MOSQUITO CONSOLIDATED GOLD MINES LTD.
Tel: 604-689-7902 WWW.MOSQUITOGOLD .COM FAX: 604-689-7816
Mosquito Provides Update Regarding CuMo Project Resource/PEA.
Vancouver, Canada, September 13, 2012 – Mosquito Consolidated Gold Mines Limited (TSX.V:MSQ; US OTCQX: MQCMF – “Mosquito” or the “Company”) reports that an independent review of the Company’s April 27, 2011 CuMo Project resource estimate determined that an error made in the calculation of the Mineral Resource estimate artificially inflated the molybdenum Recovered Value (“RCV”) included in the estimate by a factor of 1.5.
Due to the complexity of the CuMo mineralization (including molybdenum, copper, silver and tungsten minerals) and variable recoveries of each of those metals within four different geological zones that make up the deposit, the cut-off grades used to report the Mineral Resource relied on the calculation of a RCV for a block model to establish cutoff values that were then used to calculate resource tons in each classification (Indicated and Inferred).
On April 27, 2011 Mosquito disclosed a 43-101 compliant resource estimate that had been prepared by Snowden Mining Industry Consultants (“Snowden”) and Mr. Shaun Dykes, M.Sc. (Eng), P.Geo who oversaw the creation of the estimate. The estimate was based on results from new drill holes that had been completed around that time and on work reported in a 2009 Preliminary Economic Assessment (“2009 PEA”). The Company now understands that an error had been made in the molybdenum RCV calculation that was provided by Mr. Dykes and subsequently included in the April 27, 2011 CuMo Project resource estimate and the 2009 PEA. Snowden has confirmed that it agrees that an error was made.
The value calculation for molybdenum is the largest contributor to the value of the RCV for CuMo. Unfortunately, the value calculation in question was made for the molybdenum oxide as opposed to the metal. This was a mistake, as the industry buys and sells all products, including roasted molybdenum oxide, on the basis of molybdenum contained in concentrate, and not for every pound of concentrate produced as the calculation assumed. As a result, molybdenum values in the RCV were artificially inflated by a factor of 1.5. The RCV values, based on estimated process recoveries, were correctly calculated for other metals and then applied to the metal prices indicated in the resource estimate.
Implications to Previous Financial Models
Since the RCV was used to establish an economic cutoff in the block model it is expected that the total estimated size of the resource at specific cutoffs will be reduced. However, the amount of Mineral Resource reduction is not proportionate to the change in RCV cutoffs, and may not be significant based on the range of values reported at varying RCV cutoffs on April 27, 2011. As well, the assayed grades for metals presented in various drill hole data, or the estimated grades in the resource model, remain reliable and are not affected by the error. At this time, the Company is uncertain what effect this error will have on the financial models filed in the 2009 PEA. Discussions with the various contributors regarding all of the technical work on the CuMo project are ongoing and the Company is currently evaluating how to re-report the Mineral Resource estimate. This work will be completed and disclosed as soon as possible.
Wayne Ash, P.Eng., is the Company’s Qualified Person with respect to the Company’s Cumo Project and has reviewed and approved this press release.
On Behalf of the Board
MOSQUITO CONSOLIDATED GOLD MINES LTD.
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