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VANCOUVER, Dec. 21 /CNW/ - Gitennes Exploration Inc. (TSX-GIT) is pleased to report that it has received an initial payment from the 2% net smelter returns ("NSR") royalty which Gitennes holds on gold production at the Virgen Mine, Peru. The NSR royalty payment is calculated on the basis of payable gold production of 35,334 ounces during the six-month period from May 15 to October 15, 2006. The total pre-tax royalty payment due is US $425,907. Net proceeds to Gitennes after withholding taxes total US $298,134. The initial payment is US $149,067. Three more payments of US $49,689 plus interest are to be received in each of January, February and March 2007.
Background: Under the terms of the NSR royalty, Gitennes is entitled to a 2% NSR royalty payment on gold production from the Virgen Property. The royalty payment was triggered once production exceeded 145,000 ounces on May 15, 2006, and is payable every six months. This being the first such payment made by the Virgen Mine, Gitennes is working with the mine operator, Compan¿a Minera San Simon S.A. ("San Simon"), to ensure that the royalty payments are done in the spirit of the NSR agreement, in accordance with all regulatory requirements, and that future royalty payments are made in a timely fashion.
The Virgen Mine is operating on a gold discovery made by Gitennes in 1997 - 1998, situated 22 kilometres east of Barrick Gold Corporation's mining operations at Lagunas Norte. At Virgen, one target on the property, Zona Rio Suro was drilled by Gitennes between February 1997 and June 1998, and then by Cambior from February to July 1999. The property was sold to private Peruvian interests in 2001, and placed into production in September 2003. The mine is an open pit, heap leach operation producing gold and by-product silver from run-of-mine ore. Gitennes has no mine production or reserve information other than that available on public domain web sites. Gitennes cannot independently verify or confirm any information published on these web sites.
Historical Resource Estimates: Earlier resource estimates were prepared by (1) Roscoe Postle Associates Inc. (RPA) on behalf of Gitennes and (2) Cambior Inc. using terminology as defined by the Canadian Institute of Mining, Metallurgy and Petroleum, as the CIM Definition Standards on Mineral Resources and Mineral Reserves. These resource estimates were prepared prior to the adoption of National Instrument 43-101. Gitennes believes that these historical estimates are useful inasmuch as they encompass those areas of the property that have been or are currently being mined. However, the current relevancy of the historical estimates is questionable as they were made during a period of lower metal prices and with less information than is now available only to San Simon. Since these estimates were made the operator will likely have completed additional drill holes, developed revised ore deposit models and have produced a mine production plan, none of which has been made available to Gitennes.
1) On October 19, 1998 Gitennes issued an in situ mineral resource
estimate prepared by for what was then known as the Zona Rio Suro Sur
and is now called Suro Sur. The Zona Rio Suro was one of ten
mineralized gold zones that had been found on the Virgen Property,
and was sufficiently advanced to permit a preliminary resource
calculation.
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Resource Category Tonnes Grade Ounces
g/t Gold Gold
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Measured 2,435,000 2.15 168,400
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Indicated 1,162,000 0.98 36,500
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Total Measured and Indicated 3,597,000 1.77 204,900
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Inferred 2,972,000 1.71 163,900
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The measured and indicated resources were restricted to a 140 metre
long segment of the Zona Rio Suro with medium to high confidence
estimation parameters, coinciding with an area of underground
drilling and development. The inferred resource, considered to be a
lower confidence estimate, covers the overall 700 metre strike length
of Zona Rio Suro, where drilling was sufficient to satisfy the
calculation methodology, but did not satisfy the criteria used for
the measured and indicated categories.
2) On February 21, 2000 the Company released the results of Cambior's
exploration at Virgen and its revised estimates:
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Resource Category Tonnes Grade Ounces
g/t Gold Gold
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Measured 3,519,000 1.62 184,000
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Indicated 8,577,000 1.05 290,000
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Total Measured and Indicated 12,096,000 1.22 474,000
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Inferred 4,442,000 0.86 123,000
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The Cambior resource estimate was prepared in-house by their
engineering department. The Cambior estimate is based upon Gitennes'
56 previously drilled surface and underground holes, and 38 new
in-fill holes done by Cambior. Cambior applied a 0.4 g/t cut-off
grade, as compared to the 0.3 g/t cut-off used in the earlier
calculation. A bullion price of US$ 325 per ounce was employed.
The technical information contained in this release has been reviewed by Jerry Blackwell (P.Geo.), a Qualified Person as defined in National Instrument 43-101.
Cautionary Statement Regarding Forward-Looking Statements
Some of the statements contained in this release are forward-looking statements, such as statements that describe or infer future plans, intentions, objectives or goals, including words to the effect that Gitennes or management expects a stated condition or result to occur and specifically Gitennes' anticipation that its royalty payments will be continue to be received. Since forward-looking statements are not statements of historical fact and address future events, conditions and expectations, forward-looking statements by their nature inherently involve unknown risks, uncertainties, assumptions and other factors well beyond Gitennes' ability to control or predict. Actual results and developments may differ materially from those contemplated by such forward-looking statements depending on, among others, such key factors as the timing of Compan¿a Minera San Simon S.A.'s booking of proceeds under applicable sales agreements. The forward-looking statements included in this release represent Gitennes' views as of the date of this release. While Gitennes anticipates that subsequent events and developments may cause Gitennes' views to change, Gitennes specifically disclaims any obligation to update these forward-looking statements. You are referred to the full discussion of Gitennes' business contained in its reports filed with the securities regulatory authorities.
The Toronto Stock Exchange has neither approved nor disapproved the
information herein.