(VML) Vane Minerals

VANE Minerals plc (AIM:VML)

("VANE" or the "Company")

Mexican gold & silver quarterly operations update covering the period 1 October to 31 December 2011 ("Q4")

VANE is pleased to announce an operational update on its gold/silver operations in Mexico.

The Company announces increased revenues from its Mexican operations, brought on by higher than expected grades of gold and silver being produced and improved recovery from its joint venture mine at La Colorada. This has generated sufficient cash to cover all of the Company's costs (both its operational costs and its exploration costs) for Q4.

Highlights

·     Total revenue of US$2,692,093  generated in Q4

·     7,802 tonnes of ore in total processed by SDA Mill during Q4 (Q3: 8,022 tonnes) with average grades 8.06 /T Au (Q3: 5.17g/T Au) and 127g/T Ag (Q3: 105g/T Ag)

·     Average recovery rate of 78.2% Au (Q3: 75.9%) and 70.9% Ag (Q3: 69.9%)

·     1,352 oz. Au and 19,410 oz. Ag produced in Q4 at a direct production cost of $585 equivalent per oz. Au; or $10.8 equivalent per oz. Ag (Q3: 628 oz. Au and 18,724 oz. Ag produced at a direct production cost of $640 equivalent per oz. Au; or $14.6 equivalent per oz. Ag)

·     68.6 tonnes of concentrate held in inventory at period end (Q3: 75.9 tonnes)

·     All gold and silver sold unhedged

The Company announced on 9 November 2011 its intention to close down its Diablito mine during the course of 2012. Ahead of this closure, work has now commenced to remove an identified 3,200 tonnes of higher grade ore from the mine. Of these 3,200 tonnes, it is expected that approximately 1,663 tonnes of high grade ore (17.9g/T Au and 1,801g/T Ag) will be processed through the Company's Merrill Crowe facility at the rate of 120 tonnes per month, with the remaining ore (2g/T Au and 200 g/T Ag) stockpiled.

Commenting today, David Newton, CEO of VANE said: "These results are very encouraging and underpin the Company's decision to switch its focus to ore produced at the La Colorada Mine. Whilst there can be no guarantee that these results will be replicated in the future, they demonstrate that if these production levels can be maintained then the Company's Mexican operations will continue to make a significant cash contribution to the total running costs of the Group."

Kristopher K. Hefton, Chief Operating Officer VANE Minerals (US) LLC, BSc Geology, who meets the criteria of a qualified person under the AIM Rules - Guidance for Mining, Oil and Gas Companies, has reviewed and approved the technical information contained within this announcement.

For further information, please contact:

Simon Rothschild

Further detail on the agreement with the Ruiz brothers and exploration potential

The JV's initial focus is the four concessions, of which La Colorada is currently in production. Exploration and mine planning of the additional concessions continues.

Within the four concessions, a number of precious metals veins and vein systems are known and have been partially developed:

· La Colorada concession (14 hectares) - includes the following workings: Salto, La Camichina,
Campo Ancho, Chapparo, La Colorada and La Escondida workings located at different elevations along the same vein(s) system. These workings have opened the principal vein structure intermittently over a horizontal distance of 400 meters and a vertical distance of 130 meters;

· Maria Fernanda concession (72 hectares) - includes two separate veins, Saltito, which has
numerous shallow workings along a strike length of more than 500 meters and the largely unexplored Papayal vein;

· Jorge Luis concession (11.9 hectares) - covers the upper level workings along the La
Valenzuela vein 75 meters above La Valenzuela tunnel; and

· La Valenzuela concession (74.9 hectares) - an adit provides access to the lower level as well as the upper workings along the La Valenzuela vein.

Although several ore shoots have been intersected in the Colorada concession, current production is from the Camichina drift, a 2-3 meter wide vein, which is currently projected to extend for 150 meters along strike and 70 meters in the dip direction. The Board believes that the potential of the La Colorada concession remains encouraging based on historic drill results obtained in 2006. The lowermost Salto tunnel, 50 meters below the Camichina level, will allow for easy access to newly discovered ore shoots. Mapping and sampling continues to be carried out by the JV to determine the location of all of the underground workings and the best method to access the known ore shoots to expand production. Diamond drilling will be carried out by the JV as necessary.

The Saltito vein system, which is the JV's next target for production, on the Maria Fernanda concession, exhibits numerous shallow mine workings over a 500+ meter strike length. Historic drilling (2006) has given indications of mineralization extending to depth. Mineralogy and grades are projected to be similar to the ore being produced at La Colorada. The JV will carry out mapping and sampling to determine the best method of accessing and developing the ore shoots currently indicated from shallow underground workings along with diamond drilling as necessary.

