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 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
Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report 090644-3-0000-20-IFI-100 Table 19.7: Pulacayo Projected Concentrate Grades Grade Element Units Zinc Concentrates Lead Concentrates Pb % 1.12 48 Zn % 51 6.53 Ag gms/mt 411 7438 Au gms/mt 0 0 Fe % 2.19 N.A. As % na 1.48 Sb % 0.04 1.25 Bi ppm na 0.03 H 2 O % 7 to 10 7 to 11 Based on prevailing market, environmental and technological conditions, potential Pulacayo concentrate quality issues should be limited to the following: 19.3.2.1 Zinc Concentrates Based on the limited specifications available at the time of preparation of this report, no significant issues are foreseen with the zinc concentrates. Having said that, although projected zinc levels are in line with most other standard qualities, the high silver levels may make them unsuitable for smelters with no or limited silver recovery. Nonetheless, as there are several potential smelter homes in Asia, Europe, Canada and Mexico that could likely handle these concentrates, this should not have a material impact on saleability, treatment terms or net realizations. Elements commonly found in zinc concentrates, which are typically subject to penalties, and their thresholds are: Table 19.8: Elements Commonly Found in Zinc Concentrates Which are Typically Subject to Penalties and their Thresholds Element Typical Penalty Thresholds Fe 8 to 9% Pb 3 to 6% Cd 0.3 to 0.4% Hg F+Cl 100 ppm 500 to 800 ppm SiO2 3 to 4% Although none of the above are expected to be an issue in the Pulacayo concentrates based on early expectations, penalties may be incurred should any of these thresholds be breached. TWP Sudamérica S.A. Av. Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473 Page 224
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Pulacayo Project Feasibility Study - Apogee Silver

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