Transcript of "Cobre Panama Basic Engineering & Financing Plan"
May 7, 2012M 7 2012
Forward Looking InformationSecurities regulators encourage companies to disclose forward-looking information to help investors g g p g punderstand a company’s future prospects. This presentation contains statements about Inmet, andInmet’s future financial condition, results of operations and business based on assumptions we makeabout factors that are not within our control but that affect the mining industry generally and ourbusiness in particular, such as metal prices, currency exchange rates, the cost of consumables used atour operations and changes in legal and regulatory requirements among others requirements,These statements are “forward-looking” because we have used what we know and expect today tomake a statement about the future. Forward-looking statements usually include words such as may,expect, anticipate, believe or other similar words. W b li t ti i t b li th i il d We believe th expectations or assumptions reflected the t ti ti fl t din these forward looking statements are reasonable. However, actual events and results could besubstantially different because of the risks and uncertainties associated with our business or events thathappen after the date of this presentation. You should not place undue reliance on forward-lookingstatements. As a general p g policy, we do not update forward-looking statements, except as required by y, p g , p q ysecurities laws and regulationsAll values expressed in United States dollars 2
Presenters and Agenda Jochen Tilk Strategy, Financing and Outcome President & CEO Fernando Martinez‐Caro VP, Engineering & Tier One Asset and Basic Engineering Infrastructure Craig Ford VP, Corporate Privilege to Operate Responsibility Frank Balint VP, Corporate Project Economics and Upside Development p 3
“Responsible Growth as a Base Metal Producer Providing Superior Returns to our Shareholders” S i R Sh h ld ” Based on the quality of the project, the milestones achieved to date,and the solid funding plan, which includes partnerships as well as third party financing, we decided to proceed with the full construction of Cobre Panama upon closing of the high yield offering. • 5
Strategy and Introduction Financing Fi i Functional Tier one opportunity Operational ownership project that didn’t readiness structure exist before Ready for construction 6
Strategy and Introduction Financing Fi i Functional Tier one opportunity Operational ownership project that didn’t readiness structure exist before Ready for construction 7
Cobre Panama: A Tier 1 Asset in an Attractive Jurisdiction A Ti 1 A i A i J i di i Long Mine Life 31+ years Significant Cu Reserves & Resources Reserves 9.3M t Meaningful Annual Cu Production M&I (incl. reserves) 14.7M t Year 2‐16 298k t Inferred 8.7M t LOM 266k t Clean concentrate, no deleterious qualities Low Cash Costs ($/lb Cu) Located within immediate proximity to Year 2‐16 $0.72 Panama Canal LOM $0.82 Simple mining and proven technology Large Scale (k tpd) 160‐240+ Inexpensive and secured power Strong Annual Free Cash Flow • 4.4¢ kWh LOM Year 2‐16 Year 2 16 $0.9Bn $0 9Bn • 2 7¢ kWh first 9 years when excess 2.7¢ kWh first 9 years, when excess LOM $0.8Bn power sold to grid (before D&A) Large resource and production at low cash costs 8Note: All figures on 100% basis.
Privilege to Operate: A Meaningful Contributor in an Attractive Jurisdiction AM i f lC ib i A i J i di iPanama: Attractive Mining Jurisdiction• Stable democratic system with investment grade Largest project in Panama, with ability to rating transform exports and address trade deficit p y y• U.S. dollar is the primary currency• Unaffected by 2009 recession; economy % of Panamanian Exports continued to grow and reached a rate of 10.6% in 2011 Agri cul ture Gol d 3% 7% MPSA• A ti Active contract law with conditions similar to t tl ith diti i il t 82% Sea food those in North American, under which MPSA 8% Once in production, benefits from: Minera Panama will – Duty‐free imports become the country’s biggest exporter biggest exporter – No withholding tax on exports and dividends Cobre Panama is a key driver of growth in Panamanian economy 9
Strategy and Introduction Financing Fi i Functional Tier one opportunity Operational ownership project that didn’t readiness structure exist before Ready for construction 10
Strategy and Introduction Financing Fi i Functional Tier one opportunity Operational ownership project that didn’t readiness structure exist before Ready for construction 11
Strategy and Introduction Financing Fi i Functional Tier one opportunity Operational ownership project that didn’t readiness structure exist before Ready for construction 12
Management Resource in Place KPMC Liaison Officer President & CEO PROJECT TEAM Project Director External Finance & Construction Environment Permits & Land Operations Security Manager HR Director Relations Administration Director Director Director Director Director Director Engineering Manager Project Controls ManagerOur Panama City office 13
Fernando Martinez‐CaroVP, Engineering & Infrastructure
Basic Engineering Capital Costs CAPEX Total Area % of Project % of Project ($ MM) ($ ) Mining $760 12% Process plant $1,184 19% S e se ces Site & services $550 9% Port site facilities $543 9% Power plant $646 10% Total Direct Costs $3,682 59% Construction indirects $844 14% Total Field Costs $4,526 73% EPCM services $355 6% Owner costs Owner costs $885 14% Contingency $415 7% Project Total Costs $6,181 100% The estimation process and outcome have been extensively reviewed 15Note: All figures on 100% basis.
