BEAR CREEK ANNOUNCES INCREASED SILVER RECOVERIES TO 75% FROM RECENT COLUMN TESTS AND OFFICIAL FILING OF THE PROJECT "ESIA" AT SANTA ANA, PERU

VANCOUVER, Jan. 19 /PRNewswire/ - Bear Creek Mining Corporation (TSX Venture: BCM/ BVL: BCM) ("Bear Creek" or the "Company") is very pleased to announce an update to the silver recovery for its 100% owned Santa Ana deposit located in southern Peru.  Santa Ana will be the first of two silver deposits to achieve production that, combined, will see the Company producing 15-20 million ounces of silver per year by 2014.

As anticipated in the Feasibility Study and 43-101 Technical Report, the test work shows improvement to the overall recovery and speed of the recovery when the ore is crushed to 80% passing 3/8-inch compared with ¾-inch crushing used during previous column tests (see news release dated 7 October 2010).  Highlights of this update include (all figures in this news release are in US dollars):

• Recently completed column tests on a representative composite of the Santa Ana ore crushed to 80% passing 3/8-inch returned results that show the long-term recovery of silver is expected to be 75%.  This is an improvement from 70% recovery for the ¾-inch crushed ore.
  
  
• The rate of the recovery is significantly improved over the previous coarsely ground ore with the ultimate 75% recovery being reached in 180 days rather than the 365 day recovery cycle of the ¾-inch crushed sample.
  
  
• Using the same metal price of $14.50 per ounce for economic analysis the economic results for the Santa Ana Project improve to a pre-tax NPV of $107 million at a 5% discount rate and 29% IRR.  After tax NPV increases to $81 million and 25% IRR.  (Details of the changes are shown below).
  
  
• Cash costs per ounce of silver produced decreases from $9.02 to $8.72 per ounce for the life of mine.
  
  
• Applying $28.19 per ounce (London closing silver price as of January 17) to the finer crushing scenario, the NPV at 5% is $554 million and the IRR increases to 103% (see Tables below).
  
  
• The details of this modification to the crushing circuit were discussed in detail in the recently filed 43-101 technical report.
  
  
• The Company filed the project Environmental and Social Impact Assessment ("ESIA") to the Ministry of Energy and Mines on December 23, 2010; maintaining the timeline for approval during Q3 2011.

Andrew Swarthout, President and CEO, states "As anticipated, the now completed column tests show significant improvements in project performance at the finer crush size and further demonstrate the project's strong leverage to the rising silver price.  The small incremental capital requirement of $2 million to capture the benefits of the increased silver recovery is covered by our recent financing in 2010.  Importantly, the successful filing of the ESIA in December maintains the timeline for production start-up in 2012. "

Finer Crushing Assumptions-The basis for this economic update to the financial results of the Feasibility Study of Santa Ana are discussed in detail in the opportunity section of the 43-101 Technical Report dated October 21, 2010.  As anticipated in the Technical Report and confirmed by recent test work, the following assumptions are being carried forward into the detailed engineering and project design:

1. Recovery is increased from 70% to 75%
2. Recovery occurs over 180 days instead of 1 year
3. Capital expenditure increases by $2 million to accommodate the additional crusher needed to produce the finer material
4. Process operating costs increases by $0.30 per process tonne to pay for the finer crushing
5. Cash costs per ounce of silver produced decreases from $9.02 to $8.72 per ounce

All other parameters remain the same including mining and processing rates, reserve tonnes, grade, and stripping ratio.

Project summary after update to crushing assumption and increased silver recoveries -The project has a pre-tax internal rate of return ("IRR") of 29.9%, a net present value of $106.9 million at a 5% discount rate and earnings before interest, taxes, depreciation and amortization ("EBITDA") of $173 million over the 11 year life based upon $14.50 per ounce silver.  Recovered silver production in the first six years now averages 5.0 million ounces per year and the project is expected to produce an average of 4.3 million payable ounces of silver per year over the 11 year mine-life. The deposit remains open laterally to the north, northwest, and at depth.  Pre-production capital investment in the project is estimated to be $70.8 million and sustaining capital expenditures are estimated at an average $1.4 million per year over the 11-year life of the mine. Based upon a $14.50 silver price, the project achieves payback of capital in approximately 3.0 years and at the spot silver price of $29.22 per ounce, the payback is 1.1 year. The Feasibility Study has been prepared using cost bids and estimates and production forecasts provided by qualified engineering consulting groups. 

