Pulacayo Project Feasibility Study - Apogee Silver

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Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report 090644-3-0000-20-IFI-100 Table 14.8: Comparison of Drillhole Composite Grades and Block Model Grades Parameter Metal Domain Composites Metal Domain Blocks Parameter Ag Pb Zn Ag Pb Zn Mean Grade 114.87 g/t 1.04 % 1.53 % 107.73 g/t 1.06 % 1.49 % Minimum Grade 0.14 g/t 0.01 % 0.01 % 0.01 g/t 0.01 % 0.01 % Maximum Grade 1,500 g/t 15 % 15 % 1,489.28 g/t 12.96 % 14.94 % Variance 47015 2.41 3.12 13,685 0.73 1.06 Standard Deviation 216.83 1.55 1.77 116.99 0.86 1.03 Coefficient of Variation 1.89 1.49 1.15 1.09 0.81 0.69 Count 8,068 6,952 11,398 899,626 746,442 1,290,276 The ID 2 resource model for the Pulacayo deposit was checked using Ordinary Kriging (OK) interpolation methodology. Search ellipse and other parameters were the same as those used in the ID 2 model where applicable. Results of the OK modeling showed that average grades and tonnage closely match those of the preferred ID 2 model. Results of the two methods are considered sufficiently consistent to provide an acceptable check on the preferred ID 2 methodology. Nugget and sill values were determined from the variogram analysis discussed in section 14.3.6 and are presented in Table 14.9. Table 14.9: Additional Resource Parameters for Ordinary Kriging Check Model Item Ag Pb Zn Nugget (C0) 0.60 0.65 0.65 Sill (C1) 0.40 0.58 0.52 14.3.4.14 Comment on Previous Resource Estimates Mercator reviewed each of the previous resource estimates and has concluded that these provide valuable assessments of the Pulacayo deposit as defined by drilling results available at the time of reporting. The current resource is based on geological and mineralization models of discrete domains for each metal that differ significantly from the combined NSR domain modeling of all contributing metals from previous estimates. While both methodologies provide an evolving assessment of grade distribution of the TVS and associated secondary structures, the current resource methodology aims at improving grade correlation and minimizing potential dilution of each metal with adjacent lower grade tons. Results from the current resource estimate differ from those of the previous resource. Outside of the stated methodology change, this reflects impact of new drilling results, upgraded confidence in the underground workings digital model, inclusion of oxide zone and sulphide zone optimized pit resources and revised (higher) NSR cutoff values for underground resources. TWP Sudamérica S.A. Av. Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473 Page 141
Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report 090644-3-0000-20-IFI-100 15 MINERAL RESERVES 15.1 Introduction To convert Mineral Resources to Mineral Reserves, minable stopes were designed within the mineralized zone. These stopes have sufficient widths to be accessed and practically mined with the selected mining method and equipment fleet. A mining recovery and dilution factor has been included. Only Indicated Mineral Resource material has been converted to Reserves. This deposit does not contain Measured Mineral Resource material. Any Inferred material within the designed stopes is treated as waste and allocated a mineralization grade of zero. 15.2 Methodology Two mining methods will be utilized at Pulacayo, shrinkage stoping and longhole open stoping. The stope widths vary from 3 m to 6 m, depending on the mining method and width of mineralization. Mining losses total 9% for the ore body. This includes material lost to the existing mine workings. Mining dilution is 8%. It is anticipated that 8% of the material mined will be unplanned waste from blasting overbreak and possible contamination from the existing stopes. The geological block model was provided by Mercator Geological Services, based in Dartmouth Canada. The model was created in Surpac and converted into Datamine format by TWP for mine planning. The mine planning model is based on the original file received from Mercator called ‘pulacayo2012.mdl’. The model is rotated by ten degrees in the clockwise direction and contains 4,098,653 blocks. The parent block size is 5 m in the X direction by 3 m in the Y direction by 3 m in the Z direction. The minimum sub-cell size is half of the parent cell dimensions. Rock density has been interpolated in the block model. 15.3 Stope Generation and Mining Cut-off Grades Potentially economic portions of the mineralization were founded on operating costs provided by Apogee. TWP Sudamerica S.A has reviewed these costs and consider them to be reasonable given TWP's recent reserve estimating experience in Peru and across Africa. Several factors were used to determine if a stope was viable and economic to mine. The first criterion was the average grade for the stope must be above 150 g/t silver. Because the Pulacayo deposit is polymetalic, there is potential for the stope optimisation software (MSO) to draw revenue from stopes that have a low silver grade, but high lead and zinc grades. Using the silver grade cut-off of 150 g/t forces the model to remain silver focused by first seeking to exploit the stopes with higher silver grades. The second criterion is that the stope must have an NSR greater than US$ 70/t. US$ 70/t is the economic breakeven value of a block. See the calculation of NSR in the table below. Using the NSR instead of an individual grade allowed flexibility in the ratios of silver, lead and zinc, while still keeping silver as the main commodity through the silver cut-off grade. TWP Sudamérica S.A. Av. Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473 Page 142
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Pulacayo Project Feasibility Study - Apogee Silver

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