Guanaco Compañía Minera Limitada, Guanaco Gold Project Antofagasta Province, Region II, Chile, NI 43-101 Technical Report on Feasibility Study Chile
Prepared for: Guanaco Compañía Minera Limitada Prepared by: Emmanuel Henry, MAusIMM Douglas Chapman P.E. Alfonso Ovalle, MAusIMM David Miranda, MAusIMM Tony Maycock, P.Eng Krishna P. Sinha,, P.E. Andy Briggs, P.Eng Project No. 2181 Effective Date: 12 November 2010
CERTIFICATE OF QUALIFIED PERSON Emmanuel Henry, MAusIMM (CP) AMEC International Ingeniería y Construcción Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510.
[email protected] I, Emmanuel Henry, am employed as a Principal Geostatistician, and the Geology and Mining Consulting Group Manager, South America, with AMEC International Ingeniería y Construcción Limitada. This certificate applies to the technical report entitled “Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study“ (the “Technical Report”) dated 12 November 2010. I am a member and Chartered Professional of the Australasian Institute of Mining and Metallurgy (MAusIMM and CP, #208972). I graduated from the Ecole Nationale Supérieure de Géologie, in Nancy, France in 1996, and I have a Master of Applied Science in Geostatistics from the Ecole Polytechnique de Montreal in Canada in 1999. I have practiced my profession for 12 years. I have been directly involved in mining operations, project management, and resource estimation since 1999 and have participated in the audit and estimation of gold resource models in Canada, USA, and Argentina since 2003. As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101). I visited the Guanaco property on 9 September, 2010. I am responsible for Sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 17.1, 17.3, 20, 21, 22 and 23 of the Technical Report. I am independent of Guanaco Compañía Minera Limitada as independence is described by Section 1.4 of NI 43–101. I have had no previous involvement with the Guanaco Gold Project. I have read NI 43–101 and this Technical Report has been prepared in compliance with that Instrument.
AMEC International Ingenieria y Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510
www.amec.com
As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. “Signed and sealed”
Emmanuel Henry, MAusIMM (CP) 12 November 2010
AMEC International Ingenieria y Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510
www.amec.com
CERTIFICATE OF QUALIFIED PERSON Douglas A. Chapman, P.E. AMEC International Ingenieria y Construccion Limitada Av. Apoquindo 3846, Piso 19 Las Condes, Santiago, Chile Tel (56) 2 957-7777 Fax (56) 2 957-7769
[email protected]
I, Douglas A. Chapman P.E., am employed as a Principal Mining Engineer with AMEC International Ingeniería y Construcción Limitada. This certificate applies to the technical report entitled “Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study“ (the “Technical Report”) dated 12 November 2010. I am a member of Nevada State Board of Professional Engineers and Land Surveyors. I graduated from Montana College of Mineral Science and Technology in 1992 with a Bachelor of Science degree in Mining Engineering. I have practiced my profession for 18 years since graduation. I have been directly involved in mine planning, optimization and design for open pit mining operations and in design blasting audits, fragmentation and recovery improvement programs, technology development and implementation, project management, and operations supervision. As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101). I have not visited the Guanaco property. I am responsible for Sections 17.2, 17.3, 18.1, 18.3, 18.5, and those portions of the Summary, Conclusions and Recommendations that pertain to those Sections. I am independent of Guanaco Compañía Minera Limitada as independence is described by Section 1.4 of NI 43–101. I have had no previous involvement with the Guanaco Gold Project. I have read NI 43–101 and this Technical Report has been prepared in compliance with that Instrument.
AMEC International Ingenieria Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510
y
www.amec.com
As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. “Signed and sealed”
Douglas A. Chapman P.E. Dated: 12 November 2010
AMEC International Ingenieria Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510
y
www.amec.com
CERTIFICATE OF QUALIFIED PERSON Alfonso Ovalle, MAusIMM AMEC International Ingenieria y Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510.
[email protected]
I, Alfonso Ovalle, MAusIMM, am employed as a Principal Mining Engineer with AMEC International Ingenieria y Construccion Limitada. This certificate applies to the technical report entitled “Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study“ (the “Technical Report”) dated 12 November 2010. I am member of the Australasian Institute of Mining and Metallurgy (AusIMM, #303157). I graduated in Mining Engineering from the University of Chile in 1969. I have practiced my profession for 41 years. I have been directly involved in planning, engineering, operations and management of underground mining projects. As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101). I visited the Guanaco property on 19 October 2009. I am responsible for preparation of Sections 17.2, 17.3, 18.2, 18.3 and those portions of the Summary, Conclusions and Recommendations that pertain to those Sections of the Technical Report. I am independent of Guanaco Compañía Minera Limitada as independence is described by Section 1.4 of NI 43–101. I have had no previous involvement with the Guanaco Gold Project. I have read NI 43–101 and this Technical Report has been prepared in compliance with that Instrument.
AMEC International Ingenieria y Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510
www.amec.com
As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. “Signed”
Alfonso Ovalle, MAusIMM Dated: 12 November 2010
AMEC International Ingenieria y Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510
www.amec.com
CERTIFICATE OF QUALIFIED PERSON David Miranda MAusIMM Technical Director, Process South America AMEC International Ingenieria y Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510.
[email protected] I, David Miranda, MAusIMM, am employed as a Technical Director, Process South America with AMEC International Ingenieria y Construccion Limitada. This certificate applies to the technical report “Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study“ (the “Technical Report”) dated 12 November 2010.
I am a member of the Australasian Institute of Mining and Metallurgy (AusIMM #990791). I graduated from with a distinction degree in Mining Engineering (Extractive Metallurgy) from University of Chile in 1980. I have practiced my profession for 29 years. I have been directly involved process and plant design and operations, engineering studies, EPCM projects and commissioning of mineral processing including SAG mills and other comminution circuits, sulphide flotation, heap and ROM leaching, and SX-EW. As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101). I have not visited the Guanaco property. I am responsible for Sections 16.1 to 16.3.1, 16.3.6 to 16.3.11, 16.5 and 16.6, and those portions of the Summary, Conclusions and Recommendations that pertain to those Sections of the Technical Report.
I am independent of Guanaco Compañía Minera Limitada as independence is described by Section 1.4 of NI 43–101. I have had no previous involvement with the Guanaco Gold Project. I have read NI 43–101 and this Technical Report has been prepared in compliance with that Instrument.
AMEC International Ingenieria y Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510
www.amec.com
As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. “Signed”
David Miranda, MAusIMM Dated: 12 November, 2010
AMEC International Ingenieria y Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510
www.amec.com
CERTIFICATE OF QUALIFIED PERSON Anthony Ralph Maycock , P. Eng. AMEC International Ingenieria y Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510.
[email protected] I, Anthony Ralph Maycock, am employed as Manager of the Projects Department with AMEC International Ingenieria y Construccion Limitada
This certificate applies to the technical report entitled “Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study“ (the “Technical Report”) dated 12 November 2010. I am a member of the Association of Professional Engineers and Geoscientists of British Columbia (APEGBC, #13275). I graduated from the University of London, Imperial College, Royal School of Mines in 1969 with a BSc. (Hons) in mineral processing. I have practiced my profession for 41 years. I have been directly involved in plant operations, process design and project management for mines and projects in Zambia, Canada, USA, Brazil, Peru, Argentina and Chile. As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101). I have not visited the Guanaco property. I am responsible for Sections 18.4, 18.6 to 18.11, and 19, and those portions of the Summary, Conclusions and Recommendations that pertain to those Sections of the Technical Report. I am independent of Guanaco Compañia Minera Limitada as independence is described by Section 1.4 of NI 43–101. I have had no previous involvement with the Guanaco Gold Project. I have read NI 43–101 and this Technical Report has been prepared in compliance with that Instrument.
AMEC International Ingenieria y Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510
www.amec.com
As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. “Signed and sealed”
Anthony Ralph Maycock, P. Eng Dated: 12 November 2010
AMEC International Ingenieria y Construccion Limitada Av. Américo Vespucio Sur 100, Of. 201, Las Condes Santiago, Chile Tel (56) 2 210 9500 Fax (56) 2 210 9510
www.amec.com
CERTIFICATE OF QUALIFIED PERSON Krishna P. Sinha, Ph.D., P.E Ausenco Vector Rosario Norte 532, Piso 2, Las Condes Santiago, Chile
I Krishna P. Sinha, Ph.D., P.E, am employed as the Corporate Technical Director with Ausenco Vector. This certificate applies to the Technical report entitled This certificate applies to the technical report entitled “Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study“ (the “Technical Report”) dated 12 November 2010. I am a member of Society of Petroleum Engineering (SPE) and have been a member of the Mining & Metallurgical Society of America (MMSA) for many years in the past. I graduated from the University of Minnesota, Department of Civil & Mineral Engineering (Ph.D. Geological Engineering) in 1979, the University of Roorkee, India (M.E., Civil Engineering – Soil Mechanics & Foundation Eng.) in 1967, and Bihar Institute of Technology, Sindri, India, (B.Sc. Engineering, Civil) in 1964. I am a professional engineer registered in the State of Utah (#272545). I am a current member of the American Society of Petroleum Engineering. I have practiced my profession for 36 years since obtaining my undergraduate degree in 1964 in the fields of geotechnical engineering and energy resources related to drilling, exploration, production, stimulation and development. In the mining sector, I have been directly involved in and have worked on issues related to both surface and underground mining including heap leaching and mine waste/tailings disposal. As a result of my experience and qualifications, I am a “Qualified Person” as defined in in National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). I have not visited the proposed tailings disposal or heap leach facility site at the Guanaco Mine. I am responsible for Sections Sections 16.3.2 to 16.3.5 and 16.4, and those portions of the Summary, Conclusions and Recommendations that pertain to those Sections, with the exception of the information on tailings disposal, tailings treatment, and cyanide decomposition by hydrolysis and natural degredation. I am independent of Guanaco Compañía Minera Limitada as independence described by Section 1.4 of NI 43-101. I have had no previous involvement with the Guanaco Gold Project. I have read NI 43-101 and certify that the sections of the report I am responsible for, have been prepared in compliance with that instrument.
As of the date of this certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information regarding tailings disposal that is required to be disclosed to make the technical report not misleading. Krishna P. Sinha, Ph.D., P.E. Professional Structural Engineer- Utah #272545 Ausenco Vector Rosario Norte 532, Piso 2, Las Condes, Santiago, Chile 12 November 2010
CERTIFICATE OF QUALIFIED PERSON Andrew P W Briggs - P. Eng First Quantum Minerals 24 Outram Street, West Perth, WA 6005 Australia Tel: (61 8) 9346 01 30 Fax: (61 8) 9226 2522 I, Andrew PW Briggs, P. Eng, am employed as a Consulting Metallurgist with First Quantum Minerals. This certificate applies to the technical report entitled “Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study“ (the “Technical Report”) dated 12 November 2010. I am a member of the Southern African Institute of Mining and Metallurgy, and am a Professional Engineer Licensed by NAPEG - The Association of Professional Engineers, Geologists and Geophysicists of the Northwest Territories (and Nunavut) - Canada. I graduated from Imperial College, London (Royal School of Mines) with a BSc (Eng) First Class in Metallurgy in 1974. I have practiced my profession for 36 years. I have been directly involved in gold plant designs, including cyanide management, recycle and destruction for the 32 of my years in practice. I was involved in the design of the El Peñon Project in Chile, which is located in the Atacama Desert and utilises an identical process for tailings detoxification as proposed for Guanaco. I have also been involved in process development work for a cyanide recycle process using resins, and I designed the SART circuit for Yanachoca (Peru) for copper precipitation and cyanide recycle. As a result of my experience and qualifications, I am a Qualified Person as defined in National lnstrument 43-101 Standards of Disclosure for Mineral Projects (N I 43-101). I visited the Guanaco property for one week during August 2005. I am responsible for that portion of Section 16.4 that deals with tailings disposal, tailings treatment, and cyanide decomposition by hydrolysis and natural degradation, and those portions of the Summary, Conclusions and Recommendations that pertain to those data. I am independent of Guanaco Compañía Minera Limitada as independence is described by Section 1.4 of NI 43–101. I was involved with the Guanaco Mine Re-Opening project from July 2005 until November 2006 during the early phases of the project development, followed by some minor work reviewing testwork results up until June 2008, but have had no involvement since then, with the exception of reviewing the information in the sections for which I have responsibility of this Technical Report. I have read NI 43-101 and this report has been prepared in compliance with that Instrument.
As of the date of this certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information that is required to be disclosed to make the technical report not misleading. “Signed and sealed”
Andrew P.W. Briggs, P.Eng. 12 November 2010
IMPORTANT NOTICE This report was prepared as a National Instrument 43-101 Technical Report for Guanaco Compañía Minera Limitada (Minera Guanaco) by AMEC Ingenieria y Construccion Limitada (AMEC). The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in AMEC’s services, based on: i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and qualifications set forth in this report. This report is intended for use by Minera Guanaco subject to the terms and conditions of its contract with AMEC. This contract permits Minera Guanaco to file this report as a Technical Report with Canadian Securities Regulatory Authorities pursuant to National Instrument 43-101, Standards of Disclosure for Mineral Projects. Except for the purposes legislated under provincial securities law, any other uses of this report by any third party is at that party’s sole risk.
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
CONTENTS 1.0
SUMMARY ................................................................................................................................... 1-1 1.1 Project Setting, Location and Access .............................................................................. 1-1 1.2 Mineral Tenure ................................................................................................................ 1-2 1.3 Royalties .......................................................................................................................... 1-2 1.4 Surface Rights and Land Use ......................................................................................... 1-2 1.5 Permits............................................................................................................................. 1-2 1.6 Environmental .................................................................................................................. 1-3 1.7 Geology and Mineralization ............................................................................................. 1-3 1.8 Production History ........................................................................................................... 1-4 1.9 Exploration ....................................................................................................................... 1-4 1.10 Drilling .............................................................................................................................. 1-5 1.11 Sample Preparation and Analysis ................................................................................... 1-5 1.12 Data Verification .............................................................................................................. 1-6 1.13 Metallurgical Testwork ..................................................................................................... 1-6 1.14 Mineral Resource Estimates............................................................................................ 1-6 1.15 Mineral Reserve Estimates............................................................................................ 1-11 1.16 Proposed Mining Operations ......................................................................................... 1-13 1.16.1 Open Pit Operation ........................................................................................... 1-13 1.16.2 Underground Operation .................................................................................... 1-14 1.17 Proposed Mine Plan ...................................................................................................... 1-14 1.18 Process Considerations................................................................................................. 1-15 1.19 Waste Disposal .............................................................................................................. 1-16 1.20 Project Implementation .................................................................................................. 1-16 1.21 Taxation ......................................................................................................................... 1-17 1.22 Markets .......................................................................................................................... 1-17 1.23 Financial Analysis .......................................................................................................... 1-17 1.24 Interpretation and Conclusions ...................................................................................... 1-19 1.25 Recommendations......................................................................................................... 1-20
2.0
INTRODUCTION .......................................................................................................................... 2-1 2.1 Qualified Persons ............................................................................................................ 2-1 2.2 Site Visits ......................................................................................................................... 2-3 2.3 Effective Dates ................................................................................................................ 2-4 2.4 Previous Technical Reports............................................................................................. 2-4 2.5 References ...................................................................................................................... 2-4 2.6 Technical Report Sections and Required Items under NI 43-101 ................................... 2-5
3.0
RELIANCE ON OTHER EXPERTS .............................................................................................. 3-1 3.1 Tenure and Encumbrances ............................................................................................. 3-1 3.2 Surface Rights, Royalties and Water Rights ................................................................... 3-1 3.3 Environmental .................................................................................................................. 3-1
4.0
PROPERTY DESCRIPTION AND LOCATION ............................................................................ 4-1 4.1 Location ........................................................................................................................... 4-1 4.2 Property and Title in Chile ............................................................................................... 4-1 4.2.1 Mineral Tenure ................................................................................................... 4-1 4.2.2 Surface Rights .................................................................................................... 4-3
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11
4.12 4.13 4.14 4.15
4.2.3 Environmental..................................................................................................... 4-3 Project Ownership History ............................................................................................... 4-5 Tenure History ................................................................................................................. 4-7 Mineral Tenure ................................................................................................................ 4-7 4.5.1 Additional Tenure in the Region ....................................................................... 4-14 Encumbrances/Royalties ............................................................................................... 4-14 Surface Rights ............................................................................................................... 4-15 Conveyance Rights-of-Way ........................................................................................... 4-15 Water Rights .................................................................................................................. 4-16 Permits........................................................................................................................... 4-17 Environmental ................................................................................................................ 4-17 4.11.1 Environmental Impact Statement ..................................................................... 4-17 4.11.2 Environmental Approvals ................................................................................. 4-18 4.11.3 Required Environmental Authorizations ........................................................... 4-18 4.11.4 Land Use Change Requests ............................................................................ 4-19 Remediation and Closure .............................................................................................. 4-19 Socio-economics ........................................................................................................... 4-19 Heritage and Culture ..................................................................................................... 4-19 Comment on Section 4 .................................................................................................. 4-19
5.0
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ......................................................................................................................... 5-1 5.1 Accessibility ..................................................................................................................... 5-1 5.2 Climate............................................................................................................................. 5-1 5.3 Local Resources and Infrastructure ................................................................................ 5-1 5.3.1 Existing Infrastructure ......................................................................................... 5-2 5.3.2 Planned Infrastructure ........................................................................................ 5-2 5.4 Physiography ................................................................................................................... 5-8 5.5 Flora and Fauna .............................................................................................................. 5-8 5.6 Comment on Section 5 .................................................................................................... 5-9
6.0
HISTORY ...................................................................................................................................... 6-1
7.0
GEOLOGICAL SETTING ............................................................................................................. 7-1 7.1 Regional Geology ............................................................................................................ 7-1 7.2 Project Geology ............................................................................................................... 7-3 7.2.1 Lithologies .......................................................................................................... 7-3 7.2.2 Alteration ............................................................................................................ 7-4 7.2.3 Structure ............................................................................................................. 7-8 7.3 Comments on Section 7 .................................................................................................. 7-8
8.0
DEPOSIT TYPES ......................................................................................................................... 8-1 8.1 Comment on Section 8 .................................................................................................... 8-2
9.0
MINERALIZATION ....................................................................................................................... 9-1 9.1 Comment on Section 9 .................................................................................................... 9-1
10.0
EXPLORATION .......................................................................................................................... 10-1 10.1 Grids and Surveys ......................................................................................................... 10-1 10.2 Geological and Structural Mapping ............................................................................... 10-1 10.3 Geochemistry ................................................................................................................ 10-2 10.4 Geophysics .................................................................................................................... 10-2 10.5 Trenches and Pits .......................................................................................................... 10-7
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
10.6 10.7 10.8 10.9 10.10 10.11
Drilling ............................................................................................................................ 10-7 Bulk Density ................................................................................................................... 10-7 Petrology, Mineralogy and Other Research Studies ..................................................... 10-7 Exploration Potential...................................................................................................... 10-7 Activity Related to Mine Development........................................................................... 10-7 Comment on Section 10 ................................................................................................ 10-8
11.0
DRILLING ................................................................................................................................... 11-1 11.1 Legacy Drill Data ........................................................................................................... 11-3 11.1.1 Enami (1970s) .................................................................................................. 11-3 11.1.2 BHC (1980)....................................................................................................... 11-3 11.1.3 SCMG (1987–1990) ......................................................................................... 11-3 11.1.4 Amax (1991–1997) ........................................................................................... 11-4 11.1.5 Kinam (1999–2000) .......................................................................................... 11-4 11.2 Minera Guanaco Drill Programs .................................................................................... 11-5 11.2.1 Drill Contractors and Methods .......................................................................... 11-5 11.2.2 Legacy Data ..................................................................................................... 11-6 11.2.3 Minera Guanaco Logging ................................................................................. 11-6 11.2.4 Minera Guanaco Collar Surveys ...................................................................... 11-6 11.2.5 Minera Guanaco Down-hole Surveys............................................................... 11-6 11.2.6 Minera Guanaco Recoveries ............................................................................ 11-7 11.2.7 2009–2010 Drill Program ................................................................................. 11-7 11.2.8 Drilling Used to Support Mineral Resource and Mineral Reserve Estimation .. 11-8 11.3 Comment on Section 11 .............................................................................................. 11-10
12.0
SAMPLING METHOD AND APPROACH .................................................................................. 12-1 12.1 Geochemical Sampling.................................................................................................. 12-1 12.2 Legacy Sampling ........................................................................................................... 12-1 12.3 Minera Guanaco Sampling ............................................................................................ 12-2 12.4 Quality Assurance and Quality Control ......................................................................... 12-2 12.5 Density (Specific Gravity) Determinations ..................................................................... 12-2 12.6 Comment on Section 12 ................................................................................................ 12-4
13.0
SAMPLE PREPARATION, ANALYSES, AND SECURITY ........................................................ 13-1 13.1 Analytical Laboratories .................................................................................................. 13-1 13.1.1 Legacy Drill Campaigns.................................................................................... 13-1 13.1.2 Minera Guanaco Drill Campaigns .................................................................... 13-2 13.2 Sample Preparation and Analysis ................................................................................. 13-2 13.2.1 Legacy Programs ............................................................................................. 13-2 13.2.2 Minera Guanaco Programs .............................................................................. 13-3 13.3 Quality Assurance and Quality Control ......................................................................... 13-5 13.4 Databases ..................................................................................................................... 13-6 13.5 Sample Security ............................................................................................................ 13-6 13.6 Sample Storage ............................................................................................................. 13-7 13.7 Comment on Section 13 ................................................................................................ 13-7
14.0
DATA VERIFICATION ................................................................................................................ 14-1 14.1 AMEC (2000) ................................................................................................................. 14-1 14.2 AMEC (2010) ................................................................................................................. 14-1 14.2.1 Drill Data ........................................................................................................... 14-2 14.2.2 Assay Data ....................................................................................................... 14-2 14.2.3 QA/QC Review ................................................................................................. 14-2
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
14.3
Comment on Section 14 ................................................................................................ 14-4
15.0
ADJACENT PROPERTIES ........................................................................................................ 15-1
16.0
MINERAL PROCESSING AND METALLURGICAL TESTING .................................................. 16-1 16.1 Review of Metallurgical Testwork .................................................................................. 16-1 16.1.1 Mineralogical and Analytical Studies ................................................................ 16-1 16.1.2 Bottle Roll Cyanide Tests ................................................................................. 16-2 16.1.3 Comminution Tests........................................................................................... 16-3 16.1.4 Activated Carbon Tests .................................................................................... 16-4 16.1.5 Sedimentation Testwork ................................................................................... 16-4 16.1.6 Filtration Testwork ............................................................................................ 16-5 16.2 Predicted Metallurgical Recoveries ............................................................................... 16-5 16.2.1 Estimated Recovery, Phase II Heap ................................................................ 16-5 16.2.2 Estimated Historic Recovery, Mined Ore from Open Pits ................................ 16-5 16.2.3 Recovery Parameters Used for Feasibility Study ............................................. 16-6 16.3 Proposed Process Design ............................................................................................. 16-6 16.3.1 Crushing Plant .................................................................................................. 16-6 16.3.2 Heap Leach Pad ............................................................................................. 16-11 16.3.3 Irrigation System............................................................................................. 16-12 16.3.4 Heap Solution Collection System and Ditches ............................................... 16-13 16.3.5 Process Ponds ............................................................................................... 16-13 16.3.6 Grinding Plant ................................................................................................. 16-14 16.3.7 CCD and Leaching Area ................................................................................ 16-14 16.3.8 Adsorption, Desorption and Regeneration (ADR) Plant ................................. 16-16 16.3.9 Plant Control System ...................................................................................... 16-17 16.3.10 Water and Services ........................................................................................ 16-17 16.3.11 Reagents and Consumables .......................................................................... 16-18 16.4 Tailings Storage Facilities............................................................................................ 16-18 16.5 Projected Plant Production Plan .................................................................................. 16-19 16.6 Comment on Section 16 .............................................................................................. 16-20
17.0
MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES............................................. 17-1 17.1 Mineral Resources......................................................................................................... 17-1 17.1.1 Database .......................................................................................................... 17-1 17.1.2 Geological Model .............................................................................................. 17-1 17.1.3 Block Model ...................................................................................................... 17-2 17.1.4 Exploratory Data Analysis ................................................................................ 17-3 17.1.5 Grade Capping ................................................................................................. 17-4 17.1.6 Composites ....................................................................................................... 17-5 17.1.7 Variography ...................................................................................................... 17-5 17.1.8 Grade Estimation .............................................................................................. 17-6 17.1.9 Density .............................................................................................................. 17-8 17.1.10 Mineral Resource Confidence Classification .................................................... 17-8 17.1.11 Assessment of Reasonable Prospects for Economic Extraction ..................... 17-9 17.1.12 Mineral Resource Statement .......................................................................... 17-11 17.2 Mineral Reserves......................................................................................................... 17-14 17.2.1 Optimization Parameters ................................................................................ 17-14 17.2.2 Mineral Reserve Statement ............................................................................ 17-17 17.3 Comment on Section 17 .............................................................................................. 17-18
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18.0
ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORT ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES .................................................................. 18-1 18.1 Open Pit Mine Plan........................................................................................................ 18-1 18.1.1 Optimization ...................................................................................................... 18-1 18.1.2 Slope Criteria .................................................................................................... 18-3 18.1.3 Mine Equipment................................................................................................ 18-4 18.1.4 Mine Plan .......................................................................................................... 18-4 18.2 Underground Mine Plan................................................................................................. 18-8 18.2.1 Mining Method .................................................................................................. 18-8 18.2.2 Geotechnical..................................................................................................... 18-9 18.2.3 Hydrology ....................................................................................................... 18-13 18.2.4 Equipment and Infrastructure ......................................................................... 18-13 18.2.5 Personnel ....................................................................................................... 18-14 18.3 Proposed Mine Plan .................................................................................................... 18-14 18.4 Project Implementation ................................................................................................ 18-15 18.5 Waste Rock Facilities .................................................................................................. 18-16 18.6 Workforce .................................................................................................................... 18-17 18.7 Taxation ....................................................................................................................... 18-17 18.8 Markets ........................................................................................................................ 18-18 18.9 Capital Costs ............................................................................................................... 18-19 18.9.1 Project Sunk Capital Costs ............................................................................. 18-19 18.9.2 Project Initial Capital Cost .............................................................................. 18-20 18.9.3 Project Sustaining Capital Cost ...................................................................... 18-20 18.9.4 Project Closure Capital Cost .......................................................................... 18-20 18.10 Operating Costs ........................................................................................................... 18-21 18.11 Financial Analysis ........................................................................................................ 18-23 18.11.1 Basis of Financial Analysis ............................................................................. 18-23 18.11.2 Results of Financial Analysis .......................................................................... 18-25 18.11.3 Sensitivity Analysis ......................................................................................... 18-25
19.0
OTHER RELEVANT DATA AND INFORMATION ................................................................... 19-31
20.0
INTERPRETATION AND CONCLUSIONS ................................................................................ 20-1
21.0
RECOMMENDATIONS .............................................................................................................. 21-1
22.0
REFERENCES ........................................................................................................................... 22-1 22.1 Bibliography ................................................................................................................... 22-1 22.2 Units and Abbreviations................................................................................................. 22-1 22.3 Glossary of Terms ......................................................................................................... 22-1
23.0
DATE AND SIGNATURE PAGE ................................................................................................ 23-1
TABLES Table 1-1: Open Pit Mineral Resources, Effective Date 8 August 2010, Emmanuel Henry, M.AusIMM. . 1-9 Table 1-2: Underground Mineral Resources Mineral Resources, Effective Date 8 August 2010, Emmanuel Henry, M.AusIMM .............................................................................................. 1-10 Table 1-3: Leach Pad Mineral Resources, Effective Date 8 August 2010, Emmanuel Henry, M.AusIMM. ........................................................................................................................... 1-11
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Table 1-4: Open Pit Probable Mineral Reserve, Effective Date May 19, 2010, Douglas Chapman, P.E. ...................................................................................................................................... 1-12 Table 1-5: Underground Mineral Reserves, Effective Date 19 May 2010, Alfonso Ovalle, M.AusIMM .. 1-12 Table 2-1: QPs, Areas of Report Responsibility, and Site Visits .............................................................. 2-3 Table 2-2: Contents Page Headings in Relation to NI 43-101 Prescribed Items—Contents ................... 2-5 Table 4-1: Mineral Tenure Summary, Deposits with Reported Mineral Resource and Mineral Reserve Estimates ............................................................................................................................. 4-11 Table 4-2: Infrastructure Covered by Surface Rights Application .......................................................... 4-15 Table 11-1: RC and Core Drill Summary Table...................................................................................... 11-1 Table 11-2: Sonic Drill Hole Summary Table .......................................................................................... 11-3 Table 11-3: 2009–2010 Exploration Drill Results ................................................................................... 11-8 Table 11-4: Example Intercept Drill Summary Table.............................................................................. 11-9 Table 16-1: Metallurgical Average Recovery Results ............................................................................ 16-2 Table 16-2: Comminution Testwork Results .......................................................................................... 16-4 Table 16-3: Metal Recovery .................................................................................................................... 16-6 Table 16-4: Proposed Integrated Production Plan, 2011 to 2016 ........................................................ 16-21 Table 17-1: Outlier Restriction Strategy, Inside the Grade-Shell ............................................................ 17-4 Table 17-2: Outlier Restriction Strategy, Outside the Grade-Shell ......................................................... 17-4 Table 17-3: Parameters for Open Pit Resource Classification ................................................................ 17-8 Table 17-4: Parameters for Underground Resource Classification......................................................... 17-8 Table 17-5: Economic Parameters Used to Assess Reasonable Prospects of Economic Extraction for Open-Pit Mineral Resources .............................................................................................. 17-10 Table 17-6: Economic Parameters Used to Assess Reasonable Prospects of Economic Extraction for Underground Mineral Resources ....................................................................................... 17-10 Table 17-7: Open Pit Mineral Resources, Effective Date 8 August 2010, Emmanuel Henry, MAusIMM (CP). ................................................................................................................................... 17-12 Table 17-8: Underground Mineral Resources Mineral Resources, Effective Date 8 August 2010, Emmanuel Henry, MAusIMM (CP)..................................................................................... 17-13 Table 17-9: Leach Pad Mineral Resources, Effective Date 8 August 2010, Emmanuel Henry, MAusIMM (CP)................................................................................................................... 17-14 Table 17-10: Open Pit Optimization Design Parameters ...................................................................... 17-15 Table 17-11: Underground Optimization Design Parameters .............................................................. 17-16 Table 17-12: Open Pit Probable Mineral Reserve, Effective Date May 29, 2010, Douglas Chapman, P.E. .................................................................................................................................... 17-17 Table 17-13: Underground Mineral Reserves, Effective Date May 29, 2010, Alfonso Ovalle, MAusIMM17-18 Table 18-1: Pit Design Parameters ........................................................................................................ 18-3 Table 18-2: Open Pit Proposed Production Schedule (mine to stockpile and plant) ............................. 18-5 Table 18-3: Open Pit Proposed Production Schedule (total to plant) .................................................... 18-6 Table 18-4: Heap Leach Pad Proposed Production Schedule............................................................... 18-8 Table 18-5: Proposed Annual Underground Mine Production ............................................................. 18-10 Table 18-6: Proposed Underground Mine Production by Zone............................................................. 18-10 Table 18-7: Total Proposed Ore Production for Guanaco ..................................................................... 18-14 Table 18-8: Proposed Ore Production by Source ................................................................................. 18-14 Table 18-9: Design Tonnages and Volumes for the Open Pit Waste Dumps ....................................... 18-16 Table 18-10: Tax Assumptions for Financial Analysis........................................................................... 18-18
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Table 18-11: Exchange Rates Based On 1 April, 2010 US Dollars ..................................................... 18-19 Table 18-12: Project Sunk Capital Costs ............................................................................................. 18-19 Table 18-13: Project Initial Capital Costs ............................................................................................. 18-20 Table 18-14: Sustaining Capital ............................................................................................................ 18-20 Table 18-15: Projected Total Underground Mine Operating Cost ........................................................ 18-22 Table 18-16: Open Pit and Heap Total Operating Cost ........................................................................ 18-22 Table 18-17: Process Plant Total Operating Cost ................................................................................. 18-22 Table 18-18: Smelting and Refining Terms .......................................................................................... 18-24 Table 18-19: Long-term Metal Price Assumptions ............................................................................... 18-24 Table 18-20: Forecast Cashflow Analysis Table .................................................................................. 18-26 Table 18-21: Sensitivity to Metal Price Changes................................................................................... 18-30 FIGURES Figure 1-1: Projected Ore Production by Source ................................................................................... 1-15 Figure 2-1: Project Location Map ............................................................................................................. 2-2 Figure 4-1: Minera Guanaco Corporate Structure .................................................................................... 4-6 Figure 4-2: Mineral Tenure Summary Map .............................................................................................. 4-8 Figure 4-3: Detail Map, Mineral Tenure .................................................................................................... 4-9 Figure 4-4: Detail Map, Mineral Tenure in Relation to Existing Infrastructure ....................................... 4-10 Figure 4-5: Mineral Tenure Plan, Perseverencia, Dumbo and Defensa Deposit Areas......................... 4-12 Figure 4-6: Mineral Tenure Plan, Cachinalito Area ................................................................................ 4-13 Figure 5-1: Proposed Project Infrastructure Layout Plan ......................................................................... 5-3 Figure 5-2: Final Layout Plan, Process Plant ........................................................................................... 5-4 Figure 7-1: Regional Geology Map........................................................................................................... 7-2 Figure 7-2: Schematic Showing Main Vein Systems................................................................................ 7-5 Figure 7-3: Geological Plan Cachinalito Deposits Area ........................................................................... 7-6 Figure 7-4: Dumbo and Perseverancia Deposits Area ............................................................................. 7-7 Figure 9-1: Example Gold Grade Distribution, Defensa – Section 446,300E (Gold Composites) ............ 9-2 Figure 9-2: Example Gold Grade Distribution, Defensa – Bench Plan 2700 (Gold Composites) ............. 9-3 Figure 9-3: Example Gold Grade Distribution, Perseverancia – Section 446,400E (Gold Composites) .. 9-4 Figure 9-4: Example Gold Grade Distribution, Perseverancia – Bench Plan 2700 (Gold Composites) ... 9-5 Figure 10-1: Geochemical Sample Location Plan .................................................................................. 10-3 Figure 10-2: Location Plan showing Outline of CSAMT Survey Lines ................................................... 10-5 Figure 10-3: Magnetometric Survey Plan ............................................................................................... 10-6 Figure 11-1: Drill Hole Location Plan ...................................................................................................... 11-2 Figure 12-1: Density Determination Results, 2006................................................................................. 12-3 Figure 12-2: Density Determination Results, 2008................................................................................. 12-4 Figure 16-1: Schematic Layout, Process Plant ...................................................................................... 16-7 Figure 16-2: Site Layout Plan, Process Infrastructure............................................................................ 16-8 Figure 16-3: Crushing Plant Process Flow Diagram ............................................................................... 16-9 Figure 16-4: Proposed Phase III Pad and Pond Locations .................................................................. 16-11 Figure 16-5: Proposed Process Block Flow Diagram........................................................................... 16-22 Figure 18-1: Defensa Whittle Resource/Pit Design Comparison ........................................................... 18-2 Figure 18-2: Perseverancia Whittle Resource/Pit Design Comparison................................................... 18-2
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Figure 18-3: Current Phase I and II Leach Pads and Proposed Phase III Leach Pad.......................... 18-3 Figure 18-4: Proposed Open Pit Mine Production Schedule ................................................................. 18-7 Figure 18-5: Proposed Underground Mine Production by Tonnage and Grade .................................. 18-11 Figure 18-6: Cachinalito Central Isometric View .................................................................................. 18-11 Figure 18-7: Cachinalito West Isometric View....................................................................................... 18-12 Figure 18-8: Dumbo Isometric View ...................................................................................................... 18-12 Figure 18-9: Proposed Ore Production by Source ............................................................................... 18-15 Figure 18-10: Sensitivity of After-Tax NPV Discounted at 8% .............................................................. 18-29 Figure 18-11: Sensitivity of After-Tax NPV Discounted at 8% .............................................................. 18-29 Figure 18-12: Sensitivity of After-Tax IRR ............................................................................................. 18-30 Figure 18-13: Sensitivity of After-Tax IRR ............................................................................................. 18-30
APPENDICES
Appendix A: Mineral Claim Summary Table
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1.0
SUMMARY AMEC Ingenieria y Construccion Limitada (AMEC) was commissioned by Guanaco Compañía Minera Ltda. (Minera Guanaco) to prepare an independent Qualified Person’s Review and NI 43-101 Technical Report (the Report) for the wholly-owned Guanaco gold project (the Project) located in the Antofagasta Province of Chile. The Report discloses the results of a feasibility study completed on the Guanaco Project in August 2010, engineering design elements of which were updated in early November 2010. Guanaco Compañía Minera Ltda. is an indirectly wholly-owned subsidiary of the Australian-listed company Austral Gold Limited (Austral) and is the Chilean operating entity for the Guanaco Project. For the purposes of this Report, the name “Minera Guanaco” is used interchangeably for the parent and subsidiary companies.
1.1
Project Setting, Location and Access The Project is located in the community of Taltal, Province of Antofagasta, in Region II of Chile, 220 km southeast of Antofagasta, at an elevation of approximately 2,750 masl. The area has a low botanical diversity and a low flora coverage (less than 5%) which is characterized almost exclusively by formations of patches of annual grass and dispersed bushes. The area is accessed by an unpaved road 42 km long turning off from the Panamericana Norte (Ruta 5 Norte) at km 1,198. Travel time by road from Antofagasta is approximately three hours. The preferred transportation for equipment and materials for the Guanaco Project is by sea freight and the best port is Mejillones which is approximately of 320 km from the plant. Potable and process water was projected to be obtained from ground and sub-surface water sources. Minera Guanaco holds water permits for a total of 16.59 L/s from these sources. Feasibility-level trade-off studies have determined that for financial reasons, the proposed Guanaco mine will operate independent of the national grid systems in the area. Diesel generators will be installed to provide power for the Project.
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1.2
Mineral Tenure The Project consists of 208 exploitation claims covering 13,571 ha. Additionally, there are 49 exploration mining claims covering 11,400 ha. Exploitation concessions (mensura) do not expire; exploration concessions (manifestations) have a two-year duration, after which they can be converted to mensura. Minera Guanaco has the mining concessions transferred to its name in the Property Register or Discovery Register, as appropriate, of the Curator of Mines Department (Conservador de Minas) of Taltal. Three claims, part of the purchase agreement with the Chilean state company Empresa Nacional de Mineria (Enami), where Enami’s original ownership could not be conclusively established, remain in the name of Enami. The Boa claims remain in the name of Amax, but are held by Minera Guanaco via way of agreement. All required mining patent payments have been made for 2009 and AMEC was advised by Minera Guanaco that no outstanding amounts are currently due for 2010. As part of the mineral patenting process, all claim monuments are surveyed by a licensed Chilean mining surveyor.
1.3
Royalties Royalty payments are due to Compañía Minera Kinam Guanaco (a Kinross Gold Corp. subsidiary) on four of the Project tenements; however, these tenements do not host mineralization that forms the currently-envisaged production plan. There is also a royalty payable to Enami. This is calculated as 3% of gross income; however, an advance payment of $6.5 M has already been made.
1.4
Surface Rights and Land Use Minera Guanaco has made application for 257 ha of surface rights (Judicial Rights) to cover proposed infrastructure sites in a submission dated 26 April 2010, to the state of Chile, in order to value the requested lands. Minera Guanaco holds the appropriate conveyance rights-of-way to allow unfettered access to the Project and support transport of goods and materials to and from the proposed mining operation.
1.5
Permits Mining projects in Chile require both environmental approval and numerous sectorial permits prior to construction. Sectorial permits for the Project are not all required at
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the same time, and approvals times for different permit preparation and approval will vary. It is expected that permits will be prioritized and those on the critical path (requiring a long period for preparation or for approval, or required early in project development) will be given priority.
1.6
Environmental The Guanaco Mine Re-opening Project was submitted to the Environmental Impact Evaluation System (SEIA) as an Environmental Impact Statement (DIA). The DIA was granted 15 July 2009. A number of environmental approvals are already granted. Minera Guanaco has established a list of environmental authorisations, that will be required in addition to the granted permits, and has identified the primary agency, likely estimated times to prepare submissions, and likely review times. Land use change requests were granted by Seremi of Agriculture for the Antofagasta Region for a total of 332.87 ha. Land use change for a further 204.79 ha was requested in the DIA. A preliminary closure plan has been prepared.
1.7
Geology and Mineralization The Guanaco Project deposits are considered to be examples of high-sulphidation epithermal systems. The Project lies along the western edge of the 30 km diameter Cachinal Caldera and is about 25 km south of the overlapping, 7 Ma younger, Soldado Caldera. The subalkaline volcanic complex consists of alternating lava flows, tuff beds, breccias, and agglomerates, commonly massive or loosely stratified, mainly andesitic and dacitic in composition, with minor basaltic and rhyolitic constituents. These rocks are intruded by small subvolcanic bodies formed of gabbros to rhyolites, and by rhyolitic and dacitic domes. Hydrothermal alteration of varying intensities has affected wide zones in the region, and gold and silver epithermal deposits and minor copper, lead, and zinc veins, are related to the hydrothermal activity. The main alteration phase within the Guanaco deposits is characterised by an intense silicification hosting the gold mineralization. The gold-bearing structures are all steeply inclined ledges composed of massive vuggy and cryptocrystalline quartz of replacement origin. The ledge structures extend for at least 4 km along strike, although gold concentrations are confined to relatively restricted shoots within them.
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Native gold forming dendrites and coarse and fine grains is the most important ore mineral, although it is rarely visible. Disseminated pyrite is the most common mineral in the non-weathered ores, while enargite, luzonite, and minor chalcopyrite are present in the deeper horizons. Chalcocite and covellite together with copper carbonates, silicates, and a number of rare copper arsenates (chenevixite, ceruleite) have been found in secondary enrichment zones.
1.8
Production History Gold was discovered at Guanaco in 1878, with small-scale production occurring to 1886. From 1887 until 1890 more than 200 underground mines were developed and approximately 200,000 oz Au were produced from high-grade veins. Extensive gold production continued until 1928, when low gold prices forced the closure of the mines. Relatively high copper prices led to the development of copper deposits from 1928 to 1930. Total gold production prior to 1986 has been estimated at approximately 1 Moz Au. The amount of copper production is unknown. In 1990, an 800 t/d open pit/heap leach operation commenced, producing about 75,000 oz Au to the end of 1991. Amax Inc. (Amax) began large-scale open pit mining in early 1993, with gold recovered from heap leach pads and a Merrill Crowe recovery plant. Three open pit mines were operated by Amax: the Dumbo and Defensa open pits exploiting the Dumbo–Defensa vein structure, and the Perseverancia open pit exploiting the Chilena vein structure. In 1997, the operation was placed on care and maintenance due to a combination of low gold prices and poor metallurgical recoveries due to the presence of copper.
1.9
Exploration Modern exploration commenced in the 1980s. Work programs by predecessor companies and Minera Guanaco comprised geological mapping, airborne and ground geophysical surveys, and geochemical sampling. Drilling methods include reverse circulation (RC) and core. From 2003 to 2010, Minera Guanaco has undertaken data reviews, sonic, core, and RC drilling, mineral resource and mineral reserve estimation, hydrological and geotechnical studies, metallurgical studies, reviews of Project social and environmental conditions, and assessments of existing infrastructure and equipment, culminating in commissioning of a feasibility study during 2009–2010. Construction of an exploration decline commenced mid-2010, and at 31 October was at 1,344 m complete of the planned 1,500 m.
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1.10
Drilling Drilling methods include RC, core, and sonic types. Drilling supporting the open pit and underground Mineral Resource estimate comprises a total of 74,005.65 m of RC and core drilling, corresponding to 668 drill holes. Less than 1% of the drilling is core. Leach pad mineral resource estimates are based on 50 sonic drill holes (998 m). All drill holes have been geologically logged. Geotechnical logging has also been performed. RC and core drill collars have been picked up using geodetic-grade, global positioning system (GPS) instruments; sonic drill hole collars were surveyed using a Trimble GPS. Downhole inclinometry was completed at variable depths of 10 m, 20 m or 50 m intervals, and also at the end of some holes using a gyroscope instrument. Recovery data for RC drill data are not recorded in the Project database. AMEC estimated RC recovery using a theoretical sample weight, with values returned ranging from 21% to 147%, averaging 100%. Sample collection and handling of RC drill cuttings and core was done in accordance with industry standard practices. Sampling is typically undertaken on 1 m to 2 m intervals.
1.11
Sample Preparation and Analysis Gold, copper, and silver analyses were performed by independent certified laboratories. Sample preparation protocols for all drill programs were generally appropriate for epithermal-style deposits, consisting of drying, crushing, splitting, and pulverization. Gold was typically assayed using fire assay (FA) with an atomic absorption (AA) finish. For samples with Au grades greater than 1 g/t Au, a gravimetric finish was used instead. Silver and copper were determined by AA following acid digest. Specific gravity (SG) measurements were completed on 40 samples by an independent laboratory. Default density values of 2.5 g/cm3 for mineralization and 2.4 g/cm3 for waste were used for all open pit and underground models. For sonic drill results, specific gravity was not measured; tonnages reported by Amax were used. There are a limited number of density determinations for a project at feasibility level. During the campaigns, the operator companies applied different programs of quality assurance and quality control (QA/QC programs). Most programs included
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submission of field duplicates, pulp duplicates, coarse blanks, and standard or certified reference materials (SRMs or CRMs). Sample security has relied upon the fact that the samples were always attended or locked in the on-site sample preparation facility. Chain-of-custody procedures consist of filling out sample submittal forms that are sent to the laboratory with sample shipments to make certain that all samples are received by the laboratory.
