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
Porto Vesme or an advancement/delay of the Belledune closure will have a significant
effect on the market.
There has been an explosion of secondary lead smelter capacity over the last year or so
with the resultant increase in capacity tightening the spent battery market significantly. As
a consequence, some primary plants are being forced back into the concentrate market
for lead units.
The aforementioned and recently announced closure of Doe Run’s Herculaneum smelter
will release some 220,000 dmt clean concentrates into the custom market.
Taking all of the above into consideration, consensus appears to be forming around long-term
treatment charges for complex, high silver-bearing lead concentrates in the following range and it
is recommended that these base levels be used for the purposes of the Feasibility Study:
Treatment Charge
Escalator
De-escalator
Ag Refining Charge
USD 225 per dmt @ basis price of USD 2,000/mt
+USD 0.10/dmt for each USD 1.00 Pb price > USD 2,200/mt
-USD 0.05/dmt for each USD 1.00 Pb price < USD1,800/mt
USD 1.50/payable oz
19.3 Pulacayo-Paca Project
19.3.1 Marketing Pulacayo Concentrates
The securing of long-term contracts by Apogee and the terms, which can be fixed, will be
influenced principally by the balance of supply and demand for custom zinc and/or lead
concentrates during the period of contract negotiation, and the willingness, ability, and capacity of
the counterparties to receive and process these concentrates based on their specific
characteristics.
Because of the magnitude and history of the custom smelting/refining trade, the habits of the
industry and the manner in which custom miners and custom smelters deal with each other is
well established. For many new mines, off take contracts are frequently required which will
ensure that the mine can deliver its concentrate to the market through the period during which
debt financing is being repaid. For the purposes of this study, it is assumed that no specific
restrictions will be placed on Apogee with respect to the sale of its concentrate products.
19.3.2 Concentrate Production Schedule and Quality
Over the currently projected 12.5 year LOM, annual production is projected to average
approximately 21,200 dry metric tons zinc concentrates and 10,250 dry metric tons lead
concentrates, grading approximately as set out in Table 19.7.
TWP Sudamérica S.A. Av. Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473
Page 223