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
22 ECONOMIC ANALYSIS
22.1 Introduction
A Technical-Financial Model (TFM) has been developed to evaluate the economic viability of
Pulacayo mine. To complete the model, information was collected from the mine to
determine the value chain that its products will follow from the mine to the market. This
information covered commercial information, engineering, production, process and cost data
such as on-mine costs and sales terms.
22.2 Assumptions
The following assumptions have been made:
All the costs included in the TFM model and this report are expressed in terms of
2012 quarter four US dollars (USD) and do not include escalation or inflation (i.e. the
model is in constant real money terms).
Revenue is recognized as the concentrate is produced. No allowance has been
made for time delays between shipment and payment for the concentrate. It is
assumed that the concentrate will be sold as it is produced or an inventory
arrangement be made.
Ocean freight, concentrate containerization and terminal costs have not been
accounted for.
The initial capital expenditure will be financed by equity and revenue.
Operating cash flows will be used to finance sustaining and working capital once the
mine has reached full production.
The metal price estimates used in the model are tabulated below:
Table 22.1: Estimated Metal Prices for Lead, Zinc and Silver
Metal
Price and Price Participation
$/lb or $/oz
$/tonne
Pb 0.86 $/lb 1,896
Zn 1.00 $/lb 2,205
Ag
28.0 $/oz
22.3 Financial Modeling
22.3.1 The Mine Value Chain of Pulacayo mine
The purpose of the Technical-Financial Model (TFM) is to evaluate a mine in the context of
the mine value chain that its products follow from the mine to the market. The value chain
that the products of Pulacayo mine will follow is described below:
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