Capex Inflation Controlled From FEED 2010 in Q2 2009 Dollars CAPEX Total ($ MM) FEED study capital costs (power plant not included) FEED t d it l t ( l t t i l d d) $4,320 $4 320 Power plant $646 Increased process plant capital cost estimate $403 Increased mining capital cost estimate Increased mining capital cost estimate $312 Increased port site capital cost estimate $285 Other $215 Basic Engineering Capital Cost Estimate $6,181 Capex increase mostly due to power plant and scope increase 16Note: All figures on 100% basis.
Engineering is Significantly Advanced • Process design Frozen • Process flow diagrams 80.0% • Piping & instrumentation diagrams 37.6% • Overall engineering 43.6% • Civil engineering 39.9% • Geotechnical engineering Execution risk mitigated by depth of engineering work 17
By the End of 2012, $4 Billion Would be Committed Proportion of capital based on level of pricing work completed • 30 % of Capex under Lump sum EPC arrangements 10% JVP Estimates • Not subject to large currency $0.57 Bn 19 Packages fluctuations: 93% quoted in US Budget dollars, 6% in Canadian dollars, $ $2.0 Bn 32% 1% in Euros and Swiss Francs 74 Packages Firm $3.61 Bn 58% 70 Packages 30% of Cobre Panama’s capex is under lump sum fixed prices 18Note: All figures on 100% basis.
What has Changed Since the FEED?• No use of cyanide• Increased throughput rate from upsizing of grinding and processing capacity from 150k tpd to 160k tpd, with planned expansion to 240k tpd• Increased recoveries and higher commodity prices lead to slightly higher cut off • Coal‐fired power plant on MPSA’s balance sheet lowers power costs significantly Significant improvements since FEED study 19
Introducing the Construction Team • 22 years of experience in engineering and construction Fernando Martinez‐Caro • Leadership of large EPC projects in Canada, U.S., U.K. and Spain with Grupo Project Sponsor Ferrovial • 23 years of experience in mining, aluminum and process industries f l d d Cesar Inostroza • Worked on both the contractor and owner sides, for companies like Rio Tinto, Project Director DuPont, Hatch and SNC‐Lavalin in locations around the world, including the Middle East, North America and Western Africa • Qualified and experienced Owner’s Team of 50 members – Expected to grow to 107 by 2013 Owner’s Team • Comprised of senior, seasoned individuals with extensive experience in mining and large project development • The prime EPCM is Joint Venture Panama (JVP), a joint venture led by SNC‐Lavalin with partners GyM S.A. and Techint International Construction EPCM • JVP has mobilized a qualified team of 154, that could peak at 361 in 2013 20
Project Timeline and Milestones 2012 2013 2014 2015 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Full Notice to Proceed Site capture Infrastructure construction Tailings starter dam Process plant construction Power plant (both units) First ore processed First concentrate shipment First concentrate shipment 21
Privilege to Operate: Our Sustainability Vision for Cobre PanamaO S t i bilit Vi i f C b P Cobre Panama will be a profitable venture to sustain Inmet’s growth objectives, contribute to Panama’s development and be a regional economic engine that will help alleviate poverty in the project area, catalyzing the development of sustainable communities and protection of the rich biodiversity of the Mesoamerican Biological Corridor 23
Privilege to Operate: S i E i t l C t t f th P j t Socio‐Environmental Context of the Project• The Cobre Panama project is located in an undeveloped and remote part of north‐ central Panama – Within a tropical rainforest with high Within a tropical rainforest with high biodiversity value – Presence of threatened and endangered species – Endemic poverty of local communities – Physical resettlement of approximately 60 households – A country with little experience of modern mining – Presence of artisanal mining 24
