1. Preliminary Feasibility Study
Magistral Project
Department of Ancash, Peru
Report Prepared for
Inca Pacific Resources Inc.
Report Prepared by
October 2006
2. Preliminary Feasibility Study
Magistral Project
Department of Ancash, Peru
IncaPacific Resources Inc.
1550 – 625 Howe Street
Vancouver, B.C. V6C 2T6
Canada
SRK Consulting (Canada) Inc.
Suite 800, 1066 West Hastings Street
Vancouver, B.C. V6E 3X2
Tel: 604.681.4196 Fax: 604.687.5532
E-mail: vancouver@srk.com
Internet: www.srk.com
SRK Project Number: 2CI004.006
October 2006
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Table of Contents
1 Executive Summary..................................................................................................... 1
1.1 Introduction .......................................................................................................................1
1.2 Climate..............................................................................................................................1
1.3 Property Tenure ................................................................................................................3
1.4 Geology and Resource Estimate .......................................................................................3
1.5 Mining and Reserves.........................................................................................................5
1.5.1 Geotechnical Overview ...........................................................................................................5
1.5.2 Mining Overview......................................................................................................................6
1.5.3 Mineral Reserves ....................................................................................................................7
1.5.4 Mine Production Schedule ......................................................................................................7
1.5.5 Major Mining Equipment..........................................................................................................8
1.6 Metallurgy and Process Facilities ......................................................................................9
1.6.1 Metallurgical Test Work...........................................................................................................9
1.6.2 Flowsheet Development........................................................................................................11
1.6.3 Process Facility .....................................................................................................................12
1.7 Mine Waste Management and Water Control ..................................................................14
1.7.1 Waste Rock Dumps...............................................................................................................14
1.7.2 Tailings Management Facility................................................................................................14
1.7.3 Water Control ........................................................................................................................15
1.8 Infrastructure and Support Facilities ................................................................................16
1.8.1 Access Road .........................................................................................................................16
1.8.2 Power Line.............................................................................................................................17
1.8.3 Concentrate Pipeline .............................................................................................................17
1.8.4 Water Treatment Plant ..........................................................................................................18
1.8.5 Port of Chimbote ...................................................................................................................18
1.8.6 Communications....................................................................................................................19
1.8.7 Magistral Site.........................................................................................................................19
1.8.8 Conchucos Office ..................................................................................................................21
1.8.9 Lima Office ............................................................................................................................21
1.9 Capital Cost Estimate ......................................................................................................21
1.9.1 Mining....................................................................................................................................24
1.10 Operating Cost Estimate .................................................................................................27
1.10.1 Manpower Basis....................................................................................................................28
1.10.2 Estimate Basis.......................................................................................................................29
1.10.3 Mining....................................................................................................................................29
1.10.4 Processing Plant ...................................................................................................................29
1.10.5 G&A and Support Services ...................................................................................................31
1.10.6 Environmental Health & Safety .............................................................................................33
1.10.7 Water Treatment Plant ..........................................................................................................33
1.11 Project Development Plan ...............................................................................................33
1.12 Environmental and Permitting..........................................................................................36
1.13 Socio-Economics.............................................................................................................37
1.14 Project Economics...........................................................................................................37
1.14.1 Model Inputs ..........................................................................................................................37
1.14.2 Mine & Process Production...................................................................................................38
1.14.3 Gross Income from Mining ....................................................................................................39
1.14.4 Operating Costs ....................................................................................................................39
1.14.5 Capital Costs .........................................................................................................................40
1.15 LoM Project Cash Flow ...................................................................................................40
1.15.1 Project Sensitivity ..................................................................................................................41
1.16 Project Opportunities and Risks.......................................................................................43
1.16.1 Resource Model Review .......................................................................................................43
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1.16.2 Reserves and Mining.............................................................................................................43
1.16.3 Metallurgy and Processing....................................................................................................44
1.16.4 Infrastructure .........................................................................................................................44
1.16.5 Mine Waste Management and Water Control .......................................................................44
2 Introduction................................................................................................................ 45
2.1 Terms of Reference.........................................................................................................45
2.2 Basis of the Report..........................................................................................................45
2.3 Limitations & Reliance on Information..............................................................................47
2.4 Disclaimers & Cautionary Statements for US Investors ...................................................48
2.5 Mineral Resource and Mineral Reserve Statements & LoM Plans ...................................48
2.6 Price Strategy..................................................................................................................48
2.7 Qualifications of Consultant (SRK) ..................................................................................49
2.8 Terms of Reference.........................................................................................................50
2.9 Abbreviations...................................................................................................................52
3 Property Location and Description .......................................................................... 53
3.1 Property Location ............................................................................................................53
3.2 Company Ownership and Land Tenure ...........................................................................53
3.3 Adjacent Properties .........................................................................................................62
3.4 Access.............................................................................................................................64
3.5 Climate............................................................................................................................66
3.6 Local Resources and Infrastructure .................................................................................67
3.7 Physiography...................................................................................................................68
3.8 Project History .................................................................................................................68
3.8.1 General History .....................................................................................................................68
3.8.2 Anaconda Historic Mineral Resource Estimates ...................................................................71
3.8.3 2004 AMEC Block Model Estimate .......................................................................................76
4 Geology and Resource Estimate .............................................................................. 79
4.1 Geological Setting ...........................................................................................................79
4.1.1 Regional Geology..................................................................................................................79
4.1.2 Major Structural Features......................................................................................................79
4.1.3 Property Geology ..................................................................................................................82
4.1.4 Magistral Deposit Geology ....................................................................................................86
4.2 Deposit Types .................................................................................................................99
4.3 Mineralisation ................................................................................................................ 100
4.3.1 Styles of Mineralisation .......................................................................................................100
