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Colossus Minerals Updates Development Progress at Serra Pelada


December 5, 2011

Toronto, Ontario, December 5, 2011 – Colossus Minerals Inc. (the “Company” or “Colossus”) (TSX: CSI)(CUSIP: 91681L109) is pleased to provide an update on the development activities at its 75% owned Serra Pelada Gold-Platinum-Palladium Project. The Serra Pelada Project is a Colossus-COOMIGASP Joint Venture located in Para, Brazil.

HIGHLIGHTS

  • Approximately 675 metres of decline development completed; total advance, including secondary development, of approximately 775 metres
  • First underground drill bay has been commissioned and underground drilling is underway
  • Surface infrastructure construction continues, ahead of schedule, with a number of auxiliary buildings now complete
  • Agreement to build a dedicated electrical transmission line has been reached
  • Approximately ninety percent of all underground mining equipment is on site; ordering of process plant equipment has commenced
  • Metallurgical test-work confirms Gravity Recoverable Gold (GRG) values of between 76% and 88%
  • PGM flotation program ongoing to optimize the efficiency of the flow-sheet to extract platinum and palladium

Claudio Mancuso, President & Chief Executive Officer of Colossus commented, “We are very pleased with the progress of development at Serra Pelada.  We continue to strengthen our on-site management team with the addition of a number of experienced mining professionals.  The pace of decline development has progressively and methodically increased over the past six months and we are now approaching our target of five metres of development per day.  The next twelve months will be very exciting as we continue de-risking the project and work towards our goal of producing gold in 2013.”

DETAILS

November was Colossus’ best month for underground development with the pace of development at approximately four metres per day. The Company has now completed approximately 675 metres of decline development to a vertical depth of approximately 100 metres. The pace of both decline and total development continues to improve with the achievement of six metres per day on certain days throughout November. Secondary development items completed in November included a muck bay and the first underground drill bay.  The underground drill bay has been commissioned and underground drilling has begun.  The first of a series of underground holes will be a geotechnical hole drilled parallel to the decline.  This geotechnical hole will serve as an additional tool to predict ground conditions in the decline and will help to further improve the pace of development. Close-spaced underground definition drilling of the Central Mineralized Zone (CMZ) will commence in mid-December.  The Company currently estimates that the top of the CMZ will be reached with approximately 600 metres of further decline development and an additional 100 metres to open two working faces into the CMZ from the decline.  Once development reaches the top of the CMZ, the first 2,500 tonne bulk sample will be extracted.

In addition to the pace of underground development continuing to improve, surface infrastructure remains ahead of schedule with a number of auxiliary support buildings now complete. An industrial warehouse and mine-dry area are approximately ninety percent complete, which have allowed the Company to order additional supplies to support underground development and construction efforts.  Approximately ninety percent of equipment required for underground development is now on site and includes three drill jumbo’s (two for exploration and one for development), and various other underground equipment such as shotcrete jumbos, rock-bolters and loaders. In November 2011, the company concluded an agreement with Centrais Eléctricas do Parà, the state’s electrical transmission provider, to build a dedicated 32 kilometre, 34.5 kV power line to site.  Construction of the power line will commence immediately and is anticipated to be completed by December 2012 at a net cost of approximately R$1.4 million (USD $0.8 million).  Power for site construction and underground development is currently provided by four diesel generators which will be used for auxiliary and standby power supply once the dedicated transmission line is in place.

The current metallurgical development program is aimed at confirming Serra Pelada’s amenability to gravity gold separation processes and to continue with optimization of a flow-sheet for extraction of platinum and palladium and other platinum group metals using flotation.  The latest multi-stage gravity separation tests conducted at Met-Solve Laboratories (Langley, BC) on samples from the CMZ have confirmed previous test results, with GRG values continuing in the 76% to 88% range (see Table 1, below). Recent gravity tests, using Falcon and Knelson concentrators, have purposely targeted lower-grade composites and have averaged 82.1% gravity gold recovery. Gravity recoveries are expected to increase with increased grades. These results, along with tests to verify the physical properties of Serra Pelada mineralization, are being used to support the ongoing design and engineering of the first phase, gravity processing plant.

