🕐22.02.12 - 18:27 Uhr

BLUE NOTE AND CRITICAL ELEMENTS ANNOUNCE UPDATED PREFEASIBILITY STUDY AND RESOUR
CE ESTIMATE FOR THE CROINOR GOLD PROJECT



If you have trouble seeing this e-mail, please click here

Add to your address book or safe list to ensure delivery of email blasts (click for instructions)
� Blue Note and Critical Elements announce updated prefeasibility study and
resource estimate for the Croinor gold project

Click Here for a Free Real-time Stock Quote on TSX-V: BNT

MONTREAL, Feb. 22, 2012 - Blue Note Mining Inc. (TSXV: BNT) ("Blue Note") and Critical Elements Corporation (TSXV: CRE) ("Critical Elements") announce results from the updated Prefeasibility and Mineral Resource Estimate (the "Prefeasibility Study") for their jointly owned Croinor gold project located near Val dOr, Quebec. The Prefeasibility Study was completed by InnovExplo Inc. with the participation and contribution of Golder Associates, Genivar and other contractors, and confirms the projects positive economics.

The Prefeasibility Study includes updated mineral resources/reserves with respect to Measured and Indicated resources. In order to evaluate the impact of the Inferred resources on the project economics with the assumption that the Inferred resources would be converted into Indicated Resources, a second study was completed. A preliminary economic assessment (the "PEA") that includes Inferred resources potentially viable to mining is presented in the same release. The Inferred resources are all in the immediate vicinity of the Indicated resources. The bulk of the Inferred resources represent a fringe around the Indicated resources and extend to a maximum of 70m and do not have enough drill holes intersects to be categorized as Indicated although It would be relatively easy to convert all or parts of the Inferred into Indicated category by definition drilling. The reader is cautioned that the results of the PEA is preliminary in nature; it includes Inferred mineral resources that are too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. The existing mineral reserves and Prefeasibility Study are still current and valid in light of the key assumptions and parameters used in the PEA.

The Prefeasibility Study outlines an underground mining operation using custom milling at a fully permitted milling facility near Val dOr and projects a five-year mine life. The Prefeasibility Study and PEA will be filed on within 45 days of this news release in accordance with Regulation 43-101. Highlights from the Prefeasibility Study and PEA are presented in the following table. All currency in this report is in Canadian dollars unless otherwise noted.

HIGHLIGHTS OF PREFEASIBILITY STUDY AND PEA(1)

This table compares Mineral Reserves with Mineral Resources potentially viable to mining(2).

Parameters Prefeasibility Results PEA Results(2) � � � Resources included in Mine Plan(2) 566,872 t at 6.64g/t(3) 583,285 t at 6.64g/t (Measured+Indicated)
105,876 t at 7.13 g/t (Inferred)(3) Proven & probable mineral reserve 566,872 t at 6.64g/t(3) N/A Total contained gold 120,883 oz 124,503 oz (Measured+Indicated)
24,287 oz (Inferred) Mine life (including 18-month pre-production) 5 years (58 months) 5 years (65 months) Daily mine production 425 t/day ramping up to 675 t/day in year 4 425 t/day ramping up to 760 t/day in year 3 Gold recovery 97.5% 97.5% Annual gold production 21.259 to 41,578 oz 22,785 to 47,477 oz LOM recovered gold 117,956 oz 145,073 oz Average cash operating cost $164/tonne $160/tonne Average cash operating cost US$762/oz US$731/oz Capital cost(4) $ 37.4 million(4) $ 38.5 million(4) Total cost per ounce US$1022/oz US$951/oz Total revenue $166 million $203.9 million Total operating cost $87 million $104.2 million Total project cost $124 million $142.7 million Total operating cash flow (before tax & royalties) $47.2 million $66.7 million Estimated mining and income taxes $12.5 million $18.2 million Net cash flow (After tax & royalties) $31 million $42.1 million Pre-tax NPV (7% discount ) $30.6 million $42.8 million Pre-tax IRR 57 % 70 % After-tax NPV (7% discount ) $21 million $28.9 million After-tax IRR 44 % 53 % Payback period 38 months 36 months Pre-production period (including 41,115t of production) 18 months 18 months

