Announcement to the Australian Securities Exchange and Toronto Stock Exchange



    Masbate Gold Project optimisation review results 206,000oz pa
    at US $306/oz

    PERTH, Western Australia, Oct. 5 /CNW/ - The Board of Directors of CGA
Mining Limited ("CGA", "the Company"), Filminera Resources Corporation
("Filminera") and Phil. Gold Processing & Refining Corp. ("PGPRC") are pleased
to announce the successful completion of the optimisation review into the
development of the Masbate Gold Project in the Philippines.

    Optimisation Results

    The optimisation of the previously completed full feasibility study
("FS") prepared by Ausenco International Pty Ltd Australia ("Ausenco") in June
2006 confirms the robust nature of the Masbate Gold Project, further improving
project economics. The key results of the optimisation are summarised below:

    
    -------------------------------------------------------------------------
                   Optimisation Study Results Years 1 - 8
    -------------------------------------------------------------------------
    Physical Parameters                    Unit
    -------------------------------------------------------------------------
    Milled Ore                             Million Tonnes               37.8
    -------------------------------------------------------------------------
    Grade                                  g/t                          1.63
    -------------------------------------------------------------------------
    Mill Recovery - Gold                   %                           82.7%
    -------------------------------------------------------------------------
    Refining Recovery - Gold               %                           99.9%
    -------------------------------------------------------------------------
    Bullion Produced - Gold                Million ozs                  1.65
    -------------------------------------------------------------------------
    Bullion produced per annum             Ozs                       206,000
    -------------------------------------------------------------------------
    Mill Throughput YR1-2                  Mtpa                            4
    -------------------------------------------------------------------------
    Mill Throughput YR3-8                  Mtpa                            5
    -------------------------------------------------------------------------
    Operating Cash Cost                    US$/oz                        306
    -------------------------------------------------------------------------
    Capital Cost - Project                 US$ million                 119.5
    -------------------------------------------------------------------------
    

    Average annual gold production over the first 8 years of the mine life is
forecast at 206,000 ounces plus silver credits at a cash operating cost of
US$306/oz. The cash operating cost does not reflect the benefit of the 6 year
tax free holiday that PGPRC is entitled to.

    
    -------------------------------------------------------------------------
                      Life of Mine Financial Parameters
    -------------------------------------------------------------------------
    Parameter                              US$650 Gold Price
    -------------------------------------------------------------------------
    Total Cash Flow After
     Income Tax                            US$ million                 529.6
    -------------------------------------------------------------------------
    NPV @ 5% discount                   US$ million                 289.7
    -------------------------------------------------------------------------
    IRR Geared - $65M                      %                              77
    -------------------------------------------------------------------------
    IRR Ungeared                           %                              51
    -------------------------------------------------------------------------
    

    An executive summary of the Masbate project optimisation review is
appended to this announcement.

    Mining Contractor

    The optimisation assumes mining will be undertaken on a contractor basis.
A Notice of Intent with respect to a strategic alliance mining contract has
been issued to Leighton Contractors (Philippines) Inc, a wholly owned
subsidiary of Leighton Holdings Limited ("Leighton"). Leighton will provide
the full mining fleet and associated equipment (currently estimated to cost in
the order of US$34m) and will provide contract mining services for the
project. They will work under an alliance agreement as has been successfully
applied at a number of other mines. The alliance agreement is designed to
maintain unlimited flexibility with all aspects of mining, total transparency
of costs and provide the safest and lowest mining cost per tonne. Leighton is
Australia's largest project development and construction company. The group
employs over 25,000 people throughout Australia and Asia and work in progress
is now estimated at approximately $21 billion.
    Leighton has been operating in Asia since 1975, and has a unique
combination of local knowledge and extensive international experience which
has made them the region's international contractor of choice.
    The Asian operations are active in Hong Kong, Macau, China, Mongolia,
Taiwan, Korea, the Philippines, Guam, Thailand, Vietnam, Laos and Cambodia,
with annual revenue in that region over US$300 million and employing almost
2,500 people in Asia alone.
    Today, Leighton is also the world's leading contractor miner, mining in
excess of 100 million tonnes of iron ore and 100 million tonnes of coal each
year, across Australia and Asia. They operate and maintain a fleet of owned
and leased mining plant and equipment, currently worth over US$1.5 billion.

    Reserves and Resources

    As set out in the NI 43 - 101 compliant technical report prepared by
International Mining Consultants Pty Ltd ("IMC") ("the Masbate Report") the
reserves and resources of the project are as follows:

    
    Indicated Resources      59.3mt @ 1.55g/t containing 3.0m oz

    Inferred Resources       33.7mt @ 1.63g/t containing 1.8m oz
    

    Both of the above were calculated at a 0.7 g/t cut-off and US$450/ounce
gold price.

