TLO Talon Metals Corp

Initial Metallurgical Results for Trairão Project Also Announced

TSX:TLO

ROAD TOWN, Tortola, British Virgin Islands, March 2, 2012 /PRNewswire/ - Talon Metals Corp. ("Talon" or the "Company") (TSX: TLO) is pleased to announce an updated inferred mineral resource estimate and an initial indicated mineral resource estimate for Target Areas 1 to 6 and 8 at its 100% owned Trairão Iron Project ("Trairão Project"), located in Pará State, Brazil, with approximately 1.4 billion tonnes ("Bt") at an average grade of approximately 34.27% Fe (using a 25% Fe cut-off) in the indicated category and approximately 1.2 Bt at an average grade of approximately 29.48% Fe (using a 25% Fe cut-off) in the inferred category (see Table 1).

Table 1: Updated Mineral Resource Estimates for the Trairão Iron Project

As previously reported in Talon's news release dated November 24, 2011, the cumulative mineral resource estimate for Target Areas 1 - 6 was 1.2 Bt in the inferred category. This compares to the updated mineral resource estimate of 1.2 Bt in the inferred category and 1.36 Bt in the indicated category for Target Areas 1- 6. The increase in the mineral resource estimate reported here is due to a number of factors, and follows from the latest drilling results (as reported in Talon's February 17, 2012 news release entitled, "Talon Metals Reports the Outstanding Results from 2011 Drilling Campaign at the Trairão Iron Project, Brazil"),  including:

• An increase in the depth of reverse circulation ("RC") drilling on a 200 metre x 200 metre grid in the central parts of both Target Areas 1 and 2 (cumulative strike length of 5,000 metres) from approximately 50 metres depth to between 100 and 120 metre depth.
  
  
  
  
• The addition of data from 89 diamond drilling holes completed on Target Areas 1, 2 and 3, which were drilled to vertical depths of between 49.4 metres and 391.85 metres, which served to both delineate inferred mineral resources in the fresh rock and also increase the confidence level of the mineral resource estimates in the weathered rock (saprolite and saprock) and elevate certain of these resources to the indicated resource category.
  
  
  
  
• The inclusion of an inferred mineral resource estimate for Target Area 8.

"This updated resource estimate substantially increases the mineral resource tonnage at the Trairão Project," said Henri Van Rooyen, CEO of Talon. "The initial inferred resource estimate on the fresh rock, which is open at depth, of almost 600 million tonnes, as well as the relatively large proportion saprock within the indicated resources category of 975 million tonnes, highlight the importance of both types of deposits in developing the Trairão Project."

The indicated and inferred mineral resource estimates are also reported and classified by deposit type, as shown in Table 2 below.

Table 2: Mineral Resource Estimates by Deposit Type

The effective date of the updated mineral resource estimates for Target Areas 1 to 6 and 8 inclusive is March 2, 2012.

The surficial deposits (2-10 metres thick), the saprolite unit (30-40 metre thick) and the saprock unit (30 -100 metres thick) consist of oxidized mineralization distributed in horizontally disposed units that overlie the fresh rock. The fresh rock units, which extend to depths beyond current drilling, consist of banded iron formations ("BIFs") and quartz chlorite magnetite rock. The BIFs comprise interlayered quartz and magnetite which have a grade of approximately 30% Fe and are enclosed within a wide zone of the quartz chlorite magnetite rock, which has been included within the fresh rock inferred resource and has grades of approximately 27% Fe. In Target Area 3, two parallel BIF units have been mapped and drilled, whereas in Target Areas 1 and 2 the BIFs are duplicated by folding and extend to drilled depths of at least 391.85 metres, with the mineralization being open at depth. As many of the diamond drill holes have ended within the fresh rock mineralized zones, the widths of the individual mineralized units have not yet been determined accurately.

The updated mineral resource estimates in the inferred and indicated categories for Target Areas 1 to 6 were prepared by Talon's independent technical consultants, Coffey Consultoria e Serviços Ltda., a branch of Coffey International in Brazil ("Coffey"), based on the results of 324 RC drill holes (19,185 metres) and 89 diamond drill holes (12,581 metres), drilled between November 2010 and December 2011. The RC holes were drilled to depths of between 10 metres and 134 metres mostly on a 200 x 200 metre spaced grid and the diamond holes were drilled at drill spacings varying from 200 metres to 800 metres at -60 to vertically, with depths of between 49.40 metres and 391.85 metres.

The mineral resource estimates in the inferred and indicated categories for Target Area 8 were prepared by Coffey based on the results of 22 RC drill holes (1,193 metres) on a 200 x 200 metre spaced grid. As reported in Talon's news release of January 12, 2012, most of these RC holes were drilled vertically, except three holes which were drilled at   - 60 degrees. The shallowest drill hole reached 21 metres while the deepest went to a depth of 102 metres.

Talon plans to file a fourth National Instrument 43-101 ("NI 43-101) compliant technical report on the results of the Trairão Project within 45 days.

Preliminary Metallurgical Studies

Talon also announces today its preliminary metallurgical results at the Trairão Project, which has been undertaken in the fresh rock, saprock, saprolite and surficial material. The mineralogical and metallurgical test work has been conducted at a number of laboratories, including PCM, Fundação Gorceix, Universidade de São Paulo and Universidade Federal de Minas Gerais.  These Brazilian located laboratories are all independent of Talon and service the iron ore industry in Brazil. The aim of the preliminary metallurgical test work has been to establish processes that could be applied to the production of a high grade iron concentrate amenable for the pellet feed market.

The initial metallurgical test work reported here is predominantly based on both low and high intensity magnetic separation processes, in which various grinding procedures were applied over a range of particle sizes. Samples of the various rock types were submitted for metallurgical testing and this initial report includes the results of the preliminary test work on certain of the samples that has been completed.

The initial results of the preliminary metallurgical test work are as follows:

Fresh Rock: Quartz - magnetite BIF

Low intensity magnetic separation (800Gauss) of an approximately 3kg sample of particle sizes less than 38µm was performed on quartz-magnetite BIF material, grading 30% Fe in situ. Results indicate a Fe grade of 70%, with a calculated metallurgical recovery of approximately 71%.  Petrographic analysis demonstrated that the feed consisted of approximately 39% magnetite measured by area. The aluminum content of the concentrate was reduced to 0.24% while phosphorus content was 0.01%.

The preliminary results of the test work has indicated an encouraging concentrate grade, although optimization studies will be required to improve the recovery rate and further work will be required to map and accurately define the distribution of this rock unit.

Fresh Rock: Magnetite-rich chlorite schist

Low intensity magnetic separation (800Gauss - 1300Gauss) of approximately 25kg-44kg samples of particle sizes less than 45µm was performed on the magnetite-rich chlorite schist material, grading 25%-30% Fe in situ. Results produced a 63% Fe to 67% Fe concentrate. While recovery of Fe from the magnetite component of the rock is at approximately 71%, total metallurgical recovery of Fe is in the 32%-46% range.  Contained magnetite calculated by weight varies between 28% and 35% of total rock tested in the various samples.  Aluminum is in the 0.39% to 1.21% range, while phosphorus is in the 0% to 0.01% range. The laboratory test results show that between 30% and 80% of the total magnetite mass in the various samples has been extracted.

Further mineralogical test work needs to be conducted to design and implement metallurgical test procedures that will optimize the separation of the magnetite from the host rock with the objective of improving recovery rates.

Saprock and Saprolite

Both low and high intensity magnetic separation (800Gauss - 16,130Gauss) on particle sizes less than 45µm was performed on mineralization that consists of blended samples, including both saprolite and saprock. While magnetic separation, applying 800 Gauss - 3,200 Gauss produced a pre-concentrate grade of approximately 64% Fe with a metallurgical recovery of approximately 47%, magnetic separation applying 800 Gauss to 16,130 Gauss produced a pre-concentrate grade of 60% Fe and a metallurgical recovery of approximately 79%.  In the case of a 47% metallurgical recovery, aluminum was reduced to 1.68% and in the case of a 79% metallurgical recovery, aluminum was reduced to 3.22%.

Further optimization test work is required, particularly on discrete saprock samples in order to produce representative results for this rock type.

Saprolite

Based on a mineralogical laboratory test, saprolite consists of approximately 11% iron oxides (hematite/magnetite) and 77% goethite (iron oxy-hydroxides).

While the recovery of Fe from the iron oxides is 80%, producing a Fe concentrate of 60%, recovery from the iron oxi-hydroxides, being hematite/magnetite/goethite, showed 58% recovery of the contained Fe.