1.12
Data Verification Verification is performed on all digitally-collected data on upload to the main database, and includes checks on surveys, collar co-ordinates, lithology data, and assay data. The checks are appropriate, and consistent with industry standards. Data verification was performed by AMEC personnel during 2000 and 2007, and included checks on drill data, geological interpretations and QA/QC data. The database is considered sufficiently free from error to support Mineral Resource or Mineral Reserve estimation.
1.13
Metallurgical Testwork Several phases of metallurgical testwork were undertaken on the Project; the first prior to the 1993–1997 mining phase, and the second by Minera Guanaco. Testwork has included mineralogical studies, bottle roll cyanide tests, leach optimization testwork, comminution (work index) testwork, activated carbon tests, flocculant tests, and filtration testwork. Recovery factors developed for the underground and open pit ores are based on testwork. Recovery factors for the heap leach material were developed from a combination of testing and data obtained from the initial mining operation. Gold and silver recoveries were estimated for each year of production and average 72.4% and 49.1% respectively over the life-of-mine.
1.14
Mineral Resource Estimates Wire-frame models for the projected underground and open pit areas were constructed by Minera Guanaco personnel. Open pit models (Defensa, Dumbo, and Perseverancia) represented the mineralization types (oxide and sulphide) and 0.5 g/t Au grade-shell solids interpreted from the drill hole data. For the underground (Dumbo West, Cachinalito Central, and Cachinalito West), the main vein was modelled together with several minor structures parallel to the main vein. The grade-shells were interpreted using a 1.0 g/t gold cut-off. No geological models were constructed for the leach pad (Phase I and Phase II) estimate.
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Separate block models were created by AMEC for the Defensa, Dumbo, and Perseverancia deposits. Block size was 2.5 m x 2.5 m x 2.5 m. Minera Guanaco commissioned independent consultant Eduardo Magri Consultores in 2006 to prepare the Dumbo West, Cachinalito Central, and Cachinalito West block models, which consisted of regular blocks of 2 m x 2 m x 2 m. The resource block model for the Phase I and Phase II leach pads was prepared by Eduardo Magri Consultores. A block discretization of 4 m x 4 m x 1 m was adopted. AMEC prepared a set of histograms, cumulative probability plots, box plots, and contact plots by mineralization types within and outside the grade-shells for each deposit, in order to validate the proposed estimation domains and define boundary modelling and outlier samples. Grade caps were applied to the gold, copper and silver values at each deposit. Hard boundaries were used between domains. Composites were set at 1.5 m intervals for open pits, and 1 m intervals for the underground and leach pad. Down-the-hole and directional correlograms were calculated for gold using Sage2001® software. Typically, the variograms show a very high nugget effect and absence of spatial structure. AMEC estimated gold, silver, and copper grades for the open pit deposits using the inverse distance squared (ID2) method. The grade estimation was completed in four passes including a first pass developed to restrict the influence of high grades. Ordinary kriging (OK) was used to interpolate Au, Ag and Cu grades inside the underground grade-shell; outside the grade-shell an ID2 interpolation approach was used by Eduardo Magri Consultores. Copper was estimated only for Dumbo West. Inverse distance to the power of one was used to interpolate Au, Ag, and Cu grades for each leach pad. Blocks of each pad were estimated only with the drill holes of the that pad. Blocks were assigned to each pad based on the location of their centroids relative to the solids built with the current topography. Checks on the estimate involved comparison of summary statistics between the ID2 estimates and a nearest-neighbour (NN) estimate, visual inspection of estimated grades against composites, drift analysis to detect spatial bias, and assessment of the degree of smoothing through an Hermitian correction method. The estimates were globally unbiased when compared to the drill-hole information. Open pit Mineral Resources were only classified if they fell within the 0.5 g/t Au grade shell. Classification categories were based on a combination of distance to the nearest drill hole, and number of composites available to inform the block. Eduardo Magri Consultores based the underground resource classification on the kriging pass
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in which a block was estimated and the average distance of samples used to estimate the block. The rest of the estimated blocks in Passes 2 or 3 were assigned to the Inferred category. Eduardo Magri Consultores classified leach pad Mineral Resources as Measured and Inferred. The proposed scheme was based on the fact that the lower parts of the pad were not drilled and hence grades could not be estimated. Given that total tonnage is relatively well established, mineral resources that were not estimated were assigned the same average grade as the rest of the material and classified as Inferred. AMEC reviewed the work completed by Eduardo Magri Consultores, and accepted the classifications. Mineralization that fell within designed Lerchs–Grossmann (L–G) pit shells, and displayed geological and grade continuity was considered to have reasonable prospects for economic extraction using open pit mining methods. The reporting cutoff grade for open pit Mineral Resources is 0.4 g/t Au, consistent with the long term price and cost assumptions used. Mineralization that displayed geological and grade continuity, fell within the 1 g/t Au grade-shell, and can be constrained within a minimum stope width of 2 m and a minimum stope height of 10 m was considered to have reasonable prospects for economic extraction using a sub-level open stoping mining method. There are reasonable prospects for economic processing of the heap leach material as this material will have lower costs than in-situ material and its average grade is above the expected operational cut-off of 0.4 g/t Au. Copper was included in the Mineral Resources, because, although not in the current mine plan, an insitu leach of the tailings at the end of the mine life could recover the copper. Mineralization at the Guanaco Project that demonstrates grade and geological continuity can be appropriately classified as Measured, Indicated, and Inferred Mineral Resources under the Australasian Joint Ore Reserves Committee (JORC) Code. Classifications were reconciled from JORC to the classifications outlined by the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves. Mineral Resources have an effective date of 8 August 2010. The Qualified Person for the estimate is Emmanuel Henry, M.AusIMM, an AMEC employee. Mineral Resources are inclusive of Mineral Reserves and do not include dilution. Readers are cautioned that Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Mineral Resources that can be extracted using open pit mining methods are included in Table 1-1; Mineral Resources that can be extracted using underground mining methods are included in Table 1-2; and the Mineral Resources that are contained within the Phase I and Phase II heap leach pads are summarized in Table 1-3.
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Table 1-1: Open Pit Mineral Resources, Effective Date 8 August 2010, Emmanuel Henry, M.AusIMM. Category
Deposit
Redox Tonnage Au Ag Cu Au Metal Type (kt) (g/t) (g/t) (%) (koz) Measured Defensa Oxide 233 1.36 14.18 0.03 10 Sulphide 111 2.27 20.49 0.30 8 Perseverancia Oxide 245 1.71 14.10 0.05 13 Sulphide 67 1.87 12.59 0.06 4 Total Oxide 479 1.54 14.14 0.04 24 Sulphide 178 2.12 17.50 0.21 12 Indicated Defensa Oxide 246 1.26 12.15 0.04 10 Sulphide 71 1.64 19.05 0.43 4 Perseverancia Oxide 315 1.35 11.31 0.05 14 Sulphide 134 1.92 10.63 0.14 8 Total Oxide 561 1.31 11.68 0.04 24 Sulphide 205 1.82 13.55 0.24 12 Measured + Indicated Defensa Oxide 479 1.31 13.14 0.03 20 Sulphide 182 2.02 19.93 0.35 12 Perseverancia Oxide 560 1.51 12.53 0.05 27 Sulphide 201 1.90 11.28 0.11 12 Total Oxide 1,040 1.42 12.81 0.04 47 Sulphide 383 1.96 15.39 0.22 24 Inferred Defensa Oxide 2 1.42 14.29 0.03 0.1 Sulphide — — — — — Perseverancia Oxide 13 1.67 9.52 0.09 0.7 Sulphide — — — — — Total Oxide 15 1.63 10.27 0.08 0.8 Sulphide — — — — — “*” indicates values are less than 100 (ounces or tonnes); “—“ indicates not applicable
Ag Metal (koz) 106 73 111 27 218 100 96 43 115 46 211 89 202 116 226 73 428 190 1 — 4 — 5 —
Cu Metal (kt) 0.06 * 0.1 * 0.2 0.4 * 0.3 0.1 0.1 0.2 0.5 0.2 0.6 0.3 0.2 0.4 0.9 * — * — * —
Notes to Accompany Open Pit Mineral Resource Table: 1. 2. 3. 4. 5. 6. 7.
Project No.: 2181 November 2010
Mineral Resources are inclusive of Mineral Reserves Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability Mineral Resources are defined with a Lerchs–Grossmann pit shell, and reported at a 0.4 g/t Au cut-off grade Mineral Resources are reported using commodity prices of US$890/oz Au, US$12.65/oz Ag, and US$2.07/lb Cu, variable process recoveries based on redox state of the mineralization, a mining cost of US$2/t, a process cost of US$6.5/t and a gold marketing cost of US$3/oz Tonnages are rounded to the nearest 1,000 tonnes, grades are rounded to two decimal places Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content Tonnage and grade measurements are in metric units; gold and silver ounces are reported as troy ounces.
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Table 1-2: Underground Mineral Resources Mineral Resources, Effective Date 8 August 2010, Emmanuel Henry, M.AusIMM Category
Deposit
Measured
Cachinalito Central Cachinalito West Dumbo West Defensa Perseverancia Total Indicated Cachinalito Central Cachinalito West Dumbo West Defensa Perseverancia Total Measured + Cachinalito Central Indicated Cachinalito West Dumbo West Defensa Perseverancia Total Inferred Cachinalito Central Cachinalito West Dumbo West Defensa Perseverancia Total “—” indicates not applicable
Tonnage (kt) 515 288 149 78 234 1,264 728 524 540 418 596 2,806 1,243 812 689 497 830 4,070 328 115 1,010 74 166 1,693
Au (g/t) 5.25 3.14 3.10 2.06 1.92 3.70 4.28 2.84 2.78 2.35 1.71 2.89 4.68 2.95 2.85 2.30 1.77 3.14 3.52 2.59 2.24 1.92 1.62 2.44
Ag (g/t) 3.40 3.18 10.16 20.91 17.68 7.88 3.75 3.47 10.38 18.79 20.54 10.78 3.61 3.36 10.33 19.12 19.73 9.88 4.30 3.93 15.08 16.60 11.14 11.91
Cu (%) — — 0.78 0.45 0.18 — — — 0.99 0.39 0.30 — — — 0.95 0.40 0.26 — — — 1.07 0.49 0.10 —
Au Metal (koz) 87 29 15 5 14 151 100 48 48 32 33 261 187 77 63 37 47 411 37 10 732 5 9 133
Ag Metal (koz) 56 29 49 53 133 320 88 58 180 253 393 972 144 88 229 305 526 1,292 45 15 489 39 59 3 648
Cu Metal (kt) — — 1 0.3 0.4 2 — — 5 2 2 9 — — 7 2 2 11 — — 11 0.4 0.2 11
Notes to Accompany Underground Mineral Resource Table: 1. 2. 3. 4. 5. 6. 7. 8.
Project No.: 2181 November 2010
Mineral Resources are inclusive of Mineral Reserves Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability All underground mineral resources are based on sulphide material Mineral Resources are defined with minimum stope widths, and reported at a1 g/t Au cut-off grade Mineral Resources are reported using commodity prices of US$1,000/oz Au, US$12.65/oz Ag, and US$2.07/lb Cu, variable process recoveries based on redox state of the mineralization, a mining cost of US$14.6/t, a process cost of US$15/t and a gold marketing cost of US$10/oz Tonnages are rounded to the nearest 1,000 tonnes, grades are rounded to two decimal places Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content Tonnage and grade measurements are in metric units; gold and silver ounces are reported as troy ounces.
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Table 1-3: Leach Pad Mineral Resources, Effective Date 8 August 2010, Emmanuel Henry, M.AusIMM. Category
Deposit
Measured
Phase I Phase II Total Phase I Phase II Total
Inferred
Tonnage (kt) 3,898 4,437 8,334 939 1,838 2,777
Au (g/t) 0.51 0.57 0.54 0.51 0.57 0.55
Ag (g/t) 2.77 2.56 2.66 2.77 2.56 2.63
Au Metal (koz) 64 82 146 15 34 49
Ag Metal (koz) 347 365 712 84 151 235
Notes to Accompany Heap Leach Mineral Resource Table: 1. 2. 3. 4. 5. 6.
1.15
Mineral Resources are exclusive of Mineral Reserves Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability Mineral Resources are defined with the heap leach pads; all mineralization is over 0.4 g/t Au Tonnages are rounded to the nearest 1,000 tonnes, grades are rounded to two decimal places Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content Tonnage and grade measurements are in metric units; gold and silver ounces are reported as troy ounces.
Mineral Reserve Estimates Three block models were developed by Minera Guanaco for the proposed Defensa, Perseverancia, and Dumbo open pit areas; however, it was determined that only the Defensa and Perseverancia areas would be mined by open pit methods and the Dumbo deposit would be mined by underground methods. As a result, an underground Mineral Reserve was developed for the Cachinalito and Dumbo vein systems. The leach pad material was included in the open pit Mineral Reserve estimate. Mineral Reserves were estimated using a base case of US$825/oz Au and US$12.50/oz Ag. Pit optimization was completed by using a L–G-developed pit shell that considered only Measured and Indicated mineral resource classifications. A dilution factor of 15% that was provided by Minera Guanaco was used. A cut-off grade was established using appropriate parameters for an open pit operation at altitude in Chile. Underground Mineral Reserves were constrained assuming sublevel open stoping, with stopes having a maximum 60 m height with sublevels at 20 m. For design purposes it was assumed that there would be a recovery of 85% (losses in pillars and floors). Cut-off grades were established using input parameters that were appropriate to the underground mining conditions expected. Stope design, was based on a cut-off grade of 2.00 g/t Au, assuming a more conservative gold price of US$800/oz. A cut-off grade of 1.56 g/t Au was used for material that must be mined as part of the logical mining sequence when no additional development is required.
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The classifications used for Mineral Reserves are those outlined by the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves. These equate to Proved and Probable Ore Reserves under the JORC Code. Open pit Mineral Reserves are presented in Table 1-4. The Qualified Person is Douglas Chapman, P.E., an AMEC employee, and the effective date of the estimate is 19 May, 2010. Underground Mineral Reserves are presented in Table 1-5. The Qualified Person is Alfonso Ovalle, MAusIMM, an AMEC employee, and the effective date of the estimate is 19 May, 2010. Table 1-4: Open Pit Probable Mineral Reserve, Effective Date May 19, 2010, Douglas Chapman, P.E. Area
Category
Tonnage (kt)
Au (g/t)
Ag (g/t)
Defensa Perseverancia Phase I Phase II Total
Probable Probable Probable Probable Probable
322 370 3,898 4,437 9,026
1.37 1.57 0.51 0.57 0.62
10.65 8.63 2.77 2.56 3.18
Au Metal (koz) 14 19 64 82 179
Ag Metal (koz) 110 103 347 365 923
Table 1-5: Underground Mineral Reserves, Effective Date 19 May 2010, Alfonso Ovalle, M.AusIMM Area
Cachinalito Central Cachinalito West Dumbo West
Total
Category
Proven Probable Subtotal Proven Probable Subtotal Proven Probable Subtotal
Tonnes
Au Grade
Ag Grade
Au Metal
Ag Metal
(kt)
(g/t)
(g/t)
(koz)
(koz)
334,341 406,933 630,083 166,736 264,047 366,166 88,780 232,840 273,377 1,269,625
6.68 5.71 6.15 3.85 3.43 3.59 3.80 4.10 4.02 4.95
3.52 3.87 3.71 3.07 3.49 3.33 8.37 6.69 7.15 4.34
71,807 74,706 146,513 20,639 29,119 49,758 10,847 30,693 41,540 237,810
37,838 50,633 88,471 16,458 29,628 46,086 23,891 50,082 73,973 208,530
Notes to accompany Mineral Reserve Tables: 1. 2. 3. 4. 5.
Project No.: 2181 November 2010
Open pit Mineral Reserves are defined with a Lerchs-Grossmann pit shell; underground Mineral Reserves are confined to designed stopes. Underground Mineral Reserves incorporate 19% dilution and material that is projected to be left in pillars was removed from the estimate. Mineral Reserves are reported using commodity prices of US$825/oz Au and US$12.50/oz Ag for the open pit and US$800/oz Au and US$12.50/oz Ag for the underground. Tonnages are rounded to the nearest 1,000 tonnes, grades are rounded to two decimal places Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content Tonnage and grade measurements are in metric units. Gold and silver ounces are reported as troy ounces.
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1.16
Proposed Mining Operations Due to the nature and characteristics of the Mineral Reserves, Minera Guanaco plans to develop a combined open pit and underground mining operation at the Project. Substantial assets already exist on site including a crushing plant, heap leach infrastructure including a Merrill Crowe gold recovery plant, administration building, laboratory, warehouse, maintenance facilities, an accommodation complex, and mobile equipment. The management and operation of the plant and management and engineering for the mine, and geology and exploration services will be performed by Minera Guanaco personnel. The underground mine, open pit and Phase II heap operation will be performed by contractors with known qualifications and experience in the area. The polyclinic, catering and camp services, transportation of personnel to and from the site, safety, and security will also be provided by contractors. Existing facilities will be used to the largest possible extent, refurbishing existing facilities and replacing equipment where the process requires new capacities.
1.16.1
Open Pit Operation The leach operation is based on a design tonnage of 4,000 t/d of ore being fed to the crushing plant from the two open pits and the old leach pads for loading on the new Phase III leach pad. The controlling production constraint for the operation is the old Phase II heap leach which has been scheduled to provide approximately 75% of the total estimated 4,000 t/d of ore sent to the new leach pad. The open pit expansion areas are therefore scheduled to provide approximately 800 t/d of ore. After the ore from the pits is depleted, the old leach pads, Phase II and later Phase I, provide the entire 4,000 t/d to the crushing plant. The project is scheduled to initially begin mining ore and waste from the Defensa pit and material from the Phase II heap. Production will then commence from the proposed Perseverancia pit, and then finally from the Phase 1 pad. The ultimate pit designs were developed using recommended parameters provided by Minera Guanaco, and based on equipment recommendations that were also provided by Minera Guanaco. Both pit designs included set infrastructure dimensions necessary for pit operation such as bench height, haul road width and grade, catch bench width, and pit slope angles. The pit design slope angle parameters were based on historical performance and design criteria recommendations obtained from extensive field mapping and core logging completed by Ingeniería de Rocas Ltda. (Ingeroc) in October 1994.
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Minera Guanaco has decided that the surface operation will be mined using contract labour and equipment. Using one contractor for all the transport operations will result in an optimized single fleet for the work. The ore and waste loading equipment are the same and one fleet can therefore operate on all four circuits (open pit to crusher, open pit to waste dumps, old heap to crusher, and crusher to the new pad). Blasting operations will be performed by a contractor, while Minera Guanaco will supply all consumable materials. 1.16.2
Underground Operation The proposed underground operation was designed to produce 950 t/d, and has the potential to be expanded to as much as 1,500 t/d (540,000 t/a). Minera Guanaco will contract the pre-production and production work to contractors specialized in the construction of tunnels, underground work, and earthmoving. Sub-level stoping will mine stopes of maximum 60 m height with sublevels at 20 m. Where higher-grade mineralization is present, or ground conditions warrant, cut-and-fill methods are envisaged: these could either be drift-and-fill and/or bench-and-fill. The development plan is based on an advance of 300 m/month per Jumbo with multiple working faces and a maximum advance of 90 m/month per face. Cachinalito Central is divided in to two zones (Central East and Central West) and is developed first because it is the zone that provides the most ounces of gold. The next zone to be developed is Cachinalito West and then Dumbo. Underground mine design incorporated considerations of ramp and haulage level developments, road widths and grades, crossings, safety, and ventilation.
1.17
Proposed Mine Plan The overall Minera Guanaco production plan considers that ore will come from the underground mine, the open pits, and the recovery of partially leached material from the existing Phase I and II heap pads (Figure 1-1).
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Figure 1-1: Projected Ore Production by Source 2,000 1,800 1,600
Tonnes ore
1,400 1,200 1,000 800 600 400 200 0 2010
2011
2012
2013
2014
2015
2016
YEAR Underground Mine
1.18
Leach Pad 2
Open Pit Mine
Total Ore
Process Considerations Process facilities were designed to treat 1,000 t/d of underground sulphide ore, for seven years of operation. The facilities were designed for a future expansion to 1,500 t/d for some critical equipment. Process plant unit operations will comprise: • Crushed ore stockpile • Ball mill grinding • Pre-leach thickening • Cyanide leaching • Counter current decantation (CCD) • Tailings filtration • Reagent preparation and distribution: lime, cyanide, flocculant • Water and solution storage tanks • Process and emergency water ponds. Initially the ore from the open pits and the Phase II heap leach will be processed through refurbished existing facilities. This material will be processed in the existing crushing plant, leached on the new heap, and the resultant solutions will be treated in the adsorption, desorption and recovery (ADR) plant. New facilities are required to process underground mine ore (of higher grade) in a grinding, agitation leach, CCD circuit, and filter plant followed by dry tailings deposition. Doré will be produced from both process routes.
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
1.19
Waste Disposal An estimated 4.1 Mt of tailings will be produced over the seven-year mine life. Vector Chile Ltda. (Vector) designed the tailings storage facility (TSF) to be a dry deposit suitable for the containment of filtered tailings with a containment wall as a protection against possible tailings movement, and a catchment and rainwater diversion system. The tailings area will be located to the north of the existing Phase I and Phase II heap leach pads. The dry TSF will have a storage capacity of 4.07 Mt, which will be deposited at a rate of 1,500 t/d of wet tailings from the filter plant. Waste dump designs and parameters were provided by Minera Guanaco and are based on proven operating designs for the historical open pit mining operation and the Ingeroc study in 1995. The two existing dumps for the Defensa and Perseverancia pits will be utilized and expanded for the open pit operations. Total expected waste is about 3.1 Mt.
1.20
Project Implementation The Project will be developed in two stages. The Project work plan considers the execution of Stage 1 during 2009 and 2010 to start production of doré from the processing of material from the Phase II heap on the Phase III heap in late 2010. Stage 2 will commence in December 2011. Stage 1 activities included: •
Underground mine access ramp (pre-mining activities)
•
Existing crushing plant refurbishing
•
Existing ADR plant reconditioning
•
Phase III heap leach pad construction
•
Pond and solution handling system construction
•
Electrical system refurbishing
•
Existing infrastructure refurbishing.
Stage 2 activities will comprise the construction of the following: •
Grinding plant
•
Agitation leach and CCD plant
•
Tailings filter plant
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
•
Dry tailing dam
•
Reagent system
•
Additional power supply.
As at the Report effective date of 12 November 2010, the Phase III leach pad was in operation and the first doré bar was produced 19 October 2010. As at 31 October 2010, the crusher refurbishment was completed and the crusher was in operation, the ADR plant was also operational, and the construction of solution handling systems had been completed. An open pit contractor was appointed 6 October 2010, and preliminary open pit mining operations had commenced.
1.21
Taxation AMEC does not provide expert advice on taxation matters. The tax calculations in the financial analysis are made based on information provided by Minera Guanaco, together with documentation that is publicly available. It is assumed that the Guanaco Project will be subject to income and/or revenue taxes as follows: •
Corporate Income tax rate: 17%
•
Government mining tax rate: 4%.
It should be noted that there is a second taxation category of 18% on dividends paid by a Chilean entity. The feasibility study financial analysis assumed that no dividends are paid. The amount of income taxes payable for the duration of the project are US$7.1 M, however, this is adjusted downward to US$2.5 M due to a pre-payment of US$4.6 M by Minera Guanaco. The total mining tax paid is US$3.0 M.
1.22
Markets The marketing strategy developed for the Project assumes selling of doré bullion on the spot market. Minera Guanaco will contract with a refinery for refining services and sell the products from the doré bullion.
1.23
Financial Analysis The results of the economic analysis represent forward-looking information as defined under Canadian securities law. The results depend on inputs that are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those presented here. Factors that could cause
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
such differences include, but are not limited to: changes in commodity prices, currency exchange rate, costs and supply of materials relevant to the mining industry, the actual extent of the mineral resources compared to those that were estimated, actual mining and metallurgical recoveries that may be achieved, technological change in the mining, processing and waste disposal, changes in government and changes in regulations affecting the ability to permit and operate a mining operation. Forward-looking information in this analysis includes statements regarding future mining and mineral processing plans, rates and amounts of metal production, and resulting cash flows. Financial analysis of the Project was carried out using a discounted cash flow (DCF) approach. This method of valuation required projecting yearly cash inflows (or revenues) and subtracting yearly cash outflows (such as operating costs, capital costs, royalties, and taxes). The resulting net annual cash flows were discounted back to the date of valuation and totalled in order to determine the net present value (NPV) of the Project at selected discount rates. The internal rate of return (IRR) was expressed as the discount rate that yields an NPV of zero. The payback period was the time calculated from the start of Project cash flows until all initial capital expenditures were recovered. The economic analysis included sensitivities to variations in operating costs, capital costs, and metal prices. All monetary amounts are presented in United States dollars (US$). For discounting, cash flows were assumed to occur at the end of each period. Key assumptions supporting the financial analysis are: •
Mineral Reserves will be processed at a maximum rate of 1.8 Mt/a over a planned mine life of approximately seven years
•
Gold and silver recoveries are estimated for each year of production and average 72.4% and 49.1% respectively
•
The Base Case incorporates smelting and refining terms. It is assumed that the gold/silver doré will be collected by the refiner from the Guanaco operation
•
The analysis uses a constant silver price and a reverting price curve for gold. This approach realizes some near-term higher price advantage that can be reasonably expected for projects, such as Guanaco, that can be put into production within one to two years and have a relatively short mine life
•
Operating costs used for the financial analysis are averaged as follows: −
Project No.: 2181 November 2010
Mining: US$5.31/t milled
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
•
−
Process: US$9.38/t milled
−
G&A: US$0.67/t milled.
Project costs used for the financial analysis are: −
Construction capital (including sustaining capital): US$56.2 M
−
Closure costs: US$2.1 M
−
Salvage value: US$3.2 M
−
Total project capital cost: US$55.1 M
•
Royalty payments are due to Kinross and are calculated as a percentage of the net revenue on 100% of the production. There is also a royalty payable to Enami, which is calculated as 3% of gross income; however, an advance payment of $6.5 M has already been made. Using base case metal prices the current financial model estimates the total value of royalty payments at $8.7 M
•
A working capital allocation of one month operating cost was included in the cash flow model. The allocation varies throughout the project life and peaks at $3.1 M. The assumption is made that all of the working capital can be recovered at project termination. Thus, the sum of all working capital over life of mine is zero
•
The Base Case economic analysis is based on 100% equity financing
•
The Base Case economic analysis includes no inflation. Capital and operating costs are expressed in second quarter 2010 US dollars.
Financial analysis of the Base Case showed the after tax project NPV (discounted at 8%) to be US$32.9 M and the internal rate of return (IRR) to be 36.9%. The cumulative, undiscounted cash flow value for the project is US$57.4 M and the payback period is three years. The life of mine cash cost per ounce of payable gold is US$556.88. Sensitivity analysis was performed on the Base Case taking into account variations in metal prices, operating costs, and capital costs. The results of the analysis show that the project sensitivity is (in order from highest to lowest) metal price, operating expenditure, capital expenditure. For the purposes of the analysis, grades were assumed to be mirrored by commodity prices.
1.24
Interpretation and Conclusions The financial analysis indicates a Project, which using the assumptions outlined in this Report returns a positive NPV. In the opinion of the AMEC QPs, the Project that is outlined in this Technical Report has met its objectives. Mineral Resources and Mineral Reserves have been estimated for the Project, and a development plan has
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
been outlined. This indicates the data supporting the Mineral Resource and Mineral Reserve estimates were appropriately collected, evaluated and estimated, and the original Project objective of identifying mineralization that could potentially support mining operations has been achieved. Areas of uncertainty that may materially impact Mineral Reserve estimation include:
1.25
•
The grade-shells were modeled using only the drill-hole information located below the current topography, and ignoring the drill-hole information that has already been mined out; therefore the grade-shell model does not make the best use of all the available information and it could be more accurate close to the current topography, in places
•
There are limited density determinations for a Project at feasibility stage. Changes to the average density values used to estimate tonnages will result in changes to the Mineral Resources and Mineral Reserves
•
Guanaco is developing an exploration ramp in 2010 in the Cachinalito Central area which consists of three drifts (two in Cachinalito Central and one in an area of Cachinalito high grade) to collect more information to be used in stope design. Modifications to the stope designs may result in changes to the Mineral Reserves
•
The design recovery of 85% from the stopes may be able to be improved once the drifts are opened in late 2010, and the stopes may be redesigned so that the pillars are in waste or low grade ore. Modifications to the stope designs may result in changes to the Mineral Reserves
•
Refinements to the grade shells used to constrain the open pit-mineable mineralization, and determination of more accurate values for recoveries and mining costs for the open pit mining may result in changes to the open pit Mineral Reserves, and result in refinements to the surface mining plan.
Recommendations The decision to proceed with mine construction is at the discretion of the board and management of Minera Guanaco. AMEC has restricted Project recommendations to areas that would benefit from additional work; all work can be completed concurrently as part of a single work program. AMEC estimates the program is likely to take about five to six months to complete (excluding drilling if required) and cost approximately US$270,000: •
Project No.: 2181 November 2010
Different metal prices were used to state the underground and the open-pit Mineral Resources. AMEC recommends eliminating this discrepancy in the future statements (US$7,500; one to two weeks)
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
•
The grade-shells should be refined using the drill-hole information located above the current topography (US$30,000; two to three months)
•
The density model should be refined, and if need be, Minera Guanaco should undertake an additional measurement campaign (minimum US$10,000, maximum US$100,000, assuming drilling; two to three months)
•
AMEC also recommends refining the level of design of the underground mine, which is somewhat less detailed than what would normally be expected at a feasibility stage. Minera Guanaco should, in particular, have a detailed layout of all the production levels, permanent underground infrastructure, and stope geometry (US$100,000; five to six months).
•
Checks on the recovery achieved from the heap leach Stage 1 operation should be conducted. These should be a combination of field measurements, and assessments of the metallurgical balance during initial production periods. (three months at US$20,000)
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2.0
INTRODUCTION AMEC Ingenieria y Construccion Limitada (AMEC) was commissioned by Guanaco Compañía Minera Ltda. (Minera Guanaco) to prepare an independent Qualified Person’s Review and NI 43-101 Technical Report (the Report) for the wholly-owned Guanaco gold project (the Project) located in the Antofagasta Province of Chile (Figure 2-1). The Report discloses the results of a feasibility study completed on the Guanaco Project in August 2010, engineering design elements of which were updated in early November 2010. Guanaco Compañía Minera Ltda. is an indirectly wholly-owned subsidiary of the Australian-listed company Austral Gold Limited (Austral) and is the Chilean operating entity for the Guanaco Project. For the purposes of this Report, the name “Minera Guanaco” is used interchangeably for the parent and subsidiary companies. All measurement units used in this Report are metric, and currency is expressed in US dollars unless stated otherwise. The Report uses Canadian English. As at the effective date of the Report, the exchange rate was US$1 equal to approximately 513 Chilean pesos.
2.1
Qualified Persons The following people served as the Qualified Persons (QPs) as defined in National Instrument 43-101, Standards of Disclosure for Mineral Projects, and in compliance with Form 43-101F1. The QPs responsible for the preparation of the Report are: •
Emmanuel Henry, M.AusIMM. (C.P.), Principal Geostatistician, AMEC Santiago
•
Douglas Chapman, P.E., Principal Mining Engineer, AMEC Santiago
•
Alfonso Ovalle, MAusIMM, Principal Mining Engineer, AMEC Santiago
•
David Miranda, MAusIMM, Technical Director, Process South America, AMEC Santiago.
•
Tony Maycock, P.Eng., Manager, Projects Department, AMEC Santiago
•
Krishna P. Sinha, P.E., Corporate Technical Director with Ausenco Vector
•
Andy Briggs, P.Eng., Consulting Metallurgist, First Quantum Minerals.
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Figure 2-1: Project Location Map
Guanaco
Figure from www.turistel.cl.
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2.2
Site Visits QPs conducted site visits to the Project as shown in Table 2-1. Table 2-1: QPs, Areas of Report Responsibility, and Site Visits Qualified Person Emmanuel Henry
Site Visits 7 September 2009
Douglas Chapman
No site visit
Alfonso Ovalle
9 September 2009
David Miranda
No site visit
Tony Maycock
No site visit
Krishna P. Sinha
No site visit
Andy Brigg
August 2005
Report Sections of Responsibility (or Shared Responsibility) Sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 17.1, 17.3, 20, 21, 22 and 23 Sections 17.2, 17.3, 18.1, 18.3, 18.5, and those portions of the Summary, Conclusions and Recommendations that pertain to those Sections Sections 17.2, 17.3, 18.2, 18.3 and those portions of the Summary, Conclusions and Recommendations that pertain to those Sections Sections 16.1 to 16.3.1, 16.3.6 to 16.3.11 and 16.5, and those portions of the Summary, Conclusions and Recommendations that pertain to those Sections Sections 18.4, 18.6 to 18.11, and 19, and those portions of the Summary, Conclusions and Recommendations that pertain to those Sections Sections 16.3.2 to 16.3.5 and 16.4, and those portions of the Summary, Conclusions and Recommendations that pertain to those Sections, with the exception of the information on tailings disposal, tailings treatment, and cyanide decomposition by hydrolysis and natural degradation That portion of Section 16.4 that pertains to tailings disposal, tailings treatment, and cyanide decomposition by hydrolysis and natural degradation and those portions of the Summary, Conclusions and Recommendations that pertain to those data
During the site visit, the scope of the personal inspection by Mr Henry comprised inspection of core and surface outcrops, drill platforms and sample cutting and logging areas; discussions of geology and mineralization with Mansfield staff; reviewing geological interpretations with staff; and viewing of potential locations of major infrastructure. Mr Ovalle toured the existing infrastructure and reviewed the potential locations of major infrastructure. The QPs who visited site are not aware of any material changes to scientific and technical information on the Project occurring between the site visit and the signature date of the Report.
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2.3
Effective Dates The report has a number of effective dates, as follows: •
30 November 2008: date of closure of the database for Mineral Resource estimation
•
8 August 2010: date of the update of the Mineral Resource estimate
•
19 May 2010: date of the Mineral Reserve estimate
•
28 July 2010: date the assumptions used in the financial analysis were updated
•
26 October 2010: date of the last supply of available drill information from ongoing drill program
•
16 August 2010: date of completion of feasibility study
•
26 October: date of update of status of on-site construction and engineering work
•
12 November 2010: date of update of engineering design aspects of feasibility study
The overall effective date of the Report, based on the feasibility study update is 12 November 2010. There has been no material change to the available scientific and technical information on the Project between the effective date of the Report, and the signature date.
2.4
Previous Technical Reports Minera Guanaco has not previously filed technical reports on the Project.
2.5
References The primary reference sources for Report preparation are: •
AMEC, 2010a: Guanaco Mine Re-Opening Feasibility Study: unpublished internal study prepared by AMEC Chile Limitada for Guanaco Compañía Minera Limitada, August, 2010
•
AMEC, 2010b: Guanaco Mine Re-Opening Feasibility Study: unpublished internal study prepared by AMEC Chile Limitada for Guanaco Compañía Minera Limitada, October, 2010
In addition, reports and documents listed in the Reference section of this report were used to support preparation of the Report.
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2.6
Technical Report Sections and Required Items under NI 43-101 Table 2-2 relates the sections as shown in the contents page of this Report to the Prescribed Items Contents Page of NI 43-101. The main differences are that Item 25 “Additional Requirements for Technical Reports on Development Properties and Production Properties” is incorporated into the main body of the Report, following Item 19, “Mineral Resource and Mineral Reserve Estimates”. Table 2-2: Contents Page Headings in Relation to NI 43-101 Prescribed Items—Contents
NI 43-101 Item Number Item 1 Item 2 Item 3 Item 4 Item 5 Item 6 Item 7
Report Section Number
NI 43-101 Heading
Item 8 Item 9 Item 10 Item 11 Item 12 Item 13 Item 14 Item 15
Title Page Table of Contents Summary Introduction Reliance on Other Experts Property Description and Location Accessibility, Climate, Local Resources, Infrastructure and Physiography History Geological Setting Deposit Types Mineralization Exploration Drilling Sampling Method and Approach Sample Preparation, Analyses and Security
Section 6 Section 7 Section 8 Section 9 Section 10 Section 11 Section 12 Section 13
Item 16 Item 17 Item 18:
Data Verification Adjacent Properties Mineral Processing and Metallurgical Testing
Section 14 Section 15 Section 16
Item 19
Mineral Resource and Mineral Reserve Estimates Other Relevant Data and Information Interpretation and Conclusions Recommendations References Date and Signature Page Additional Requirements for Technical Reports on Development Properties and Production Properties Illustrations
Section 17
Item 20 Item 21 Item 22 Item 23 Item 24 Item 25 Item 26
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Section 1 Section 2 Section 3 Section 4 Section 5
Section 19 Section 20 Section 21 Section 22 Section 23 Section 18
Report Section Heading Cover page of Report Table of contents Summary Introduction Reliance on Other Experts Property Description and Location Accessibility, Climate, Local Resources, Infrastructure and Physiography History Geological Setting Deposit Types Mineralization Exploration Drilling Sampling Method and Approach Sample Preparation, Analyses and Security Data Verification Adjacent Properties Mineral Processing and Metallurgical Testing Mineral Resource and Mineral Reserve Estimates Other Relevant Data and Information Interpretation and Conclusions Recommendations References Date and Signature Page Additional Requirements for Technical Reports on Development Properties and Production Properties Incorporated in Report under appropriate section number
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
3.0
RELIANCE ON OTHER EXPERTS The AMEC QPs, authors of this Report, state that they are qualified persons for those areas as identified in the “Certificate of Qualified Person” attached to this Report. The authors have relied on, and believe there is a reasonable basis for this reliance, upon the following reports, which provided information regarding mineral rights, surface rights, and environmental status in sections of this Report as noted below.
3.1
Tenure and Encumbrances The AMEC QPs have fully relied upon and disclaim information relating to the tenure status for the Project through the following confidential legal opinions prepared for Minera Guanaco: •
Baker and Mckenzie, 2010: Mining Concessions Report, Guanaco Compañía Minera Ltda: unpublished legal opinion prepared by Cruzat, Ortuzar & Mackenna Ltda for Baker and Mckenzie on behalf of Guanaco Compañía Minera Ltda, file dated 5 May 2010.
This information is used in Sections 4.5 and 4.6 of the Report.
3.2
Surface Rights, Royalties and Water Rights The AMEC QPs have fully relied upon and disclaim information relating to the surface rights status for the Project through the following confidential legal opinions prepared for Minera Guanaco: •
Baker and Mckenzie, 2010: Mining Concessions Report, Guanaco Compañía Minera Ltda: unpublished legal opinion prepared by Cruzat, Ortuzar & Mackenna Ltda for Baker and Mckenzie on behalf of Guanaco Compañía Minera Ltda, file dated 5 May 2010.
This information is used in Sections 4.6, 4.7, 4.8 and 4.9 of the Report.
3.3
Environmental The AMEC QPs have fully relied upon and disclaim information relating to the environmental status for the Project through the following environmental reports prepared by Minera Guanaco:
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•
Guanaco Compañía Minera Ltda, 2008: Declaracion de Impacto Ambiental Proyecto Reapertura Mina Guanaco: internal Guanaco Compañía Minera Ltda report dated May 2008.
This information is used in Section 4.11 of the Report.
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4.0
PROPERTY DESCRIPTION AND LOCATION
4.1
Location The Project is located in the community of Taltal, Province of Antofagasta, in Region II of Chile, 220 km southeast of Antofagasta, at an altitude of approximately 2,750 masl. The UTM coordinates of the centre of the Project are N 7 223 000 and E 445 000.
4.2
Property and Title in Chile Chile’s mining policy is based on legal provisions that were enacted as part of the 1980 constitution. These were established to stimulate the development of mining and to guarantee the property rights of both local and foreign investors. According to the law, the state owns all mineral resources, but exploration and exploitation of these resources by private parties is permitted through mining concessions, which are granted by the courts.
4.2.1
Mineral Tenure The concessions have both rights and obligations as defined by a Constitutional Organic Law (enacted in 1982). Concessions can be mortgaged or transferred and the holder has full ownership rights and is entitled to obtain the rights of way for exploration (pedimentos) and exploitation (mensuras). In addition, the concession holder has the right to defend ownership of the concession against state and third parties. A concession is obtained by a claims filing and includes all minerals that may exist within its area. Mining rights in Chile are acquired in the following stages: •
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Pedimento: A pedimento is an initial exploration claim whose position is well defined by UTM coordinates which define north-south and east-west boundaries. The minimum size of a pedimento is 100 ha and the maximum is 5,000 ha with a maximum length-to-width ratio of 5:1. The duration of validity is for a maximum period of two years; however, at the end of this period, and provided that no overlying claim has been staked, the claim may be reduced in size by at least 50% and renewed for an additional two years. If the yearly claim taxes are not paid on a pedimento, the claim can be restored to good standing by paying double the annual claim tax the following year. New pedimentos are allowed to overlap with pre-existing ones, however the underlying (previously staked) claim always takes precedent, providing the claim holder avoids letting the claim lapse due to lack of payments, corrects any minor filing errors, and converts the pedimento to a manifestacion within the initial two year period;
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•
Manifestacion: Before a pedimento expires, or at any stage during its two year life, it may be converted to a manifestacion. Within 220 days of filing a manifestacion, the applicant must file a “Request for Survey” (Solicitud de Mensura) with the court of jurisdiction, including official publication to advise the surrounding claim holders, who may raise objections if they believe their preestablished rights are being encroached upon. A manifestation may be also be filed on any open ground without going through the pedimento filing process;
•
Mensura: Within nine months of the approval of the “Request for Survey” by the court, the claim must be surveyed by a government licensed surveyor. Surrounding claim owners may be present. Once surveyed, presented to the court, and reviewed by the National Mining Service (Sernageomin), the application is adjudicated by the court as a permanent property right (a mensura), which is equivalent to a (“patented claim”).
At each of the stages of the claim acquisition process, several steps are required (application, “publication”, “inscription payments”, notarization, tax payments, “patente payment”, lawyers’ fees, publication of the extract, etc.) before the application is finally converted to a “declaratory sentence” by the court constituting the new mineral property. A full description of the process is documented in Chile’s mining code. Many of the steps involved in establishing the claim are published in Chile’s official mining bulletin for the appropriate region (published weekly). At the manifestacion and mensura stages a process for opposition from conflicting claims is allowed. Most companies in Chile retain a mining claim specialist to review the weekly mining bulletins and ensure that their land position is kept secure. The mineral rights tax is a protecting patent fee assessed at a percentage of the Monthly Tax Unit (Unidades Tributarias Mensuales, UTM) applicable to each hectare of land covered by exploitation and exploration concessions, payable yearly in one instalment due by 31 March. For exploitation concessions the applicable tax rate is set at 1/10 of one UTM per hectare. For exploration concessions, this tax is set at 1/50 of one UTM per hectare. The value of the UTM is adjusted on a monthly basis in accordance with the variation of the Chilean Consumers Price Index (IPC). Legislation is being considered that seeks to further streamline the process for better management of natural resources. Under the new proposed law, mining and exploration companies will have to declare their reserves and resources and report drilling results. The legislation also aims to facilitate funds for mining projects across the country. In addition to the mining law, the Organic Constitutional Law on Mining Concessions (1982) and the Mining Code of 1983 are the two key mechanisms governing mining activities in Chile.
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4.2.2
Surface Rights Concession owners do not necessarily have surface rights to the underlying land; however, they do have the right to explore or exploit the concession.
4.2.3
Environmental The following summary is based upon Chile’s Environmental Law 19.300 and the Regulations regarding environmental impact studies, as posted on the web site of Chile’s Regional Commission for the Environment (Conama) (http://www.conama.cl/portal/1255/channel.html). Chile’s environmental law (Law Nº 19.300), which regulates all environmental activities in the country, was first published on March 9, 1994. Previously, an exploration project or field activity could not be initiated until its potential impact to the environment was carefully evaluated. This is documented in Article 8 of the environmental law and is referred to as the Sistema de Evaluación de Impacto Ambiental (SEIA). However, in regulations for SEIA, published on 7 December 2002, an amendment to the law was passed (Article 3, section i) whereby work described as “Exploration” for minerals was exempted from the filing of either a Declaración de Impacto Ambiental (DIA), or an Evaluación de Impacto Ambiental (EIA). The definition of exploration in the context of this regulation is, “actions or works leading to the discovery, characterization, delimitation and estimation of the potential of a concentration of mineral substances which may eventually lead to a mine development project.” The SEIA is administered and coordinated on both regional and national levels by the Comisión Regional del Medio Ambiente (Corema) and Conama, respectively. The initial application is generally made to Corema, in the corresponding region where the property is located, however in cases where the property might affect various regions the application is made directly to the Conama. Various other Chilean government organizations are also involved with the review process; however, most documentation is ultimately forwarded to Conama, who are the final authority on the environment and are the organization that issues the final environmental permits. There are two types of environmental review, DIA and EIA. As defined in the SEIA, one of these must be prepared prior to starting any mining and/or development project (including coal, building materials, peat or clays) or processing and disposal of tailings and waste.
