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
composites. Block size was 5 m (x) by 3 m (y) by 3 m (z) with no sub- blocking. Block model
results were checked using ordinary Kriging and Nearest Neighbor interpolation methods.
The polymetallic nature of the mineralization was evaluated by a Net Smelter Return (NSR)
value considering an underground mining scenario below the oxide surface, constrained by
a minimum operating cost of $ 40 NSR/t. The $ 40 NSR/t peripheral constraining solid was
created from 50 m spaced interpreted sections of assay sample NSR values. NSR values
were determined from a calculator developed by John Starkey, P. Eng., of Starkey and
Associates Inc., Consulting Metallurgical Engineers. The modeling used a 24 month trailing
average silver price and a 27 month forward seller contract price for both lead and zinc as of
31 August 2011, which correspond to prices of $ 24.87 USD/oz silver, $ 1.19 USD/lb lead,
and $ 1.09 USD/lb zinc respectively. The $ 40 NSR solid model has a 25 to 30 m average
thickness with a 1,100 m strike length oriented at 280 degrees and a 425 m average subvertical
dip extent. This reflects the orientation and geometry of the principal TVS
mineralized structure and associated secondary structures.
Grade interpolation was peripherally constrained by the $40NSR solid and carried out using
multiple independent search ellipsoid passes for silver, lead and zinc. Contributing silver
values were capped at 1,500 g/t and interpolated using an ellipsoid oriented at 280 degrees
with a 30 degrees major axis plunge and 80 degrees N dip, contributing lead values were
capped at 13.5% and interpolated using an ellipsoid oriented at 280 degrees with a
45 degrees major axis plunge and a 75 degrees N dip, and contributing zinc values were
capped at 13.5% and interpolated using an ellipsoid oriented at 280 degrees with a
45 degrees major axis plunge and an 80 degrees N dip. A 60 m ellipsoid major axis, 30 m
semi-major axis and 5 m minor axis were applied for all primary interpolation passes, with
secondary and tertiary passes applied at 2 times and 3 times these ranges to completely fill
the peripheral wireframe model.
A specific gravity model was interpolated by ID2 methodology from 1 m down hole specific
gravity composites using an ellipsoid oriented at 280 degrees with a 45 degrees major axis
plunge, 80 degrees N dip and the ranges specified above.
A solid model of historic underground mining and stoping was used to remove previously
mined blocks and an interpolated 5 m marginal envelope to historic workings was applied to
assign intersecting resource blocks to the Inferred category. This reflects uncertainty in local
accuracy of the underground solid model. Indicated resources occur outside this envelop
and have an interpolated grade for each metal derived from primary interpolation ellipsoid
passes and have at least two or more contributing drill holes within at least one of the
passes. All other interpolated blocks were categorized as Inferred resource blocks.
The Mercator deposit model included additional new Apogee drilling results and differed
from previous Micon models in its use of a specific block grade cutoff value for statement of
resources rather than inclusion of all blocks within an interpreted assay-based peripheral
constraint, as carried out by Micon. This difference manifests as inclusion of sub cut-off
grade blocks using the Micon approach.
Mercator prepared a subsequent mineral resource estimate (Cullen et al., 2012) for the
Pulacayo deposit with an effective date of 28 September 2012. This estimate included oxide
zone material not included in previous resource estimates and forms the basis of the current
Feasibility Study. Full documentation for the estimate appears in this Feasibility Study
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