4.3.2 Mineralisation Exposed at Surface and in Underground Workings.....................................100
4.3.3 Mineralisation in Mixed and Intrusive Rocks.......................................................................102
4.3.4 Mineralisation in Prograde and Distal Skarn.......................................................................105
4.3.5 Late Stage Quartz-Calcite-Sulphide Veins..........................................................................105
4.3.6 Implications to Modelling.....................................................................................................106
4.4 Exploration ....................................................................................................................108
4.4.1 Topographic Surveys ..........................................................................................................108
4.4.2 Geological Mapping.............................................................................................................111
4.4.3 Surface Sampling ................................................................................................................111
4.4.4 Underground Mapping and Sampling .................................................................................112
4.4.5 Geophysical Studies............................................................................................................117
4.4.6 Petrographic Studies ...........................................................................................................118
4.4.7 Mineralogical Studies ..........................................................................................................118
4.5 Drilling ........................................................................................................................... 119
4.5.1 Minera Magistral (Cerro de Pasco) Drilling, 1969-1973......................................................122
4.5.2 Anaconda Peru Drilling 1999-2001 .....................................................................................124
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6.3 Historical Test Work ...................................................................................................... 240
6.3.1 Lakefield Test Program in 2000 ..........................................................................................240
6.3.2 CIMM Test Program in 2001 ...............................................................................................240
6.3.3 G&T Test Program in 2005 .................................................................................................240
6.3.4 CIMM Grindability Test Work ..............................................................................................241
6.3.5 G&T Grindability Test Work.................................................................................................242
6.4 Flotation Test Work ....................................................................................................... 242
6.4.1 Lakefield Flotation Test Work..............................................................................................242
6.4.2 CIMM Flotation Test Work...................................................................................................243
6.4.3 G&T Flotation Test Work.....................................................................................................244
6.5 Metallurgical Performance............................................................................................. 256
6.5.1 Process Plant Recoveries ...................................................................................................256
6.5.2 Reagents .............................................................................................................................257
6.6 Flowsheet Development ................................................................................................258
6.6.1 Design Basis........................................................................................................................258
6.6.2 Primary Crushing.................................................................................................................258
6.6.3 Grinding...............................................................................................................................259
6.6.4 Rougher-Scavenger Flotation .............................................................................................259
6.6.5 Regrinding and Cleaner Flotation .......................................................................................259
6.6.6 Selective Flotation ...............................................................................................................259
6.6.7 Concentrate and Tailings Thickening..................................................................................260
6.6.8 Copper Concentrate Filtration .............................................................................................260
6.6.9 Molybdenum Concentrate Filtration and Drying..................................................................260
7 Processing Facility .................................................................................................. 261
7.1 Process Description....................................................................................................... 261
7.1.1 Throughput Capacity and Production Schedule .................................................................265
7.1.2 Crushing ..............................................................................................................................267
7.1.3 Ore Reclaim.........................................................................................................................267
7.1.4 Grinding...............................................................................................................................267
7.1.5 Bulk Copper-Molybdenum Flotation....................................................................................268
7.1.6 Copper-Molybdenum Separation ........................................................................................269
7.1.7 Copper Concentrate Thickening .........................................................................................269
7.1.8 Molybdenum Concentrate Thickening.................................................................................270
7.1.9 Copper Concentrate Filtration .............................................................................................270
7.1.10 Molybdenum Concentrate Leaching-Filtration-Drying.........................................................270
7.1.11 Mill Process Tailings............................................................................................................270
7.1.12 Reagents .............................................................................................................................270
7.1.13 Mill Building .........................................................................................................................271
7.1.14 Plant Services .....................................................................................................................271
7.1.15 Process Controls .................................................................................................................271
8 Mine Waste Management and Water Control ........................................................ 272
8.1 Geochemistry ................................................................................................................ 272
8.1.1 Overview of Testing Programs............................................................................................272
8.1.2 Static Test Results ..............................................................................................................272
8.1.3 Kinetic Testing.....................................................................................................................274
8.1.4 Water Quality Estimates......................................................................................................274
8.1.5 Conclusions and Considerations for Waste and Water Management ................................275
8.2 Water Balance............................................................................................................... 276
8.2.1 General................................................................................................................................276
8.2.2 Catchments .........................................................................................................................277
8.2.3 Climate and Hydrology ........................................................................................................277
8.2.4 Mine Layout .........................................................................................................................283
8.2.5 Pit Inflow..............................................................................................................................283
8.2.6 Waste Rock Dumps.............................................................................................................284
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8.2.7 Mill Water Balance and Reclaim Water...............................................................................284
8.2.8 Tailings Pond.......................................................................................................................284
8.2.9 Runoff Diversion System.....................................................................................................285
8.2.10 Water Treatment Plant ........................................................................................................285
8.2.11 Closure Conditions ..............................................................................................................285
8.2.12 Results.................................................................................................................................286
8.2.13 Conclusions.........................................................................................................................287
8.2.14 Recommendations ..............................................................................................................287
8.3 Tailings Management Facility ........................................................................................ 294
8.3.1 Tailings Production..............................................................................................................294
8.3.2 Site Selection ......................................................................................................................294
8.3.3 Design Criteria.....................................................................................................................294
8.3.4 Foundation Conditions ........................................................................................................295
8.3.5 Description of the Proposed Tailings Management Facility ................................................295
8.3.6 Construction ........................................................................................................................302
8.3.7 Operation.............................................................................................................................302
8.3.8 Water Management.............................................................................................................302
8.4 Waste Rock Dumps....................................................................................................... 303
8.4.1 Overburden and Waste Rock Production............................................................................303
8.4.2 Site Selection ......................................................................................................................303