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A DIA is prepared in cases when the applicant believes that there will be no environmental impact as a result of the proposed activities. The potential impacts include areas such as health risks, contamination of soils, air and/or water, relocation of communities or alteration of their ways of life, proximity to “endangered” areas or archaeological sites, alteration of the natural landscape, and/or alteration of cultural heritage sites. The DIA will include a statement from the applicant declaring that the project will comply with the current environmental legislation, and a detailed description of the type of planned activities, including any voluntary environmental commitments that might be completed during the project. An EIA will be required if any one of the above “potential impacts” is affected. The EIA report is much more detailed and includes a table of contents, an executive summary, a detailed description of the upcoming exploration program or study, a program for compliance with the environmental legislation, a detailed description of the possible impacts and an assessment of how they would be dealt with and repaired, a baseline study, a plan for compensation (if required), details of a follow-up program, a description of the EIA presentation made to Corema or Conama, and an appendix with all of the supporting documentation. Once an application is made, the review process by Corema or Conama will take a maximum of 120 days. If it is approved, an environmental permit is awarded and the exploration or development can commence. If, however, Corema or Conama comes back with additional questions or deficiencies an equal period of time is granted to the applicant to make the appropriate corrections or additions. Once re-submitted and a 60 day period has elapsed, if no further notification from Corema or Conama is received, the application is assumed to be approved. In July 2008, the government proposed the creation of a new Ministry of Environment. The proposal plans to “create an adequate integration among information and incentives” for the various agencies involved in environmental issues. The proposal will rationalize the environmental responsibilities of various agencies, place environmental policy in one place with specific responsibilities, integrate environmental legislation, end the fragmented supervision of environmental issues, and generate a sound system of accountability. The new Ministry of Environment will have the main functions currently exercised by Conama (National Commission for the Environment) except for environmental impact study approval and supervision. The proposal eliminates the Council of Ministries which is responsible for deciding environmental policies, this function being taken over by the new Ministry of Environment. Included in this legislation is a proposal to limit the validity period of EIAs to three years that is under discussion.
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Legislation regarding water was submitted by two senators to the congress proposing a nationalization of water resource management. This is still under consideration.
4.3
Project Ownership History The Project has had a number of owners over the long development and mining history. Early companies involved included the Chilean state company Empresa Nationale de Miniera (Enami), Banco Hipotecario de Chile (BHC), and Amax Inc. (Amax). In 1999, Kinross Gold Inc. (Kinross) acquired Amax and the Project was operated by the wholly-owned indirect Kinross subsidiary, Kinam Guanaco (Kinam). In January 2003, AGD Mining Ltd. (AGD) obtained, through its subsidiary Golden Rose International Limited (Golden Rose), an option to acquire the Guanaco Project, comprising a concession covering 150 km2 excluding the Soledad claims (Soledad) that were adjacent to the Guanaco mine, as well as some other small third-party properties. To help fund the acquisition, Guanaco Capital Holding Corporation (Guanaco Capital), an entity under the control of Eduardo Elsztain, a South American fund manager, agreed to provide funds to complete the purchase conditional on Guanaco Capital holding title to the Guanaco Project, pending an equitable distribution of equity being concluded, and also on AGD managing the project on terms and conditions to be agreed upon. The purchase of the Chilean companies owning the title and the rights to the Guanaco mine was conducted through a new company called Guanaco Mining Company Ltd (Guanaco Mining Company) incorporated by Guanaco Capital. The Guanaco Project was acquired by Minera Guanaco and a binding international arbitration in July 2003 determined that Guanaco Capital should hold 51% of the equity in the Guanaco Project. Minera Guanaco was therefore owned 51% by Guanaco Capital and 49% by Golden Rose. In December 2005 Guanaco Capital increased its interest in Minera Guanaco through the acquisition of the minority interests in Golden Rose of 26.99%. Guanaco Capital’s interest in the Guanaco Project, excluding its flow-through interest arising from its holding in AGD (66.716%), was approximately 64.22%. AGD had a 73.01% interest in Golden Rose and, accordingly, its effective interest in the Guanaco Project was approximately 35.78%. At a General Meeting of AGD on 22 May 2007, shareholders approved several resolutions which had the effect of simplifying the corporate structure of the AGD group; extinguishing the loans that Minera Guanaco owed to both AGD and Guanaco Capital; giving AGD a 51% interest and operatorship of Minera Guanaco and increased Guanaco Capital’s holding in AGD from 66.80% to 78.12%. The company’s name was changed from AGD to Austral Gold Ltd. (Austral Gold).
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At a General Meeting of Austral Gold on 28 May 2008, shareholders approved several resolutions which had the effect of simplifying the corporate structure and AGD acquired the 49% remaining interest of Guanaco Capital in Guanaco Mining Company, becoming the 100% holder of Guanaco Mining Company, in exchange for the issuance of shares of AGD. At the same time, a distribution of shares was approved by Guanaco Capital, pursuant to which Guanaco Capital´s shareholders become direct shareholders in AGD. Without the distribution in shares, Guanaco Capital would have become the holder of 91.20% of AGD. Prior to this reorganization, Guanaco Capital owned 77.82% of AGD and a direct 49% in Guanaco Mining Company. After the reorganization AGD owned 100% of Guanaco Mining Company directly (and not through Golden Rose) and, pursuant to the distribution of shares, IFIS (Guanaco Capital´s controlling shareholder) became the largest shareholder in AGD, with 60.76%, and the former Guanaco Capital minority shareholders owned 30.44% of AGD as a whole. As at 30 June 2010, the controlling group owned 86.62% of Austral Gold Limited (69.49% belonged to IFIS, 14.36% belonged to Guanaco Capital, and 2.77% belonged to ESE) and 13.38% belonged to other minority shareholders. As at 30 June 2010, Guanaco Mining Company was the 100% owner of Guanaco Compañía Minera Ltda. (Minera Guanaco) which operates the Guanaco mine. The current corporate structure is shown in Figure 4-1. Figure 4-1: Minera Guanaco Corporate Structure
IFIS
GCH and ESE 17.13%
Other Minorities
69.49%
13.38%
Austral Gold Limited 99.29%
99.997
Austral Gold Argentina S.A.
Guanaco Mining Company 100% Guanaco Compañía Minera Ltda.
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4.4
Tenure History The Project tenure dates back to 2003 when it was legalized by means of a Public Document completed at María Gloria Acharán Toledo´s notary office in Santiago, where a Contract of Purchase and Sale between Compañía Minera Kinam Guanaco, Kinam de Chile Limitada, and Golden Rose International Chile Limitada was signed. Under this contract of purchase and sale, and claim assignment, Golden Rose International Chile Limitada bought from Compañía Minera Kinam Guanaco the rights of to established exploitation mining concessions Estrella de Venus 1 to 2, Blanca Estela, Quillota, and Inés. The Kinam de Chile Ltda. exploitation mining concessions were also obtained as a result of exercising an existing option with Enami, and the Boa, A, B, C, D, E, F, G, H, J, and K exploitation concessions were obtained from Amax Gold de Chile Limitada. This created the Chilean holdings of Golden Rose International Chile Ltda.; in 2005, this entity changed its name to Compañía Minera Robolistic Limitada. In 2006 Compañía Minera Robolistic Limitada, by contract of purchase and sale, sold, ceded, and transferred the mining rights obtained from Compañía Minera Kinam Guanaco, Amax Gold de Chile Limitada and Enami, plus other exploitation mining concessions that were in the process of approval, to Guanaco Compañía Minera Limitada. At the Report effective date, Minera Guanaco has the Project mining concessions that are noted in Section 4.5 and Appendix 1 registered in its name in the Property Register of the Curator of Mines Department (Conservador de Minas) of Taltal.
4.5
Mineral Tenure The Project consists of 208 exploitation claims covering 13,571 ha. Additionally, as at 30 June 2010, there were 49 exploration mining claims covering 11,400 ha. The full list of mineral tenements is presented in Appendix 1. Project mineral tenure is shown in Figure 4-2, and the area of detailed claim staking, known as the Guanaco 1– 168 area, is presented in Figure 4-3. Figure 4-4 shows the mineral tenure in the Guanaco 1–168 area superimposed on a satellite image. Within the image, the plant location, and the locations of the existing open pit, waste rock and tailings facilities are displayed. There are claims held by third-parties within the Guanaco 1–168 area that are excluded from the Project (refer to Figure 4-3).
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Figure 4-2: Mineral Tenure Summary Map
Note: The plan covers an area of approximately 13 km east–west and 11 km north–south. Map north is to the top of the plan.
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Figure 4-3: Detail Map, Mineral Tenure
Note: Map north is to the top of the plan. Cyan-coloured tenure outlines indicate third-party claims held by Palermo and Eureka. Magenta-coloured tenure outlines indicate third-party claims held by Soledad. Both claim groups are not part of the Guanaco Project. All other claim boundary colours indicate claims held by Minera Guanaco.
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Figure 4-4: Detail Map, Mineral Tenure in Relation to Existing Infrastructure
Note: Map north is to the top of the plan
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Currently, Guanaco Compañía Minera Limitada has the mining concessions transferred to its name in the Property Register or Discovery Register, as appropriate, of the Curator of Mines Department (Conservador de Minas) of Taltal. Three claims, part of the purchase agreement with Enami, where Enami’s original ownership could not be conclusively established, remain in the name of Enami. The Boa claims remain in the name of Amax, but are held by Minera Guanaco by way of agreement pursuant to the exercise of an option agreement over the Boa A, B, C, D, E, F, G, H, J, and K exploitation concessions by Golden Rose, a Minera Guanaco predecessor company, from Amax Gold de Chile Limitada. There are numerous overlaps in the claim boundaries, and some claims within the Guanaco Project area are held by third-parties. A second layer of mining rights has been established over existing rights to enhance protection and the corresponding area is being monitored on a permanent basis to prevent conflict with third-party rights. The mineral resources and mineral reserves discussed in Section 17 of this report are hosted within the specific tenements listed in Table 4-1. Table 4-1: Mineral Tenure Summary, Deposits with Reported Mineral Resource and Mineral Reserve Estimates Perseverancia
Dumbo
Defensa
Cachinalito
Universal
Dumbo 1-4
Defensa
Buenos Muchachos
Desdicha
Huascar
Cupido
Sajonia
Tropezon
California
Panchita
Nebulosa
Progreso
Estrella de Venus 1-2
Brillante
Maria Teresa
Juana Maria
Los Pepes 3-5
Los Pepes 14
Augusto
Dos Amigos
Los Pepes 7
Barcelona
Maria Estela
Perseverancia
San Andres
Todos Santos
Guicelda
Josefina
Restauradora
Veintiuno de Mayo
Fides
K
Jenoveva
Altamira
Juana Luisa
Esperanza
Lucila
Teresaç Don Juan Amalia Emma Luisa Santa Clara Amparo Note: Cachinalito includes Cachinalito East and Central deposits
Figure 4-3 shows the tenure layout for Perseverancia, Dumbo and Defensa, and Figure 4-5 for Cachinalito, respectively. The tenure outlines are superimposed on a satellite image that shows the open pits and waste rock facilities generated by previous mining activity (refer to Section 6 of this Report).
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Figure 4-5: Mineral Tenure Plan, Perseverencia, Dumbo and Defensa Deposit Areas
Note: Map north is to top of plan. Figure 4.-5 is approximately contiguous to the top left of this plan.
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Figure 4-6: Mineral Tenure Plan, Cachinalito Area
Note: map north is to top of plan. Dark blue outline is that of the final configuration of the decline that is currently under construction. Figure 4-4 is approximately contiguous to the right of this plan.
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Exploration concessions (manifestations) have a two-year duration, after which they can be converted to exploitation concessions (mensura), which do not expire. All mineral rights are protected according to Chilean law by payment of appropriate fees. Annual rental payments for the mining concessions are based on a monthly tax unit (UTM) per hectare. The UTM varies for every month based on a scale set by the Chilean government. The annual payments must be made in advance, between 1 March and 31 March every year. All required payments were made for 2009. AMEC was provided with legal opinion that indicated payments were current to February 2010; Minera Guanaco have advised that all appropriate rental payments had been made as required by 30 October 2010. In Chile, mining claims are obtained through a judicial process that requires all survey information to be filed with the appropriate government agency. As part of the mineral patenting process, all claim monuments are surveyed by a licensed Chilean mining surveyor. 4.5.1
Additional Tenure in the Region Minera Guanaco continuously monitors the tenure situation immediately surrounding the Project area, and if ground becomes available, will apply for it. Minera Guanaco is also actively engaging other mining, exploration and prospecting companies in joint venture and acquisition discussions.
4.6
Encumbrances/Royalties There are current mortgages on four of the mineral exploitation claims held Minera Guanaco in favour of Compañía Minera Kinam Guanaco, which were registered in the Mortgage Register of the Curator of Mines of Taltal, Folio 1, No. 1, dated April 2, 2003. These mortgages relate to the Estrella de Venus 1 to 2, Blanca Estela, Quillota, and Inés claims. The mortgage and prohibition were constituted by Golden Rose Internacional Chile Limitada (to which the legal successor is Minera Guanaco) in favour of Compañía Minera Kinam Guanaco in order to guarantee the complete payment of the price of the Purchase Contract and Transfer of Rights executed by means of a public deed granted before Mrs. María Gloria Acharán Toledo, Notary Public of Santiago, on March 14, 2003. The price can be paid through a quarterly royalty due to Compañía Minera Kinam Guanaco; however, Minera Guanaco (as legal successor of Golden Rose Internacional Chile Limitada) has the right to terminate the royalty payments by paying a unique amount of US$7.5 M.
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Royalty payments are due to Compañía Minera Kinam Guanaco and are calculated as a percentage of the net revenue on 100% of the production. Under the mortgage agreement, all four claims are subject to a 10% royalty payment. No production from the four claims is envisaged in the feasibility study that is the subject of this Report. The remainder of the claims purchased from Compañía Minera Kinam Guanaco are subject to a 5% royalty. There is also a royalty payable to Enami. This is calculated as 3% of gross income; however, an advance payment of $6.5 M has already been made.
4.7
Surface Rights Minera Guanaco has made application for 257 ha of surface rights (Judicial Rights) to cover proposed infrastructure sites in a submission dated 26 April 2010, to the state of Chile, in order to value the requested lands. The submission is currently in process, and a decision is expected by about December 2010. Areas covered under the application are summarized in Table 4-1. Table 4-2: Infrastructure Covered by Surface Rights Application Nº
Area
1 2 3 4 5 6 7 8 9 10
Heap and Ponds Tailings Area Plant Area Cachinalito Waste Area Explosives Magazine Camp Airstrip Defensa - Perseverance Waste Dump Defensa - Dumbo Waste Dump Defensa Waste Dump Total
Surface (Ha) 46 33 13 10 6 37 20 22 36 34 257
The application allows Minera Guanaco to use the land on the fifth working day after the submission provided that a guarantee is paid prior to the use. These submissions normally take between six and eight months to be processed; during this time the annual charge to be paid is estimated. This procedure is commonly used by mining companies to claim rights because it is regulated and has a relatively rapid turnaround.
4.8
Conveyance Rights-of-Way Guanaco holds the appropriate conveyance rights-of-way to allow unfettered access to the Project and support transport of goods and materials to and from the proposed mining operation.
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4.9
Water Rights Water needed for the project will be obtained from the following sources: •
A source located 30 km east of the site, where Minera Guanaco has the rights to 4.84 L/s. These rights date back to 2003 when a Public Document, dated 14 March prepared before María Gloria Acharán Toledo, Notary in Santiago, a contract of purchase and sale between Compañía Minera Kinam Guanaco, Kinam de Chile Limitada, and Golden Rose International Chile Limitada was completed. Under this contract of purchase and sale, and assignment of claim Golden Rose International Chile Limitada bought from Compañía Minera Kinam Guanaco the rights to exploitation of surface waters at Pastos Largos, Varitas, Vega Larga, Vega Quemada, Punta del Viento, Varas Norte, Varas Sur, and Las Mulas
•
Groundwater for which the company has rights to 11.75 L/s. In 2005 Compañía Minera Robolistic Limitada started procedures to obtain the rights to underground waters from existing wells. By Dirección General de Aguas (General Water Directorate - DGA) Resolutions, II Region of Antofagasta, dated January 10, April 18. and September 25, 2008, Public Works Ministry (Ministerio de Obras Públicas), the rights of consuming use of underground waters was constituted in favour of Guanaco Compañía Minera Limitada, in the community of Taltal, province of Antofagasta, according to Article 4 of Law No. 20.017/2005, for a total of 11.75 L/s. These resolutions granted by the DGA, were summarized in a Public Document notarized by Hector Basualto Bustamante in Antofagasta, and registered in the Register of Water Properties (Registro de Propiedad de Aguas) by Hector Garcia Aguirre Taltal’s Curator of Properties (Conservador de Bienes Raíces de Taltal)
•
A Public Document dated February 27, 2007, Purchase of Rights of Consuming Use of Underground Waters, in the name of Guanaco Compañía Minera Limitada was registered in the Register of Water Properties of Taltal (Conservador de Bienes Raíces) for Pastos Largos, Varitas, Vega Larga, Vega Quemada, Punta del Viento, Varas Norte, Varas Sur, and Las Mulas, acquired by contract of purchase and sale from Compañía Minera Robolistic Limitada for a total of 4.84 L/s.
All of these water rights have a mortgage in force in favour of Compañía Minera Kinam Guanaco, dated April 10, 2003.
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4.10
Permits Mining projects in Chile require both environmental approval and numerous sectorial permits prior to construction. Sectorial permits for the Project are not all required at the same time, and approvals times for different permit preparation and approval will vary. It is expected that permits will be prioritized and those on the critical path (requiring a long period for preparation or for approval, or required early in project development) will be given priority. Key Project permits that could be required for exploitation and construction include:
4.11
•
Provision of potable water
•
Waste water, garbage, sewage, industrial waste disposal
•
Maritime considerations including port intake and discharge areas, liquid waste discharges
•
Housing and construction permits
•
Road construction
•
Extraction of aggregate
•
Storage and use of fuel and gas
•
Electricity supply
•
Explosives use and storage
•
Mining operations
•
Telecommunications.
Environmental
4.11.1
Environmental Impact Statement The Guanaco Mine Re-opening Project was submitted to the Environmental Impact Evaluation System (SEIA) as an Environmental Impact Statement (DIA). The DIA was approved by the appropriate Chilean authorities on 15 July, 2009 (refer to next subsection). Various baseline studies were performed in support of the DIA, collecting data on: •
Climate and meteorology
•
Geology, geomorphology, soils, natural risks, and seismology
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4.11.2
•
Water resources
•
Vegetation and flora
•
Fauna
•
Historic patrimony, archaeology, and religious environment
•
Socioeconomic and demographic environment. Environmental Approvals
A number of permits and authorisations have been granted. These include:
4.11.3
•
A favourable environmental qualification for the Guanaco Mine Re-opening Project was granted by the Region II Corema as Resolution of Environmental Qualification 0251 dated 15 July, 2009
•
Exempt Resolution 973, dated 12 March, 1996, Antofagasta Health Service, authorizes the water supply system for human consumption, consisting of a storage reservoir and distribution networks for the camp.
•
Exempt Resolution 972 dated 12 March, 1996, Antofagasta Health Service, authorizes the aerobic system of sewage water treatment by sedimentation pond, sludge accumulator and stabilization ponds, with a treatment flow of 36,288 L/day located in the camp.
•
Three resolutions and modifications (Resolution 002 dated 21 December, 2000, Resolution 022 dated 25 July, 2001, Resolution 676 dated 14 February, 1997, and Resolution 3147 dated 25 October, 2006, to allow temporary waste storage on the site and construction of a landfill facility.
•
Provision for gasoline storage under agreements with the SEC (folio number 28, dated May 2, 2007, folio number 29, dated 2 May. 2007).
Required Environmental Authorizations The Project still needs to obtain the following major sectorial environmental authorizations as required by Supreme Decree 95/2001: •
Sectorial Environmental Authorization for Construction of Dry Tailings Deposit (Article 84 SEIA Regulation). Authorization to construct a tailings deposit, referred in Article 47 of Supreme Decree 86/70, Ministry of Mining: Construction and Operation of Tailings Deposit Regulation.
•
Sectorial Environmental Authorization for Waste Dumps and Heap Leach (Article 88 SEIA Regulation). Authorization to establish a mining waste dump referred in
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Clause 2 of Article 233 and waste dumping to which Article 318 is referred, both from Supreme Decree 72/85, Ministry of Mining: Mining Safety Regulation. Minera Guanaco has established a list of environmental authorisations that will be required in addition to these two key permits, and has identified the primary agency that will be responsible for the grant, the likely estimated times to prepare submissions, and the likely review times. 4.11.4
Land Use Change Requests Land use change requests were granted by Seremi of Agriculture for the Antofagasta Region for a total of 332.87 ha. Land use change for a further 204.79 ha has been requested in the DIA.
4.12
Remediation and Closure The closure plan for the Project will be prepared as stipulated in current legislation and to meet Minera Guanaco’s environmental standards. Closure will address water monitoring and quality, access restrictions the site, dismantling of facilities and infrastructure, road closure as appropriate, rehabilitation of waste dumps and other disturbed areas, and erosion control measures. In the financial model, closure provisions of US$2.14 M have been allocated.
4.13
Socio-economics The closest community to the Project site is the township of Taltal, which is one of the most isolated inland communes of the Antofagasta Region, and one which has limited public transport availabilities to other local communities. Mining is the main economic mainstay of the town.
4.14
Heritage and Culture Archaeological surveys in the project area and its area of influence (mine and water sources) detected two types of archaeological evidence which are differentiated by their chronology, pre-Hispanic or historical sites. Such sites will be conserved in accordance with required regulations, and access limited.
4.15
Comment on Section 4 In the opinion of the AMEC QPs, the information discussed in this section supports the declaration of Mineral Resources and Mineral Reserves, based on the following:
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•
Legal opinion provided to AMEC indicated that Minera Guanaco holds 100% of the Project
•
Information from legal experts supports that the mining tenure held is valid and is sufficient to support declaration of Mineral Resources and Mineral Reserves
•
Minera Guanaco holds sufficient surface rights in the Project area to support the mining operations, including access and power line easements
•
There is limited water in the immediate Project vicinity. Water will be obtained for process and potable needs from a combination of groundwater and borefield sources that are already permitted.
•
Minera Guanaco has presented a DIA in support of Project development. A number of permits are already held; however Minera Guanaco will need to apply for additional permits as appropriate under local, State and Federal laws to allow mining operations
•
At the effective date of this Report, environmental liabilities from the activities performed by Minera Guanaco are limited to those that would be expected to be associated with an advanced exploration project, and include roads, and drill pads. An open pit and heap leach operation was conducted between 1993 and 1997, and there is an expectation of that there will be some contamination associated with these activities
•
Closure provisions are considered in the mine plan and are preliminary in nature
•
Minera Guanaco has advised AMEC that the company is not aware of any significant environmental, social or permitting issues that would prevent the proposed exploitation of the Project deposits.
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5.0
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY
5.1
Accessibility The Guanaco Project is located 220 km southeast of Antofagasta, and 42 km east of the Panamerican highway. The area is accessed by an unpaved road 42 km long turning off from the Panamericana Norte (Ruta 5 Norte) at km 1,198. Travel time by road from Antofagasta is approximately three hours. A railroad track, currently not in service, is located 20 to 30 km west of the Guanaco Project area. The railroad operation stopped three decades ago, but the track is still maintained by the railroad company. The closest airport is the Cerro Moreno International Airport at Antofagasta.
5.2
Climate A meteorological station has been operated by Minera Guanaco at the Project site since August 2006. There is no sharp contrast in temperature between seasons. The average temperature of the coldest month, July, is 11.8°C and the average temperature for the hottest month, January, is 19.2ºC. The daily variation is significant, ranging from a maximum of 33.5°C to a minimum of 2.3°C. The prevailing wind directions are from the north–northeast and the north. Sporadic occurrences of rain and thunderstorms during the “Bolivian Winter” (from November to February) are common. The average rainfall and estimated evapotranspiration rate are the same, which indicates, at the regional level, that the available flow of surface or groundwater runoff is zero for years with 50% exceedance probability (years with average or below average rainfall). It is expected that mining operations will be conducted year-round.
5.3
Local Resources and Infrastructure Taltal is the closest town to the Project. has an airport.
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5.3.1
Existing Infrastructure Three open pit mines were operated by Amax: the Dumbo and Defensa open pits exploiting the Dumbo–Defensa vein structure, and the Perseverancia open pit exploiting the Chilena vein structure. Substantial assets already exist on site including a crushing plant, heap leach infrastructure including a Merrill Crowe gold recovery plant, administration building, laboratory, warehouse, maintenance facilities, an accommodation complex, and mobile equipment. Much of this infrastructure was reconditioned for Project use between September 2009 and March 2010.
5.3.2
Planned Infrastructure The project layout as envisaged in the feasibility study is presented in Figure 5-1. The figure demonstrates the current topographic surface in the area of the proposed infrastructure, the existing pits, tailings and waste rock facilities, and the general area of the processing and administration infrastructure. Figure 5-2 shows the final layout of the key components of the process plant infrastructure. Access
Existing national and provincial roads will be used during construction and operation (refer to Section 5.1 and Figure 2-1). These roads are mainly either bitumen or consolidated dirt roads and will require minimum improvements to accommodate transport of special oversized or heavy parts during the construction stage. The main access to the Guanaco Project is by an existing public road, route B-865, which connects to Highway 5 North at Km 1,198. The road is a good quality unpaved road on which maintenance will be performed every quarter. There is potential for a sealant such as magnesium chloride or bischofitea to be added to provide a better surface and reduce dust, but this decision is still pending. Site roads in the plant, mine, and camp area will be unpaved and will be irrigated with fresh water or treated water from the sewage treatment plant to minimize the quantity of particulate material in suspension. Minera Guanaco will establish a bus service to transport their personnel from Taltal and Antofagasta to the site and back. This service will be performed with a transportation company specialized in this type of service.
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Figure 5-1: Proposed Project Infrastructure Layout Plan
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Figure 5-2: Final Layout Plan, Process Plant
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Port
The preferred transportation for equipment and materials for the Guanaco Project is by sea freight and the best port is Mejillones which is approximately of 320 km from the plant. Access to the plant from Mejillones is by a paved road (B-400) and then by Ruta 5 Norte to the south approximately 300 km to the turn-off to the location of the proposed plant. From that point to the site, approximately 45 km to the east, access is via a gravel road in reasonably good condition. Dangerous materials can be transported from the port of Mejillones by Ruta B-400 and Ruta 5 Norte to the mine site. Buildings and Infrastructure
Current on-site buildings comprise: •
300-person capacity camp. Additional modules to support a 396-person capacity are planned to be added
•
Catering facilities section for 150 persons per sitting
•
Generator building and electrical rooms. The electrical rooms at the generator building, ADR plant and crushing plant are re-conditioned. The heap leach, process plant, and filter plant electrical rooms will be new
•
General management, administration, and the mining and geology management office building
•
Change house and process management office building
•
Gold room
•
Access guardhouse.
Personnel
Chile has sufficient experienced and skilled professionals to run the proposed Guanaco mining operation. The potential labour force in the nearby towns of Taltal, Chañaral and Diego de Almagro is experienced in mining; there are already several copper, iron, and gold mines operating in the region. Water
Water for industrial purposes is scarce in the area, but there is underground water potential in neighbouring areas, and it may be possible to purchase unused water rights, from other mining companies.
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Industrial water necessary for the construction phase will be needed principally for the soil compaction activities, preparation of concrete in situ, and road watering for dust control. Industrial water will be obtained from the reservoirs located in the administration area. For the operation activities the main use will be for the irrigation of the Phase III heap, water from the reservoir and tanks at the plant will be used. These have pumps to distribute the water to the consumption points at crushing and leaching. As water with low salts and suspended solids is required for the ADR plant, preparation of reagents, and in the filter plant, water from Pastos Largos will be used preferentially at these points because of the physical-chemical characteristics of this water. For the purposes of the feasibility study, potable and process water was projected to be obtained from the following sources: •
A source located 30 km east of the site at Domeyko Cordillera, where Minera Guanaco has the rights to 4.84 L/s. Water usage rights to this area are registered with the Register of Water Properties of Taltal
•
Groundwater for which the company has rights to 11.75 L/s. Usage rights are granted by the DGA, and registered in the Register of Water Properties (Registro de Propiedad de Aguas).
Sub-surface water from sources of the Domeyko Cordillera, specifically in Punta del Viento, Las Mulas and Pastos Largos flows through pipelines by gravity to the Guanaco mine area, and is stored in two 600 m3 tanks located in the administration area. Water is distributed from there to a 2,500 m3 reservoir (located in the mine area) and two 700 m3 storage reservoirs (located in the process plant area). Pipes have isolation valves at the points of storage and consumption and are semi-buried to protect them from low temperatures during the night. Currently, the water used by Minera Guanaco for human consumption and in exploration comes from this source. In order to provide water for the Phase III heap leach operation groundwater wells PA2 and WE-104, located 12 km east of the Guanaco mine, will be started up. Potable water for human consumption is obtained from Pastos Largos and flows to the plant where a line feeds the potable water reservoir located in the camp where chlorine is added. This water is used for the potable water needs at the dining facility, showers, administration offices, and bedroom units. Bottled water is purchased for drinking. Fire water will be provided from the water pond, where the bottom part of the 2,500 m3 fresh water reservoir will provide two hours of dedicated water supply (500 m3).
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Sewage (brown water) will be treated in anaerobic septic tanks before being reintegrated into the environment. Grey water will be used in the re-vegetation program, irrigating a greenhouse near the camp facilities. Waste
Minera Guanaco currently holds permits for a land-fill on site. In compliance with local regulations, hazardous waste, such as oil filters, used oil, and the like, will be transported to an appropriate regional centre for disposal. Power
The closest power line in this area is a 220 kV line from the Taltal power plant (located in Paposo 54 km north of Taltal) to Diego de Almagro, which at one point is less than 100 km from the Guanaco Project. These facilities are part of the Chilean central power grid generation and distribution system (SIC). Feasibility-level trade-offs have determined that for financial reasons, the proposed Guanaco mine will operate independent of the national grid systems in the area. Seven Perkins-FGWilson model PE660 diesel generators will be installed to provide power for the first phase of the Project. The units have a 600 kVA rating and operate at low voltage (380 V) and 50Hz. At any time there will be six operating units and one stand-by for the first phase operation which includes the Phase III heap leach, ADR plant, and auxiliary services. In order to cover the future electrical demand for the second phase of the Project, six additional 1,000 kVA, low voltage (380 V) generators will be added. These generators will be arranged in interconnected groups of three units so as not to exceed the maximum capacity of the low voltage switches available in the market. The power distribution system for the first stage of production (heap leach Phase III, ADR plant, crushing plant, general maintenance activities, and administration) will be at two voltage levels: •
Low voltage (380 V) for consumers close to the generator building (heap leach Phase III, crushing plant, and ADR plant);
•
Medium voltage (13.2 kV) for more distant consumers such as ILS and PLS ponds, underground mine, and infrastructure (camp, administration, laboratory).
Electrical distribution for the heap leach, ADR plant, crushing plant, maintenance, and administration will be through four electrical rooms located at the generator building, crushing plant, ADR plant, and heap leach areas.
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When the underground mine and process plant come into operation there will be one electrical room for the grinding, leaching, and CCD area and another for the filter plant. Communications
Phones will be installed in all buildings and facilities. Cellular telephone coverage will be available in the camp and mining areas. An IP (internet protocol) telephone system will be used for off-site communications. The system includes a device for connecting to the public network, voice mail, and direct selection of extension number. The telephone switchboard will share installations with the data network, which will have power and air conditioning back-up support systems. Hand-held and base-station radios will be provided for survey and ore control personnel, geologists, and ADR operators. The mine base station will tie in to a solarpowered transponder to allow radio communications with camp. Mobile equipment will also be provided with radios.
5.4
Physiography The altitude ranges between 2,400 masl and 2,900 masl, averaging 2,600 masl. Project topography is generally gently rolling. Hydrogeologically the area lies between the La Negra and Pan de Azúcar gullies. The drainage systems are relatively mature, with poorly defined drainage channels. Within the Project area is a gully, also called Guanaco, which emerges very close to the reservoir with the same name, and eventually peters in the vicinity of the Catalina station, a distance of about 20 km. The average elevation of the groundwater in the area is between 2,540 masl and 2,530 masl (180 m to 190 m depth from surface), based on drill hole intercepts. There are no declared tourist or scenic sites in the Project area.
5.5
Flora and Fauna The Project falls within a transition zone between the desert of Taltal and the desert of the Cordillera de Domeyko. The area has a low botanical diversity and a low flora coverage (less than 5%) which is characterized almost exclusively by formations of patches of annual grass and dispersed bushes.
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The Guanaco gully (Pastos Largos and Las Mulas) hosts some plant diversity. There are small wetlands on the slopes of the ravine where some vegetation exists. The results of several studies confirm that this sector of the Cordillera de Domeyko is an active area for the reproduction of the cameloid family, including guanacos. There are also abundant birds of prey especially small eagles.
5.6
Comment on Section 5 In the opinion of the AMEC QPs, the existing and planned infrastructure, availability of staff, the existing power, water, and communications facilities, the methods whereby goods are transported to the Project and any planned modifications or supporting studies are well-established, or the requirements to establish such, are well understood by Minera Guanaco, and can support the declaration of Mineral Resources and Mineral Reserves and the proposed mine plan.
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6.0
HISTORY Gold was discovered at Guanaco in 1878 by miners from the nearby Cachinal silver mines. There was only small scale production until 1886. From 1887 until 1890 more than 200 underground mines were developed and approximately 200,000 oz Au were produced from high-grade veins. The richest veins apparently averaged 160 g/t Au to 180 g/t Au. At that time, the minimum grade that could be exploited was 50 g/t Au to 60 g/t Au (Egaña, 1978). Extensive gold production continued until 1928, when low gold prices forced the closure of the mines. Relatively high copper prices led to the development of copper deposits from 1928 to 1930. Low copper prices during the 1930s depression forced the closure of these mines. In 1930 the Chatal Company acquired most of the claims in the district, and continued moderate scale exploration and mining until 1960. In 1971, the Chilean state organizations Enami and Corfo acquired the former Chatal holdings. Total gold production prior to 1986 has been estimated at approximately 1 Moz Au. The amount of copper production is unknown. In the early 1980s, Banco Hipotecario de Chile (BHC) completed a reverse circulation (RC) drill campaign. No other work has been recorded. During 1987, Minera Guanaco, at that stage controlled by the Gordo brothers, became operators of the property by undertaking to commence underground production at a minimum rate of 500 t/d within six months. By the end of 1990, Minera Guanaco had drilled 179 exploration holes and developed a 1,800 t/d open pit/heap leach operation. The Gordo brothers produced an estimated 75,000 oz Au to the end of 1991. Amax entered an option to purchase agreement with Minera Guanaco effective April 1, 1991, and subsequently commenced mapping, geochemical sampling, and reverse circulation drilling. A pre-feasibility study was completed the same year. In 1992, Amax Gold leased additional properties from Enami. In April, 1992, Amax, through a wholly-owned subsidiary, acquired a 90% interest in the Project for $35 million. Open pit mining commenced in early 1993, with gold recovered from heap leach pads and a Merrill Crowe recovery plant. From 1993 to 1996, in addition to mining operations, work completed included mineral resource and mineral reserve estimation, airborne and ground geophysical surveys, rock chip and grab sampling, geological mapping, and RC and core drilling. In 1997, the operation was placed on care and maintenance due to a combination of low gold prices and poor metallurgical recoveries due to the presence of copper.
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In 1999, Kinross acquired Amax, and Project operations were conducted by Kinross’ indirect subsidiary Kinam Guanaco. Kinross performed exploration core and RC drilling, data reviews, geological mapping and chip sampling, preparation and description of petrographic samples, ground geophysical surveys. In early 2000, Cominco Chile Exploraciones Limitada (Cominco) appraised the Kinross-held property over a three-month period, during which time a ground geophysical survey was conducted. Golden Rose, a subsidiary of Austral Gold, entered into an option to purchase agreement with Kinross in 2002, which was executed in March 2003. From 2003 to 2010, Austral Gold has undertaken data reviews, core and RC drilling, mineral resource and mineral reserve estimation, hydrological and geotechnical studies, metallurgical studies, reviews of Project social and environmental conditions, and assessments of existing infrastructure and equipment, culminating in commissioning of a feasibility study during 2009–2010. The remainder of this Report discusses the results of the feasibility assessment.
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7.0
GEOLOGICAL SETTING
7.1
Regional Geology The Guanaco district is located in a large geological province resulting from the eastward migration of the Andean volcanic front between late Cretaceous and Eocene ages. Volcanic and sub-volcanic rocks of this age interval crop out in the Intermediate Depression and the Domeyko Cordillera, forming a north–northeast–south–southwest oriented belt, 20–60 km wide and several hundred kilometres long (Figure 7-1). The Project lies along the western edge of the 30 km diameter Cachinal Caldera and is about 25 km south of the overlapping, 7 Ma younger, Soldado Caldera. The oldest rocks associated with the Cachinal Caldera are 61 Ma to 62 Ma pyroxene andesites and associated diorites. Subsequent large scale eruption of lapilli tuffs and ignimbrites led to the collapse of the caldera. Intrusions of dacitic domes and laccoliths between 59 Ma and 55 Ma were associated with resurgence and are the youngest associated rocks known. The compositionally similar Soldado Caldera located to the north was active between 53 Ma and 51 Ma. Hydrothermal alunite samples from the Guanaco mine area have yielded dates ranging from 48.5 ± 6.6 Ma to 43.8 ± 1.2 Ma. These dates indicate a 7 Ma to 10 Ma interval between the end of magmatic/volcanic activity within the Cachinal Caldera and the onset of hydrothermal activity. The late Cretaceous-Eocene sub-alkaline volcanic complex consists of alternating lava flows, tuff beds, breccias, and agglomerates, commonly massive or loosely stratified, mainly andesitic and dacitic in composition, with minor basaltic and rhyolitic constituents. These rocks are intruded by small subvolcanic bodies formed of gabbros to rhyolites, and by rhyolitic and dacitic domes (Boric et al., 1990). A number of lithostratigraphic units have been described in the region including Icanche Formation, Cerro Cinchado Formation, Augusta Victoria Formation, Chile– Alemania Formation, Estanque Beds, Azabache Formation, and Cerro Islote Formation. To the west, these units overlie unconformably other volcanic and sedimentary units belonging to the Jurassic–Early Cretaceous Arc. They are covered to the east, also unconformably, by Oligocene–Early Miocene sedimentary rocks. Late Miocene to Recent clastic unconsolidated sediments, mainly breccias and sands, conceal much of the older formations. The volcanic rocks are sub-horizontal or gently dipping in the Intermediate Depression, but they form wide, north–south or northeast–southwest striking folds in the Domeyko Cordillera. The volcanic sequence is very thick, reaching 3,900 m in the Domeyko Cordillera.
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Figure 7-1: Regional Geology Map
450,000 m
7,214,000m
7,226,000m
440,000 m
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Hydrothermal alteration of varying intensities has affected wide zones in the region, and gold and silver epithermal deposits such Guanaco and El Peñón, as well as minor copper, lead, and zinc veins, are related to the hydrothermal activity.
7.2
Project Geology The Guanaco gold district, taken to include Mina Inesperada, spans the eastern boundary of a north-trending graben of Palaeocene age. Alteration and mineralization in the district are hosted by volcanic flows, tuffs, and breccias of mainly andesitic, dacitic, and rhyolitic compositions which range in age from Palaeocene to mid-Eocene. The north-striking Soledad fault system is mapped along the eastern side of the Palaeocene graben, with the main break dividing the gold district into eastern and western parts. Seven deposits have been outlined within the Project:
7.2.1
•
Quillota
•
Cachinalito Oeste
•
Cachinalito Central
•
Cachinalito Extension Norte
•
Dumbo
•
Defensa
•
Perseverancia.
Lithologies The Chile–Alemania Formation, represented in the Project area by dacitic and andesitic tuffs and andesitic lavas of Palaeocene age, is intruded in the area by synchronous dacitic domes. The Guanaco Project deposits are hosted by these rocks. Reddish-grey to greenish andesitic tuffs form the base of sequence and reach at least 200 m in thickness. They are covered by a series of light-coloured, fragmental pyroclastic rocks of dacitic composition. Calc-alkaline dikes or sills were observed to intrude the pyroclastic rocks. Dark reddish-grey andesitic flows crop out at the eastern ends of the Guanaco Project deposits, overlying the pyroclastic rocks. They have been usually assigned to the Chile–Alemania Formation, but Clark Arnold (1999) mapped an unconformable contact with the lower, altered volcanics, which suggests a younger age for this unit.
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Quaternary to Recent alluvial deposits, from a few metres to tens of metres thick, cover most of the Project area. As a result, the volcanic units rarely crop out. Tens of mineralized veins have been identified and exploited in the district; the most important vein systems are Defensa, Perseverancia, and Dumbo (recognised and exploited in open pits, see Figure 7-2) and Abundancia, San Lorenzo, and Cachinalito. The veins can extend for as much as 900 m along strike, and to 270 m in depth. Figure 7-3 shows a geological plan of the area of the Cachinalito deposits, whereas Figure 7-4 shows the area of the Dumbo–Perseverancia deposits farther to the east. 7.2.2
Alteration Silica–alunite replacement is pervasive throughout much of the rhyolitic ash flow sequence that caps Cerro Estrella. This appears to be an early alteration event. The main alteration phase at the Guanaco Project is characterised by an intense silicification hosting the gold mineralization. Alteration is best developed along two east–west- and east–northeast-trending, sub-vertical zones. These structural systems are often accompanied by hydrothermal breccias. Three types of silicification have been differentiated; the two early stages of silica contain variable amounts of gold. The third, barite–silica phase quite often contains high-grade gold; these veins were the focus of historical underground production. Silicification grades outward into advanced argillic alteration, and more distal to the structures, into propylitic alteration. The alteration front is highly irregular. It is better developed along permeable zones resulting from fracturing or brecciation, lithological contacts, or even favourable rocks, such as volcanics, where tuffs are the preferred hosts. Intermediate argillized zones are barren of gold, while advanced argillized zones are locally mineralized. An alteration assemblage containing chlorite, gypsum, pyrite, and hematite (derived from oxidation of ferromagnesian minerals) is broadly distributed in the andesite tuff and andesite/basalt units peripheral to argillized zones.
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Figure 7-2: Schematic Showing Main Vein Systems
Note: As an indication of the scale of the figures, the distance between the centre lines of the Dumbo and Perseverancia pits is 450 m.
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Figure 7-3: Geological Plan Cachinalito Deposits Area
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Figure 7-4: Dumbo and Perseverancia Deposits Area
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7.2.3
Structure The most important structural feature related to gold mineralization at Guanaco is characterised by two vein systems that have either an east–west, or an east– northeast–west–northwest strike. This structure, the Dumbo structure, underwent appreciable dextral-oblique normal displacement. Displacement on the other goldbearing structures in the district is far less well constrained, but appears to have been substantially less than on the Dumbo structure Gold-bearing structures are all steeply-inclined ledges composed of massive vuggy and cryptocrystalline quartz of replacement origin. Individual ledges are up to 5 m wide, but more commonly seem to comprise several impersistent siliceous strands separated by altered, but barren, wall-rock. The ledge structures extend for at least 4 km along strike, although gold concentrations are confined to relatively restricted shoots within them. The ledges, formerly exploited underground, and then in the Dumbo, Defensa, and Perseverancia open pits, contain the largest ore shoots, which reportedly extended over vertical intervals of as much as 300 m. Farther west, however, the ore shoots defined to date appear to be more restricted both laterally and vertically. For example, individual shoots discovered at Cachinalito West range from 50 to 150 m in vertical extent and occur at slightly different elevations along closely spaced, parallel structures rather than within a single continuous ledge. The gold-bearing ore shoots in the Guanaco ledges appear to be closely associated with ledge segments that underwent fracturing, brecciation, and the introduction of late-stage quartz and barite (barium sulphate). The shoots are of different sizes, but tend to be both horizontally and vertically more restricted in the northwestern part of the district, the current focus of exploration activity.
7.3
Comments on Section 7 In the opinion of the AMEC QPs, knowledge of the deposit settings, lithologies, and structural and alteration controls on mineralization is sufficient to support Mineral Resource and Mineral Reserve estimation.
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8.0
DEPOSIT TYPES The Guanaco Project deposits are considered to be examples of high-sulphidation epithermal systems. Global examples of such deposits include Summitville (Colorado, USA); Nansatsu (Japan), El Indio (Chile); Temora (New South Wales, Australia), Pueblo Viejo (Dominica), and Lepanto (Philippines). The following description of epithermal and high-sulfidation epithermal deposits in particular, is taken from Hedenquist (2005). Epithermal gold and silver deposits of both vein and bulk-tonnage styles are known by a variety of largely synonymous terms. They may be broadly grouped into highsulfidation (HS), intermediate-sulfidation (IS), and low-sulfidation (LS) types based on the sulfidation states of their primary sulfide assemblages (Hedenquist et al., 2000). Porphyry-related base-metal veins and HS epithermal deposits share many common features, and some deposits appear to have a close relationship (Einaudi et al., 2003). In addition to their mineralogical differences, epithermal deposits also form in distinct tectonic settings (Sillitoe and Hedenquist, 2003). Most HS deposits are generated in mildly extensional to neutral calc-alkaline andesitic–dacitic arcs. Typically, deposits are associated with subvolcanic to volcanic in calderas, flow-dome complexes, and more rarely maars and other volcanic structures. Deposits are also often associated with subvolcanic stocks, dykes and breccias. Host rocks can include volcanic pyroclastic and flow rocks, commonly subaerial andesite to dacite and rhyodacite, and their subvolcanic intrusive equivalents; more rarely are sedimentary rocks host to epithermal deposits. Highly-acidic hydrothermal fluids form advanced argillic lithocaps over porphyry systems. The lithocaps may host subsequent HS mineralization, which itself is due to higher-pH, moderate- to low-salinity fluids. Vuggy quartz is typical, but not a determining characteristic, of HS epithermal deposits. Drusy cavities, banded veins, hydrothermal breccias, massive wall rock replacements with fine-grained quartz are also typical of the deposits. Zones of residual, vuggy quartz have halos of advanced argillic quartz–alunite alteration and roots of pyrophyllite and/or sericite. These zones typically contain disseminated pyrite and >95 wt% SiO2, and form bodies that flare out upwards and/or preferentially replace a lithological unit. In many cases, these bodies lack base- and precious-metals and constitute a barren lithocap of advanced argillic alteration (Sillitoe, 1995).