FEASIBILITY STUDY

The reserve and resource estimates were updated for the Feasibility Study ("FS") by Independent Mining Consultants ("IMC"), Tucson, AZ. and Ausenco Vector, Lima, Peru co-lead the study with support from Resource Development Inc. ("RDI") (processing), and McClelland Labs, Sparks, NV (metallurgical testing). All are independent, preeminent engineering and metallurgical testing firms with recent mine development and operating experience in Peru. 

The FS is based upon mining assumptions derived from mine planning sequences completed by IMC and metallurgical test work performed by McClelland Labs.  The mining sequence derives ore from the pit for 9.5 years and during the operation of the mine a 3 million tonne stock pile of ore is built up which is used as leach feed after mining has stopped.  The mine will utilize conventional open pit methods with a waste to ore stripping ratio of 2:1.  The crushing operation will run for 10.3 years with feed coming directly from the mine followed by crushing of the stock pile.  Leaching of the ore and drain-down of the leach pad will continue for approximately one year after the addition of new ore has been stopped.  The ultimate leach pad recoveries are expected to be at least 75% with 48% of the silver being recovered in the first four weeks of leaching.  The mine will produce a high purity silver doré bar that will be shipped off site for refining. 

The silver price selected for the FS is $14.50 per ounce.

Metallurgical testing - The Company has completed seven column leach test at McClelland Labs and over one-hundred leach amenability tests. The results have consistently demonstrated that the Santa Ana ore responds well to conventional heap leaching techniques.  As indicated by the preliminary test results discussed in the Technical Report, the recently completed column tests indicate that further improvements in recovery to 75% silver can be achieved by crushing the ore to minus 3/8 of an inch. 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For further information, please visit the Company's website (www.bearcreekmining.com)

Regulatory footnotes:

All of Bear Creek's exploration programs and pertinent disclosure of a technical or scientific nature, including the scientific and technical information contained in this news release, are prepared by or prepared under the direct supervision of, and reviewed and approved by, Marc Leduc, P. Eng., COO of the Company and Andrew Swarthout, P.Geo., the President and CEO of the Company, who serve as the Qualified Persons under NI 43-101 ("QP").  The block model estimate, mine design and schedules for the Feasibility Study were prepared by Independent Mining Consultants of Tucson Arizona, with John Marek, P.E. acting as the independent QP 43-101.  Additionally, the methods used in determining and reporting the mineral reserves and resources are consistent with the CIM Best Practices Guidelines. 

Assumptions used in the mineral reserve are consistent with the costs calculated used throughout the Feasibility Study and these are: Silver Price=$14.50/oz; Silver Recovery=70% to a doré bar; Mining Costs per tonne= $1.68; Process cost per tonne= $3.19; G&A per processed tonne= $1.17; Pit Slopes= 42 degrees in mineralized tuff and 46 degrees in post-mineralized tuff.  A variable reserve cutoff of 24 to 27 g/t was used and this was employed to improve the IRR in the early years of operation.  The mineral reserves are contained within a practical mining plan that utilized the "floating-cone" method as an initial guide for design. 

The mineral resource portion of the project is contained in a larger pit than the FS design pit.  The method used in the resource calculation is equivalent to the method used in the resource calculation shown in the Company's May 26, 2009 Technical Report on the Santa Ana project (available under the Company's profile at www.sedar.com).  For this resource estimate we have used metal prices based on a 3-year backward average and a 2-year forward price based on the current metal markets, Assumptions used in the resource model by IMC.  Silver Price= $16.00/oz; Silver Recovery= 70%; Zinc Recovery= 0%; Lead Recovery= 0%; Smelter charges: Silver= $0.40 per ounce; Mining Costs per tonne= $1.67; Process plus G&A cost per tonne= $5.30; Pit Slopes= 40 degrees in all rock types.

The Feasibility Study was prepared by a team of independent engineering consultants.  The mining and block model portion was prepared by Independent Mining Consultants of Tucson Arizona, with John Marek, PE acting as QP. The process plant design was prepared by Ausenco Vector in Peru with the Metallurgy and Process design criteria developed by Resource Development Inc., with Deepak Malhotra, Ph.D acting as QP.   Geotechnical, environmental, infrastructure, waste stockpile and heap leach designs and financial modeling were prepared by Ausenco Vector, with Scott Elfen, PE acting as the QP. 