8.4.3 Design Criteria.....................................................................................................................304
8.4.4 Foundation Conditions ........................................................................................................304
8.4.5 Description of the Proposed Waste Rock Dumps...............................................................305
8.4.6 Construction ........................................................................................................................305
8.4.7 Water Management.............................................................................................................306
9 Infrastructure and Ancillary Facilities.................................................................... 309
9.1 Access Road ................................................................................................................. 309
9.2 Power Line .................................................................................................................... 312
9.3 Concentrate Pipeline ..................................................................................................... 314
9.4 Water Treatment Plant .................................................................................................. 316
9.4.1 Introduction..........................................................................................................................316
9.4.2 Discharge Criteria................................................................................................................317
9.4.3 Water Treatment Technology Selection..............................................................................318
9.5 Port of Chimbote ........................................................................................................... 321
9.5.1 Weather ...............................................................................................................................323
9.5.2 Rivers ..................................................................................................................................323
9.5.3 Bathymetry ..........................................................................................................................325
9.5.4 Bay Sediments ....................................................................................................................325
9.5.5 Tides....................................................................................................................................325
9.5.6 Waves..................................................................................................................................325
9.5.7 Currents...............................................................................................................................326
9.5.8 Alternative 1: Sider Peru’s Pier ...........................................................................................327
9.5.9 Alternative 2: Chimbote’s Fishing Pier ................................................................................327
9.5.10 Alternative 3: New Pier in the South Area...........................................................................329
9.5.11 Warehouse ..........................................................................................................................330
9.6 Communications............................................................................................................ 333
9.7 Magistral Site.................................................................................................................333
9.7.1 Administration Building........................................................................................................333
9.7.2 Mine Truck Shop .................................................................................................................333
9.7.3 Processing Plant Office.......................................................................................................333
9.7.4 Process Plant Maintenance Facilities, Changehouse and Warehouse ..............................333
9.7.5 Laboratories.........................................................................................................................334
9.7.6 Medical Clinic ......................................................................................................................335
9.7.7 Site Security ........................................................................................................................335
9.8 Conchucos Office .......................................................................................................... 335
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9.9 Lima Office ....................................................................................................................335
10 Capital Cost Estimate .............................................................................................. 336
10.1 Basis of Estimate........................................................................................................... 338
10.1.1 Introduction..........................................................................................................................338
10.1.2 Scope of the Estimate .........................................................................................................338
10.1.3 Reference Documents.........................................................................................................339
10.1.4 Material Take-Offs and Pricing Basis..................................................................................339
10.2 Mining............................................................................................................................ 340
10.3 Processing Plant (WBS 100-1100) ................................................................................ 343
10.4 Infrastructure and Support Facilities .............................................................................. 343
10.4.1 Access Road (WBS 2000)...................................................................................................343
10.4.2 Power Lines and Substation (WBS 2100)...........................................................................343
10.4.3 Water Treatment Plants (WBS 1600)..................................................................................344
10.4.4 Concentrate Pipeline (WBS 2200) ......................................................................................344
10.4.5 Tailings Dam (WBS 1900)...................................................................................................344
10.4.6 Magistral Site (WBS 1300) ..................................................................................................344
10.4.7 Conchucos Office (WBS 1400) ...........................................................................................344
10.4.8 Chimbote Port (WBS 1500).................................................................................................344
10.4.9 Lima Office (WBS 2300)......................................................................................................345
10.5 EPCM (WBS 2500)........................................................................................................346
10.6 Vendor Commissioning (WBS 2600) ............................................................................. 346
10.7 Process Plant Initial Spares (WBS 2700).......................................................................346
10.8 Process Critical Capital Spares (WBS 2800) ................................................................. 346
10.9 Mine Initial Spares & Fills (WBS 2900) ..........................................................................346
10.10 Process Plant First Fills (WBS 3000) .................................................................. 346
10.11 Owner’s Costs (WBS 3100) ................................................................................ 348
10.12 Sustaining Capital ............................................................................................... 348
10.13 Mine Closure and Reclamation Costs ................................................................. 349
10.14 Contingency........................................................................................................ 349
10.15 Added Value Tax (IGV) ....................................................................................... 349
11 Operating Cost Estimate ......................................................................................... 350
11.1 Manpower Basis............................................................................................................351
11.2 Estimate Basis............................................................................................................... 352
11.3 Mining............................................................................................................................ 352
11.3.1 Mining Labour......................................................................................................................354
11.4 Processing Plant ........................................................................................................... 358
11.4.1 Process Plant Labour ..........................................................................................................359
11.5 G&A and Support Services............................................................................................363
11.5.1 Magistral Site.......................................................................................................................363
11.5.2 Conchucos Office ................................................................................................................365
11.5.3 Chimbote Port .....................................................................................................................367
11.5.4 Lima Office ..........................................................................................................................368
11.6 Environmental, Health and Safety ................................................................................. 369
11.7 Water Treatment Plants................................................................................................. 370
12 Project Implementation ........................................................................................... 372
12.1 Project Schedule ...........................................................................................................372
12.1.1 “At Risk’ Activities ................................................................................................................372
12.1.2 Engineering .........................................................................................................................372
12.1.3 Procurement........................................................................................................................372
12.1.4 Construction ........................................................................................................................372
12.1.5 Mine Pre-production ............................................................................................................373
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12.2 Contracting Strategy...................................................................................................... 373
12.2.1 Engineering .........................................................................................................................373
12.2.2 Procurement........................................................................................................................373
13 Environmental and Permitting................................................................................ 376
13.1 General ......................................................................................................................... 376
13.2 Baseline Studies............................................................................................................ 377