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In other cases, after the leaching stage, copper and gold were introduced to form epithermal Au–(Cu) deposits with abundant sulfide minerals, for example the case of the Lepanto HS deposit, which overlies the Far Southeast porphyry deposit in Luzon, Philippines (Hedenquist et al., 1998). The principal copper minerals in HS deposits are enargite, luzonite and/or famatinite, indicating a high sulfidation state. Two ore types are generally developed, massive enargite–pyrite and/or quartz–alunite–gold. Principal ore minerals include pyrite, enargite/luzonite, chalcocite, covellite, bornite, gold, electrum; chalcopyrite, sphalerite, tetrahedrite/tennantite, galena, marcasite, arsenopyrite, silver sulphosalts, and tellurides. A typical sequence of mineral deposition is pyrite + enargite ± luzonite, followed by chalcopyrite ± tennantite ± sphalerite ± galena + pyrite. Also post-dating the enargite assemblage is the gold stage, which typically consists of electrum and gold tellurides, as at Lepanto (Philippines); Goldfield, Nevada (USA); and El Indio, (Chile). Oxidation of primary ores is commonly necessary for desirable metallurgy; primary ores may be refractory and can render low-grade mineralization sub- to noneconomic. Gangue minerals include pyrite and quartz, with, more rarely, barite. The form of HS deposits varies from replacement or dissemination to vein, stockwork and hydrothermal breccia. Irregular deposit shapes are frequently determined by host rock permeability and the geometry of ore-controlling structures. Multiple, crosscutting composite veins are common.
8.1
Comment on Section 8 The deposits of the Project area are considered by the AMEC QPs to be examples of high-sulphidation systems based on the following: •
Hosted in volcanic and volcaniclastic rocks of the Cachinal Caldera
•
Gold-bearing structures are all steeply-dipping ledges composed of massive vuggy and cryptocrystalline quartz of replacement origin.
•
Alteration comprises intense silicification, advanced argillic alteration and distal propylitic alteration
•
Pervasive acid-sulphate alteration
•
Presence of sulpharsenides enargite and its low-temperature dimorph, luzonite
•
Disseminated pyrite is the most common mineral in the non-weathered ores, while enargite, luzonite, and minor chalcopyrite are present in the deeper horizons
•
Mineralization is hosted by siliceous alteration, fringed by a lower grade zone of quartz–alunite alteration.
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9.0
MINERALIZATION Native gold forming dendrites and coarse and fine grains is the most important ore mineral, although it is rarely visible. Disseminated pyrite is the most common mineral in the non-weathered ores, while enargite, luzonite, and minor chalcopyrite are present in the deeper horizons. Chalcocite and covellite together with copper carbonates, silicates, and a number of rare copper arsenates (chenevixite, ceruleite) have been found in secondary enrichment zones. Important gangue minerals are quartz, tabular barite, as well as pink alunite and kaolinite (in substitution of feldspars in zones affected by advanced argillization), hematite, chlorite, epidote. Pervasive silicification commonly replaces all the primary rocks, whereas vuggy silica resulting from extreme acid leaching is a preferred host of the gold mineralization. In the Cachinalito vein system the economic mineralization appears to form 50 m to 150 m long clusters, known locally as ‘bolsones’. A narrow vertical range (less than 150 m) corresponding to relatively restricted paleo-depth conditions seems to have been relevant for economic gold deposition. The majority of the gold mineralization is concentrated between the 2,500 m and 2,650 m elevation levels. High-grade ore shoots (up to 180 g/t Au), 0.5 to 3.0 m wide, have been exploited. Lower-grade halos, below 2 g/t Au, reach 20 m in width. The oxidation zone extends down 130 to 150 m and is relatively free of copper. Gold grades in this zone are generally high, sometimes exceeding 50 g/t Au. A series of cross-sections and bench plans are included to illustrate the typical mineralization distribution in the various deposit areas. Figure 9-1 and Figure 9-2 display mineralization grades at the Defensa deposit; Figures 9-3 and 9-4 present similar plans for the Perseverancia deposit. Note that the pits shown on the figures with grey/black outlines are illustrative only of the pit shapes used to confine the Mineral Resources discussed in Section 17; the pits have yet to be mined. Brownedged pits are existing pits from the 1990s mining operation.
9.1
Comment on Section 9 The AMEC QPs are of the opinion that the mineralization styles and settings are well understood for the Project deposits, and can support declaration of Mineral Resources and Mineral Reserves.
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Figure 9-1: Example Gold Grade Distribution, Defensa – Section 446,300E (Gold Composites)
Block Model Limits Current Topography
Resources Pit
Au g/t 0.0 – 0.5 0.5 – 1.0 1.0 – 2.0 2.0 – 3.0 3.0 – 4.0 4.0 – 5.0 5.0 – 7.5 7.5 – 10.0 ≥ 10.0
Resource Classification Measured Indicated Inferred
Note: the colours in the gold grade legend apply only to the colours used on the drill traces.
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Figure 9-2: Example Gold Grade Distribution, Defensa – Bench Plan 2700 (Gold Composites)
Au g/t 0.0 – 0.5 0.5 – 1.0 1.0 – 2.0 2.0 – 3.0 3.0 – 4.0 4.0 – 5.0 5.0 – 7.5 7.5 – 10.0 ≥ 10.0
Block Model Limits
Resources Pit
Resource Classification Measured Indicated Inferred
Note: the colours in the gold grade legend apply only to the colours used on the drill traces.
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Figure 9-3: Example Gold Grade Distribution, Perseverancia – Section 446,400E (Gold Composites)
Block Model Limits
Resource Classification Measured Indicated Inferred
Current Topography
Au g/t 0.0 – 0.5 0.5 – 1.0 1.0 – 2.0 2.0 – 3.0 3.0 – 4.0 4.0 – 5.0 5.0 – 7.5 7.5 – 10.0 ≥ 10.0
Resources Pit
Note: the colours in the gold grade legend apply only to the colours used on the drill traces.
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Figure 9-4: Example Gold Grade Distribution, Perseverancia – Bench Plan 2700 (Gold Composites)
Resource Classification Measured Indicated Inferred
Block Model Limits
Current Topography
Resources Pit
Note: the colours in the gold grade legend apply only to the colours used on the drill traces.
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Au g/t 0.0 – 0.5 0.5 – 1.0 1.0 – 2.0 2.0 – 3.0 3.0 – 4.0 4.0 – 5.0 5.0 – 7.5 7.5 – 10.0 ≥ 10.0
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
10.0
EXPLORATION Modern exploration commenced on the Project in the 1970s, and has been nearly continuous since that date. Exploration has been undertaken by Austral, its precursor companies (e.g. initial gold exploration by Amax), or by contractors (e.g. airborne geophysical surveys, hydrological surveys and geotechnical studies). For the purposes of the exploration, drilling and sampling discussions, data collected prior to Austral’s interest in the Project are referred to as “legacy data”.
10.1
Grids and Surveys The Project is located in UTM zone 19J and the PSAD56 datum is used for topographic measurements. Topographic measurements were referenced to nine HM (Hitos de Mensura) points previously surveyed with reference to the Chilean Instituto Geográfico Militar (IGM) national grid. The original surface topography, before laying the plastic liner for leaching, was established by aero-photographic restitution. This work was done by Intrasearch from Denver in 1991. The scale of the plans was 1:2.500 and 1 m contours were plotted. The final topography of the completed pads was not available; however, AMEC is of the opinion that differences should be very small with respect to the original surface. The current surface topographies of the leach pads were measured using a Geodimeter Total Station Series 500. This work was done by Amax on a continuous basis as the heaps were loaded. The current topography corresponds to the last measurement done before the closure of mining operations. In 2009, Maptek Pty Ltd produced a high resolution topographic map by air surface scanning. Minera Guanaco has updated this plan by including new roads and other features as necessary.
10.2
Geological and Structural Mapping In 1992 Thematic Mapper Spectral data (TMS) for the area surrounding the Guanaco mine was purchased by Water Management Consultant (WMC) for water exploration. The data was reanalysed and processed by Candee (1997). The regional scale (1:250,000) thermal infrared image identified regional linear north–south trends. The
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majority of the zones of hydrothermal alteration were located within a 10 km wide by 30 km long belt centered along an east–west trend. Geological mapping was performed at scales ranging from district to prospect. Results of the mapping programs were used as vectors for drill programs and exploration targeting.
10.3
Geochemistry Soil and rock sampling were used to evaluate mineralization potential and generate targets for diamond drilling. Transported cover in the Project area can be an impediment in geochemical sampling, as potential bedrock mineralization can be covered in tens of meters of barren cover. A total of 1,734 samples were taken. Figure 10-1 shows the sample location points. Geochemical sampling during 1991 and 1992 suggested a N70°E mineral trend defined by the Guanaquito sector on the west and by the Plaermo sector on the east. This trend showed anomalies for Au, Ag, As, Sb, and Cu. The Cerro Inesperado sector showed Au, As, Pb, Cu, and Mo anomalies. The Sierra Las Pailas and Cerro Campana were anomalous for antimony (Candee, 1997).
10.4
Geophysics The following geophysical methods have been used at the Guanaco Project, as part of first-pass exploration to target areas of sulfides that may be associated with gold–silver mineralization: •
Airborne magnetic, radiometric and resistivity surveys: Collected by RTZ Mining and Exploration Ltd. (RTZ) in 1992, and obtained by Amax. Data were collected at an elevation of 400 m mean-terrain-clearance along north–south flight lines. The flight lines were spaced 1,000 m apart in the western and central portions of the survey area and 500 m apart in the eastern portion of the survey area. Because of the high altitude and wide spacing of these flight lines, the resolution in the radiometric data was poor
•
Geoscan spectral data: five flight lines totalling 119 km completed in 1996
•
Ground magnetic surveys: Performed by Amax in 1996, along north–south lines spaced 50 m apart
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Figure 10-1: Geochemical Sample Location Plan
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•
Ground transient electromagnetic (TEM) surveys: TEM geophysical profiles, totalling 19,350 m, were completed by Geodatos Ltda. (Geodatos) in 1994. Ten lines of TEM data were collected by Amax on the Project prior to October 1996. These data were collected using 300 m x 50 m (east by north) transmitter loops, and 22 time channels
•
Ground induced polarisation (IP) and resistivity survey: Quantec Geofisica Limitada (Quantec), in 2000, completed a ground survey consisting of nine lines of frequency-domain data collection using the dipole-dipole array with 300 m spacing
•
Ground controlled source audio-magneto-telluric (CSAMT) survey: Performed by Kinam in 2000
•
CSAMT survey: 70 km (Zonge, March 2008) and 14 km (Zonge, June 2008) surveys performed by Zonge Ingenieria y Geofisica (Chile) SA for Minera Guanaco
•
Magnetometric survey performed by Minera Guanaco in 2010.
Figure 10-2 and Figure 10-3 show the location of the surveys performed on behalf of Minera Guanaco. The geophysical data and models were integrated into an interpretation of the Guanaco Project area. Several alteration and mineralization signatures were identified in the vicinity of the Guanaco deposits. Both the dipole-dipole resistivity and TEM data were interpreted as silica zones (high resistivity) near the mine. Several other areas of interpreted silica zones were identified. An IP high and potassium low are coincident with the silicification near the mine. The high IP values were interpreted as the presence of sulphide mineralization. Gold mineralization appears to occur at the margins of both potassium highs and lows (Beasley, 2000). Fritz (1996) and Ellis (1996) indicated that the magnetic structures, TEM and VLF trends have similar configurations to those identified by mapping and photos. Fritz identified a magnetic anomaly related to a probable porphyry system that could be the source of alteration exposed at Cerro Inesperado, Chancho, and Guanaco. A total of 84 Geoscan anomalies were identified within the Guanaco concessions. All of the anomalies were either coincident with known altered or mineralised zones or located within a 10 km wide by 30 km long EW trending belt identified from the TMS data.
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Figure 10-2: Location Plan showing Outline of CSAMT Survey Lines
Note: red and green lines from Zonge (2008) survey, yellow lines from Quantec (2000).
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Figure 10-3: Magnetometric Survey Plan
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10.5
Trenches and Pits Pitting and trenching were used as first pass delineation tools in the areas of the current open pits. The trenched and pitted areas have since been mined out.
10.6
Drilling Drilling completed on the Project is discussed in Section 11.
10.7
Bulk Density Bulk density determinations are discussed in Section 12.
10.8
Petrology, Mineralogy and Other Research Studies Arnold Clark (1999) collected 250 samples and performed a petrographic study on 14 of those samples on behalf of Kinross. The study confirmed that the hydrothermal alteration associated with enargite–gold mineralization was of acid-sulphate type, characterized by the development of alunite, various clays, sericite and enargite. Silicification was locally noted to be intense. Alteration effects, as well as gold and copper mineralization, were related to development of permeable zones resulting from faulting and/or development of tectonic breccias. A fluid inclusion study undertaken in 2000, (Townley, 2000) concluded that based on the temperature and salinity characteristics evident from the inclusions, mineralization in Guanaco took place at depths between 200 m and 500 m, confirming the epithermal nature of the deposit.
10.9
Exploration Potential The Cachinalito deposits remains open along strike. During 2010, an extension to the east, named the Natalia prospect, was identified and will be the subject of additional exploration work.
10.10
Activity Related to Mine Development Construction of an exploration decline commenced during March 2010. Austral Gold Limited (Austral Gold), the parent company of Minera Guanaco, have stated that as at 26 October, the work was progressing ahead of schedule.
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The decline is planned for completion in December 2010 and includes the construction of two ventilation raises and civil works at the decline portal (Austral Gold, 2010). As at 31 October 2010, decline construction was at 1,344 m of the planned 1,500 m. As at 31 October 2010, the crusher refurbishment was completed and the crusher was in operation, the ADR plant was also operational, and the construction of solution handling systems had been completed. On 6 October 2010, Austral Gold announced the engagement of Incopesa, an open cut mining contractor, to undertake open pit mining and heap leach reclaiming operations (Austral Gold, 2010). Preliminary activities relating to open pit mining had commenced by 31 October 2010. Heap leaching recommenced during September 2010 with the recommissioning of the crushing circuit. On 26 October 2010, Austral Gold announced pouring the first gold doré bar from retreatment of heap leach material (Austral Gold, 2010).
10.11
Comment on Section 10 In the opinion of the AMEC QPs, the exploration programs completed to date are appropriate to the style of the deposits and prospects within the Project. The structural, age dating, and petrographic research work supports the genetic and affinity interpretations.
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11.0
DRILLING In total, 279,837 m in 1,991 RC and core holes have been drilled on the property since 1980 and drilling is in progress at the Report effective date. Of these drill holes, the majority, 1,965 holes, are RC (275,732 m) and only 26 holes (4,105 m) are core holes. Drilling is summarized in Table 11-1 by operator. Drill hole collar locations are shown in Figure 11-1. Table 11-1: RC and Core Drill Summary Table Company
Year
Hole ID Series
BHC SCMG Amax
1980 1990 1991 1992
SG SG I, SG AG SG, WE AD, RC, SG EG, P, RC EL, Q, RC, SH RC RC A to E KGMC RC RCGUA CA F RC RC RC RC RC
Kinam/Cominco
Minera Guanaco /Austral
1993 1994 1995 1996 -1997 1999 2000
2000 2004 2006 2007 2008 2009 2010 *
Totals Note: 2010 RC total includes redrill of six existing drill holes
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Core # Holes
4
3
19
26
Core Meterage (m)
RC # Holes
RC Meterage (m)
36 166 178
2,696 10,564 35,932.5
305 119 261 95 93 34 21
38,841.7 14,212.4 33,169.5 10,591.5 11,610 4,471 633
104 34
21,173.5 7,597
50 188 101 37 58 85
994 27,511 19,904 9,981 10,593 15,257
1,965
275,732
158.1
572.7
3,374
4,105
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Figure 11-1: Drill Hole Location Plan
Note: Red indicates deposit outlines. Drill lines and collars are colour-coded by year. Cyan = 2010 RC drilling, pale blue = 2009 RC drilling, blue = November 2008 drilling, green
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=
2008
drilling
prior
to
November,
Page 11-2
pink
=
2006
and
2007
drilling,
grey
=
drilling
pre
2006.
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
There are also 50 sonic drill holes (994 m) drilled in 2006 by Minera Guanaco to test the material contained within the existing Phase I and Phase II leach pads. These drill holes are summarized in Table 11-2. Table 11-2: Sonic Drill Hole Summary Table Item
No.
Min.
Max.
Total
Drill holes Drill hole Length (m) Assay Length (m) Au (ppm) Ag (ppm) Cu (%)
50 50 994 994 993 994
NA 14 1 0.03 0.08 0.000
NA 20 1 4.40 70.00 0.549
NA 994 994 NA NA NA
11.1
Legacy Drill Data
11.1.1
Enami (1970s) Drill holes completed by Enami during the 1970s are not included in the database due to the paucity of available information.
11.1.2
BHC (1980) In 1980, BHC drilled 50 RC drill holes (SG-1 to SG-50) using a Schramm open-hole rotary rig, totalling about 3,000 m. All holes were inclined (-16° to -75°). No information is available regarding hole diameters, recoveries, contractors, and methods used in sample collection. Data from these campaigns were not considered during the resource estimation. Holes were drilled in the areas that became the Huascar and Dumbo pit zones.
11.1.3
SCMG (1987–1990) Between 1987 and 1990 SCMG drilled 167 holes (SG-51 to SG-229) with a total meterage of about 10,564 m. All holes were RC and were executed in the Perseverancia, Huascar, and Defensa pit zones. Drill holes SG-51 through SG-90 were drilled during the first SCMG evaluation phase. There is no information regarding the type of rig used, hole diameters, and sample collection techniques used, but it is assumed that all were equivalent to those used for holes SG-91 through SG-229. These later holes were drilled after SCMG started development and their own drill was used which employed conventional open-hole rotary and 5¼ inch pneumatic hammers. Most of the SCMG holes were drilled at
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either -60° or -90°. A small percentage was drilled at other inclinations between -60° and -90°. About half of the holes were between 35 m and 60 m in depth, with the deepest being 144 m. 11.1.4
Amax (1991–1997) Amax drilled 1,005 holes totalling 142,674 m between 1991 and 1997. These holes were drilled using reverse circulation rotary drills and belong to the drill hole series EG (001 to 092), I, P, RC (001 to 351), SG (230 to 639), SH (002 to 031), and WE (001 to 090). Six holes from the AG drill hole series, totalling 405.25 m, were core holes. Holes comprised exploration, condemnation and infill drill holes. The first 175 rotary holes were drilled with 5¼ inch bits, except for the top 3 to 6 m of each hole, which was drilled with 7 inch bits to allow installation of the casing. The majority of drilling was accomplished using conventional pneumatic hammers, but 15% to 20% of the meterage was drilled with tricone bits. About 1–2% of the drill holes were drilled with an open-face hammer bit. Ausdrill Ltda (Ausdrill) and Harris y Cia. Ltda. (Harris) were the main drilling contractors. Rasco Inversiones Ltda (Rasco) was the principal downhole surveyor. Rasco used both Eastman Multishot and Reflex Fotobor methods to measure the hole deviations. All of the Amax holes were drilled dry, with the exception of 10 holes which utilized injected water to drill the last 15 m to 50 m.
11.1.5
Kinam (1999–2000) The Kinam drilling programs consisted of 138 RC drill holes totalling 25,645 m from the RC-352 to RC-489 drill hole series. The drill hole average length was 198 m. In addition, three diamond holes were completed during the Kinam exploration program, totalling 572.65 m. An additional 34 RC drill holes were drilled during 2000, totalling 7,597 m. The program was oriented to explore new concealed targets in gravel-covered areas previously recognised by geological and geophysical surveys. Ausdrill was the drilling contractor. The drilling equipment selected for this exploration stage was a Schramm ED-2 Rotary Drill mounted on a Ford L8000 diesel truck. Tricones with 5½" or 5¾" diameter were used so that each sample would weigh approximately 58 to 64 kg. A dust collection system was installed and the cyclone and the hoses were checked every day to avoid sample spillage.
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Kinam had trained personnel at the rig on a permanent basis. Kinam employees were in charge of keeping sampling records, sample splitting, bagging, labelling, weighing, and loading the samples onto a truck for daily transportation to the laboratory. Kinam employees were also responsible for inserting sample blanks and field duplicates before sending the samples to preparation. Geological logging was performed by qualified geologists.
11.2
Minera Guanaco Drill Programs Minera Guanaco drill programs were carried out between 2004 and 2008. The exploration and infill drill programs consisted of 208 RC drill holes totalling 57,396 m from the RC-490 to RC-815 drill hole series. The drill hole lengths varied from 7 m to 450 m with an average of 176 m. Samples were taken at 1 m or 2 m lengths. Additionally, 19 diamond holes were completed in the Cachinalito area during 2004, totalling 3,374 m. These holes belong to the CA drill hole series. The purpose of the programs was to identify extensions to known mineralised areas. These areas included Cachinalito Oeste, Extension Norte, Chilena, Abundancia, Dumbo Oeste, Salvadora, Cerro Guanaquito, Guanaquito Oeste, Cerro Quillota, Sierra El Inesperado, and Quebrada Guanaco. During May and June, 2006, 50 holes were drilled on the existing leach pads, 17 holes on the Phase I pad and 33 holes on the Phase II pad. A total of 994 m were drilled on both pads.
11.2.1
Drill Contractors and Methods Diamond drill holes during 2004 were completed by Major Drilling Ltda (Major), a local contractor. Major used UDR-650 and UDR-1000 rigs. No documentation on hole diameter was available. Major was also used during the 2008 drilling campaign. During 2006–2007 RC drilling was conducted by Harris. The drill used was a Schramm boring a 5.5” to 5.75” (14 to 14.6 cm) diameter hole with 5¼” rotary tricone drill bits. Dust collection systems were installed consisting of a cyclone, hoses, and a 2.5 m long vent over the cyclone for improved dust recovery. A riffle splitter was installed just below the cyclone opening to divide the whole sample. Minera Guanaco contracted Boart Longyear to drill the leach pad holes using the Sonic drilling method. This method provides highly representative, continuous core samples of overburden formations.
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11.2.2
Legacy Data There is limited information on how drill data were collected prior to the involvement of Minera Guanaco. Minera Guanaco compiled the various legacy data files into a single Excel database.
11.2.3
Minera Guanaco Logging Standardized logging forms and geological legends were developed by Minera Guanaco for the deposits based on the mining operations and drilling completed. The geological legend is partly built on historical observations of the local geology. Geological logging was performed digitally for all Minera Guanaco programs. Data recorded include lithology, veining, alteration and mineralization, using pre-set geological legends and alphanumeric codes. Unique features not accounted for in the legends are noted under written comments.
11.2.4
Minera Guanaco Collar Surveys From 2008, all drill data have been surveyed using a global positioning system (GPS) instrument. Guillermo Contreras, a local contractor, surveyed the Minera Guanaco program drill collar locations using a Total Station Geodimeter 500 prior to drilling. The collar locations were re-surveyed after drilling was completed, and the inclination of the hole was also measured. Leach program sonic drill hole collar locations were surveyed by Rodolfo Sanchez, a local contractor, using a Trimble GPS, model Pathfinder ProXRT with 30 cm precision. Collar data are uploaded directly into the database.
11.2.5
Minera Guanaco Down-hole Surveys From 2006 onwards, Comprobe Limitada (Comprobe) conducted the downhole surveying for the infill and exploration drill programs undertaken by Minera Guanaco using the gyroscope method which determines the azimuth by magnetic reading and the inclination of the hole. Downhole surveys were completed for 627 drill holes using the gyroscope instrument. Almost all drill holes are inclined with approximately -55° to -70° dips and 0° to 25° and 175° to 100° azimuths. Changes in azimuth and dip indicate a tendency of the holes to rotate clockwise and to become more vertical in orientation with depth. Trajectories
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of the surveyed holes diverge from the initial orientation as depth increases. This produces a difference between the coordinates of the intervals calculated with the deviation and the coordinates of the same intervals calculated without deviation. Measurements were collected at variable depths of 10 m, 20 m or 50 m intervals, and also at the end of some holes. The overall average azimuth and dip deviations were 1.81° per 100 m and -1.81° per 100 m, respectively. Comprobe also conducted the downhole surveying for the leach pad sonic drilling. According to Magri (2007) results indicate that the maximum deviation from vertical is 1.15°. This maximum inclination would produce a deviation from vertical at the bottom of a 20 m drill hole of 4.07 cm, which is negligible. 11.2.6
Minera Guanaco Recoveries The minimum recovery from the 2006–2007 RC drilling program was 90%. Drill recovery for each sample interval was calculated by AMEC by comparing the actual weight with the estimated weight. The estimated weight of a 2 m sample was established at 52 kg. This information is not recorded in the Project database. Minera Guanaco recorded the recovered weight by drilling interval for the 2008 drilling campaign, but not the estimated recovery percentage. AMEC estimated recovery using a theoretical sample weight of 32.7 kg, assuming a 2.5 g/cm3 density. The resulting recoveries ranged from 21% to 147%, averaging 100%. Recoveries were not measured for the sonic drill programs over the leach pads.
11.2.7
2009–2010 Drill Program A total of 58 RC holes were drilled in 2009. Minera Guanaco completed a drill program in late September 2010, which was undertaken in order to refine the geological model, evaluate the continuity of mineralization, evaluate possible deposit extensions, test for continuity of regional structures that were considered to be of exploration interest, and confirm the mineralization defined by previous drilling campaigns. A total of 79 new drill holes were completed in 2010, and an additional 7 holes were redrilled. The 2009 and 2010 drill hole collar locations are shown in Figure 11-1. Significant results from the program that were available as at 31 October 2010 are summarized in Table 11-2. A number of drill holes are yet to have final assay results available.
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Table 11-3: 2009–2010 Exploration Drill Results Natalia Total Dip Depth (m)
Hole
East
North
Azimuth
RC-891
444725
7223808
180
-55
220
RC-892
444900
7223850
180
-55
190
RC-895
RC-896
445100
444560
7223992
7223795
180
180°
-55
-55°
330
280
Cachinalito Total Dip Depth (m)
From
To
Width (m)
Au g/t
Ag g/t
151
152
1
3.2
4.0
0.008
157
158
1
18.3
14.0
0.169
136
139
3
8.3
11.8
0.044
273
286
13
3.2
50.4
0.813
286
293
7
1.8
24.7
0.779
293
299
6
2.9
38.9
0.956
300
308
8
1.7
23.6
0.133
56
62
6
21
2.4
0.030
219
224
5
1.9
21.6
0.700
From
To
Width (m)
Au g/t
Ag g/t
Cu % 0.011
Cu %
Hole
East
North
Azimuth
RC-898
444775
7223886
180°
-55°
234
76
82
6
8.3
5.8
RC-899
445000
7223992
180°
-55°
276
194
195
1
1.2
14.5
0.010
RC-901
445075
7224017
180°
-55°
280
133
134
1
1.3
16.0
0.0306
From
To
Width (m)
Au g/t
Ag g/t
Cu %
Hole RC-898
11.2.8
East
North
Azimuth
San Lorenzo Total Dip Depth (m)
444775 7223886 180° -55° 234 206 210 4 1.2 8.8 0.200 Note: Depending on the dip of the drill hole, and the dip of the mineralization, drill intercept widths are typically greater than true widths. Drill hole RC898 intersected both the Cachinalito and the San Lorenzo systems.
Drilling Used to Support Mineral Resource and Mineral Reserve Estimation A total of 440 drill holes were used to estimate the open pit mineral resources; all but one were RC drill holes. The average length of the RC drill holes is approximately 116 m, the longest being 270 m long. The only core hole is approximately 11 m long. A total of 292 drill holes, of which 12 are core holes and the balance are RC holes, were used to estimate the underground mineral resources. The average core hole length is approximately 183 m and the longest core hole is approximately 213 m long. The average RC hole length is approximately 201 m and the longest RC hole is approximately 351 m long. Drill holes were generally orientated perpendicular to the mineralization. Dips vary depending on the target and range from -60º to -90º. The spacing between drill holes tightens to about 25 m in the most densely drilled areas on the surface; drill holes are further apart at depth.
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Example drill intercepts for the Minera Guanaco deposits that have mineral resource estimates, sourced from various drilling programs are summarized in Table 11-4, and are illustrative of nature of the mineralization. The example drill holes contain oxide and sulphide intersections and areas of higher-grade in lower-grade intervals. Table 11-4: Example Intercept Drill Summary Table Hole ID
From (m)
To (m)
Interval (m)
Au (g/t)
Ag (g/t)
Zone
EG-086 EG-086 EG-086 EG-086 EG-086 QI QI QI QI QI QI QI RC-260 RC-260 RC-260 RC-260 RC-260 RC-260 RC-260 SG561 SG561 SG561 SG561 RC-257 RC-257 RC-257 RC-827 RC-827 RC-827 SG521 SG521 SG521 SG521 RC-255 RC-255 RC-255 RC-255 RC-255 RC-255 RC-263 RC-263 RC-263 CA-02 CA-02 CA-02 CA-02 CA-02 CA-02 KGMC-1 KGMC-1 KGMC-1
28.5 33 48 49.5 51 64.5 66 69 70.5 73.5 138 139.5 43.5 46.5 48 49.5 75 82.5 85.5 241.5 243 244.5 246 96 97.5 99 8 9 10 106.5 108 109.5 136.5 4.5 91.5 94.5 96 97.5 99 84 124.5 138 111.3 112.2 113.2 113.6 114.4 115.2 130.85 131.55 133.78
30 34.5 49.5 51 52.5 66 67.5 70.5 72 75 139.5 141 45 48 49.5 51 76.5 84 87 243 244.5 246 247.5 97.5 99 100.5 9 10 11 108 109.5 111 138 6 93 96 97.5 99 100.5 85.5 126 139.5 112.2 113.2 113.6 114.4 115.2 116.05 131.55 132.48 135.09
1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1 1 1 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 0.9 1 0.4 0.8 0.8 0.85 0.7 0.93 1.31
19.20 2.11 2.54 2.09 3.79 2.46 5.32 2.91 2.02 4.00 8.96 4.19 8.43 40.75 11.05 7.98 20.40 5.48 11.63 3.30 8.40 7.50 5.30 8.16 6.43 6.64 39.3 11.8 3.59 10.00 4.90 12.40 5.50 7.76 3.40 29.94 58.20 38.79 15.26 3.05 3.48 3.09 4.37 2.22 7.66 9.39 3.47 16.9 4.04 10.72 5.25
3.9 2.3 8.7 7.3 10.7 2.2 1.2 1.7 1.2 1.8 12 11.1 0.9 1.7 5.0 1.2 26.3 17.5 39.9 26 39 30 18 10.4 10 10.4 38 39.9 20.3 40 49 70 486 2.8 1.2 0.8 0.8 — — 39.6 39.6 18.7 2 1 2 4 3 3 4.1 5.5 3.5
Quillota Quillota Quillota Quillota Quillota Quillota Quillota Quillota Quillota Quillota Quillota Quillota Perseverancia Perseverancia Perseverancia Perseverancia Perseverancia Perseverancia Perseverancia Perseverancia Perseverancia Perseverancia Perseverancia Defensa Defensa Defensa Defensa Defensa Defensa Defensa Defensa Defensa Defensa Dumbo Dumbo Dumbo Dumbo Dumbo Dumbo Dumbo Dumbo Dumbo Cachinalito Central Cachinalito Central Cachinalito Central Cachinalito Central Cachinalito Central Cachinalito Central Cachinalito Central Cachinalito Central Cachinalito Central
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Hole ID
From (m)
KGMC-1 KGMC-1 RC-594 RC-594 RC-594 RC-594 RC-594 RC-594 RC-594 RC-594 RC-594 RC-594 RC-594 RC-594 RC-594 RC-614 RC-614 RC-614 RC-614 RC-568 RC-568 RC-568 RC-568 SG540 SG540 SG540 SG540 Note: Depending than true widths.
11.3
To (m)
Interval (m)
171.2 171.7 171.7 172.23 94 95 97 98 98 99 99 100 100 101 101 102 102 103 103 104 147 148 154 155 155 156 157 158 158 159 6 7 7 8 15 16 193 194 34 35 35 36 36 37 39 40 40.5 42 42 43.5 45 46.5 46.5 48 on the dip of the drill hole,
Au (g/t)
0.5 0.53 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1.5 1.5 1.5 1.5 and the dip of
Ag (g/t)
2.77 15.1 4.96 40.2 3.24 1 5.18 2 13.75 3 5.88 2 2.48 1 3.86 2 4.48 2 2.91 2 2.11 9 4.52 3 7.09 3 3.76 2 3.33 1 5.23 2 2.88 1 5.01 0.1 7.35 50 17.65 99 4.87 47 6.79 20 4.77 11 2.80 64 3.00 29 53.60 7 3.60 17 the mineralization, drill
Zone Cachinalito Central Cachinalito Central Cachinalito Oeste Cachinalito Oeste Cachinalito Oeste Cachinalito Oeste Cachinalito Oeste Cachinalito Oeste Cachinalito Oeste Cachinalito Oeste Cachinalito Oeste Cachinalito Oeste Cachinalito Oeste Cachinalito Oeste Cachinalito Oeste Dumbo Oeste Dumbo Oeste Dumbo Oeste Dumbo Oeste Perseverancia Perseverancia Perseverancia Perseverancia Perseverancia Perseverancia Perseverancia Perseverancia intercept widths are typically greater
Comment on Section 11 In the opinion of the QPs, the quantity and quality of the lithological, geotechnical, collar and downhole survey data collected in the exploration and infill drill programs completed by Minera Guanaco are sufficient to support Mineral Resource and Mineral Reserve estimation as follows: •
RC and core logging undertaken by Minera Guanaco meets industry standards for gold and copper exploration within a high-sulphidation epithermal-style setting;
•
Collar surveys have been performed for the Minera Guanaco programs using industry-standard instrumentation;
•
Downhole surveys were performed using industry-standard instrumentation;
•
Geotechnical logging of drill core meets industry standards for planned open pit operations;
•
Drilling is normally inclined. Depending on the dip of the drill hole, and the dip of the mineralization, drill intercept widths are typically greater than true widths;
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•
Drill orientations are generally appropriate for the mineralization style, and have been drilled at orientations that are optimal for the orientation of mineralization for the bulk of the deposit area;
•
Drill orientations are shown in the example cross-sections (Figures 9-1 and 9-3), and can be seen to appropriately test the mineralization. The sections display typical drill hole orientations for the deposits, show summary assay values using colour ranges for assay intervals that include areas of non-mineralized and very low grade mineralization, and outline areas where higher-grade intercepts can be identified within lower-grade sections. The sections confirm that sampling is representative of the gold grades in the deposits, reflecting areas of higher and lower grades;
•
Drill hole intercepts as summarized in Table 11-2 appropriately reflect the nature of the gold and copper mineralization;
•
No material factors were identified with the data collection from the drill programs that could affect Mineral Resource or Mineral Reserve estimation.
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12.0
SAMPLING METHOD AND APPROACH
12.1
Geochemical Sampling Geochemical samples were collected during early-stage exploration on the Project and are superseded by drill data.
12.2
Legacy Sampling Legacy drill sampling data were collected as follows: •
BHC (1980): RC drill samples were collected on 1 m intervals. No data are available on sample collection, transportation or storage methods.
•
SCMG (1987–1990): All holes were drilled dry and sampled on 1 m intervals. The samples generated were first weighed to determine recoveries and then split with a Jones splitter. Depending on the recoveries, the samples were split two to three times to obtain about 5 kg of sample which was used to prepare composites for assay.
•
Amax (1991–1997): RC drill samples were collected on 1.5 m intervals. The dry samples were first weighed and then split at the drill site using a Jones splitter. The number of splits taken and sample combinations was dependent upon the recovery for each interval and the requirements for duplicate samples. The first objective was to provide the sample preparation laboratory with about 10 kg of cuttings, or as much as possible if recovery was very low, and to have at least a minimal sample for logging. Other objectives were to provide Amax with a representative split of each sample and to collect duplicate samples from every tenth sample for checks on both the sample preparation and analytical work. About two-thirds of the way through the program the criteria for collecting duplicates was changed to include the collection of duplicates from every fifth sample in strongly silicified zones. The samples generated when drilling wet were collected using a rotating wet splitter. Two equal volume samples were collected. One was sent to the sample preparation laboratory for drying and preparation and the other was given to the mine for storage.
•
Kinam (1999–2000): RC drill samples were collected on 2 m intervals. All the drilled material was put in thick (150 to 180 µm) polyethylene bags; usually 50 cm x 90 cm sample bags. The bags were immediately sealed in order to avoid sample spillage during transportation, handling, and storage. Three-part numbered labels, indicating the elements to be assayed, were used to identify the samples: one part was inserted inside the inner bag with the sample material, a second was clipped to the bag, and the third was retained as a sampling record.
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RC samples typically weighed 58 kg to 64 kg. Transportation of samples from the drilling site to the primary laboratory preparation facilities at the Guanaco Camp was by a truck with high wooden sides. All the samples for each day were transported the same day to the on-site preparation facilities.
12.3
Minera Guanaco Sampling RC samples were collected every 1.5 m in 2004, and every 1 m or 2 m in the 2006– 2010 drilling campaigns. A riffle splitter was installed just below the dust collector opening (cyclone) to divide the whole sample. The sample was split and collected in two metallic trays. One portion was selected for analysis and the second was retained for back up. A small portion of the sample was collected by a spoon and placed in a chip sample tray for geological logging (“cuttings”). Samples were weighed and bagged into pre-labelled plastic bags. The average estimated sample weights were 52 kg and 26 kg for 2 m and 1 m samples respectively. All samples were labelled using numbered tickets. One was clipped at the mouth of the bag; the second one was inserted in the bag. Sonic drill samples were collected on 1 m intervals.
12.4
Quality Assurance and Quality Control The quality assurance and quality control (QA/QC) programs for the Project are discussed in Section 13.
12.5
Density (Specific Gravity) Determinations In 2006 40 samples were assayed at the IDIEM laboratory at Universidad de Chile in Santiago using wax-coated water immersion techniques. Twenty samples were taken from KGMC-1, KGMC-2, and KGMC-3 diamond drill holes in the Cachinalito area. Samples were typically 10 cm to 15 cm long and were mineralised samples with gold grades ranging from 2.38 g/t to 32.17 g/t. Density results ranged from 2.21 g/cm3 to 2.63 g/cm3 with an average of 2.50 g/cm3. Another 20 chip samples were taken from mineralised areas at level 2662.5 m in the Dumbo pit. Samples from the Dumbo pit show two distinct populations, one with values above 2.8 g/cm3 associated with barite at the bottom of the pit, and the other close to 2.42 g/cm3 on average.
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The density results ranged from 2.27 g/cm3 to 3.38 g/cm3 with an average of 2.58 g/cm3 (Table 12-1). Figure 12-1: Density Determination Results, 2006 Cachinalito Density Sample 3 (g/cm ) 59924 2.21 59925 2.47 59926 2.51 59927 2.61 59928 2.33 59929 2.56 59930 2.41 59931 2.56 59932 2.56 59933 2.63 59934 2.48 59935 2.54 59936 2.50 59937 2.54 59938 2.56 59939 2.49 59940 2.55 59941 2.53 59942 2.48 59943 2.52 Average 2.502 Min. 2.210 Max. 2.630
Dumbo Density 3 (g/cm ) 62510 2.83 62511 3.38 62512 2.93 62513 2.48 52661 2.51 52662 2.37 52663 2.44 52664 2.30 52665 2.37 52666 2.27 52667 2.52 52668 2.60 52669 2.50 52670 3.00 52671 2.46 52672 2.38 52673 3.07 52674 2.51 52675 2.30 52676 2.29 Average 2.576 Min. 2.270 Max. 3.380 Sample
In 2008, 72 core samples from the Cachinalito Central area were sampled and sent to the Dictec laboratory at University of Atacama in Copiapó for density determination using wax-coated water immersion techniques. Samples were typically 5 cm to 15 cm long and were taken from mineralised and non-mineralised intervals including various rock types. Density values are summarized in Table 12-2.
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Figure 12-2: Density Determination Results, 2008 Rock-Alteration Type Count AND-ARG 1 BX-ARG 1 BX-FRE 1 BXH 2 BXH-SIL 3 BX-SAR 1 BX-SIL 4 PRD 1 TOC-ARG 7 TOC-FRE 5 TOC-PRO 2 TOC-SAR 9 TOC-SIL 8 TOP-ARG 4 TOP-SAR 6 TOP-SIL 13 VSZ-SIL 4 Rock Type TOC Crystal tuff TOP Pumice tuff BX Volcanic breccia BXH Hydrothermal breccia VSZ Vuggy silica PRD Rio-dacitic porphyry
12.6
3
Average (g/cm ) 2.46 2.36 2.15 2.30 2.45 2.34 2.36 2.32 2.33 2.36 2.46 2.39 2.46 2.33 2.36 2.41 2.59 Alteration Types SIL ARG SAR FRE PRO
3
Max (g/cm ) 2.46 2.36 2.15 2.40 2.50 2.34 2.51 2.32 2.44 2.52 2.54 2.59 2.63 2.52 2.44 2.65 2.77
3
Min (g/cm ) 2.46 2.36 2.15 2.20 2.37 2.34 2.20 2.32 2.10 2.09 2.38 2.20 2.32 2.20 2.27 1.79 2.39
Silica Argillic Silicic-Argillic Fresh Propylitic
Comment on Section 12 A description of the drilling programs, including sampling and recovery factors, are included in Section 11 and Section 12. All collection, splitting, and bagging of RC and core samples were carried out by Minera Guanaco personnel from 2004 to 2010, or, for legacy drill data, by the company that was Project manager at the time, depending on the date of the drill program. No material factors were identified with the drilling programs that could affect Mineral Resource or Mineral Reserve estimation. Data validation of the drilling and sampling program is discussed in Section 14, and includes review of database audit results. In the opinion of the QPs, the sampling methods are acceptable, meet industrystandard practice, and are adequate for Mineral Resource and Mineral Reserve estimation and mine planning purposes, based on the following: •
Data are collected following Project-approved sampling protocols
•
Sample collection and handling of RC chips and core was undertaken in accordance with industry standard practices, with procedures to limit potential sample losses and sampling biases
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•
Sample intervals, comprising 1 m intervals for sonic drill holes, and 1 to 2 m intervals for RC drilling are considered to be adequately representative of the true thicknesses of mineralization. Not all drill material may be sampled, depending on location and alteration
•
Specific gravity determination procedures completed are consistent with industrystandard procedures
•
There are a limited number of density determinations for a project at feasibility level. AMEC recommends obtaining additional density data to explore differences between mineralization (oxide, mixed, and sulphide), alteration, and/or lithological types, as well as spatial differences, in particular in the vertical direction.
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13.0
SAMPLE PREPARATION, ANALYSES, AND SECURITY From Project inception to date, Project staff employed by SCMG, Amax, Kinam and Minera Guanaco were responsible for the following: •
Sample collection;
•
Core splitting;
•
Density determinations;
•
Sample storage;
•
Sample security.
SCMG personnel also performed sample analyses at the run-of-mine laboratory established on site.
13.1
Analytical Laboratories
13.1.1
Legacy Drill Campaigns The following laboratories were used in the legacy drilling campaigns: •
BHC (1980): AMEC has no documented references for the laboratory used;
•
SCMG (1987–1990): Cesmec, a commercial laboratory in Antofagasta, acted as primary laboratory during the execution of first 41 holes (SG-51 to SG-90). The remaining drill holes were assayed by SCMG’s onsite run-of-mine laboratory, which was operated by SCMG personnel. It is not known what certifications were held by either Cesmec or the SCMG laboratory;
•
Amax (1991–1997): SGS Chile Ltda (SGS) was used as the primary laboratory. SGS established a preparation facility on site. A portion of 250 g was shipped to SGS in Santiago for analysis. Bondar Clegg laboratory in Vancouver was used to reanalyze approximately 100 of the first 400 Amax samples. Both Bondar Clegg (now owned by ALS Chemex) and SGS are independent laboratories. It is not known what certifications were held at the time of analysis. In addition, the Amaxoperated Guanaco mine laboratory on site analyzed samples from many of the silicified intervals, using splits prepared from the unprocessed drill samples. The mine laboratory was not certified;
•
Kinam (1999–2000): Sample preparation facilities onsite were used. Samples were submitted to Bondar Clegg laboratory in La Serena. Bondar Clegg held ISO 9000 certification during the latter part of the drill program;
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13.1.2
Minera Guanaco Drill Campaigns Minera Guanaco’s 2004 drill samples were assayed at ALS Chemex, La Serena as the primary laboratory. ALS Chemex held ISO 9000 accreditation at the time and is an independent laboratory. During 2006 to 2007 samples were assayed at Geoanalítica Ltda. (Geoanalítica), Coquimbo. Actlabs Chile Ltda (Actlabs) acted as the secondary laboratory. Both laboratories have ISO 9000 registration and are independent commercial laboratories. During 2008, Vigalab, in Copiapó, was used as the primary laboratory and Geoanalitica acted as the secondary laboratory. Vigalab has ISO9001:2000 certification and is an independent commercial laboratory. The 2009 and 2010 drill programs were submitted to Acme in Santiago, as the primary laboratory. The laboratory holds ISO 9001:2000 registration and is an independent commercial laboratory.
