Anaconda Made Improved Offer; New Island Board of Directors Allows Offer to
Expire

TORONTO, Aug. 24 /CNW/ - Anaconda Mining Inc. ("Anaconda") (TSX: ANX) announces that it has made an improved offer to New Island Resource Inc. ("New Island") that would allow New Island shareholders to retain their New Island shares which would result in New Island continuing to operate as an independent publicly listed company.

On Friday, August 20, 2010, Anaconda delivered an improved proposal (the "Proposal") to New Island to enter into a friendly transaction with a creative structure intended to facilitate each party achieving their respective goals on behalf of their respective shareholders. To accomplish this, Anaconda developed a unique structure that will allow New Island shareholders to retain their shares in New Island and still receive the same consideration Anaconda was offering for the whole company. Anaconda would acquire New Island's interest in the Pine Cove Mine and Mill and New Island would retain all other remaining assets of the company including the prospective Glover Island property.

Pursuant to the improved Proposal, the transaction was to be structured as a Plan of Arrangement between New Island and Anaconda. The following summarizes the improved Proposal:

- Each shareholder of New Island would still receive the full consideration of 0.42 Anaconda shares per New Island share, as per Anaconda's current offer ("Offer"), but distributed to them under the Plan of Arrangement.

- All of the New Island shares already acquired by Anaconda pursuant to its take-over bid would be returned to tendering shareholders so that every New Island shareholder would have received 0.42 of an Anaconda share (per New Island share tendered) and would continue to own a New Island share.

- Anaconda would acquire New Island's interest in the Pine Cove Mine and Mill

- New Island would continue as a public company and would retain the prospective Glover Island property and all of its other remaining assets.

The improved Proposal was open for acceptance until 5 p.m. (Toronto) on Monday, August 23, 2010. New Island responded that the improved Proposal had been received by its Board, but they were not in a position to respond by the deadline.

New Island has also made an application (on August 23) to the Alberta Securities Commission and the Ontario Securities Commission for technical bid violations that Anaconda believes have no merit.

Anaconda President and CEO Lew Lawrick stated, "We are disappointed that the improved Proposal was allowed to expire. Our improved Proposal would have allowed New Island shareholders to hold two pieces of paper - both their original and entire New Island shareholdings; along with the same number of Anaconda shares that we offered in exchange for the entire Company. Under our improved Proposal we are only seeking to fold in New Island's non operating interest in Pine Cove into Anaconda, leaving New Island intact with its other assets. No rational business person can deny that it makes no sense for ownership of the relatively small Pine Cove Gold Mine to continue to be divided between two companies. Under our improved Proposal New Island would then be free to keep or deal Glover Island and its other assets as they please."

Anaconda Chairman John McBride added, "It is important to the Anaconda Board of Directors that New Island shareholders appreciate that behind the scenes we have reached out to all parties, directly, indirectly, through intermediaries and through advisors, seeking a friendly commercial resolution to no avail. As a 41% New Island shareholder, we are deeply concerned that New Island's current strategy is destroying value. The mounting costs, on a per share basis, associated with this completely unnecessary process are significant relative to the size of New Island. These costs are rising daily and far exceed any gains achieved through ratio increases to date. Costs will spiral further out of control with needless proceedings looming before two regulatory bodies. It is a clever illusion that New Island management's stated intention is to continue the fight in order to extract more value on behalf of New Island shareholders, when in fact the material impairment of value through escalating expenses only renders the assets less valuable and therefore less attractive. The time is long overdue for the parties to seek a friendly outcome - but it takes two to tango."

Anaconda's Current Offer

Anaconda's current offer to purchase all of the outstanding common shares ("New Island Shares") of New Island on the basis of 0.42 common shares of Anaconda per New Island share remains open until 5:00 p.m. (Toronto time) on Tuesday, August 31, 2010.

This is the final extension of the Offer and Anaconda does not intend to extend it any further.

Anaconda is New Island's largest shareholder and beneficially owns approximately 41% of the issued and outstanding New Island Shares which it has acquired pursuant to the Offer.

Anaconda notes that it continues to hold sufficient New Island Shares to defeat any special resolution of shareholders of New Island to approve a proposed transaction with Mountain Lake Resources Inc. or any other transaction that may be proposed.

As previously announced, Anaconda has requisitioned a meeting of shareholders of New Island for the purpose of electing a new Board of Directors of New Island as soon as possible. Anaconda has also requested two Board seats immediately and forwarded to New Island its full slate of Directors which it expects will be put forward at the shareholders meeting New Island has called for September 30, 2010.

Investors may obtain a free copy of the Offer documents filed by Anaconda with Canadian securities regulators at www.sedar.com. In addition, you may request these documents free of charge, from Anaconda's information agent, Kingsdale Shareholder Services Inc. within North America at 1-888-518-1558 (outside North America at 1-416-867-2272).

DISCLAIMER

This press release does not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell, any of the securities of New Island. Such an offer can only be made pursuant to an offer to purchase and accompanying an offering circular filed with the securities regulatory authorities in Canada.

ABOUT ANACONDA

Anaconda is a Toronto, Canada-based mining development and exploration company focused on advancing its principal assets, the Pine Cove Gold Mine in Canada and its portfolio of Chilean iron ore assets. Anaconda is committed to bringing the Pine Cove Gold Mine into full Commercial Production, as well as advancing the exploration and near-term production opportunities of its Chilean iron ore assets. Anaconda continues to evaluate strategies to 'unlock' value attributable to its Chilean iron portfolio for the benefit of its shareholders.

FORWARD-LOOKING INFORMATION

This news release contains certain "forward-looking information" under applicable Canadian securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking information. Forward-looking information is often characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Assumptions upon which such forward-looking information is based include Anaconda's ability to acquire 100% of the New Island common shares and the benefits that may be obtained as a result of the business combination of the two companies. Many of these assumptions are based on factors and events that are not within the control of Anaconda and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking information include changes in market conditions, variations in ore grade or recovery rates, risks relating to international operations, fluctuating prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, the business of New Island and Anaconda not being integrated successfully or such integration proving more difficult, time consuming or costly than expected as well as those risk factors discussed or referred to in the Annual Information Form for Anaconda filed with securities regulatory authorities and available at www.sedar.com. Although Anaconda has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Anaconda undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change, except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking information.

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For further information: Lew Lawrick, President and CEO, Anaconda Mining Inc., [phone], Email: [email protected]; Greg DiTomaso, Investor Relations, Anaconda Mining Inc., [phone], Email: [email protected]; Or visit Anaconda's website: www.anacondamining.com; For a copy of the early warning report, please contact Greg DiTomaso at [phone]