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Carpathian Gold Inc.: Carpathian Receives a Robust Preliminary Economic Assessment Study for its RDM Gold Project, Brazil

TORONTO, ONTARIO--(Marketwire - Aug. 12, 2009) - Carpathian Gold Inc. (TSX:CPN) (the "Corporation" or "Carpathian") is pleased to announce the results of the Preliminary Economic Assessment Study ("PEA" or the "Study") on its 100% owned Riacho dos Machodos Gold Project ("RDM" or the "Project) located in Minas Gerais State, Brazil. The PEA was compiled by a consortium of engineering companies led by NCL Brasil Ltda ("NCL") of Belo Horizonte, Brazil. The Study is based solely on the open pit mineralization outlined in the NI 43-101 Mineral Resource Estimate released on May 18, 2009, which defined 15.16 Mt at 1.56 g/t Au for 762,700 oz Au in the Inferred Resource and 4.55 Mt at 1.84 g/t Au for 268,800 oz Au in the Measured plus Indicated Resource category. This resource was defined within an open pit shell utilizing the pit-optimizer software (Whittle) with appropriate mining costs, US$800 per ounce gold price, and a 0.30 g/t Au cut-off grade. The open pit mine design and production schedule for the PEA was based on a $704 per ounce gold price to obtain a pit shell as a strategy for lowering the risk of the Project.

Highlights of the Study include:

- Average annual production of 102,000 ounces of gold per annum over an initial 7.1 year mine life.

- Total operating cash cost of US$428 per gold ounce.

- Project after tax net present value ("NPV") of US$123.3 million based on a 5% discount rate and a gold price of US$900 per ounce.

- Project after tax internal rate of return ("IRR") of 32.0%, with a 2.9 year payback on Project capital expenditures, at a gold price of US$900 per ounce.

According to the cautionary statement required by NI 43-101, it should be noted that this assessment is preliminary in nature as it includes inferred mineral resources that cannot be categorized as reserves at this time and as such there is no certainty that the preliminary assessment and economics will be realized. The full Study will be available at the Company's website [ www.carpathiangold.com ] and on SEDAR [ www.SEDAR.com ] within 45 days.

"We are pleased with the robust nature of the results from the PEA" said Dino Titaro, President and CEO. "We are currently drilling the open pit resource area to upgrade the inferred resource to the measured plus indicated category and early results, which will be reported shortly, indicate that there should be no difficulty in upgrading the resource category and maintaining or improving the grades and tonnages. Additionally, the drilling program is also designed to expand the current open pit resource used in the Study. The objective of the PEA was to define a profitable open pit operation that would allow rapid recovery of all of the initial capital costs while generating good margins and free cash flow for future development. Results of the Study confirm the viability of the economic potential of the Project to become on average a +100,000 ounce per year gold producer and give a firm basis to proceed quickly to feasibility and production. We also take comfort from the Study being conducted with greater costing detail than standard PEA studies"

The following table presents a list of the Project parameters and assumptions derived from the PEA and cash flow model. While the cost assumptions and mining plan are considered to be at a very high confidence level, the Study contains inferred resources as part of the assessment and as such is classified as a PEA study.

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Project Parameters Base Case using US
 $704 open pit design
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Total Tonnes Ore Produced 15,187,200
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Open Pit Ore Production Rate 6,000 t/d
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Average Ore Processing Rate 2.2 million t/yr
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Average Mill Feed Gold Grade 1.65 g/t
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Gold Recovery 90%
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Total Contained Gold 806,722 oz
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Total Gold Production 725,645
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Exchange Rate R$:US$ 1.95
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Mine life 7.11 years
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Average Annual Gold Production 102,012 ounces
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Total Capital (Including Sustaining Capital) US$125.5 million
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Total Initial Capital Required (Including Pre-Strip) US$112.9 million
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Total Operating Cost US$20.45/t
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Effective Tax Rate (Including Federal Incentives) 15.25%
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Royalty 2%
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Refining + Transport + Insurance US$10/ounce
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Cash Operating Cost Per Ounce US$428 per ounce
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Cut-Off grade 0.41 g/t Au
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Average Strip Ratio LOM 8.9:1
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Pre-Production Tonnes 15.0 million
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The financial model cash flow using gold prices of US$850 and US$900 are 
shown below. Sensitivity charts using gold prices ranging from US$750 to 
US$950 are found at the end of this press release.

