Crazy Horse Resources Inc.: New PEA Increases Post Tax IRR to 29.3% and Reduces Initial Capex by 41% on Taysan Copper Gold Pr...

Crazy Horse Resources Inc. (TSX VENTURE:CZH)(OTCQX:CRZHF) - 

Highlights:



--  Taysan Copper-Gold Porphyry Project reoriented as a staged development,
    reduces initial investment, increases profitability and enhances
    robustness. 
--  Initial capex reduced by 41% from US$869 million to US$511 million. 
--  Post tax IRR increases by over 33%, from 21.9% to 29.3% based on
    US$3.00/lb copper and US$1,000/oz gold prices. 
--  Robust project economics driven by low strip ratio in initial years,
    proximity to port (20 km) and electrical grid, paved road access and
    excellent metallurgy. 
--  Base case net present value (NPV) is US$484 million at a 10% discount
    rate. 
--  Pre-feasibility study on Taysan Project is fully funded and scheduled
    for completion in March 2012. 
--  Project received endorsement from the Provincial Board of Batangas for
    further development.



Crazy Horse Resources Inc. (TSX VENTURE:CZH)(OTCQX:CRZHF) (the "Company") is
pleased to announce that its new management has completed a review and scoping
study of the Taysan Copper-Gold Porphyry Project in Batangas Province on Luzon
Island in the Philippines. The scoping study was initiated in order to lower
initial capital costs, increase profitability and possibly fast track
development. It uses the same resource estimate as contained in the Company's
NI43-101 report dated October 10, 2011 and entitled "Update of the Mineral
Resource Estimate and Preliminary Economic Assessment for the Taysan Project"
prepared by Mining Associates Pty. Ltd. and AMEC Minproc Limited and available
under the Company's profile at www.SEDAR.com, which strictly relates to the
30Mtpa case only.


The scoping study is based on new pit optimizations at a higher copper cutoff
grade (0.19% vs 0.10%), as well as a reduced plant size of 15Mtpa (compared to
30 Mtpa). These changes result in a significant increase in profitability, with
the internal rate of return of the Project (IRR) increasing by over a third to
29.3%, from the 21.9% shown in the last Preliminary Economic Assessment ("PEA")
based on a 30 Mtpa project. The net present value (NPV) at US$484 million
remains highly attractive:




---------------------------------------------------
                                     30Mtpa  15Mtpa
---------------------------------------------------
IRR                                   21.9%   29.3%
NPV @ 10% (US$ Million)                 639     484
Initial Capital Cost (US$ Million)      869     511
---------------------------------------------------



The Company views the new 15Mtpa throughput configuration as the first stage of
the Taysan Project with the second stage, to double capacity and output,
dependent on future copper prices. It is also anticipated that the staged
development will allow the Company to fund any future expansion largely with
project cash flow and limit dilution to shareholders.


"This new plan to develop the Taysan deposit through a staged operation starting
with a 15Mtpa plant maximizes profitability, as evidenced by the 34% increase in
the expected IRR and also makes the project financeable," said Mitch Alland,
Chairman and CEO of Crazy Horse Resources Inc. "Taysan is now an exceptional and
robust copper project and the pre-feasibility study is now continuing on a much
stronger and attractive basis."


New 15 Mtpa Scoping Study

In the new scoping study, IMC Mining Group, the Company's mining consultant,
increased the average copper grade processed material by selecting a smaller and
higher-grade pit to mine; thereby reducing the waste required to be mined and
improving the Project's cash flows and profitability. This change decreased the
mined copper resource from 750 million tonnes to 250 million tonnes and the mine
life from 25 years to 15 years.


