Results of DFS

Thor Mining PLC
04 December 2006


                                THOR MINING PLC


            Results of the definitive feasibility study at Moliyhil


Dated: 4 December 2006


Thor Mining PLC ('Thor' or the 'Company') the specialist metals company
currently focussed on advancing tungsten-molybdenum and uranium projects in the
Northern Territory of Australia, today announced the completion of a definitive
feasibility study ('DFS') on the Molyhil Tungsten-Molybdenum Project ('Molyhil')
in the Northern Territory of Australia. The study confirmed that the project is
technically and economically viable, with strong financial returns and a rapid
capital payback.


Following release of the DFS today trading resumed on the Australian Stock
Exchange.


Highlights


  • DFS on Molyhil confirms viability of a 300,000tpa mining and processing
    operation;


  • Thor will proceed with the development which has a rapid capital payback
    and strong financial returns;


  • Financial modelling for the project indicates a pre-royalty EBIT of AUD117
    million over the first 4 years;


  • A NPV of AUD88 million discounted at 8% at an average AUD/USD exchange
    rate of 0.73;


  • An IRR of 111%;


  • Significant opportunities identified for reduction of CAPEX through the
    purchase of second-hand equipment; and


  • Further drilling planned for the first quarter of 2007, which is designed
    to increase the life of mine within open pit designs and to increase the
    resource at depth.


Introduction


The Board today agreed to proceed with a new mine development at Molyhil,
subject to securing all necessary approvals, including a suitable off take
agreement; and completing a fund raising in the first quarter of 2007.


The DFS, which was carried out over the past 12 months, paves the way for the
financing and development of Molyhil during 2007. The Company proposes to
complete a fundraising and an off take agreement during the first quarter of
2007. Thor is currently in discussions with a number of parties in relation to
this, however, at this stage, no terms have been agreed. Construction is
targeted to commence in May 2007 with first production in the first quarter of
2008.


The DFS confirmed the viability of a mining and processing operation based on a
JORC compliant resource for the Molyhil deposit of 2.4 million tonnes grading
0.8% combined tungsten WO3 and molybdenum MoS2 to a vertical depth of 150
metres.


The operation would be based on an open pit mining operation and 300,000tpa
process plant with an initial 4-year mine life. Drilling is planned in 2007 to
extend the mine life both within the planned pit designs and at depth. This deep
drilling is to be completed with a view to extending the life of the mine by
underground mining at the cessation of open pit operations.


Estimated recoveries based on metallurgical test work of 67% for tungsten and
77% for molybdenum, the operation would generate two quality concentrate
products, initially by flotation of molybdenum (MoS2), followed by gravity
separation and concentration of tungsten (WO3).


The estimated capital cost is AUD44.5 million, which includes the engineering,
procurement and construction management contracts and a contingency. The
forecast total operating cost is AUD94/tonne. The stage 1 and stage 2 open pits
have been designed to optimise cash flow in the first year of production to take
advantage of current strong commodity prices and achieve an early payback of
capital.


Significantly, the DFS indicates that a capital payback period of less than 7
months can be achieved with the stage 1 pit, with the operation generating a
positive pre-royalty EBIT of AUD117 million over its initial 4-year life, using
a base case sale price of US$20/lb of molybdenum and US$204/mtu for tungsten. At
these base case prices the project has a net present value ('NPV') of AUD88
million, an internal rate of return (IRR) of 111%, and a capital payback of 7
months. However the projects financial model is highly sensitive to changes in
the commodity price. For example, if commodity sales prices reduce by 15% from
the base case level then the NPV reduces to AUD56 million and the IRR to 74%
with a payback period of 11 months.


Thor has already secured key items of plant and equipment for the Molyhil
development, including an option to purchase a spirals plant and tables and a
second-hand two-stage crushing circuit at a significantly reduced cost compared
with a new circuit. Additional metallurgical tests to further optimise the
flotation conditions and concentrate grade and recovery forecast are
recommended. No change to the current cleaning circuit is expected however
further optimisation of the re-cleaning circuit is likely to reduce flow sheet
complexity and possibly capital cost. A particular area of focus in the
re-cleaning work would be the recovery of Mo in the -75 (micro)m fractions,
especially looking at separation of Mo from both Cu and Fe. As a result of this
a discount of 20% to the current commodity prices has been applied to the
financial model. Additional test work focusing on the recovery of the fine
tungsten, currently excluded from the flow sheet and recovery forecasts, is
recommended and represents an upside recovery of 15%.