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Financial Model US $850 Gold US $900 Gold
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NPV0 pre-tax US $ 178.3 million US $ 213.8 million
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NPV0 Free Cash flow (after tax) US $ 152.6 million US $ 182.7 million
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NPV5 pre-tax US $ 119.8 million US $ 147.8 million
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NPV5 Free cash flow (after tax) US $ 99.7 million US $ 123.3 million
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IRR pre-tax 31.4% 37.1%
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IRR Free cash flow (after tax) 27.1% 32.0%
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Years to payback from start of
 production (at 0% discount) 3.2 years 2.9 years
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Proposed Mining Plan and Processing

The PEA study was completed by NCL which led a consortium of specialists assembled for the Study. NCL was responsible for the preparation of the overall study as well as the mineral resource estimate, open pit mine design, and economic models. Other members of the consortium included Golder Associates Brasil Consultoria e Projetos Ltda. that was responsible for the geotechnical aspects of the project as well as hydrology, the tailings and waste management design and water containment design, Tecnomin Projetos e Consultoria Ltda that was responsible for the process plant design and infrastructure, and YKS Services Ltda. that was and are still responsible for all aspects of the environmental and permitting process for the Project.

The Project will be a conventional open pit mine with down-the-hole drill rigs and blasting, backhoe excavators, and conventional haul trucks. The processing operation will include crushing the ore to minus 19 mm and processing it in an industry standard carbon in leach and ADR (adsorption, desorption, and recovery) plant followed by a detoxification process prior to placing the tailings in an impoundment area. The open pit mining operation will be at a rate of 6,000 tonnes per day with a life-of-mine average plant feed grade of 1.65 g/t gold over a life of mine of 7.1 years.

Metallurgical test work collected for three composite samples extracted from the drill core within with the three mineral zones of the open pit was performed by SGS Geosol in Belo Horizonte Brazil. Based on the test work, the gold recovery is estimated at 90%. The gold bullion produced should be high purity since there are no contaminating metals such as copper or zinc to be recovered with the gold. Additional metallurgical test work is currently being conducted on sample results distributed throughout the ore body to further examine the gold extraction rates versus particle size to determine if additional gold recovery can be achieved with a finer grind.

The work index of the ore, as per previous test work performed by Companhia Vale do Rio Doce ("Vale"), ranges from 14.5 kWh/t to 15.5 kWh/t. The grinding curve test work performed at SGS Geosol confirmed these results.

Future Upside

An in-fill and expansion drilling program is underway, and with positive results, the Corporation believes that it may be able to expand the mineable portion of the open pit resources used in the PEA, by both the deepening of the pit as well as possibly extending the mineralization along strike. During the feasibility study stage, the Corporation expects to optimize the open pit resource to maintain a relatively constant strip ratio and deepen the planned pit to extract additional ore for a longer mine life. There are also numerous gold targets on the property, within close proximity to the open pit, which will be evaluated in the future which could extend the mine life and add further gold production to the Project.

Additionally, once the open pit is in production the Corporation plans to evaluate the underground resource, as defined in the NI 43-101 Mineral Resource Estimate report (see below), which could provide additional ore production in the future to increase both the overall annual gold production for the Project and mine life. Insufficient work has been completed at this time to allow for this potential underground resource to be included in the PEA.

RDM Project Background

The RDM gold project is a 22,000 hectare land parcel comprising Exploration Licenses and one Mining Concession that covers a 20 kilometre long north-south shear zone. The Mining Concession hosts a past producing open-pit gold mine, which was previously operated by Vale between 1986 and 1997 from which oxide gold ore was mined to maximum depths of 60 m below the surface. The gold mineralization at RDM is shear zone hosted, within a package of Precambrian aged metamorphic rocks. This shear zone strikes 20 degrees and dips 40 to 50 degrees west. The gold mineralization is known to be continuous over a strike length of 1,350 m and open at depth to greater than 550 m at the RDM mine-site. The 2008 drilling program has demonstrated that this mineralization is now continuous for a strike length of at least 2,000 m.

An initial NI 43-101 compliant Resource Estimate was released on May 18, 2009 based on 11,227 m of diamond drilling and re-sampling of 102 diamond core drill holes completed prior to 1996 by Vale, the previous operator of the Project. This Resource Estimate utilized open pit optimization software to constrain an open pit resource and underground resource for material below the open pit using appropriate cut-off grades, costs, and a US$800/ounce gold price. This open pit is 1,700 m in length and ranges from 60 m deep in the south extension to 270 m deep in the middle portion of the open pit.