Building Privilege to Operate What is privilege • Building trust Building trust to operate? • Broad acceptance of our presence • Approval of our Category III ESIA • Reception of post‐ESIA approval permits What evidence • Lack of conflict in the project area do we have of • Free, Prior and Informed Consent of those physically and economically privilege to displaced by the project operate? • Participation in regional development planning • Participation of local communities • Open, transparent dialogue, listening to concerns and incorporating p , p g , g p g those into our plans since 2007 How have we • Building trust by delivering on our commitments achieved privilege • Ensuring that the benefits of our operation are shared with to operate? the people of Panama the people of Panama • Actions to deliver net positive benefit socially and environmentally 25
Setting New Benchmarks for Industry Leadership• Actions to demonstrate application of evolving best practice and deliver net positive benefit: Compliance with IFC Performance Standards on Social and Environmental Sustainability Implementation of the Voluntary Principles on Security and Human Rights Free, Prior and Informed Consent of those to be resettled Leading edge biodiversity offset and conservation program Community based environmental monitoring Community‐based environmental monitoring Best practice community response mechanism with a dedicated Grievance Officer Developing an independent human rights monitoring function Committed to set new standards socially and environmentally 26
Do the Locals Want it? 2,500+ in March 2012 ~6,000 jobs to be created (direct and indirect) over operation LOM 27
Economics: Low Operating CostsOperating Costs per Component ($/t milled) $0.28 $6.88 $0.88 $ 03 $1.03 Other $3.29 $3 29 $1.01 Power $2.44 $4.08 Material $0.77 Labour Mine Process Plant G&A Site Services Total Low operating costs reflect low strip ratio and inexpensive power 29
Cash Costs or Total Costs: Defensive Economics on Any BasisC1 Cash Costs ($/lb Cu) Forecast 2020 Copper Industry C1 Cost Curve1 3.00 Cost CentreCost Centre Years 2‐16 Years 2 16 LOM Avg. LOM AvgMine $0.30 $0.32 2.50 Cobre Panama Y2‐16 C1 Cash Cost ($US/lb Paid Copper) $0.72/lb 2.00 Plant $0.37 $0.44 1.50 G&A $0.11 $0.12 1.00 1.00Site servicesSite services $0.03 $0 03 $0.04 $0 04Offsite costs $0.30 $0.30 0.50 Cobre Panama Y2‐16 with Stream Sale:By‐product credits ($0.40) ($0.40) 0.00 $0.86/lbC1 Cash Costs $0.72 $0.82 (0.50) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cumulative Percentile Production Cumulative Percentile ProductionC3 Cash Costs ($/lb Cu) Forecast 2020 Copper Industry C3 Cost Curve1 4.00 Cost Item Years 2‐16 LOM Avg. 3.50 Cobre Panama Y2‐16 d Copper) C1 cash costs $0.72 $0.82 3.00 $US1.41/lb C3 Cash Cost ($US/lb Paid Depreciation and closure $0.50 $ $0.48 $ 2.50 Royalty and front end taxes $0.14 $0.14 2.00 1.50 Interest cost (3rd party debt) 2 $0.04 $0.03 Cobre Panama Y2‐16 1.00 C3 Cash Costs $1.41 $1.47 with Stream Sale: 0.50 $US1.48/lb 0.00 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cumulative Percentile Production 30 1. 2020 Copper Cost League by Brook Hunt with Brook Hunt’s 2012 Q1 assumptions adjusted for metal prices and derived input costs under the Consensus Long‐Term Price Scenario. 2. Assumes $1.6Bn debt.
Robust Economics on Three Price Scenarios After‐Tax NPV8% ($ Bn)1 $6.0 $6 0 $4.8 $3.2 LT Consensus Forward C F d Curve 3 Yr Trailing dropping to Average LT Consensus IRR (%) 14.3% 18.5% 19.2% Cu ($/lb) $2.75 Forward Curve $3.42 Au ($/oz) $1,250 and LT Consensus $1,316 Ag ($/oz) $20.00 $24.90 Mo ($/lb) $15.00 $14.68 Significant leverage to copper 31Note: All figures on 100% basis.1. Assumes $1.6 Bn debt.