Based on the positive results of the DFS, Thor has decided to proceed with the
Molyhil project, subject to determining a number of key outcomes, such as
finalisation of the off take agreement and finance package as well as State
Government and Native Title approvals.



Commenting on the DFS results, Thor's Chief Executive Officer, Mr John Young,
said: 'We are very pleased with the outcome, which confirms the viability of a
mining development at Molyhil to underpin Thor's transition to production next
year. The DFS indicates a rapid capital payback and strong financial returns,
with the key to this project being rapid development to take advantage of
current strong commodity prices.'



'We have also identified several opportunities to significantly reduce the
estimated capital cost through the acquisition of suitable second-hand
equipment,' he added. 'This has the potential to enhance returns and improve the
overall economics. Our focus now is on securing all necessary approvals and
completing financing and off-take agreements over the next few months'



Executive Summary



The Molyhil project is a proposed open cut mine and processing facility to be
constructed in the Northern Territory. The main objective of the proposed
facility is to produce scheelite and molybdenite concentrate for sale.



Thor, through its wholly-owned Australian subsidiary Sunsphere Pty Ltd, owns
100% of the Molyhil, which comprises EL 22349, totalling 829 km2 in area, and
includes ML 23825 which covers the deposit (former open pit, waste dumps and
Run-of-Mine stockpile). In 2004, Thor applied for ML 24429 to further extend the
mining operation and recently MLA 25721 to cover the project infrastructure
requirements. The combined mining lease applications cover an area of 247 ha.



The DFS report has been prepared by a number of consultants including Proteus
Engineers, AMC and Golder Associates and covers the technical and economic
feasibility of developing Molyhil. The DFS includes preliminary design,
engineering and cost estimates for the mining, process plant and associated
facilities for a 300,000tpa operation. The DFS mineral resources and ore reserve
estimation was classified in compliance with the JORC Code. All prices are in
Australian Dollars unless stated to the contrary.



The Ore Reserve estimate has been established through a series of mine
optimisations and mine designs. The current pit model has proved and probable
reserves of 1.094Mt at 0.21% (Mo) and 0.62% (W).



A two-staged pit design has been recommended, providing 201,621t of ore grading
0.26% (Mo) and 1.28% (W) in stage 1 and 892,237t of ore grading 0.20% (Mo) and
0.47% (W) in stage 2. Stripping ratios are 8.0:1 and 7.4:1 respectively. Mining
is planned to be undertaken by conventional truck and shovel operations under
contract mining arrangements.



The metallurgical test work and resultant process flow sheet indicate the
recovery of 889 tpa of dry Molybdenite concentrate (77.0% recovery of Mo) and
1,511tpa of dry Tungsten concentrate (67.20% recovery of WO3) at saleable
specifications. Additional test work is being commissioned to finesse the
recovery/grade of both concentrates. No change to the current cleaning circuit
is expected however further optimisation of the re-cleaning circuit is likely to
reduce flow sheet complexity and possibly capital cost. A particular area of
focus in the re-cleaning work would be the recovery of Mo in the -75 (micro)m
fractions, especially looking at separation of Mo from both Cu and Fe. As a
result of this, a discount of 20% to the current commodity price has been
applied in the financial model. Additional test work focusing on the recovery of
the fine tungsten, currently excluded from the flow sheet and recovery
forecasts, is recommended and represents an upside recovery of 15%.



The suggested process flow sheet is a partial secondary crush SAG comminution
circuit, followed by flotation to produce a Molybdenite concentrate. A final
stage of flotation removes pyrite prior to a gravity separation of the Tungsten
concentrate, with subsequent magnetic and high tension separation of the dried
Tungsten primary concentrate to reject the remaining magnetic and conducting
minerals to produce a saleable tungsten concentrate.



