Drilling Rigs Mobilized At Continental Precious Minerals Properties In Sweden

Drilling Rigs Mobilized At Continental Precious Minerals Properties In Sweden

Wednesday, August 9th 2006

Continental Precious Minerals Inc. (TSX VENTURE:CZQ – News; the “Company” or “Continental”) is pleased to announce that it has received permission from government authorities to drill on two of its mineral exploration licences in northern Sweden. The permission has been granted to commence drilling on the Guorbavare licence, being one of Continental’s hard rock uranium licences (“HRU Licences”) and on the Viken licence, being one of Continental’s multi metal sediment licences (“MMS Licences”). The drilling on the Guorbavare licence will follow the general outline in Continental’s National Instrument 43-101 report dated September 2005 (“43-101 Report”), namely, a program of twinned-hole diamond drilling for grade checks, infilling gaps in existing drill grids and for deposit extensions. Drilling on the MMS Licence, being one of Continental’s several alum shale (also known as oil shale) licences, will be primarily verification drilling. Drilling is expected to commence in mid-August and it is expected that Continental will have two drills operating by the end of the month. In phase one, the Company estimates that it will undertake 1,500 metres of drilling over a period of three months at a cost of approximately US $150,000.

HRU Licence to be Drilled

The Guorbavare licence (covering 77 hectares or 0.77 square kilometres), which contains the Pleutajokk uranium deposit, is considered, along with six other HRU Licences held by Continental, to be advanced stage exploration prospects with gridded, resource definition drilling having been carried out in the late 1970′s and early 1980′s by the Sveriges Geologiska Undersokning or Geological Survey of Sweden (“SGU”). In the case of Guorbavare, a total of 192 diamond drill holes for a total of approximately 17,400 metres were drilled.

As indicated above, indicated resources for the Guorbavare contain 649.6 tonnes of uranium oxide (or 1,430,000 pounds of uranium oxide) and inferred resources for the Guorbavare contain 1,743.7 tonnes of uranium oxide (or 3,843,000 pounds of uranium oxide). For all of Continental’s HRU Licences as a whole, including the Guorbavare, indicated resources contain 6,043.8 tonnes of uranium oxide (or 13,320,000 pounds of uranium oxide) and inferred resources contain 3,290 tonnes of uranium oxide (or 7,251,000 pounds of uranium oxide).

There is, however, significant uncertainty in any mineral resource estimate. In addition, a mineral resource is not equivalent to a commercially mineable ore body or reserve, and the actual deposits encountered and the economic viability of mining a deposit may differ materially from our estimates.

MMS Licence to be Drilled

Of Continental’s total of 39 exploration licences in Sweden, 18 licences are referred to by Continental as its MMS Licences, containing black shale hosted metalliferous deposits and semi-anthracitic laminae, and eight licences are referred to by Continental as its MMS Cal Licences. The Company is continuing to apply for additional exploration licences and has applied to have oil and gas expressly included in its existing alum shale licences. The MMS Licence areas are contiguous to semi-contiguous and are centred approximately 23 kilometres southwest of the regional centre of Ostersund in the Swedish County of Jamtland. The MMS Licence area was explored by the SGU in the 1970′s to early 1980′s. The SGU drilled 28 vertical diamond drill holes in an area of approximately 250 square kilometres and analyzed the alum share cores for uranium, molybdenum, vanadium and organic carbon (“Corg”).

The MMS Licences in northern Sweden cover approximately 95 square kilometres of outcropping and near surface sub-croppings of the carbonaceous Alum Shale Formation. In addition, the MMS Cal Licences, also in northern Sweden, cover approximately 42 square kilometres. For that portion of the Alum Shale Formation found in Jamtland in the area of the MMS Cal Licences, the 1985 SGU report (referred to below) refers to the unusually high trace element concentrations (11-12% Corg, 200-240 ppm uranium, 350-40 ppm molybdenum and 1,500-2,000 ppm vanadium).

History of Alum Shale Exploitation in Southern Sweden

The Alum Shale Formation, which underlies part of Scandinavia (extending from Finnmark in northern Norway to Skane in southern Sweden), is referred to in several published and unpublished historical geological reports. According to one such report written on behalf of the SGU in 1985 entitled “The Scandinavian Alum Shales” by Astrid Andersson, Bertil Dahlman, David G. Gee and Sven Snall, the Alum Shale Formation was at the time of such report viewed as Sweden’s most important fossil energy resource and also considered to be the largest known uranium resource in Europe.