Impressive Cash Flow Generation Debt Case Project Cash Flow ‐ Consensus vs Spot 2,500 40 2,000 30 1,500 20 1,000 1 000 10 500 ‐ ‐ (500) (10) (1,000) (20) (1,500) Cobre Panama would generate an annual free cash flow of (30) (2,000) $1.5 Bn at current prices1 (2,500) (40) 2012 2017 2022 2027 2032 2037 2042 Debt Case Cash Flow ‐ Consensus ($USm, LHS) Debt Case Cash Flow ‐ Spot ($USm, LHS) Cumulative Cash Flow ‐ Consensus ($Usb, RHS) Cumulative Cash Flow ‐ Spot ($USb, RHS) Strong cash flow profile with considerable upside 32Note: All figures on 100% basis.1. Based on spot pricing of Cu $3.74/lb, Mo $13.83/lb, Au $1,642.22/oz and Ag $30.37/oz
Upside Case #1: Accelerating the Third Line • Assume advance from Year 10 to Year 3 Assume advance from Year 10 to Year 3 • Could enhance copper production profile by 38% during Years 3‐9 • Total metal production increases during the first 10 Years would be2: +695 +7 +175 +3,900 25% 25% 37 16% 31% 16 340 16,340 3,435 1,250 2,740 30 1,075 12,440 Copper (k t) Moly (k t) Gold (k oz) Silver (k oz) Results in ~$5.0 Bn (37%) increase in gross revenue during Years 3‐9 1 33Note: All figures on 100% basis. Based on the Basic Engineering mine plan accelerated to full 240k tpd throughput during years 3‐9. For illustrative purposes only.1. Based on Consensus Long‐Term Price Scenario.2. Payable metal production.
Upside Case #2: Resources Beyond Current Mine Plan Contained Cu Contained Cu (Bn lb) M&I Resource 32 LESS: Reserve 20 Unexploited M&I 12 Inferred 19 Potential valuation range @ 3¢/lb Cu = $0.9 Bn @ 6¢/lb Cu = $1.8 Bn Option value should be further enhanced when infrastructure is in place 34Note: All figures on 100% basis.
Mineral Deposits and Defined Resources Plan Map Balboa 35
Upside Case #3: Inferred Resources in Current Mine Pits • Inferred mineral resources amounting to 321 Mt at 0.26% Cu within current pit p design are treated as waste Converting inferred would further reduce the low strip ratio 36
Successful Exploration… Cu M&I Resources (Bn lbs) Cu Inferred Resources (Bn lbs) (Inclusive of Reserves) 26% 32 142% 142% 26 15% 19 126% 17 11 11 7 1992 1998 2010 2012 1992 1998 2010 2012 ...and momentum is just beginning 37Note: All figures on 100% basis.
Strong Exploration Potential• Concession wide program started late 2010 • Numerous targets identified • One of the first targets tested in early 2011 resulted in the Balboa discovery Plan Map Balboa Deposit • Deposit remains open to expansion in this direction • Deposit remains open to expansion down plunge, with grades of .86% Cu and 0.26 g/t Au over 241 metres in Hole 11‐116 and 0.78% Cu and 0.81 g/t Au over 237 metres in Hole 11‐095 Au over 237 metres in Hole 11 095 • Extensive exploration program for 2012 is underway with some 36 holes testing additional targets on the concession 38
Financing Plan Including Notes Offering($ Bn) Current financing $7.6 Other financing options being pursued: Secured requirement: $0.6 Bn $1.0 • Project level debt financing, including In process $6.6 off‐take financing and equipment In discussions $6.2 financing $1.0 $5.6 • p g/ Corporate level debt financing / revolver $1.0 $4.6 • Sale of additional equity in the project $1.4 $3.2 $1.5 $1.7 1 Cash on Cash Flow KPMC Note Total Capex Precious Other Hand Financing Metals Stream Inmet has the ability to finance Cobre Panama without equity dilution 401. Based on cash flow from current operations. Net of financing costs.
