Straits reports lower Mt Muro gold, silver production

The following is an excerpt from Straits Resources Limited taken from quarterly report ended 31 December 2010 released on Wednesday.

The operational performance of Mt Muro for the September quarter was down on the prior quarter, producing 5,181 oz Au and 6,754 oz Ag relative to 10,563 oz Au and 17,890 oz Ag in the September 2010 quarter.

This reduction is in line with the reduced production during the scheduled recapitalisation program at Mt Muro.

The program in place to concentrate on the development of the new ore sources from the Serujan open pit and significantly reduce site cash costs is well underway. Mine development capital is focused on the cut back at the Serujan open pit.

The cost reduction programme at Mt Muro focussing on the removal of surplus equipment, repositioning of major contracts and an increase in the productivity of the remaining fleet is well underway. Optimisation will continue with further equipment size rationalisation to occur.

Mt Muro remains a resource with significant upside exploration potential. Continued drilling under the Serujan and Batman pits shows promise of extending both the mine life and meeting Straits? expectation of ramping progressively to 80,000 ounces equivalent per year and beyond.

Mt Muro (IMK)
Straits ? 100%

Mt Muro ? Exploration drilling continued below the historical pits Bantian and Serujan during the quarter with one diamond and 2 RC rigs. Encouraging results continue to be received from both projects. Some of the best intercepts include:
? 7.85m @ 11.02g/t AuEq (Bantian)
? 21.lm @ 4.32g/t AuEq (Serujan)
? 6m @ 15.32g/t AuEq (Serujan)

Current drilling programs for these areas were designed to increase the resource base below the pits which were last mined more than ten years ago at a much lower gold price. This campaign is testing the mineralization to l00m+ below the mined pits. A number of significant results reflect the robust nature of the mineralization with exploration continuing to extend the depth of mineralization.

Serujan Project
Exploration drilling beneath Serujan pit continues to expand the footprint and depth extent of the known structures. At Serujan both the grade and width of the structures increases with depth and these are expected to be included in updated pit designs. The Serujan mineralisation has now been drilled over 1.5km and to a depth of 170m down dip on the vein. Mineralisation is open at depth and drilling will continue in the upcoming quarter with an additional drill rig mobilised to site.

Bantian Project
Exploration at the northern end of Bantian continued during the quarter with one diamond rig and up to 2 RC rigs. Results continue to confirm the prospectivity of this structure below the shallow historical pits with a number of outstanding intersections. Exploration will continue in the coming quarter with 2 RC rigs and 1 diamond rig. At this stage only 20% of the Bantian structure has been tested and it remains open along strike and at depth.

The exploration effort at Mt Muro continues to gain momentum and systematic exploration drilling on the major structures will continue in the upcoming quarter utilizing addition drill rigs. (end of excerpt)

	Units	Dec 10 Qtr (Q2 FY 2011)	Sept 10 Qtr (Q1 FY 2011)	FY 2011	FY 2010
Ore Milled	tonnes	38,160	126,470	164,630	615,544
Grade
-Gold	g/t Au	3.7	2.9	3.1	2.6
-Silver	g/t Ag	5.8	6	6.3	12
Recovery
-Gold	% Au	90.2%	90.3%	90.3%	89.7%
-Silver	% Ag	72.3%	67.1%	68.3%	58.9%
Production
(Gold)*	oz Au	5,181	10,563	15,744	45,521
(Silver)	oz Ag	6,754	17,890	26,644	143,496
Gold Sold	oz Au	7,555	10,834	18,389	43,754
*Production reported is gold poured