Over three hundred years ago, it was recognized that hydrated salt, potassium aluminum sulphate could be recovered from the alum shales by roasting and leaching with warm water. During the early years, the burning of the shale was achieved with the help of wood but it was later determined that some of the shale could be burned without wood due to its contained organic matter. When the kerogen content of the alum shales was identified, various attempts were made to extract and refine the hydrocarbons. Kerogen is a naturally occurring solid, insoluble organic matter that occurs in source rocks and can yield oil upon heating. Using conventional retorting methods, oil yields were significant only in Kinnekulle and Ostergotland in southern Sweden. Production at a pilot plant at Kinnekulle reached 500 tonnes of petroleum a year and later expanded during World War II, largely for military purposes. With the availability of conventional oil after the war, alum shale oil operations were terminated in 1966. During the period 1942-1966, about 50 million tonnes of shale were processed.

In the late 1800′s it was also recognized that certain facies of the Alum Shale Formation containing kolm lenses were uranium-enriched and attempts were made to mine them. Due to the erratic nature of the uranium distribution further work was terminated. In the late 1940′s, the SGU, on behalf of the Swedish Oil Shale Company and, later, the Atomic Energy Company, established that some parts of Narke and Vastergotland in southern Sweden contained units at least three metres thick with more than 200 ppm uranium. Later, at Ranstad, a 3.5 metre thick unit containing 300 ppm uranium was discovered and a production facility established. A plant designed to produce 120 tonnes of uranium per year was built but, during the 1965-1969 period, it only produced at half of capacity due to depressed uranium prices.

In 1940, vanadium was recognized as a constituent of the Dictyonema facies of the alum shale in Skane and small amounts of vanadium pent oxide were produced together with potassium and ammonium sulphate.

In the 1985 SGU report referred to above, Sweden’s alum shale resources were estimated at approximately 50 billion tonnes of shale containing 6 billion tonnes of kerogen, taking into account only shales containing more than 10% organic matter.

Continental has not undertaken any independent investigation of the SGU’s resource estimate of alum shales referred to in this press release, nor has it independently analyzed the assay results of the previous exploration results in order to verify the resource database, and therefore the historical estimates should not be relied upon. The estimates are not current estimates made in compliance with either National Instrument 43-101 or National Instrument 51-101 and Continental is not treating these historical resource estimates as a resource or reserve within the meaning of either National Instrument 43-101 or National Instrument 51-101 as verified by a qualified person or any other expert. At best, Continental views these historical estimates as a conceptual indication of the potential size of the resource contained within the Alum Shale Formation as a whole (and not necessarily an indication of any resource underlying Continental’s property interests). In essence, these estimates are only relevant to Continental’s decision to proceed with exploration.

Other Developments

Dr. Sven Snall of Sweden and Mr. Thomas K. Sills, M.Sc. have joined the Continental team as consultants. Dr. Snall was a senior geologist with the SGU and was one of the authors of “The Scandinavian Alum Shales” report referred to above. Dr. Snall will assist with the identification of alum shale targets and with chemistry and mineralogy related to the alum shales. Mr. Sills has 35 years of experience in mineral deposit modeling and mineral exploration (including exploration for uranium). He is currently in the process of completing the modeling of deposits on three of Continental’s HRU Licences.

The Alberta Research Council Inc. of Edmonton, Alberta is continuing with its evaluation of the fuel production potential and metallurgy of Continental’s alum oil shale licences.

The contents of this press release have been reviewed by G.A. Harron, P.Eng., an independent consultant, and a qualified person as defined in National Instrument 43-101.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding intended exploration programs and applications for additional exploration licences and applications to expressly include oil and gas into certain existing exploration licences. Actual developments may differ materially from those contemplated by these statements depending upon, among other things, the decisions made by regulators and any change in the Company’s exploration and drilling programs which could occur as the result of a variety of factors including the Company’s ongoing assessment of results thereof. The forward looking statements contained in this press release represent the Company’s views and expectations as of the date of this release and should not be relied upon as representing its views and expectations at any subsequent date.



Ed Godin Continental Precious Minerals Inc. President

(416) 805-3036

Source: Continental Precious Minerals Inc.

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