A Tier One Asset in a Small UniverseLOM Total Cu Production (Bn lbs) Feasibility & Construction Feasibility & Construction Pre Feasibility Pre‐Feasibility Denotes project controlled by <US$10 Bn market cap 30 25 17 13 10 0 9 8 8 7 6 6 6 5 5 Oyu Cobre La s Si erra Rel i ncho Senti nel Agua El Morro Cerro Pebbl e Ha qui ra Ga l ore Ca na ri a co Ca s i no Tol goi Pa na ma Ba mba s Gorda Ri ca Ca s a l e CreekOperating Cost ($/t milled) Feasibility & Construction Pre‐Feasibility Denotes project controlled by <US$10 Bn market cap $15.31 $15.07 $13.40 $13 40 $13.51 $13 51 $12.73 $11.48 $8.68 $9.70 $6.84 $6.88 $6.28 N/A N/A N/A Agua Cobre Si erra Oyu Cerro El Morro La s Rel i ncho Senti nel Ca na ri a co Ha qui ra Ca s i no Pebbl e Ga l ore Ri ca Pa na ma Gorda Tol goi Ca s a l e Ba mba s Creek 41Source: Individual company reports.Note: All figures on 100% basis.
Cobre Panama – Achievements to Date• Since our 2010 FEED study we have: Awarded power plant contract p g Completed the resettlement negotiations with local communities Received Panamanian approval of the Environmental & Social Impact Assessment Increased our copper resources Established a highly experienced and competent project execution team Finalized our partnership with LS‐Nikko and KORES Announced debt financing A d d bt fi i Substantial value has been built, and risk reduced 42
Conclusion: Back to Inmet• 20+ years as a builder and operator of underground and open pit mines • Always been a copper stock: 71% of gross sales last year from Cu, and a higher proportion expected this year p pp p g y pp g p y• Expect copper production growth ~ 25% this year as Las Cruces approaches design capacity• Cobre Panama delivers another low cash cost mine in a favourable jurisdiction = 30+ years to come Cu Resource (lbs) per $1,000 invested Inmet Cu Production (MM lbs) 12,703 200%+ , 5,714 4,847 4 847 3,971 3,767 2,950 220 ‐ 250 Inmet Lundin First Quantum OZ Minerals PanAust HudBay 2012 2017 A natural path for Inmet: copper exposure, low cash costs and growth 43
Risks & Opportunities • Quotes to build power plant and processing plant are written on a “Lump Sum” and “Not to Exceed” basis • Quotes are received from audited, sophisticated vendors with balance sheets to manage costs • Quotes are materially conservative – in some cases the labour multiplier (unit of work over unit of time) used for the project is as high as 3X and some of the quotes for individual work packages have small overlaps in scope the project is as high as 3X and some of the quotes for individual work packages have small overlaps in scope • Advanced stage of engineering (overall 38% complete) in combination with the large portion of firm bids received (58%) should further reduce potential for unforeseen costsCost • Panama’s use of U.S. Dollars is another positive characteristic that would reduce material cost escalation Escalation throughout • Engineering, procurement and construction contractors have incentives to stay on schedule and on budget • Received an opinion from a third party review that there is sufficient firmness and conservativeness in the project budget • By the end of 2012, 50% of the project spend is expected to be committed against firm contracts • Actively considering early purchase of bulk commodities for construction 46
Risks & Opportunities (cont’d) • Cobre Panama, while being relatively low grade, would be amenable to large scale mining methods that result in Low Cost Low Cost the efficient handling of ore and waste gProduction • Very low strip ratio, roughly a 20% of the average (0.58 vs. 2.53) for all open‐pit copper mines in 2011from a Low • Proximity to the coast permits the use of a pipeline that travels a short distance, providing a cost efficient method Grade Mine of delivering concentrate to the port • Access to low‐cost, self‐generated power which takes advantage of proximity to a coal source • Inmet has developed three mines within the tenure of the current management (Las Cruces, Cayeli and Troilus)Management • For Cobre Panama, recruited an Owner’s team that has relevant experience in construction and operations and Depth ensured that the engineering, procurement and construction contractors are of a high standard of quality • Approval of ESIA indicative of support at the highest levels of gov’t; derisks entire permitting process significantly • Extensive involvement and cooperation at both the gov’t and community level • Referring to Inmet, Signi Schneider (EDC, Chief CSR Advisor) commented “These companies take a holistic approach to risk and opportunities. They make CSR part of their business strategies. In the mining sector, companies that are acquiring mineral assets don‘t want projects that have put the community offside, where p q g p j p y ,Gov’t & SocialG ’t & S i l there is a high risk that the project may face roadblocks. They also know their financiers require them to get it right early on.” (The Globe & Mail ‐ Jan 1, 2012) • At the community level, the current lack of conflict in the project area indicates that community engagement efforts are working and a recent study shows overwhelming support for the project. • Received free prior and informed consent of the community; engaging the local community through employment p y; g g g y g p y 47