Table 1: Gravity Test Results

Date

Sample Origin

Head Grade, Gold (g/t)

Gold Recovery (%)

Nov-2010

CMZ Composite

15.9

88.0

Nov-2010

CMZ Composite

15.8

84.2

Nov-2011

CMZ (SPD-113)

15.8

79.4

Nov-2011

CMZ (SPD-113)

12.7

76.6

Average

 

 

82.1

Both platinum and palladium continue to report to the gravity concentrate at lower levels (typically less than 10% recovery); therefore, a parallel program of flotation testing and mineralogy is being conducted at Blue Coast Research (Nanaimo, BC) to improve recovery. Results from the initial programs completed to date show the importance of controlling gangue flotation; therefore, the current program is focusing on graphite pre-flotation circuits in addition to the use of dispersants and depressants.  Results of the PGM flotation program are expected to be released in early 2012.

The basic engineering for the first phase, gravity processing plant is presently well underway, with detailed engineering anticipated to commence early in the new-year. Construction of the process plant is expected to commence in the first quarter of 2012. Procurement of certain long-lead equipment items has commenced, with the ball mill refurbishment substantially complete. The gravity process flow sheet includes crushing, scrubbing, ball milling, centrifugal gravity concentration prior to intensive cyanidation, electro-winning and smelting of gravity concentrates to make a gold doré. A simplified flowsheet is given in Figure 1 below.

Andy Holloway, P.Eng, Principal Process Engineer at AGP Mining Consultants, is a qualified person under National Instrument 43-101 and is responsible for the Company’s metallurgical program and results and has verified the contents disclosed.

About Colossus:

Colossus is a development-stage mining company focused on bringing into production the high-grade gold-platinum-palladium Serra Pelada project, located in the mineral prolific Carajas region in the state of Para, Brazil. Between 1980 and 1986 Serra Pelada was host to the largest precious metals rush in Latin American history.  Coverage by 60 Minutes of this famous mining rush can be viewed at the following link: http://sixtyminutes.ninemsn.com.au/article.aspx?id=299887.

To view the flowsheet, "Figure 1," please click here.

CAUTIONARY STATEMENT REGARDING FORWARD‐LOOKING INFORMATION

Forward-looking statements in this press release include statements regarding the timing and nature of future exploration and development programs that are dependent on projections that may change as drilling continues, or if unexpected ground conditions are encountered. The Company does not currently have any mineral properties that are in production or that contain a reserve as defined by National Instrument 43-101. In addition, areas of exploration potential are identified which will require additional drilling to determine whether or not they contain similar mineralization to areas that have been explored in more detail. Significant additional drilling is required at Serra Pelada to fully understand system size. 

Except for statements of historical fact relating to Colossus, certain statements in this press release relating but not limited to the Company’s exploration and development plans, activities and intentions, constitute “forward‐looking information” within the meaning of the Securities Act (Ontario) or "forward‐looking statements" within the meaning of the United States Private Litigation Reform Act of 1995. These forward-looking statements represent management's best judgment based on current facts and assumptions that management considers reasonable.  Forward‐looking statements are frequently characterized by words such as “target”, “plan”, “expect”, “project”, “intend”, believe”, “anticipate” and other similar words, or statements that certain events or conditions “appear to”, “may” or “will” occur.  Forward‐looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward‐looking statements.  The factors include but are not limited to risks related to the joint venture operation, actual results of exploration activities, the inherent risks involved in the exploration and development of mineral properties, changes in project parameters as plans continue to be refined, delays in obtaining government approvals, the uncertainties of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, the uncertainties inherent to conducting business in Brazil and the rest of Latin America, the availability of equipment and supplies, unexpected adverse climate conditions, the reliance on only a few key members of management, as well as those factors discussed in the section entitled "Risk Factors" in the Company’s most recent Annual Information Form filed with Canadian provincial securities regulatory authorities and other regulatory filings which are posted on SEDAR at www.sedar.com.  Unless required by law, Colossus undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change.  The reader is cautioned not to place undue reliance on forward‐looking statements.

For further information, please contact:

Ann Wilkinson, Vice-President, Investor Relations
Colossus Minerals Inc.
Tel: (416) 643-7655
Web site: www.colossusminerals.com
Email: awilkinson@colossusminerals.com