NYSE MKT: TGD • $0.48     TSX: TMM • $0.65     Gold: 1251.67

2008

Pre-Feasibility Study Confirms Economic Viability Of The San Francisco Mine Sonora, Mexico


April 8, 2008

Timmins Gold Corp. ("Timmins" or the "Company") announces the completion and filing of the technical report titled NI 43-101 F1 Technical Report on the Preliminary Feasibility Study for the San Francisco Gold Project , Sonora, Mexico, dated March 31, 2008, prepared by Micon International Limited of Toronto (Micon) and Independent Mining Consultants, Inc. of Tucson, Arizona (IMC) (the Pre-Feasibility Study). Management is very pleased with the results of the study as it demonstrates the strong economics of the project. In particular the conclusions and recommendations of Micon state that:

Timmins should proceed with development of the San Francisco open pit mine, crushing, heap leaching and gold recovery plant as described in the preliminary feasibility study...Given the amount of work conducted previously at the San Francisco project on the known exploration and areas of mineralization, the property should be regarded as an advanced-stage exploration project with significant economic potential.
Mineral Reserves

Mineral Reserves of the San Francisco Project are reported to be:

Case

Reserve Class

Gold
Cut-off (g/t)

Reserve
(000 t)

Grade (g/t)

Gold
(000 oz)

High Grade Crusher feed

Probable

0.50

12,000

1.05

403.7

Low Grade Crusher feed

Probable

0.23

4,653

0.88

132.0

Sub-total Crusher feed

Probable

 

16,653

1.01

535.7

Low Grade ROM leach

Probable

0.28

5,981

0.39

75.3

Grand Total

Probable

 

22,634

0.84

611.0


Stripping ratio (waste:ore) is estimated to be 2.0:1 on average over the life of the mine.

Capital & Operating Costs and Project Economics

Significant capital and operating costs associated with re-commissioning operations at the San Francisco Gold Property over the life of mine (LOM) are reported by Micon to be:

Initial capital costs:
Sustaining capital costs:
Total cash operating costs:
US$33.8 million (including a 20% (US$5.6 million) contingency);
US$12.7 million;
US$412 per oz gold.

Net present value and sensitivity analysis of pre-tax cash flows are reported by Micon to be:

 

Gold Price
(US$)

 

Before-
Tax
IRR
(%)

 

After-Tax
IRR
(%)

 

LOM*
Total
Undiscounted
(US$ 000)

 

NPV
5%
Discount
(US$ 000)

 

NPV
10%
Discount
(US$ 000)

 

NPV
15%
Discount
(US$ 000)

 

LOM
Net Cash Flow US$/oz

 

$686
(base case)

 

51.7%

 

38.5%

 

$61,565

 

$48,757

 

$38,538

 

$30,280

 

$152

 

$850

 

86.7%

 

66.2%

 

$127,722

 

$104,454

 

$85,981

 

$71,119

 

$315

 

$1,000

 

129.2%

 

97.7%

 

$188,467

 

$156,913

 

$131,797

 

$111,536

 

$465

* Life of Mine

Summary of Project Base Case Discounted Cash Flow and Unit Costs

IRR 38.5%

USD 000

 LOM TOTAL (Undisc)

 NPV disc. at 5% 

 NPV disc. at 10% 

 NPV disc. at 15%

 US$ per tonne

LOM Ave. USD/oz

Revenue

Gross Sales

278,188

241,900

212,654

188,763

12.29

686.63

less

Refining charges

(709)

(613)

(536)

(473)

(0.03)

(1.75)

less

Bullion delivery

(2,334)

(2,047)

(1,818)

(1,632)

(0.10)

(5.76)

less

Royalty

-

-

-

-

-

-

 

Net Sales Revenue

275,145

239,240

210,300

186,658

12.16

679.12

 

 

 

 

 

 

 

Cash op.costs 

G&A costs

6,821

5,921

5,200

4,614

0.30

16.84

 

Mining costs

113,070

99,032

87,640

78,273

5.00

279.08

 

Crushing costs

22,161

19,118

16,688

14,720

0.98

54.70

 

Processing costs

19,736

17,174

15,111

13,426

0.87

48.71

 

Laboratory costs

3,686

3,202

2,814

2,498

0.16

9.10

 

Social & Env.Mgt

1,677

1,456

1,278

1,134

0.07

4.14

 

Total cash op.costs

167,152

145,903

128,731

114,665

7.38

412.57

 

 

 

 

 

 

 

 

Net Cash Operating Margin

107,994

93,337

81,570

71,993

4.77

266.55

 

 

 

 

 

 

 

 

Capital Exp.

Initial/exp. capital

33,769

33,359

32,974

32,609

1.49

83.35

 

Sustaining capital

12,659

10,651

9,079

7,827

0.56

31.25

Change  in Working Capital

-

569

979

1,277

-

-

 

 

 

 

 

 

 

 

Net cash flow before tax

61,565

48,757

38,538

30,280

2.72

151.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Project Highlights, Improvements & New Developments

It is important to note that the Pre-Feasibility Study, base case economic model has been calculated on a variable gold price that averages US$686 per oz over the life of the proposed operation. This average price is 31% below the current spot price of approximately US$900 per oz gold (April 2, 2008). As a result, in addition to considering the potential for an expanded mineral re/_templates/4/source/reserve Company management believes it is also important to consider the sensitivity analysis detailed in Section 18.8 (Economic Analysis) of the Pre-Feasibility Study in assessing the long term viability and economic potential of the San Francisco Project. As expected the project is most sensitive to revenue drivers (i.e. total reserve, reserve grade, recoveries) and operating costs, more specifically mining costs as they constitute a significant portion of cash costs. The project is less sensitive to capital costs.

