntz, PGeo, president and chief executive officer, is the qualified person for the information contained in this press release and is a qualified person defined by National Instrument 43-101. Mr. Kuntz was senior resource geologist at the Campbell gold mine and global spatial data systems co-ordinator for Placer Dome, vice-president, enterprise mining solutions, for Runge Ltd., and most recently, chief operating officer with Mega Precious Metals.

We seek Safe Harbor.