Brazauro Announces Increased Mineral Resource and Positive Results from Preliminary Economic Assessment of Tocantinzinho Gold Project, Brazil.

HOUSTON -- Brazauro Resources Corporation (TSX VENTURE:BZO) is pleased to report that a Preliminary Economic Assessment on its Tocantinzinho Gold Project, in northern Brazil, has been completed by NCL Brasil Ltda.

Highlights include:

* Average annual gold production of 82,000 ounces of gold over a mine life of 20 years, based on a mining rate of 2 million tons per year

* Operating cash cost of US$ 360 per ounce

* Net present value (NPV) of US$ 34.5 million, using a 5% discount rate and gold price of US$ 550 per ounce

* Project Internal Rate of Return (IRR) of 8.3%

* Economic valuation based on an Updated Mineral resources estimate, with total ounces approximately 30% greater than the previous published estimate

* Significant potential for mining rate increase, improving the key economic parameters

NCL, a Brazilian/Chilean consultancy, has prepared this Preliminary Economic Assessment with input from a number of independent parties, including SGS Lakefield and Hazen Research Inc. (metallurgical tests), L.Bernal (Processing), Gadelha (Infrastructure). NCL undertook the Mineral resource estimate, mine planning, preliminary economic valuation and report compilation.

Mineral Resources Update

The Mineral Resource estimate was prepared in accordance with National Instrument 43-101 based on information compiled by NCL's principal, Rodrigo Mello, who is a "qualified person" as defined in National Instrument 43-101.

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Cautionary Statement: The Preliminary Economic Assessment is preliminary in nature and includes 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 conclusions reached in the Preliminary Economic Assessment will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

Processing

Based on four different metallurgical tests, a flow sheet was proposed with a flotation circuit followed by cyanidation of the concentrate. The process recovery rate is projected to be 91%.

Mine Plan

NCL undertook a mine plan based on the Indicated and Inferred Updated Mineral Resources delineated to date. Pit optimization was performed using a gold price of US$ 550/oz. Only fresh rock resources were used in the mine plan. The resources contained in the economic pit shell are the following:

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Capital Costs

Total capital expenditure is estimated to be US$ 105 million. The main components are the process plant (US$ 43.4 million) and infrastructure (US$ 32 million). Costs for a 200 km power line at 138 kV are included, as supplied by the state's energy agency (Celpa), who stated that after September 2008 enough hydroelectric energy will be available for the project. Mining expenditures (US$ 20 million) contemplate pre-production and equipment, based on an owner operated mining fleet.

Operational Costs

The following operating costs were estimated:

Open Pit Total Operating Costs  >











                                >
Ore Tonne (US$/tonne)










Mining                          >
4.43










Processing                      >
7.46










G & A                       >
2.00










Environment                     >
0.60










Total                           >
14.49

The mining cost per ton moved is US$ 1.20, and the total cash cost per ounce produced is US$ 360.

Sensitivity Analysis

The project is more sensitive to process recovery, gold grade and price and less to operational and capital expenses. At a spot price of US$ 730, the NPV, discounted at 5%, is US$ 175 million, utilizing the same pit optimization as at US$ 550 /oz.

Project Upsides 

The main upsides of the Tocantinzinho Project are:

* Optimizing the engineering solutions adopted will enhance the economics. For example, a quick estimate of the potential of increasing production by 50% would increase the NPV by over 50%.

* No oxide ore or tailings are considered in this study, which, if included, could enhance the gold production.

* The exploration potential of the area has not yet been tapped, with several interesting targets over the 43,840 hectares of Brazauro's mining rights in the prospective Tapajos gold area.

* High grade intercepts present throughout the mineralized zone may continue at depth providing potential for future underground mining.

Rodrigo Mello, who is a "qualified person" as defined in National Instrument 43-101, has read and approved the contents of this release.

Mark E. Jones III

Chairman, CEO Brazauro Resources Corporation

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. The news release includes certain "forward-looking statements." All statements other than statements of historical fact included in this release, including, without limitation, statements regarding potential mineralization, exploration results and future plans and objectives of Brazauro Resources 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 Brazauro's expectations are exploration risks detailed herein and from time to time in the filings made by the Company with securities regulators.