Marengo Mining Limited provides the following update on its Yandera Copper-Molybdenum-Gold Project in Papua New Guinea, following a review of the progress of recent technical work in support of a Feasibility Study in consultation with its major shareholder, The Sentient Group. The Company’s Board of Directors has decided that additional work is required in a number of specific areas before a final Feasibility Study can be prepared, specifically: Identifying an alternative cost-competitive source of power for the Project after Marengo’s preferred third party power provider decided to withdraw from the proposed power supply arrangements.

The Feasibility Study indicates that Yandera has the potential to generate substantial cash flows. However in the absence of a power solution that can support the Project, it is exposed to escalating capital and operating costs.

Further opportunities to enhance the Project include:

A review of optimized ore throughput rates;
Reviewing the option of Deep Sea Tailings Placement (DSTP) rather than a land-based Tailings Management Facility (TMF); and
Further optimisation of the mine plan. A detailed review of recent technical work in support of a Feasibility Study will be undertaken by the technical committee established by Marengo and Sentient to implement a programme to enhance project returns. The objective of this review is to help ensure that the Yandera Project is robust at all phases of the commodity price cycle.

Sentient, which is providing funding support to Marengo through a recently announced US$15 million private placement of convertible debentures, will be involved with Marengo’s project team in this next phase of technical optimisation. The Sentient Group manages over US$2.7 billion of funds invested in the development of metal, mineral and energy assets across the globe through its Cayman-based, 10 year closed-end private equity Sentient Global Resources Funds. Marengo has already commenced high-level discussions with the PNG Government regarding other potential power supply options for the Yandera Project. Power is a major issue currently confronting a number of PNG mining companies seeking to develop major new resource projects in-country.

Marengo will continue to work closely with the PNG Government to resolve the power issue and also to explore other strategic options for Yandera’s development. The Company’s Chinese partner, the major engineering, construction and mining company, China Nonferrous Metal Industry’s Foreign Engineering and Construction Co Ltd (NFC), has also reiterated its support for the Project and will be closely involved in working with Marengo and Sentient during the next phase of technical optimisation.

The Engineering, Procurement and Construction pricing provided by NFC in February 2013 provides a strong foundation for project development and Yandera remains one of NFC’s premier offshore development projects. The President of NFC, Mr Wang Hongqian, recently commented: "Marengo's Yandera Project is a high priority for NFC. We remain fully supportive of Marengo as it advances the development of the project". The Company has initiated a review of administration, consultant and corporate overheads in order to ensure that costs are controlled and maintained at an appropriate level for this next phase of activity.

Marengo’s President/CEO, Mr Les Emery: “Yandera is a large copper resource and this fact is clearly recognised by our strategic partners. However, the recent withdrawal of our preferred third party power provider has resulted in an unexpected cost escalation which negatively impacted on the current rate of economic return. “Accordingly, we have decided to defer completion of work in relation to a Feasibility Study and undertake a focused optimisation program. We are confident that this work has the potential to make substantial improvements to the Project that could deliver lasting benefits for all stakeholders.”