13.2
Sample Preparation and Analysis
13.2.1
Legacy Programs Sample preparation and analysis during the legacy programs comprised: •
BHC (1980): AMEC has no documented references for sample preparation;
•
SCMG (1987–1990): AMEC has no documented references for sample preparation. It is not known what analytical technique was used by Cesmec for Au, but it is assumed that it is the same as that used by the mine laboratory. This technique was conventional fire assay (FA) and gravimetric finish on a 60 g aliquot;
•
Amax (1991–1997): The entire drill core split was crushed to -10 mesh in roller mills. The -10 mesh material was passed through a Jones splitter and 1 kg was then reduced to -40 mesh in a disc pulverizer. After homogenization, the -40 mesh material was then riffle split into two equal portions. One half was put into storage for possible later metallic sieve testing for coarse gold. The other half was dried in an oven and pulverized to -150 mesh using a ring-and-puck mill. The product was rolled, quartered, and split into two 250 g portions. One was stored on site and the other was shipped for analysis. Sample preparation for RC samples comprised crushing to minus 2.0 mm (10 mesh) in roller mills, splitting to obtain a 1,000 g sub-sample using a Jones splitter, pulverizing to minus 0.422 mm (40 mesh) using disc pulverizer, splitting to obtain a 500 g sub-sample using a
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riffle splitter, pulverizing to minus 0.104 mm (150 mesh Tyler) using a ring-andpuck mill and finally homogenization and splitting to obtain two 250 g portions for storing and analysis. SGS assayed for Au using FA and atomic absorption spectroscopy (AAS) finish on a 50 g sample. Prior to determination the FA bead was dissolved with aqua regia. For samples with Au grades greater than 1 g/t Au, a gravimetric finish was used instead. Silver was determined by AAS on a 5 g aliquot digested by hydrofluoric acid and aqua regia. Copper analyses were assayed by atomic absorption on a 1 g sample digested in a mixture of hydrofluoric acid and aqua regia. Bonder Clegg assayed for Au using FA and AAS finish on a 30 g sample digested in aqua regia. Silver was assayed using AA on a 1 g sample digested in aqua regia. Copper was determined by AA on samples digested in a mixture of hydrofluoric acid and aqua regia. Samples with Cu grades greater than 10% were analyzed by a potentiometer titration method. The Minera Guanaco mine laboratory typically used fire assay and gravimetric methods on a 60 g aliquot to determine gold and silver. The method used for assaying for copper is not known; •
13.2.2
Kinam (1999–2000): The on-site preparation procedure included drying at 100° to 105°C, crushing, 80% below 10 mesh, with a Rhino jaw crusher, and splitting with a Jones splitter in order to obtain a 1,000 g sample. The rejected material was kept in the original sample bag. A Bondar Clegg supervisor was present on a permanent basis at the sample preparation facility. Once the samples arrived at the laboratory in la Serena, they were dried and ground to 95% under 150 mesh. Two bags were then prepared: 250 g for analysis and 750 g for back up. Gold was assayed by FA and AA finish on 30 g aliquots with a lower detection limit of 5 ppb Au. Silver, copper, lead, and arsenic were assayed by AA after digestion of a 0.5 g sample with HNO3–HCl digestion and HCl re-dissolution. The detection limits were 0.1 ppm for Ag, 1 ppm for Cu, 2 ppm for Pb, and 5 ppm for As.
Minera Guanaco Programs During the Minera Guanaco 2004 drill programs, sample preparation at ALS Chemex was as follows: •
Weighing;
•
Drying at 60ºC on stainless steel trays;
•
Crushing to 70% minus 1.68 mm (10 mesh Tyler) with a Rhino jaw crusher;
•
Homogenization and splitting to obtain about 500 g sub-sample;
•
Pulverizing the collected sub-sample to 85% minus 0.074 mm (200 mesh Tyler) in an LM-2 pulverizer.
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Gold was assayed by FA and AAS finish. Samples with Au grades greater than 10 g/t were finished by gravimetry. The lower detection limit for gold was 0.005 g/t. Copper and silver were assayed by total digestion and AA finish. In 2006–2007, sample preparation at Geoanalítica was as follows: •
Weighing;
•
Drying at 105ºC on stainless steel trays;
•
Crushing to 85% minus 2 mm with a jaw crusher with a 10 mesh vibrating screen;
•
Homogenization and splitting to obtain about a 1,000 g sub-sample;
•
Pulverizing of the collected sub-sample to 95% minus 0.105 mm in an LM-2 pulverizer.
Gold was assayed by FA and AA finish in 50 g aliquots. The lower detection limit was 0.01 g/t. For Au grades greater than 3 g/t the assays were finished by gravimetric method. Samples were also assayed at Geoanalítica in 2006–2007 for total copper (CuT) and Ag by AAS in approximately 1.0 g aliquots digested with aqua regia and acid dilution (HCl). For Ag grades greater than 50 ppm the assays were finished by gravimetry. The lower detection limits were 0.001% Cu and 1 g/t Ag. Leach pad sonic drill samples were prepared by Geoanalítica as follows: • • •
Drying Splitting by rotary divider. One half for normal assays and the other half for metallurgical testwork to be done at a later stage. The half sample for assaying could follow one of two different procedures: -
Normal assay:
-
Screening and Assaying:
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Crushing to minus 10 mesh. Approximately 1.0 kg sample split by rotary divider for pulverizing. Reject sent to Minera Guanaco. Pulverizing to minus 150 mesh. Envelope containing 250 g for Au, Ag, and Cu assays, rest for Minera Guanaco.
Samples were screened into five fractions: +¾”, - ¾” + ⅜”, -⅜” + ¼”, - ¼” + 10#, and –10#. Each fraction was prepared and assayed as described above.
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Fraction weighted averages were calculated for each sample.
A total of 334 and 660 samples were obtained from Phase I and II heaps respectively. Of these, 67 and 132 samples were split into size fractions, prepared and assayed. The rest were submitted for normal sample preparation and assaying as per the core and RC sampling described above for Geoanalítica. There is no information on the 2008 sample preparation methodology. It is likely that Vigalab and Geoanalítica used the same standard procedures for Au by FA with AA finish or gravimetry finish and others metals such as Cu and Ag by acid digestion and AA were applied. No information was available to AMEC for the sample preparation and analytical methods employed for the 2009 and 2010 drill programs.
13.3
Quality Assurance and Quality Control During the campaigns, the operator companies applied different programs quality assurance and quality control (QA/QC programs). Little to no documentation from drilling campaigns prior to 2000 is available. There is no information for the BHC and SCMG programs. Amax implemented a QA/QC protocol which included the insertion of 10 to 15% of field duplicates from RC samples and some check samples. The field duplicate consisted of approximately a quarter of the original sample (5 kg sample); however, no details and results are available. No details of certified reference materials (CRMs) and blank samples are documented for the Amax drilling campaigns. During the drilling program in 2000, Kinam implemented QA/QC protocols consisting of the insertion of field duplicates, pulp duplicates, coarse blanks, and CRMs. Austral’s QA/QC program comprised insertion of field duplicates, check samples, coarse blanks, and CRMs. The control samples for the 2004 drill program were inserted in the submission batches on site prior to submission to ALS Chemex. Minera Guanaco also submitted check samples (pulverised samples) to Actlabs at La Serena, (2.8% of the routine samples). Minera Guanaco personnel inserted the control samples (field duplicates and coarse blanks) in the submission batches on site for the 2006–2007 drill programs, prior to submission to Geoanalítica. Minera Guanaco also submitted check samples (pulverised samples) to Actlabs in La Serena during 2006 (at a rate of about 6.77% of the routine samples). The 2007 check samples (pulverised samples) were submitted to Actlabs in La Serena, in a proportion of about 2.1% of the
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routine samples. A similar procedure was followed for the 2008 drill program that was submitted to Vigalab. No information was available to AMEC for the QA/QC procedures employed for, and results of the 2009 and 2010 drill programs.
13.4
Databases The Project data are stored in a Vulcan software database. The database was first compiled from various Excel, MineSight and Gems files into a single Vulcan database in 2006. While performing this first compilation, Minera Guanaco compared the electronic entries with the original certificates, when available. Such certifications only became fully available from 2006 onwards. All geological and geotechnical data collected during the Minera Guanaco drill programs were entered electronically directly into the system. Assays were received electronically from the laboratories and imported directly into the database. Drill hole collar and down hole survey data were manually entered into the database. Data are verified on entry to the database by means of in-built program triggers within the mining estimation software. Checks are performed on surveys, collar co-ordinates, lithology data, and assay data. Paper records were kept for all assay and QA/QC data, geological logging and bulk density information, downhole, and collar coordinate surveys from the Minera Guanaco drill programs. For data acquired prior to 2006, some paper records were missing. Overall, approximately 50% of the data within the mineralized grade-shell have an original paper assay certificate, and approximately 43% have a paper copy of the assay certificate. Only approximately 7% of the data within the grade-shell have no paper support.
13.5
Sample Security Sample security relied upon the fact that the samples were always attended or locked at the sample dispatch facility. Sample collection and transportation have always been undertaken by company or laboratory personnel using corporately-owned vehicles. Chain of custody procedures consisted of filling out sample submittal forms that were sent to the laboratory with sample shipments to make certain that all samples were received by the laboratory.
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13.6
Sample Storage Core and representative 1 m RC samples are numbered and ordered, and stored in a dry, clean, and well-maintained core shed.
13.7
Comment on Section 13 The AMEC QPs are of the opinion that the quality of the gold analytical data collected during the Minera Guanaco drill programs are sufficiently reliable (also see discussion in Section 14) to support Mineral Resource and Mineral Reserve estimation and that sample preparation, analysis, and security are generally performed in accordance with exploration best practices and industry standards as follows: •
Geochemical sampling covered sufficient area and was apparently adequately spaced since first-order geochemical anomalies were generated, and thus can be considered representative of first-pass exploration sampling
•
Drill sampling has been adequately spaced to first define, then infill, gold and copper anomalies to produce prospect-scale and deposit-scale drill data. Drill hole spacing varies with depth. Drill hole spacing in the core of the deposit is about 25 m. Drill hole spacing increases with depth as the number of holes decrease and holes deviate apart
•
Sample preparation for samples that support Mineral Resource estimation has followed a similar procedure for all Minera Guanaco drill programs. The preparation procedure is in line with industry-standard methods for highsulphidation epithermal deposits
•
Typically, Minera Guanaco drill programs included insertion of blank, duplicate and standard reference material samples. QA/QC submission rates meet industryaccepted standards of insertion rates. The QA/QC program results do not indicate any problems with the analytical programs, therefore the gold and copper analyses from the RC and core drilling are suitable for inclusion in Mineral Resource and Mineral Reserve estimation
•
Data that were collected were subject to validation, using in-built program triggers that automatically checked data on upload to the database. All the drill holes available prior to 2009 were used to support the Mineral Resource and Mineral Reserve estimates.
•
Verification is performed on all digitally-collected data on upload to the main database, and includes checks on surveys, collar co-ordinates, lithology data, and assay data. The checks are appropriate, and consistent with industry standards
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•
Sample security has relied upon the fact that the samples were always attended or locked in the on-site sample preparation facility. Chain-of-custody procedures consist of filling out sample submittal forms that are sent to the laboratory with sample shipments to make certain that all samples are received by the laboratory
•
Current sample storage procedures and storage areas are consistent with industry standards.
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14.0
DATA VERIFICATION A number of data verification programs and audits have been performed over the Project history, primarily in support of compilation of mining-related studies on the Project.
14.1
AMEC (2000) The Kinam sampling programs were reviewed in 2000 (Simon, 2000), with the following results:
14.2
•
The analysis of 289 field duplicates yielded four failures for Au (1.4%); silver and copper were not reviewed. The Au failure rate is considered acceptable for field duplicates
•
The analysis of 145 pulp duplicates yielded 14 failures for Au (9.7%; this result is considered borderline, but acceptable as it is just under the 10% failure rate that AMEC considers as unacceptable
•
AMEC analysed 237 CRM samples from 19 CRMs. The samples represent a total of 3.4% of the samples included in submission batches. Most of the individual bias values were acceptable (below of absolute 5% bias), with the exception of the Au132, Au192, Au61, Au67, Au69 and Au72. The overall bias for Au was -5.26%. The Kinam program did not include CRMs to control the Ag and Cu accuracy. On the basis of these results AMEC concluded that the Au accuracy at Bondar Clegg during the Kinam exploration was within acceptable ranges
•
AMEC reviewed the 357 assays from coarse blank materials inserted during the Kinam campaign. Given a threshold value of five times the lower detection limit (25 ppb Au), four blanks reported greater than the threshold for Au. AMEC concluded that non-significant cross-contamination occurred during preparation at Bondar Clegg.
AMEC (2010) AMEC performed a number of checks on the Project database in support of the feasibility study. QA/QC checks were primarily undertaken post the 2007 drill program.
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14.2.1
Drill Data AMEC reviewed cuttings from seven drill holes (0.9% of the drill holes included in the database) with special attention to lithological and mineralized units and contacts. The observations were compared with drill hole records in the database. The main lithological contacts, alteration features and sample intervals, were appropriately recorded in the database. AMEC concluded that there was good agreement between the geological interpretations, log records and digital information. AMEC verified selected drill hole collar locations in the field using an E-TrexTM handheld GPS. Eight drill holes, representing 1.03% of the drill hole database, were checked. Results, given the accuracy of the hand-held equipment, indicated no errors with the drill collar locations. AMEC compared drill collar elevations of the selected drill holes recorded in the database with the digital topography provided by Minera Guanaco. No discrepancies were noted. A review of the down-hole survey data indicated no potential kinks or other indications of problematic down-hole surveys. AMEC noted that most of the drill holes tend to deviate horizontally by up to 20 m approximately at 200 m depth. The average deviations are considered reasonable because the average depth of the drill holes is 140 m (and 80% of depths do not exceed 200 m) and no significant departures of the trajectories are observed in plan. AMEC investigated the possibility of RC downhole contamination for all RC drill holes. This used the in-house AMEC “decay-and-cyclicity” program to assess whether downhole contamination had occurred. The analysis indicated that no significant downhole contamination had occurred during RC drilling.
14.2.2
Assay Data The drill hole database reviewed contained 1,254 drill hole records, with 107,221 assay records. AMEC reviewed 527 assay certificates, selected 484 Au and Ag records, and compared these data with the assay database. No discrepancies were found.
14.2.3
QA/QC Review AMEC reviewed the QA/QC results of the Minera Guanaco drill programs to end 2007. 2004
Analysis of 93 field duplicates yielded 15 failures for Au (16.1%). An acceptable level of precision is achieved if the failure rate does not exceed 10%. Therefore, AMEC
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concluded that the sampling precision of Minera Guanaco for Au during 2004 drilling campaign was poor. In total, 69 samples were sent for external control to Actlabs. The samples were assayed for Au, Ag and Cu. The sample batches did not include control samples. Analysis indicated a good fit for Au between ALS Chemex and Actlabs. Copper and silver were not evaluated due to their low grades, most of which were below detection limits. AMEC analysed the results of 93 CRM samples from four CRMs representing a total of 3.9% of the samples included in submission batches. The overall bias for Au was 4.99%. On the basis of these results AMEC concluded that the Au accuracy at ALS during the Minera Guanaco exploration program in 2004 was within acceptable ranges. AMEC reviewed the 81 assays from coarse blank materials inserted during the Minera Guanaco 2004 drilling period; four blanks reported greater than threshold for Au. AMEC concluded that no significant cross-contamination occurred during preparation at ALS during the drilling campaign. 2006
The analysis of 195 field duplicates yielded 16 failures for Au (8.21%), no failures for Ag, and four failures for Cu (2.05%). AMEC concluded that the sampling precision of Minera Guanaco for Au, Ag, and Cu during its 2006 drilling campaign was satisfactory. In total, 1,537 samples were sent for external control to Actlabs laboratory and were assayed for Au, Ag, and Cu. The sample batches did not include control samples. An RMA analysis indicated a good fit for Au, Ag, and Cu between Geoanalítica and Actlabs. AMEC analysed the results of 345 CRM samples from 11 CRMs, representing a total of 1.52% of the samples included in submission batches. The overall bias for Au was -1.10%. On the basis of these results, AMEC concluded that the Au accuracy at Geoanalitica during the Minera Guanaco exploration in 2006 was within acceptable ranges. AMEC reviewed the 357 assays from coarse blank materials inserted during the Minera Guanaco drilling period. Ten blanks reported greater than threshold for Au. AMEC concluded that non-significant cross-contamination occurred during preparation at Geoanalítica.
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2007
The analysis of 399 field duplicates yielded 18 failures for Au (4.5%). There were no data for Ag and Cu. In total, 387 samples were sent for external control to Actlabs laboratory. The samples were assayed for Au, Ag, and Cu. An RMA analysis indicated a good fit for Au, Ag, and Cu between Geoanalitica and Actlabs. AMEC analysed the results of 252 CRM samples from seven CRMs. The overall bias for Au was -1.10%. On the basis of these results, AMEC concluded that the Au accuracy at Geoanalitica during the Minera Guanaco exploration in 2007 was within acceptable ranges. AMEC reviewed the 60 assays from coarse blank materials inserted during the Minera Guanaco drilling period. No blanks were reported greater than the threshold for Au.
14.3
Comment on Section 14 The process of data verification for the Project has primarily been performed by external consultancies. AMEC considers that a reasonable level of verification has been completed, and that no material issues would have been left unidentified from the programs undertaken. The AMEC QPs, who rely upon this work, have reviewed the appropriate reports, and are of the opinion that the data verification programs undertaken on the data collected from the Project adequately support the geological interpretations, the analytical and database quality, and therefore support the use of the data in Mineral Resource and Mineral Reserve estimation, and in the feasibility study: •
No sample biases were identified from the QA/QC programs undertaken by Minera Guanaco
•
Sample data collected adequately reflect deposit dimensions, true widths of mineralization, and the style of the deposits
•
External reviews of the database were undertaken in 2000 and 2007, producing independent assessments of the database quality. No significant problems with the database, sampling protocols, flowsheets, check analysis program, or data storage were noted
•
Drill data are typically verified prior to Mineral Resource estimation, by running a software program check.
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15.0
ADJACENT PROPERTIES There are no immediately adjacent properties that are at the same stage of development as the Project.
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16.0
MINERAL PROCESSING AND METALLURGICAL TESTING
16.1
Review of Metallurgical Testwork Several phases of metallurgical testwork were undertaken on the Project. These include initial testing conducted by AMAX prior to the involvement of Minera Guanaco in the Project, and programs in 2006, 2007, and 2008 conducted on behalf of Minera Guanaco. Laboratories and testing facilities involved in the Minera Guanaco testwork programs included: •
SGS Lakefield Research Chile S.A (Lakefield; Chile);
•
Ciba Especialidades Químicas Ltda. (Ciba; Brazil);
•
Larox Chile S.A. (Larox; Chile);
•
Julius Kruttschnitt Mineral Research Center (JKMRC; Australia).
The metallurgical testwork laboratories are independent, but are not certified; this is typical for metallurgical testing facilities. Work completed on behalf of Minera Guanaco included bottle leaching trials, activated carbon tests, sedimentation and filtering tests, comminution testwork, Bond ball milling, Bond rod milling, uniaxial compressive strength (UCS) tests, SMC (laboratory comminution) tests, low energy impact tests, abrasion tests, and JK drop-weight tests. Mineralogical work was performed by Carmen Pérez of Guarachi Engineers Ltda, based in Chile. 16.1.1
Mineralogical and Analytical Studies Mineralogical studies were performed at large grain size (6 mesh) in order not to change the gold present due to attrition (ductile and malleable), and to analyze the size and degree of liberation to determine if a gravity concentration circuit was required in the process route. Of the three samples reviewed, all showed the presence of native gold and electrum; two samples hosted native silver. Additional sulphide minerals identified included chalcopyrite, covellite, chalcocite, bornite, and enargite. Pyrite and limonite traces were also identified. Gold is 52.5% free and 91.8% associated in the assessed samples, which indicates that gold can be released at a coarse grain size. The minor presence of cyanicides and contaminating elements such as mercury, selenium, and arsenic, indicate that the
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mineralization can be classified as metallurgically “clean”; this conclusion was supported by ICP analytical results. Results of the microscopic analysis of tailings support the recovery data. Conclusions were that the non-recovered gold must be occluded within the grains or associated as electrum, as electrum has slower dissolution kinetics than gold. Analysis of industrial water collected from the Guanaco Project for tests at Lakefield did not show anions or cations at concentration levels that would impact cyanidation. 16.1.2
Bottle Roll Cyanide Tests Bottle roll cyanide tests were run at 50% solids and pH = 11 with 2.5 kg of ore for each test. Gold, silver, and copper recovery increased as the particle size of the samples was reduced (fine grain sizes). However; this increase in recovery was less significant when the P80 was reduced from 75 µm and 150 µm. Average recoveries for each element are presented in Table 16-1. Table 16-1: Metallurgical Average Recovery Results Area Cachinalito Norte Cachinalito Alta Ley Cachinalito Oeste Cachinalito Central Perseverancia
Average Au Extraction (%) 87.0 99.2 98.6 97.8 71.9
Average Ag Extraction (%) 65.2 94.3 71.5 84.7 57.6
Average Cu Extraction (%) 83.2 67.9 29.3 69.5 55.0
The impact of cyanide concentration on gold and silver recovery was only seen in those samples with a high copper content (Cachinalito Norte and Perseverancia) and the consumption ranged between 10 kg/t and 12 kg/t. In general terms, the results demonstrated that for ore with low copper grades, satisfactory gold (>87–99%) and silver (>65–94%) recoveries are obtained. The cyanide consumption for ore with low copper content was in the normal range for an industrial process (0.5 kg/t to 1.3 kg/t). The lime consumption was not impacted by the copper concentration of the samples and also showed consumptions in the normal range for leaching of gold ore, ranging between 0.34 kg/t and 1.2 kg/t. Leach optimization testwork performed with cyanide in agitated bottle roll tests evaluated the effects of particle size, cyanide concentration, pulp density, and pH.
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Results indicated that there was no trend to increase the recovery as particle size was reduced. Gold is released at a size larger than 212 µm. Since the process included an activated carbon circuit, particle sizes greater than 150 µm impacted the activated carbon efficiency and performance. Therefore, a P80 = 150 µm was selected as the optimal particle size for ongoing tests and gave the best results. Dispersion of test results run at optimal conditions were found to be minimal and within the experimental error of the tests and the chemical analysis. Cyanide concentration was found to have little impact on the Au recovery; however, there was a significant impact on the velocity of gold dissolution. With high cyanide concentrations the reagent consumption was found to increase (other types of minerals start to leach), and the copper extraction increased. The percentage of solids did not impact Cachinalito Alta Ley and Cachinalito Oeste mineralization recovery. However, for Cachinalito Central, with 35% solids, the recovery increased by 1.2%. A figure of 50% solids was selected as optimal for all three ore types because there are no major differences in the recovery and the equipment sizes are reduced. Over the pH range 10.5, 11, and 12 there was no impact on Au recovery. A pH 11 was set as the optimal condition for safety reasons. The minimum estimated design residence time for the leach tanks was 30 hours; after this period the dissolution kinetics curve had reached the plateau. Mineralogical characterization of the leached solids showed that the non-recovered gold (average size 10 µm) was mostly occluded at P80 = 150 µm, indicating that the obtained recovery is very close to the maximum and that a P80 grind was appropriate. As a result of these tests, it was concluded that cyanidation was the most feasible process technically and economically for the Cachinalito ores, with recoveries of over 95% for gold and low reagent consumption (1 kg/t of NaCN and 1.1 kg/t of lime). 16.1.3
Comminution Tests The work index (Wi) results of the comminution testwork are summarized in Table 162. In general, ores were classified as hard and abrasive, which is typical for high-silica epithermal mineralization. JK drop weight tests indicated the ore is soft in resistance to fracture by impact. In addition, as the particle size is reduced, the resistance to impact increases.
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Table 16-2: Comminution Testwork Results Test Wi Bond ball milling Wi Bond rod milling UCS Low-energy impact Bond test (min) Low-energy impact Bond test (max) Abrasion index SMC
Test
JK Drop Weight Test
16.1.4
Cachinalito Central 18.5 kWh/t 16.3 kWh/t 114 MPa 6.12 kWt/h 11.03 kWh/t 0.628 g 6.70 DWi 61.40 A 0.62 b 30.40 T10@1kWh/t Composite 53.60 A 1.29 b 38.8 T10@1kWh/t 0.88 ta
Cachinalito Oeste 18.0 kWh/t 17.4 kWh/t n/a 6.71 kWt/h 9.92 kWh/t 0.737 g 6.80 DWi 68.20 A 0.59 b 28.40 T10@1kWh/t
Activated Carbon Tests Two tests were carried out: •
Determination of the adsorption speed constant (r) for Au in extruded vegetal carbon (Norit RO 3515) and coconut shell (Calgon DG-11);
•
Determination of the equilibrium constant K for activated carbon from coconut shell.
The extruded vegetal carbon displayed better adsorption speeds than the coconut shell carbon. It was noted that the extruded vegetal carbon produced a larger amounts of fines, which could lead to higher gold losses in the tailings under operating conditions. As a consequence, the final design was based on the use of coconut shell carbon. 16.1.5
Sedimentation Testwork Six flocculants were tested. The flocculant producing the best response was the anionic flocculant Rheomax 1010, which had sedimentation speeds in the free-settling zone between 7.1 m/h and 7.8 m/h for a flocculant concentration of 10 g/t. This flocculant concentration is normal to low for the mining industry. These values were used to model the grinding and counter-current decant (CCD) thickeners. The resulting dimension for a high rate thickener (with 20% design allowance) was 13– 14 m diameter (the normal size for a 1,500–2,000 t/d plant).
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16.1.6
Filtration Testwork Tests were oriented toward use of a vacuum belt filter. Initial tests used a cloth with 28 m3/m2min permeability with a solid P80 of 150 µm. The results of the four samples showed a filtering capacity between 190–330 kg DS/m2h with filtering efficiencies between 60% and 90%. Filter aids tests showed filtering rates of 200–230 kg DS/m2h with washing efficiencies between 80% and 99%. The best washing efficiency was obtained with Orifloc 2020 at a dosage of 40 g/t.
16.2
Predicted Metallurgical Recoveries Minera Guanaco obtained the gold recovery estimate for the heap leach from two different estimates. One estimate was obtained from bottle roll testing performed on material from the Phase II heap, and the other estimate was based on historical results at the Guanaco operations prior to 1998 for ore from the pits.
16.2.1
Estimated Recovery, Phase II Heap To estimate the gold recovery for the material on the Phase II heap, ten separate samples of 300 g each were used, which were taken from the partially-leached material on the heap, after alkaline leaching. Size fractions examined ranged from +3/8” to -1/8”. The impact of reducing the particle size below +3/8” was moderate. In general, there was a tendency to improved gold recovery for the -1/8” size fraction. In order to estimate the potential recovery in the heap leach, a conservative factor was applied to the results from the bottle roll tests. Applying a factor of 60% to the average test recovery of 75.6% gave an estimate for the heap leach recovery of 46%.
16.2.2
Estimated Historic Recovery, Mined Ore from Open Pits Historical information on recoveries obtained during the operating years of the heaps was used to estimate the recovery from the ore from the pits when processing fresh Guanaco ore. From 1993 to 1997 the average recovery was 55%, and in 1998 and 1999 the average recoveries were 58% and 61%, respectively. These recoveries are not adjusted for head grades that decreased from 1.5 g/t to 0.6 g/t. Hence, the historical data supports a gold recovery of 60% with a head grade of 1.2 g/t Au.
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16.2.3
Recovery Parameters Used for Feasibility Study Gold and silver recoveries were estimated for each year of projected production and average 72.4% and 49.1% respectively (Table 16-3). Table 16-3: Metal Recovery Ore Source Underground & stockpiles Leach Pad Open Pit Average
16.3
Au Recovery to Doré (%) 93.0 46.0 60.0 72.4
Ag Recovery to Doré (%) 82.0 40.0 50.0 49.1
Proposed Process Design The process facilities were designed to treat 1,000 t/d of ore, for seven years of operation. The facilities were designed for a future expansion to 1,500 t/d for some critical equipment. Process plant unit operations will comprise: • Crushed ore stockpile; • Ball mill grinding; • Pre-leach thickening; • Cyanide leaching; • Counter current decantation (CCD); • Tailings filtration; • Reagent preparation and distribution: lime, cyanide, flocculant; • Water and solution storage tanks; • Process and emergency water ponds. The planned plant layout is shown in Figure 16-1. The planned infrastructure layout to support the plant is shown in Figure 16-2.
16.3.1
Crushing Plant The existing crushing plant at the Guanaco Project will be used to process 1,500 t/d to a top size of 3/8” at the ball mill feed. The Guanaco crushing plant process flow diagram is presented in Figure 16-3.
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Figure 16-1: Schematic Layout, Process Plant CIRCUITO MOLIENDA
NaCN
Bolas Molienda Agua Fresca
MINERAL DESDE CHANCADO
Hidrociclones
Solución de Riego Pilas
Estanque de Acondicionamiento
Estanque Agua Fresca Solución Estéril de ADR
Molino Bolas Agua Fresca
Estanque de Solución Estéril
A
Estanque solución molienda
Solución Rica de Pilas
Cajón descarga molino Solución Rica a ADR
Floculante
Estanque de "Pregnant Solution"
CIRCUITO DE LIXIVIACIÓN Cianuro y cal
Espesador Pre-Lixiviación
Lixiviación (4 etapas - 24 hrs) MIXT E
Planta Reactivos
M I XT E MIXTE M I XT E
Clarif.
2 Estanques Futuros
TK A.Sello
Aire
Agua Sello (sol.filtrada)
4 Estanques Lixiviación De bba piso
Floculante
CCD (3 etapas)
RELAVE FILTRADO
Estanque Pulmón Filtración A TK Alim. Filtro
CIRCUITO CCD
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FILTRACIÓN RELAVE
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Figure 16-2: Site Layout Plan, Process Infrastructure
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Figure 16-3: Crushing Plant Process Flow Diagram
Note: Figure sourced from AJG Ltda. Ingeniería y Construcción
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Existing equipment was reviewed by AJG Ltda. Ingeniería y Construcción and comprises: • Primary Crusher: The existing equipment is a 42” x 48” jaw crusher with a processing capacity of 376 t/h at the upper limit (for a discharge of 5”). A capacity of 300 t/h was defined as conservative; • Secondary/Tertiary Crusher: The equipment can meet the metallurgical requirements for a 300 t/h treatment rate; •
Conveyor belts: The equipment is capable of meeting the conveying requirements.
The secondary crushers (with a 15 mm setting), the tertiary crushers (with a 7 mm setting), and the conveyors, will be able to meet the production requirements at a treatment rate of 300 t/h. The Guanaco crushing plant capacity is 5,400 t/d at 75% utilization. Ore from the mine and the Phase II heap will be discharged into a 620 t capacity storage bin. The maximum feed size to the ore storage bin must be less than 30”, all rocks over 30” will be retained on the grizzly on top of the bin. The oversize material will be broken up by a rock breaker located over the grizzly or a front end loader will be used to remove the oversize. The bin will have a dust suppression system consisting of a mist spray system from a monitor to optimize water consumption. Ore will be transferred from the bin using an apron feeder to the primary 42” x 48” 250 HP jaw crusher. The apron feeder will discharge onto the primary crusher grizzly-type, 150 mm opening screen, which will remove fine material prior to the jaw crusher. The fine ore will be discharged directly onto a conveyor belt where it will be mixed with the ore coming from the jaw crusher discharge. The output of the primary crusher will be fed to a double deck 8’ x 20’ secondary screen. The screen oversize will feed the secondary cone crushers (standard Symons 5 ½’ cone crushers with 350 HP motors) and the fine material will be fed directly onto a conveyor belt where it will be mixed with the undersize from the tertiary screens. The tertiary screening circuit will consist consists of two vibrating double-deck screens, one 8’ x 20’ and the other 8’ x 24’, each with a 50 HP motor. The tertiary screen oversize feeds the tertiary crushing circuit which consist of two Symons 5½’ short head crushers each with a 350 HP motor. The undersize from the secondary and tertiary screens will form the crushing circuit product, which discharges into the fine ore truck load-out bin. Lime will be added onto
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the mixed secondary–tertiary undersize conveyor belt to condition the ore pH prior to leaching. The load-out bin can feed 180 t trucks. The bin size enables the plant to operate for 22 minutes without loading a truck. This operation will require maintaining a flow of 30 t capacity trucks of one truck loaded every 4 minutes to produce 4,000 t in eight hours. 16.3.2
Heap Leach Pad Minera Guanaco requested Vector Chile Ltda. (Vector) design the Phase III heap leach pad and process ponds. The Phase III heap will have 10 levels, each 3 m thick, with a total capacity of 7 Mt of ore. The pad is approximately rectangular and is to the north-east of the existing Phase I and II pads (Figure 16-4). Figure 16-4: Proposed Phase III Pad and Pond Locations
The planned Phase III heap will partially cover the current Phase II heap location. Topographically, the area has some major water courses that must be avoided and other minor water courses that must be provided with diversions, resulting in an expected average ground slope of 2.9% for solution collection. The first stage will be
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the pad preparation for strips 1 to 6, and the second stage will be for the remaining four strips. The new leach heap Phase III expansion will be placed to the north of the Phase I pad. The design envisages: • Maximum height of heap: 30 m • Number of lifts: 10 • Height of each lift: 3 m • Final slope of the crown: Parallel to improved surface • Stability berm width: 5 m (minimum) • Overall ratio: 3:1 (H:V) • Minimum pad slope: 2% • Ore angle of repose: 36°. Leach pad design includes the earth moving required for levelling, mass and structural fill, trench excavation, and excavation of collection system ditches. The pad final surface will consist of a compacted support bed with fine material on the surface where the waterproofing system (a liner of 1.5 mm thick, simple-textured LLDPE) is placed under the heap where it is not exposed to the sun, and a liner of 2.0 mm thick, doubletextured HDPE will be used where the liner will be exposed to the sun. 16.3.3
Irrigation System The heap will be irrigated with barren solution and ILS from the process plant. The irrigation systems are: • Barren solution pumping and piping system • ILS solution pumping and piping system • Irrigation systems; drip and sprinkler systems for crowns and only drip systems for the slopes (technically viable up to the 10th lift of the Phase III heap and also for the 11th lift if used) using barren solution and ILS • PLS solution pumping and piping system • Emergency pond pumping system. The ILS from the heap will be pumped from the ILS pond to existing barren solution storage tank TK-3B, where new barren solution pumps will pump the ILS to the heap irrigation system. The irrigation system for crowns and slopes for each heap level can be fed by either barren or ILS solution. The irrigation area on top of the heap will be broken down into modules, typically 75 m wide and 75 m, 80 m, or 90 m long
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depending on the strip. The irrigation module for the slopes will typically be 75 m wide and 3.4 m long. Each module on the surface will be irrigated using drip and sprinkler systems, providing flexibility. Slope irrigation will use only drippers so as not to impact the heap stability. The PLS pumping system will pump from the storage pond to existing solution storage tank TK4. 16.3.4
Heap Solution Collection System and Ditches The Phase III heap solution collection system includes the drainage and collection piping installed within the heap. Piping will discharge solution into the main collection piping outside the heap, which will then transfer the solutions to the process ponds. The main collection ditch will run along the south side of the heap, will receive the main collection pipelines from the heap, and will transfer all the solution flow to the process ponds. This ditch has been designed as secondary overflow containment and will be lined with HDPE in the event that if a pipe leaks the solution will flow to the process pond. The ditch will be divided in two so that the different solutions flow separately and discharge into two separate sand traps, one for the PLS solution and the other for the ILS solution. Rainfall diversion ditches will be installed along the north and east sides, and will be constructed with a gravel liner, and appropriate safety and overflow containment berms.
16.3.5
Process Ponds The process ponds will be located southwest of the heap. Ponds were designed based on the heap irrigation flows and on the type of solution. The emergency pond allows a safety contingency in case of emergency. The existing topography was utilized as much as possible in the design of the ponds to reduce cut and fill volumes and to adjust the design of the ponds to the natural slopes. Ponds and sand traps will be fully lined. Sand traps, and the PLS and ILS ponds will have leak detection systems. The emergency pond will collect the overflow of the ILS and PLS ponds by gravity. The emergency pond is planned on the west side of the ILS pond and the pumps will operate sporadically to transfer any contained solution to the ILS or PLS pond. The emergency pond will contain any overflow from solution transfer ditches between the PLS and ILS ponds and between the ILS and emergency ponds.
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16.3.6
Grinding Plant At one side of the grinding area there is will be a structure with offices, a changing room, an electrical room, and a control room. Oversize crushed ore will be discharged into the 2,000 t live fine ore storage bin which feeds a discharge belt via two vibrating feeders at the base of the bin. The belt, in turn, will feed a second belt that will, in turn, feed the ball mills. The belt will have a weightometer, and a lime bin will discharge onto the belt. The ball mill feed will include the fresh ore, the balls loaded through a mobile chute, the cyclone underflow, and the cyanide solution. The mill will discharge through the trommel to the 8.5 m3 grinding box where pumps will feed the classification system. Barren solution will be added into this box to control the hydrocyclone feed density. The cyclone battery overflow will discharge by gravity to the pre-leach thickener feed box. The pumped line to the cyclone battery will have a flowmeter, used in a control loop, to control the cyanide addition into the mill discharge box. The grinding area will include an overflow collection ditch and a sump pump, which will pump spillage to the mill discharge box or into the plant emergency pond.
16.3.7
CCD and Leaching Area The CCD–leach complex will contain four areas: • CCD area: contains the pre-leach thickener, the mill solution tank, and the CCD thickeners • Leaching area: contains four leach tanks • Flocculant plant • Pregnant solution tank. The pre-leach thickener will receive the overflow from the grinding cyclones. The underflow from this thickener will feed the leach tanks through the pre-leach thickener underflow pumps. The overflow from the thickener gravity will feed the pregnant solution tank. The mill solution tank will feed the ball mill and the washing bar on the trash screen, to be located in the grinding area. Dissolution of gold and silver will start in the mill where grinding solution containing sodium cyanide as leaching agent will be added. Dissolution will be completed in the four leaching tanks (24 h residence time). In the first tank cyanide will be added to adjust the concentration to optimize recovery and the pH will be adjusted to around
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10.5. The underflow from the pre-leach thickener (average density 50% solids) will be leached in four tanks in series. The tanks will be set at different heights to allow cascade of the slurry by gravity between units. The feed into the first tank will displace an equivalent volume of slurry to the second tank and so on through the four tanks. The discharge from the leach circuit will be by gravity from the last leach tank to the CCD slurry washing circuit, where it will be washed with barren solution. This CCD circuit will consist of three 13.7 m diameter, high-capacity thickeners. The leached slurry will be in contact in counter-current flow with barren solution from the ADR circuit. The barren solution will enter the feed well of the last thickener in series, and the leached slurry will be fed into the first thickener in series. Flocculant solution will be added to each of the thickeners to aid settling. The overflow from the first thickener flows by gravity to the grinding solution tank will be as a semi-enriched solution and the underflow from the last thickener, which is the tailing (washed, leached slurry), will be pumped to the tailings filtration plant to recover the maximum of the slurry solution. The pregnant solution tank will receive the rich solution from the Phase III heap, from the pre-leach thickener, and from the overflow of the mill solution tank. This tank will feed the adsorption columns in the ADR plant through two lines fitted with two fixedspeed centrifugal pumps, one of which will be a stand-by. Filtration will separate the solid phase from the liquid phase to discharge tailings with a moisture content of approximately 14%. The underflow from the third CCD thickener will feed the filter feed tank located in the filter plant. The filtration operation will be batch-style, in cycles that last for approximately 22 minutes with the following stages: • Feeding • Pre-squeezing • Cake washing • Pressing or squeezing • Blowing or drying • Discharge • Cloth washing. Each filter will have a collection tray for the cloth-washing water, which will open to enable discharge of the filter cake. The cake will be received by the filter discharge belt conveyors, which will run under the filters and feed the filter product conveyor. This conveyor will discharge onto a tailings stockpile from which the tailings will be
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trucked to the dry tailings storage facility. The liquid in the collection tray will flow to a sump with a sump pump that will return the liquid to the filter plant head tank. 16.3.8
Adsorption, Desorption and Regeneration (ADR) Plant The ADR gold recovery circuit will recover gold from the pregnant solutions generated from the heap leach circuit or from the leaching/CCD circuits. The ADR plant was designed to treat solutions at the following rates: • Stage 0, 350 m3/h of pregnant liquid solution (PLS) • Stage 1, 455 m3/h of PLS • Stage 2, 500 m3/h of PLS. The circuit comprises the following: • Adsorption of silver and gold from solution in carbon columns • Acid treatment and elution of carbon • Regeneration and recycle to adsorption of barren carbon • Electrowinning of eluates •
Calcining and smelting of electrowinning products.
Carbon adsorption columns for gold recovery from solution already exist at Guanaco and will be refurbished for the new operations. The final carbon adsorption circuit will consist of one train of five columns, 2.7 m in diameter by 3.4 m tall, with a solution treatment capacity of about 400 m3/h. Pregnant solution will be sampled, passed through a trash screen, and introduced into the bottom of the first column. The solution will flow through a distribution plate and then uniformly upward through the carbon at sufficient velocity to expand the bed without carry over of carbon. Each column will have the capacity to handle in excess of 100% bed expansion based on 3 t of carbon inventory per stage. The transfer of 3 t of carbon in this manner will take about five hours and the procedure will be performed once per day. It will be possible to move a maximum of 6 t of carbon per day if required. The overflow from each tank will pass into a launder feeding the next tank. The discharge from the last tank will pass via a vibrating carbon catch screen with 0.5 mm openings, which will retain the undersized and floating carbon escaping from the adsorption columns prior to discharging into the barren sump and transfer to the barren solution tank. Carbon will be transferred in a counter current direction up the
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adsorption train. The transfer will be done daily with the carbon removed from the head tank of the train being loaded into the acid wash columns. The carbon elution, regeneration, and gold and silver electrowinning and smelting circuits already exist at Guanaco. The existing circuits will be refurbished for the new operation, with the addition of new pumps and ancillaries to meet the process operational requirements. The recovery area will comprise two parallel circuits, one designed to treat 2 t per batch of loaded carbon, and the other to treat 1 t batches. Loaded carbon elution will be achieved using the split Anglo American Research Laboratory (AARL) method. Eluted carbon from the elution system will be regenerated in a horizontal, gas fired carbon regeneration kiln, and returned to the last adsorption tank in each adsorption circuit. The first half of the electrolyte solution from the elution process will be collected in the electrolyte tank. The second, low strength half of the solution will be collected in the eluate mix tank for use in the first half of the subsequent elution. Two electrowinning cells in parallel will be used, with a flow of 15 m3/h of solution each. Gold and silver will load progressively down the cell on the stainless steel wool cathodes which will be cleaned when electrowinning efficiency is impaired. Loaded cathodes from the electrowinning cell will be dried in an oven, and treated in the bullion smelting furnace with fluxes to produce the final doré bars. 16.3.9
Plant Control System A technological platform will be implemented to modernize the existing control system of the plant. A state of the art control system has been considered, including the refurbishment of the existing equipment by updating the motor control systems and adding them into the communications system, adding programmable controllers to automate the processes and to communicate through control and information networks, and installing an additional data collection, supervision, and control system (Scada) in one control room. This system will have a graphical interface that can be used by the operator to interact and operate controllers and field equipment managing the plant.
16.3.10 Water and Services Fresh water will only be used for duties where good quality water is required (i.e. low in cyanide, low total dissolved solids (TDS), no solids), or for make-up purposes.
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Barren solution will be used instead of process water due to the safety requirement of maintaining high pH (pH must be greater than 10 in all fluids). Barren solution will be distributed throughout the plant as make-up water in the heap leach and milling circuits, for other process requirements, and as hosing and flushing water. Barren solution will be the returning solution from the carbon columns or thickener overflow from both the pre-leach and tailings thickeners. These thickeners will overflow into the process water (barren solution) tank and make-up water will be provided from the fresh water system. Gland water for the slurry pumps will be provided using filtered barren solution from the barren solution tank. High pressure compressed air for general use throughout the plant will be supplied at a rate of 800 Nm3/h by two air compressors. Instrument air will be distributed throughout the plant for use in actuation of valves and for use instrument systems. Instrument air will be generated by the plant air compressor. 16.3.11 Reagents and Consumables Reagent and consumable requirements were determined by area. Existing facilities on site will be refurbished for the project, where possible. Facilities will include handling and storage, mixing or preparation, and distribution facilities.
16.4
Tailings Storage Facilities An estimated 4.1 Mt of tailings will be produced over the seven-year mine life. Vector Chile Ltda. (Vector) designed the tailings storage facility (TSF) to be a dry deposit suitable for the containment of filtered tailings with a containment wall as a protection against possible tailings movement, and a catchment and rainwater diversion system. The tailings area will be located to the north of the existing Phase I and Phase II heap leach pads. The dry TSF will have a storage capacity of 4.07 Mt, which will be deposited at a rate of 1,500 t/d of wet tailings from the filter plant. The surface area prepared for the TSF will be 28 ha. The proposed site location geology, foundation soils, structure, geotechnical characteristics, seismicity, hydrology, proximity to existing infrastructure, and public accessibility were evaluated. Safety factors and compliance with Chilean regulations were also assessed. The deposition schedule considers that during the start-up tailings will be deposited first in areas where there are ground depressions, until a flat surface is achieved with a maximum slope of 4.6%.