13.3 Permitting...................................................................................................................... 378
13.4 Mine Closure ................................................................................................................. 382
14 Socio-Economics..................................................................................................... 383
15 Economic Analysis .................................................................................................. 385
15.1 Model Inputs.................................................................................................................. 385
15.1.1 General Criteria ...................................................................................................................385
15.1.2 Mine & Process Production.................................................................................................386
15.1.3 Gross Income from Mining ..................................................................................................386
15.1.4 Operating Costs ..................................................................................................................387
15.1.5 Capital Costs .......................................................................................................................387
15.2 Base Case Analysis....................................................................................................... 388
15.3 Sensitivity Analysis to Base Case.................................................................................. 388
16 Project Opportunities and Risks............................................................................. 395
16.1 Reserves and Mining.....................................................................................................395
16.1.1 Structural Geology...............................................................................................................395
16.1.2 Mining..................................................................................................................................396
16.2 Metallurgy and Processing ............................................................................................397
16.3 Infrastructure .................................................................................................................398
16.4 Mine Waste Management & Water Control....................................................................398
16.4.1 Geochemistry ......................................................................................................................398
17 Certificates of Qualified Persons............................................................................ 400
18 References................................................................................................................ 412
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List of Tables
Table 1.1: Magistral Mineral Resource Estimate – MDA 2005........................................................5
Table 1.2: Pit Slope Recommendations per Slope Design Sector ..................................................6
Table 1.3: Magistral Mineral Reserves by Pit Phases.....................................................................7
Table 1.4: Magistral Mine Production Schedule..............................................................................8
Table 1.5: Major Mine Equipment Fleet Requirements ...................................................................8
Table 1.6: Mineral Composition of the Three Ore Types...............................................................10
Table 1.7: Fragmentation characteristics of the Three Ore Types ................................................10
Table 1.8: Summary of Waste Rock Dumps.................................................................................14
Table 1.9: Type 3 Road Design Parameters.................................................................................17
Table 1.10: Pre-production Capital Costs for Magistral ($000s)....................................................22
Table 1.11: LoM Sustaining Capital ($000s) .................................................................................23
Table 1.12: Pre-Production Mining & Fixed Facilities Initial Capital costs (excl. IGV Tax).............25
Table 1.13: Mining Equipment Initial & Sustaining Capital Costs (excl. IGV Tax)..........................26
Table 1.14: LoM Operating Cost Summary...................................................................................27
Table 1.15: Concentrate Transport Operating Cost Summary ......................................................28
Table 1.16: LoM Labour Requirements for Magistral ....................................................................28
Table 1.17: LoM Process Plant Operating Costs ..........................................................................30
Table 1.18: Project Development Plan – Budget ..........................................................................35
Table 1.19: General Model Criteria...............................................................................................38
Table 1.20: Mine and Process Production ....................................................................................38
Table 1.21: Gross Income from Mining (US$000s) .......................................................................39
Table 1.22: LoM Operating Cost Estimate (US$)..........................................................................39
Table 1.23: Capital Cost Summary (US$000s) .............................................................................40
Table 1.24: LoM Project Cash Flow (US$000s)............................................................................41
Table 1.25: Base Case Economic Sensitivities (US$ million)........................................................41
Table 1.26: Base Case Economic Sensitivities (US$ million @ NPV8%)........................................42
Table 1.27: Base Case Economic Sensitivities (US$ million @ NPV8%)......................................42
Table 1.28: Base Case Economic Sensitivities (US$ million @ NPV8%)......................................42
Table 1.29: Economic Sensitivities – Metal Price (US$ million @ NPV8%) ..................................42
Table 2.1: Key Project Personnel .................................................................................................50
Table 2.2: Units of Measure & Abbreviations................................................................................52
Table 3.1: Magistral Concessions Optioned from Centromin ........................................................57
Table 3.2: Magistral Ancash Cobre Concessions .........................................................................60
Table 3.3: Magistral Property Mining Concession Details and Payments .....................................62
Table 3.4: Prospects and Old Mines in the Vicinity of Magistral....................................................63
Table 3.5: Road Access Route Alternatives..................................................................................66
Table 3.6: Meteorological Parameters at Conchucos Station (1964-1980) (After AMEC 2004).....67
Table 3.7: Summary of Work History on Now-Privatised Magistral Concessions..........................69
Table 3.8: Anaconda 2000 Polygonal Historic Resource Estimate ...............................................72
Table 3.9: Anaconda 2000 Geostatistical Block Model Historic Resource Estimate......................72
Table 3.10: In-situ Bulk Densities Used in the 2000 Geostatistical Resource Estimate.................73
Table 3.11: Lithologies and Codes Used in 2001 Resource Model...............................................73
Table 3.12: Alteration Facies and Codes Used in 2001 Resource Model .....................................74
Table 3.13: 2001 Geostatistical Resource Estimate: Measured Resources..................................75
Table 3.14: 2001 Geostatistical Resource Estimate: Indicated Resources ...................................75
Table 3.15: 2001 Geostatistical Resource Estimate: Inferred Resources .....................................75
Table 3.16: 2001 Geostatistical Resource Estimate: Measured & Indicated Resources ...............76
Table 3.17: Domain Codes and Descriptions................................................................................77
Table 3.18: Bulk Density Values by Domain and Rock Type within each Domain.........................77
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Table 3.19: AMEC’s 2004 Resource Estimate – Measured, Indicated, and Inferred.....................78
Table 4.1: Magistral Exploration History ..................................................................................... 108
Table 4.2: Reference Survey Coordinates on the Magistral Property (after Acuna, 2001) .......... 109
Table 4.3: Geochronology of Magistral Rocks ............................................................................111
Table 4.4: Magistral Project Drilling Summary ............................................................................119
Table 4.5: Samples Shipped for Analysis by Anaconda Peru .....................................................133
Table 4.6: Analytical Methods for Drill Core 2004.......................................................................135
Table 4.7: Sampling and Assaying Summary 2004 ....................................................................135
Table 4.8: Analytical Methods 2005............................................................................................136
Table 4.9: Sampling and Assaying Summary 2005 ....................................................................136
Table 4.10: Detection Limits for Elements Analysed by CIMM ICP-AES, 2005........................... 137
Table 4.11: Twin Check Assays: RMA Regression Statistics...................................................... 142
Table 4.12: Coarse Check Assays: RMS Registration Statistics................................................. 142
Table 4.13: Pulp Check Assays: RMA Regression Statistics ...................................................... 142
Table 4.14: Accepted Values of Certified Reference Materials ................................................... 145
Table 4.15: Types and Frequencies of QA/QC Samples ............................................................ 145
Table 4.16: Check Assays: RMA Fit Values ............................................................................... 149
Table 4.17: Types and Frequencies of QA/QC Samples Inserted in the 2005 Drill Campaign .... 151
Table 4.18: 2005 Standard Sample Data: WCM Cu113.............................................................. 152
Table 4.19: 2005 Standard Sample Data: WCM Cu117.............................................................. 152
Table 4.20: 2005 Standard Sample Data: GBM396-6C.............................................................. 152
Table 4.21: 2005 Blank-Sample Data......................................................................................... 155
Table 4.22: Data Loaded and Used in the MDA Model............................................................... 162
Table 4.23: Copper Zone............................................................................................................ 163
Table 4.24: Descriptive Statistics of the Copper Domains .......................................................... 165
Table 4.25: Descriptive Statistics of the Copper Domain Composite Data.................................. 166
Table 4.26: Molybdenum Zones ................................................................................................. 167
Table 4.27: Descriptive Statistics of the Molybdenum Domains.................................................. 169
Table 4.28: Descriptive Statistics of the Molybdenum Domain Composite Data ......................... 170
Table 4.29: Descriptive Statistics of the Arsenic Domains .......................................................... 171
