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Cobalt Area Project Exploration Update and Property Buy-out

Cabo Mining Enterprises Corp. (the “Company”) provides the following update on exploration activities on its silver-cobalt-diamond project in the Cobalt area of northeastern Ontario, prepared by Seymour M. Sears, P.Geo. a qualified person as defined by National Instrument 43-101. Cabo holds the mining rights on more than 10,000 hectares in the heart of the Cobalt silver camp and in the southern end of the rapidly developing New Liskeard-Timiskaming kimberlite

Since late 2003, Cabo’s exploration activity has focused on evaluating the known silver prospects and occurrences within the Cobalt Property. A small stripping program was carried out in November on the Santa Maria Prospect in search of the source of a large “silver nugget” reported on government geological maps and assessment work filed for this area in the 1920’s.
The stripping program exposed a narrow calcite vein (up to 10 cm wide and typical of Cobalt Type veining) within a much wider zone of brecciation. Samples taken from the vein and adjacent wall rock contained massive sulphides and arsenides with assays up to 74 g/t Ag, 4.03 % Co, 28.9% Ni and 4.13 g/t Au (News release, Feb. 4, 2004). In March of 2004, six drill holes were completed in this area. Four of these holes (CSM-1, 2, 3 & 5) tested an 80 metre thick zone of silicified mafic volcanics that lie between the Santa Maria shaft collar and an underlying diabase sill. The holes intersected abundant narrow calcite-quartz veins, but none that appear to be the Santa Maria Vein. Intense faulting, fracturing and shearing were encountered, including a very shallow dipping fault zone that is assumed to have cut-off or offset the Santa Maria Vein. The lower part of hole CSM-5 intersected a hematized breccia zone that contained three silver bearing veins. The best of these was a 13 cm calcite breccia vein that assayed as follows:


Hole #



Width  0.13m





The other two holes tested similar geology on the north and south side of the Santa Maria shaft area. Hole CSM-7 was drilled to test a narrow calcite vein system referred to as the Flemming Prospect exposed in an open cut along the access road to the Santa Maria Prospect. No significant silver-cobalt VALUES (were intersected in this hole.

The vein systems that host typical “Cobalt Type” silver-cobalt mineralization are relatively narrow in comparison to other types of deposits. Of the 77 past producers in the camp (450 million oz of silver and 24.8 million pounds of cobalt produced between 1903 and 1962); the average width of the veins was 2.5 feet (0.76 m). One of the veins (the Carson Vein at the Crown Reserve Mine) is thought to have been the richest silver vein in the world, having dimensions of 37 inches (0.94m) wide, 286 feet (87 m) long and 150 feet (47m) deep, and
yielding 9,100,000 oz of silver.

Using this target type and size as a model, a program consisting of relocating and sampling all of the known silver prospects on the property is currently in progress. This will continue to be accompanied by geological mapping, prospecting and soil test surveys over known vein systems and areas of favourable geology. The sampling is critical to confirm mineralization in the old workings areas, since shafts were sometimes put down for no obvious reason. Results from the early stages of this work have demonstrated the high grade potential of the known veins on the property and have led to the discovery of several new veins. A grab sample from the waste dumps near the main shaft of the Silver Leaf Prospect (a Cabo claim located in Coleman Township contiguous to the west with the prolific Crown Reserve Mine referred to above) assayed 4243 g/t (123 oz/ton) Ag and 0.28% Co. A second grab sample from the North Shaft area assayed 701 g/t (20.4 oz/ton) Ag, 1.9% Co and 2.27% Ni. These areas are to be followed up with stripping and detailed sampling.