Geochemical test work on representative tailings samples has been commissioned
with results anticipated in January 2007. Provision has been made in the design
of the tailings storage facility for the installation of a liner and
underdrainage system if geochemical testing of the tailings and tailings liquor
indicate that the installation would be required.



The cost of three subsequent 1.5m lifts to contain the final tailings volumes
has been included in the operational costs.



While it is anticipated that the project will require a formal assessment
through a Public Environmental Review, no environmental or heritage concerns
have been identified that cannot be managed within the framework of an
Environmental Management Plan.



The estimated capital cost for the Molyhil process plant and facility, including
an allowance for contingency, EPCM and Owner's costs is AUD45.5 million. No
allowance has been made in the base case for escalation over the project life.
The effect of escalation on the capital cost is illustrated in the sensitivity
analysis.



The capital cost of the project has been reduced through the use of BOO
contracts to provide the accommodation village, power station, fuel storage
facilities and support buildings. These costs are reflected in the process plant
operating cost which has been estimated at AUD63.10/tonne of ore treated. The
average operating cost of the mining operation has been estimated at AUD31.04/
tonne of ROM ore produced.



In addition, there are also opportunities to reduce the direct capital cost of
the process plant and facilities by AUD3.6 million through the use of
second-hand equipment or by reducing design and construction specifications due
to the relatively low project life required.



The operating cost includes transporting the concentrate to Darwin Port, but no
allowances have been made for any shipping or handling charges ex Darwin Port as
no definite sales arrangements have been agreed to date.



The base case scenario uses the following assumptions:



  • A constant Molybdenum price of US$25 per pound less 20% discount;
  • A constant Tungsten (APT) price of US$255 per mtu less 20% discount;
  • No allowance for taxation, Northern Territory Government royalties or
    Central Land Council royalties;
  • A commission of 0.75% paid on revenue received;
  • Capital expenditure of AUD45.5 million inclusive of AUD1.0M of owner's
    costs, EPCM and a 10% contingency;
  • Salvage value of the plant and equipment is assumed to be sufficient to
    meet final closure obligations;
  • Operational insurances and duties are assumed to be AUD500,000 pa.
  • Discount rate 8% and an average AUD/USD exchange rate of 0.73 has been
    used; and
  • 100% equity finance.



Based on these assumptions the project has a NPV of AUD88 million, an IRR of
111%, and a capital payback of 7 months. The project financial model is highly
sensitive to commodity price changes. For example, if commodity sales prices
reduce by 15% from the base case, the NPV reduces to AUD56 million and the IRR
to 74% with a payback period of 11 months.



The DFS confirms that the project is technically and economically viable and it
is recommended for development.



Glossary of geological and technical terms


TERM                DESCRIPTION

DFS                 Definitive Feasibility Study

MOLYBDENUM          Molybdenum (Mo) is a transition metal. The pure metal is silvery white in colour,
                    fairly soft, and has one of the highest melting points of all pure elements. In
                    small quantities, molybdenum is effective at hardening steel.

TUNGSTEN            Tungsten (W) is found in several ores including wolframite and scheelite. It is a
                    very hard, heavy, steel-grey to white transition metal

                  . The pure form is used mainly in electrical applications but its many compounds
                    and alloys are widely used in many applications.

ORE                 Ore defined as mining product containing economically recoverable minerals.

SCHEELITE           CaWO4, Calcium Tungstate

MOLYBDENITE         MoS2, Molybdenum disulfide.

CONCENTRATE         The valuable metal from which most of the waste rock has been removed.

WASTE               Mining product containing no economically recoverable minerals.

TAILINGS (TAILS)    The waste product from the process.

BERM                The walls are stepped. The inclined section of the wall is known as the batter, and
                    the flat part of the step is known as the bench or berm. The steps in the walls
                    help prevent rock falls continuing down the entire face of the wall

SAG                 Semi Autogenous Grinding, uses grinding media (balls) and the ore itself to effect
                    the reduction in size of the ore to meet the size specification for the flotation
                    circuit.

