Galway Resources reports positive scoping study results for the Victorio Project



    ELKO, NV, Feb. 27 /CNW/ - Galway Resources Ltd. (GWY: TSX-V) is pleased
to announce results from a National Instrument 43-101 Preliminary Economic
Assessment (or "Scoping Study") performed by SRK Consulting U.S. Inc. for its
100% owned Victorio molybdenum-tungsten project (the "Project"), located
20 miles west of Deming, New Mexico.
    The highlights of the Scoping Study which contemplated two different
mining scenarios (using an average life of mine price of $15/lb molybdenum and
$8/lb tungsten price) include:
    Block Caving Scenario: This scenario is a larger project that considers
producing an average of 9.4 million pounds of molybdenum and 9.0 million
pounds of tungsten annually for 17 years. The preliminary economics suggest an
NPV (discount rate of 6%) of over US$270 million, a pre-tax (unlevered) IRR of
over 15%, and a required investment in the order of US$440 million.
    Selective Mining Scenario: This is a smaller scale project that offers
higher returns with a pre-tax (unlevered) IRR of 26%, and a NPV of
US$95 million. Under this scenario only a portion of the target resource is
extracted, with an average of 6.2 million pounds of molybdenum and 5 million
pounds of tungsten annually for 10 years. The capital required is in the order
of US$240 million, the mining methods are a combination of long hole stoping
with paste backfill and room-and-pillar mining.
    "Using the U.S. Securities and Exchange Commission's (the "S.E.C.")
suggested 3-year rolling average molybdenum price and then conservatively
discounting the price by a further 20%, leaves us with a molybdenum price of
US$22.50 versus the current price of $33 per pound. Utilizing this number,
Galway finds the IRR for the selective mining method rises to 52%, and the NPV
rises to US$309 million. Likewise, the IRR for the block caving scenario rises
to 27% and the NPV rises to US$730 million," states Robert Hinchcliffe,
President and CEO of Galway Resources. Mr. Hinchcliffe adds: "given the robust
global demand for molybdenum from specialty steels and the oil industry, we
think this pricing scenario is entirely feasible in the years to come."
    This Victorio project has very favorable infrastructure such as ready
access to a highway, railway, gas pipeline, and power grid nearby. Topography
is flat to gently rolling desert terrain, the climate is mild year round, and
with a relatively small footprint it is anticipated the Project can be
developed in a responsible manner with minimal environmental impact.
    "We are very pleased with the outcome. Taking the additional time and
cost to assess two different mining scenarios will provide Galway with
flexibility to advance the Project. We believe there is plenty of upside,
particularly with additional engineering and progress on the metallurgical
front. We will look to be creative in advancing the project and maximizing
leverage for our shareholders," states Marshall Himes the COO of Galway
Resources.

    
    -------------------------------------------------------------------------
                       VICTORIO SCOPING STUDY SUMMARY
    -------------------------------------------------------------------------
                                   Selective Scenario  Block Caving Scenario
    -------------------------------------------------------------------------
    Net Present Value at 6%             US$95 million         US$270 million
    -------------------------------------------------------------------------
    Internal Rate of Return (IRR)                 26%                    15%
    -------------------------------------------------------------------------
    Payback                                 3.2 years              6.3 years
    -------------------------------------------------------------------------
    Cash Cost Per Pound Moly(*)     US$6.03 per pound      US$8.67 per pound
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Annual Ore Production            2.6 million tons       8.2 million tons
    -------------------------------------------------------------------------
    Daily Production Rate                  8,500 tons            25,000 tons
    -------------------------------------------------------------------------
    Mine Life                                10 years               17 years
    -------------------------------------------------------------------------
    Mineable Resource               28.5 million tons       139 million tons
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Average Grade - molybdenum                  0.13%                  0.07%
    -------------------------------------------------------------------------
    Average Grade - tungsten (WO(3))            0.12%                  0.07%
    -------------------------------------------------------------------------
    Moly Production Per Year       6.2 million pounds     9.4 million pounds
    -------------------------------------------------------------------------
    Tungsten Production Per Year   5.0 million pounds     9.0 million pounds
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Metallurgical Recovery
    -------------------------------------------------------------------------
    Molybdenum                                    85%                    85%
    -------------------------------------------------------------------------
    Tungsten                                      75%                    75%
    -------------------------------------------------------------------------
    Molybdenum Payfor                             90%                    90%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Mining Cost Per Ton (LoM ave.)             $17.60                  $4.60
    -------------------------------------------------------------------------
    Processing Cost Per Ton                     $9.84                  $8.44
    -------------------------------------------------------------------------
    G&A Per Ton                                 $1.50                  $0.75
    -------------------------------------------------------------------------
    Total Cost Per Ton                         $28.94                 $13.79
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Capital
    -------------------------------------------------------------------------
    Mine, Equipment & Development        $130 million           $213 million
    -------------------------------------------------------------------------
    Processing                            $66 million           $144 million
    -------------------------------------------------------------------------
    Tailings                              $25 million            $51 million
    -------------------------------------------------------------------------
    Infrastructure                         $7 million            $11 million
    -------------------------------------------------------------------------
    Other                                 $14 million            $23 million
    -------------------------------------------------------------------------
    Total Capital Cost                   $242 million           $442 million
    -------------------------------------------------------------------------
    (*) Galway Calculated Value
    