Table 4.30: Descriptive Statistics of the Arsenic Domain Composite Data.................................. 171
Table 4.31: Descriptive Statistics of the Silver Domains ............................................................. 174
Table 4.32: Descriptive Statistics of the Silver Domain Composite Data..................................... 175
Table 4.33: Specific Gravity Data Used in the MDA Model ......................................................... 176
Table 4.34: Specific Gravity Data Used in the Previous Model ...................................................176
Table 4.35: Criterial for Resource Classification Individual Models............................................. 183
Table 4.36: 2005 Magistral Measured Resources.......................................................................184
Table 4.37: Magistral Indicated Resources................................................................................. 184
Table 4.38: Magistral Measured and Indicated Resources ......................................................... 185
Table 4.39: Magistral Inferred Resources................................................................................... 185
Table 4.40: 2004 & 2005 Magistral Resource Estimates Comparison – Measured & Indicated .. 187
Table 4.41: 2004 and 2005 Magistral Resource Estimates Comparison – Inferred..................... 187
Table 5.1: Summary of the Fault Structures ............................................................................... 195
Table 5.2: Domain 1 – Fault and Joint Structures – Limestone...................................................197
Table 5.3: Domain 2 – Fault and Joint Structures – Skarn and Porphyry.................................... 198
Table 5.4: Domain 3 – Fault and Joint Structures – SE Limestone and Skarn and Porphyry ...... 198
Table 5.5: Domain 4 – Fault and Joint Structures– NW Limestone and Skarn and Porphyry...... 198
Table 5.6: Kinematic Analysis Summary of Domains 1............................................................... 199
Table 5.7: Kinematic Analysis Summary of Domain 2 ................................................................ 199
Table 5.8: Kinematic Analysis Summary of Domain 3 ................................................................ 199
Table 5.9: Kinematic Analysis Summary of Domain 4 ................................................................ 200
Table 5.10: Rock mass parameters used in the Slope/W limit equilibrium modelling. ................. 200
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Table 5.11: Factors of Safety for the more Critical Slope Directions for the Overall Slope.......... 201
Table 5.12: Pit Slope Recommendations per Slope Design Sector ............................................ 202
Table 5.13: Packer Testing Results in Area of Open Pit ............................................................. 203
Table 5.14: SRK Pit Optimisation Economic Parameters............................................................ 211
Table 5.15: Magistral Mineable Inventory Reported by Whittle ................................................... 211
Table 5.16: Summary of Recommended Overall Slope Angles .................................................. 212
Table 5.17: Summary of Overall Angles Used in Whittle Pit Limits Analysis ............................... 212
Table 5.18: Pit Design Parameters.............................................................................................213
Table 5.19: Magistral Mineral Reserves ..................................................................................... 221
Table 5.20: Magistral Phase Pit Quantities................................................................................. 222
Table 5.21: Magistral Ultimate Pit Quantity Comparison to Whittle Pit Shell ............................... 222
Table 5.22: Magistral Mine Production Schedule........................................................................224
Table 5.23: Major Mine Equipment Fleet Requirements ............................................................. 225
Table 5.24: Mine Support Equipment Requirements .................................................................. 226
Table 5.25: Tailings Dam Construction Waste Rock Schedule ...................................................228
Table 5.26: Mine Department Budget for Various Support Operations ....................................... 230
Table 5.27: Mine Department Labor Requirements ....................................................................231
Table 6.1: Mineral Composition of the Three Ore Types............................................................. 237
Table 6.2: Fragmentation Characteristics of the Three Ore Types.............................................. 237
Table 6.3: Crushing Index .......................................................................................................... 240
Table 6.4: SAG Power Index ...................................................................................................... 241
Table 6.5: CIMM Ball Mill Work Indices ...................................................................................... 241
Table 6.6: G&T Grindability Test Results.................................................................................... 242
Table 6.7: Lakefield Locked Cycle Test Results ......................................................................... 243
Table 6.8: Composite Head Assays for CIMM Metallurgical Test Work ...................................... 243
Table 6.9: CIMM Metallurgical Test Results for Locked Cycle Tests........................................... 244
Table 6.10: Head Assays for G&T Metallurgical Program........................................................... 245
Table 6.11: G&T Metallurgical Test Results for Bulk Concentrate .............................................. 245
Table 6.12: Bulk Concentrate Assays......................................................................................... 249
Table 6.13: Molybdenum Deportment in Bulk Concentrate......................................................... 254
Table 6.14: G&T Metallurgical Test Results for Copper-Molybdenum Separation....................... 254
Table 6.15: Final Concentrate Assays........................................................................................ 255
Table 6.16: Metallurgical Results from Dewatering Test Work.................................................... 256
Table 6.17: Process Plant Reagents .......................................................................................... 257
Table 7.1: Major Equipment List for the Magistral Process Plant ................................................ 263
Table 7.2: Summary of the Design Criteria for the Process Plant ............................................... 264
Table 7.3: LoM Process Plant Production Schedule...................................................................266
Table 8.1: Estimated Runoff for Quebrada Magistral. ................................................................. 280
Table 8.2: Comparison of Site and Regional Monthly Precipitation (Dec-04 to Dec-05).............. 282
Table 8.3: Scenario Annual Summaries ..................................................................................... 286
Table 8.4: Schedule of Dam Construction Stages ......................................................................302
Table 8.5: Location and Capacity of Waste Dumps ....................................................................305
Table 9.1: Access Road Route from Lima to Chimbote to Magistral ........................................... 309
Table 9.2: Types of Road – GMI Study....................................................................................... 309
Table 9.3: Summary of Predicted Source Concentrations .......................................................... 316
Table 9.4: Peruvian Ambient Water Quality and Effluent Criteria................................................ 317
Table 9.5: Summary of Treatment Effectiveness for Meeting Drinking Water Standards ............ 320
Table 9.6: Design Criteria for Port of Chimbote .......................................................................... 322
Table 10.1: Preproduction Capital Costs for Magistral ($000s)...................................................337
Table 10.2: LoM Sustaining Capital ($000s) ............................................................................... 338
Table 10.3: Pre-Production Mining & Fixed Facilities Initial Capital Costs (Excl. IGV Tax).......... 340
Table 10.4: Mining Equipment Initial & Sustaining Capital Costs (Excl. IGV Tax) ....................... 342
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Table 10.5: Capital Cost Summary by WBS for the Process Plant ............................................. 343
Table 10.6: Concentrate Pipeline Cost Summary ....................................................................... 345
Table 10.7: Emergency Pond Cost Summary............................................................................. 345
Table 10.8: Overall Cost Summary............................................................................................. 345
Table 10.9: Capital Cost for Process Plant First Fills .................................................................. 348
Table 11.1: LoM Operating Cost Summary................................................................................. 350
Table 11.2: Concentrate Transport Operating Cost Summary .................................................... 351
Table 11.3: Summary of LoM Labour Staffing ............................................................................ 352
Table 11.4: Mining Operating Costs ........................................................................................... 356
Table 11.5: Mining Labour Costs................................................................................................ 357
Table 11.6: LoM Process Plant Operating Costs ........................................................................ 358
Table 11.7: Process Plant Labour Schedule............................................................................... 360
Table 11.8: LoM Process Plant Operating Costs for Consumables ............................................ 361
Table 11.9: Power Consumption ................................................................................................ 362
Table 11.10: Process Plant Mobile Equipment Operating Costs................................................. 363
Table 11.11: LoM G&A Operating Costs for the Magistral Site ................................................... 364
Table 11.12: Magistral Vehicle/Transportation Costs.................................................................. 365
Table 11.13: LoM Operating Costs for the Conchucos Office ..................................................... 366
Table 11.14: LoM Operating Costs for Port of Chimbote ............................................................ 367
Table 11.15: Annual Mobilte Equipment Costs-Chimbote Port ...................................................368
Table 11.16: LoM Operating Cost for Lima Office....................................................................... 369
Table 11.17: LoM Operating Cost for EH&S............................................................................... 370
Table 11.18: LoM Operating Costs for Water Treatment Plant-Tailings Dam Operation ............. 371
Table 11.19: LoM Operating Costs for Water Treatment Plant-Filter Plant ................................. 371
Table 13.1: Permitting Process requirements for Mining Projects............................................... 379
Table 13.2: Requirements to be fulfilled during the Permitting Process ...................................... 380
Table 15.1: General Model Criteria............................................................................................. 385
Table 15.2: Mine & Process Production...................................................................................... 386
