Vulcan Resources proceeds with copper cobalt mine in Finland

West Perth-based development and exploration company Vulcan Resources Ltd has today announced that it is proceeding with the Kylylahti Mine in Finland.

The Company's primary focus is the development of the 800,000 tpa 100% owned Kylylahti copper-cobalt project located in eastern Finland which has a Resource of 7.85 million tonnes grading 1.17% copper, 0.24% cobalt, 0.22% nickel, 0.49% zinc and 0.70 g/t gold5.

A definitive feasibility study has been completed on a 10 year underground mine and concentrator producing copper-gold and zinc-cobalt-nickel concentrate for sale.

All environmental and mining permits for the project are in place and production is planned to commence in late 2010.

The Kuhmo Nickel Project is 95% owned by Vulcan and has a resource containing 38,000 tonnes of nickel metal and over 80,000 ounces of platinum and palladium6.

Vulcan also has extensive iron-vanadium-titanium and nickel-copper projects in northern Finland.

Vulcan is listed on the Australian Stock Exchange (VCN), the Frankfurt Stock Exchange (VUA) and the Norwegian OTC (VCNR).

The full announcement is pasted below:

Vulcan Resources Limited ("Vulcan") has completed the Definitive Feasibility Study ("DFS") for an 800,000 tonnes per annum ("tpa") Kylylahti mine and concentrator in eastern Finland.

The Board of Vulcan has adopted the findings of the DFS and approved the initial development of Kylylahti Copper-Cobalt-Nickel Project.

The DFS has confirmed the economic and technical viability of the project which has an after tax NPV (8%) of US$149 million, an IRR of 29.5%, a life of mine pre tax cash flow of US$618 million and a capital cost of US$170 million.

Vulcan's Chairman, Mr Barry Eldridge, said he was delighted with the outcome of the DFS given the global escalation in costs.

"The Kylylahti mine development will mark the revitalising of the Outokumpu copper field some 100 years after the initial discoveries in 1910.

Finland is an excellent country to do business and Vulcan expects to generate150 jobs during construction and 200 permanent jobs.

Vulcan has already obtained all mining and environmental permits necessary for commencing operations.

We expect site works to commence in July and the decline by the end of 2008".

"Metals markets look strong for the initial years of the Project and robust demand growth and difficulties withmeeting the supply challenge around the world suggest elevated prices in the medium to long term," said Mr Eldridge.

Managing Director, Dr Alistair Cowden, said "Kylylahti is a robust conventional project with a 10 year life but recent drilling indicates that this will be extended.

The strong cobalt, nickel and zinc credits deliver a low cash operating cost of $US1.05/lb copper equivalent. All technical and financial information has been subject to independent study and review."

"The DFS saw significant changes to the Project plan described in the Pre-Feasibility Study ("PFS") with mine throughput increased from 500,000 tpa to 800,000 tpa.

The Project will produce two concentrates; firstly a copper-gold concentrate for sale to copper smelters in the Nordic countries or elsewhere in Europe and secondly a bulk cobalt-nickel-zinc concentrate for sale to
processing facilities within Europe.

The development of a facility to produce nickel-cobalt intermediate products as envisaged in the PFS has not been included in the project plan, however Vulcan will continue to examine concentrate processing options to produce high value intermediate products."