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 25 INTERPRATION AND CONCLUSIONS 25.1 Project Feasibility Much progress has been made in the development of the Pulacayo Project since the publishing of the Preliminary Assessment of the Pulacayo Project in 25 June 2010. Additional drilling has allowed for a significant increase of mineral reserves. Mineral reserves have now been established at 19.5 million ounces of silver in concentrate in the Pulacayo deposit. During the course of the Feasibility Study, a detailed analysis of numerous mine plan options was performed by TWP and the most cost effective plan was selected as the mine/waste production schedule for this study. Extensive metallurgical test work highlighted the complexity of the Project deposit mineralization and resulted in reorienting the flotation step in the process flow sheet from bulk flotation process to conventional differential flotation process. Furthermore, all environmental aspects and impacts were studied in detail and allowed for the development of a solid environmental management plan for tailings and waste disposal. The operations were engineered to process ore at a full design rate of 1,000 tons per day through two modular circuits of 500 tons per day. Although, operations were fully permitted to process ore at a rate of 300 tons per day, Apogee Silver is in the process of getting the environmental permit to process ore at full design capacity (EIA extension). The increase in the level of engineering developed during the course of the Feasibility Study allowed for significant de-risking. Thereafter, the capital cost and operating cost estimates associated with the Project have been developed to a significantly improved degree of accuracy. The Feasibility Study demonstrates that the project is technically feasible and has a robust economic investment case. 25.1.1 Geology The Pulacayo deposit is located on the western flank of the Cordillera Oriental, near the Cordillera-Altiplano boundary. The area is underlain by folded sedimentary and igneous rocks of Silurian, Tertiary and Quaternary ages that locally host low sulphidation epithermal polymetallic vein and stock work styles of mineralization. Polymetallic (Ag-Pb-Zn) vein and disseminated wall rock mineralization at Pulacayo are controlled by east west trending secondary faults. The main mineralized trend was emplaced on the southern side of the Pulacayo dome complex and is best exemplified by the Tajo Vein System (TVS) that is the subject of this Feasibility Study. The TVS trends east-west, dips 75° to 90° to the south along 2,700 m of defined surface strike length, and is present in mine workings at a depth of 1,000 m below surface. In the upper levels of the deposit, where volcanic strata host mineralization, the TVS consists of a stock work vein system that locally reaches 120 m in mineralized width. TWP Sudamérica S.A. Av. Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473 Page 287
Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report 090644-3-0000-20-IFI-100 Sedimentary strata host the vein system at depth, where narrower widths of 1 to 3 meters are apparent. Mineralization of economic interest is comprised of sphalerite, galena and tetrahedrite in sulphide-rich veins that are accompanied by locally abundant quartz, barite and pyrite. Disseminated mineralization is preferentially developed around and between veins hosted by andesite. The Pulacayo deposit is well defined by recent core drilling by Apogee in combination with compiled extents of historic underground workings. Modeling of individual metal distribution and host rock lithology trends has provided sufficient definition of the main vein system to support feasibility level mine planning and geotechnical studies. Further core drilling within the currently defined deposit limits can be used to convert existing Inferred resources to Indicated status and good opportunities exist to extend deposit limits both along strike and at depth. Further infill drilling is required to improve geological interpretations in order to better define stoping layouts. In order to advance the project to basic/detailed engineering stage, additional in-fill drilling should be completed. The information from this drilling would be used to complete reserve definition, geotechnical studies, and hydrogeologic investigations. 25.1.2 Mining Pulacayo is an existing mine with a long history of development, recently on a small scale This project plans to increase production significantly and exploit previously unmined material utilizing a combination of two methods. Shrinkage stoping will be used on zero level and longhole open stoping will be used on all levels below zero level. The stope widths vary from 3 m to 6 m, depending on the mining method and width of mineralization. The mine has an existing tunnel (San Leon Tunnel) located on zero level which starts in the town of Pulacayo and exits on the northern side of the mountain that hosts the mineralized rock. This tunnel will continue to be used but a new decline ramp system will be constructed to allow access with trackless equipment and to exit closer to the mineral processing plant. This decline ramp system will be developed from surface (at an inclination of 8 degrees from the horizontal) using conventional drill and blast techniques. Conventional drill and blast techniques will also be used to advance existing ore and waste drives, and to develop new shrinkage stopes. Air loaders will be used to clean development faces. The broken rock will be loaded into locomotives and trammed out of the mine. A face jumbo will be used to develop tunnels that are required to access the long hole stopes. These tunnels are the main haulage, crosscuts and ore drives. An LHD will be used to muck out, and the broken rock will be hauled out of the mine using the existing 15 tonne truck. The development will take place by drilling a planned round of 4.2 m (at a blasthole diameter of 45mm) for the trackless section and 2.4 m (at a blasthole diameter of 38mm) for the conventional section of the mine to achieve an effective face advance of 3.8 m and 2.2 m respectively per blast. The blastholes will be charged with Anfex. TWP Sudamérica S.A. Av. Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473 Page 288
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Pulacayo Project Feasibility Study - Apogee Silver

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