PYRITE              Iron sulphide, FeS2

SULPHIDE            Minerals containing sulphur

COMMINUTION         Process of reducing the size of the ROM material through crushing, screening  and
                    grinding

ROUGHER             The rougher flotation cells are designed to recover the coarse liberated and faster
FLOTATION           floating molybdenite mineral

SCAVENGER           The scavenger flotation cells are designed to recover the slower floating
FLOTATION           molybdenite mineral

CLEANING            Further stages of flotation used to improve the grade of the molybdenite recovered
Flotation           from the rougher and scavenger flotation units

(micro)m            Micron, one millionth of a metre

Mtu                 Metric tonne unit, a unit of mass used in mining to measure the mass of the
                    valuable metal in an ore. Customarily, the metric ton unit is defined to be one
                    metric ton of ore containing 1% metal, but it is the metal, not the ore, that is
                    being measured.
tpa                 Tonnes per annum

THICKENER           A piece of equipment that recovers water from a slurry

ROM                 Run of Mine, the ore that is extracted from the mine to be processed

CELLS               An individual flotation unit

RECOVERY            The percentage of the valuable mineral that is recovered in the concentrate
                    fraction of the particular process.

MAGNETIC            Magnetic separation is used to separate magnetic minerals from non-magnetic
SEPARATION          minerals and can be undertaken on either wet or dry material

HT SEPARATION       High Tension separation is used to separate minerals that are conductors from
                    minerals that are non-conductors

GEOTECHNICAL        Scientific methods and engineering principles to acquire, interpret, and apply
                    knowledge of earth materials for solving engineering problems.

BOO                 Build Own and Operate, a contractual arrangement whereby the contractor designs,
                    constructs and operates the plant to supply product or services whilst retaining
                    ownership of the plant. The contractor is reimbursed for the supply of product or
                    services rather than for the supply of the plant.

PABX                Private Automatic Branch Exchange, a telephone exchange that is owned by a business

MATV                Master Antenna Television System

EPBC                The Environment Protection and Biodiversity Conservation

NOI                 Notice of Intent, used to notify the Department of Primary Industries, Fisheries
                    and Mines of details of the proposed project

PER                 Public Environmental Review

APT                 Ammonium Paratungstate

CIF                 Carriage Insurance Freight, international shipping terminology denotes that the
                    seller delivers the product to the port of destination and has included these costs
                    in the stated price and will provide the buyer with the documents necessary to
                    obtain the goods from the carrier.

EPCM                Engineering, Procurement and Construction Management

FIFO                Fly in and fly out of the mine site. Employees stay in temporary accommodation and
                    return 'home' at the end of their shift roster

OH&S                Occupational Health and Safety

CCE                 Capital Cost Estimate

p.a.                Per annum

NPV                 Net Present value, is the present value of cash flow minus initial investment of
                    the project. It is one method of ranking projects; it measures the excess or
                    shortfall of cash flows, in present value terms, once financing charges are met and
                    takes into account the reducing value of future revenue due to the anticipated
                    interest rate over the period.

IRR                 Internal Rate of Return, is another method of ranking projects and is defined as
                    the discount rate that results in a net present value of zero, and it is usually
                    interpreted as the expected return generated by the investment.

EBIT                Earnings before interest and tax


JORC Compliance

The information in this report that relates to exploration results, mineral
resources or ore reserves is based on information compiled by John Young, who is
a Member of The Australasian Institute of Mining and Metallurgy. John Young, the
Chief Executive Officer of Thor, has sufficient experience which is relevant to
the style of mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person as defined in
the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves'.


John Young consents to the inclusion in this RNS announcement of the matters
based on his information in the form and context in which it appears.)


Enquiries:

John Young           + 61 (0)419 954 020       Thor Mining PLC             Chief Executive Officer
John Simpson         020 7512 0191             ARM Corporate Finance       Nominated Adviser
                                               Limited
Leesa Peters         020 7429 6600             Conduit PR Limited          Public Relations/UK
         or          020 7429 6603
                     
Jos Simpson

Nicolas Read         + 61 (0) 8 9388 1474      Jan Hope & Partners         Public Relations/Australia


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