Mangazeya Mining Limited announces significantly decreased Mineral Resources and Reserves of the Savkino Gold Mine

TORTOLA, BVI, Jan. 31, 2014 /CNW/ - Mangazeya Mining Ltd. (NEX:MGZ.H) ("Mangazeya" or the "Company") announces the completion of an updated NI 43-101 technical report titled "Mineral Resource and Reserve of the Savkino Gold Project, Chita Region, Russian Federation" (the "2014-Technical Report") dated January 31, 2014 for the Savkino Gold Mine in Siberia, Russia. The 2014-Technical Report was prepared by Micon International Co Limited ("Micon").

The 2014-Technical Report updates the technical report titled "Mineral Reserve and Resource Estimates of the Savkino Deposit, Zabaikalsky Territory, Russian Federation" (the "2011-Technical Report") dated December 13, 2011 prepared by JSC TOMS Engineering ("TOMS") on the Savkino Gold Mine.

The 2014-Technical Report estimates that Savkino gold deposit contains approximately 2.8 million tonnes of Proven and Probable reserves grading at 1.31 g/t, containing 119,350 ounces of gold, which is a 72.8% reduction in reserve ounces from the estimate contained in the 2011-Technical Report.

The updated mineral resource and reserve estimates are set out in the tables below.

The 2014-Technical Report will be filed on SEDAR within 45 days.

Highlights:

• The gold ounces contained in each resource and reserve category have been revised as follows:
• Measured and Indicated Resources reduced by approximately 32% (156 koz);
• Inferred Resources reduced by approximately 38% (13 koz); and
• Proven and Probable reserves reduced by approximately 73% (320 koz).
• The reduction of tonnage in each resource and reserve category has been revised as follows:
• Measured and Indicated Resources reduced by approximately 48% (6,565 kt);
• Inferred Resources reduced approximately 65% (847 kt); and
• Proven and Probable reserves reduced by approximately 78% (10,218 kt).
• The reduction in resources occurred, in part, because the Micon estimate is constrained within a pit shell and the TOMS estimate accounts for the entire block model.
• The reduction in reserves occurred, in part, as a result of differences in the gold price, mining and process costs, process recovery, and that Micon has only included oxide material (transition and primary material is treated as waste).

At the request of Mangazeya, Micon prepared the 2013-Technical Report describing the mineral resources and reserves of Mangazeya's Savkino gold mine and heap leach operation located in the Zabaikalsky Territory of the Russian Federation. The report was prepared in accordance with the Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101").

Mineral Resources:

Micon has prepared an updated Mineral Resource estimate for the Savkino project mineralised zones that have sufficient data to allow for continuity of geology and grades.

A summary of the Mineral Resources is provided in Table 1.

Table 1: Mineral Resource Estimate for the Savkino Deposit (Micon 1^st September 2013)

1. Mineral Resources are reported inclusive of Mineral Reserves.
2. Mineral Resources that are not Mineral Reserves are not required to demonstrate economic viability.
3. Mineral Resources are reported below the 31^st August 2013 mined surface and constrained using a pit shell provided by the Company.
4. Mineral Resources are reported to a cut-off grade of 0.50 g/t Au.
5. The above mineral resource estimate is classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum's "CIM Definition Standards - For Mineral Resources and Mineral Reserves" in accordance with the requirements of NI 43-101.

To the best knowledge of the author the stated mineral resources are not materially affected by any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other relevant issues, unless stated elsewhere in this report.

Micon has completed a basic comparison with the 2011-Technical Reports mineral resource estimate prepared by TOMS in order to evaluate the differences observed between the two results, summarised in Table 2. Both estimates are presented at a cut-off grade of 0.5 g/t Au. The approximate production from the Savkino Central Zone (open pit) between the two estimates is approximately 1.029 Mt, comprising 692 kt in 2012 plus 337 kt from the first 8 months of 2013.

It is clear that the tonnage figures for both estimates are vastly different. The main, and simple reason for this is that Micon has constrained the block model within a pit shell. The TOMS mineral resource estimate appears to comprise the entire block model, not constrained within any pit shell. The entire Micon block model, with no cut-off applied and not constrained, equates to a comparable 12.2 Mt versus the total of 13.6 Mt in the TOMS resource estimate; noting an extraction of circa 1 Mt from the 2012/13 production.

It should be noted that mineral resources must have reasonable prospects for eventual economic extraction; this implies a judgement in respect of the technical and economic factors likely to influence (economic) extraction. In order to meet this requirement Micon used the pit shell provided by the Company that has technical and economic factors applied in its generation to constrain the resource block model and produce a mineral resource that may be considered economically extractable. In accordance with the CIM guidelines, material outside of this pit shell (and considered uneconomic) is excluded from the mineral resource estimate.

Table 2. Mineral Resource estimates comparison table on the Savkino Gold Deposit by Micon September 1, 2013 versus TOMS December 1, 2011, NI 43-101

What is shown is that the Micon mineral resource estimate (constrained within a pit shell) for the Central Zone contains 40% of the (Measured + Indicated) tonnes and approximately 53% of the contained gold metal compared to the TOMS estimate (not constrained).

It should be noted that only the Micon estimate is constrained within a pit shell and that the TOMS estimate accounts for the entire block model.

Mineral Reserves:

Mineral reserve estimation has been generated by estimating the tonnage and gold grade of all the ore types contained within the pit design and applying the mining dilution and loss factors (Note however that transition and primary material is treated as waste).

The final Proven and Probable mineral reserves at a cut-off grade of 0.40 g/t Au for the oxide only material is presented in Table 3.

Table 3: Savkino Mineral Reserves (Micon 31^st October 2013)

1. Mineral Resources are reported based on a cut-off grade of 0.40 g/t Au, gold price of US$1,300/oz and recoveries of 70% (Central) and 70% (South West).

To the best of Micon's knowledge the mineral reserves are not materially affected by any known mining, metallurgical, infrastructure, permitting, or other relevant issues, unless stated elsewhere in this report.

In order to mine the above Mineral Reserves, transition and primary material (summarised in Table 4) will need to be extracted to stockpile (or waste), however this has not been included in the Mineral Reserve. For the purposes of the Mineral Reserve, this material has been reported as part of the 27.7 Mt of waste material contained in the mining schedule.

Тable 4: Transition and Primary Material Contained within Open Pits

It should be noted that the Central Zone (open pit) contains 153 kt (at 1.62 g/t Au) of material (Type N/A) that has insufficient data to be categorised as either oxide, transition or primary, and as such has not been estimated as a Mineral Resource or Reserve. However, Micon believes that it is likely that this material is oxide, but until this is confirmed this material can only be treated as waste.

The mineral reserve below (Table 5) were estimated by Micon October 31, 2013 using a cut-off grade of 0.40 g/t Au for the oxide only material and by TOMS December 1, 2011 for all material.

Table 5. Mineral Reserve estimates comparison table on the Savkino Gold Deposit showing Micon October 31, 2013 (gold price $US 1300 /oz), versus TOMS December 1, 2011, (gold price $US 1500 /oz)

As with the mineral resource estimates the biggest difference in the mineral reserve estimates are observed in the ore tonnage. Of the total Proven and Probable reserves the Micon estimate is some 78% less than the TOMS estimate, due largely to Micon restricting the estimate to oxide material only. In the Micon estimate transition and primary material is thus treated as waste. Aside from the fact that Micon has only included oxide material, as opposed to TOMS who have included oxide, transition, and primary material (the latter which cannot be economically processed), some of the main parameters applied in the estimates differ as summarised below:

Significant differences are observed in the gold price, mining and process costs, and process recovery. Throughout 2011 the gold price rose steadily from around US$1,350/oz in January to US$1,650/oz by December and so the use of US$1,500/oz by TOMS was justified at the time of their report. Micon cannot account for the costs used by TOMS, or the process recovery which perhaps relates to test work results rather than actual recovery results. Actual recovery in 2011 and 2012 was 59% and 66% respectively.

What is shown is that the Micon mineral reserve estimate for the Central Zone contains approximately 23% of the (Proven + Probable) tonnes and approximately 29% of the contained gold metal to that estimated by TOMS. The figures for the South West Zone (Probable only) are 20% and 24.5% respectively.

It should be noted that key estimation parameters, including gold price, operating costs, and process recovery factors, differ significantly between the Micon and TOMS mineral reserve estimate.

Furthermore (and perhaps of more significance), Micon has only included the oxide ore within its estimate whereas TOMS has included transition and primary material.

Due to substantial decrease of the reserves and resources of the Savkino Gold Deposit, Mangazeya Mining management has started to re-assess the previous production mining schedule which should reflect the existing reserves of the mineable oxide ore amenable for heap leaching production.

