Pulacayo Project Feasibility Study - Apogee Silver

Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report
090644-3-0000-20-IFI-100
for 2014; and, Century: 40 to 70 kt/y, closure now set for 2016) and lack of any significant new
projects outside of China. Having said that however, this transition to deficit may prove more
gradual than some anticipate as China continues to invest in both new lead mines (driven also by
relatively attractive zinc and silver prices) and in its currently underdeveloped secondary smelting
industry. Furthermore, environmental issues and concerns can be expected to continue limiting
the ability to expand both primary and secondary supply, with such challenges no longer confined
to developed economies, as China too has experienced considerable environmental scrutiny of
its lead industry over the past few years and, as a result, can be expected to implement stricter
regulation on projects going forward (particularly with respect to secondary smelters).
Elsewhere, the market continues to watch developments at several other western operations, all
of which will have medium term supply side consequences:
At Doe Run’s La Oroya smelter in Peru, which was shuttered in early 2009, discussions
surrounding the recommencement of operations there were initiated with the Humala
government in early 2012 however, several significant issues remain unresolved and a
restart date remains elusive. While it is viewed as likely that these issues will ultimately be
worked out, this is not expected to happen in the near future, keeping important western
smelting capacity and in particular that capable of handling complex, high precious metal
concentrates out of the market.
There are ‘on again/off again’ plans to restart Glencore’s 80,000 t/y lead smelter in Port
Vesme, Italy, which was placed on care and maintenance in 2009. Although expected to
start up earlier this year, this decision has been postponed with the latest rumors focusing
on plans to treat complex, precious metal bearing concentrates there. In conjunction with
this decision however, Glencore is apparently discussing with Xstrata the future for the
latter is 60,000 ton Belledune, New Brunswick lead smelter.
Original plans had Belledune scheduled for closure in tandem with the Brunswick mine
shutdown in 2013. However, the smelter was given an unofficial reprieve in 2011 when it
was unofficially chosen to treat residues from the future Albion process (residue produced
from treatment of Xstrata’s McArthur River bulk concentrates).
More recent plans apparently have Porto Vesme handling the bulk of these residues. Any
deferral of the Porto Vesme restart or an advancement/delay of the Belledune closure will
significantly impact the lead market, but particularly the market for concentrates.
In the United States, Doe Run announced in late June that it will not be proceeding with
the investment in a hydrometallurgical process for treating lead concentrates at its
Herculaneum, Missouri operation but will instead shut that facility at year end 2013 and
sell concentrates into the custom market, thereby removing the last primary lead smelter
in the United States.
On the mine supply side, the low lead content of many of the larger zinc mine projects
(e.g. Bracemac, Perkoa, Lalor Lake, Bisha) and the poor economics of developing leadonly
mines anywhere outside of China, will restrict growth in primary lead output and will
be supportive of lead prices.
TWP Sudamérica S.A. Av. Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473
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