While some success with magnetic separation has been achieved, to date, a marketable product has not been produced from saprolite at reasonable recovery rates. Further mineralogical testing and process investigation is required, however, due to the saprolite being a small portion of the overall resource and geological potential, it is not currently a priority for the Company.

Surficial Deposits

The surficial deposit includes unconsolidated iron rich eluvial material as well as a ferruginous duricrust or "hard cap" of which the latter is composed of primarily hematite and goethite with a thickness varying up to 13 metres. A low intensity magnetic separation (800 Gauss - 1,300 Gauss) on a 30.2 kg sample with a size fraction ground to less than 150µm produced a Fe concentrate of 66% and a metallurgical recovery of 35% and low silica, alumina and phosphorus content.  Further test work is required to improve the recovery levels.

These results are encouraging and therefore the extent and resource potential of these surficial deposits is under investigation.

Summary of metallurgical test results

The fresh rock, consisting of 599 Mt of inferred mineral resources and the saprock consisting of 975 Mt of indicated mineral resources and 352 Mt of inferred mineral resources, requires further mineralogical and metallurgical testing. Given the variations in the preliminary metallurgical results from the various rock types, these rock types will be mapped in more detail in preparation for further metallurgical test work to optimize the results received to date.

The results from the metallurgical testing of the fresh rock samples indicate that the quartz magnetite BIF material is the most encouraging concentrate grade and further test work is required to confirm these results and improve the recovery level on a wider suite of samples. Additional test work is also planned on the magnetite-rich chlorite schist. In addition, further geological mapping is required to define the distribution of the two different iron-rich fresh rock types(quartz magnetite BIFs and the magnetite-rich chlorite schist).  It is therefore not yet possible to link the metallurgical test results to a specific tonnage of fresh rock. Further work needs to be completed to perform proper domaining of the fresh rock before any conclusions can be reached.

Within the oxidized and weathered iron mineralization, the test work on the dominant saprock material indicates to have higher recovery levels and concentrate grades than those indicated for the saprolite. Further samples of discreet saprock material need to be selected and test work on these samples need to be undertaken.

Although the saprolite deposit shows low metallurgical recoveries, it only represents the near surface upper 30m-40m of the approximately 400m high Trairão ridge, which, even if the saprolite were to be stockpiled for future processing, would still present a mining operation with a low strip ratio.

The encouraging concentrate grade indicated by test work on the duricrust samples from the near surface surficial deposits requires that the test work be continued with the aim of improving the recovery grades of this rock type.

The extent and size of the duricrust within the surficial deposit needs to be further investigated, followed by additional metallurgical testing to confirm the initial results.

"The expanded resource estimate, and specifically the addition of a fresh rock resource that is open at depth, is a big step forward for the Trairão Project," said Henri Van Rooyen, CEO of Talon.  "We are in the preliminary stages of metallurgical testing and our current results, as well as further metallurgical testing, will enable us to refine and remap the geological units for the purpose of designing a conceptual mine plan."

Outlook and Drilling Update

The initial RC and diamond drilling programs have now been completed. Given the significant potential size of the project and the requirement for domaining according to predefined zones, Talon has decided to focus on further mineralogical and metallurgical test work as well as progressing infrastructure trade off studies, which will ultimately form the basis for potentially commissioning a preliminary economic assessment. Consequently, Talon's previously disclosed plans to complete a preliminary economic assessment and prefeasibility study in the second and fourth quarters of this year respectively have been revised.

Quality Assurance, Quality Control and Qualified Person

Talon's exploration programs are being managed by Talon's Mining Engineer, Mr. Ricardo Álvares de Campos Cordeiro (MAIG) and Talon's VP Exploration, Mr. Paulo Ilidio de Brito. Mr. Cordeiro is qualified person within the meaning of NI 43-101and he has reviewed, approved and verified the technical information disclosed in this news release (other than the mineral resource estimate) including sampling, analytical and test data underlying the technical information.

The "Qualified Person" who prepared the mineral resource estimate presented in this news release is Mr. Porfírio Cabaleiro Rodriguez, who is a mining engineer, independent of Talon and an employee of Coffey. Mr. Rodriguez is a member of the Australian Institute of Geoscientists ("AIG"). Mr. Rodriguez is responsible for the mineral resource estimate in this news release and has reviewed, approved and verified the data disclosed in this news release relating to the mineral resource estimate (including sampling, analytical and test data underlying the mineral resource estimate). In Coffey's opinion, the mineral resource estimates disclosed herein are compliant with NI 43-101.

