Straits reports Mt Muro gold, silver production

The following is an excerpt from Straits Resources Limited taken from quarterly report ended 31 December 2011 released on Tuesday.

Mt Muro maintained its production profile over the quarter producing 7,898 oz Au and 163,198 oz Ag (10,952 oz Aueq).

The operation continues to focus on the major development of the Serujan open pit. This is progressing well, with waste movement levels continuing to rise and now at scheduled levels. Waste movement has risen to 2.8 Mbcm in the quarter, up from 2.0 Mbcm in the September 2011 quarter.

Resource extension drilling has shown increases in the potential depth of the Serujan pit and the mine plan has been adjusted to increase the pit size to include this extra material. This has necessitated higher volumes of initial pre-stripping in this financial year which has delayed slightly the ramp up in production. As a consequence the production target for FY 2012 is now 60 koz Aueq. The total three year production plan highlighted previously still applies. Production is targeted to approach an annualised rate of 100 koz Aueq in the June quarter 2012, and in excess of this level for FY2013. The management team is driving further improvements in both productivity and costs.

Cash costs for the quarter were US$1,486 Au eqoz. This includes US$100/oz related to under accrual in the previous quarter.

Mt Muro remains a resource with significant upside and exploration potential. Continued excellent drill results underpin the very positive outlook for Mt Muro, with significant drilling resources remaining committed to the project.

Mt Mum (IMK): Straits - 100%
Exploration over the last 2 years has focused primarily on developing the potential of the Serujan deposit, which is currently being mined. Serujan has now been drilled to a depth of approximately 250m over a strike length of ~ 1.8km with additional incremental gains expected along strike. Although exploration will continue in this area, focus is now shifting to other projects in the development pipeline.

During the December 2011 quarter exploration began to ramp up in the Bantian project with a view to this becoming the next development project. This group of structures is ~3km long and a series of pits is envisaged. Other projects that will form part of the near term exploration strategy include Permata and Hulubai projects, in which Straits has previously intersected mineralization and resource estimates have been completed and reported. Exploration will continue in these project areas in 2012.

In line with the progression of development projects infrastructure planning and sterillisation will become a significant component of the work programmes moving forward.

Exploration continued during the quarter at the Serujan, Bantian and Hulubai prospects with three diamond drill rigs and two RC rigs in operation.

The focus of drilling at Serujan was at the Serujan Central pit area with encouraging intersections below and plunging to the west of the main mineralisation

Sterilisation for waste dump locations intersected a potential new discovery, the ?Selampung Dua? vein.

At Bantian drilling focused on Blocks 2 and 3 and Luit Bawah.

A limited programme of drilling was undertaken at the northern end of Hulubai, returning encouraging results and opening the potential mineralisation to extend further to the north.

The IP programme between Bantian and Permata-Hulubai was 95% completed by the end of the quarter.

Serujan Exploration
Exploration continued during the quarter with 17 diamond drill holes drilled for 3,726 metres. Drilling was focused on the western part of Serujan Central where mineralization was open. Encouraging diamond drill results were received late in the quarter (see table below) and indicate that the mineralization is open to the west forming a gently plunging high grade zone. In addition, this mineralization appears to be part of a new high grade vein to the footwall of the existing mineralisaion.

Further drilling will continue to explore the western extension to the Serujan Central mineralization in the upcoming quarter.

Selampung Dua Prospect
During the quarter a new discovery was made north of the Serujan pit during RC sterilization of potential waste dump locations. Two RC drill holes intersected mineralization on holes spaced 125m apart. The mineralization was intersected approximately 30m below surface and is open to the east and down dip (see table below)

The area is located within the Serujan ?corridor? and had not been subject to any prior exploration activities, yet is located within 900m from the process plant.

Late in the month diamond drilling was undertaken to confirm the RC drill intersections. Two drill holes intersected the mineralized structure and results are pending.

Bantian Exploration
Exploration continued during the quarter with 66 drill holes completed for 9,393m at Bantian and including Luit Bawah. Drilling focused on Block 2 and 3. At Luit Bawah drilling focused on testing depth and lateral extent of the system, which has been extended to a 500m strike length. (end of edited release)

	Units	Dec 11 Qtr	Sept 11 Qtr	FY 2012	FY 2011
Ore Milled	tonnes	228,027	173,014	401,041	325,035
Grade
- Gold	g/t Au	1.2	1.4	1.2	2.5
- Silver	g/t Au	29.6	46.7	33.8	28.9
Recovery	% Au	93.4%	93.0%	93.2%	92.6%
- Gold	% Au	70.3%	69.3%	69.8%	72.9%
- Silver
Production
(Gold)**	oz Au	7,898	6,906	14,804	25,022
(Silver)	oz Ag	163,198	147,755	310,953	228,502
Gold Sold	oz Au	7,362	7,137	14,499	25,911
Silver Sold	Ag oz	153,521	152,813	306,334	189,337
**Production reported is gold poured