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A containing wall will be located downstream of the TSF to protect the mine facilities located south of the tailings deposit from any possible movement of the tailings. A system of ditches will be built to evacuate rainwater to the ravine to the west of the TSF. Rainwater falling directly onto the TSF will be captured by a system of collection ditches. Tailings will be transported by 14 m3 capacity trucks from the filter plant to the TSF. Once tailings are unloaded at the tailings deposit by the trucks, the tailings will be spread in layers 0.15 m to 0.2 m thick. Stacking will be done at night when possible so that the ploughing and irrigation can be done during the day. An agricultural plough of the tailings layer will provide better aeration for cyanide degradation. In general, the tailings will be deposited in two 0.15 m thick layers and then in one 0.2 m thick layer to achieve a height of 0.5 m. A minimum of 18 days of aeration will be allowed between layers. Irrigation rates will fluctuate between 35 and 40 L/t depending on the time of year (winter will be 35 L/t and summer will be 40 L/t) equivalent to 0.4 and 0.6 L/s respectively. This aeration and irrigation process will be repeated at least daily until the cyanide concentration in the tailings is less than 2 ppm. This deposition, cyanide degradation, and compaction of tailings will result in a deposit that is mechanically stable, free of contamination, and with access roads that will allow circulation of vehicles for the operation. The management of the tailings deposit is recommended to include a monthly monitoring program that can be audited at any moment during the life of the deposit.
16.5
Projected Plant Production Plan Dates presented in this sub-section are for illustrative purposes only, as the final decision to proceed with the processing operation as described in this section is still to be made. The process review resulted in the selection of an optimum processing route comprising a combination of heap leaching and agitated leaching. The initial start-up (provisionally scheduled for late 2010) entails the processing of low-grade material from two sources: from open pit deposits and from existing partially leached Phase I and Phase II heaps; by leaching in the Phase III heap (new). The processing of the resulting PLS will be performed in an ADR plant and EW to produce metal doré. From late 2011, the operation is planned to commence production of high-grade ore by milling, agitated leaching and counter current decantation, with further filtration and storage in a dry tailings deposit. Resulting solutions will be treated in the same ADR and EW plant which started treating heap solutions.
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Stage 1 was defined as the start-up of the heap leaching and the processing of the resulting PLS in an ADR and EW plant to produce metal doré (Table 16-4) from Year 1 to the end of the life-of-mine (LOM). Open pit ores are planned to be leached until Year 3 (2013). Stage 2 is planned to start late 2011 to process underground ore production in the agitated leaching and CCD plant until the end of the LOM. The ADR and EW facilities will be expanded in this stage to process PLS solutions coming from Phase 3 heap leach and agitated leach plant. A planned process block flow diagram for the LOM is given in Figure 16-5.
16.6
Comment on Section 16 In the opinion of the AMEC QPs, the metallurgical test work conducted to date supports the declaration of Mineral Resources and Mineral Reserves based on the following: •
The metallurgical testwork completed on the Project has been appropriate to establish the optimal processing route
•
Tests were performed on samples that were representative of the mineralization
•
Recovery factors were tailored to various metallurgical types, but see note below.
•
Regent consumption and process conditions have been appropriately determined to establish process operating costs at a feasibility accuracy level.
After reviewing the gold recovery estimate prepared by Minera Guanaco for the heap leach (obtained from bottle roll testing performed on material from the Phase II heap and other estimates based on historical results at the Guanaco operations prior to 1998 for ore from the pits) it is AMEC’s opinion that current recovery must be confirmed through column tests or by performing a field tests campaign at the beginning of the Stage 1 operation.
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Table 16-4: Proposed Integrated Production Plan, 2011 to 2016 DESCRIPTION
Year Unit
PLANT FEED UG mine and stockpile feed production to CCD Heaps Phase 1 & 2 feed production to Heap Phase 3 Open pit mines feed production to Heap Phase 3
t/a t/a t/a
ORE PROCESSING Gold Grade for UG mine and stockpile Gold Grade for Leach pads 1 & 2 Gold Grade for Open Pit Silver Grade for UG mine and stockpile Silver Grade for Leach pads 1 & 2 Silver Grade for Open Pit
g/t g/t g/t g/t g/t g/t
CONTAINED METAL Gold in UG mine and stockpile Gold in Leach pads 1 & 2 Gold in Open Pit Silver in UG mine and stockpile Silver in Leach pads 1 & 2 Silver in Open Pit
Oz Oz Oz Oz Oz Oz
METALLURGICAL RECOVERIES Gold recovery in CCD Gold recovery from Pad 1 & 2 in Leach Pad 3 Gold recovery from OP in Leach Pad 3 Silver recovery in CCD Silver recovery from Pad 1 & 2 in Leach Pad 3 Silver recovery from OP in Leach Pad 3
% % % % % %
SHIPPED METAL Gold Silver
Oz Oz
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2010
2011 0
547,880 64,120
2012 1
2013 2
2014 3
2015 4
2016 5
6
115,900 1,166,030 292,146
347,700 1,167,054 292,946
354,400 1,407,914 52,087
365,000 1,460,000 -
253,601 1,460,000 -
74,352 1,125,122 -
4.38 0.56 1.75 4.07 2.78 9.12
4.54 0.68 2.08 4.62 2.82 9.79
4.10 0.57
3.69 0.51
3.45 0.51
1.50 5.24
4.85 0.45 1.18 4.47 1.88 10.97
3.48 3.26
3.68 2.77
2.54 2.77
7,423 2,244 26,339 10,792
18,057 16,772 11,042 16,655 70,455 102,993
48,951 21,101 16,483 45,506 104,276 85,891
51,716 30,984 3,476 52,594 127,722 16,400
48,105 26,545 40,783 153,239 -
30,097 23,940 29,988 130,026 -
8,238 18,449 6,061 100,202 -
0.40 0.50
0.93 0.46 0.60 0.82 0.40 0.50
0.93 0.46 0.60 0.82 0.40 0.50
0.93 0.46 0.60 0.82 0.40 0.50
0.93 0.46 0.60 0.82 0.40 -
0.93 0.60 0.82 -
0.93 0.60 0.82 -
4,761 15,932
31,133 93,336
65,121 121,971
64,434 102,416
56,949 94,738
27,990 24,590
7,661 4,970
0.42 1.09
0.46 0.60
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Figure 16-5: Proposed Process Block Flow Diagram
Open Pit & Heap Phase 1 & 2
Underground Mine
4,000 t/d
1,000 t/d
Crushing Plant (Batch Process) Phase 3 Heap Leach
Stockpile Grinding & Thickening
ADR Plant
Agitated Leaching
EW & Smelter Plant
Counter Current Decantation
Dore
Filter Plant Dry Tailings Deposit
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17.0
MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES
17.1
Mineral Resources
17.1.1
Database A total of 74,005.65 m of RC and core drilling, corresponding to 668 drill holes completed to 2008 was available for resource estimation for the deposits assumed to be mined by open pit methods. Data were supplied to AMEC in the form of a Microsoft Access database. Topography was supplied in the form of a digital terrain model. For the deposits assumed to be mined by underground methods, drilling databases were provided in separate Excel files for collar, survey, assay, and mineralization zone (minzone). The Dumbo West database contains 109 drill holes, Cachinalito Central, 147, and Cachinalito West, 40. The leach pad database comprised 50 drill holes (994 m).
17.1.2
Geological Model Open Pit Minera Guanaco provided triangulated surfaces representing the mineralization types (oxide and sulphide) and 0.5 Au g/t grade-shell solids interpreted from the drill hole data. In total, 12 domains were defined for the purposes of open pit-exploitable mineralization. The interpreted grade-shells have an east–northeast sub-vertical orientation. Abrupt transitions in the vein orientation resulted in the interpretations being performed on a single set of north–south vertical sections without being reconciled on bench-plan. AMEC recommends that in future modelling efforts, the section interpretations be reconciled on a bench by bench basis. AMEC noted that the interpretations were made using only the samples below the current topography. This should also be corrected in the next modelling effort, since the composites above the surface topography were not used to estimate the grades in the grade-shells, but should be so used. Underground Minera Guanaco, with the assistance of Maptek Sudamerica, constructed three dimensional wire frame models of the vein systems in each deposit. In every mineralized zone a main vein was modelled together with several minor structures
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parallel to the main vein. The grade-shells were interpreted using a 1.0 g/t gold cut-off. The veins have an east–northeast sub-vertical orientation. Interpretations were again performed on a single set of north–south vertical sections without being reconciled on bench-plan, due to the abrupt transitions in the vein orientation. AMEC recommends that in future modelling efforts, the section interpretations be reconciled on a bench by bench basis. Although geological attributes are preferable to grade interpretation, AMEC found the criteria used to build the grade-shell wireframes to be acceptable, considering that the mining cut-off grade used is about double the grade interpretation cut-off grade. Leach Pad No geological models were constructed for the leach pad estimate. 17.1.3
Block Model Open Pit Separate block models were created by AMEC for the Defensa, Dumbo, and Perseverancia deposits. Block size was 2.5 m x 2.5 m x 2.5 m; this size was selected to permit underground and open pit mine planning with the same model, and with the intent of reblocking to a larger size for open pit, if needed; however, the 2.5 m block size was eventually used for open pit planning. Underground Minera Guanaco commissioned independent consultant Eduardo Magri Consultores in 2006 to prepare the Dumbo West, Cachinalito Central, and Cachinalito West block models. Block models were generated in Vulcan® and consisted of regular blocks of 2 m x 2 m x 2 m. Leach Pad The resource block model for the Phase I and Phase II leach pads was prepared by Eduardo Magri Consultores for Minera Guanaco in Vulcan® software in November 2007 with the assistance of Maptek South America. A block discretization of 4 x 4 x 21 nodes was adopted for block kriging. This level of discretization is sufficient (and somewhat exaggerated vertically) for the block size and composite length used for resource estimation.
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17.1.4
Exploratory Data Analysis Open Pit AMEC prepared a set of histograms, cumulative probability plots, box plots, and contact plots by mineralization types within and outside the grade-shells for each deposit, in order to validate the proposed estimation domains and define boundary modelling and outlier samples. Gold shows different statistical distribution for oxides and sulphides in Defensa and Dumbo, while in Perseverancia distributions are similar for the different mineralization types for at least 80% of the grade range. The mixed and sulphide domains were combined for open pit modelling purposes. For silver and copper, differences in grades distributions and basic statistics suggest that the mineralization types, in particular the mixed zone, should be considered as different estimation domains. This distinction should be evaluated in future models. Contact plot data were not clear; therefore AMEC modelled all boundaries as hard. When additional data are available, the use of the hard contacts should be reevaluated. Underground AMEC prepared summary statistics for gold, silver, and copper composites by deposit, inside and outside the grade-shell units, as well as histograms, cumulative probability distributions, and contact plots to validate the estimation domains. AMEC modelled all boundaries as hard, as contacts between grades across the boundary defined by the grade-shell were abrupt. Leach Pad No geological domains were defined. AMEC prepared histograms and probability plots for gold, silver, and copper composites by leach pad. In general, gold grades increase with depth, especially below 10 m. However, this increase in grade is not consistent throughout the pad and there are slices that show no residual grades above 0.4 g/t Au.
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17.1.5
Grade Capping Open Pit Grade caps were applied to the gold, copper and silver values at each deposit. Inside the grade-shell, grades were used at their full value up to a 1.5 m x 7.5 m x 7.5 m search radius (Table 17-1). Outside the grade-shell, grades were capped at the threshold values shown in Table 17-2. Table 17-1: Outlier Restriction Strategy, Inside the Grade-Shell Estimation Domains Defensa Dumbo Perseverancia
Oxide Sulphide Oxide Sulphide Oxide Sulphide
Outlier Threshold Au (g/t) Cu (%) 5.5 0.2 10.0 1.5 3.6 0.02 13.2 9.0 5.5 0.2 10.0 1.5
Ag (g/t) 70.0 100.0 5.8 92.0 100.0 100.0
Restricted Search Radius X, Y, Z (m) 1.5 x 7.5 x 7.5 1.5 x 7.5 x 7.5 1.5 x 7.5 x 7.5 1.5 x 7.5 x 7.5 1.5 x 7.5 x 7.5 1.5 x 7.5 x 7.5
Table 17-2: Outlier Restriction Strategy, Outside the Grade-Shell Estimation Domains Defensa Dumbo Perseverancia
Oxide Sulphide Oxide Sulphide Oxide Sulphide
Outlier Threshold Au (g/t) Cu (%) 1.5 0.39 1.5 0.69 1.5 1.0 1.5 3.0 7.0 0.7 7.0 2.5
Ag (g/t) 32.0 33.0 50.0 60.0 50.0 60.0
Underground The initial resource estimates had no restriction for anomalous high grade assays applied inside the grade-shell with the exception of silver in Cachinalito West. Gold distribution inside the grade-shell in Cachinalito Central has a different behaviour for the higher grades. Grades above 10 g/t Au to 20 g/t Au, usually capped in the other deposits, showed spatial continuity, therefore applying a pure capping strategy would be too restrictive. An estimation pass before pass one of the estimation process with a smaller search radius was set up to allow for high grades below 100 g/t Au to estimate close blocks.
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Leach Pad Anomalously high grades were restricted only for gold, using a restrictive influence of one block for grades above 2 g/t Au. AMEC recommends that outliers for silver and copper also be restricted in future estimates. 17.1.6
Composites Open Pit In general, the original sample length was 1.5 m, but there are smaller and larger samples. AMEC regularized the samples by compositing them to 1.5 m. The composites were broken down at the grade-shell contacts. Underground The original sampling interval was 1 m. Eduardo Magri Consultores generated composites breaking them down at the grade-shell contacts. Although the original sample length was 1 m, smaller samples were generated at the solid limits; therefore composites smaller than 0.1 m were discarded for resource estimation. AMEC would normally recommend eliminating composites smaller than 50% of the nominal composite length. However, no correlation between length and grade was found that could introduce a bias in the estimation by using smaller samples in the interpolation. AMEC found that the composites honour the domain contacts and composite length and are suitable for resource estimation, considering the relatively selective mining approach considered for this mineralization. Leach Pad Compositing was carried out in Vulcan® at the original sampled interval i.e. 1 m
17.1.7
Variography Open Pit Down-the-hole and directional correlograms were calculated for gold using Sage2001® software. Typically, the variograms show a very high nugget effect and absence of structure.
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Underground Eduardo Magri Consultores calculated and modelled correlograms for gold, silver, and copper in the principal directions defined by the orientation of the grade-shell using composites inside the grade-shell. Outside the grade-shell an inverse distance interpolation approach was used. AMEC found the parameters used for the experimental variogram calculation appropriate and that the models adopted for the resource estimation are acceptable for all three deposits. Leach Pad AMEC calculated down-the-hole and directional semi-variograms for gold using Sage2001® software to check spatial continuity assumptions used for estimation. Consistently, very high nugget effect and absence of structure are observed. 17.1.8
Grade Estimation Open Pit AMEC estimated gold, silver, and copper grades using the inverse distance squared (ID2) method. The grade estimation was completed in four passes including a first pass developed to restrict the influence of high grades. The estimation plan applied to blocks outside the grade-shell followed the same scheme developed to estimate blocks inside the grade-shell but in this case no restricted search was implemented i.e. top cap thresholds were applied for all passes. The minimum and maximum samples per hole were modified to prevent the estimation from a single drill hole and to control extrapolation. Checks on the estimate involved comparison of summary statistics between the ID2 estimates and a nearest-neighbour (NN) estimate, visual inspection of estimated grades against composites, drift analysis to detect spatial bias, and assessment of the degree of smoothing through an Hermitian correction method. In general estimates were acceptable. Perseverancia estimates show higher smoothing with a potential underestimation of tonnages of 10%, but this is compensated by an overestimation of the average grade above the cut-off by the same amount.
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Underground Ordinary kriging (OK) was used to interpolate Au, Ag and Cu grades inside the gradeshell; outside the grade-shell an ID2 interpolation approach was used by Eduardo Magri Consultores. Copper was estimated only for Dumbo West. The kriging plan developed for the Cachinalito West, Cachinalito Central and Dumbo West deposits consisted of three decreasingly restrictive search strategies. For the first and second passes a minimum of four and a maximum of eight composites were allowed with a maximum of three composites per hole. In the third pass, the minimum number of composites was lowered to two without restriction on the minimum number of drill holes. The same kriging plan was set up for gold, silver, and copper. Copper was estimated for the Dumbo West deposit only because copper grades were extremely low and of no economic interest in Cachinalito West and Central. A maximum of eight composites was used. On review of the estimation, AMEC noted that a discrepancy existed with the search ellipse orientation, which was subsequently corrected by Minera Guanaco. AMEC validated the Cachinalito West, Cachinalito Central, and Dumbo West models using a series of comprehensive independent checks including comparison of summary statistics for global estimation bias visual inspection of estimated grades against composites, drift analysis to detect spatial bias, and assessment of the degree of smoothing through an Hermitian correction method. In general estimates were acceptable. Leach Pad Inverse distance to the power of one (ID) was used to interpolate Au, Ag, and Cu grades for each pad. Blocks of each pad were estimated only with the drill holes of that pad. Blocks were assigned to each pad based on the location of their centroids relative to the solids built with the current topography. The interpolation plan developed for the leach pads consisted of three decreasingly restrictive search strategies. For the first and second passes a maximum of three samples per drill hole were allowed, no restriction on the minimum of drill holes was applied in the third pass. A minimum of eight samples and maximum of 16 in the first pass resulted in a minimum of three drill holes and a maximum of six. For the second pass the minimum number of drill holes was lowered to two. The same kriging plan was set up for silver and copper. AMEC found that the number of composites, search distances, and anisotropies used to estimate the leach pad were appropriate, given the unstructured nature of this type of material.
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AMEC validated the leach pad model through the comparison of summary statistics for global estimation bias, visual inspection of estimated grades against composites, and drift analysis to detect spatial bias. In general estimates were acceptable. 17.1.9
Density Default density values of 2.5 g/cm3 for mineralization and 2.4 g/cm3 for waste were used for all open pit and underground models. Specific gravity measurements were not performed for the heap leach pads by Minera Guanaco; instead tonnages reported by Amax were used. The calculated specific gravity for the two heaps (tonnage/volume) seem reasonable for this type of material (1.765 g/cm3 for the Phase I pad and 1.499 g/cm3 for the Phase II pad).
17.1.10 Mineral Resource Confidence Classification Open Pit Mineral Resources were only classified if they fell within the 0.5 g/t Au grade shell. Classification criteria are displayed in Table 17-3. Categories assigned to each block were smoothed by hand in section to eliminate isolated blocks surrounded by blocks of a different confidence category. Table 17-3: Parameters for Open Pit Resource Classification Category
Kriging Pass No.
Measured Indicated Inferred
1 1 or 2 3
Distance to Closest Sample (m) 0 to 13 13 to 45 —
Minimum Number of Drill-Holes
Minimum Number of Samples
2 — —
2 — —
Underground Eduardo Magri Consultores based the resource classification on the kriging pass in which a block was estimated and the average distance of samples used to estimate the block (Table 17-4). The rest of the estimated blocks in Passes 2 or 3 were assigned to the Inferred category. Table 17-4: Parameters for Underground Resource Classification Category Measured Indicated Indicated
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Kriging Pass 1 1 2
Average Distance (m) 0 to 15 15 to 30 0 to 30
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Equivalent Average Spacing (m) 30 x 30 60 x 60 60 x 60
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
AMEC found the criteria used to classify the blocks to be acceptable and in line with other deposits where a similar method is used. AMEC recommends that the search radius criteria is converted into an equivalent drill hole spacing criteria, and the accuracy of tonnage, grades, and metals on quarterly and annual production basis should be studied to test the current classification scheme under operating conditions. Leach Pad Resources were classified as Measured and Inferred by Eduardo Magri. No Indicated resources were declared. The proposed scheme was based on the fact that the lower parts of the pad were not drilled and hence grades could not be estimated. Given that total tonnage is relatively well established, resources that were not estimated were assigned the same average grade as the rest of the material and classified as Inferred. This classification scheme was accepted by AMEC, considering the type of material and the quality of the methods used to obtain data. 17.1.11 Assessment of Reasonable Prospects for Economic Extraction Open Pit Mineral Resources are constrained within Lerchs–Grossmann (L–G) pit shells that were based on metal prices of US$890/oz Au, US$12.65/oz Ag, and US$2.07/lb Cu, and reasonable mining and operating costs that were based on operational experience gained during the 1990s mining operation at Guanaco. Mineralization that falls within the L–G pit shells, and displays geological and grade continuity is considered to have reasonable prospects for economic extraction. The reporting cut-off grade for open pit Mineral Resources is 0.4 g/t Au, consistent with the long-term commodity price and cost assumptions used.
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Table 17-5: Economic Parameters Used to Assess Reasonable Prospects of Economic Extraction for Open-Pit Mineral Resources Parameter Slope Angle Minimum Stope Width Metallurgical Au Recovery Metallurgical Ag Recovery Mining Cost Processing Cost Gold Marketing Cost Gold Price Silver Price Copper Price
Open Pit 40° NA 60% 40% 2.0 US$/t 6.5 US$/t 3.0 US$/oz 890 US$/oz 12.65 US$/oz 2.07 US$/lb
Underground Mineral Resources are reported within a 1 g/t Au grade-shell designed by Minera Guanaco for the Cachinalito Central, Cachinalito West and Dumbo West deposits. For Defensa and Perseverancia, where Minera Guanaco had modelled a 0.5 g/t Au gradeshell, AMEC modelled another grade-shell at 1 g/t Au included within the 0.5 g/t gradeshell with a minimum stope width of 2 m and a minimum stope height of 10 m. Mineral Resources that display geological and grade continuity, fall within the 1 g/t Au gradeshell, and can be constrained within a minimum stope width of 2 m and a minimum stope height of 10 m were considered to have reasonable prospects for economic extraction using a sub-level open stoping mining method (Table 17-6). Table 17-6: Economic Parameters Used to Assess Reasonable Prospects of Economic Extraction for Underground Mineral Resources Parameter Underground Slope Angle NA Minimum Stope Width 2m Metallurgical Au Recovery 93% Metallurgical Ag Recovery NA Mining Cost 14.6 US$/t Processing Cost 15.0 US$/t Gold Marketing Cost 10 US$/oz Gold Price 1,000 US$/oz Silver Price NA Copper Price NA Note: silver and copper were not evaluated for the underground mineral resources
The gold price assumptions are not consistent between the underground and the open-pit scenarios. A higher long-term gold price for underground was agreed after the open pit mine planning had been carried out. There is an opportunity that the open pit Mineral Resources may be able to be marginally increased by using the US$1000 gold price that was selected for the underground assessment, and re-running the L–G optimization.
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Leach Pad There are reasonable prospects for economic processing of the heap leach material as this material will have lower costs than in-situ material and its average grade is above the expected operational cut-off of 0.4 g/t Au. Copper The current process design envisages copper in the mineralized material being sent to tailings with the filter cake. Although not in the current mine plan, an insitu leach operation could be undertaken on the tailings at the end of the mine life to extract the copper. As a result, copper has been included in the Mineral Resource estimates as having reasonable prospects of economic extraction, but is not in the Mineral Reserves. 17.1.12 Mineral Resource Statement Mineralization at Guanaco that demonstrates grade and geological continuity can be appropriately classified as Measured, Indicated, and Inferred Mineral Resources under the Australasian Joint Ore Reserves Committee (JORC) Code. Classifications were reconciled from JORC to the classifications outlined by the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves. Mineral Resources that can be extracted using open pit mining methods are included in Table 17-7; Mineral Resources that can be extracted using underground mining methods are included in Table 17-8; and the Mineral Resources that are contained within the Phase I and Phase II heap leach pads are summarized in Table 17-9. Mineral Resources are inclusive of Mineral Reserves and do not include dilution. Readers are cautioned that Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Mineral Resources have an effective date of 8 August 2010. The Qualified Person for the estimate is Emmanuel Henry, MAusIMM (CP), an AMEC employee.
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Table 17-7: Open Pit Mineral Resources, Effective Date 8 August 2010, Emmanuel Henry, MAusIMM (CP). Category
Deposit
Redox Tonnage Au Ag Cu Au Metal Type (kt) (g/t) (g/t) (%) (koz) Measured Defensa Oxide 233 1.36 14.18 0.03 10 Sulphide 111 2.27 20.49 0.30 8 Perseverancia Oxide 245 1.71 14.10 0.05 13 Sulphide 67 1.87 12.59 0.06 4 Total Oxide 479 1.54 14.14 0.04 24 Sulphide 178 2.12 17.50 0.21 12 Indicated Defensa Oxide 246 1.26 12.15 0.04 10 Sulphide 71 1.64 19.05 0.43 4 Perseverancia Oxide 315 1.35 11.31 0.05 14 Sulphide 134 1.92 10.63 0.14 8 Total Oxide 561 1.31 11.68 0.04 24 Sulphide 205 1.82 13.55 0.24 12 Measured + Indicated Defensa Oxide 479 1.31 13.14 0.03 20 Sulphide 182 2.02 19.93 0.35 12 Perseverancia Oxide 560 1.51 12.53 0.05 27 Sulphide 201 1.90 11.28 0.11 12 Total Oxide 1,040 1.42 12.81 0.04 47 Sulphide 383 1.96 15.39 0.22 24 Inferred Defensa Oxide 2 1.42 14.29 0.03 0.1 Sulphide — — — — — Perseverancia Oxide 13 1.67 9.52 0.09 0.7 Sulphide — — — — — Total Oxide 15 1.63 10.27 0.08 0.8 Sulphide — — — — — * indicates values are less than 100 (ounces or tonnes); — indicates not applicable
Ag Metal (koz) 106 73 111 27 218 100 96 43 115 46 211 89 202 116 226 73 428 190 1 — 4 — 5 —
Cu Metal (kt) 0.06 * 0.1 * 0.2 0.4 * 0.3 0.1 0.1 0.2 0.5 0.2 0.6 0.3 0.2 0.4 0.9 * — * — * —
Notes to Accompany Open Pit Mineral Resource Table: 1. 2. 3. 4.
Mineral Resources are inclusive of Mineral Reserves Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability Mineral Resources are defined with a Lerchs-Grossmann pit shell, and reported at a 0.4 g/t Au cut-off grade; Mineral Resources are reported using commodity prices of US$890/oz Au, US$12.65/oz Ag, and US$2.07/lb Cu, variable process recoveries based on redox state of the mineralization, a mining cost of US$2/t, a process cost of US$6.5/t and a gold marketing cost of US$3/oz; 5. Tonnages are rounded to the nearest 1,000 tonnes, grades are rounded to two decimal places; 6. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content; 7. Tonnage and grade measurements are in metric units. Gold and silver ounces are reported as troy ounces.
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Table 17-8: Underground Mineral Resources Mineral Resources, Effective Date 8 August 2010, Emmanuel Henry, MAusIMM (CP) Category
Deposit
Measured
Cachinalito Central Cachinalito West Dumbo West Defensa Perseverancia Total Indicated Cachinalito Central Cachinalito West Dumbo West Defensa Perseverancia Total Measured + Cachinalito Central Indicated Cachinalito West Dumbo West Defensa Perseverancia Total Inferred Cachinalito Central Cachinalito West Dumbo West Defensa Perseverancia Total * — indicates not applicable
Tonnage (kt) 515 288 149 78 234 1,264 728 524 540 418 596 2,806 1,243 812 689 497 830 4,070 328 115 1,010 74 166 1,693
Au (g/t) 5.25 3.14 3.10 2.06 1.92 3.70 4.28 2.84 2.78 2.35 1.71 2.89 4.68 2.95 2.85 2.30 1.77 3.14 3.52 2.59 2.24 1.92 1.62 2.44
Ag (g/t) 3.40 3.18 10.16 20.91 17.68 7.88 3.75 3.47 10.38 18.79 20.54 10.78 3.61 3.36 10.33 19.12 19.73 9.88 4.30 3.93 15.08 16.60 11.14 11.91
Cu (%) — — 0.78 0.45 0.18 — — — 0.99 0.39 0.30 — — — 0.95 0.40 0.26 — — — 1.07 0.49 0.10 —
Au Metal (koz) 87 29 15 5 14 151 100 48 48 32 33 261 187 77 63 37 47 411 37 10 732 5 9 133
Ag Metal (koz) 56 29 49 53 133 320 88 58 180 253 393 972 144 88 229 305 526 1,292 45 15 489 39 59 3 648
Cu Metal (kt) — — 1 0.3 0.4 2 — — 5 2 2 9 — — 7 2 2 11 — — 11 0.4 0.2 11
Notes to Accompany Underground Mineral Resource Table: 1. 2. 3. 4. 5. 6. 7. 8.
Project No.: 2181 November 2010
Mineral Resources are inclusive of Mineral Reserves Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability Mineral Resources are defined with a Lerchs-Grossmann pit shell, and reported at a1 g/t Au cut-off grade All mineralization is classified as sulphide material Mineral Resources are reported using commodity prices of US$1,000/oz Au, US$12.65/oz Ag, and US$2.07/lb Cu, variable process recoveries based on redox state of the mineralization, a mining cost of US$14.6/t, a process cost of US$15/t and a gold marketing cost of US$10/oz Tonnages are rounded to the nearest 1,000 tonnes, grades are rounded to two decimal places Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content Tonnage and grade measurements are in metric units. Gold and silver ounces are reported as troy ounces.
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Table 17-9: Leach Pad Mineral Resources, Effective Date 8 August 2010, Emmanuel Henry, MAusIMM (CP) Category
Deposit
Measured
Phase I Phase II Total Phase I Phase II Total
Inferred
Tonnage (kt) 3,898 4,437 8,334 939 1,838 2,777
Au (g/t) 0.51 0.57 0.54 0.51 0.57 0.55
Ag (g/t) 2.77 2.56 2.66 2.77 2.56 2.63
Au Metal (koz) 64 82 146 15 34 49
Ag Metal (koz) 347 365 712 84 151 235
Notes to Accompany Heap Leach Mineral Resource Table: 1. 2. 3. 4. 5. 6.
17.2
Mineral Resources are exclusive of Mineral Reserves Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability Mineral Resources are defined with the heap leach pads; all mineralization is over 0.4 g/t Au; Tonnages are rounded to the nearest 1,000 tonnes, grades are rounded to two decimal places; Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content; Tonnage and grade measurements are in metric units. Gold and silver ounces are reported as troy ounces.
Mineral Reserves Three block models were developed by Minera Guanaco for the proposed Defensa, Perseverancia, and Dumbo open pit areas, however, it was determined that only the Defensa and Perseverancia areas would be mined by open pit methods and the Dumbo deposit would be mined by underground methods. As a result, an underground Mineral Reserve was developed for the Cachinalito and Dumbo vein systems. The Guanaco mine was previously operated with two heap leach pads that contain partially-leached material. Due to constraints for new leach pad areas and positive recovery testwork on the partially leached ore, some of the old heap leach material will be removed from the pads, re-crushed, and placed on the new pad for re-leaching. This material is included in the open pit Mineral Reserve statement.
17.2.1
Optimization Parameters Mineral Reserves were estimated using a base case of US$825/oz Au and US$12.50/oz Ag. Open Pit
Pit optimization was completed by using a L–G-developed pit shell that considered only Measured and Indicated mineral resource classifications. An economic evaluation equivalent to an net present value (NPV) calculation for a multi-element
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deposit was used for the pit optimization. Design parameters used for the estimate are presented in Table 17-10. Table 17-10: Open Pit Optimization Design Parameters Design Criteria Mining Base Mining Cost Estimate Vertical Mining Adjustment Cost (Up) Vertical Mining Adjustment Cost (Down) Dilution (%) Processing Oxide Processing & Admin Cost Sulphide Processing & Admin Cost Oxide Density Sulphide Density Oxide Au Recovery (mine ore) Sulphide Au Recovery (mine ore) Oxide Au Recovery (leach pad material) Sulphide Au Recovery (leach pad material) Oxide Ag Recovery (mine ore) Sulphide Ag Recovery (mine ore) Oxide Ag Recovery (leach pad material) Sulphide Ag Recovery (leach pad material) Au Selling Cost Ag Selling Cost Au Price Ag Price Heap Leach Capacity Maximum benches mined per year
Units
Defensa
Perseverancia
US$/t US$/t US$/t %
2.50 0.007 0.009 15.00
2.50 0.007 0.009 15.00
US$/t US$/t g/cc g/cc % % % % % % % % US$/oz US$/oz US$/oz US$/oz t/d
8.00 8.00 2.5 2.5 60.0 60.0 46.0 46.0 40.0 40.0 30.0 30.0 3.00 825.00 12.50 4,000 10
8.00 8.00 2.5 2.5 60.0 60.0 46.0 46.0 40.0 40.0 30.0 30.0 3.00 825.00 12.50 4,000 10
During the optimization process a small factor was included in the calculation to account for added costs incurred for mining at higher (US$0.007/t) and lower (US$0.009/t) elevations compared to the base case. This value was estimated by AMEC and based on recommended truck performance and operating costs. A dilution factor of 15% that was provided by Minera Guanaco was used for the pit optimization. AMEC considers the percentage to be reasonable for the 5 m benches in the proposed mine design. This has the effect of increasing the processed tonnage by 15% with a similarly reduced overall Au and Ag grade. The cut-off grade used for the open pit Mineral Resource calculation was based on the following cash flow variables and equations: • • • • •
Project No.: 2181 November 2010
Au Price = US$825.00/oz Ag Price = US$12.50/oz Au Recovery = 69% Ag Recovery = 40% Cost of Processing = US$8.00/t
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
• • • •
Cost of Sales = US$3.00/oz Dilution = 15% (1.15) Volume = 2.5*2.5*2.5 = 15.625 Revenue = (Density x Topo % x Volume x Au grade x Recovery/31.1035) x (Au Price – Cost of Sales) + (Density x Topo % x Volume x Ag grade x Recovery 1.1035) x Ag Price Cost = Cost of Processing x Dilution x Density x Topo % x Volume
•
If revenue ≥ cost, then the block is classified as ore, otherwise the block is considered waste. Underground
The primary planned underground mining method is sublevel open stoping. Stopes were assumed to have a maximum 60 m height with sublevels at 20 m. The estimated design dilution is 1.5 m at the walls (0.75 m each side) for an approximate overall dilution figure of about 19%. For design purposes it was assumed that there would be a recovery of about 85% (losses in pillars and floors). This recovery should improve when the drifts are opened and better information is available and pillars can be left in waste or in low-grade ore. Remnant pillar material was extracted from the estimate prior to declaration of mineral reserves. Where higher-grade mineralization is present, or ground conditions warrant, cut-and-fill methods were envisaged: these could either be drift-and-fill and/or bench-and-fill. Cut-off grades were established using input parameters are included in Table 17-11. Table 17-11: Underground Optimization Design Parameters Parameter Underground mining cost Processing cost General costs Refining and sales costs Gold price Metallurgical recovery Cut-off grade (Au)
Value US$26.30/t US$15/t US$5/t US$10/oz Au US$1,000/oz 93% 1.56 g/t
Stope design, however, was based on a cut-off grade of 2.00 g/t Au, assuming a more conservative gold price of US$800/oz. The cut-off grade established in Table 17-11 was used for material that must be mined as part of the logical mining sequence when no additional development is required.
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17.2.2
Mineral Reserve Statement Mineral Reserves for the Guanaco Project were developed on mineralization that had been classified as Measured and Indicated Mineral Resources. The classifications used for Mineral Reserves are those outlined by the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves. These equate to Proved and Probable Ore Reserves under the JORC Code. Open pit Mineral Reserves are presented in Table 17-12. The Qualified Person is Douglas Chapman, P.E., an AMEC employee, and the effective date of the estimate is 29 May, 2010. Table 17-12: Open Pit Probable Mineral Reserve, Effective Date May 29, 2010, Douglas Chapman, P.E. Area
Category
Tonnage (kt)
Defensa Probable 322 Perseverancia Probable 370 Phase I Probable 3,898 Phase II Probable 4,437 Total Probable 9,026 Notes to accompany Open Pit Mineral Reserve Table:
Au (g/t)
Ag (g/t)
1.37 1.57 0.51 0.57 0.62
10.65 8.63 2.77 2.56 3.18
Au Metal (koz) 14 19 64 82 179
Ag Metal (koz) 110 103 347 365 923
1. 2. 3. 4.
Open pit Mineral Reserves are defined with a Lerchs-Grossmann pit shell Open pit Mineral Reserves are reported using commodity prices of US$825/oz Au and US$12.50/oz Ag. Tonnages are rounded to the nearest 1,000 tonnes, grades are rounded to two decimal places; Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content; 5. Tonnage and grade measurements are in metric units. Gold and silver ounces are reported as troy ounces.
Underground Mineral Reserves are presented in Table 17-13. The Qualified Person is Alfonso Ovalle, MAusIMM, an AMEC employee, and the effective date of the estimate is 29 May, 2010.
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Table 17-13: Underground Mineral Reserves, Effective Date May 29, 2010, Alfonso Ovalle, MAusIMM Area
Category
Cachinalito Central Cachinalito West Dumbo West
Proven Probable Subtotal Proven Probable Subtotal Proven Probable Subtotal
Total
Tonnes
Au Grade
Ag Grade
Au Metal
Ag Metal
(kt)
(g/t)
(g/t)
(koz)
(koz)
334,341 406,933 630,083 166,736 264,047 366,166 88,780 232,840 273,377 1,269,625
6.68 5.71 6.15 3.85 3.43 3.59 3.80 4.10 4.02 4.95
3.52 3.87 3.71 3.07 3.49 3.33 8.37 6.69 7.15 4.34
71,807 74,706 146,513 20,639 29,119 49,758 10,847 30,693 41,540 237,810
37,838 50,633 88,471 16,458 29,628 46,086 23,891 50,082 73,973 208,530
Notes to accompany Mineral Reserve Tables: 1. 2. 3. 4. 5.
17.3
Underground Mineral Reserves are confined to designed stopes. Remnant pillar material that cannot be mined has been removed from the estimate, and 19% dilution has been applied; Underground Mineral Reserves are reported using commodity prices of US$825/oz Au and US$12.50/oz Ag. Tonnages are rounded to the nearest 1,000 tonnes, grades are rounded to two decimal places; Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content; Tonnage and grade measurements are in metric units. Gold and silver ounces are reported as troy ounces.
Comment on Section 17 The QPs are of the opinion that the Mineral Resources and Mineral Reserves for the Project, which have been estimated using core drill data conform to the requirements of CIM (2005). The Mineral Reserves are acceptable to support mine planning. Mineral Reserves by definition have taken into account environmental, permitting, legal, title, taxation, socio-economic, marketing, and political factors and constraints, as discussed in Section 4 and Section 18 of this Technical Report. The results of the economic analysis to support Mineral Reserves (see Section 18) represent forward-looking information that is subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those presented here. Areas of uncertainty that may materially impact Mineral Reserve estimation include: •
Project No.: 2181 November 2010
There are limited density determinations for a Project at feasibility stage. Changes to the average density values used to estimate tonnages will result in changes to the Mineral Resources and Mineral Reserves.
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•
Minera Guanaco is developing an exploration ramp in 2010 in the Cachinalito Central area which consists of three drifts (two in Cachinalito Central and one in an area of Cachinalito high grade) to collect more information to be used in stope design. Modifications to the stope designs may result in changes to the Mineral Reserves.
•
The design recovery of 85% from the stopes may be able to be improved once the drifts are opened in 2010, and the stopes may be redesigned so that the pillars are in waste or low grade ore. Modifications to the stope designs may result in changes to the Mineral Reserves.
•
Refinements to the grade shells used to constrain the open pit-mineable mineralization, and determination of more accurate values for recoveries and mining costs for the open pit mining may result in changes to the open pit Mineral Reserves, and result in refinements to the surface mining plan.
The gold price assumptions are not consistent between the underground and the open-pit scenarios. A higher long-term gold price for underground was agreed after the open pit mine planning had been carried out. Consequently, there is an opportunity that the open pit Mineral Resources may be able to be marginally increased by using the US$1,000 gold price that was selected for the underground assessment, and re-running the L–G optimization.
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18.0
ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORT ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES Due to the nature and characteristics of the Mineral Reserves, Minera Guanaco will develop a combined open pit and underground mining operation at the Project. Dates discussed in this section of the Report are for illustrative purposes only, as a decision to proceed with mine construction still requires regulatory approval and approval by Minera Guanaco management.
18.1
Open Pit Mine Plan The leach operation is based on a design tonnage of 4,000 t/d of ore being fed to the crushing plant from the two open pits and the old leach pads for loading on the new Phase III leach pad. The controlling production constraint for the operation is the old Phase II heap leach which has been scheduled to provide approximately 75% of the total estimated 4,000 t/d of ore sent to the new leach pad. The open pit expansion areas are therefore scheduled to provide approximately 800 t/d of ore. After the ore from the pits is depleted, the old leach pads, Phase II and later Phase I, provide the entire 4,000 t/d to the crushing plant. For this mining plan and equipment and labour estimating purposes it was assumed that the mine would operate with two 12 hour shifts per day, seven days per week, 365 days per year.
18.1.1
Optimization Pit optimization indicated that there was a large amount of ore grade material surrounding the west side of the old workings of the Defensa pit, and to the north and below the old Perseverancia pit. The pit design process concentrated on maximizing the tonnage from these areas (Figure 18-1 and Figure 18-2); however, due to the existing haulage road in the Perseverancia pit and the existing access road to the crusher, the pit design left a sizable amount of the mineralization in place. It is recommended that a pit optimization be carried out after the process costs and metal sales prices are verified, and that a new mine design be developed considering moving the current crusher access road. The ultimate pit designs were developed using recommended parameters provided by Minera Guanaco, and based on equipment recommendations that were also provided by Minera Guanaco. Both pit designs included set infrastructure dimensions necessary for pit operation such as bench height, haul road width and grade, catch bench width, and pit slope angles (Table 18-1). Leach pad design is shown in Figure 18-3.
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Figure 18-1: Defensa Whittle Resource/Pit Design Comparison
Figure 18-2: Perseverancia Whittle Resource/Pit Design Comparison
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Table 18-1: Pit Design Parameters Item Bench height Minimum catch bench width Haul road width Maximum ramp grade Minimum mining width Bench Face Angle (hard rock) Bench Face Angle (leach material) Inter-Ramp Slope Angle Waste Dump Face Angle
Unit 5m 2.6 m 10 m 10 % 15 m 75º 26º 52º 37º
Figure 18-3: Current Phase I and II Leach Pads and Proposed Phase III Leach Pad
18.1.2
Slope Criteria The pit design slope angle parameters were based on historical performance and design criteria recommendations obtained from extensive field mapping and core logging completed by Ingeniería de Rocas Ltda. (Ingeroc) in October 1994. The pit slope angles recommended by Ingeroc were based on industry standard practices and have proven to be acceptable by the stability reflected in the walls of the historical mining areas of the existing Guanaco open pits.
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18.1.3
Mine Equipment Minera Guanaco has decided that the surface operation will be mined using contract labour and equipment. It was assumed that the contractor’s production fleet would consist of 25 t (Actros MP3336 or equivalent) road dump trucks and front-end loaders (Komatsu WA470 or equivalent). The estimated contractor’s production fleet also includes production drills for mining. It was assumed that a small drill (Sandvik – Ranger DX700 or similar) with an 89 mm (3½”) bit would be used. Ancillary equipment assumptions included dozers, graders, water trucks, maintenance and service vehicles, and various light trucks and buses. Using one contractor for all the transport operations will result in an optimized single fleet for the work. The ore and waste loading equipment are the same and one fleet can therefore operate on all four circuits (open pit to crusher, open pit to waste dumps, old heap to crusher, and crusher to the new pad). Blasting operations will be performed by a contractor, while Minera Guanaco will supply all consumable materials.
18.1.4
Mine Plan The open pit mining operation was designed to provide a small amount of ore during the development and start-up of the underground mining operation. The open pit areas are not considered as the primary deposit for the overall operation and are only being exploited to augment the initial production from the underground areas. The mining schedule was developed to begin in August, 2010 and is reported by month for the first 11 months (until the end of June, 2011) at which time it is reported by quarter until the end of mine life in January, 2013 with the exception that the final period is one month due to the exhaustion of surface material. Table 18-2 and Table 18-3 show the planned open pit production schedule, which is also illustrated graphically in Figure 184. Table 18-4 shows the proposed production from the Phase I and Phase II heap leach pads. Total mining rates for the open pits and for the Phase I and II leach pads range from 4,000 t/d to 4,500 t/d depending on the location of the mining. As with most operations there is a start-up period during the first three months of the project which begins with a 200 t/d production sequence from the open pits and increases to 800 t/d by 200 t/d increments.
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Table 18-2: Open Pit Proposed Production Schedule (mine to stockpile and plant)
Mine to Stockpile
Mine to Plant
Total Mined
Waste
Ore
Ore
Au
Ag
Cu
Ore
Au
Ag
Cu
Period
(t)
(t)
(t)
(t)
(g/t)
(g/t)
(%)
(t)
(g/t)
(g/t)
(%)
1-Aug-10
98,588
94,749
3,838
0.017
8,850
8,850
1.503
3.505
0.016
1-Oct-10
139,500
128,851
10,649
10,649
1.117
4.633
0.021
1-Nov-10
135,000
117,929
17,071
17,071
1.025
5.388
0.015
1-Dec-10
139,500
115,788
23,712
23,712
0.843
6.596
0.019
1-Jan-11
140,938
116,125
24,812
24,812
0.836
7.048
0.025
1-Feb-11
125,565
103,154
22,411
22,411
0.869
8.813
0.046
1-Mar-11
140,018
115,206
24,812
24,812
1.234
11.546
0.028
1-Apr-11
134,353
110,341
24,012
24,012
1.076
5.559
0.039
1-May-11
138,363
113,550
24,812
24,812
0.974
8.447
0.039
1-Jun-11
131,738
107,726
24,012
— — — — — — — — — — —
1.810
126,150
— — — — — — — — — — —
1.854
135,000
— — — — — — — — — — —
3,838
1-Sep-10
— — — — — — — — — — —
24,012
1.335
12.699
0.060
1-Jul-11
368,000
292,540
75,460
1,824
0.958
13.556
0.062
73,637
1.075
11.600
0.103
1-Oct-11
359,110
285,473
73,637
0.159
281,414
72,836
72,836
1.822
13.216
0.139
355,248
282,412
72,836
72,836
1.561
8.997
0.055
1-Jul-12
364,323
290,686
73,637
73,637
1.499
7.274
0.071
1-Oct-12
340,773
267,136
73,637
73,637
2.117
7.033
0.060
1-Jan-13
128,970
78,707
50,263
— — — — — —
14.203
354,250
— — — — — —
1.510
1-Apr-12
— — — — — —
73,637
1-Jan-12
— — — — — —
50,263
2.076
9.793
0.044
3,729,238 3,027,939 701,299 1,824 0.958 13.556 0.062 699,475 1.473 9.588 Note: Copper is included in this schedule to provide an indicative life-of-mine copper grade. Copper does not contribute to Project economics and is sent to the tailings facility.