(1) Bloomberg base case consensus forecasts as of December 19, 20112012 2013 2014 2015 Gold price ($US/oz) 1,834 1,893 1,572 1,506 Exchange rate ($C/$US) 1.03 1.01 1.04 1.01 (2)The reader is cautioned that the results of the PEA is preliminary in nature; it includes Inferred mineral resources that are too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized (3)Tonnage and grade take into account the mining dilution and recovery (4)Includes 17.9M sustaining/working capital in the case of Prefeasibility Study, 19.10M sustaining/working capital in the case of PEA and capitalized preproduction operating costs net of associated revenue in all cases

OUTLOOK

Blue Note intends to pursue project financing based on this new updated information. Upon successful completion of such financing, Blue Note intends to proceed with mine dewatering and pre-production as outlined in the Prefeasibility Study.

Blue Note intends to evaluate the possibility of mining an open-pit on the western part of the project to reduce capital requirements and generate cash flow that would improve the project economics and accelerate the development process.

Resource Estimation

The Mineral Resource Estimate was performed by Karine Brousseau, Eng. and Tafadzwa Gomwe, Ph.D., G.I.T., under the supervision of Carl Pelletier, B.Sc., P.Geo, all from the Val dOr based consulting firm InnovExplo Inc. One of the objectives of InnovExplos work was to prepare a Mineral Resources estimate in compliance with Regulation 43-101 for the Croinor deposit using 3D block modelling instead of polygonal method like the previous estimates. The effective date of this Mineral Resource Estimate is November 4, 2011.

At a cut-off grade of 4 g/t Au, the Measured Resources contains 80,000 tonnes at 8.41 g/t Au for 22,000 ounces, the Indicated Resources contains 600,000 tonnes at 9.18 g/t Au for 177,000 ounces and the Inferred Resources contains 160,000 tonnes at 8.56 g/t Au for 44,000 ounces.

The Mineral Resource Estimate was made using 3D block modelling and the inverse distance (1/D6) interpolation method for a 1,570-m strike-length corridor of the Croinor property and down to a vertical depth of 545 metres below surface on 54 mineralized zones.

InnovExplo compiled drill holes of the Croinor property. The 2010 and 2011 surface drill holes were added up to CR-11-413, which was complete, in term of assays results, at the time of the current Mineral Resource Estimate. The current Mineral Resource Estimate considered 1,219 surface and underground diamond drill holes and covers an east-west distance of 1,530 m on the Croinor deposit.

The database contains a total of 27,655 assays taken from the 122,339 metres of core drilled in 1,219 drill holes. The data base also comprise 4,309 assays taken from 1,927 channel samples compiled by InnovExplo in 2005 (Pelletier C. and Boudrias, G., 2005) combining chip samples from the development headings done between 1983 and 1986.

At a cut-off grade of 5 g/t Au, the Measured Resources contains 59,000 tonnes at 9.81 g/t Au for 19,000 ounces, Indicated Resources contains 447,000 tonnes at 10.78 g/t Au for 155,000 ounces and Inferred Resources contains 102,000 tonnes at 10.90 g/t Au for 36,000 ounces.

For the previous Mineral Resources Estimate made by ODowd (2009), the Measured Resources contained 31,192 tonnes at 8.59 g/t Au for 8,615 ounces, Indicated Resources contained 783,036 tonnes at 9.13 g/t Au for 229,799 ounces and no Inferred Resources.

For the current Mineral Resources Estimate, Inferred Resources were calculated. No Inferred were calculated in the previous estimate. Because additional drilling was done in the lateral extension and at depth in 2010 and 2011, it has been demonstrated that the mineralized zones were continuous outside the area of the known resources and that sufficient information was available to establish the geological and grade continuities of the zones. The Inferred resources of the Croinor deposit are all in the immediate vicinity of the Indicated resources. The bulk of the Inferred Resources represent a fringe around the indicated resources and extend to a maximum of 70m and do not have enough drill holes intersects to be categorized as Indicated although it would be relatively easy to convert all or parts of the Inferred into Indicated category by definition drilling.

After the Mineral Resource Estimate was performed by ODowd in 2009, a total of 65 drill holes for a total of 15,390 m were drilled by Blue Note. In order to quantify the impact of the recent drilling on the Mineral Resources, a second calculation of the block model was done without the 2010-2011 drill holes. A total of 47 drill holes and 2,444 assays were removed from the database and the block model was recalculated with the same 3D solids and the same parameters.

The results show that without the 2010 and 2011 drill holes, the Measured Resources contains 59,000 tonnes at 9.81 g/t Au for 19,000 ounces, Indicated Resources contains 430,000 tonnes at 10.79 g/t Au for 149,500 ounces and Inferred Resources contains 65,000 tonnes at 10.61 g/t Au for 22,000 ounces.

There was a decrease of 336,036 tonnes from the 2009 resource estimate to the 2012 estimate based on changes in resource estimation methodology and geological interpretation. Based on results from the 2010 and 2011 diamond drill campaigns, 16,209 tonnes of indicated resources and 37,990 tonnes of inferred resources were added to the 2012 resources.

This exercise demonstrates that the 2010-2011 drilling programs had a positive impact on the mineral resources and that the decrease in Mineral Resources is mainly cause by the change of estimation method. ODowd (2009) used polygonal method on cross section and InnovExplo used 3D block modelling with inverse distance power six (1/D6).

The table below show the Mineral Resources Estimate with cut-off variation from 3 g/t Au to 5 g/t Au. � Mineral Resource Estimate CategoryCut-off 3 g/t AuCut-off 4g/t AuCut-off 5g/t Au � � tonnesg/touncestonnesg/touncestonnesg/tounces Measured � 112,395 � 7.00 � 25,306 � 80,517 � 8.41 � 21,759 � 59,390 � 9.81 � 18,724 Indicated � 848,260 � 7.51 � 204,726 � 599,565 � 9.18 � 176,866 � 447,322 � 10.78 � 154,996 Total Measured and indicated � 960,700 � 7.45 � 230,000 � 680,100 � 9.08 � 198,700 � 506,700 � 10.66 � 173,700 � � � � � � � � � � � � � � � � � � � Inferred � 227,751 � 7.03 � 51,512 � 160,140 � 8.56 � 44,071 � 102,428 � 10.90 � 35,885

PREFEASIBILITY STUDY HIGHLIGHTS

Reserve Estimation

Mineral reserves were classified in accordance with the CIM Definition Standards for Mineral Resources and Mineral Reserves. Mineral Reserves for the project incorporate appropriate allowances for mining dilution and mining recovery according to the selected mining method.

In order to determine the Resource to be converted to Reserve, the MSO (Mineable Shape Optimizer), a Datamine software application, was used. According to specified stope parameters, MSO generates individual stope shapes from the block model.

Two mining methods appear to be most convenient for the Croinor deposit, long-hole retreat and room-and-pillar. In order to select the most appropriate mining method, two MSO runs were completed on the block model using the following parameters for both methods. A small block size was selected in order to obtain results adapted to the narrow vein nature of the deposit.

Long-hole mining method:

Cut-off grade value: 3.7 g/t; Minimal mining width of 1.8 m (stope thickness); Mining dilution of 0.4 m on the hanging wall and 0.2 m on the footwall; Minimal slope walls angles of 45 degrees; Sub-level interval of 13 m (vertical height); Spacing interval of 5 m (stope length).

Room and pillar mining method:

Cut-off grade value: 5.4 g/t; Minimal mining width of 1.8 m (stope thickness); Maximal mining width of 3 m (stope thickness); Maximal slope walls angles of 45 degrees; Spacing interval of 5m x 5m (stope size long strike).

The estimated proven and probable reserves are presented in Table below and totalled 120,883 ounces after applying the mining recovery and dilution factor according to the selected method.

Diluted Mineral Reserve Estimate Categorytonnesg/tounces Proven � 68,849 � 6.23 � 13,789 Probable � 498,023 � 6.69 � 107,094 Total Reserves � 566,872 � 6.64 � 120,883

The current study report a lower tonnage and grade leading to lower ounces compared with the 2010 prefeasibility study. Lower tonnage result of changes in resource estimation methodology, geological interpretation and changes in the criterion of resources category. Lower grade is caused by the increase in long hole mining method application. In the current mine plan, 75% of the resources is planned with the long hole method as oppose to 20% in the 2010 prefeasibility study. This method was applied as much as possible due to lower mining cost and higher productivity.