    Low Grade Indicated Resources 18.65 mt @ 0.61 g/t containing 0.4m oz

    Probable Reserves 37.4 @ 1.65 g/t containing 1.984m oz

    The probable reserve reflects a conversion rate of 63% of the total
indicated resource estimate (excluding the low grade dumps) at 0.7g/pt cut
off. Given the conservative gold price (US$450/oz) used to determine the
optimum pit shell adopted in the feasibility study, more of these resources
could convert into a reserve and ultimately, into the mine schedule, once the
project is operational.
    The resource includes 18.65Mt of low grade stockpiles which were drilled,
modelled and metallurgically tested during the FS. The designation was due to
the grade being determined as uneconomic at the then prevailing gold price
(US$450/oz). The improvements in gold price will likely result in this
material being determined as economic and convertible into a reserve category.
The material is presently scheduled for treatment in years 9 and 10 and the
necessary work to reclassify to reserves will be done during operations. It is
however likely that when the new pit optimisation routines based on current
gold price are completed, there may be additional material available within
the open pits that will replace the low grade dump material in the latter
years and thus push the life of mine ("LOM") beyond 10 years.
    It is also planned to undertake further infill drilling which may convert
further inferred resources into the indicated category and subsequently into
additional reserves.

    Metallurgy

    Subsequent to the FS, the owners of the project purchased a large SAG
mill and two large ball mills. The combined grinding capacity of the complete
installation is in excess of that specified within the FS. CGA, under the
supervision of R.W. Bourne and Assoc ("RWB") (consulting metallurgist),
completed testwork at Ammtec Laboratories in Perth WA. The results of that
work indicate that by using the additional grinding capacity of the ball mills
to grind the higher grade material to be processed in Years 1 and 2 to a
fraction of P80.75 micron (compared with P80.150micron in the FS), gold
recoveries can be increased by +4% to +6% dependent on material type.
    At the point in time (Year 3) when the higher grade material has been
mined the finer grind will be discontinued. Modelling of the grinding circuit
by Oreway Metallurgical Consultants ("Oreway") has demonstrated that a mill
throughput approaching 5Mtpa is achievable if a grind of P80.150 micron is set
as the operating standard and a secondary crusher included into the circuit.

    Process Plant

    Lycopodium Engineering Ltd, a highly regarded and internationally
respected Australian design engineering firm has been commissioned as a
subcontractor to Leighton to carry out the detailed design of the processing
facility and selected infrastructure. Leighton has been issued with a Notice
of Intent to undertake the design and construction of the process plant and
selected infrastructure on a Fixed Price Lump Sum ("FPLS") contractual basis.

    Power

    The optimisation assumes that power will be provided by coal fired power
station on Masbate Island. The main benefit of coal generation is the non
reliance on fuel and the vagaries of the international fuel price and reduced
operating costs. This is planned to be financed and operated by a third party.
It is currently anticipated that the coal fired power station will be
completed around June 2009, which will leave an interim period of six months,
during which it is planned to source power from contracted bunker fuel
equipment.
    The incremental costs of operating the project on bunker fuel over the
life of mine ("LOM"), with no coal fired power station is 6%, which in turn
assumes an oil price of US$68/bbl. Costs per ounce increase by 1.5% if the oil
price assumption over the LOM is increased to US$75/bbl.

    Tailings Storage and Facility

    GHD Engineering Limited ("GHD") has been commissioned to carry out the
design and supervise the construction of the tailings storage facility
("TSF"). The original design concept carried out by Knight Piesold will form
the basis for the GHD design. All decant water will be reused in the process
plant. At the point in time when a positive water balance is experienced and
it becomes necessary to reintroduce processed solution to the environment that
solution will be subject to cyanide detoxification and treatment for any
residual heavy metals.

    Security and Community Relations

    A baseline study has been completed detailing the existing environmental
and social conditions in and around the project site. A well respected and
experienced security contractor will be appointed to manage the project site
and an experienced environmental and sociological consulting firm will monitor
the environment and community attitudes to the development.
    An extensive community relations plan has been developed with the program
now approved by the Philippine Government. We have already commenced
implementation of a number of key initiatives, all of which are designed to
enhance the well being and livelihood of local communities on Masbate Island.

    Permits and Approvals

    All key permits have now been secured including the recent approval of
the feasibility studies in respect of PGPRC (processing) and Filminera (mining
and infrastructure) and the issue of a Mineral Processing Permit by the
central and regional authorities in the Philippines.