A quartz carbonate breccia vein exposed by stripping on Cabo claims near Giroux Lake (Cummings Pit Area) in Gillies Limit Township has been cleaned out and re-examined. The vein ranges in width from 30 cm to 1.0 metres along a 30 metre exposed length(open in both directions). Six chip samples collected from the vein representing an average width of 0.6 metres have an average grade as follows:
402 g/t (11.74 oz/ton) Ag; 5.6 g/t (0.16 oz/ton) Au; 4.6% Cu and 5.4% Pb
The average gold assay of 5.6 g/t includes VALUES (ranging from a low of 0.085 g/t to a high of 25.27 g/t. The exploration program is continuing on the Cobalt Property, with more than 20 known silver-cobalt veins already slated for surface stripping and detailed sampling.

In addition to the silver-cobalt targets, the Cobalt Property is well situated within the southern part of the New Liskeard – Timiskaming diamond bearing kimberlite field. At least 16 kimberlite pipes have been identified in the area, including two new “pipe” discoveries by Sudbury Contact Mines Ltd. and two kimberlite “dykes” by Tres-Or Resources Ltd. These companies, along with Adroit Resources Inc., are carrying out aggressive exploration programs for diamonds in the
immediate area.

In 2001, diamonds were discovered in lamprophyre dykes and lamprophyric breccias on Cabo’s property in the Pan Lake- Anderson Lake area of southern Lorrain Township. The host rocks are similar in appearance and geological setting to diamondiferous lamprophyric rocks currently being explored by Pele Mountain Resources Ltd.and Bandore Resources Ltd. in the Wawa Area of Ontario. The Pan-Anderson breccia zone was sampled by 10 drill holes in 2002. Four of these holes as well as a surface channel sample, have yielded a total of 95 microdiamonds and 4 macrodiamonds in earlier testing. Sixteen samples from two of the holes were recently processed for diamonds by Saskatchewan Research Council Laboratories in Saskatoon utilizing the caustic digestion method. No microdiamonds were recovered. These results confirm a very
3 erratic diamond distribution within the lamprophyric breccia zone. The core from the remaining 3 holes completed in 2002 remains stored for possible future processing. The breccia zone ranges from 25 to more than 50 metres wide and has been traced for in excess of 100 metres (overburden covered on both ends). Many other lamprophyre dykes also occur in this area. In addition, airborne geophysical surveys and very limited till sampling have outlined numerous
potential kimberlite targets, particularly in the northern and western parts of the property adjacent to the regional scale Montreal River fault zone.

The Company also announces that it has entered into a buy-out agreement, subject to a one percent (1%) net smelter return royalty reserved for Prairie C and to acceptance by the TSX Venture Exchange, to purchase all of Prairie C’s remaining interest in the original Cobalt Properties (including all of the additional claims included therein by various amendments) and sixteen (16) claims under the Prairie C Option Agreement. The buy-out agreement, which will cost the Company $225,000 and 400,000 shares upon Exchange acceptance plus an additional 100,000 shares upon commencement of commercial production, replaces all of Cabo’s existing option agreements with Prairie C, eliminating $216,000 of option payments due between now and April 2007, plus a $50,000 lump sum payment presently due and a $75,000 lump sum payment due April 1, 2007, as well as subsequent option payments starting at $8,000 per month
escalating by $2,000 per month every 36 months thereafter. Also eliminated with the old agreement is a $2,000,000 payment required to exercise the option and a total of $1,500,000 of optional payments to buy-down the NSR royalty from 3% to 1%. The Company will also issue 50,000 shares outstanding under the Prairie C Option Agreement.

Cabo is a drilling services and mineral exploration company headquartered in Vancouver BC Canada. The Company provides drilling services through its subsidiaries Heath & Sherwood Drilling (1986) Inc. of Kirkland Lake, Ontario and Petro Drilling Company Limited of Springdale, Newfoundland. Cabo’s mineral exploration properties are located near Cobalt, Kenora, and Sudbury Ontario, Canada. The Company’s common shares trade on the TSX Venture Exchange under the symbol: CBE.ON BEHALF OF THE BOARD

(signed “John Versfelt”)

John A. Versfelt

Chairman, President and CEO

* * * *

The Exchange has not in any way passed upon the merits of this news release. This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, potential mineral recovery processes and other business transactions timing. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.


Last Updated: 07/22/2004