The mining fleet equipment is of the same size as that assumed for the 30Mtpa
operation, thereby not increasing variable mining costs per tonne. The average
in-situ grades for the life of mine (LOM) and initial five years of the 15Mtpa
operation are as follows:




----------------------------------------------------------
                      Avg                          Avg LOM
Grade            Year 1-5   Avg LOM Metallurgical recovery
----------------------------------------------------------
Copper (%)           0.39      0.32                    91%
Gold (g/t)           0.16      0.12                    60%
Silver (g/t)         1.57      1.15                    63%
Magnetite (%)        4.21      3.58                    51%
----------------------------------------------------------



The 30Mtpa PEA assumed two front-end trains of 15Mtpa each. As a result,
considerable process design parameters and criteria remain the same in the new
study, although the back end of the plant was reconfigured to suit a 15 Mtpa
operation. The planned payable production of copper, gold, silver and magnetite
(net of deductions) is as follows:




---------------------------------------------------------------------------
                                                Cu Equivalent Cu Equivalent
Production               Avg/Year LOM Total LOM        (Mlbs)      (tonnes)
---------------------------------------------------------------------------
Copper (Mlbs)                      89     1,338         1,338       606,979
Gold ('000 oz)                     27       409           136        61,864
Silver ('000 oz)                  181     2,717            24        10,681
Magnetite ('000 t)                273     4,091           136        61,858
---------------------------------------------------------------------------
Total Copper Equivalent                                 1,634       741,382
---------------------------------------------------------------------------



The infrastructure requirements, prepared by GHD Australia, are largely based on
the work done for the 30Mtpa PEA. The tailings storage facility option selected
provides the optimum size and location to minimize capital and operating costs
for a 15Mtpa operation. Other infrastructure requirements remain the same,
including the port, power distribution, telecommunications and access roads. The
water dam, camp, tailings storage facility, haul roads and fuel farm have all
been scaled down to suit the lower mine throughput.


The following table summarizes the estimated initial capital expenditure for the
15 Mtpa operation compared to the 30Mtpa PEA:




-------------------------------------------------------------
                   Capital Cost Comparison                   
-------------------------------------------------------------
                                            30 Mtpa   15 Mtpa
-------------------------------------------------------------
Process Plant (including EPCM)                532.2     294.8
Mining Equipment, Mining Pre-production       186.6      76.2
Infrastructure                                122.5      89.2
Owners Costs, Land and Port Acquisition        23.0      45.5
Initial Cash Account Funding                    5.0       5.0
-------------------------------------------------------------
TOTAL                                         869.2     510.7
-------------------------------------------------------------



Operating costs are based on pre-feasibility study work completed for the 30Mtpa
operation and have been scaled down in proportion to the reduction in equipment.
Consequently, unit variable costs are similar, with the difference mostly
arising from the fixed cost elements, including port and administrative costs.
The most significant operating cost change stems from the use of available grid
power compared to the assumption of building a captive coal fired power station
at Batangas for the larger 30Mpta operation.


The total average cash operating cost per pound of copper equivalent is
US$1.55/lb over the life of the project and averages US$1.28/lb during the first
five years of operations, compared to US$1.63/lb and US$1.39, respectively, for
the 30Mtpa project. The NPV and IRR at US$2.50 and US$4.00/lb copper prices, as
well as at the US$3.00/lb base case, is as shown in the following comparison
table:




------------------------------------------------------------------------
            Taysan Project - Comparison of Financial Returns            
------------------------------------------------------------------------
Item                             30 Mtpa                 15 Mtpa        
------------------------------------------------------------------------
Copper Price      $/lb     $2.50   $3.00   $4.00   $2.50   $3.00   $4.00
------------------------------------------------------------------------
Gold Price        $/oz      $850  $1,000  $1,400    $850  $1,000  $1,400
------------------------------------------------------------------------
Silver Price      $/oz       $24     $26     $28     $24     $26     $28
------------------------------------------------------------------------
Magnetite Price  $/tonne     $80    $100    $110     $80    $100    $110
------------------------------------------------------------------------
Discount Rate       %        10%     10%     10%     10%     10%     10%
------------------------------------------------------------------------
Project NPV        $M        $47    $639  $1,745    $132    $484  $1,154
------------------------------------------------------------------------
Project IRR         %      10.9%   21.9%   41.0%   15.7%   29.3%   52.7%
------------------------------------------------------------------------



Mineral resources that are not mineral reserves do not have demonstrated
economic viability. The PEA is preliminary in nature, and is based partially on
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. There is no certainty that the PEA will be
realized.