    Financing

    The Company has already secured preliminary credit approval subject to
documentation and completion of detailed due diligence for a US$65m project
finance facility. The project finance facility documentation is underway and
the execution and drawdown on the facility will be subject to standard project
financing terms and conditions including completion of all conditions
precedent, typical for a project of this nature. Now that the optimisation has
been completed we expect to finalise this facility shortly.
    It is currently anticipated that one of the conditions precedent to the
abovementioned facility will be hedging to provide a level of price protection
on the gold price and potentially oil price. It is the current intention to
use a combination of puts and forward sales, with the object of minimizing the
forward sales component to provide a floor to revenues while leaving
significant exposure to the upside in the gold price.
    In addition to this facility, the Company has A$27.7 million
(August 2007) cash on hand and Filminera has A$9.1M (August 2007). CGA has
recently announced a placement of new shares and promissory notes for a total
raising of US$65m, which is also planned to be applied to the development of
the project.

    Construction Time Frame

    The construction time frame is currently estimated at 15 months, and
consequently gold production is targeted for the first quarter of calendar
2009. The Board recognises that in order to achieve this timeframe it will be
necessary to advance the commencement of certain works and capital purchase
commitments prior to a commitment to development. To this end, the Board has
approved expenditure on work required to maintain the critical path of the
construction schedule.

    Development Timetable

    The Company is working to the following development timetable:

    
    -------------------------------------------------------------------------
                Milestone                                 Date
    -------------------------------------------------------------------------
    Arrange finance                                     Q4, 2007
    -------------------------------------------------------------------------
    Preliminary site works and other
     long lead capital purchases                        Q4, 2007
    -------------------------------------------------------------------------
    Commencement of tailings dam
     and water dam construction                         Q4, 2007
    -------------------------------------------------------------------------
    Commencement of open pit mining                     Q2, 2008
    -------------------------------------------------------------------------
    Plant commissioning                                 Q4, 2008
    -------------------------------------------------------------------------
    Gold production                                     Q1, 2009
    -------------------------------------------------------------------------
    

    Project Team

    A number of key appointments have been made to establish both the
development and operating team in the Philippines and in connection therewith,
the Board of CGA has resolved to issue 2.25m employee options under the
Employee Option Plan, expiring on 30 September 2012. The exercise price will
be $0.90. The Board is pleased to secure the services of these key employees
and looks forward to working with the team.

    National Instrument 43-101 Compliance

    National Instrument 43-101 - Standards of Disclosure for Mineral Projects
("NI 43-101") is a rule developed by Canadian Securities Administrators, which
establishes standards for all public disclosure an issuer makes of scientific
and technical information concerning mineral projects.
    The scientific and technical information and all resource and reserve
estimations regarding the Masbate project contained in this announcement are
based upon the FS and the Masbate Report.
    Readers are cautioned that the conclusions, projections and estimates set
out in this announcement are subject to important qualifications, assumptions
and exclusions, all of which are detailed in the feasibility study and the
Masbate Report. To fully understand the summary information set out herein,
the Masbate Report should be read in its entirety. A copy of the Masbate
Report is available on the SEDAR website at www.sedar.com under CGA's SEDAR
profile.
    Mr Geoff.G.Jones, F.Aus.I.M.M.CP Mng, CGA's general manager, technical,
is acting as the Qualified Person in compliance with NI 43-101 with respect to
this announcement. He has prepared and or supervised the preparation of the
scientific or technical information in this announcement.

    Cautionary Note Regarding Forward Looking Statements

    This announcement includes certain "forward-looking statements" within
the meaning of Canadian securities legislation. All statements, other than
statements of historical fact, included herein including, without limitation,
statements regarding anticipated dates for construction and production, and
other milestones related to the Masbate Gold Project; estimates of capital and
operating costs, recovery rates, production estimates and estimated economic
return; and CGA's future operating or financial performance, are
forward-looking statements. Information concerning mineral reserve and
resource estimates including statements regarding the conversion of inferred
resources to reserves also may be deemed to be forward-looking statements in
that it reflects a prediction of the mineralization that would be encountered
if a mineral deposit were developed and mined. Forward-looking statements
involve various risks and uncertainties and are based on certain factors and
assumptions. There can be no assurance that such statements will prove to be
accurate, and actual results and future events could differ materially from
those anticipated in such statements. Important factors that could cause
actual results to differ materially from CGA's expectations include
uncertainties related to fluctuations in gold and other commodity prices and
currency exchange rates; uncertainties relating to interpretation of drill
results and the geology, continuity and grade of mineral deposits; uncertainty
of estimates of capital and operating costs, recovery rates, production
estimates and estimated economic return; the need for cooperation of
government agencies in the development of the Masbate Gold Project; the need
to obtain additional financing to develop the Masbate Gold Project; the
possibility of delay in development programs or in construction projects and
uncertainty of meeting anticipated program milestones for the Masbate Gold
Project; and other risks and uncertainties disclosed under the heading
"Caution Regarding Forward-Looking Statements" in CGA's Annual Information
Form for the year ended 30 June 2007 filed with the Canadian securities
regulatory authorities on the SEDAR website at www.sedar.com.


