October 4, 2016

BMSC Announces Commercial Production on Zinc Expansion

Bisha Mining Share Company (the “Company” or “BMSC”) is pleased to announce that the Bisha Mine in Eritrea has declared commercial production for the zinc expansion with the successful commissioning of its new zinc flotation plant effective October 1, 2016. Since commissioning commenced in June 2016, the existing copper circuit and the new zinc circuit have produced approximately 40,000 tonnes of commercially saleable zinc concentrate.

BMSC’s Chairman, Cliff Davis, stated, “We are pleased to have reached this major milestone.  The start of our zinc concentrate production coincides with the recent rally in zinc prices in 2016 and a decline in spot treatment charges for zinc concentrates.  In terms of copper production, we are expediting work to increase the quality of the copper circuit product and resolve certain metallurgy challenges when processing the highly variable primary ore materials. The concentrate produced from the copper circuit is currently considered “bulk con” which while saleable is not of a quality that would normally be acceptable as a copper concentrate for most copper smelters. The complex mineralogy of portions of the primary ore mined from the Bisha main pit to date has prevented successful clean separation of the copper and zinc ores on a consistent basis so as to produce saleable copper concentrate in any meaningful quantities. Test work with the assistance of external specialists is on-going with continued efforts to resolve before the end of 2016.”

Throughout September, the processing plant has operated consistently in a manner intended by the Bisha Mine, achieving targeted metrics for plant throughput, including successful mechanical and electrical operations, with the production of saleable bulk and zinc concentrates.  As noted above, both the existing copper and zinc circuits are producing concentrates, but due to the high zinc content reporting to both circuits, both products are being marketed as zinc concentrate.  The transportation logistics from the mine site to the Massawa port continue to function well and the Bisha Mine has made three ocean shipments of concentrate in September for sales totalling approximately US$21 million.

Production and selling costs, offset by the associated sales proceeds, for concentrates produced during the pre-commercial production period will be capitalized against the build cost.  The build cost of the zinc plant was approximately US$77 million, compared to a budget of US$100 million.

Forward Looking Statements

Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimated,” “potential,” “possible” and similar expressions, or statements that events, conditions or results “will,” “may,” “could” or “should” occur or be achieved.  Forward-looking statements are statements concerning the Company’s current beliefs, plans and expectations about the future including but not limited to commercial production, future production of copper and related cash flows and other events or conditions that may occur in the future, and are inherently uncertain.

Bisha Mining Share Company

“Cliff T. Davis”

Cliff T. Davis
Chairman