Historic mapping from the La Valenzuela vein indicates two ore shoots extending from the upper Jorge Luis drift to 40 meters below the La Valenzuela drift, a vertical difference of 115 meters in which a non-compliant NI43-101 resource of 43,000 tonnes at 6.8 g/T Au (9,400 oz. Au) and unspecified silver has been inferred. Mapping and sampling will be carried out by the JV to determine the best method of accessing and developing the ore shoots currently indicated from the underground workings along with diamond drilling as necessary.

Within the 1,500 km² area covered by the JV, numerous other precious metals vein targets exist as per the "Geological-Mining Monograph of the State of Sinaloa" published by the Consejo de Resursos Minerales, and the Board anticipates that these will be explored and evaluated during the course of the JV. The Board's intention is that the JV will develop several additional projects that will be capable of each supplying 50+ tonnes of ore per day which, the Board believes, would in turn justify the construction of an additional mill in a location more central to the mines. Concentrates from that mill would then be processed by leaching and Merrill Crowe precipitation at the SDA Mill or sent to the smelter.

VANE Minerals plc (AIM:VML)

("VANE" or the "Company")

Copper exploration drilling update

VANE confirms that it has drilled a copper-molybdenum porphyry system at its McGhee Peak project.

Drilling continues at McGhee Peak which is located on the Hillsboro-Chino-Tyrone-Bisbee porphyry mineral trend in southwest New Mexico. The drilling has discovered two mineralised targets located approximately one mile apart within a clearly identified porphyry system, containing copper, molybdenum and zinc.

Highlights

·      Two rotary holes completed with a third being re-drilled

·      Mineralised copper, molybdenum and zinc (Mo Zn Cu) porphyry system encountered

o  Copper values in the range of 300-600 ppm

o  Zinc values greater than 200 ppm

o  Visible molybdenite encountered in hole subsequently lost due to caving and therefore being re-drilled 

·      Further drilling being undertaken to determine if economically viable higher grade mineralisation is present

David Newton, CEO of VANE, commented:

"These are encouraging results, showing a mineralised porphyry and confirming our geological theory that the porphyry systems that have been successfully discovered and mined at surface in this part of the U.S., also occur at depth.  Further drilling is required over the coming months to confirm whether this porphyry has economic potential. This successful drilling result at what is only our third project on this very favourable mineral trend gives us confidence of further exploration success in our remaining projects. "

Three McGhee Peak holes have been drilled and are in various stages of completion. Holes MP-2 and MP-3 are located in the north target area approximately half a mile apart. Both holes intersected a silicified porphyry intrusion with encouraging alteration and vein-type copper, molybdenum, tungsten and zinc mineralisation.

Hole MP-2 intersected anomalous copper values in the range of 300-600 ppm to a depth of about 380 feet. Higher zinc values greater than 200 ppm were found below a depth of about 580 feet. This hole (MP-2) is presently being deepened in order to pursue visible Mo-Zn-Cu mineralization observed near the depth of 1,300 feet. Hole MP-3 also intersected the underlying porphyry body. Assay results are pending from this hole, which showed visible indications of zinc and weak molybdenum mineralisation to its completed depth of 1,508 feet.

 Hole MP-1, located approximately 1 mile to the south, was designed to test the southern mineralised target area. The hole was lost at a depth of 360 feet.  Encouraging alteration with anomalous copper and visible molybdenite was encountered before bad ground conditions prevented continuation of the hole.  A plan is in effect to re-drill the hole in order to test the projected porphyry target below 1,000 feet.

Results to date from drill hole and surface geology/geochemistry/geophysics are encouraging, in that a larger mineralised porphyry system encompassing both the north and south target areas is indicated. The discovery of a large mineralised porphyry system is the first step in VANE's copper exploration program. This will be followed by vectoring within the large porphyry system to determine if economically viable higher grade mineralisation is present.

The rotary drill currently working at McGhee Peak will be moved to our next copper target once the re-drilling of hole MP-1 is completed as additional drill holes will require permitting. Permitting of the additional holes at McGhee Peak is underway and bids on the diamond drilling required for the vectoring holes are being evaluated.

Kristopher K. Hefton, Chief Operating Officer VANE Minerals (US) LLC, BSc Geology, who meets the criteria of a qualified person under the AIM Rules - Guidance for Mining, Oil and Gas Companies, has reviewed and approved the technical information contained within this announcement.

For further information, please contact: