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Unprecedented Joint Venture Agreement Sees Cream Minerals' Nuevo Mileno Project Advance In Mexico

With a new joint venture agreement signed with Roca Mines for US $12 million in exploration expenditures on the Nuevo Mileno Project, Cream Minerals' President Michael O'Connor is enthusiastic about continuing with project generation. Cream Minerals is now turning its' sights to the Blueberry Gold Project 20 km's NE of Flin Flon, Manitoba; and the continued review of precious metals exploration properties in Mexico with the intention of optioning a property in the near future. Here, Mr. O'Connor speaks with resourceINTELLIGENCE reporter, Katherine Young about developments at Cream.

Resource Intelligence: Could you tell us about Cream's Nuevo Milenio project in Nayarit State, Mexico?
Michael O'Connor: Yes, we acquired the Nuevo Milenio Project in 2000. It is located in northern Mexico 27 kilometres from Tepic, the capital city of Nayarit State. It has a resource of 5.1 million tonnes of ore, with 1.66 g/t gold and over 251 g/t silver, so very high-grade. The December 2008 resource estimate identified an Inferred Mineral Resource of 54.6 million ounces silver equivalent.

RI: Cream recently made a deal with Roca Mines to develop the project. Can you tell us about the deal?
MO: Cream Minerals still owns 100% of the project, but we recently optioned Nuevo Milenio to Roca Mines to develop the project.  Roca has agreed to spend US $12 million over the next four years. Spending US $ 12 million earns Roca a 50% interest in the project, but in order to earn the full 70% they must also conduct a Compliant Feasibility Study.

This is an excellent agreement for Cream. An option agreement like this involves enough exploration capital to see the whole 2,560 hectare property systematically explored. Our current NI 43-101 Inferred Mineral Resource is based on exploration on an area that is approximately 600 ha of the total 2,560 ha. Roca could expand on that enormously. This is an enormous amount of money for an option agreement and a fantastic deal for both Cream and Roca. Normally, on a deal like this you might get a few hundred thousand dollars for a first payment, then moving toward a total of about $5 million over 5 years. US $12 million over four years is really unprecedented, but Roca Mines did their due diligence and reviewed all our data. They wouldn't be investing capital like this unless they were firmly convinced of the potential for the project.

RI: What will change on the project now that Roca is involved?
MO: Now that Roca has taken over as the operator on this project exploration activity will accelerate. We had initially planned a 2-year underground exploration program that would have upgraded the existing inferred mineral resource to measured and indicated with an additional 50 million ounce silver target. The plan included a goal of production within five years.

The Roca option agreement extends over seven years with the requirement that Roca complete a Compliant Feasibility Study by the end of seven years and three months. Roca can pursue early production opportunities if they choose. If they do not proceed with a Compliant Feasibility Study and design a mine development and production plan, given that they are acknowledged to be excellent mine developers and operators based on the success of the MAX Mine, then the time line to early production would probably be roughly five to six years. Roca has the option to earn a further 20% interest in Nuevo Milenio, for a total interest of 70%, through the completion a Compliant Feasibility Study within three years of November 24, 2013. Should Roca earn an interest in Nuevo Milenio Cream and Roca would then participate proportionately in the further development of Nuevo Milenio.

RI: What has Roca undertaken so far on the project?
MO: Roca began drilling on the property in February 2010. The first phase of the drill program includes drilling up to seven holes for a total of 1,500 meters, which doesn't sound like a lot, but fortunately for the project, the drill targets are shallow. They've been busy on the project since July 2009 conducting multiple property visits with their geologists, reviewing all of Creams core and analyzing all of Creams original data. In addition Roca has been working on generating a 3D geological model in Vulcan.  A phase II drill program is also planned following results from Phase I. Roca has engaged Robert ("Bob") Lane P.Geo, a recognized authority on epithermal gold and silver deposits to design and oversee their exploration program.

RI: How is the infrastructure in the area of Mexico where the project is located?
MO: The property is located 24 kilometres by paved road and 3 kilometres by dirt road from Tepic, the capital city of Nayarit State, Mexico. Tepic is the capital of Nayarit State with a population of about 300,000 and is a commercial centre located 150 km northeast of Puerto Vallarta. Critical infrastructure such as airport, railway, water and power lines are all easily accessible to the Nuevo Milenio Project, which is good news for keeping costs low.