An updated technical report incorporating this new PEA will be filed with the
securities commissions within 45 days. A complete copy of the PEA and the
updated technical report (once completed) can be viewed under the Company's
profile at www.SEDAR.com.


The Pre-Feasibility Study

Virtually all of the work that had been previously completed for the
pre-feasibility study on a 30 Mtpa operation, including the resource estimate,
mining studies and process and infrastructure engineering, is now being used for
the pre-feasibility study of the 15Mtpa project. In addition, 45 drill holes
that have been completed are now being assayed and will be used for a revised
resource estimate that will be conducted by Mining Associates Pty. Ltd., the
Company's resource consultant. The updated resource estimate will be used as the
basis for the mineral reserve estimate and mining studies for the
pre-feasibility study of the new 15Mtpa Project. This will result in a better
defined estimate, with the potential to convert some of the Indicated Resource
to Measured status and Inferred Resource to Indicated status.


In addition, as part of the pre-feasibility study, further detailed pit
optimization studies may result in improved mine life and a further increase in
return on investment, Similarly, as in all pre-feasibility studies, additional
work being undertaken on metallurgy, including comminution and magnetite
recovery test work, as well an on infrastructure options for water supply,
tailings storage facilities, camp sites, access roads and power supply, will
determine optimum solutions to minimize capital and operating costs and to
provide the maximum return to the project. The pre-feasibility study is fully
funded and scheduled for completion in March 2012.


Additional Upside Potential

Apart from the effect of higher copper prices than assumed in the base case and
from the aforementioned possible upside potential stemming from on going
pre-feasibility work and from a revised resource estimate, metallurgical test
work results indicate that there is considerable potential to significantly
increase the magnetite recovery from the 51% achieved to date. Test work
continues to assess this upside potential.


The technical information contained in this news release has been reviewed by
Alistair Barton. Mr. Barton is a Qualified Person ("QP") as defined in the
"Canadian Institute of Mining, Metallurgy and Petroleum, CIM standards on
Mineral Resources and Reserves" and NI 43-101.


Board Change and Option Grant

In other news, the Company advises that based on his new appointment as
President and CEO of Sabina Gold and Silver Corporation and the recent changes
to management and direction of the Company, the Board and Mr. Robert Pease have
agreed that Mr. Pease will step down as the Chairman of the Company. Mr. Pease
is replaced by Mr. Mitchell Alland effective immediately. The Company wishes to
thank Mr. Pease for his contributions and wishes him success in his new role
with Sabina Gold and Silver Corporation.


The Company has granted to Mr. Alland stock options to purchase up to 700,000
common shares in connection with his positions as President, CEO and Chairman of
the Board. Each option is exercisable to acquire one common share of the Company
at a price of C$0.30 until November 13, 2016. The options will vest in
accordance with the Company's stock option plan.


(i) Copper equivalents are calculated on the basis of US$3.00/lb Cu and 91% Cu
metallurgical recovery, US$1,000/oz. Au and 60% Au recovery, US$26/oz. Ag and
63% recovery and US$100/tonne magnetite and 51% magnetite recovery.




Glossary                                                                    
Ag = Silver                                                                 
Au = Gold                                                                   
Cu = Copper                                                                 
g/t = grams per tonne                                                       
IRR = internal rate of return                                               
lb = pound(s)                                                               
LOM = life of mine                                                          
Mtpa = million tonnes per annum                                             
NPV = net present value                                                     
oz = ounce(s)                                                               



ON BEHALF OF THE BOARD

Mitchell Alland, Chairman, President and CEO