Ore Recovery and Dilution

The ore recovery and dilution factor applied in the mining plan and reserve calculations were based on rock geomechanical study and on common factors applied to the selected method.

In the long-hole method, as a first step, each stope was evaluated individually and pillar locations were determined according to the geomechanical evaluation. A 95% recovery factor was then applied to the remaining tonnage. A 0.6-meter thickness dilution was initially applied in the MSO parameters. Once compiled, the overall stope resulting dilution was 24%. In order to remain conservative, a 6% dilution factor was added to consider an overall dilution factor of 30% for the long-hole stopes resulting average mining width of 4.0 m including 1.2 m of dilution. The dilution grade was set at 0.0 g/t Au.

The room-and-pillar stopes were evaluated considering a recovery factor of 85%. In the cases where the stope dimension was smaller and considered stable from the geomechanical study, a 100% recovery factor was applied. A dilution factor of 5% was applied to room-and-pillar stopes.

Cut-off grade

The estimated cut-off grade was calculated using a metal price of $1205.52 at an exchange rate of 1.07. This metal price reflected the three-year average metal prices as of October 31, 2011 at the time the stope shapes were generated.

The remaining parameters used in the cut-off grade estimation are presented in the following Table.

Cut-off grade parameters � � Long-hole � Room-and-pillar Operating Cost � $150.00/t � $203.00/t Mint cost � $5.00 /oz � $ 5.00 /oz Mill recovery � 97.5 % � 97.5 % Mining dilution � Included in the MSO parameters � 5.0%

InnovExplo is not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant issues that would materially affect the Mineral Reserve Estimate. InnovExplo considers the present Prefeasibility Study to be reliable and thorough, based on quality data, reasonable hypotheses and parameters compliant with Regulation 43-101 and CIM standards with regard to Mineral Reserve and Resource estimates.

Mining

The proposed mining plan of the Croinor project involves the underground mining of narrow subvertical vein. A large portion of the identified resources presents a dip running below 45 degrees. This dip is unfavorable to long-hole mining since the broken ore does not flow easily on the footwall. It is also unfavorable for room-and-pillar as the dip makes it hard for workers to travel in the stope with the equipment and the material. However, in the recent years, the introduction of electronic detonators demonstrated better results in control in blasting leading to better mining recovery in stopes with low dipping footwall angle.

The mining plan for the Croinor project comprises a combination of conventional and mechanized mining. The approach in this study was to force long-hole mining application by adding dilution to ensure a minimal footwall angle of 45 degrees. When this approach was not convenient, room-and-pillar mining was selected. The use of MSO software permitted this stope analyses by calculating optimized stope shape according to specified mining parameters.

The ore will be transported to surface using a combination of 3.5-yd and 6-yd scooptrams and 30-tons truck. Waste material will either be brought to surface or used to fill mined out stope when possible.

The deposit will be accessed via a ramp. The existing ramp will be restored to level 125 and a new section will be excavated to access all resources. The production drifts will be accessed via crosscuts connecting the ramp. A small portion of the resources will be mined with captive method; however, the haulage will always be mechanized.

Existing Mine Infrastructure
The Croinor deposit is serviced by a ramp measuring 300m long by 4m high by 4.5m wide (4m x 4.5m) that extends to level 125 (38m), and by a 3-compartment shaft extending 195m deep. Development was completed on four (4) levels: 496 metres on level 125; 560 metres on level 250; 233 metres on level 375; and 730 metres on level 500. Approximately 320 metres of raise development was also completed. The Croinor mine is currently flooded to the portal entrance.

Production Schedule
InnovExplo developed a preliminary development and production schedule based on the existing underground development. The operation will use a production schedule of two 10-hour shifts, 6 days a week for a total of 300 days per year. The underground mine design provides for a five-year mine plan producing 566,429 tonnes of ore assaying 6.64 g/tonne. Using a mill recovery of 97.5%, a total of 117,950 oz of gold will be produced during this period.

The mining method will have a 75/25 ratio for long-hole mining to room-and-pillar. The mining plan includes all development required to access and mine the mineralized zones. The Table below presents the mine life production schedule.

Prefeasibility Mine Life Production ScheduleYear 1Year 2Year 3Year 4Year 5 � � � Pre-prodPre-prodProdMonth 25-36



Products & Services | Jobs