Qualified Persons

The 2014-Technical Report was prepared by Micon International Co. Limited ("Micon"). The Savkino mineral resource estimate data in this news release was read and approved by Jason Ché Osmond, M.Sc., EurGeol., C.Geol., FGS, Senior Geologist, Micon, and a Qualified Person ("QP") as defined by NI 43-101. The Savkino mineral reserve estimate data in this news release was read and approved by Bruce Pilcher, B.E. C.Eng. EurIng. FIMMM. FAusIMM. CP(Min), Senior Mining Engineer, Micon, and a QP as defined by NI 43-101. By virtue of their education, membership to a recognized professional association and relevant work experience Mr Osmond and Mr Pilcher are considered to be independent Qualified Persons as defined in NI 43-101.

Mr Osmond and Mr Pilcher have reviewed, approved and verified the technical information disclosed in this press release, including sampling, analytical and test data underlying the technical information, and the mineral resource and mineral reserve estimates. Micon visited the Savkino Gold Mine from 7th to 11th September, 2013, to ascertain the geological and geographical setting of the Savkino property; observe the extent of the exploration work completed to date; review sample preparation methodology; inspect core logging and sample storage facilities; discuss geological interpretation and inspect drill core; review data for the assay database from historical sampling; inspect mining operations; and hold discussions with personnel involved in exploration and mining activities.

Micon is satisfied with the quality of the laboratories used for the metallurgical testing, and based on its quality control investigations there is no evidence of bias within the current database that would materially impact the mineral reserve and resource estimates.

In order to verify the information incorporated within the 2006-2011 drill programs, Micon has: completed a check of the digital drilling database against the diamond drill core to confirm both geological and assay values and provide a reasonable representation of the Savkino Project; compared the lithological coding used in the database versus the text description; and verified the quality of geological and sampling information and developed an interpretation of gold grade distributions appropriate to the use in the mineral resource model.

For further information with respect to the key assumptions, parameters and risks associated with the results of the 2014-Technical Report, the mineral resource and reserve estimates and other technical information with respect to the Savkino Gold Mine, please refer to the 2014-Technical Report to be made available at www.sedar.com.

About Mangazeya

Mangazeya is a gold mining and exploration company with its assets based in eastern Russia. The common shares of Mangazeya are listed and posted for trading on the NEX Exchange under the symbol "MGZ.H".

Forward-Looking Statement

This news release contains forward looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of applicable Canadian securities laws including with respect to the impact of the new resource and reserve estimate on the Savkino Gold Deposit's economics, expansion at the Savkino Mine, the planned production and the timing thereof, the economic feasibility of the open-pit operations on the Savkino deposit, and the planned level of output and the sustainability of production. Words such as "may", "will", "should", "anticipate", "plan", "expect", "believe", "estimate" and similar terminology are used to identify forward-looking statements and forward-looking information. Forward looking statements in this press release related to the 2013-Technical Report, and include, among others, statements with respect to the estimation of mineral resources and reserves, costs, metal prices, gold recoveries, mining methods and mine plan and operating performance of the Company. Such statements and information are based on assumptions, estimates, opinions and analysis made by the management of Mangazeya in light of their experience, current conditions and their expectations of future developments as well as other factors which they believe to be reasonable and relevant. Forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements and information. Risks and uncertainties that may cause actual results to vary include but are not limited to: uncertainties relating to the interpretation of the geology, continuity, grade and size of estimates; unanticipated operational or technical difficulties; changes in the availability of qualified personnel; changes in equity and debt markets; fluctuations in gold and other commodity prices; as well as other risks and uncertainties which are more fully described in Mangazeya's Annual Information Form dated March 28, 2013 and its annual and quarterly Management's Discussion and Analysis and in other filings made by Mangazeya with Canadian securities regulatory authorities and available at www.sedar.com.

Any forward-looking statement and information speaks only as of the date on which it is made and, except as may be required by applicable laws, Mangazeya disclaims any intent or obligation to update any forward-looking statement and information, whether as a result of new information, future events or results or otherwise. Although Mangazeya believes that the assumptions inherent in the forward-looking statements and information are reasonable, forward-looking statements and information are not guarantees of future performance and accordingly undue reliance should not be put on such statements or information due to the inherent uncertainty therein.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Mangazeya Mining Ltd.