The open pit resource includes (combined oxide, transition, fresh zones and 0.30 g/t Au cut-off):

- Measured + Indicated - 4.547 M tonnes at 1.84 g/t Au for 268,800 ounces Au

- Inferred - 15.164 M tonnes at 1.56 g/t Au for 762,700 ounces Au

The underground resource includes (1.0 g/t Au cut-off):

- Measured + Indicated - 0.201 M tonnes at 3.31 g/t Au for 21,400 ounces Au

- Inferred - 2.733 M tonnes at 2.84 g/t Au for 249,700 ounces Au

The combined open pit and underground resource includes:

- Measured + Indicated - 4.748 M tonnes at 1.90 g/t Au for 290,200 ounces Au

- Inferred - 17.897 M tonnes at 1.76 g/t Au for 1,012,400 ounces Au

The underground resource has a geological potential of 12 million tonnes at 2.91 g/t Au for a total insitu metal content of 1.12 million gold ounces. This was determined by NCL through the measurement of the volume of the deposit from the geological model provided by Carpathian for the Resource Estimate, using the average grade of the composite samples below the open-pit, less the current underground resource. This potential that exists within the underground grade shell model where data from existing drill holes is too widely spaced to properly interpolate grade and should not be relied upon as a NI 43-101 compliant resource. Further deep drilling will be required to ascertain the extent of this mineralization and convert the mineralization into a resource. The grade of this underground mineralization is similar to existing underground operating mines in Brazil.

A +15,000 m diamond in-fill drilling program is underway with the primary objective of upgrading approximately 80% of the inferred mineral resource category in the open pit portion of the Mineral Resource Estimate. Drill results and further information on this program will be released shortly in a separate press release. In addition to this drilling program further environmental and permitting work is also underway in preparation for a feasibility study and mine building.

Mr. Carlos Guzman, a qualified person as defined in NI 43-101 and Principal Mining Engineer of NCL Brasil Ltda., Belo Horizonte, Brazil, has read and approved the technical portions of this release.

Corporate

The PEA study for the Rovina Au-Cu Project in Romania is well underway and nearing completion and the Corporation anticipates that it will provide the results of this study during the third quarter of 2009.

The Corporation wishes to announce that Mr. Kevin Flaherty has resigned from the Board of Directors effective August 11, 2009.

Mr. Titaro is the qualified person (as defined in National Instrument 43-101) and is responsible for preparing the information contained in this news release.

Carpathian Gold is an exploration and development company whose primary business interest is developing near-term gold production on its 100% owned Riacho dos Machados Gold Project in Brazil along with progressing its exploration and development plans on its 100% owned Rovina Valley Au-Cu project located in Romania.

Forward-Looking Statements: This press release includes certain statements that may be deemed "forward-looking statements". Forward-looking statements are frequently characterized by words such as "plan", "expect", "Project", "intend", "believe", "anticipate", "estimate", and other similar words, or statements that certain events or conditions "may" or "will" occur. All statements in this release, other than statements of historical facts, that address future exploration drilling, exploration activities and events or developments that the Corporation expects, are forward-looking statements. Although the Corporation believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. There can be no assurance that forward-looking statements will prove to be accurate, as results and future events could differ materially from those anticipated statements. The Corporation 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.

 Sensitivity Tables

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 NPV (M$) pre-tax
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 GOLD PRICE (US$/oz)
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Gold Price &
Discount Rate 750 800 850 900 950
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Discount 0.0% $ 107.1 M $ 142.7 M $ 178.3 M $ 213.8 M $ 249.4 M
Rate 2.5% $ 83.5 M $ 114.9 M $ 146.3 M $ 177.8 M $ 209.2 M
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 5.0% $ 64.0 M $ 91.9 M $ 119.8 M $ 147.8 M $ 175.7 M
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 7.5% $ 47.9 M $ 72.8 M $ 97.7 M $ 122.6 M $ 147.6 M
 10.0% $ 34.4 M $ 56.8 M $ 79.2 M $ 101.5 M $ 123.9 M
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 IRR (%) 19.7% 25.6% 31.4% 37.1% 42.6%
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 NPV (M$) after tax
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 GOLD PRICE (US$/oz)
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Gold Price &
Discount Rate 750 800 850 900 950
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Discount 0.0% $ 92.3 M $ 122.4 M $ 152.6 M $ 182.7 M $ 212.9 M
Rate 2.5% $ 70.4 M $ 97.0 M $ 123.7 M $ 150.3 M $ 176.9 M
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 5.0% $ 52.4 M $ 76.0 M $ 99.7 M $ 123.3 M $ 147.0 M
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 7.5% $ 37.4 M $ 58.6 M $ 79.7 M $ 100.8 M $ 121.9 M
 10.0% $ 25.1 M $ 44.0 M $ 62.9 M $ 81.9 M $ 100.8 M
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 IRR (%) 17.1% 22.2% 27.1% 32.0% 36.7%
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The TSX does not accept responsibility for the adequacy or accuracy of this news release.