Strathmore Minerals Corp STHJF

Strathmore Reports Favourable Preliminary Economic

[mdenoon14]

October 24, 2012
Strathmore Reports Favourable Preliminary Economic Assessment & Updated Resource Estimate for Roca Honda Uranium Project
STRATHMORE MINERALS CORP. ("Strathmore" or the "Company") is pleased to report favourable results from a National Instrument 43-101 technical report entitled "Technical Report on the Roca Honda Project, McKinley County, New Mexico," dated August 6, 2012, and prepared by Roscoe Postle Associates Inc. ("RPA"). The technical report includes an updated NI 43-101 compliant mineral resource estimate and the results of a Preliminary Economic Assessment ("PEA") for the uranium resources outlined to date at the Roca Honda Project in New Mexico. The Roca Honda Property is 60% owned by Strathmore and 40% owned by Sumitomo Corporation of Japan under their jointly held subsidiary, Roca Honda Resources LLC (RHR).

PEA Summary

• Base case estimated pre-tax Net Present Value (NPV) (8% discount), of US $220 million and pre-tax internal rate (IRR) of return of 19.2%, using US $75/lb uranium based on independent third party 2015 price forecasts. Using a uranium price of US $65/lb, the estimated pre-tax NPV (8% discount) is US $112 million and the IRR is 14%. The current long-term uranium contract price is US $60/lb.
• A mine life of nine years by conventional underground methods with a variable processing rate of 1,030 stoping tons per day during the time that mining occurs in Property Sections 9 and 16. Production increases to 1,200 stoping tons per day when Property Sections 9, 16, and 10 are all mined simultaneously, and then production drops to 1,020 stoping tons per day when mining from Property Section 10, only.
• Average annual production over the life of the mine is 2.6 million lbs of uranium; Estimated initial pre-production cost of approximately US $344 million, including contingency of $US 61 million. Total capital costs over the life of the mine are estimated to be US $444.5 million with contingency. Operating costs are estimated at US$24/lb. Total Capital, operating and royalty costs per pound are approximately US $44/lb with contingency and US $41 without contingency. Payback is approximately four years after production begins. A Sensitivity Analysis notes the project is most, and equally sensitive to, head grade, the uranium price and recovery. It is least, and equally sensitive to operating and capital costs.

Economic Evaluation

A summary of pre-tax financial evaluation using the base case uranium price of US $75/lb is presented below. The current spot and long-term uranium prices are considerably below the base case US $75/lb price used in the PEA, which is derived from independent third-party forecasts for 2015. The Roca Honda Project includes construction of a milling facility at RHR's Peña Ranch property with excess processing capacity which could be used as a regional toll mill. However, the base case assumes no toll milling, and uses a market price of US $75/lb for all years.

Table 1: Summary of Roca Honda Pre-Tax PEA Results 

Description	Value
Base Case
Forecasted Uranium Price	US $75/lb
Pre-tax Cash Flow With Contingency	US $713 million
Net Present Value (Discount Rate of 8%)	US $220 million
Estimated Payback	Approximately 4 years
Life of Mine (estimated)	Nine (9) years
Mine Production - Processing
Mining Method	Underground Conventional (Mechanized)
Total Life of Mine Capital Cost with Contingency	US $ 445 million
Mill Processing Type	Acid Leach/Solvent Extraction/Precipitation
Estimated Processing Recovery	94%
Mill Processing Rate	Variable: averaging 1,085 tons per day
Estimated Operating Cost	US $24/lb
Total Capital, Operating, & Royalty Costs Per Lb with Contingency:
Without Toll Milling Option	US$ 42/lb
With Toll Milling Option	US$ 44/lb
Approximate Annual Uranium (U3O8) Production:	Est. 2.6 million lb/yr

Strathmore cautions that the PEA is preliminary in nature and includes inferred resources that are considered to be too speculative geologically for economic consideration that would enable them to be classified as mineral reserves. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that the PEA will be realized.

The economic evaluation of the Roca Honda uranium resource was prepared under the supervision of Stuart E. Collins of Roscoe Postle (USA) Ltd., Lakewood, Colorado. Mr. Collins is a Registered Professional Mining Engineer in the state of Colorado, and is a registered member of the Society for Mining and Metallurgy, and Exploration, and an independent and Qualified Person as defined in NI 43-101.