RI: What else should investors know about the operator, Roca Mines? Why are you confident in their expertise?
MO: Roca recently opened the MAX Molybdenum Mine, the newest primary molybdenum mine to begin operation in Canada. Roca this month announced revenues of $17.2 million for the nine months ended May 31, 2009.
Roca acquired 100% interest in the high-grade, large scale MAX molybdenum deposit in 2003. Exploration on the deposit eventually revealed a measured and indicated resource of 42.9 million tonnes at a grade of 0.20% MoS2, which at a cutoff of 0.1 % MoS2 makes for a $3 billion dollar metal value at least.  

RI: Could you tell me a little about your team?
MO: I have over 20 years experience on the financial side in brokerage, private banking and investment counseling, investor relations and corporate communications. My background in financing developing companies is particularly relevant for my leadership at Cream.

We have Frank Lang who retired as President of Cream Minerals in late 2008, but remains with us as Chairman of the Board of Directors. In 1982 Frank co-discovered the Hemlo discovery, which became the Hemlo mine. That mine currently produces 500,000 ounces of gold per year.  Frank has founded a number of companies including Aurizon, which also became a producing mine. Aurizon is on track to produce in excess 150,000 ounces of gold in the coming year.
We also have Fred Holsipak who is our head geologist. He has extensive experience in acquisition and exploration of mineral projects in North and South America and Mexico as well as Australia and Africa over the last 30 years. He was exploration manager of Agilis Engineering for eight years. He acted as Director of Exploration for the Nicaraguan Government between 1979 and 1982, and since 1991 he has been the exploration and administrative manager in Mexico for the Lang Mining group of companies.

RI: What other properties does Cream Minerals have on its roster?
MO: In the beginning of December we announced that we expanded our mineral claim interest on our Blueberry Project in northern Manitoba. The Blueberry Project is located only 20km northeast of the infamous Flin Flon, Manitoba. There is great access to the property and solid infrastructure. There is a road that is maintained year round that runs right through the property and gives us four season access to the property.

We're excited that there is an outcropping in the middle of the property that is approximately 250m by 450m. Grab and chip samples from that outcropping have returned assays that range on the low end from 0.4 g/t gold and on the highest end up to 43 g/t gold. So we're pretty encouraged.

We also have the Goldsmith property in southeastern BC. Grab sampling there in 2003 returned very high-grade gold-silver assays, the highest being 9,901.79 g/t gold. We have the silver-lead-zinc Kaslo Property about 12 km from the town of Kaslo in southeastern BC at the site of the old Cork Province Mine. We completed an HTEM HELIMAG Airborne Geophysical survey there. At the Cork South Zone, drilling returned a weighted average of 209.3 g/t silver, 6.02% lead, and 8.04% zinc over a 21.1 meter width. In the Gold Cure zone trenching returned an average silver grade of 416 g/t silver, 1.2% lead and 0.63% zinc over a 4m width. Finally, the Silver Bear Zone returned averages of 192.3 g/t silver, 1.76% lead and 1.69% zinc over a 37m width.

Another important property is our Casierra Diamond Project in Sierra Leone. It is an offshore alluvial diamond exploration prospect. It's approximately 88 square kilometers in size and the Moa and Mano Rivers drain into this area from well-known diamond hosting areas in Sierra Leone. We'll be looking to joint venture this project to continue exploration on the project.

RI: The deal Cream made with Roca could be described as project generating. Is Cream focused on project generation at the moment, and if so, why?
MO: Joint venturing with companies like Roca Mines is advantageous in the current economic climate because capital is expensive at the moment. Cream Minerals has long considered itself to be a project generation company, but particularly at this time, it is a clever strategy to partner with companies like Roca Mines who have excellent cash flow, which gives them the leeway to invest in exploration and develop properties toward production.

Milestones:

* July 24, 2010: Roca Mines' deadline to spend US $1
* million on Nuevo Milenio
* July 24, 2011: Roca Mines' deadline to spend US $3.5
* million on Neuvo Milenio
* July 24, 2013: Roca Mines' deadline to complete US $12 million on exploration on Nuevo Mileno

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