0.074
Total
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Table 18-3: Open Pit Proposed Production Schedule (total to plant) Stockpile to Plant
Total To Plant
Total
Au
Ag
Cu
Total
Au
Ag
Cu
Period
(t)
(%) —
(g/t)
(g/t)
(%)
3,838
1.854
1.810
0.017
1-Sep-10
— —
(g/t) —
(t)
1-Aug-10
(g/t) — —
—
—
8,850
1.503
3.505
0.016
1-Oct-10
—
—
—
—
10,649
1.117
4.633
0.021
1-Nov-10
—
—
—
—
17,071
1.025
5.388
0.015
1-Dec-10
—
—
—
—
23,712
0.843
6.596
0.019
1-Jan-11
—
—
—
—
24,812
0.836
7.048
0.025
1-Feb-11
—
—
—
—
22,411
0.869
8.813
0.046
1-Mar-11
—
—
—
—
24,812
1.234
11.546
0.028
1-Apr-11
—
—
—
—
24,012
1.076
5.559
0.039
—
—
—
—
24,812
0.974
8.447
0.039
1-Jun-11
—
—
—
—
24,012
1.335
12.699
0.060
1-Jul-11
—
—
—
—
73,637
1.078
11.552
0.104
1-Oct-11
—
—
—
—
73,637
1.510
14.203
0.159
1-Jan-12
—
—
—
—
72,836
1.822
13.216
0.139
1-Apr-12
—
—
—
—
72,836
1.561
8.997
0.055
1-Jul-12
—
—
—
—
73,637
1.499
7.274
0.071
1-Oct-12
—
—
—
—
73,637
2.117
7.033
0.060
1-Jan-13
1,824
0.958
13.556
0.062
52,087
2.076
9.793
0.044
1-May-11
Total 1,824 0.958 13.556 0.062 701,299 1.474 9.583 0.074 Note: Copper is included in this schedule to provide an indicative life-of-mine copper grade. Copper does not contribute to Project economics and is sent to the tailings facility.
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Figure 18-4: Proposed Open Pit Mine Production Schedule
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Table 18-4: Heap Leach Pad Proposed Production Schedule Period 1-Aug-10 1-Sep-10 1-Oct-10 1-Nov-10 1-Dec-10 1-Jan-11 1-Feb-11 1-Mar-11 1-Apr-11 1-May-11 1-Jun-11 1-Jul-11 1-Oct-11 1-Jan-12 1-Apr-12 1-Jul-12 1-Oct-12 1-Jan-13 1-Apr-13 1-Jul-13 2014 2015 2016 TOTAL
Ton 120,161 111,149 113,351 102,929 100,289 99,187 89,589 99,187 95,988 99,187 95,988 292,539 294,363 287,163 291,164 294,363 294,363 309,737 364,001 734,176 1,460,000 1,460,000 1,125,122 8,334,000
Au 0.38 0.87 0.57 0.05 0.18 0.25 0.36 0.69 0.69 0.66 0.64 0.51 0.18 0.86 0.37 0.41 0.61 0.67 0.75 0.66 0.57 0.51 0.51 0.54
Ag 1.83 2.65 1.53 0.16 1.14 1.61 1.71 2.04 2.04 2.34 2.47 2.46 0.99 2.81 2.41 2.51 3.39 3.29 3.16 2.46 3.26 2.77 2.77 2.66
Cu 0.03 0.06 0.03 0.00 0.02 0.03 0.03 0.04 0.04 0.05 0.05 0.04 0.01 0.05 0.03 0.03 0.04 0.04 0.03 0.03 0.03 0.03 0.03 0.03
The project is scheduled to begin mining ore and waste from the Defensa pit and material from the Phase II heap for the first seven months. In March, 2011 the production also begins from the Perseverancia pit. By 2014 production starts from the Phase I pad.
18.2
Underground Mine Plan The proposed underground operation was designed to produce 950 t/d, and have the potential to be expanded to as much as 1,500 t/d (540,000 t/a). Minera Guanaco will contract the pre-production and production work to contractors specialized in the construction of tunnels, underground work, and earthmoving.
18.2.1
Mining Method Sub-level stoping will mine stopes of maximum 60 m height with sublevels at 20 m. Because Cachinalito Central has the best tonnage and grade at a production rate of 900 t/d, AMEC was requested to prepare the production plan using the following assumed criteria: •
Cachinalito Central was to be divided into two zones to facilitate the mining sequence and achieve 950 t/d to feed the plant.
•
The plant will start operation in September 2011.
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The development plan is based on an advance of 300 m/month per Jumbo with multiple working faces and a maximum advance of 90 m/month per face. The development plan uses as a basis a start date of February 2010 for construction of the Cachinalito Central ramp. Cachinalito Central is divided in to two zones (Central East and Central West) and is developed first because it is the zone that provides the most ounces of gold. The next zone to be developed is Cachinalito West and then Dumbo. Proposed production rates are shown in Table 18-5, and by zone in Table 18-6. Grade and tonnage fluctuations expected over the life-of-mine (LOM) are illustrated in Figure 18-5. Mine development views for the deposits are shown in Figure 18-6 (Cachinalito Central), Figure 18-7 (Cachinalito West), and Figure 18-8 (Dumbo). Access ramps to haulage levels are designed with a constant slope equal to -12% and will be developed in waste with a minimum turning radius of 30 m. The haul trucks will enter these levels to load the ore at the loading stations. These are also developed in waste. Crossings are 20 m long and 4 m wide. These points also serve as truck loading stations during ramp construction. Each mining unit will have a raise in order to generate a free face. These raises will normally be built using a raise borer. They will be 2.4 m diameter and the length will vary from 60 m to 150 m. Mobile double-walled safety stations will be used in all mining areas (Cachinalito, West Cachinalito and Dumbo) with 48 hours autonomy and capacity for eight to 12 people. The Cachinalito and West Cachinalito areas are inter-connected providing two accesses to the production areas. Dumbo has been designed with two entrances. In areas where two access ramps are not available, stairs will be installed in the ventilation shafts. 18.2.2
Geotechnical Rock units were classified as good to regular quality. Three zones were defined for the preparation of the geotechnical model, consisting of: •
Silicified rocks and units of argillaceous rocks in an area of silicified bodies surrounded by halos of argillaceous alteration;
•
Fresh rocks
•
Alluvium
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Table 18-5: Proposed Annual Underground Mine Production Sector Cachinalito Central Cachinalito West Dumbo Total Mine Grades Au (g/t) Ag (g/t) Ounces Au Ag
2010
2011
2012
2013
2014
2015
2016
11,740
150,455 2,700
180,000 86,425 37,345 303,770 4.26 3.98 41,606 38,874
180,000 88,633 88,430 357,063 4.54 4.63 52,128 53,141
180,000 90,000 90,000 360,000 4.09 3.45 47,356 39,924
68,809 90,000 90,000 248,809 3.59 3.57 28,726 28,519
72,128 4,288 76,416 3.83 2.98 9,414 7,328
11,740 10.71 12.12 4,041 4,574
153,155 4.45 3.90 21,893 19,226
Total 771,004 429,886 310,063 1,510,953 4.22 3.94 205,164 191,587
Table 18-6: Proposed Underground Mine Production by Zone Sector Cachinalito Central Cachinalito West Dumbo Total Mine
Project No.: 2181 November 2010
2010 100%
100%
2011 98% 2% 100%
2012 59% 28% 12% 100%
Page 18-10
Contribution by Zone 2013 2014 50% 50% 25% 25% 25% 25% 100% 100%
2015 28% 36% 36% 100%
2016 94% 6% 100%
Total 51% 28% 21% 100%
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Figure 18-5: Proposed Underground Mine Production by Tonnage and Grade Tonnes vs grade 7,50
370.000 320.000
6,50 5,50
220.000 170.000
4,50
T
120.000 3,50
70.000 20.000
2,50 2010
2011
2012
2013
tonnes Años
2014
grade
Figure 18-6: Cachinalito Central Isometric View
Project No.: 2181 November 2010
Page 18-11
2015
2016
Au (g/t)
Tonnes
270.000
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Figure 18-7: Cachinalito West Isometric View
Figure 18-8: Dumbo Isometric View
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Four main types of discontinuities were identified: major faults, intermediate faults, minor discontinuities, and the contact between fresh rock and hydrothermal breccias. 18.2.3
Hydrology From the information obtained from drilling in the area and from other background information (measurements in nearby wells) García Consultores determined that the lowest level of the mine will be above the static phreatic level (the lowest design level for the mine is 2,530 masl).
18.2.4
Equipment and Infrastructure The following equipment will be required: •
Front-end loaders between 4 and 6 yd3
•
Trucks between 10 and 17 m3 capacity.
•
1 arm electro-hydraulic Jumbo (type H-104).
•
Track Drill or Simba type drills.
The requirement for air for each production area (considering Cachinalito Central as two areas) with a maximum production of 500 t/d in any one area was estimated to be 78,000 cfm. This will enter through the main ramp and intake shafts using 50 kW fans in series (forced intake) and will be extracted through the 2.4 m diameter exhaust shaft. The air will be forced from the ramp to the production areas (stopes) and extracted through the connections between the stope and the exhaust shaft which will take the used air to the surface. The compressed air required for the drilling equipment, shotcrete equipment (if used), and other minor consumer is estimated to be 600 cfm. This will be provided by mobile units located near to the consumers. A fire alarm procedure will be established by the operation that will be supported by the telecommunications system provided in the mine. This procedure will regulate the exits, fan operation, rescue procedures, and traffic on haul roads. Fire extinguishers will be installed in all the mine facilities (substations, offices, shelters). All equipment will be fitted with an automatic fire extinguishing system. The mine and the working face will be fitted with an industrial water supply system for drilling, shotcreting, and other tasks. This will be a 110 mm HDPE piping system fed from 20 m3 tanks on the surface that will be filled by a water truck twice per day with water from the industrial water tanks located in the camp area.
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Electrical power will be generated at each of the mines by generators (two at Cachinalito, one at West Cachinalito, and one at Dumbo). The generators will be located on the surface close to the intake ventilation shafts. Power will be distributed via power distribution panel (PDP) that will feed the main ventilation fan on the surface and PDPs inside the mine in the access to the stopes. 18.2.5
Personnel It is estimated that the underground contractor will have 84 operating personnel for preparation, development, benching, and ore haulage to the crusher. It is assumed that there will be two shifts per day and that four operating teams will cover the continuous operation of the underground mine. The contractor will also have 24 administrative personnel working five days per week.
18.3
Proposed Mine Plan The overall Guanaco Project production plan considers that ore will come from the underground mine, the open pits, and the recovery of partially leached material from the existing Phase I and II heap pads. Table 18-7 shows the total production by years for the Guanaco operation, and Table 18-8 and Figure 18-9 show the total Guanaco production by sources. Table 18-7: Total Proposed Ore Production for Guanaco Year
Production (kt)
2010 2011 2012 2013 2014 2015 2016 Total
612 1,574 1,808 1,814 1,825 1,714 1,199 10,546
Au (g/t)
Ag (g/t)
0.49 0.91 1.49 1.48 1.27 0.98 0.69 1.13
1.89 3.76 4.05 3.37 3.31 2.90 2.76 3.30
Au Metal (koz) 9.7 45.9 86.5 86.2 74.7 54.0 26.7 383.6
Ag Metal (koz) 37.0 190.1 235.7 196.7 194.0 160.0 106.3 1,119.9
Table 18-8: Proposed Ore Production by Source Source Underground Mine Open Pit Phase I and II heap pads Total
Project No.: 2181 November 2010
Production (kt) 1,511 701 8,334
Au (g/t) 4.22 1.47 0.54
Ag (g/t) 3.94 9.58 2.66
Au Metal (koz) 205.2 33.2 145.23
Ag Metal (koz) 191.6 216.1 712.38
10,546
1.13
3.30
383.6
1,119.9
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Figure 18-9: Proposed Ore Production by Source 2,000 1,800 1,600 1,400 Tonnes ore
1,200 1,000 800 600 400 200 0 2010
2011
2012
2013
2014
2015
2016
YEAR Underground Mine
18.4
Leach Pad 2
Open Pit Mine
Total Ore
Project Implementation The Project will be developed in two stages. The Project work plan considers the execution of Stage 1 during 2010 to start production of doré from the processing of material from the Phase II heap on the Phase III heap in late 2010. Stage 2 will commence in about December 2011. Stage 1 will consist of the refurbishing and construction of facilities to allow the operation of Phase III heap leach which will process ore from the existing Phase II leach pad and the open pit. This material will be processed in the existing crushing plant, leached on the new heap, and the resultant solutions will be treated in the ADR plant. Facilities and work in this stage include: •
Underground mine access ramp (pre-mining activities)
•
Existing crushing plant refurbishing
•
Existing ADR plant reconditioning
•
Phase III heap leach pad construction
•
Pond and solution handling system construction
•
Electrical system refurbishing
•
Existing infrastructure refurbishing.
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Existing facilities will be used to the largest possible extent, refurbishing existing facilities and replacing equipment where the process requires new capacities. Refurbishment activities by contractors have commenced, following engineering studies and contract bidding. Stage 2 will comprise construction of new facilities to process underground mine ore (of higher grade) in a grinding, agitation leach, CCD circuit, and filter plant followed by dry tailings deposition. The integrated operation is expected to start up in late 2011 and operate until 2016. Facilities included are:
18.5
•
Grinding plant
•
Agitation leach and CCD plant
•
Tailings filter plant
•
Dry tailing dam
•
Reagent system
•
Additional power supply.
Waste Rock Facilities Waste dump designs and parameters were provided by Minera Guanaco and are based on proven operating designs for the historical open pit mining operation and the Ingeroc study in 1995. The two existing dumps for the Defensa and Perseverancia pits will be utilized and expanded for the open pit operations, and designed to store the waste rock tonnages outlined in Table 18-9. Table 18-9: Design Tonnages and Volumes for the Open Pit Waste Dumps Pit
Material
Density
Defensa Perseverancia Total
Rock Rock
1.8 1.8
Quantity (kt) 1,278 1,841 3,119
Volume 3 (m x 1,000) 0.7 1,031 1,733
The waste rock design parameters that were used reflect the angle of repose for broken waste rock of 37° are: •
Maximum lift height – Defensa: 75 m
•
Maximum lift height – Perseverancia: 55 m
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
•
18.6
Slope face angle: 1.3:1 (H:V) ~ 37°.
Workforce The management and operation of the plant and management and engineering for the mine, and geology and exploration services will be performed by Owner personnel. Minera Guanaco’s organizational structure will be composed of three levels; management, supervision, and employees, all reporting to the General Manager. The mine management will consist of Planning, Geotechnical, and Mining Operation departments. The Geology and Exploration department will be responsible for the exploration, production and resources, drilling and laboratory areas. The Process department will consist of the Operation, Maintenance and Planning, and Metallurgical areas. The Administration and Finance department organization will include Accounting, Human Resources, Purchasing, and IT. The underground mine, open pit and Heap II operation will be performed by contractors with known qualifications and experience in the area. The polyclinic, catering and camp services, transportation of personnel to and from the site, safety and security will also be provided by contractors. The Guanaco mine will be operated by Chilean professionals with managers, supervisors, and staff living in Antofagasta or Taltal. The mine will operate continuous shifts, day and night, 24 hours per day, 7 days per week. Both mine and plant operations personnel will work a 7 x 7 shift system working 12 hour work shifts, equivalent to 42 work hours per week. Administration, supervision and technical staff will work from Monday to Thursday, on 4 x 3 day shift system working 12 hour work days, with a total of 43 work hours per week.
18.7
Taxation Chilean companies are subject to a statutory income tax rate of 35% on its taxable income. However, that rate is applicable as a 17% tax on income accrued at company level, and the 18% balance is applied when the company distributes profits to a foreign parent company by way of dividends. This tax on dividends, or second tier tax, may be deferred indefinitely as long as (i) dividends are paid to a local shareholder company, or (ii) if the foreign parent immediately reinvests the dividends in another Chilean company. On top of the regular income tax, there is a 5% mining tax which is calculated on operative net income (earnings before interest and taxes (EBIT) with regular rather than accelerated depreciation).
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
AMEC does not provide expert advice on taxation matters. The tax calculations in the financial analysis are made based on information provided by Minera Guanaco, together with documentation that is publicly available. It is assumed that the Guanaco Project will be subject to income and/or revenue taxes as per Table 18-10. It was assumed that Minera Guanaco will re-invest profits in Chile; hence no dividend remittance tax is applicable. No municipal taxes or other levies were considered. Table 18-10: Tax Assumptions for Financial Analysis Item Corporate Income tax rate Government mining tax rate
Unit % %
Amount 17 4
It should be noted that there is a second taxation category of 18% on dividends paid by a Chilean entity. The feasibility analysis assumed that no dividends are paid. The amount of income taxes payable for the duration of the project are US$7.1 million, however, this is adjusted downward to US$2.5 million due to a pre-payment of US$4.6 M by Minera Guanaco. The total mining tax paid is US$3.0 million.
18.8
Markets The marketing strategy developed for the Project assumes selling of doré bullion on the spot market. The Guanaco Project sales product will be doré bullion which is a solid solution of gold, silver, and some impurities. In the case of Guanaco, the principal impurity is copper, with some iron and selenium, all of which will be eliminated in the smelting process. Provision is made in the operating costs for removal of the impurities. The metals will be priced according to the following: •
Gold at the afternoon fixing in US$ per troy ounce of the London Bullion Market less US$ 0.25 per oz gold
•
Silver at the fixing in US$ per troy ounce of the London Bullion Market less US$0.01 per oz silver
Minera Guanaco will contract with a refinery for refining services and sell the products from the doré bullion. Minera Guanaco will use the “door to door” system, in which the refiner will be responsible for the transportation costs and the insurance costs when it
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
accepts the bullion from the Guanaco mine. The refinery will arrange for transportation and insurance from the Guanaco mine to the vault of the refinery. The cost for this service will be charged to the mine without mark-up by the transport agent.
18.9
Capital Costs The cost estimate has an accuracy range of ±10% to ±15% and 85% confidence level. This standard complies with an AACE class 3 estimate. Costs were derived from a combination of letter quotes and benchmarking, and were based on material quantity take-off estimates. Exchange rates used in estimation are summarized in Table 18-10. Table 18-11: Exchange Rates Based On 1 April, 2010 US Dollars Currency
Rate per US$1
Canadian Dollar Euro Australian Dollar Chilean Pesos
1.0547 0.6843 1.1082 524.46
No escalation was included. A probabilistic model was used to calculate the contingency, with a minimum of 10% allocated. 18.9.1
Project Sunk Capital Costs Minera Guanaco has commenced Guanaco mine re-opening activities with the refurbishment of existing facilities and the construction of some new facilities. Such costs were assigned to the current operation, and therefore are considered sunk costs (Table 18-11). Table 18-12: Project Sunk Capital Costs Proposed Construction Phase 00 00 00 00 00 00 00 00
Project No.: 2181 November 2010
Description
Labor (Man hours)
Total Amount (US$)
Mine Crushing Heap Leaching Pad Carbon Adsorption Circuit Elution & Regeneration EW & Gold Room Indirect Cost Total
— 12,187.75 2,217.90 1,077.86 15,483.51
3,360,847 3,945,333 3,044,336 1,346,645 440,365 170,391 826,062 13,133,979
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
18.9.2
Project Initial Capital Cost The initial capital cost, both direct and indirect, is shown in Table 18-12. Table 18-13: Project Initial Capital Costs Proposed Construction Phase 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01
18.9.3
Description
Labor (Man hours) 1,621.45 50,605.16 21,150.68 14,730.73 642.43 537.60 18,274.24 6,486.17 20,195.58
General Mine Crushing Heap Leaching Pad Grinding & Thickening Agitated Leach CCD Carbon Adsorption Circuit Elution & Regeneration EW & Gold Room Filtration & Tailings Tailings Deposit Reagents Site & Utilities & Infrastructure Indirect Cost Contingency Total
134,244
Total Amount (US$) 148,278 9,474,000 410,245 179,883 7,242,796 2,130,361 2,010,350 486,718 245,955 4,034,665 848,377 887,698 4,681,420 14,381,784 4,611,986 51,775,000
Project Sustaining Capital Cost The sustaining capital required for the Project (Table 18-13) is related to the underground mine development and includes the following development meterages: • • •
Cachinalito Central Cachinalito West Dumbo
270 m 810 m 1,419 m.
Table 18-14: Sustaining Capital
18.9.4
Description
Year
Underground Mine Underground Mine
2012 2113
Amount (US$) 4,305,000 77,000
Project Closure Capital Cost Closure costs were based on based on Minera Guanaco’s commitments to the Chilean authorities, and include: •
Disassembly of process equipment, pipes, cables, and tanks
•
Clean up of buildings and ancillaries facilities
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
•
Accesses to underground mine closed off
•
Final configuration of waste repository will be secured by the slope and stability of the pile; the waste dump will be covered by a surface of rough soil material to mitigate any dust
•
Closure of acid solution irrigation
•
Leach pad washing with recirculation of fresh water
•
Disassembly of pumps, removal of pipes, and clean up of the leach pad area.
Costs were factored as percentages of each sunk and initial capital cost area, and total US$2.14 M.
18.10
Operating Costs Operating costs are based on unit operations and include labour (direct and contractors), materials, fuel, power, reagents, water, and consumables required to perform each activity. The underground mine operating cost was prepared by Minera Guanaco. Operating costs for loading, hauling, and support unit operations for the open pit and leach pad mining were based on a quotation for contract mining services from Santa Marta Mining. Process plant operating and maintenance staffing and associated costs for the crushing plant, process plant, Phase III heap, filter plant, and ADR plant were included for the process area operating costs. Projected operating costs for the underground operation are included in Table 18-14; Table 18-15 presents the same data for the open pit operation, and Table 18-16 presents the process plant operating costs.
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Table 18-15: Projected Total Underground Mine Operating Cost Description Labour Cost Preparation Benching Electrical Power Electrical Power Consumption Electrical Power Cost Diesel Diesel Consumption Diesel Cost Material, Spare Parts, Tires and Consumables Explosive and Blasting Subcontract Total UG Operating Cost
Unit US$ x 1,000 US$ x 1,000 US$ x 1,000
2010 655 2,175 0
kWh US$ x 1,000
7,481 97,821 195,935 231,046 Included in Preparation and Benching cost
233,420
161,325
50,316
m US$ x 1,000 US$ x 1,000
173 528 730 560 Included in Preparation and Benching cost Included in Preparation and Benching cost
522
361
113
US$ x 1,000 US$ x 1,000
Included in Preparation and Benching cost 2,830 9,092 10,283 7,420
6,629
4,518
1,519
3
2011 2,619 6,250 223
2012 2,619 5,306 2,358
2013 2,619 1,293 3,508
2014 2,619 0 4,010
2015 1,746 0 2,771
2016 655 0 864
Table 18-16: Open Pit and Heap Total Operating Cost Description Labour Cost Electrical Power: Diesel Diesel Consumption Diesel Cost Material, Spare Parts, Tires, and Consumables Explosive and Blasting Subcontract Others (contractor) Total Operating Expenses
Unit US$ x 1,000 3
m US$ x 1,000 US$ x 1,000 US$ x 1,000 US$ x 1,000 US$ x 1,000
2010 411 Not required
2011 1,088
2012 1,128
2013 213
362 300 548 173 630 2,063
874 724 1,480 431 1,513 5,237
864 716 1,609 399 1,512 5,363
166 138 267 40 358 1,015
2013 3,416 838 6,156 3,435 110 1,752 2,985 18,692
2014 3,416 838 6,221 3,506 111 1,752 2,985 18,829
2015 3,416 839 5,501 2,757 103 1,752 2,983 17,353
Table 18-17: Process Plant Total Operating Cost Description Labour Maintenance materials Operation materials Power Water Other G&A Total Process Plant Operating Cost
Project No.: 2181 November 2010
Unit US$ x 1,000 US$ x 1,000 US$ x 1,000 US$ x 1,000 US$ x 1,000 US$ x 1,000 US$ x 1,000 US$ x 1,000
Page 18-22
Year 2010 614 123 1,626 437 35 734 171 3,739
2011 2,214 1,447 4,608 1,660 92 1,750 1,269 13,040
2012 3,416 1,839 6,121 3,391 110 1,752 2,987 19,615
2016 1,385 354 2,982 654 64 1,350 856 7,645
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
18.11
Financial Analysis The results of the economic analysis represent forward-looking information as defined under Canadian securities law. The results depend on inputs that are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those presented here. Factors that could cause such differences include, but are not limited to: changes in commodity prices, costs and supply of materials relevant to the mining industry, the actual extent of the mineral resources compared to those that were estimated, actual mining and metallurgical recoveries that may be achieved, technological change in the mining, processing and waste disposal, changes in government and changes in regulations affecting the ability to permit and operate a mining operation. Forward-looking information in this analysis includes statements regarding future mining and mineral processing plans, rates and amounts of metal production, tax and royalty terms, smelter and refinery terms, the ability to finance the project, and metal price forecasts. Financial analysis of the Project was carried out using a discounted cash flow (DCF) approach. This method of valuation required projecting yearly cash inflows (or revenues) and subtracting yearly cash outflows (such as operating costs, capital costs, royalties, and taxes). The resulting net annual cash flows were discounted back to the date of valuation and totalled in order to determine the net present value (NPV) of the Project at selected discount rates. The internal rate of return (IRR) was expressed as the discount rate that yields an NPV of zero. The payback period was the time calculated from the start of Project cash flows until all initial capital expenditures were recovered. The economic analysis included sensitivities to variations in operating costs, capital costs, and metal prices. All monetary amounts were presented in United States dollars (US$). For discounting, cash flows were assumed to occur at the end of each period.
18.11.1 Basis of Financial Analysis Key assumptions supporting the financial analysis were: •
Mineral Reserves will be processed at an average rate of 1.8 Mt/a over a planned mine life of approximately 5.5 years.
•
Gold and silver recoveries are estimated for each year of production and average 72.4% and 49.1% respectively
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
•
The Base Case incorporates smelting and refining terms (Table 18-16). It is assumed that the gold/silver doré will be collected by the refiner from the Guanaco mine.
Table 18-18: Smelting and Refining Terms Terms Doré Monthly shipping charge Insurance Doré metal content Gold Pay factor Charge per ounce Silver Pay factor Charge per ounce Doré refining charge
•
Unit
Value
US$/month % %
6,000 0.25% 99%
% US$/oz
100% 0.25
% US$/oz US$/oz
100% 0.01 0.58
The analysis uses a constant silver price and a reverting price curve for gold (Table 18-17). This approach realizes some near-term higher price advantage that can be reasonably expected for projects, such as Guanaco, that can be put into production within one to two years and have a relatively short mine life.
Table 18-19: Long-term Metal Price Assumptions Year Gold Silver
(US$/oz) (US$/oz)
•
•
•
Project No.: 2181 November 2010
2010 1,127 15.15
2011 1,075 15.15
2012 1,038 15.15
2013 1,010 15.15
2014 990 15.15
2015 974 15.15
2016 962 15.15
Operating costs used for the financial analysis are averaged as follows: −
Mining: US$5.31/t milled
−
Process: US$9.38/t milled
−
G&A: US$0.67/t milled.
Project costs used for the financial analysis are: −
Construction capital (inc. sustaining capital): US$56.2 M
−
Closure costs: US$2.1 M
−
Salvage value: US$3.2 M
−
Total project capital cost: US$55.1 M
Royalty payments are due to Kinross and are calculated as a percentage of the net revenue on 100% of the production. There is also a royalty payable to Enami. This is calculated as 3% of gross income; however, an advance payment
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
of $6.5M has already been made. Using base case metal prices the current financial model estimates the total value of royalty payments at $8.7 M. •
A working capital allocation of one month operating cost was included in the cash flow model. The allocation varies throughout the project life and peaks at $3.1 M. The assumption is made that all of the working capital can be recovered at project termination. Thus, the sum of all working capital over life of mine is zero.
•
Closure costs of US$ 2.1 M and a salvage value of $3.2 M have been included in the model.
•
The Base Case economic analysis is based on 100% equity financing.
•
The Base Case economic analysis includes no inflation. Capital and operating costs are expressed in 2nd quarter 2010 US dollars.
18.11.2 Results of Financial Analysis Financial analysis of the Base Case showed the after tax project NPV (discounted at 8%) to be US$32.9 M and the internal rate of return (IRR) to be 36.9%. The cumulative, undiscounted cash flow value for the project is US$57.4 M and the payback period is three years. Cashflow on an annualized basis is presented in Table 18-20. The life of mine cash cost per ounce of payable gold is US$556.88. 18.11.3 Sensitivity Analysis Sensitivity analysis was performed on the Base Case taking into account variations in metal prices, operating costs, and capital costs. The results of the analysis show that the project sensitivity is (in order from highest to lowest) metal price, operating expenditure, capital expenditure. For the purposes of the analysis, grades were assumed to be mirrored by commodity prices. Figures 18-10 to 18-13 show the aftertax sensitivities for a range of cases. Table 18-21 shows the post-tax IRR and NPV for a range of gold and silver prices.
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Table 18-20: Forecast Cashflow Analysis Table Calendar Year Project year Production year Projected months of production Metal prices Gold Silver Extracted metal Gold Silver Extracted metal value Gold Silver Total Smelter deductions Gold deduction Gold per ounce charge Silver deduction Silver per ounce charge Total Refining charges Gold Silver All content Total Product transport Freight Insurance Total Net Smelter Return Production costs Mining
Project No.: 2181 November 2010
Unit
Total
2010 1 1 3
2011 2 2 12
2012 3 3 12
2013 4 4 12
2014 5 5 12
2015 6 6 12
2016 7 7 3
2017 8 8 0
1,127 15.15
1,075 15.15
1,038 15.15
1,010 15.15
990 15.15
974 15.15
962 15.15
962 15.15
278 550
5 16
31 93
65 122
64 102
57 95
39 77
16 45
281,405 8,333 289,738
5,365 241 5,607
33,468 1,414 34,882
67,594 1,848 69,442
65,077 1,552 66,629
56,378 1,435 57,814
37,988 1,160 39,148
15,534 683 16,216
(69)
(1)
(8)
(16)
(16)
(14)
(10)
(4)
(6) (75)
(0) (1)
(1) (9)
(1) (17)
(1) (17)
(1) (15)
(1) (11)
(0) (4)
(485) (485)
(12) (12)
(73) (73)
(110) (110)
(98) (98)
(89) (89)
(68) (68)
(36) (36)
US$/oz US$/oz kozs kozs US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
(396)
(18)
(72)
(72)
(72)
(72)
(72)
(18)
(396) 288,782
(18) 5,575
(72) 34,728
(72) 69,243
(72) 66,442
(72) 57,637
(72) 38,998
(18) 16,158
US$000
(55,969)
(4,893)
(14,329)
(15,646)
(8,435)
(6,629)
(4,518)
(1,519)
Page 18-26
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Calendar Year Process G&A Total Royalty payment Kinross royalty Net Smelter Return Production Costs Net Revenue Royalty percentage of Net Revenue Net Revenue royalty Enami royalty Gross income Royalty percentage of gross income Gross income royalty Pre-payment balance Applied royalty Total royalty Closure and Salvage Closure costs Salvage value - mine Salvage value - crusher Total Earnings Earnings before taxes, depreciation & amortization Deductible interest Total earnings before taxes, depreciation & amortization Taxation Depreciation deduction accelerated Mining concession
Project No.: 2181 November 2010
Unit US$000 US$000 US$000
Total (98,913) (7,053) (161,935)
2010 (3,739) (383) (9,015)
2011 (13,040) (1,367) (28,735)
2012 (19,615) (1,379) (36,641)
2013 (18,692) (1,312) (28,440)
2014 (18,829) (1,276) (26,734)
2015 (17,353) (916) (22,786)
2016 (7,645) (420) (9,585)
US$000 US$000 US$000 %
288,782 (161,935) 126,847 5.00%
5,575 (9,015) (3,440) 5.00%
34,728 (28,735) 5,993 5.00%
69,243 (36,641) 32,602 5.00%
66,442 (28,440) 38,002 5.00%
57,637 (26,734) 30,903 5.00%
38,998 (22,786) 16,212 5.00%
16,158 (9,585) 6,573 5.00%
US$000
(6,514)
(300)
(1,630)
(1,900)
(1,545)
(811)
(329)
US$000 %
289,663 3.00%
5,605 3.00%
34,873 3.00%
69,425 3.00%
66,612 3.00%
57,798 3.00%
39,138 3.00%
16,212 3.00%
US$000 US$000 US$000 US$000
(8,690) 6,500 (2,190) (8,704)
(168) 6,500
(1,046) 6,332
(2,083) 5,286
(1,998) 3,203
(1,174)
(486)
(300)
(1,630)
(1,900)
(1,734) 1,205 (529) (2,075)
(1,174) (1,985)
(486) (815)
US$000 US$000 US$000 US$000
(2,140) 3,159
(2,140) 3,159
1,019
1,019
US$000
119,162
(3,440)
5,693
30,972
36,102
28,829
14,228
5,758
1,019
US$000 US$000
119,162
(3,440)
5,693
30,972
36,102
28,829
14,228
5,758
1,019
US$000
(56,157)
(11,532)
(12,250)
(12,262)
(6,456)
(6,456)
(6,456)
US$000
(26,202)
(6,148)
(6,083)
(5,376)
(3,682)
(1,524)
(449)
Page 18-27
(2,939)
2017
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Calendar Year Capitalized expenses Pre-tax net cash flow (Deprec Accelerated) Depreciation deduction accelerated (add back) Mine & crusher salvage Depreciation deduction regular Pre-tax net cash flow (Deprec Regular) Carryover NOL available Government mining tax Carryover NOL added Carry forward NOL Net taxable income Corporate income tax Tax pre-payment balance Corporate income tax applied Government mining tax Total tax paid Net earnings Capital expenditure Construction capital Sustaining capital Working capital Debt drawdown Debt repayment Total Net project cash flow Pre-tax After tax
Project No.: 2181 November 2010
Unit US$000 US$000
Total
2010
2011
2012
2013
2014
2015
2016
2017
36,803
(3,889)
2,754
13,292
17,770
11,190
4,089
(2,223)
(5,438)
US$000
56,157
11,532
12,250
12,262
6,456
6,456
6,456
US$000 US$000
(3,159) (56,157)
(3,635)
(3,850)
(3,854)
(3,854)
(3,854)
(3,159) (3,854)
US$000
33,644
26,169
19,598
6,691
380
(5,994)
(784) 11,190 10,406 10,406 (1,769)
(268) 4,089 3,821 3,821 (650)
(15) (2,223) (2,238)
(5,438) (7,676)
(1,769) (784) (2,553) 26,276
(650) (268) (917) 13,310
(15) (15) 5,743
1,019
US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
42,150 (7,166) 4,642 (2,524) (3,071) (5,595) 113,567
US$000 US$000 US$000 US$000 US$000 US$000
(56,157) 0 0 0 0 (56,157)
US$000 US$000
63,005 57,410
(3,071) 36,803
(3,889)
2,754
21,189
(3,889) (3,889)
(3,889) (110) 2,754 (1,245)
4,642
4,642
(1,245) (848) 13,292 11,200 11,200 (1,904) 4,642
(3,440)
(110) (110) 5,583
(848) (848) 30,125
(1,047) 17,770 16,723 16,723 (2,843) 2,738 (105) (1,047) (1,152) 34,951
(51,775)
(4,305)
(77)
(2,401)
(659)
683
142
329
1,905
(54,175)
(4,964)
606
142
329
1,905
(48,482) (48,592)
26,009 25,161
36,709 35,557
28,971 26,418
14,557 13,639
7,663 7,648
(3,440) (3,440)
Page 18-28
(2,238)
1,019 1,019
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Figure 18-10: Sensitivity of After-Tax NPV Discounted at 8%
Figure 18-11: Sensitivity of After-Tax NPV Discounted at 8%
Project No.: 2181 November 2010
Page 18-29
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Figure 18-12: Sensitivity of After-Tax IRR
Figure 18-13: Sensitivity of After-Tax IRR
Table 18-21: Sensitivity to Metal Price Changes Item Gold (US$/oz) Silver (US$/oz) Internal Rate of Return (%) Cumulative Net Cash Flow (US$ M) Net Present Value 5% (US$ M) Net Present Value 8% (US$ M) Net Present Value 10% (US$ M)
Project No.: 2181 November 2010
Base Case Variable 15.15 36.9% 57 41 33 28
Case 2
Case 3
Case 4
Case 5
Case 6
Case 6
1,000 15.15 32.5% 55 38 30 26
800 14.00 3.7% 6 (2) (6) (8)
900 16.00 18.7% 32 19 13 10
1,100 17.00 47.0% 76 55 46 40
1,200 18.00 62.5% 97 73 61 55
1,300 20.00 79.9% 118 90 77 69
Page 18-30
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
19.0
OTHER RELEVANT DATA AND INFORMATION At the end of the third quarter of 2010 several of the Stage 2 project activities outlined in Section 18.4 had been started. Construction had commenced on the decline to allow underground access. Work is projected to finish in about September 2011. The work plan for Stage 2 is based on the construction of the process plant using an EPC type of contract; however, the underground mine infrastructure, the dry tailings deposit, and modifications to the infrastructure will be built using separate contracts for engineering and construction.
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
20.0
INTERPRETATION AND CONCLUSIONS The following interpretations and conclusions are made based on the completed feasibility study: •
Information from legal experts supports that the mining tenure held is valid and is sufficient to support declaration of Mineral Resources and Mineral Reserves
•
Minera Guanaco holds sufficient surface rights in the Project area to support the mining operations, including access and power line easements. Water will be obtained for process and potable needs from a combination of groundwater and borefield sources that are already permitted
•
Current permits have allowed exploration and associated feasibility studysupporting testwork to be conducted under appropriate Chilean laws. A number of permits relating to mine development activities are already held; however, Minera Guanaco will need to apply for additional permits as appropriate under local, State and Federal laws to allow mining operations
•
Minera Guanaco has presented a DIA in support of Project development
•
Understanding of the Project geology and mineralization, together with the deposit type, is sufficiently well established to support Mineral Resource and Mineral Reserve estimation
•
Exploration completed to date has included geological mapping, airborne and ground geophysical surveys, geochemical sampling, data reviews, preparation and description of petrographic samples. Completed exploration programs were appropriate to the mineralization style. To date, a number of deposits and exploration targets have been identified
•
Drilling methods include RC, core, and sonic types. There is an expectation that additional mineralization is likely to be identified with continued exploration and infill drilling
•
An open pit mining operation was conducted between 1993 and 1997 with gold recovered from heap leach pads and a Merrill Crowe recovery plant. The operation was placed on care and maintenance due to a combination of low gold prices and poor metallurgical recoveries due to the presence of copper. AMEC notes that the current process envisages the use of an ADR plant, and carbon technology for extraction of the precious metals mineralization, rather than the earlier Merrill Crowe circuit. Carbon is selective for gold and will reject much of the copper. Additional copper management can be provided by careful pH monitoring to facilitate the gold selectivity
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
•
Mineral Resource and Mineral Reserve estimation, hydrological and geotechnical studies, metallurgical studies, reviews of Project social and environmental conditions, and assessments of existing infrastructure and equipment have been performed in support of feasibility-level studies
•
Drilling supporting the open pit and underground Mineral Resource estimate comprises a total of 74,005.65 m of RC and core drilling, corresponding to 668 drill holes. Less than 1% of the drilling is core. Leach pad estimates are based on 50 sonic drill holes (998 m). Drill orientations are generally appropriate for the mineralization style. Logging and survey data have been appropriately collected. All collection, splitting, and bagging of RC and core samples were carried out by Owner personnel of the company that was Project manager at the time, depending on the date of the drill program. No material factors were identified with the data collection from the drill programs that could affect Mineral Resource or Mineral Reserve estimation
•
The ongoing exploration drilling program has identified additional mineralization to the east of the known Cachinalito deposits, in particular at the Natalia prospect; this mineralization may support estimation of additional mineral resources
•
There are a limited number of density determinations for a project at feasibility level. AMEC recommends obtaining additional density data to explore differences between mineralization (oxide, mixed, and sulphide), alteration, and/or lithological types, as well as spatial differences, in particular in the vertical direction. Default density values of 2.5 g/cm3 for mineralization and 2.4 g/cm3 for waste were used for all open pit and underground models
•
Sample collection and handling of RC chips and core was undertaken in accordance with industry standard practices. Sample intervals, from 1 m to 2 m, depending on drill type, are acceptable
•
Sample security has relied upon the fact that the samples were always attended or locked in the on-site sample preparation facility. Chain-of-custody procedures consist of filling out sample submittal forms that are sent to the laboratory with sample shipments to make certain that all samples are received by the laboratory
•
Sample preparation and analysis has been conducted by independent analytical laboratories. Typically, Minera Guanaco drill programs included insertion of blank, duplicate and standard reference material samples. QA/QC submission rates meet industry-accepted standards of insertion rates. The QA/QC program results do not indicate any problems with the analytical programs, therefore the gold and copper analyses from the RC and core drilling are suitable for inclusion in Mineral Resource and Mineral Reserve estimation
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
•
Verification is performed on all digitally-collected data on upload to the main database, and includes checks on surveys, collar co-ordinates, lithology data, and assay data. The checks are appropriate, and consistent with industry standards
•
External reviews of the database were undertaken in 2000 and 2007, producing independent assessments of the database quality. No significant problems with the database, sampling protocols, flowsheets, check analysis program, or data storage were noted
•
Metallurgical tests were performed on samples that were considered representative of the gold and silver mineralization. Metallurgical testwork completed can support estimation of gold and silver Mineral Resources and Mineral Reserves. Recovery figures for gold and silver that were used to support Mineral Resources and Mineral Reserves are based on metallurgical testwork and are appropriate to the mineralization styles. Recovery figures are supported by production recoveries from the 1993–1997 mining episode. However, after reviewing the gold recovery estimate prepared by Minera Guanaco for the heap leach (obtained from bottle roll testing performed on material from the Phase II heap and other estimates based on historical results at the Guanaco operations prior to 1998 for ore from the pits) it is AMEC’s opinion that current recovery must be confirmed through column tests or by performing a field test campaign at the beginning of the Stage 1 operation
•
Geological models were developed that are appropriate to the deposits, but which display abrupt transitions in the vein orientations. AMEC recommends that in future modelling efforts, the section interpretations be reconciled on a bench by bench basis. When additional data are available, the use of hard contacts between domains should be re-evaluated
•
Gold, silver, and copper grades were estimated using a combination of ID, ID2 and OK interpolation
•
Open pit Mineral Resources for the Defensa and Perseverancia deposits are confined using a combination of grade shells and L–G pit shell; underground Mineral Resources for the Cachinalito Central, Cachinalito West, Dumbo West, Defensa and Perseverancia deposits are confined using a combination of grade shells and preliminary stope designs. The heap leach pad Mineral Resources contain all material within the Phase I and Phase II pads
•
Copper was included in the Mineral Resources for the proposed open pit and underground. The current process design envisages copper in the mineralized material being sent to tailings with the filter cake. Although not in the current mine plan, an insitu leach operation could be undertaken on the tailings at the end of the mine life to extract the copper. As a result, copper has been included in the
Project No.: 2181 November 2010
Page 20-3
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Mineral Resource estimates as having reasonable prospects of economic extraction, but is not in the Mineral Reserves •
The gold price assumptions are not consistent between the underground and the open-pit Mineral Resource scenarios. A higher long-term gold price for underground was agreed after the open pit mine planning had been carried out. Consequently, the open pit Mineral Resources may be able to be increased by bringing the open pit gold price to the same level as the underground gold price and re-running the L–G optimization
•
Three block models were developed by Minera Guanaco for the proposed Defensa, Perseverancia, and Dumbo open pit areas, however, it was determined that only the Defensa and Perseverancia areas would be mined by open pit methods and the Dumbo deposit would be mined by underground methods. As a result, an underground Mineral Reserve was developed for the Cachinalito and Dumbo vein systems. Due to constraints for new leach pad areas and positive recovery testwork on the partially leached ore, some of the old heap leach material will be removed from the pads, re-crushed, and placed on the new pad for releaching. This material is included in the open pit Mineral Reserve statement
•
Mineral Reserves were estimated using a base case of US$825/oz Au and US$12.50/oz Ag. An economic evaluation equivalent to a net present value (NPV) calculation for a multi-element deposit was used for the open pit optimization. A dilution factor of 15% was incorporated into the pit design. The primary planned underground mining method was sublevel open stoping, and stope design incorporated appropriate dilution
•
Minera Guanaco is developing an exploration ramp and associated drifts in 2010 in the Cachinalito Central area to collect more information to be used in stope design. Modifications to the stope designs may result in changes to the Mineral Reserves. The design recovery of 85% from the stopes may be able to be improved once the drifts are opened, and the stopes may be able to be redesigned so that the pillars are in waste or low-grade ore
•
Due to the nature and characteristics of the Mineral Reserves, Minera Guanaco will develop a combined open pit and underground mining operation at the Project. The schedule and production plan is achievable
•
The leach operation is based on a design tonnage of 4,000 t/d of ore being fed to the crushing plant from the two open pits and the old leach pads for loading on the new Phase III leach pad. The controlling production constraint for the operation is the old Phase II heap leach which has been scheduled to provide approximately 75% of the total estimated 4,000 t/d of ore sent to the new leach pad. The open pit expansion areas are therefore scheduled to provide approximately 800 t/d of ore. After the ore from the pits is depleted, the old leach pads, Phase II and later
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Phase I, provide the entire 4,000 t/d to the crushing plant. Minera Guanaco has decided that the surface operation will be mined using contract labour and equipment •
The proposed underground operation was designed to produce 950 t/d, and have the potential to be expanded to as much as 1,500 t/d (540,000 t/a). Minera Guanaco will contract the pre-production and production work to contractors specialized in the construction of tunnels, underground work, and earthmoving
•
The planned process route uses conventional and well-tested extractive technologies
•
The Project will be developed in two stages. The project work plan assumes execution of Stage I during 2009 and 2010 to start production of doré from the processing of material from the Phase II heap on the Phase III heap by approximately September 2010. Stage II will comprise construction of new facilities to process underground mine ore (of higher grade) in a grinding, agitation leach, CCD circuit, and filter plant followed by dry tailings deposition. The integrated operation is expected to start up in late 2011 and operate until 2016. These dates are included for illustrative purposes only, as a decision to proceed with mine construction still requires regulatory approval, and approval by Minera Guanaco management
•
The financial analysis indicates a Project, which using the assumptions outlined in this Report returns a positive NPV. Sensitivity analysis was performed on the Base Case taking into account variations in metal prices, operating costs, and capital costs. The results of the analysis show that the project sensitivity is (in order from highest to lowest) metal price, operating expenditure, capital expenditure.
