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Minera IRL: a golden opportunity in Peru Minera IRL Ltd is a Jersey-registered gold-mining company listed on the London (AIM), Lima and Toronto stock exchanges with business units, compris ing all 100%-owned projects, in Peru and Argentina. With its head office in Lima, Peru, it operates the Corihuarmi gold mine and is carrying out feasibility studies on the Ollachea project and the company’s next gold mine, Don Nicolas in Argentina. In less than 10 years, Minera IRL has grown a resource base that has a current inventory of 1.8Moz in the measured and indicated categories, plus 1.4Moz in the inferred category. The Corihuarmi concession, in the high Andes of Peru, was acquired in 2002 and was taken through the discovery, feasibility and permitting stages before raising funds with the 2007 AIM IPO to build the mine. Corihuarmi began production in 2008 as an open-pit, heap-leach operation and made a return on capital within seven months. Current production is about 33,000oz/y at a cash operating cost of US$400/oz. All gold is sold at the prevailing spot price. Corihuarmi has a projected mine life into 2015. The Ollachea project, the company’s flagship, is an Orogenic gold deposit acquired from Rio Tinto in 2006, located on the eastern escarpment of the Andes in southern Peru. Logistics and infrastructure are excellent as the deposit lies very close to the new Inter-oceanic highway, readily available hydroelectricity and adequate water. Minera IRL acquired the Corihuarmi concession, in the high Andes of Peru, in 2002 An Atlas Copco Boomer 282 operating at Ollachea Company profile Following the negotiation of a comprehensive surface rights agreement with the local Ollachea community, exploration started in 2008 and rapidly resulted in a major gold discovery. A positive scoping study carried out in 2009 led to a pre-feasibility study, completed in mid-2011. The pre-feasibility study is predicated upon an underground mine and conventional treatment plant with a capacity of 1.1Mt/y. The production schedule is projected to recover over 1Moz of gold during a nine-year mine life. The projected economics are compelling and a full feasibility, currently in progress, is expected to be completed during Q3, 2012. A 1.2km-long exploration drive into the deposit is beginning and will allow further exploration of the eastern strike extent of the deposit from underground. The Ollachea deposit remains open-ended along “Minera IRL is well poised to grow rapidly, with its increasing resource base” Drilling operations at Ollachea www.minera-irl.com strike in both directions and down dip. The NI43-101compliant resource inventory has already increased to 10.7Mt grading 4g/t gold containing 1.4Moz in the indicated category plus 13.7Mt grading 2.8g/t gold containing 1.2Moz in the inferred category. Drilling from surface with two diamond rigs continues to probe the deposit. A feasibility study is nearing completion on the Don Nicolas project in the Deseado Massif in Patagonia, Argentina. This is predicated upon a high-grade measured and indicated resource of 1.5Mt grading 6.0g/t gold, containing 280,000oz and 13.4g/t silver, containing 630,000oz. The project will be based on an open-pit and conventional gold treatment plant with a capacity of 1,000t/d. Extensive exploration is also being carried out by Minera IRL in Peru and Argentina. The company holds an extensive 270,000ha tenement package in the Deseado Massif which has already resulted in a discovery announced at Escondido in 2010. In Peru, exploration continues at Ollachea and nearby the Corihuarmi mine, including the Bethania gold-copper porphyry project. A key aspect of Minera IRL’s business is the comprehensive community programme at Ollachea and Corihuarmi in Peru. Programmes include health, education and sustainable development projects. The company also practises ‘World Best Practice’ environmental programmes. Minera IRL is well poised to grow rapidly, with its increasing resource base, an excellent track record in exploration success and its team of mine developers and operators with a proven ability to discover and develop mines in South America. CONTACT Minera IRL Av. Santa Cruz 830, Piso 04, Miraflores, Lima 18, Perú Tel: +(511) 418 1230 Fax: +(511) 418 1270 E-mail: minera@irl.com.pe A conveyor at Corihuarmi
environmental questions such as water, waste and land use, as well as health and safety concerns. Developing programmes and actions based on these building blocks should help provide the stability sought by mining companies and foster the trust demanded by all stakeholders. The building blocks apply throughout the life cycle of the project, supporting all parties through exploration, negotiation, feasibility, development, operation and monitoring through to enforcement, closure and legacy. They should ensure that while the potential for conflict is minimised, the means for resolving disputes still exists. WEF reports that stakeholders raised many worries about process. Their needs and priorities related to the ‘how’, rather than the ‘what’. They seek practical actions that underpin tailored solutions for each project. The report highlights a selection of possible actions, case