Delivery of new equipment at Panasqueira

Primary Metals has made technical developments and improved mine output at its Panasqueira tungsten mine in Portugal. Operations have been progressing as scheduled at Panasqueira and include the delivery of additional new low profile mining equipment. Four major new pieces of low-profile mining equipment were delivered to the Panasqueira mine in the final weeks of 2006.

The delivery included: two low profile Atlas Copco Scooptramp ST600LP LHDs; and two low profile Rocket Boomer S1 L jumbo drilling rigs. The new equipment was all in operation on level 3 of the mine by January 6, 2007.

There are now six low-profile LHDs and five low-profile jumbo drill rigs operating on level 3, which will now be mined exclusively using this equipment. This will minimize dilution of the tungsten ore with waste rock. The replaced mining equipment will be used to continue production from level 2, where tungsten ore is transported out of the mine by conveyor without the need to use the internal mine hoist.

A record daily mine output of 3,523 t of ore was achieved on November 7, 2006 with a daily average of 3,078 t for the month and a daily average of some 3,012 t for December. Monthly run of mine output has also improved in recent months. After averaging some 58,500 t over the previous five months (excluding August when the mine was shut down for the annual summer vacation), monthly mine output was also increased with 66,762 t of ore mined in October 2006; 64,636 t in November 2006; and 54,223 t in the three operating weeks of December 2006 when the mine was shut down for the normal scheduled holiday period from December 23 to January 6, 2007.

Underground development work at the Panasqueira mine has continued with the excavation of the D9 ramp to access new zones of indicated tungsten resources between operating levels 2 and 3. The ramp intersected seven tungsten veins and underground development to mine these areas began this month and will continue until mid-summer 2007. It is expected that stoping of the zones will commence by June.

Overall production of concentrates totalled about 26,300 t units (1 t unit = 10 kg of tungsten trioxide) for October, November and December. The run of mine ore grade has not changed significantly and remained fairly consistent with the previous quarter averaging some 0.17% WO3. Mined ore grade has been impacted by some marginal grade material resulting from the excavation of the D9 ramp. Improvements are expected in due course with the introduction of the new low profile mining equipment and access to the new mining areas. Tungsten prices have remained strong between $245 and $255/t unit for European APT (ammonium paratungstate) on which the company’s sales contract is based.

The Knelson concentrator is now fully operational in recovering additional ultra fine tungsten minerals in the process plant. Tungsten recovery in the slimes circuit in November showed an approximate 10% improvement over the average recovery of tungsten slimes for the previous six operating months, reflecting an overall improvement of at least 1% in tungsten recovery. Further improvement is expected with the installation of additional equipment including a new hydrosizer and an additional four Duplex tables in the slimes circuit later this month.