Camp Morado Mine And Mill Operational

VANCOUVER, BC - Dick Whittington, President and CEO of Farallon Resources Ltd. reported on activities at the Company's G-9 polymetallic development project at the Campo Morado (zinc, copper, lead silver, gold) property in Guerrero State, Mexico. The mine and mill are now operational and the corporate objective of having 3,000 tonnes of saleable concentrate produced by October 1 has been met.
Underground mining has been underway throughout September with a total of approximately 33,000 tonnes being mined to date. The current focus of mining is the West Extension zone and the higher grade areas of the North zone. Access development and stope development are on going concurrently with production. There are four active stopes/faces in mineralization in the North and West Extension zones: three faces on the 938 level in the North zone and one face at the 957 level in the West Extension zone.
Approximately 33,000 tonnes of mineralized material assaying between 6% and 12% zinc (as estimated from the block model and selected grab samples) have been delivered to the plant. Mining for the next few months will continue to concentrate in the North and West Extension zones until the Southeast ramp reaches the high grade of the Southeast zone. The Southeast ramp is still expected to reach the Southeast zone by December 15, after which stope development and production in that zone will begin.
The Mill is now mechanically and electrically complete. Commissioning has been underway throughout September in conjunction with a major operational effort to achieve 3,000 tonnes of saleable concentrate production by October 1. This has been achieved and mill performance, while still officially in the "commissioning" stage is improving day to day as our operational staff start the process of improving and optimizing mill throughput performance. Highlights to date include operating the mill at an average throughput rate of 1,535 tonnes per day for nine consecutive days and producing zinc concentrate at an average grade of 50.4% Zn. The mill has also met its target of producing separate zinc, copper and lead concentrates by October 1, and is now on-stream to commence the ramp-up in production previously announced. Selective shutdowns will occur over the next 60 days as final commissioning and debugging of the mill occur. The water retention dam, tailings storage facility and water diversion ditch are fully operational.
Heavy seasonal rains, while inconvenient, have not caused any material delays in the completion of construction or the commencement of production activities at the mine or the mill. The rainy season usually lasts into November, so this will be an on-going area of focus in the short term, to ensure the continued operation of the mine and mill.
In the other non-essential construction areas such as the mine administration building, the truck shop and the mine dry, construction is projected to carry over until the end of October or early November and is not expected to interfere with the production of concentrates in the meantime. Trucking of concentrates to the port of Manzanillo is expected to commence shortly and off-take shipments, as previously announced, are expected to start in the later part of October, with full production targeted for early 2009.
No changes have been made to the previously announced project capital cost to completion of $139 million, 12% above the estimate in the December 2007 Preliminary Assessment, although some increase is expected due to the delay in completing the administration building, truck shop and mine dry. Project cost reconciliation activities are underway to account for all costs attributable to the construction of the mine and mill and to ensure the appropriate separation between project costs and operational and corporate costs. Contractor contracts are being managed to closure with increased scrutiny of all outstanding cost items. Areas of risk continue to be in the amount of work outstanding versus billed and the accuracy of contractor estimates to complete certain contracts. All key equipment is now on site, consequently no significant increases in equipment costs are expected. Construction activities will continue through to November but the work and number of contractors involved will rapidly diminish to that time.
As previously announced (News Release dated August 21, 2008) JDS Energy & Mining Inc. ("JDS") completed an initial review of the Company's mine planning options and prepared a 17 month plan that mines approximately 700,000 tonnes of mineralized material at estimated average grades of 13% zinc, 1.5% copper, 1.2% lead, 150 grams per tonne of silver and 2.2 grams per tonne of gold. The plan includes initial monthly production rates of 20,000 tonnes per month, increasing to 45,000 tonnes per month by January 2009, which is equivalent to the planned production rate of 1,500 tonnes per day. A second revision to the plan is well underway with several areas of optimization being evaluated. The new plan will consist of a combination of lower cost mining methods (primarily open stoping) and the mining of high grade areas of the G-9 deposit. The mine plan is being designed specifically to maximize cash flow over an 18 month period, commencing November 1, 2008. Given the recent uncertainty over metal prices, the Company is putting the most economically robust plan together for the next 18 months.
The company's address is 428- 800 West Pender Street, Vancouver BC, V6C 2V6, 604-684-6365, fax: 604-684-8092.