Kimberley Metals Limited (ASX:KBL) Update on Mineral Hill Mine Production

Sydney, Australia (ABN Newswire) - Kimberley Metals Limited (ASX:KBL) is pleased to report a production update of the Mineral Hill Mine, located 65 kilometres north of Condobolin in central-western New South Wales.

Mineral Hill Plant

Processing of copper ore through the refurbished process plant at Mineral Hill commenced in mid-July. Initially stockpiled ore from early mine development was processed using mill No.1 followed by production from mill No.2 from late August. The process plant has operated successfully mechanically and electrically. However, a combination of reduced high grade ore availability from new mine development and process water quality has hampered production.

A 'hard' water supply from surface dams and the underground mine dewatering resulted in poor flotation kinetics and reduced recoveries of copper with less than optimal reagent use.

Salts in solution were effectively forming a coating on copper minerals that did not allow collector reagents in the plant to recover the copper to full potential.

Hard Water Treatment Resolution

To address the hard water quality in the plant a test campaign utilising fresh river water and an average grade ore supply of 2% copper was completed. The campaign produced copper concentrates with high copper recoveries within design specifications confirming site water hardness as an issue to be resolved. Process water quality is to be improved by the installation of a water treatment facility that has been designed following test work at site in the plant and at an offsite laboratory. A water sampling and analysis of all water sources has also been completed across the mine site and identified an alternate source for process water for the short term.

Whilst the new water treatment plant is being constructed over coming weeks a combination of fresh water from haulage, and an alternate water dam at site will provide quality water for processing. The water treatment facility will increase the pH of the water removing deleterious elements (predominantly) magnesium and calcium salts from solution that will provide quality water for processing for the long term.

While the permanent water treatment facility is being established the mine is targeting a quality copper feed grade that is not less than 2% Copper to assist the plant in optimising concentrate production.

New 8 metre Thickener Tank

Currently the plant is operating at 20 tonnes per hour utilising the current 4 metre thickener. The installation of an 8 metre thickener into the circuit has been completed mechanically and electrical installation is nearing completion. The thickener will enable production to increase to a combined mill feed rate of 30 tonnes per hour.

Kimberley expects that the mills will operate sustainably at an annual rate of 250,000 tonnes per annum.

Copper Production

Approximately 350 tonnes of copper concentrates have been produced and bagged ready for transportation to Port Botany by road and rail. The first shipment requires 1,000 tonnes and will now be delayed until October 2011 due to the operational issues outlined above.

Copper concentrate shipments for the next six months will be sent to Yunnan Copper, China's third largest copper smelter, as part of an agreement announced on 28 July 2011.

Parkers Hill Underground Mine

Ore development at Parkers Hill underground mine has now been established in multiple drives from mining on the refurbished 1205 level and the new 1225 level. Rehabilitation has fallen behind schedule as additional ground support (meshing, rockbolts, and cable bolts) were required to make safe the underground mine access and development drives. The effect of this was effectively a reduction in ore supply for processing. The slower scheduled development rates have delayed the blasting of the first high grade copper stope until mid-October. The estimated grade from the first stope is 2.6% copper and will be blended with development ore for mill feed at a rate of 700 tonnes per day. Mine development has been completed to the ventilation rise location to establish the vent circuit for the Parkers Hill mine. The longhole production rig is scheduled to arrive at site 24th September 2011. The ventilation rise is to be established in ore and will add to copper ore supply in October.

Mine level plans shown below (see link at the bottom of the release) highlight the mine development and stoping priorities for the next six months.

Maiden Resource for Southern Ore Zone

As flagged to the market in the release dated 13 September 2011, Kimberley management are continuing to work towards delivering a maiden Resource estimate for the Southern Ore Zone.

The Southern Ore Zone is expected to provide a further boost to operations at Mineral Hill after the recent increase in copper Resources by 43 per cent and 64% lift in gold Resources.

The combined effect of these Resources increases is a significant extension of the Mineral Hill mine life from that when operations recommenced in August 2011.

Kimberley management are confident that the issues encountered in initial start-up operations at the Mineral Hill plant have been fully identified. Solutions to these issues have been established and are being effected to in order to deliver operating capacity to the planned 250,000 tonnes per annum.

At the same time, production of copper concentrate is expected to increase as ore is produced from higher yield stopes - resulting in Kimberley's maiden shipment of concentrate to be delivered to port in October 2011. As such, first revenues are also expected to be received by Kimberley in October 2011.

For the complete Kimberley Metals announcement including figures and tables, please view the following link:
http://media.abnnewswire.net/media/en/docs/ASX-KBL-557974.pdf

About Kimberley Metals Limited:

Kimberley Metals Limited (ASX:KBL) is an Australian resource company listed on the ASX (ASX:KBL) with focus on precious and base metals. The Company (75%) and Henan Yuguang Gold & Lead Co. Ltd (HYG&L) (25%) own the Sorby Hills Lead-Silver-Zinc deposit in Western Australia, which is one of the world's largest near surface undeveloped lead deposits, with over 1 million tons of contained metal resources, close to port infrastructure and a short distance from Asian markets. The Company also owns the Mineral Hill project located in New South Wales, where in 2009 it discovered a high-grade gold resource less than 1km from its existing mining and processing facilities.

The Company is now operating the refurbished processing plant at Mineral Hill to produce copper concentrates. This will generate cash flows to assist development of its other projects. More information can be found on KBL's website at www.kimberleymetals.com.au.

Source:

Kimberley Metals Limited

Contact:

Jim Wall
Executive Chairman
Kimberley Metals Limited
Telephone:  61-2-9927-2005

Stuart Mathews
Chief Operating Officer
Kimberley Metals Limited
Telephone:  61-2-9927-2003