Table 15.3: Gross Income from Mining (US$000s) .....................................................................386
Table 15.4: LoM Operating Cost Estimate (US$)........................................................................ 387
Table 15.5: Capital Cost Sumary (US$000s) .............................................................................. 387
Table 15.6: LoM Project Cash FLow (US$000s).........................................................................388
Table 15.7: Base case Economic Sensitivity (US$ million) ......................................................... 389
Table 15.8: Base Case Economic Sensitivity – Metal Price (US$ million @ NPV8%)................... 389
Table 15.9: Base Case Economic Sensitivity - Metal Price (IRR %) ........................................... 389
Table 15.10: Base Case Economic Sensitivity - Metal Price (Payback Years)............................ 389
Table 15.11: Base Case Ecopnomic Sensitivity - Capital Exp. (US$ million @ NPV8%) .............. 390
Table 15.12: Base Case Economic Sensitivity - Op Costs (US$ million @ NPV8%)..................... 390
Table 15.13: Base case Economic Sensitivities - Metal Price (US$ million @ NPV8%)................ 390
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List of Figures
Figure 1.1: Location Map................................................................................................................2
Figure 1.2: Project Development Plan – Schedule........................................................................34
Figure 3.1: Location Map..............................................................................................................55
Figure 3.2: Map of Concessions ...................................................................................................56
Figure 3.3: Magistral Project Access Routes ................................................................................65
Figure 4.1: Regional Geology and Structures...............................................................................81
Figure 4.2: Stratigraphic Column of the Magistral Property...........................................................83
Figure 4.3: Geology of the Magistral Property ..............................................................................84
Figure 4.4: Geologic Sections through Magistral Property............................................................85
Figure 4.5: Locations and Ages of Intrusive Stocks near Magistral...............................................87
Figure 4.6: 2005 DDH Plan of the Magistral Deposit Area............................................................88
Figure 4.7: Section 1300NE Geology ...........................................................................................89
Figure 4.8: Section 1450NE Geology ...........................................................................................90
Figure 4.9: Section 1650NE Geology ...........................................................................................91
Figure 4.10: Example of Orpiment/Realgar Mineralisation in Limestone.......................................98
Figure 4.11: Quartz-Sulfide Vein Stockwork in Retrograde-Altered Skarn .................................. 103
Figure 4.12: Quartz-Chalcopyrite-Molybdenite Vein Stockwork in San Ernesto Intrusion............ 104
Figure 4.13: Late-Stage Quartz Vein with Gray Sulfide Selvages ............................................... 106
Figure 4.14: Polygonal Survey Line at Magistral.........................................................................110
Figure 4.15: Rock Geochemistry over Magistral ......................................................................... 114
Figure 4.16: Sampling and Mapping of the San Ernesto and Arizona Drifts................................ 115
Figure 4.17: Magnetic Map......................................................................................................... 116
Figure 4.18: Drill Hole Plan Map Magistral Project......................................................................121
Figure 4.19: 2005 Standard Sample Data: WCM Cu113: Cu – AA ............................................ 153
Figure 4.20: 2005 Standard Sample Data: WCM Cu113: Mo – AA............................................ 153
Figure 4.21: 2005 Standard Sample Data: WCM Cu117: Cu – AA ............................................ 154
Figure 4.22: 2005 Standard Sample Data: WCM Cu117: Mo – AA............................................ 154
Figure 4.23: 2005 Standard Sample Data: GBM396-6C: Cu – AA............................................. 155
Figure 4.24: Blanks Inserted into the CIMM Laboratory: Cu – ICP............................................. 157
Figure 4.25: Blanks Inserted into the ALS Laboratory: Cu – AA................................................. 157
Figure 4.26: Blanks Inserted into the CIMM Laboratory: Mo – ICP ............................................ 158
Figure 4.27: Blanks Inserted into the ALS Laboratory: Mo – AA ................................................ 158
Figure 4.28: Coarse Rejects Inserted in the ALS Laboratory Sample Stream: Cu – AA............. 159
Figure 4.29: Coarse Rejects Inserted in the ALS Laboratory Sample Stream: Cu – AA............. 159
Figure 4.30: Coarse Rejects Inserted into the CIMM Laboratory: Mo – ICP............................... 160
Figure 4.31: Coarse Rejects Inserted into the CIMM Laboratory: Mo – AA................................ 160
Figure 4.32: Section 1450NE Copper Zones .............................................................................. 164
Figure 4.33: Section 1450NE Molybdenum Zones......................................................................168
Figure 4.34: Section 1450NE Arsenic Zones.............................................................................. 172
Figure 4.35: Section 1450NE Copper Model .............................................................................. 178
Figure 4.36: Section 1450NE Molybdenum Model......................................................................179
Figure 4.37: Section 1450NE Arsenic Model .............................................................................. 180
Figure 5.1: Geotechnical Mapping Locations by Program........................................................... 189
Figure 5.2: Location of Pit Geotechnical Holes ........................................................................... 190
Figure 5.3: Major Fault Structures in Proximity to the Ultimate Pit Boundaries ........................... 194
Figure 5.4: Structural Domains................................................................................................... 196
Figure 5.5: Magistral Mine Area Layout ...................................................................................... 215
Figure 5.6: Magistral Phase 1 Pit................................................................................................ 216
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Figure 5.7: Magistral Phase 2 Pit................................................................................................ 217
Figure 5.8: Magistral Phase 3 Pit................................................................................................ 218
Figure 5.9: Magistral Phase 4 Pit................................................................................................ 219
Figure 5.10: Magistral Ultimate Pit (Phase 5) ............................................................................. 220
Figure 5.11: Groundwater Well Locations................................................................................... 233
Figure 6.1: Effect of Primary Grind on Mineral Liberation ........................................................... 239
Figure 6.2: Porphyry Composite Cycle Test Flowsheet .............................................................. 246
Figure 6.3: Skarn Composite Cycle Test Flowsheet ...................................................................247
Figure 6.4: Mixed Zone Composite Cycle Test Flowsheet .......................................................... 248
Figure 6.5: Effect of pH on Rougher Flotation & Batch Cleaner Performance - Porphyry Ore..... 250
Figure 6.6: Effect of pH on Rougher Flotation & Batch Cleaner Test Performance - Skarn Ore.. 251
Figure 6.7: Effect of pH on Rougher Flotation & Batch Cleaner Test Performance - Mixed Ore.. 252
Figure 6.8: Flowsheet for Copper-Molybdenum Separation by Selective Flotation ..................... 253
Figure 7.1: Simplified Flow Sheet for the Magistral Process Plant .............................................. 262
Figure 8.1: Water Balance Components..................................................................................... 288
Figure 8.2: Runoff Determination................................................................................................ 289
Figure 8.3: Monthly Evaporation................................................................................................. 290
Figure 8.4: Site and Regional Precipitation................................................................................. 291
Figure 8.5: Mill Water Balance Flow Sheet ................................................................................. 292
Figure 8.6: Water Balance Monthly Variation.............................................................................. 293
Figure 8.7: Tailings Impoundment Layout................................................................................... 297
Figure 8.8: Section though Magistral Valley................................................................................ 298
Figure 8.9: Storage Capacity Curve for Tailings Impoundment...................................................299
Figure 8.10: Plan View of Tailings Dam...................................................................................... 300
Figure 8.11: Typical Section through Tailings Dam.....................................................................301
Figure 8.12: Layout of Waste Rock Dumps ................................................................................ 307
Figure 8.13: Sections through Waste Dumps. ............................................................................ 308
Figure 9.1: Access Roads from Chimbote to Magistral Site ........................................................ 311
Figure 9.2: Power Supply Alternatives........................................................................................ 313
Figure 9.3: Vicinity Map and Cross Section of Concentrate Pipeline .......................................... 315
Figure 9.4: Location Map for the Chimbote Port ......................................................................... 324
Figure 9.5: Panaromic View of the Chimbote Fishing Pier .......................................................... 328
Figure 9.6: Port Material Flow Diagram for Alternative 2 at Chimbote Fishing Pier ..................... 331
Figure 9.7: Schematic Flow Diagram of RO Treatment Plant...................................................... 332
Figure 11.1: Organisational Chart............................................................................................... 355
Figure 12.1: Project Schedule .................................................................................................... 375
Exhibit 15.1: Life of Mine Base Case Financial Model 390
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1 Executive Summary
1.1 Introduction
Inca Pacific Resources Inc. (“Inca Pacific”) commissioned SRK Consulting (“SRK”) to prepare a
Canadian Securities Administrators National Instrument 43-101 (“NI 43-101”) compliant
Preliminary Feasibility Study for the Magistral Project located in Peru. This Preliminary Feasibility
Study is intended to be used by Inca Pacific to further the development of the Magistral Project.
SRK’s opinion contained herein and effective July 10, 2006 is based on information provided to
SRK by Inca Pacific throughout the course of SRK's investigations as described in the report. This
report builds on the resource estimate prepared by Mine Development Associates (“MDA”) in
December, 2005.