Cobre Panama – Summary May 2012 Study Results Key Parameters Description Reserves 9.3M t Cu, 5.2M oz Au, 104M oz Ag, 169k t Mo M&I resources (incl. Reserves) 14.7M t Cu, 9.0M oz Au, 168M oz Ag, 238k t Mo Inferred resources 8.7M t Cu, 4.8M oz Au, 121M oz Ag, 156k t Mo Annual production (Yr 2‐16) 298k t Cu, 106k oz Au, 1.6M oz Ag, 3.1k t Mo Annual production (LOM) 266k t Cu, 87k oz Au, 1.5M oz Ag, 2.9k t Mo NSR breakdown at $2.75/lb Cu Cu 87%, Au 6%, Mo 5%, Ag 2% Life of mine (reserves only) 31+ years C1 cash costs (Yr 2‐16) $0.72/lb Cu C1 cash costs (LOM) $0.82/lb Cu 160k tpd to 240k tpd throughput, with further expansion Ore throughput capacity capacity Strip ratio 0.58:1 Concentrate Clean concentrate with no deleterious qualities 300 megawatt coal fired power plant (reliable and Power source inexpensive source of power) Logistics On tidewater with immediate proximity to Panama Canal 48Note: All figures on 100% basis.
Mining• Mine production schedule was developed to maximize Plan View of Site Infrastructure and Design Pits early revenues and improve overall project returns utilizing early revenues and improve overall project returns utilizing a conventional mining fleet• Ultimate pit plans and mining phase designs have not changed from the FEED completed in March 2010, with the exception of the Medio pit extension• Open pit development sequence has been adjusted to reflect slightly lower effective cut‐off grades that have resulted from increased copper recoveries and higher metal prices used to define ore in the Basic Engineering Study• Concentrator site is centrally located within 2 km of the Botija, Colina, and Valle Grande deposits as well as the stockpile – A fourth smaller deposit Medio is about 500 m A fourth smaller deposit, Medio, is about 500 m northeast of the Colina pit. The new block model incorporates a small Medio pit which was targeted by recent drilling and is part of the mine production schedule in Years 11‐14 49
Processing / Metallurgy• As part of the 2010 FEED study a large sampling and test program was undertaken to bolster the knowledge from previous work and provide insight into the variability of the grinding and flotation response id i i h i h i bili f h i di d fl i – Metallurgy was further optimized with removal of sodium cyanide as a pyrite depressant and refinements to the cleaner circuits• Metallurgical recoveries used for the production forecasts in this study are based on the results from the 2010 FEED metallurgical program as modified by the revised flow sheet test work during Basic Engineering difi d b h i d fl h kd i i i i• Cobre Panama concentrator would use current proven technology to produce clean copper and molybdenum concentrates• Project design is based on an initial ore feed rate of 160k tpd to the processing plant using two grinding lines, each having nominal capacity of 80k tpd. The design also includes an increase to 240k tpd after Year 9 of operations f k d h d l l d k d f f – This potential expansion includes the addition of a second crusher station to source Colina and Valle Grande ore and a third line in the concentrator which includes crushing, grinding, bulk rougher flotation, water and air systems• Process plant is designed to process ore at a nominal head grade of 0 5% Cu and 0 01% Mo with design maximum copper head grade Process plant is designed to process ore at a nominal head grade of 0.5% Cu and 0.01% Mo with design maximum copper head grade of 0.9% Cu and 0.015% Mo• Copper concentrate would be delivered by a 32km slurry pipeline from the mine site to the filter plant located at the port in Punta Rincon• Af After pressure filtration, the dewatered concentrate would be stored and subsequently reclaimed and loaded onto bulk concentrate fil i h d d ld b d d b l l i d dl d d b lk vessels for delivery to international customers 50