Onsite operating cost per ounce represent the sum of the mining, processing and site G&A divided by the silver ounces produced.  Cash costs per ounce are consistent with the Gold Institute's definition, where in addition to the onsite costs; refining, dore transport and royalties are added and by-product credits are subtracted from the numerator of the calculation. 

All diamond drilling has been performed using HQ diameter core with recoveries averaging greater than 95%.  Core is logged and split on site under the supervision of Bear Creek geologists.  Sampling is done on two-meter intervals and samples are transported by Company staff to Juliaca, Peru for direct shipping to ALS Chemex, Laboratories in Lima, Peru.  ALS Chemex is an ISO 9001:2000-registered laboratory and is preparing for ISO 17025 certification.  Silver, lead, and zinc assays utilize a multi-acid digestion with atomic absorption ("ore-grade assay method").  The QC/QA program includes the insertion every 20th sample of known standards prepared by SGS Laboratories, Lima.  A section in Bear Creek's website is dedicated to sampling, assay and quality control procedures.

THIS PRESS RELEASE INCLUDES FORWARD-LOOKING STATEMENTS OR INFORMATION. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACT INCLUDED IN THIS RELEASE, INCLUDING WITHOUT LIMITATION, STATEMENTS REGARDING FUTURE PLANS AND OBJECTIVES OF THE COMPANY IN RELATION TO PLANS FOR DEVELOPMENT OF ITS SANTA ANA AND CORANI PROJECTS, ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE VARIOUS RISKS AND UNCERTAINTIES.  THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS WILL PROVE TO BE ACCURATE AND ACTUAL RESULTS AND FUTURE EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH STATEMENTS. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S PLANS OR EXPECTATIONS INCLUDE:  THE POTENTIAL FOR DELAYS IN DEVELOPMENT ACTIVITIES; THE GEOLOGY, GRADE AND CONTINUITY OF MINERAL DEPOSITS; THE POSSIBILITY THAT FUTURE DEVELOPMENT OR MINING RESULTS WILL NOT BE CONSISTENT WITH THE COMPANY'S EXPECTATIONS; ACCIDENTS, EQUIPMENT BREAKDOWNS, TITLE MATTERS, LABOR DISPUTES OR OTHER UNANTICIPATED DIFFICULTIES WITH OR INTERRUPTIONS IN OPERATIONS; FLUCTUATING METAL PRICES; THE POSSIBILITY OF PROJECT COST OVERRUNS OR UNANTICIPATED COSTS AND EXPENSES; UNCERTAINTIES RELATING TO THE AVAILABILITY AND COSTS OF FINANCING NEEDED TO FUND THE COMPANY'S PLANNED OPERATIONS INCLUDING GENERAL ECONOMIC, MARKET OR BUSINESS CONDITIONS; THE INHERENT UNCERTAINTY OF PRODUCTION AND COST ESTIMATES AND THE POTENTIAL FOR UNEXPECTED COSTS AND EXPENSES; CURRENCY FLUCTUATIONS; REGULATORY RESTRICTIONS, INCLUDING ENVIRONMENTAL RESTRICTIONS AND LIABILITY AND ABILITY TO OBTAIN OR DELAYS IN OBTAINING NECESSARY PERMITS TO CONDUCT PLANNED DEVELOPMENT AND OPERATIONS; COMPETITION AND LOSS OF KEY EMPLOYEES; AND OTHER RELATED RISKS AND UNCERTAINTIES INHERENT IN THE EXPLORATION AND DEVELOPMENT OF MINERAL PROPERTIES DETAILED HEREIN AND FROM TIME TO TIME IN THE CONTINUOUS DISCLOSURE FILINGS MADE BY THE COMPANY.  AS A RESULT, READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON FORWARD LOOKING STATEMENTS. THE COMPANY MAKES ALL REASONABLE EFFORTS TO UPDATE ITS CORPORATE MATERIAL, DOCUMENTATION AND FORWARD-LOOKING INFORMATION ON A TIMELY BASIS AS MAY BE REQUIRED BY APPLICABLE CANADIAN SECURITIES LAWS.

SOURCE Bear Creek Mining Corporation

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