    MASBATE GOLD PROJECT OPTIMISATION
    EXECUTIVE SUMMARY

    Introduction

    The optimisation review was undertaken by CGA, Filminera and PGPRC staff
with assistance from independent consultants. The complete FS prepared by
Ausenco which forms the basis for this optimisation review, is the subject of
the Masbate Report, which is available on SEDAR.

    Project Location

    The Masbate Gold Project is located near the northern tip of the island
of Masbate, 360 km south-east of the country's capital of Manila, and is
centred at latitude 120 28' N and longitude 12 24' E. It lies within the
municipality of Aroroy, Masbate Province, Region V, Philippines.
    The Masbate Project is a proven gold mining area with Atlas Consolidated
Mining and Development Corporation ("Atlas") having mined the Masbate gold
deposit between April 1980 and 1994, mining a total of 17.5 Mt at 2.1 g/t Au
from open pit and underground mining operations. The bulk of the ore came from
the Main Vein pit, but several satellite pits and underground operations also
contributed mill feed. Mill throughput averaged 1.2 Mt / p.a. During the 14
years of operation over one million ounces of gold were produced, averaging
72,000 oz / p.a. In addition, a small contribution (49,200 oz) was from
heap-leach operations carried out between 1984 and 1993.

    For a map of the Project Location please see:
http://files.newswire.ca/578/CGAminingOct04pt1.doc

    Ownership

    CGA indirectly owns, through its 100% ownership of Philippine Gold Ltd,
40% of Filminera and 100% of PGPRC. The remaining 60% of Filminera is owned by
a Philippine registered company, Zoom Mineral Holdings Inc, in which CGA has a
40% interest. CGA also has an option to acquire the remaining 60% of Zoom
Mineral Holdings Inc, in accordance with Philippine law.
    Filminera holds the mineral tenements that include the Masbate gold
deposit. The mining claims and applications cover an area of approximately
8,316 ha.
    PGPRC will develop and own the process plant and will be responsible for
the sale of all gold. PGPRC and Filminera have a contractual relationship,
which includes PGPRC purchasing ore from Filminera whilst maintaining joint
financial and legal liability for the social and environmental obligations
under Philippine law.

    For a diagram of the Ownership structure please see:
http://files.newswire.ca/578/CGAminingOct04pt2.doc

    Geology and Mineralisation

    The Masbate mineralisation is of epithermal origin and is located within
a large uplifted block between two regional NW/SE faults. Gold is associated
with sulphide mineralisation (pyrite) that is located within fracture-filling
quartz veins, silicification of the host rock and as selvedge between veins
and wall rock. Calcite is also a common vein mineral. Argillaceous,
sericitisation and bleaching of the wall rock is also a feature of the
mineralisation. Gold is finely distributed within sulphides; mineralogical
work suggests a grain size of 5 um to 20 um.
    The depth and extent of weathering is largely dependent on the host
lithologies, nature and degree of alteration and structural features.
Typically, the volcanic agglomerates are highly weathered to a depth of
between 20 m to 40 m in the Main Vein area and 50 m to 60 m in Colorado.
Moderate weathering along joints and fissures extend to approximately 25 m to
50 m in Main Vein, and below the targeted open pit in Colorado. The massive
quartz veins are unaffected by weathering except where there is brecciation.

    
                   Resources/Reserves Estimate for Masbate

    The FS was carried out by Ausenco who commissioned IMC to interpret,
compute and report resources and reserves in compliance with JORC and NI43 -
101 standards.

    -------------------------------------------------------------------------
                               Cut - Off Grade
    -------------------------------------------------------------------------
                        0.0  0.5  0.6  0.7  0.8  0.9  1.0  1.2  1.5  1.7  2.0
    -------------------------------------------------------------------------
               Au g/t  1.02 1.19 1.35 1.55 1.72 1.84 1.92 2.07 2.34 2.56 2.90
    -------------------------------------------------------------------------
                 M
    Indicated  tonnes 120.3 94.6 75.6 59.3 49.5 43.0 39.4 33.4 24.1 18.8 12.7
    -------------------------------------------------------------------------
              Gold Moz  3.9  3.6  3.3  3.0  2.7  2.5  2.4  2.2  1.8  1.5  1.2
    -------------------------------------------------------------------------
               Au g/t  1.03 1.18 1.37 1.63 1.89 2.10 2.25 2.48 2.82 3.08 3.45
    -------------------------------------------------------------------------
                 M
    Inferred   tonnes  74.0 59.8 45.9 33.7 26.1 21.6 19.1 15.9 12.2 10.1  7.8
    -------------------------------------------------------------------------
              Gold Moz  2.4  2.3  2.0  1.8  1.6  1.5  1.4  1.3  1.1  1.0  0.9
    -------------------------------------------------------------------------

    The resources as set out in the Masbate Report are as follows:

    Indicated Resources      59.3mt @ 1.55 g/t containing 3.0m oz

    Inferred Resources       33.7 mt @ 1.63 g/t containing 1.8m oz
    

    Both of the above were calculated at a 0.7 g/t cut-off and US$450/ounce
gold price.

    Low Grade Indicated Resources 18.65 mt @ 0.61 g/t containing 0.4m oz

    The reserves are summarised below:

    Probable Reserves 37.4mt @ 1.65 g/t containing 1.984m oz

    The probable reserve reflects a conversion rate of 63% of the indicated
resources (excluding the low grade dump material). Given the conservative gold
price of US$450/oz used to determine the optimum pit shell adopted in the FS,
more of these resources could be converted into a reserve, once the project is
operational.
    In late 2006 and early 2007, subsequent to the acquisition of the project
by CGA, an alternative approach to mining has been investigated. This approach
was aimed at taking advantage of the current high gold price and also to
generate higher initial cashflow from the project, thereby improving the
overall economics of the project.

    Mining

    In the FS mineral reserve estimate, it had been assumed that all mining
would target the stockwork and vein material with a cut-off zone within the
stockwork, based on a marginal economic cut-off.
    The alternate approach is to target just the high grade vein material.
This will likely result in some dilution from the surrounding stockwork;
however with this approach, it is viable to target a subset from the base case
reserve that has higher grade.
    This high grading approach requires a number of small starter pits in the
initial years of operation; however the upside in terms of higher gold
production offsets the higher initial mining costs.
    A mining schedule developed for this option for years 1 and 2, has been
extracted resulting in a run of mine grade for this period approaching 2.0g/t.
    The low grade material (16.7Mt@0.62g/t) originally stockpiled by Atlas
during former operations were originally considered as indicated resources in
the FS but not included in the production schedule. The exclusion was due to
the grade being determined as uneconomic at the prevailing gold price
(US$450/oz). The improvements in gold price will likely result in this
material being determined as economic and convertible into a reserve category.
The material is presently scheduled for treatment in years 9 and 10 and the
necessary work to reclassify to reserves will be done during operations. It is
however likely that when the new pit optimisation routines based on current
gold price are completed, there may be additional material available within
the open pits that will replace the low grade dump material in the latter
years and thus push the LOM beyond 10 years. A grade control system will be
implemented in years 1 & 2 during the high grading periods. At the point in
time when the grind size increases, a bulk mining approach will be introduced
and the grade control system discontinued. This strategy is reflected in the
LOM operating cost schedule.
    Pre-production mining of material from the starter pits will provide for
commissioning ore and stockpile development, water dam construction and
general site facilities.
    The proposed mining plan utilises a staged pit development. The initial
starter pits are to be designed so as to exploit the higher grade material
within the 0.7 g/t cut off limits. The starter pits will be progressive cut
back to the final pit limits as and when necessary. The geotechnical
parameters established during the FS have been adopted during the preliminary
design phase, however these will be reviewed during operations when some
additional observations and measurements may result in a more advantageous set
of parameters being developed.
    The exploitation of the ore will be carried out on 5m benches with a two
flich approach as and when required, dependent on the attitude of the ore on
particular benches.
    The preferred mining contractors have carried out sufficient work to
determine that a combination of 110 tonne back acting excavators (diggers) and
65 tonne haul trucks is the most efficient for the intended operation. A
complete set of ancillary equipment will also be provided by the contractor.

    Mining Contractor

    The optimised model has been prepared on the assumption that the mining
of the Masbate Gold Project will be undertaken on a mining contractor basis. A
Notice of Intent with respect to the mining contract has been issued to
Leighton. Leighton will provide the full mining fleet and associated equipment
(currently estimated to cost in the order of US$34m) and will provide contract
mining services for the project. They will work under an alliance agreement as
has been successfully applied at a number of other mines. The alliance
agreement is designed to maintain unlimited flexibility with all aspects of
mining, total transparency of costs and provide the safest and lowest mining
cost per tonne. Leighton has been operating in Asia since 1975, and has a
unique combination of local knowledge and extensive international experience
which has made them the region's international contractor of choice.
    The Asian operations are active in Hong Kong, Macau, China, Mongolia,
Taiwan, Korea, the Philippines, Guam, Thailand, Vietnam, Laos and Cambodia,
with annual revenue in that region over US$300 million and employing almost
2,500 people in Asia alone.
    Today, Leighton is also the world's leading contractor miner, mining in
excess of 100 million tonnes of iron ore and 100 million tonnes of coal each
year, across Australia and Asia. They operate and maintain a fleet of owned
and leased mining plant and equipment, currently worth over US$1.5 billion.

    Metallurgy

    In early 2007, CGA commissioned RWB to carry out additional testwork to
determine gold recoveries at various grind sizes. The rationale behind this
work was that the previous owners of the project had committed to the purchase
of a large SAG mill and two large ball mills. The combined grinding capacity
of the mills was greater than that determined as appropriate in the FS and the
excess grinding capacity could therefore be used to grind the ore to a finer
fraction and result in increased metallurgical recovery.
    The RWB scope involved the examination of all previous metallurgical
testwork so as to make use of as wide a selection of materials as possible.
    To confirm the recovery benefits metallurgical testing was carried out on
17 composite samples of vein and stockwork fractions. The results are
summarised as follows:

    
    -------------------------------------------------------------------------
                                      % Recovery      % Recovery
    Material Type     Grade g / t    @P80.150u    @P80.75u      Benefit
    -------------------------------------------------------------------------
    Vein
    -------------------------------------------------------------------------
    Transition            2.67           77.5            81.9          +4.4%
    -------------------------------------------------------------------------
    Primary               4.81           77.4            81.4          +4.0%
    -------------------------------------------------------------------------
    Stockwork
    -------------------------------------------------------------------------
    Transition            1.19           74.0            76.9          +2.9%
    -------------------------------------------------------------------------
    Primary               1.42           57.6            63.8          +6.2%
    -------------------------------------------------------------------------

    The following conclusions can be drawn from these results:

    -   Ore grades are higher for the vein material compared to the stockwork
        material.

    -   Vein recoveries for the transition ore are 5% better than stockwork
        at the same grind.

    -   Vein recoveries for primary ore are 17.6% better than stockwork at
        the same grind.

    -   Gold dissolution is approximately 4% better at a grind
        of P80.75micron compared to that at P80.150micron.

    The above rationale has been applied to the newly developed mine
production schedule. In years 1 and 2 the higher grade, predominantly oxide,
transition and fresh vein material as well as oxide and transition stockwork
material will be ground to P80.75 micron. To substantiate the predicted
production rates Oreway was commissioned to model the milling circuit
throughput at various ore type blends and product sizing. The results are
summarised below:

    -   Blended material comprising 8% oxide, 52% transition and 39% fresh
        material will achieve 452tph at a grind of P80.75micron utilising all
        available installed power.

    -   The same blend of material as above can achieve a throughput
        of 614tph at a grind of P80.150 micron when 55% of the mill feed is
        secondary crushed to 80% passing 75mm.

    The following conclusions can be drawn from the above:

    -   There is a requirement for a secondary crusher when a throughput
        approaching 5Mtpa (625tph) is required.

    -   The installation of a secondary crusher will assist the grinding
        circuit to increase its throughput from the above stated 425tph at a
        product size of P80.75micron to the required 500tph at a product size
        of P80.75micron

    Process Plant

    Lycopodium has undertaken an optimisation review of the process plant
design with the objective of achieving the following criteria.

    -------------------------------------------------------------------------
                             Operating Schedule
    -------------------------------------------------------------------------
    Annual Throughput Y1 & 2           4,000,000       Tonnes per annum (tpa)
    -------------------------------------------------------------------------
                    - Yr3 - 10         5,000,000       Tonnes per annum (tpa)
    -------------------------------------------------------------------------
    Gold Recovery                        82.6%
    -------------------------------------------------------------------------
    Crushing Plant
    -------------------------------------------------------------------------
    Design Capacity                       634           Tonnes per hour (tph)
    -------------------------------------------------------------------------
    Operating Hours                        24                  Hours per day
    -------------------------------------------------------------------------
    Operating Days                         7                   Days per week
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Grinding and Leach Circuit
    -------------------------------------------------------------------------
    Design Capacity                       500           Tonnes per hour (tph)
    -------------------------------------------------------------------------
    Operating Hours                        24                  Hours per day
    -------------------------------------------------------------------------
    Operating Days                         7                   Days per week
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Leach Circuit
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Nominal Total Residence Time           24                  Hours
    -------------------------------------------------------------------------
    Leach Feed Pulp Density for
     Circuit Design                        42                  % w/w
    -------------------------------------------------------------------------
    Carbon Concentration                   15                    g/l
    -------------------------------------------------------------------------
    Solution Tail, Carbon                0.02
     Circuit Design                   (less than)                ppm
    -------------------------------------------------------------------------


    Electrical

    Power distribution within the plant area and vicinity will be at 4,160 V
and 415 V respectively.
    The estimated loading figures for the Masbate Gold Plant are as follows:

    -   Maximum Demand - 23MW

    -   Average Load - ~21MW
    

    The optimisation assumes that the power for the project will initially
come from a contracted bunker fuel plant temporarily installed on site at the
Masbate project site. Various options including barge mounted units are
presently being considered.
    DMCI Holdings Inc ("Consunji"), the largest construction contractor in
the Philippines, are assisting CGA with investigations to determine the
viability of establishing a coal fired power generation station at the project
site. Consunji are the owners of a coal mining project on a nearby island
where Consunji generate their own power via a coal fired power generation
station. Consunji were also the successful tenderers for the supply and
distribution of power on Masbate Island. To enable Consunji to fulfil its
contract to the Masbate Island, it will be necessary for them to install a
15MW coal fired power station backed up by a diesel powered standby facility.
At present Consunji and Filminera are discussing and considering how best to
combine the power facilities so as to ensure power will be delivered as
efficiently as possible to the project. Filminera will own the power
generation equipment used for the gold project and structure an operating and
maintenance relationship with Consunji.
    The indicated benefits of coal fired power generation are an approximate
6% reduction in total mine operating costs (LOM US$316/oz versus US$334/oz)
and a material reduction in the exposure of the project to fuel prices. The
power cost is expected to be in the range of US$0.08 - $0.12/kWh, including
capital, fuel and maintenance costs.

    Water Supply

    The supply of water to the site is based on the following:

    
    -   Reclaim water recycled from the TSF. The new TSF to be constructed to
        the south of the mine and processing facility will be equipped with a
        reclaim water system to return decant water from the deposited
        tailings to the process water dam at the processing facility area. It
        is anticipated that the TSF will provide up to 100% of the water
        required for the processing plant.

    -   The requirement to reuse the tailings decant solution has been the
        prime motivator behind the reinvestigation into the detoxification
        regime to be adopted on site at Masbate. During year 1 and year 2 all
        water returned from the tailings dam will be reused in the process
        and due to this the detoxification of processing residues, prior to
        introduction into the TSF has been altered.

    -   GHD has been tasked with determining the complete project water
        balance as part of the tailings disposal design. Present indications
        are that a cyanide detoxification system will have to be incorporated
        into a water treatment plant to be installed during year 3 of
        operations.

    -   Potable water will be sourced from existing and new deep well bores
        adjacent to the Guinobatan River. An allowance has been made in the
        capital cost estimate to replace the existing pumps, to extend the
        raw water line and for two new deep well pumps.0
    

    Tailings Storage Facility

    GHD has been contracted to complete a detailed design of the tailings
disposal system .The battery limits of their contract are the outlet flange of
the tailings pump located at the processing facility and the re-introduction
of returned decant solution to the process water pond.
    The tailings dam structure is planned to be built with reclaim materials
from within the planned limits of the tailings storage facility. Geotechnical
test work has already been carried out on the foundation areas for the
structures and on pit materials that potentially can be used to construct the
retaining walls.
    Broadly, it is planned to construct the tailings dam with a compacted
clay upstream liner with a rock fill downstream support. The foundation fill
material will also be compacted clay.
    The tailings dam will have an initial capacity of 4 million tonnes and at
Stage 8 a capacity of 38 million tonnes.
    GHD will supervise the construction of the TSF to ensure that the
finished utility complies with the already issued Environmental Clearance
Certificate.

    Buildings

    Site buildings will include the administration office, workshops,
laboratory, security, mining office and messing. Construction of these
structures will be under the supervision of Filminera personnel.

    Security

    Comprehensive site security will be contracted to a well regarded and
experienced Philippine contract security company who will provide:

    
    -   security personnel;

    -   thorough background checks of all on site personnel;

    -   intelligence sourcing;

    -   monitoring of local community attitudes including those of small
        scale miners operating at the project; and

    -   implementation of a security program tailored to the particular needs
        of the Masbate Project.
    

    Masbate Island does not face any notable Islamic fundamentalist issue as
in Mindanao, given the predominance of Roman Catholisism; however there is
evidence of some New Peoples Army activity. They have claimed responsibility
for some limited damage to the project during the lead up to the elections
earlier in the year. The Company's view is that a strong and meaningful
community relations program is the best investment in security.

    Environmental

    The environmental program has been developed by BMP Environment &
Community Care, Inc. based on the 2007 Baseline Monitoring program previously
completed.