Coffey compiled a NI 43-101 compliant technical report on Target Areas 1, 2 and 3 of the Trairão Project entitled "Third Independent Technical Report on Mineral Resources" dated August 12, 2011, a copy of which is available under Talon's SEDAR profile at www.sedar.com.  Please refer to this technical report for further information on the Trairão Project.

All drilling samples have been prepared and analyzed by SGS-Geosol Laboratórios Ltda ("SGS") which is ISO14001:2004 and ISO 9001:2008 accredited and is independent of Talon. Sample preparation was conducted at SGS Parauapebas preparation facility whereas analyses were performed at the SGS laboratory based in Belo Horizonte, Brazil. The samples were analyzed by fusion with lithium tetraborate-XRF for SiO₂, Al₂O₃, CaO, Fe₂O₃, K₂O, MgO, TiO₂, P, Mn and Cr₂O₃ and retained moisture (LOI) by multi-temperature.

QA/QC procedures include the submission by Talon of systematic duplicates, blanks and standard samples within every sample batch submitted to SGS. In addition, SGS inserts its own standards, blanks and duplicate samples. The results from these control samples indicate acceptable consistency of analysis.

About the Trairão Project

The Trairão Project is situated within the Serra da Seringa Archean age greenstone belt, within the Carajás Mineral Province in Brazil, which also hosts numerous other iron ore deposits. The Trairão Project comprises eight exploration licences and four applications for exploration licences for a total area of 76,523 hectares (189,092 acres).

About Talon

Talon is a TSX-listed company focused on the exploration and development of its portfolio of iron projects in Brazil. The Company has a well-qualified exploration and management team with extensive experience in exploration and project management.

Talon has a treasury of approximately CDN$21 million and has 92.0 million common shares outstanding and 109.8 million shares on a fully diluted basis.

Forward-Looking Statements

This news release contains certain "forward-looking statements". All statements, other than statements of historical fact that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future are forward looking statements. These forward-looking statements reflect the current expectations or beliefs of the Company based on information currently available to the Company. Such forward-looking statements include, among other things, statements relating to the Trairao Project with respect to estimates of mineral resource quantities, mineral resource qualities, the potential scope of the mineralized area and its characterization, the preparation of a further updated technical report for the Trairao Project and the timing associated therewith, the metallurgical test work, including recovery rates, the potential for further metallurgical and mineralogical results on the basis of further testing, including undertaking optimization studies to improve recovery rates, mapping, the timing and completion of a preliminary economic assessment, prefeasibility study and infrastructure trade off studies, the Company's expectations with respect to its financial resources, and targets, goals, objectives and plans and the timing associated therewith. Forward-looking statements are subject to significant risks and uncertainties and other factors that could cause the actual results to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company. Factors that could cause actual results or events to differ materially from current expectations include, but are not limited to: failure to establish estimated mineral resources, the grade, quality and recovery of mineral resources varying from estimates, risks related to the exploration stage of the Company's properties, the possibility that future exploration results and metallurgical testing will not be consistent with the Company's expectations (including identifying additional mineralization and/or recovery), changes in the price of iron ore, changes in equity markets, political developments in Brazil, uncertainties relating to the availability and costs of financing needed in the future, changes to regulations affecting the Company's activities, delays in obtaining or failures to obtain required regulatory approvals, the uncertainties involved in interpreting drilling and exploration results and other geological data and other factors (including exploration, development and operating risks). Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

The mineral resource figures disclosed in this news release are estimates and no assurances can be given that the indicated levels of iron will be produced. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Valid estimates made at a given time may significantly change when new information becomes available. While the Company believes that the mineral resource estimates disclosed in this news release are well established, by their nature mineral resource estimates are imprecise and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. If such estimates are inaccurate or are reduced in the future, this could have a material adverse impact on the Company.

Mineral resources are not mineral reserves and do not have demonstrated economic viability. Inferred mineral resources are estimated on limited information not sufficient to verify geological and grade continuity or to allow technical and economic parameters to be applied. Inferred mineral resources are too speculative geologically to have economic considerations applied to them to enable them to be categorized as mineral reserves. There is no certainty that mineral resources can be upgraded to mineral reserves through continued exploration.

SOURCE Talon Metals Corp.