Vancouver, British Columbia — September 4, 2012– Mercator Minerals Ltd. (TSX:ML) (“Mercator” or “Company”) is pleased to announce the results of an updated feasibility study (“2012 FS”) to the feasibility study completed November 2011 (“2011 FS”), which further enhances the potential development of a robust, large-scale, low-cost copper mine at the El Pilar project (“Project”), located in a mining friendly jurisdiction of the northern Mexican state of Sonora.

The 2012 FS includes a new base case (“Base Case”) that utilizes enhanced copper recoveries based on heap leaching in three meter lift heights, instead of the six meter lift heights used in the 2011 FS. Using the same copper price assumptions as the November 2011 FS, the 2012 FS updates the Project’s mineral reserve, metal recoveries and mine plan to determine the Project’s revised economics. Capital and operating cost assumptions are also based on the 2011 FS study with no escalation added, although initial capital has been updated based on the increased leach pad area required in the first year of operations.

Base Case (1)Highlights

(1) Base Case at $3.83/lb copper price per pound Years 0 and 1, $3.44/lb Year 2, $3.14/lb Year 3 and $2.60/lb for the remaining life of mine, averaging $2.82/lb copper over the life of mine. All calculations are Base Case except where otherwise specified.
(2) First five years, average annual production is 85.4 million pounds.
(3) First five years, average annual cash operating costs* is $1.22/lb.

“We are very pleased announce the results of the updated study on our El Pilar copper project. The further de-risking and enhancing of an already robust and low capital intensity project bodes well for Mercator and its future”, commented Bruce McLeod, Mercator’s President and CEO. “Currently, the Project is ‘construction-ready’, with all necessary permits to commence construction in place, and detailed engineering is approximately 30% complete. While this is a very viable project, we have deferred further capital funding on El Pilar while we seek a value accretive financing package. We believe that, with the short 15-month construction timetable, we can quickly reactivate the process to advance the Project when market conditions improve.”

2012 Feasibility Study
The 2012 FS builds on work from the 2011 FS completed by M3 Engineering and Technology Corp. The Project is designed to be an open pit operation using conventional drilling, blasting and loading utilizing diesel hydraulic shovels, followed by truck haulage. Run-of-mine (“ROM”) leach ore will be mined and stacked on a leach pad. Copper cathode will be produced from the oxide copper ore by acid leaching, solvent extraction and electrowinning (“SX/EW”) processing to produce an average of 79.3 million pounds of copper in cathodes per year for the life of the mine. A majority of the power required by the Project will be produced as a by-product of the sulfur burning acid plant, with backup and additional power requirements supplied by connecting to the national grid.

The Project is located approximately 32 kilometres (“km”) southeast of Nogales in the state of Sonora, Mexico, with access via paved road from Nogales. Regional infrastructure is excellent, with a rail line (between the Mexican cities of Nogales to Cananea) located immediately adjacent to the Project. Water is available from wells drilled on the Project site. Backup and extra power requirements will be met by building a 29.5 km power line connected to the national grid.

Economic Summary
The estimated overall economic performance of the Project is based on the Base Case, which summarizes the outcome of using variable copper pricing (the same assumptions as used in the 2011 FS) as follows: $3.83/lb Years 0 and 1, $3.44/lb Year 2, $3.14/lb Year 3 and $2.60/lb for the remaining life of mine (averaging $2.82/lb copper over the life of mine). As a result, the Project is expected to generate an after-tax NPV (8% discount rate) of $417.4 million, an IRR of 37.0% and simple payback to recapture the initial capital investment of 1.8 years. Annual cash flow projections were estimated over the life of the mine based on the estimates of capital expenditures and production costs summarized below. Revenues are based on the production and sale of copper cathode.

Mineral Reserves
Proven and Probable (“P&P”) Mineral Reserves(4) total 258.5 million tonnes grading 0.304% total copper (“Cu”) and contain 1.7 billion pounds of copper in the 2012 FS, as compared to 230.2 million tonnes grading 0.313% total copper and containing 1.6 billion pounds of copper in the 2011 FS. P&P Mineral Reserves for the 2012 FS were calculated at a long-term copper price of $2.15 per pound, as compared to the 2011 FS reserve copper price of $2.75 per pound.

(4) Mineral Reserves have been calculated with CIM Guidelines.

The Mineral Reserve estimate for the El Pilar Project was calculated under the supervision of Michael Broch, BSc. Geology, MSc. Economic Geology, FAusIMM, the Company’s Vice President, Exploration and Evaluations, a Qualified Person as defined by NI 43-101, the author of the 2012 FS and who supervised the preparation of and verified and approved the technical disclosure in this news release.

Mineral Resources
Measured and Indicated (“M&I”) Mineral Resources inclusive of mineral reserve (see table below) total 359.3 million tonnes grading 0.281% total copper, or 2.2 billion pounds of contained copper. Inferred Mineral Resources total an additional 68.0 million tonnes grading 0.239% total copper and contain an additional 358.3 million pounds of copper. Mineral Resources are calculated on the basis of a 0.15% total copper cut-off grade.

M& I Mineral Resources and Inferred Mineral Resources(5) exclusive of reserve are tabulated below:

M&I Mineral Resources at different cut-off grades are indicated below with the base case at a 0.15% cut-off grade noted in bold:

Inferred Mineral Resources at different cut-off grades are indicated below a base case at a 0.15% cut-off grade noted in bold:

(5) The Mineral Reserves and Mineral Resources have been prepared in accordance with Canadian Securities Administrators National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining (“CIM”) definitions for Mineral Resources. Mineral Resources for El Pilar are estimated at a cut-off grade of 0.15% total Cu.