The Magistral property is located approximately 450 km north-northwest of Lima, Peru and
approximately 140 km northeast of the seaport of Chimbote. The property lies within the District of
Conchucos, Province of Pallasca in the northern part of the Department of Ancash. The elevation at
Magistral varies between 3,900 and 4,400 m AMSL. (Figure 1.1). Existing data indicate there is
sufficient surface area within the property to construct all necessary facilities required for
production.
Inca Pacific, through its wholly owned subsidiary Compañia Minera Ancash Cobre S.A. (“Ancash
Cobre”) has a contract with Empresa Minera del Centro del Peru S.A. (“Centromin”) to submit a
Feasibility Study no later than December 31, 2006. This Preliminary Feasibility Study comprises the
first phase of a multi-phase plan, which encompasses developing the Magistral copper-molybdenum
deposit.
1.2 Climate
Magistral has a high-altitude temperate climate. Relatively dry, windy weather prevails from May to
October, with a rainy season from November to April. In dry years, the summer rains may not begin
until Christmas. The mountainous setting of the Magistral property has a strong local effect on the
weather, and there is measurable precipitation in most months. A meteorological station was
established near the Magistral camp in November 2004 and monitoring has continued since then.
Average annual precipitation at the village of Conchucos, about 7 km from Magistral, is 704 mm.
The average annual temperature is 12°C. Average monthly precipitation ranges from 9 mm to
140 mm, with the heaviest rainfall in January, February and March. Average monthly temperatures
vary little from month to month; the lowest average monthly temperature is 11.6ºC and the highest is
12.3ºC. The elevation of the Conchucos meteorological station is nearly 1000 m lower than the
Magistral camp.
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1.3 Property Tenure
The property is 100% owned by Inca Pacific, through its Peruvian subsidiary Inca Pacific S.A. and
the holding company Ancash Cobre.
Ancash Cobre has an agreement with Centromin to explore five mineral concessions (the “Magistral
Concessions”), which cover an area of 250 hectares. Ancash Cobre also holds an additional ten
concessions (the “Ancash Concessions”) with a total area (as stated in the mineral titles registry) of
5,526 hectares. These surround and are contiguous to the Magistral Concessions. The Magistral
copper-molybdenum deposit is within the Magistral Concessions. In total, the Magistral property
comprises fifteen mining concessions covering a total area of 5,776 hectares, excluding an area held
under concession by several small third parties that lies within the Magistral 12, 13 and 14
concessions.
1.4 Geology and Resource Estimate
Magistral is a copper-molybdenum deposit located near the northeastern end of the Cordillera
Blanca, a region underlain mainly by Cretaceous carbonate and clastic sequences. These units strike
north to northwest and are folded into a series of anticlines and synclines with northwest-trending
axes. Magistral stratigraphy is dominated by limestone of the north-striking, west-dipping
Cretaceous Jumasha Formation. In the late Tertiary, the Jumasha limestone was intruded by a quartz-monzonite
stock. The intrusion has an irregular elliptical shape in plan with dimensions of about
600 m east-west by 400 m north-south, at about 100 m below the surface. The hanging wall or upper
flank of the intrusion plunges at -50° to -60° to the west and west-northwest and has a well-developed
envelope of skarn around its perimeter. The copper-molybdenum mineralisation occurs in
both the stock and the surrounding skarn, and is related to hydrothermal activity generated by the
emplacement and cooling of the intrusion.
The Magistral intrusion has been subdivided into three facies, named the “San Ernesto”, “Sara”, and
“H”. The facies are distinguished by important differences in the style and intensity of alteration,
quartz-sulphide veining, and copper-molybdenum mineralisation.
The skarn surrounding the Magistral intrusion has been subdivided into three categories. These are
“distal skarn”, which occurs outside the main skarn-limestone contact, “skarn”, a proximal phase that
contains no dykes or sills, and “Mixed Zone”, a skarn phase that is intruded by numerous dikes or
sills and lies adjacent to the main intrusive contact.
The most important and abundant copper-molybdenum mineralisation occurs in stockwork and
sheeted zones of quartz-sulphide veins that are most common in the border zone of the Magistral
stock and near the intrusion/skarn contact, especially in the Mixed Zone. The dominant sulphides
are pyrite, chalcopyrite, and molybdenite. These minerals are also disseminated in the wall rocks,
but where quartz-sulphide veins are absent, the copper and molybdenum grades are low. In the
“porphyry-style” mineralisation in the Magistral stock and the Mixed Zone, chalcopyrite and
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molybdenite occur together in quartz-sulphide veins and are disseminated in wall rocks. Grades in
two-meter core samples from the best mineralised sections of the stock and the Mixed Zone can
exceed 1.5% Cu and 0.15% Mo. The highest-grade copper mineralisation in the deposit (ranging to
over 5% Cu in individual two-meter core samples) forms mantos and lenses of semi-massive
chalcopyrite and pyrite in skarn. Less commonly, molybdenite also occurs in high-grade mantos in
skarn, where Mo grades can exceed 1% in individual samples. As a rule, the copper mantos contain
very little molybdenite, and the molybdenite mantos have low copper grades.
The silver distribution is similar to that of copper. Arsenic minerals (orpiment and lesser realgar) are
present in late fractures that cut the entire deposit, and are also found in narrow (2 m to 5 m)
high-grade mantos in limestone outside the skarn/marble contact. Tetrahedrite-tennantite and stibnite
occur with chalcopyrite and molybdenite in main-stage quartz veins, as well as in widespread late
calcite veins.
The deeper sections of the Magistral deposit are only partially explored by drilling. Since the first
Anaconda drill program in 1999, the exploration approach by all operators has consistently limited
the drilling depth based on expected open-pit geometries. As a consequence, many holes were
stopped short in copper-molybdenum mineralisation, and in some cases this was in very good grade.
The geological evidence provided by some drill holes in the western and northwestern sections of the
deposit indicates that the Magistral mineralisation, which at shallow depths is concentrated in the
Mixed Zone and the outer shell of the Magistral stock, continues to depth to the west and northwest.
A NI 43-101 compliant resource model was completed in 2005 by MDA. The work was prompted
by the 2005 drilling. Models were completed for rock density, copper, molybdenum, arsenic, and
silver; an antimony model was partially completed.
The geologic model on which the resource models were based was built by Mr. Pedro Ramos, chief
geologist for Ancash Cobre. In the preparation of the resource model, the interpretations of country
rock, skarn, porphyry, and alluvium contacts and their geometries and orientations were honoured in
almost all cases except when the interfingering of skarn and porphyry was too complex, in which
case some simplifications were made. Each resource model was made using similar procedures:
• Statistical evaluation of the sample assays;
• Developed the mineral domain model on cross sections and coded the assays to those domains;
• Statistical evaluation of the sample assays by domain;
• Capped samples, composited the capped samples, calculated geostatistics;
• Took the cross-sectional model to level plan, refined and digitised on plan;
• Digitised and used the plans to code block model;
• Estimated grades into the block model; and
• Tabulated resources and performed validation.