    Capital Costs

    The capital cost of the project has been estimated as per the following
summary:

    
    -------------------------------------------------------------------------
                                                                      US$ M's
    -------------------------------------------------------------------------
    Infrastructure                                                     4.352
    -------------------------------------------------------------------------
    Process Plant                                                     45.882
    -------------------------------------------------------------------------
    Secondary Crusher                                                  2.000
    -------------------------------------------------------------------------
    Unallocated Costs                                                 11.392
    -------------------------------------------------------------------------
    Overhead                                                           8.733
    -------------------------------------------------------------------------
    Contingency                                                        4.855
    -------------------------------------------------------------------------
    Design Engineering                                                 4.822
    -------------------------------------------------------------------------
    Mills Purchase (sunk)                                              2.904
    -------------------------------------------------------------------------
    Agreed Fixed Cost                                                 84.940
    -------------------------------------------------------------------------
    Mill Refurb                                                        7.547
    -------------------------------------------------------------------------
    Mining                                                             8.616
    -------------------------------------------------------------------------
    Tailings Storage Facility                                          5.414
    -------------------------------------------------------------------------
    Power, Water & Infrastructure                                      1.281
    -------------------------------------------------------------------------
    Optional Items                                                     0.632
    -------------------------------------------------------------------------
    First Fills                                                        2.837
    -------------------------------------------------------------------------
    Owners Costs                                                       7.386
    -------------------------------------------------------------------------
    Interim Costs (sunk)                                               0.661
    -------------------------------------------------------------------------
    Sub Total                                                         37.374
    -------------------------------------------------------------------------
    Total Estimated Capital                                      US$119.314M
    -------------------------------------------------------------------------
    

    The capital cost includes a contingency of US$7.2m (6.4%) and the
proposed funding package has made an additional allowance for up to US$2.5m
for foreign currency movements prior to execution of the FPLS.
    Leighton will carry out the construction of the process facility and
selected infrastructure, pursuant to the FPLS contract, covering a scope of
works to the value of US$84.94M. The FPLS contract will have the normal
completion and process guarantees. The construction time is estimated to be 15
months.

    Operating Cash Costs

    Operating cash costs have been determined on the basis of a treatment
rate of 4 million tonnes per annum in years 1 & 2, and 5 million tonnes per
annum thereafter and on the basis of the process route described.
    A summary of operating costs, excluding Excise Tax and Value Added Tax
(applicable to Year 1 only), is tabled below:

    
    -------------------------------------------------------------------------
    Cost                             US$/Tonne Ore    US$/Gold Ounce Produced
    -------------------------------------------------------------------------
    Mining                               4.65                   122
    -------------------------------------------------------------------------
    Processing                           5.41                   142
    -------------------------------------------------------------------------
    Administration & Maintenance         1.59                    42
    -------------------------------------------------------------------------
                                        11.65                   306
    -------------------------------------------------------------------------
    

    Taxation

    PGPRC (which processes and sells all the gold) will benefit from a tax
holiday during the first six years of operation, with VAT payable only in year
one. At that time Filminera and PGPRC may apply for exemption from VAT but
cannot apply any exemption retrospectively.
    PGPRC has applied for registration with the Board of Investments ("BOI")
as a producer of gold and silver dore under a non-pioneer status which it
qualifies for under the 2007 Investment Priorities Plan ("IPP").
    Mining activities may be granted an income tax holiday ("ITH") incentive,
and based on the advice of external consultants, the activity applied for by
PGPRC is not among the exceptions and hence, PGPRC will qualify for a minimum
6 year ITH.
    Under the 2007 IPP of the BOI, registered activities/ projects located in
less developed areas (which includes Masbate Island) are automatically
entitled to an initial 6-year ITH regardless of status (pioneer or
non-pioneer) or type of project (new or expansion. This may be extended for a
further one plus one (i.e. total of two additional years) where certain
conditions during operation are met. Hence, the maximum period of ITH
availment may infact be 8 years.
    Withholding tax of 10%-15% will be applied to any interest and dividend
payments outside the Philippines made by either Filminera or PGPRC. All
repayments of debt will not be subject to any withholding tax.
    Excise Tax is payable to the Philippine Government in relation to revenue
from the sale of gold. The Excise Tax is applied, at the rate of 2.0%, to the
gold and silver sales revenue on a quarterly basis after deduction of the cost
of gold transport and refining. Cash operating costs are quoted exclusive of
the Excise Tax.
    Assuming a life of mine gold price of US$650 per ounce, the life of the
mine royalty costs are forecast at US$23.7 million for the government Excise
Tax of which 40% will return back to the Masbate Province and its community.





For further information:

For further information: Australian Contact, President & CEO - Michael
Carrick, Tel: +610 8 9263 4000, Fax: +61 8 9263 4020, Email:
mcarrick@cgamining.com; US Contact, Chairman - Mark Savage, Tel: (505)
344-2822, Fax: (505) 344-2922, Email: marksavage@comcast.net

Organization Profile

CGA Mining Limited

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