Summary of Roca Honda Mineral Resources:

The Roca Honda property represents Strathmore's largest and highest grade uranium resource. In addition, the updated Roca Honda resource estimate prepared by RPA confirms Roca Honda as one of the highest grade uranium deposits in the United States.

Table 2: Summary of Roca Honda Mineral Resources as at August 9, 2011:

Measured and Indicated Resources:
Classification	Tons	Grade % U3O8	Lb U3O8
Measured	284,000	0.395	2,247,000
Indicated	1,793,000	0.405	14,536,000
Total M+I	2,077,000	0.404	16,783,000
Inferred Resource:
Classification	Tons	Grade % U3O8	Lb U3O8
Inferred	1,448,000	0.411	11,894,000

Notes:

1. CIM definitions were followed for Mineral Resources.
2. The Qualified Person for this Mineral Resource estimate is Patti Nakai-Lajoie, P.Geo.
3. Mineral Resources are estimated using a cut-off grade of 0.13% U₃O₈.
4. A minimum mining thickness of six feet was used.
5. Numbers may not add due to rounding.

The modeling and estimation of the uranium resources were prepared under the supervision of Patti Nakai-Lajoie, P.Geo. and Principal Geologist, RPA. Ms. Nakai-Lajoie is a Professional Geoscientist in the Province of Ontario and an independent and Qualified Person as defined in NI 43-101. Ms. Nakai-Lajoie visited the Roca Honda Property on May 10-12, 2011 and is of the opinion that the data verification procedures support the geologic interpretations and confirm the quality of the database. It should be noted that mineral resources, which are not mineral reserves, do not have demonstrated economic viability.

RPA reviewed historic plans and sections, geological reports, historic and recent drill hole logs, digital drill hole database, historic drill hole summary radiometric logs and survey record, property boundary surveys, and previous Roca Honda resource estimates. As part of the data verification process, RPA independently measured counts per second (cps) of select drill core samples using a hand held scintillometer, and checked some drill hole collars and section boundaries on the property using a hand held GPS. The drill hole locations and the presence of uranium were confirmed, and few discrepancies were identified, during the verification process or the independent field data verification. Any discrepancies were either deleted or corrected.

RPA used Maptek's Vulcan^(tr) 3D modeling software to estimate the Roca Honda resource. Stationary domains were generated in ARANZ Geo Limited's Leapfrog^(tr) version 2.1.1.209 using geologic and drill hole data to create hard boundaries, which helped control the estimation process. Uranium (U₃O₈%) grades were estimated using the inverse distance weighting method

for 10 ft by 10 ft by 6 ft blocks created inside domains. Validation was done both visually and by comparison with nearest neighbor estimation method. No significant discrepancies were identified with block grade validation. Distances to samples and number of samples used in estimation were used along with geologic and grade continuity to determine measured, indicated, and inferred resources.

RPA has recommended the project proceed to the pre-feasibility stage with continuation of the New Mexico State and Federal permitting process. Overall, a two-phase work program and budget for both the Roca Honda property and the proposed Peña Ranch mill has been outlined. Phase 1, budgeted at US $1.9 million recommended the continuation of additional metallurgical test work, baseline studies, and monitor well drilling. Phase 2, which is contingent on successfully completing Phase 1, is budgeted at US $3.1 million. Phase 2 recommends additional drilling to increase the quantity and quality of the Mineral Resources, in addition to advanced mill design and permitting work.

Roca Honda Resources LLC submitted a mine permit application for the Roca Honda Project in 2009. A draft Environment Impact Statement (EIS) prepared under the direction of the United States Forest Service is scheduled to be completed in December 2012, with a final EIS due in early 2013. The mine permit decision is expected in 2013. A Nuclear Regulatory Commission license application for construction and operation of a conventional uranium mill is currently in draft form, and it is expected to be submitted in early 2013.

The technical information in this news release has been reviewed by David Miller, Chief Executive Officer for Strathmore Minerals Corp., and a Qualified Person under National Instrument 43-101. The "Technical Report on the Roca Honda Project, McKinley County, New Mexico, USA" was authored by Patti Nakai-Lajoie, P.Geo., Robert Michaud, P.Eng., Stuart E. Collins, P.E., all with RPA, and Roderick C. Smith, P.Eng. of Lyntek, All authors are independent and Qualified Persons as defined by NI 43-101, and all have reviewed and approved the technical information in this press release.