Cobre Panama Mineral Resources• Cobre Panama mineral resources (inclusive of reserves) were re‐estimated in early 2012 to incorporate the 171 holes completed since the 2010 FEED study. The bulk of this drilling was focused on infilling the Brazo Deposit and on outlining the 2011 Balboa discovery. The increase in M&I resources reflected moving inferred resources into the indicated category on the Brazo d & fl d f d h d d h deposit and the addition of the Balboa resource. d h dd f h lb The bulk of the increases in the inferred category came from Balboa’s addition to the resource statement. Mineral resources are shown on a 100% basis and are inclusive of mineral reserves. Contained Metal (x1,000) Category Tonnes Cu Au Ag Mo Cu Au Ag Mo (x 1,000) % g/t g/t % Tonnes ounces ounces tonnes Measured 262,000 0.56 0.13 1.5 0.009 1,476 1,118 12,979 24 Indicated 3,905,000 0.34 0.06 1.2 0.005 13,237 7,845 155,392 214 Total 4,167,000 0.35 0.07 1.3 0.006 14,715 8,963 168,454 238 Inmet’s Share 80% 11,772 7,170 134,763 190 Inferred 3,749,000 0.23 0.04 1.0 0.004 8,660 4,805 120,534 156 Inmet’s Share 80% 6,928 3,844 96,427 125 The mineral reserve and resource estimates are prepared in accordance with the CIM Definition Standards On Mineral Resources and Mineral Reserves, adopted by CIM Council on November 14, 2004, and the CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines, adopted by CIM Council on November 23, 2003, using geostatistical and/or classical methods, plus economic and mining parameters appropriate to each project. You will find the definitions and guidelines at www.cim.org. Estimates for all operations are prepared by or under the supervision of a qualified person as defined in National Instrument 43‐101 (usually an engineer or geologist). Mineral resources include mineral reserves. Mineral resources which do not form part of the mineral reserves do not have demonstrated economic Mineral resources include mineral reserves. Mineral resources which do not form part of the mineral reserves do not have demonstrated economic viability. Mineral resources as at March 5, 2012, were estimated by Robert Sim, P. Geo., of SIM Geological Inc. Resource grades are estimated using ordinary kriging with a nominal block size of 25 m by 25 m by 15 m. Resources are limited inside a pit shell defined by a copper price of US $2.60/lb, $1.75/t mining cost and $7.02/t total site operating cost, and are tabulated at a cut‐off grade of 0.15% copper. 51
Cobre Panama Mineral Reserves Mineral reserves are shown on a 100% basis. Contained Metal (x1,000) Category Tonnes Cu Au Ag Mo Cu Au Ag Mo (x 1,000) % g/t g/t % Tonnes ounces ounces tonnes Proven 258,000 0.57 0.14 1.6 0.010 1,478 1,126 13,020 25 Probable 2,061,000 0.38 0.06 1.4 0.007 7,781 4,041 91,008 145 Total 2,319,000 0.40 0.07 1.4 0.007 9,258 5,167 104,028 169 Inmet’s Share 80% 7,406 4,134 83,223 135The mineral reserve and resource estimates are prepared in accordance with the CIM Definition Standards On Mineral Resources and Mineral Reserves, adopted by CIM Council on November 14, 2004, and the CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines, adopted by CIM Council on November 23, 2003, using geostatistical and/or classical methods, plus economic and mining parameters appropriate to each by CIM Council on November 23 2003 using geostatistical and/or classical methods plus economic and mining parameters appropriate to eachproject. You will find the definitions and guidelines at www.cim.org. Estimates for all operations are prepared by or under the supervision of a qualified person as defined in National Instrument 43‐101 (usually an engineer or geologist). There are no known environmental, permitting, legal, taxation, political or other relevant issues that would materially affect the estimates of the mineral reserves.Mineral resources as at March 5, 2012, were estimated by Robert Sim, P. Geo., of SIM Geological Inc. Mineral reserves as at December 31, 2011 were , , y , , f g ,estimated by William Rose, P.E., of WLR Consulting, Inc., a qualified person under National Instrument 43‐101.Reserve estimates are based on the following assumptions:‐ copper price: US $2.25 per pound‐ gold price: US $1,000 per ounce‐ silver price: US $16 per ounce‐ molybdenum price: US $13.50 per pound molybdenum price: US $13.50 per pound‐ Mining costs : US $ 1.66 per tonne of ore mined, US $ 1.96 per tonne of waste mined and ‐ Milling and general and administration cost: US $ 5.27 per tonne of ore milled, average life of mine metallurgical recoveries: 89 percent for copper, 52 percent for gold, 46 percent for silver and 53 percent for molybdenum. 52
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