The Mineral Resource estimate for the El Pilar Project was calculated under the supervision of Michael Broch, BSc. Geology, MSc. Economic Geology, FAusIMM, the Company’s Vice President, Exploration and Evaluations, a Qualified Person as defined by NI 43-101, the author of the 2012 FS and who supervised the preparation of and verified and approved the technical disclosure in this news release.

Mineral Resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied.

Life of Mine Production Schedule
Approximately 8.6 million tonnes of material will be pre-stripped in the year prior to the start-up of operations, costs for which will be capitalized. The LOM plan contemplates mining of 712.3 million tonnes of material, of which 453.8 million tonnes comprises waste gravel overburden and 258.5 million tonnes is leach ore that will be mined over a 13-year mine life. The overall strip ratio for the Project is 1.76 tonnes of waste for each tonne of ore.

ROM leach ore will be mined and stacked on the leach pad at an average LOM rate of 56,000 tonnes per day, but averaging 52,400 tonnes per day in the first five years. Annual ore production is scheduled to maximize copper production through the plant and averages 20.4 million tonnes of ore per year over the mine life and varies between 17.8 million tonnes in the first year of production to a maximum of 22.0 million tonnes.

Contract mining is planned for the preproduction period and for the first two years of operations, followed by owner mining for the remainder of the life of mine.

Processing & Acid Plant
The Project is an oxide copper leach mining operation in which copper will be extracted by the application of sulfuric acid-bearing solution sprinkled on ore placed on a heap leach pad. The copper bearing leach solution will be collected at the bottom of the heap and copper will be recovered by solvent extraction (“SX”) and then plated as 99.99% pure copper cathodes using electrolysis in the electrowinning (“EW”) plant. The copper cathode will be marketed directly to a copper cathode buyer.

Estimated copper recoveries and ore acid consumptions were determined on the basis of metallurgical column testing on different grade and copper solubility materials from different portions of the deposit, as well as from large (250 tonne) bulk ore crib tests on ROM ore. The 2012 FS LOM copper recovery is expected to average 57.6% of total copper (“TCu”), as compared with 55.5% in the 2011 FS, with 2012 FS recoveries varying from a high of 68% TCu at the start of the mine life to a low of 42% TCu in the last mining year. Acid consumption is expected to average 22 kilograms of acid per tonne of ore (“kg/t”), varying between 16 kg/t early in the mine life to 28kg/t in the last year of mining.

Acid will be produced onsite by a 1,300 tonne per day (“tpd”) sulfur-burning acid plant. The acid plant will burn molten sulfur delivered by rail car to the Project site. The cost of producing acid will depend on the price of delivered sulfur, but is estimated to average approximately $42 per tonne (the same as the 2011 FS) of acid produced over the mine life. A significant economic benefit to the Project will be realized through the production of approximately 12 megawatts (“MW”) of low cost ($0.01 per kilowatt hour) power produced by harnessing the exothermic reaction of the sulfur burning-acid producing process to produce steam generated power. This represents approximately 90% of the total power demand required by the Project in the first six years and then 100% in the last seven years.

Based on the planned mining schedule in the 2012 FS, copper production from the SX/EW plant is expected to average 79.3 million pounds of copper cathode per year as compared to 73.0 million pounds in the 2011 FS. Copper production will average 85.4 million pounds in the first five years of the Project, due to higher soluble copper grades and higher copper recoveries projected early in the mine life.

Capital Costs
Initial Project capital costs are estimated to be $279.9 million, which includes a 15% contingency of $35.8 million and an estimated $12.6 million for capitalized contractor pre-stripping, but excludes estimated start-up working capital of $33.8 million. The 2011 FS estimated initial capital costs to be $245.0 million. The difference of $34.9 million between the 2011 FS and the 2012 FS is $26.4 million, plus a 15% contingency, for the Phase 2 heap leach expansion now expected to be installed in Year 0 for the larger pad area required for the three meter lifts, as compared to in Year 3 in the 2011 FS, and a $3.0 million increase in pre-stripping costs. The Project’s total capital costs in the 2012 FS as compared to the 2011 FS has not changed. This capital cost estimate is based on non-escalated 2011 dollars.

The summary breakdown of the initial capitalized costs is as follows:

Based on contractor mining for the pre-production period and for Years 1 and 2 of operations, followed by owner mining, owner equipment capital costs in Year 3 are estimated to total $120.4 million. Over the life of the mine, sustaining capital is estimated to be $30.2million.

Cash Operating Costs
Estimated total cash operating costs* for the Project are summarized below and represent LOM averages expressed in dollars per pound of copper processed.

2012 FS LOM total cash operating costs* are estimated to be $1.34 per pound of payable copper ($1.37 per pound in the 2011 FS), and $1.22 per pound in the first five years.

Sensitivity Analysis
Project sensitivities to percentage changes in copper price, total capital costs and total cash operating costs are shown below.

Sensitivity Analysis for varying Project Parameters

The 2012 FS highlights various opportunities to increase the value of El Pilar, with additional metallurgical tests showing that, using the three meter lift heights, greater copper extraction may occur over 360 days of leaching. This is due to continued copper extraction over time in the multi-lift heap configuration. This opportunity could result in:

• Total copper recovered to 1,142 million pounds, an increase of 14% over the Base Case;


• Average life of mine recoveries of 64.9%, an increase of 13% over the Base Case;


• An increase in after-tax NPV8% to $567.0 million, an IRR of 43.7% and a payback of 1.7 years.