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Estimation in all cases included a nearest neighbour, Krige, and inverse-distance interpolation, but in
all cases the inverse-distance model was selected as the final and reported model. MDA utilised
mineral domains defined by grade and geology to control the estimation. Estimation parameters
were chosen to be appropriate for the drill spacing, geologic complexity, sample locations, and
parameters defined by point validation and correlograms. In an attempt to maintain consistency with
historic estimates, MDA used a similar resource-modeling methodology unless compelling reasons
were found not to do so.
The 2005 estimated mineral resources are listed in Table 1.1.
Table 1.1: Magistral Mineral Resource Estimate – MDA 2005
Cut-off Grade
% Cu Eq
Quantity
(tonnes)
Cu
(%)
Mo
(%)
Ag
(g/t)
Measured
0.40 103,158,000 0.52 0.06 2.5
Indicated
0.40 85,890,000 0.51 0.05 2.6
Measured and Indicated
0.40 189,048,000 0.51 0.05 2.5
The copper equivalent grade calculation (CuEq) used for tabulation, is based on historic
average copper and molybdenum metal prices to arrive at a ratio of 5 to 1.
1.5 Mining and Reserves
1.5.1 Geotechnical Overview
The previous slope angle recommendations of SRK (2001), AMEC (2005) and Golder Associates
(2005) were re-evaluated in the light of the new structural, geotechnical and hydrogeological
information. Re-domaining of the Magistral geology for geotechnical and slope design purposes was
determined on the basis of the structural characteristics of the valley sides. Other than major faults,
the principal discontinuity set which was deemed to be a significant influence on slope designs is
bedding.
Based on the findings these evaluations and a review by Peter Stacey of Stacey Mining Geotechnical
Ltd, the slope design sectors and the recommended Inter Ramp Angle (“IRA”) were revised. The
revised angles are noted in Table 1.2.
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Table 1.2: Pit Slope Recommendations per Slope Design Sector
Face
Direction
IRA Sector Area
by degree
197 45 010 – 035
D1 Limestone 230 40 035 – 100
48 100 – 115
197 49 0 – 065
D2 Skarn and 267 45 065 – 105
Porphyry
306 49 105 – 160
325 50 115 – 190
Limestone
25 52 190 – 225
325 50 160 – 190
D3
Skarn and
Porphyry 25 50 190 – 225
85 52 225 – 275
Limestone
140 50 275 – 010
85 52 225 – 275
D4
Skarn and
Porphyry 140 50 275 – 010
These revised angles are based on the assumption that the evaluated joint features are not continuous
over more than a bench height, and as such will not affect the stability of the inter-ramp stack. This
assumption will need to be validated during the feasibility stage evaluations.
Essential to the slope angle determination at a feasibility level are the following requirements: the
construction of a 3D lithological/alteration model of the deposit area; the undertaking of further
geotechnical drilling in the upper areas of the northwest, northeast and southeast slopes to further
investigate the continuity of the determined structural features and verify the geotechnical strength
and joint orientation information; further characterisation of the overburden in the valley area of the
open pit and further hydrogeological testing and evaluation to understand the influence on slope
stability and mining conditions.
1.5.2 Mining Overview
The Magistral mining operation is planned as an open pit using large wheel loaders and 136 t trucks,
based on maximum mining rate of 29.5 Mtpy of material (ore and waste) over a 16-year mine life.
Mining activities will include drilling, blasting, loading and hauling, together with support activities.
A maximum of 6.7 Mtpy of ore will be delivered to a primary crusher, located on the south-west side
of the pit, for subsequent processing through the mill. Total material moved (ore and waste) will
remain below 15.2 Mtpy for the first three years of ore production, and will subsequently increase.
While there will be a RoM stockpile near the crusher to provide feed continuity and/or blending of
ore delivery over short periods, no low grade material stockpile is planned. The planned operating
schedule is three 8-hour shifts per day, 7 days per week, 365 days per year.
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The maximum pit wall height is currently planned to be about 750 m. The overall stripping ratio is
1.82:1. Side hill waste dumps will be placed to the west and south of the pit, and a valley dump to
the south-west of the pit. Over the LoM, the mine will produce 192.6 Mt of waste rock of which
31.8 Mt will be used in the construction of the tailings dam.
The mine is designed to be developed in a series of phases (designed push-backs). The Phase 1
design targets the higher grade and lower stripping ratio ore within the ultimate pit design, on the
south-west side (in the valley floor area). Phase 2 consists of the development of a pit located to the
north-west of Phase 1 in the valley floor. Phase 3 merges the Phase 1 and Phase 2 pits together and
deepens them. Phase 4NW pushes back the north-west side of the pit, and Phase 4SE the south-east
side. Phase 4SE pushes back to the ultimate pit wall on the south-east side, and is essentially a waste
stripping precursor to Phase 4M (Main) which exists only below the 4060 m elevation. Phase 5
expands the pit to the ultimate pit limits on the north-west side, and allows for the final development
of the ultimate pit bottom. In general, these phases will be scheduled in a staggered manner to
permit major waste stripping in one phase while mining ore in another.
1.5.3 Mineral Reserves
The estimate of mineral reserves within the pit phases was reported using an internal NSR cut-off
value (NSR CoV). Table 1.3 shows the mineral reserves within the designed ultimate pit based on
the Mine Development Associates (“MDA”) resource model and metal prices as follows: Cu
US$1.15/lb, Mo US$10.00/lb, and Ag US$7.50/oz.
Table 1.3: Magistral Mineral Reserves by Pit Phases
ORE $6.10/t Internal NSR CoV
Reserve
Category
Ore
(kt)
Cu
(%)
Mo
(%)
As
(%)
Ag
(g/t)
NSR
($/t)
Waste
(kt)
Total
(kt)
Strip
Ratio
Proven 68,960 0.515 0.056 0.037 2.45 15.38
Probable 37,153 0.545 0.051 0.050 2.83 14.50
Total 106,113 0.526 0.054 0.042 2.58 15.08 192,610 298,724 1.8
1. Metal prices: Cu US$1.15/lb, Mo US$10.00/lb, and Ag US$7.50/oz.
2. Statement as of September 2006.
1.5.4 Mine Production Schedule
The mine production schedule is based on providing mill feed of 6.7 Mtpy (20,000 tpd mill
throughput for 365 days per year with a mill availability of 92%). The first year’s ore production
schedule is slightly lower at 6.4 Mt, which allows for mill commissioning at the start of that year.
The mine life is approximately 16 years. Waste stripping is scheduled to provide waste rock (of
suitable quality) for tailings dam construction. This particularly affected the waste production
requirements in the pre-production year, when 3.7Mt out of the total 4.5 Mt stripped will be used for
the tailings dam construction. Table 1.4 summarizes the mine production schedule.
CAE/sdc Magistral-43-101.PreFeasStudy.Report.2CI004.006.CAE.20061101.Rev50.doc, Nov. 1, 06 October 2006