    The block cave mining method resulted in a potentially mineable resource
(including dilution) of approximately 139 million tons at an average grade of
0.07% Mo (molybdenum) and 0.07% WO(3) (tungsten). At a mining and milling rate
of 25,000 tpd the mine life would be approximately 17 years. During that
period, approximately 159 million pounds of molybdenum and 154 million pounds
of tungsten (in APT) contained in concentrates would be produced.
    The more selective long hole stoping and room-and-pillar mining methods
resulted in a potentially mineable resource of 28.5 million tons at an average
grade of 0.13% Mo and 0.12% WO(3). At a full capacity mining rate of
8,500 tons per day the mine life would be approximately 10 years. Over the
mine life approximately 62 million pounds of molybdenum and 50 million pounds
of tungsten contained in concentrates would be produced.

    Metallurgical Considerations

    Both mining options utilize conventional flotation concentration methods.
The high grade molybdenum sulfide concentrate produced will be suitable for
roasting and conversion to molybdic oxide. The lower grade tungsten
concentrate will require hydrometallurgical treatment to produce a high grade
APT. Recoveries for molybdenum and tungsten are estimated at 85% and 75%,
respectively, based on historical metallurgical testing information.

    Resource Estimate

    The two different resources for conducting this study are outlined in the
table below, and were derived from 175,000 feet of historical drilling and a
10,000 feet confirmatory drill program conducted by Galway in 2007. A
40,000 feet (20-hole) infill drilling program is currently underway to further
upgrade the resource. This Preliminary Assessment includes Inferred resources
that have not been sufficiently drilled to have economic considerations
applied to them. Until additional in-fill drilling is completed, and a final
resource estimate is done, there is no certainty that Inferred resources will
be converted to Measured and Indicated resources; therefore, there can be no
certainty that this Preliminary Assessment will be realized. In-fill drilling
by Galway Resources was limited to one portion of the deposit, and this
drilling did confirm the mineralization and resulted in the establishment of a
portion of the deposit as Indicated Resources.

    
    -------------------------------------------------------------------------
    Victorio 2007 Resource Model Run with prices per pound of $15 Mo and
    $8 WO(3)
    -------------------------------------------------------------------------
    Geologic Resource Estimate (October 2007)      Contained Metal in Pounds
    -------------------------------------------------------------------------
                   $      Tons                                      Tungsten
    Category  Cutoff (Millions) Mo %  WO(3) %      Molybdenum        (WO(3))
    -------------------------------------------------------------------------
    Indicated     25        67  0.10     0.10     132,000,000    134,000,000
    -------------------------------------------------------------------------
    Inferred      25        42  0.09     0.09      74,000,000     76,000,000
    -------------------------------------------------------------------------
    Indicated     35        41  0.12     0.12     100,000,000     98,000,000
    -------------------------------------------------------------------------
    Inferred      35        22  0.12     0.11      51,000,000     46,000,000
    -------------------------------------------------------------------------
    

    Next Steps

    Given the robust economics presented in the Scoping Study, Galway intends
to initiate a Pre-feasibility Study and is in the process of identifying and
retaining suitable, qualified experts to advance the project forward. The
Company will as part of this process be investigating strategic alternatives
in an effort to maximize shareholder value while also advancing the project in
an aggressive and creative manner.

    About the Company

    The company is focused on developing two U.S. based exploration projects
that are favorably located and have over 250,000 feet of historical drilling,
in addition to the 50,000 feet of drilling carried out by Galway over the past
18 months. The Company also has an exploration initiative underway in Colombia
that is focused on coal and gold. Management believes that its strategic
portfolio of properties offers investors an interesting exposure to a unique
blend of commodities (molybdenum, gold, tungsten, metallurgical and thermal
coal).
    Professional consultants within SRK Consulting (U.S.) are "Qualified
Persons" as defined by NI 43-101, and are the Qualified Persons responsible
for the Victorio resource estimates and the preliminary assessment (scoping
study) described in this news release. SRK has reviewed the content of this
press release.
    Pete Hahn of St. George, Utah, Galway Resources' Chief Geologist, is the
Qualified Person within Galway responsible for Galway's exploration data that
are the basis for this Preliminary Assessment.

    The TSX Venture Exchange has in no way passed upon the merits of the
    proposed transaction and has neither approved nor disapproved the
    contents of this news release.

    Forward Looking Statements:

    Some statements in this news release contain forward-looking information.
These statements include, but are not limited to, statements with respect to
the completion of transactions, the timing and amount of payments and share
issuances, the completion of financings, the use of proceeds, future
exploration, development and production activities and future expenditures.
These statements address future events and conditions and, as such, involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by the
statements. Such factors include, among others, the ability to complete
contemplated transactions, payments, share issuances and financings, the use
of proceeds, the time and success of future exploration, development and
production activities and the timing and amount of expenditures.




For further information:

For further information: Galway Resources Ltd., Robert Hinchcliffe,
President and Director, 1-800-475-2412, www.galwayresources.com

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Galway Resources Ltd.

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