In addition to the encouraging conclusions and recommendations detailed in the Pre-Feasibility Study, Company management believes it is important to note that the mineral reserve estimate and economic model reflected in the Pre-Feasibility Study are based upon a measured and indicated mineral resource of 716,790 oz gold, an estimate that was completed in February 2007 (measured mineral resource = 5.35 million tones grading 0.912 g/t Au + indicated mineral resource = 22.3 million tones grading 0.781 g/t Au). The inferred mineral resource totaling 63,490 oz Au (2.5 million tones grading 0.788 g/t Au) has not been included in the economic analysis. This mineral reserve and mineral resource estimate was based upon floating cone parameters using US$500 per oz gold, 64% recoveries and an internal cut-off grade of 0.23 g/t gold. Since reporting this estimate the Company has completed an additional 5,123 metres of drilling with the objective of both increasing the confidence level and expanding the mineral resource on which the final mine plan will be based. Management expects the updated mineral reserve/resource estimate, pit optimization and mine plan being completed by IMC will significantly improve the already robust economics of the San Francisco project. The updated estimate will be based upon revised parameters including a higher gold price and recovery, along with reduced internal and break even cut-off grades. Once the updated resource estimate is finalized in the second quarter 2008 an updated Pre-Feasibility Study may be commissioned. Taking into consideration sensitivity studies included in the 2007 resource estimate and the current gold market price, management expects the updated mineral resource will be appreciably greater than the resource estimate used in this study. This conclusion is supported by the following table detailing the various floating cones for resource definition (Pre-Feasibility Study -- Table 17.1.6):

Floating Cones for Resource Definition -- Measured, Indicated & Inferred Mineral Resources**

Gold
Price

Gold Resource Classes**

Gold
Cut-off (g/t)

Ore
(x 1,000 t)

Gold
(g/t)

Gold Resources (x 1,000 t)

Strip Ratio

500

MII

0.23

30,154

0.805

780.4

1.71

600

MII

0.23

36,378

0.762

891.2

1.87

650

MII

0.23

39,381

0.747

945.8

1.98

700

MII

0.23

41,803

0.738

991.9

2.13

**Cautionary Statement: Mineral resources that are not mineral reserves do not have demonstrated economic viability. The above table includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves.


Other highlights of the Pre-Feasibility Study include forecast gold recoveries significantly higher than those experienced historically. Both independent and in-house column leach tests were conducted on material crushed to 100% minus ½ inch to support this parameter. Company management recognizes that the project is particularly sensitive to gold recovery, and its dependence on achieving the targeted particle size. The independent column leach tests were conducted by Process Research Associates of Richmond, B.C. using 2.5 metre columns, while in-house tests were conducted at the lab facilities at the San Francisco Mine on both 2.5 and 6.0 metre columns. The 6.0 metre columns were used to better simulate the actual height of the heaps.

Project Development

Most of the significant capital and operating costs included in the Pre-Feasibility Study are based upon firm contracts and quotations. These include but are not limited to contract mining costs, new heap leach pad construction, processing plant and primary crusher refurbishment, and new secondary and tertiary crusher acquisition costs etc. The new secondary and tertiary crushers have been purchased from Sandvik. The crushing circuit has been specifically designed to accommodate the kinetics of the San Francisco ore while producing the optimum crush size and maximize throughput capacity.

Based on results obtained from the work completed to date by Timmins, the significant amount of historical information available from previous operators and management's comfort with the detailed work, analysis, conclusions and recommendations within the Pre-Feasibility Study, the Company intends to proceed with development of the San Francisco Mine. Management expects capital expenditures will be financed through a combination of debt and equity. A team of very experienced professional and technical staff lead by Mr. Alfredo Barraza, Mine Manager, has already been assembled and is working on project implementation and will ultimately be responsible for mine operations. With many of the contracts already negotiated and capital equipment ordered, management is confident mining will be initiated prior to the year end with cash flow from operations in the second quarter 2009.

Qualified Person

Pursuant to National Instrument 43-101, Darcy Krohman, P.Geo., C.A,. Executive Vice-President and CFO of Timmins Gold Corp. is the Qualified Person (QP) responsible for the disclosure in this news release. Field work has been conducted by Timmins Gold Corp. employees and contractors. Independent QP's responsible for preparation of the Pre-Feasibility Study are William J. Lewis, P.Geo., R. James Leader, P.Eng., Christopher A. Jacobs, CEng MIMMM, and Ian R. Ward, P.Eng., all of Micon International Limited and Michael G. Hester, FAusIMM of Independent Mining Consultants Inc.

For further information, contact:

Arturo Bonillas, B.Sc.(Eng)
President
Hermosillo, Sonora, Mexico
Tel: 011-52-662-262-1132
arturo@timminsgold.com

Darcy Krohman, P.Geo., C.A.
Executive Vice-President & CFO
Vancouver, BC, Canada
Tel: 604-638-8971
darcy@timmingold.com

Bruce Bragagnolo, LLB.
Chief Executive Officer
Vancouver, BC, Canada
Tel: 604-638-8980
bruce@timminsgold.com

For Investor Relations, contact:

Leighton Bocking
Corporate Development
Vancouver, BC, Canada
Tel: 604-638-8977
Leighton@timminsgold.com

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

This News Release contains forward-looking statements. Forward looking statements are statements which relate to future events. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans, "anticipates", believes", "estimates", "predicts", "potential", or "continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect out current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggests herein. Except as required by applicable law the Company does not intend to update any forward-looking statements to conform these statements to actual results.