In the opinion of the AMEC QPs, the Project that is outlined in this Technical Report has met its objectives. Mineral Resources and Mineral Reserves have been estimated for the Project, and a development plan has been outlined. This indicates the data supporting the Mineral Resource and Mineral Reserve estimates were appropriately collected, evaluated and estimated, and the original Project objective of identifying mineralization that could potentially support mining operations has been achieved.
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
21.0
RECOMMENDATIONS As the decision to proceed with mine development is one that requires approval from the Minera Guanaco Board, AMEC has provided recommendations that are based around suggested improvements to the deposit models and mine design. These work programs are estimated to take about five months, and cost approximately US$270,000. Work program recommendations, timeframes, and budgets assume work will be performed by external consultants, as follows: •
Different metal prices were used to state the underground and the open-pit Mineral Resources. AMEC recommends eliminating this discrepancy in the future statements. Estimated timeframe and cost: 50 consulting hours x 150 US$/h = US$7,500
•
The grade-shells should be refined using the drill-hole information located above the current topography. Estimated timeframe and cost: 300 consulting hours x 100 US$/h = US$30,000
•
The density model should be refined, if need be, performing an additional measurement campaign. Assuming the samples are available on site, the budget would be likely to be 100 samples x 10 US$/sample = US$10,000. If drilling has to be performed to supply the necessary samples, an additional US$100,000 has been allocated to cover drilling costs.
•
AMEC also recommends refining the level of design of the underground mine, which is somewhat less detailed than what would normally be expected at a feasibility stage. Minera Guanaco should, in particular, have a detailed layout of all the production levels, permanent underground infrastructure, and stope geometry. Estimated timeframe and cost: 1,000 consulting hours x 100 US$/h = US$100,000
•
Checks on the recovery achieved from the heap leach Stage 1 operation should be conducted. These should be a combination of field measurements, and assessments of the metallurgical balance during initial production periods. Work should include field sampling to establish head and leached material grades, and PLS (rich and lean) solution sampling, to determine gold and silver content through laboratory analysis; these data can be used to construct the metallurgical balance. Estimated timeframe and cost: three months at US$20,000
Project No.: 2181 November 2010
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
22.0
REFERENCES
22.1
Bibliography Austral Gold Ltd., 2010a: Operations Update: unpublished press release to the Australian Stock Exchange, 6 October 2010, posted to Austral Gold website, accessed 2 November 2010, http://www.australgold.com.au/activityreports2010.php Austral Gold Ltd., 2010b: Annual Report: unpublished annual report to the Australian Stock Exchange, 26 October 2010, posted to Austral Gold website, accessed 2 November 2010, http://www.australgold.com.au/activityreports-2010.php Austral Gold Ltd., 2010d: Austral Gold Become a Gold Producer: unpublished press release to the Australian Stock Exchange, 26 October 2010, posted to Austral Gold website, accessed 2 November 2010, http://www.australgold.com.au/activityreports-2010.php Austral Gold Ltd., 2010d: Quarterly Activities Report: unpublished quarterly activities report to the Australian Stock Exchange, 29 October 2010, posted to Austral Gold website, accessed 2 November 2010, http://www.australgold.com.au/activityreports-2010.php Boric, R., Diaz, F. and Maksaev, V., 1990: Geología y yacimientos metalíferos de la Región de Antofogasta: Sernageomin, Boletin N°40 246 p., two maps at 1:500.000 scale. Canadian Institute of Mining, Metallurgy and Petroleum (CIM), 2000: CIM Standards for Mineral Resources and Mineral Reserves, Definitions and Guidelines: Canadian Institute of Mining, Metallurgy and Petroleum, August, 2000 http://www.jogmec.go.jp/mric_web/tani/cimstandard.pdf Canadian Institute of Mining, Metallurgy and Petroleum (CIM), 2003: Estimation of Mineral Resources and Mineral Reserves, Best Practice Guidelines: Canadian Institute of Mining, Metallurgy and Petroleum, November 23, 2003, http://www.cim.org/committees/estimation2003.pdf. Canadian Institute of Mining, Metallurgy and Petroleum (CIM), 2005: CIM Standards for Mineral Resources and Mineral Reserves, Definitions and Guidelines: Canadian Institute of Mining, Metallurgy and Petroleum, December 2005, http://www.cim.org/committees/CIMDefStds_Dec11_05.pdf.
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Canadian Securities Administrators (CSA), 2005: National Instrument 43-101, Standards of Disclosure for Mineral Projects, Canadian Securities Administrators. Candee, C., 1997: Summary of the Geology and Geochemistry of the Balmaceda Sector, Guanaco District. Clark, A., 1999: Exploration Potential of the Guanaco Mining District, Region II, Chile. Egaña, P., 1978: Geología, Alteración, Mineralización y Prospección del Yacimiento Guanaco. Einaudi, M.T., Hedenquist, J., and Inan, E., 2003: Sulfidation State Of Fluids In Active And Extinct Hydrothermal Systems: Transitions From Porphyry To Epithermal Environments: in Simmons, S.F. and Graham, I.J., eds., Volcanic, Geothermal, And Ore-Forming Fluids: Rulers And Witnesses Of Processes Within The Earth (Giggenbach Volume): Society of Economic Geologists Special Publication 10, pp. 285–313. Hedenquist, J.W., 2005: Epithermal Gold Deposits: Styles, Characteristics, and Exploration, XVI Congreso Geologico Argentino, 18–19 September, Mendoza, Argentina. Hedenquist, J.W., Arribas, A., and Reynolds, T.J., 1998: Evolution of an Intrusioncentered Hydrothermal System: Far Southeast Lepanto porphyry and epithermal Cu-Au deposits, Philippines: Economic Geology, v. 93, pp. 374– 404. Hedenquist, J.W., Arribas, A.Jr., and Gonzalez-Urien, E., 2000, Exploration for epithermal gold deposits: Reviews in Economic Geology, v. 13, pp. 245–277. Magri, E., 2007: Geologial resources estimation for Cachinalito W & Central, Dumbo W. and Perseverancia Zones. Sillitoe, R.H., 1995: Exploration of porphyry copper lithocaps, in Pacific Rim Congress 95, 19–22 November 1995, Auckland, New Zealand, proceedings: Carlton South, The Australasian Institute of Mining and Metallurgy, p. 527–532. Sillitoe, R.H., and Hendenquist, J.W., 2003: Linkages between Volcanotectonic Settings, Ore-fluid Compositions, and Epithermal Precious-metal Deposits: Society of Economic Geologists Special Publication 10, 2003, pp. 315–343.
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Townley, B., 2000: Hidrotermalismo, Geología Económica, Depto Geología, Universidad de Chile. Zonge Ingenería y Geofisica (Chile) S.A., 2008: Informe Final, Estudio de Controlled Source Audio-Frequency Magneto-Tellurics (CSAMT) en el Distrito Guanaco, II Region, Chile, March 2008. Zonge Ingenería y Geofisica (Chile) S.A., 2008: Informe Final, Estudio de Controlled Source Audio-Frequency Magneto-Tellurics (CSAMT) en el Distrito Guanaco, II Region, Chile, June, 2008.
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
22.2
Units and Abbreviations
Term ' " # % / < > ®
µm a Å AA Ag Al ARD As asl Au AuFA B Ba Be Bi BQ C Ca CaCO3 CaO capex Cd Ce CIM Cl CN CNwad CO CRM Cu d d/wk dmt E EIS EOM Fe FeOx g 3 g/cm g/dmt 3 g/m Ga Ge GPS H H ha Hg
Project No.: 2181 November 2010
Definition seconds (geographic) minutes (geographic) number percent per less than greater than registered name micrometer (micron) annum/ year angstroms atomic absorption spectroscopy silver aluminium acid-rock drainage arsenic above sea level gold fire assay boron barium beryllium bismuth 36.5 mm size core carbon calcium calcium carbonate calcium oxide capital expenditure cadmium cerium Canadian Institute of Mining, Metallurgy and Petroleum chlorine cyanide acid-dissociable cyanide carbon monoxide certified reference material copper day days per week dry metric tonne east Environmental Impact Statement end of month iron iron oxides gram grams per cubic centimeter grams per dry metric tonne grams per cubic meter gallium germanium global positioning system horizontal hydrogen hectares mercury
Page 22-1
Term HP HQ ICP ICP-MS ICP-OES ID JORC
K 3 kg/m km km2 koz KV kV kVA kW kWh lb L–G LOM M m 3 m 3 m /hr Ma mesh Mm mm Moz Mt Mt/a MW MWMS N N Na NAG NAPP Nb NH3 NI 43-101 NN NNP NOx NQ NSR NW
Definition horsepower 63.5 mm size core inductively-couple plasma inductively-coupled plasma mass spectrometry inductively-coupled plasma optical emission spectrometry inverse distance interpolation; number after indicates the power, eg ID6 indicates th inverse distance to the 6 power. The Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia potassium kilograms per cubic meter kilometer square kilometers thousand ounces kriging variance kilovolt kilovolt–ampere kilowatt kilowatt hour pound Lerchs–Grossmann life-of-mine million meter cubic meter cubic meters per hour million years ago size based on the number of openings in one inch of screen million meters millimeter/millimeters million ounces million tonnes million tonnes per annum megawatts mine water management system north nitrogen sodium net acid generation/net acid generating net acid-producing potential niobium ammonia Canadian National Instrument 43-101 “Standards of Disclosure for Mineral Projects” nearest-neighbor/ nearest neighbour net neutralizing potential nitrogen oxide compounds 47.6 mm size core net smelter return northwest
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Term º O2 ºC OK Opex oz oz/t p P.Eng. or P.E. P.Geol or P.Geo PAG pH ppb ppm PQ QA/QC QP RAB RC RMR ROM RQD
Project No.: 2181 November 2010
Definition degrees oxygen degrees Celsius ordinary kriging operating expenditure ounce/ounces (troy ounce) ounces per tonne passing Professional Engineer Professional Geologist potentially acid-generating measure of the acidity or alkalinity of a solution parts per billion parts per million 85 mm size core quality assurance and quality control Qualified Person rotary air blast reverse circulation rock mass rating run-of-mine rock quality designation
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Term S S SAG Sb SE SEIS SG SMU SO2 SRM t t/a t/d t/h 3 t/m Topo UHF V VHF W XRD XRF
Definition south sulphur semi-autogenous grind antimony southeast Supplemental Environmental Impact Statement specific gravity selective mining unit sulphur dioxide standard reference material metric tonne tonnes per annum (tonnes per year) tonnes per day tonnes per hour tonnes per cubic meter topography ultra-high frequency vertical very high frequency west X-ray diffraction X-ray fluorescence
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
22.3
Glossary of Terms
Term acid rock drainage/ acid mine drainage adit adjacent property advanced property alluvium ANFO aquifer arroyo autogenous grinding azimuth
background concentration ball mill
beneficiation bullion carbon-in-column (CIC) carbon-in-leach (CIL)
carbon-in-pulp (CIP)
comminution/crushing/grinding
concentrate critical path
crosscut
Project No.: 2181 November 2010
Definition Characterized by low pH, high sulfate, and high iron and other metal species. A passageway or opening driven horizontally into the side of a hill generally for the purpose of exploring or otherwise opening a mineral deposit. An adit is open to the atmosphere at one end, a tunnel at both ends. A property in which the issuer does not have an interest; has a boundary reasonably proximate to the property being reported on; and has geological characteristics similar to those of the property being reported on A property for which the potential economic viability of its mineral resources is supported by a prefeasibility study or a feasibility study. Unconsolidated terrestrial sediment composed of sorted or unsorted sand, gravel, and clay that has been deposited by water. A free-running explosive used in mine blasting made of 94% prilled aluminum nitrate and 6% No. 3 fuel oil. A geologic formation capable of transmitting significant quantities of groundwater under normal hydraulic gradients. A steep-sided and flat-bottomed gulley in an arid region that is occupied by a stream only intermittently, after rains. The process of grinding in a rotating mill which uses as a grinding medium large pieces or pebbles of the ore being ground, instead of conventional steel balls or rods. The direction of one object from another, usually expressed as an angle in degrees relative to true north. Azimuths are usually measured in the clockwise direction, thus an azimuth of 90 degrees indicates that the second object is due east of the first. Naturally-occurring concentrations of compounds of environmental concern A piece of milling equipment used to grind ore into small particles. It is a cylindrical shaped steel container filled with steel balls into which crushed ore is fed. The ball mill is rotated causing the balls themselves to cascade, which in turn grinds the ore. Physical treatment of crude ore to improve its quality for some specific purpose. Also called mineral processing. Unrefined gold and/or silver mixtures that have been melted and cast into a bar or ingot. A method of recovering gold and silver from pregnant solution from the heap leaching process by adsorption of the precious metals onto fine carbon suspended by up-flow of solution through a tank. A method of recovering gold and silver from fine ground ore by simultaneous dissolution and adsorption of the precious metals onto fine carbon in an agitated tank of ore solids/solution slurry. The carbon flows counter currently to the head of the leaching circuit. A method of recovering gold and silver from fine ground ore by adsorption of the precious metals onto fine carbon in an agitated tank of ore solids/solution slurry. This recovery step in the process follows the leaching process which is done in similarly agitated tanks, but without contained carbon. Crushing and/or grinding of ore by impact and abrasion. Usually, the word "crushing" is used for dry methods and "grinding" for wet methods. Also, "crushing" usually denotes reducing the size of coarse rock while "grinding" usually refers to the reduction of the fine sizes. The concentrate is the valuable product from mineral processing, as opposed to the tailing, which contains the waste minerals. The concentrate represents a smaller volume than the original ore Sequence of activities through a project network from start to finish, the sum of whose durations determines the overall project duration. Note: there may be more than one such path. (The path through a series of activities, taking into account interdependencies, in which the late completion of activities will have an impact on the project end date or delay a key milestone.) A horizontal opening driven across the course of a vein or structure, or in general across the strike of the rock formation; a connection from a shaft to an ore
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Term crown pillar. cut and fill stoping
cut-off grade cyanidation data verification decline density depletion development development property dilution disclosure
discounted cash flow (DCF) drift easement effective date electrowinning.
elution encumbrance
feasibility study
Project No.: 2181 November 2010
Definition structure. An ore pillar at the top of an open stope left for wall support and protection from wall sloughing above If it is undesirable to leave broken ore in the stope during mining operations (as in shrinkage stoping), the lower portion of the stope can be filled with waste rock and/or mill tailings. In this case, ore is removed as soon as it has been broken from overhead, and the stope filled with waste to within a few feet of the mining surface. This method eliminates or reduces the waste disposal problem associated with mining as well as preventing collapse of the ground at the surface. A grade level below which the material is not “ore” and considered to be uneconomical to mine and process. The minimum grade of ore used to establish reserves. A method of extracting gold or silver by dissolving it in a weak solution of sodium cyanide. The process of confirming that data has been generated with proper procedures, has been accurately transcribed from the original source and is suitable to be used for mineral resource and mineral reserve estimation A sloping underground opening for machine access from level to level or from the surface. Also called a ramp. The mass per unit volume of a substance, commonly expressed in grams/ cubic centimeter. The decrease in quantity of ore in a deposit or property resulting from extraction or production. Often refers to the construction of a new mine or; Is the underground work carried out for the purpose of reaching and opening up a mineral deposit. It includes shaft sinking, cross-cutting, drifting and raising. a property that is being prepared for mineral production or a material expansion of current production, and for which economic viability has been demonstrated by a pre-feasibility or feasibility study. Waste of low-grade rock which is unavoidably removed along with the ore in the mining process. Any oral statement or written disclosure made by or on behalf of an issuer and intended to be, or reasonably likely to be, made available to the public in a jurisdiction of Canada, whether or not filed under securities legislation, but does not include written disclosure that is made available to the public only by reason of having been filed with a government or agency of government pursuant to a requirement of law other than securities legislation. Concept of relating future cash inflows and outflows over the life of a project or operation to a common base value thereby allowing more validity to comparison of projects with different durations and rates of cash flow. A horizontal mining passage underground. A drift usually follows the ore vein, as distinguished from a crosscut, which intersects it. Areas of land owned by the property owner, but in which other parties, such as utility companies, may have limited rights granted for a specific purpose. With reference to a technical report, the date of the most recent scientific or technical information included in the technical report. The removal of precious metals from solution by the passage of current through an electrowinning cell. A direct current supply is connected to the anode and cathode. As current passes through the cell, metal is deposited on the cathode. When sufficient metal has been deposited on the cathode, it is removed from the cell and the sludge rinsed off the plate and dried for further treatment. Recovery of the gold from the activated carbon into solution before zinc precipitation or electro-winning. an interest or partial right in real property which diminished the value of ownership, but does not prevent the transfer of ownership. Mortgages, taxes and judgements are encumbrances known as liens. Restrictions, easements, and reservations are also encumbrances, although not liens. a comprehensive study of a mineral deposit in which all geological, engineering, legal, operating, economic, social, environmental, and other relevant factors are considered in sufficient detail that it could reasonably serve
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Term
flotation
flowsheet footwall free milling gangue gravity separation hanging wall heap leaching Indicated Mineral Resource
Inferred Mineral Resource
internal rate of return (IRR) JORC code
liberation life of mine (LOM) magnetic separation Measured Mineral Resource
Project No.: 2181 November 2010
Definition as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production. Separation of minerals based on the interfacial chemistry of the mineral particles in solution. Reagents are added to the ore slurry to render the surface of selected minerals hydrophobic. Air bubbles are introduced to which the hydrophobic minerals attach. The selected minerals are levitated to the top of the flotation machine by their attachment to the bubbles and into a froth product, called the "flotation concentrate." If this froth carries more than one mineral as a designated main constituent, it is called a "bulk float". If it is selective to one constituent of the ore, where more than one will be floated, it is a "differential" float. The sequence of operations, step by step, by which ore is treated in a milling, concentration, or smelting process. The wall or rock on the underside of a vein or ore structure. Ores of gold or silver from which the precious metals can be recovered by concentrating methods without resort to roasting or chemical treatment. The fraction of ore rejected as tailing in a separating process. It is usually the valueless portion, but may have some secondary commercial use Exploitation of differences in the densities of particles to achieve separation. Machines utilizing gravity separation include jigs and shaking tables. The wall or rock on the upper or top side of a vein or ore deposit. A process whereby valuable metals, usually gold and silver, are leached from a heap or pad of crushed ore by leaching solutions percolating down through the heap and collected from a sloping, impermeable liner below the pad. An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The rate of return at which the Net Present Value of a project is zero; the rate at which the present value of cash inflows is equal to the present value of the cash outflows. The Australasian Code for Reporting of Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Mineral Council of Australia, as amended. Provides minimum standards for public reporting to ensure that investors and their advisers have all the information they would reasonably require for forming a reliable opinion on the results and estimates being reported. Adopted by the ASX for reporting ore body size and mineral concentrations. Freeing, by comminution, of particles of specific mineral from their interlock with other constituents of the ore. Number of years that the operation is planning to mine and treat ore, and is taken from the current mine plan based on the current evaluation of ore reserves. Use of permanent or electro-magnets to remove relatively strong ferromagnetic particles from para- and dia-magnetic ores. A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Term
merger mill Mineral Reserve
Mineral Resource
mining claim net present value (NPV)
net smelter return royalty (NSR) open pit open stope
ounce (oz) (troy) overburden plant portal. Probable Mineral Reserve
Proven Mineral Reserve
raise reclamation refining
Project No.: 2181 November 2010
Definition production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity. A voluntary combination of two or more companies whereby both stocks are merged into one. Includes any ore mill, sampling works, concentration, and any crushing, grinding, or screening plant used at, and in connection with, an excavation or mine. A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined. A Mineral Resource is a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. A description by boundaries of real property in which metal ore and/or minerals may be located. The present value of the difference between the future cash flows associated with a project and the investment required for acquiring the project. Aggregate of future net cash flows discounted back to a common base date, usually the present. NPV is an indicator of how much value an investment or project adds to a company. A defined percentage of the gross revenue from a resource extraction operation, less a proportionate share of transportation, insurance, and processing costs. A mine that is entirely on the surface. Also referred to as open-cut or open-cast mine. In competent rock, it is possible to remove all of a moderate sized ore body, resulting in an opening of considerable size. Such large, irregularly-shaped openings are called stopes. The mining of large inclined ore bodies often requires leaving horizontal pillars across the stope at intervals in order to prevent collapse of the walls. Used in imperial statistics. A kilogram is equal to 32.1507 ounces. A troy ounce is equal to 31.1035 grams. Material of any nature, consolidated or unconsolidated, that overlies a deposit of ore that is to be mined. A group of buildings, and especially to their contained equipment , in which a process or function is carried out; on a mine it will include warehouses, hoisting equipment, compressors, repair shops, offices, mill or concentrator. The surface entrance to a tunnel or adit A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated and, in some circumstances, a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A ‘Proven Mineral Reserve’ is the economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified. A vertical or inclined underground working that has been excavated from the bottom upward The restoration of a site after mining or exploration activity is completed. A high temperature process in which impure metal is reacted with flux to reduce
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Term
right-of-way room and pillar
royalty
run-of-mine semi-autogenous grinding (SAG) shaft solvent extraction-electrowinning (SX-EW) specific gravity stope strike length strip ratio stripping ratio sublevel caving supergene tailings tunnel World Geodetic Reference System of 1984 (WGS-84)-
XYZ coordinates lithogeochemistry Petrography IP frother
Project No.: 2181 November 2010
Definition the impurities. The metal is collected in a molten layer and the impurities in a slag layer. Refining results in the production of a marketable material. A parcel of land granted by deed or easement for construction and maintenance according to a designated use. This may include highways, streets, canals, ditches, or other uses This method is suitable for level deposits that are fairly uniform in thickness. It consists of excavating drifts (horizontal passages) in a rectilinear pattern so that evenly spaced pillars are left to support the overlying material. A fairly large portion of the ore (40–50%) must be left in place. Sometimes the remaining ore is recovered by removing or shaving the pillars as the mine is vacated, allowing the overhead to collapse or making future collapse more likely An amount of money paid at regular intervals by the lessee or operator of an exploration or mining property to the owner of the ground. Generally based on a specific amount per tonne or a percentage of the total production or profits. Also, the fee paid for the right to use a patented process. A term used to describe ore of average grade for the deposit. A method of grinding rock into fine powder whereby the grinding media consists of larger chunks of rocks and steel balls. An excavation of limited area compared with its depth, made for finding or mining ore or coal, raising ore, rock or water, hoisting and lowering men and materials, or ventilating underground workings. A metallurgical technique primarily applied to copper ores, in which metal is dissolved from the rock by organic solvents and recovered from solution by electrolysis. The weight of a substance compared with the weight of an equal volume of pure water at 4°C. An excavation in a mine, other than development workings, made for the purpose of extracting ore. The horizontal distance along the long axis of a structural surface, rock unit, mineral deposit or geochemical anomaly. The ratio of waste tons to ore tons mined calculated as total tonnes mined less ore tonnes mined divided by ore tonnes mined. The ratio of tonnes removed as waste, to the number of tonnes of ore removed from an open pit mine. In this method, relatively small blocks of ore within a vertical or steeply sloping vein are undercut within a stope and allowed to settle and break up. The broken ore is then scraped into raises and dropped into mine cars. Mineral enrichment produced by the chemical remobilisation of metals in an oxidised or transitional environment. Material rejected from a mill after the recoverable valuable minerals have been extracted. A horizontal underground passage that is open at both ends; the term is loosely applied in many cases to an adit, which is open at only one end The United States Defense Mapping Agency's Datum. This datum is a global datum based on electronic technology which is still to some degree classified. Data on the relationship of as many as 65 different datums to WGS-84 is available to the public. As a result, WGS-84 is becoming the base datum for the processing and conversion of data from one datum to any other datum. The Global Positioning System (GPS) is based on this datum. A grouping of three numbers which designate the position of a point in relation to a common reference frame. In common usage, the X and Y coordinate fix the horizontal position of the point, and Z refers to the elevation The chemistry of rocks within the lithosphere, such as rock, lake, stream, and soil sediments Branch of geology that deals with the description and classification of rocks. Geophysical method, induced polarization; used to directly detect scattered primary sulfide mineralization. Most metal sulfides produce IP effects, e.g. chalcopyrite, bornite, chalcocite, pyrite, pyrrhotite A type of flotation reagent which, when dissolved in water, imparts to it the ability to form a stable froth
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Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
23.0
DATE AND SIGNATURE PAGE The effective date of this Technical Report, entitled “Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study” is 12 November 2010. “signed” Emmanuel Henry, M.AusIMM, C.P.
“signed and sealed” Douglas Chapman, P.E.
“signed” Alfonso Ovalle, M.AusIMM
“signed” David Miranda, M.AusIMM
“signed and sealed” Tony Maycock, P.Eng.
“signed and sealed” Krishna P. Sinha, P.E.
“signed and sealed” Andy Briggs, P.Eng.
Project No.: 2181 November 2010
Page 23-1
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Appendix A Mineral Claim Summary Tables
Project No.: 2181 October 2010
Appendix 1
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Mineral Tenure Summary Table – Exploitation Claims Concession Name
Holder
Area (ha)
Estrella de Venus Uno al Dos (*) Blanca Estela (*) Quillota (*) Inés (*) Alfa Uno al Mil Cristina 1 al 397 Dumbo 1 al 4 Florita 1 al 776 Guanaco 1 al 168 Los Pepes 7 Los Pepes 14 Los Pepes 1 al 2 Los Pepes 11 al 13 Los Pepes 18 al 19 Los Pepes 26 Los Pepes 3 al 5 Inesperada 1 al 3 Resolución Santa Clara Santa Rita Sol Salvadora San Benito Sapiola San Manuel San Antonio Zelmira Ventura Veintiuno de Mayo Wolney Unión Universal Verónica Valparaíso Victoria ó Victorina Vallenarina Talca Tropezón Trinchera Tulipan Negro Teresa Talita Toribio Todos Santos San Roberto Santo Domingo
Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda.
7 5 5 15 4871 1985 10 3767 561 1 1 6 6 5 2 3 15 3 1 4 2 5 5 5 5 5 2 3 1 2 3 5 3 3 5 3 3 1 2 2 2 5 4 5 5 5
Project No.: 2181 October 2010
Property Registration Data Folio Nª Year Jurisdiction 138 139 140 141 142 142 vta. 143 143 vta. 144 144 vta. 145 145 vta. 146 233 146 vta. 147 147 vta. 148 148 vta. 149 149 vta. 150 150 vta. 151 151 vta. 152 152 vta. 153 153 vta. 154 154 vta. 155 155 vta. 156 156 vta. 157 157 vta. 158 158 vta. 159 159 vta. 160 160 vta. 161 161 vta. 162
Appendix 1
46 48 49 50 51 52 53 54 55 56 57 58 59 229 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91
2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003
Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal
National Roll No. 02205-0481-6 02202-1101-0 02205-0240-6 02205-0314-3 02202-1132-0 02205-1134-7 02205-1135-5 02205-1136-3 02205-1138-K 02205-1139-8 02205-1238-6 02205-1239-4 02205-1240-8 02205-1241-6 02205-1242-4 02205-1243-2 02205-0305-4 02205-1228-9 02205-0009-8 02205-0010-1 02205-0012-8 02205-0016-0 02205-0017-9 02205-0018-7 02205-0019-5 02205-0020-9 02205-0030-6 02205-0037-3 02205-0038-1 02205-0039-K 02205-0063-2 02205-0064-0 02205-0066-7 02205-0069-1 02205-0070-5 02205-0071-3 02205-0075-6 02205-0080-2 02205-0081-0 02205-0082-9 02205-0083-7 02205-0084-5 02205-0085-3 02205-0090-K 02205-0117-5 02205-0141-8
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Concession Name
Holder
Area (ha)
Susana San Juan San Andrés Sabina Sajonia Océano Pacífico Oro Escapado Oyama Panchita Pique Wessel Portales Progreso Perseverancia Pensilvania Uno al Dos Paraguaya Ricardo Rosita Río Huasco Río Huasco Rosario del Llano Rosalbita Rita Rosalbita Segunda Resguardo Primera Resguardo Segunda Restauradora Rica Mauricio Altamira Isolina Imperial Isabel Antigua Ixora Istria Ilira Jenoveva Josefina Juana Maria J Juanita Juana Luisa Lealtad Lira Laguna Lucrecia Lilita Lucila María Luisa
Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda.
5 5 5 4 2 3 2 5 3 3 3 1 3 4 5 3 2 3 2 5 3 1 2 5 5 3 2 2 1 3 5 4 3 2 5 1 2 3 3 2 5 2 2 2 3 5 5 1
Project No.: 2181 October 2010
Property Registration Data Folio Nª Year Jurisdiction 162 vta. 163 163 vta. 164 164 vta. 165 166 166 vta. 167 167 vta. 168 168 vta. 169 170 170 vta. 171 171 vta. 172 172 vta. 173 173 vta. 174 174 vta. 175 175 vta. 176 176 vta. 177 177 vta. 178 178 vta. 179 179 vta. 180 180 vta. 181 181 vta. 182 182 vta. 183 183 vta. 184 185 185 vta. 186 186 vta. 187 188
Appendix 1
92 93 94 95 96 97 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139
2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003
Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal
National Roll No. 02205-0142-6 02205-0156-6 02205-0162-0 02205-0163-9 02205-0164-7 02205-0176-0 02205-0177-9 02205-0179-5 02205-0191-4 02205-0194-9 02205-0195-7 02205-0196-5 02205-0198-1 02205-0201-5 02205-0216-3 02205-0242-2 02205-0243-0 02205-0244-9 02205-0250-3 02205-0251-1 02205-0252-K 02205-0256-2 02205-0257-0 02205-0259-7 02205-0260-0 02205-0274-0 02205-0275-9 02205-0296-1 02205-0300-3 02205-0306-2 02205-0307-0 02205-0308-9 02205-0309-7 02205-0310-0 02205-0311-9 02205-0323-2 02205-0324-0 02205-0325-9 02205-0329-1 02205-0330-5 02205-0331-3 02205-0352-6 02205-0355-0 02205-0356-9 02205-0360-7 02205-0364-K 02205-0368-2 02205-0398-4
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Concession Name
Holder
Area (ha)
Mister Meiggs Milagro Mapocho Mercedes Segunda Manuel Antonio Matta Mercedes María Teresa Mercedes María Lastenia Mar Adriatico Mercedes Naciente Nebulosa Deslindante Domitila Don Eduardo Don Felipe Desdicha Dos Amigos Don Juan D Duilia Diamante Dos Carmelos Defensa Escapada Esperanza Emma Luisa E Emma Elba Estefanía Elquina Fortunata F Fortuna Filomena Fraternidad Fresia Fedra Fides Guanajuatos G Guillermo Guicelda Graciela Huascar H
Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda.
3 2 5 5 2 3 2 4 3 5 5 3 3 3 2 2 2 1 2 2 3 4 5 3 5 2 2 5 5 5 3 5 5 2 2 2 2 3 3 4 5 2 5 1 5 5 3 5
Project No.: 2181 October 2010
Property Registration Data Folio Nª Year Jurisdiction 188 vta. 189 189 vta. 190 190 vta. 191 191 vta. 192 192 vta. 193 193 vta. 194 194 vta. 195 195 vta. 196 196 vta. 197 197 vta. 198 198 vta. 199 199 vta. 232 vta. 173 200 200 vta. 201 201 vta. 202 202 vta. 203 203 vta. 204 204 vta. 205 205 vta. 206 206 vta. 207 207 vta. 208 vta. 208 209 209 vta. 210 210 vta. 211
Appendix 1
140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 228 79 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 180 179 181 182 183 184 185
2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2006 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003
Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal
National Roll No. 02205-0401-8 02205-0402-6 02205-0403-4 02205-0405-0 02205-0407-7 02205-0408-5 02205-0410-7 02205-0413-1 02205-0415-8 02205-0416-6 02205-0419-0 02205-0447-6 02205-0449-2 02225-0426-K 02205-0527-8 02205-0528-6 02205-0529-4 02205-0531-6 02205-0532-4 02205-0533-2 02205-0534-0 02205-0535-9 02205-0536-7 02205-0537-5 02205-0549-9 02205-0580-4 02205-0581-2 02205-0583-9 02205-0584-7 02205-0585-5 02205-0586-3 02205-0587-1 02205-0588-K 02205-0619-3 02205-0620-7 02205-0621-5 02205-0622-3 02205-0623-1 02205-0624-K 02205-0627-4 02205-0628-2 02205-0645-2 02205-0646-0 02205-0647-9 02205-0649-5 02205-0650-9 02205-0667-3 02205-0671-1
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Concession Name
Holder
Area (ha)
Herminia Horacio Aconcagua Angela Araucana Argentina Auristela Amapola Amalia Amparo Andacollo Aurora A Alemania Asturiana Amistad Arco Iris Angela Augusto Brillante Bio Bio Buenos Muchachos Brilladora B Bruna María Cupido Carolina Convención Cachapoal Crisomega California Copiapina C Ciclón Cuncuna Carolina Catalina Chacabuco Chinchosa Complemento María Estela Chile Paila Dos, 1 al 29 Yolita 1 al 7 Zunilda Elvira Barcelona Esperanza Tercera
Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda.
4 4 4 2 2 5 3 2 2 4 2 3 5 5 5 5 5 3 4 3 2 5 2 5 5 1 2 2 2 2 1 3 5 5 2 4 3 2 3 4 5 3 116 35 2 1 3 5
Project No.: 2181 October 2010
Property Registration Data Folio Nª Year Jurisdiction 211 vta. 212 212 vta. 213 213 vta. 214 214 vta. 215 215 vta. 216 216 vta. 217 217 vta. 218 218 vta. 219 219 vta. 220 220 vta. 221 221 vta. 222 222 vta. 223 223 vta. 224 224 vta. 225 225 vta. 226 226 vta. 227 227 vta. 228 228 vta. 229 229 vta. 230 231 231 vta. 232 230 vta. 170 171 174 175 176 177
Appendix 1
186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 225 226 227 224 76 77 80 81 82 83
2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2006 2006 2006 2006 2006 2006
Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal
National Roll No. 02205-0672-K 02205-0674-6 02205-0815-3 02205-0816-1 02205-0818-8 02205-0819-6 02205-0820-K 02205-0821-8 02205-0822-6 02205-0824-2 02205-0825-0 02205-0826-9 02205-0827-7 02205-0828-5 02205-0829-3 02205-0830-7 02205-0831-5 02205-0832-3 02205-0851-K 02205-0892-7 02205-0894-3 02205-0896-K 02205-0897-8 02205-0904-4 02205-0906-0 02205-0934-6 02205-0936-2 02205-0938-9 02205-0940-0 02205-0941-9 02205-0942-7 02205-0943-5 02205-0944-3 02205-0945-1 02205-0946-K 02205-0947-8 02205-0950-8 02205-0951-6 02205-0954-0 02205-0956-7 02205-1023-9 02205-0955-9 02202-3035-K 02201-1327-2 02205-0029-2 02205-0582-0 02205-0893-5 02205-0590-1
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Concession Name
Holder
Area (ha)
Pancha 1 al 2 Boa - K 1, 1 al 25 Cata 5 - 1, 1 al 25 G - 23 1, 1 al 25 G - 101 1, 1 al 25 G - 102 1, 1 al 25 WE - 49 1, 1 al 25 WE - 61 1, 1 al 25 WE - 62 1, 1 al 25 Diamante 1 Rocío 1 Rocío 2, 1 al 2 Rocío 3, 1 al 2 G-1, 1 al 40 G-2, 1 al 40 WE-64 B, 1 al 25 Protector I, 1-40 Protector II, 1-60 K (#) María Luisa (#) Chilena (#) Boa A Boa B Boa C Boa D Boa E Boa F Boa G Boa H Boa J Boa K
Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Enami Enami Enami Amax Gold de Chile Ltda. Amax Gold de Chile Ltda. Amax Gold de Chile Ltda. Amax Gold de Chile Ltda. Amax Gold de Chile Ltda. Amax Gold de Chile Ltda. Amax Gold de Chile Ltda. Amax Gold de Chile Ltda. Amax Gold de Chile Ltda. Amax Gold de Chile Ltda.
2 25 25 25 25 25 25 25 25 1 1 2 2 400 400 25 200 300 2 5 5 5 5 5 5 5 5 5 5 5 5
Property Registration Data Folio Nª Year Jurisdiction 101 319 280 296 300 315 284 288 292 766 247 248 249 712
35 95 85 89 90 94 86 87 88 203 245 246 247 195
2006 2007 2007 2007 2007 2007 2007 2007 2007 2007 2006 2006 2006 2008
965 997 49 15 372 vta. 90 vta. 214 218 222 226 230 234 238 242 246
222 231 58 22 380 18 38 39 40 41 42 43 44 45 46
2009 2009 1909 1893 1908 1994 1994 1994 1994 1994 1994 1994 1994 1994 1994
Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal
National Roll No. 02202-4588-8 02202-4696-8 02202-4697-3 02202-4698-1 02202-4699-K 02202-4700-7 02202-4701-8 02202-4702-3 02202-4703-1 02202-4934-4 02202-5252-3 02202-5253-1 02202-5254-K 02202-5255-8 02202-5263-9 02202-5256-6 02202-5264-7 02202-5265-5 02205-0347-K 02205-0400-K 02205-0953-2 02202-2480-5 02202-2481-3 02202-2482-1 02202-2483-K 02202-2484-8 02202-2485-6 02202-2486-4 02202-2487-2 02202-2489-9 02202-2490-2
Notes: * = Concession subject to mortgage in favour of Compañía Minera Kinam Guanaco, registered at Taltal on 2 April 2003. # = Constituted exploitation mining concessions contained in the deed of sale with Enami, however, the tenements were not transferred in name to Guanaco as the original documents naming Enami as owner could not be located. As a consequence the tenement owner name remains as Enami.
Project No.: 2181 October 2010
Appendix 1
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Mineral Tenure Summary Table – Exploration Claims Concession Name Salvadora 1 Salvadora 2 Salvadora 3 Chancho 1 Chancho 2 Chancho 3 Chancho 4 Chancho 5 Chancho 6 Chancho 7 Chancho 8 Chancho 9 Chancho 10 Chancho 11 Chancho 12 Chancho 13 Chancho 14 Chancho 15 Chancho 16 Las Pailas XIV Las Pailas XV Las Pailas XVI Las Pailas I Las Pailas II Las Pailas III Las Pailas IV Las Pailas V Las Pailas VI Las Pailas VII Las Pailas VIII Las Pailas IX Las Pailas X Las Pailas XI Las Pailas XII Las Pailas XIII G-3 G-4 G-5 G-6 G-7 G-8 G-9 G-10 G-11 G-12 G-13 G-14 G-15 G-16 Salvadora 1 Salvadora 2 Salvadora 3 Chancho 1 Chancho 2 Chancho 3 Chancho 4 Chancho 5 Chancho 6
Holder Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda.
Project No.: 2181 October 2010
Area (ha) 200 200 200 200 200 200 200 200 200 200 200 200 200 300 200 200 300 300 300 300 300 300 300 300 300 300 300 300 300 300 300 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200
Property Registration Data Folio Nª Year 1124 1046 2009 1125 1047 2009 1126 1048 2009 1127 1049 2009 1128 1050 2009 1129 1051 2009 1130 1052 2009 1131 1053 2009 1132 1054 2009 1133 1055 2009 1134 1056 2009 1135 1057 2009 1136 1058 2009 1137 1059 2009 1138 1060 2009 1139 1061 2009 1140 1062 2009 1141 1063 2009 1142 1064 2009 2652 2377 2009 2654 2378 2009 2656 2379 2009 2447 2196 2009 2448 2197 2009 2449 2198 2009 2450 2199 2009 2451 2200 2009 2452 2201 2009 2453 2202 2009 2454 2203 2009 2455 2204 2009 2456 2205 2009 2457 2206 2009 2458 2207 2009 2459 2208 2009 2460 2209 2009 2461 2210 2009 2462 2211 2009 2463 2212 2009 2464 2213 2009 2465 2214 2009 2466 2215 2009 2467 2216 2009 2468 2217 2009 2469 2218 2009 2470 2219 2009 2471 2220 2009 2472 2221 2009 2473 2222 2009 1124 1046 2009 1125 1047 2009 1126 1048 2009 1127 1049 2009 1128 1050 2009 1129 1051 2009 1130 1052 2009 1131 1053 2009 1132 1054 2009
Appendix 1
National Roll No. Jurisdiction Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal
02202-F632-9 02202-F633-7 02202-F634-5 02202-F635-3 02202-F636-1 02202-F637-K 02202-F638-8 02202-F639-6 02202-F640-K 02202-F641-8 02202-F642-6 02202-F643-4 02202-F644-2 02202-F645-0 02202-F810-0 02202-F811-9 02202-F812-7 02202-F813-5 02202-F814-3 02202-F807-0 02202-F808-9 02202-F809-7 Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application 02202-G579-4 02202-G580-8 02202-G581-6 02202-G582-4 02202-G583-2 02202-G584-0 02202-G585-9 02202-G586-7 02202-G587-5 02202-G588-3 02202-G589-1 02202-F632-9 02202-F633-7 02202-F634-5 02202-F635-3 02202-F636-1 02202-F637-K 02202-F638-8 02202-F639-6 02202-F640-K
Guanaco Compañía Minera Limitada Guanaco Gold Project Antofagasta Province, Region II, Chile NI 43-101 Technical Report on Feasibility Study
Concession Name Chancho 7 Chancho 8 Chancho 9 Chancho 10 Chancho 11 Chancho 12 Chancho 13 Chancho 14 Chancho 15 Chancho 16 Las Pailas XIV Las Pailas XV Las Pailas XVI Las Pailas I Las Pailas II Las Pailas III Las Pailas IV Las Pailas V Las Pailas VI Las Pailas VII Las Pailas VIII Las Pailas IX Las Pailas X Las Pailas XI Las Pailas XII Las Pailas XIII G-3 G-4 G-5 G-6 G-7 G-8 G-9 G-10 G-11 G-12 G-13 G-14 G-15 G-16
Holder Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda. Guanaco Cía. Minera Ltda.
Project No.: 2181 October 2010
Area (ha) 200 200 200 200 300 200 200 300 300 300 300 300 300 300 300 300 300 300 300 300 300 300 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200
Property Registration Data Folio Nª Year 1133 1055 2009 1134 1056 2009 1135 1057 2009 1136 1058 2009 1137 1059 2009 1138 1060 2009 1139 1061 2009 1140 1062 2009 1141 1063 2009 1142 1064 2009 2652 2377 2009 2654 2378 2009 2656 2379 2009 2447 2196 2009 2448 2197 2009 2449 2198 2009 2450 2199 2009 2451 2200 2009 2452 2201 2009 2453 2202 2009 2454 2203 2009 2455 2204 2009 2456 2205 2009 2457 2206 2009 2458 2207 2009 2459 2208 2009 2460 2209 2009 2461 2210 2009 2462 2211 2009 2463 2212 2009 2464 2213 2009 2465 2214 2009 2466 2215 2009 2467 2216 2009 2468 2217 2009 2469 2218 2009 2470 2219 2009 2471 2220 2009 2472 2221 2009 2473 2222 2009
Appendix 1
National Roll No. Jurisdiction Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal Taltal
02202-F641-8 02202-F642-6 02202-F643-4 02202-F644-2 02202-F645-0 02202-F810-0 02202-F811-9 02202-F812-7 02202-F813-5 02202-F814-3 02202-F807-0 02202-F808-9 02202-F809-7 Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application Under application 02202-G579-4 02202-G580-8 02202-G581-6 02202-G582-4 02202-G583-2 02202-G584-0 02202-G585-9 02202-G586-7 02202-G587-5 02202-G588-3 02202-G589-1