studies and initiatives that emerged from WEF’s stakeholder consultation. The case studies show how suggested actions have been put into practice. The initiatives offer existing programmes or toolsets to which stakeholders can look for further advice or help with implementation. WEF notes these case studies are not presented as universal solutions but as “practical examples that have helped to advance responsible mineral development in specific circumstances”. The Swiss body acknowledges there are many other possible actions, case studies and initiatives besides, and each needs to be seen in the context of its application. Mineral Development Agreements RMDI began with an emphasis on the Mineral Development Agreements (MDAs) often used in developing countries, but quickly broadened its scope to address conditions in all countries. WEF recognised that the issues and challenges identified in Phase I of the RMDI occur in all sorts of countries and under a variety of legal and regulatory regimes. WEF says “these different regimes, as well as differences in cultural and historical traditions, can play an important part in defining both challenges and the most appropriate response”. MDAs present unique challenges. The need to use them arises most where significant constraints exist on the ability of host-country governments to manage their mining sectors in an efficient, accountable way. Following its series of consultations, WEF reports that many stakeholders thought the use of MDAs could be better, and should, where possible, give way to generally applicable legal and regulatory structures. A good, stable, well-developed legal and regulatory system is a significant step in the direction of an attractive, sustainable investment and development environment. But even the best mining legislation has to be backed by honest, efficient policing and an effective court system if its aims are to be fulfilled. Factors that can lead to an investor demanding the use of an MDA before making a significant investment in a county can include: • An underdeveloped or highly volatile legal and regulatory regime governing mineral development, taxes and royalties, capital flows, employment, imports and exports etc. • Inadequate capacity and experience of government officials at the national, regional and local levels. • Widespread corruption and the absence of the rule of law. February 2012 • An underdeveloped or corrupt judicial system that cannot be relied upon to fairly and effectively resolve disputes. Because of these concerns, MDAs are used in many countries. WEF research shows MDAs are in over 75% of the 30 leading mining countries. MDAs can be differentiated in terms of their scope: • Simple – focus on financial and fiscal terms only • More complex – encompassing broader development aspects. Phase I of the RMDI identified a number of limitations in current agreements. Many stakeholders, including industry representatives, expressed concerns about asymmetrical bargaining power. Others cited an absence of transparency and the risk that some groups might feel excluded, with both negotiation processes and final agreements difficult to access. This, in turn, says the WEF report, creates the worry expressed by stakeholders at sub-national and community levels who felt excluded from the negotiation of key provisions that affect them directly. WEF says representatives of industry and civil society commented that many MDAs attempt to address too many complex topics too early in the process, before there is a sufficient and shared understanding of potential benefits, costs, effects and issues. Industry representatives expressed frustration over attempts to reopen or axe deals occurring after companies had already invested heavily in a project. “The need to use MDAs arises most where significant constraints exist on the ability of host-country governments to manage their mining sectors in an efficient, accountable way” EGD:TSX-V EXPLORATION SPECIAL At the same time, many stakeholders believe that MDAs have untapped potential. They can clearly define the rights, roles and responsibilities of all stakeholders, thereby promoting constructive long-term relationships and consensus on a project’s contributions to local social and economic development. They could also be vehicles for implementing the types of processes outlined in the WEF report. WEF concludes that there is a case for keeping MDAs simple. They can supply the stability guarantees that companies need before making a major capital investment, and define the roles and responsibilities of the key stakeholders. Partnerships and agreements between smaller groups of actors can complement formal MDA structures. There is no single ideal model MDA. The best structure is likely to vary from country to country, and community to community, responding to individual circumstances according to domestic legislation, public sector capacity, the population affected and other local conditions. WEF says the aim must be to create national environments that are transparent, inclusive and trusting. Given this context, a country can hope to develop a stable, well-developed legal and regulatory system and investment climate. Where this applies, investors may be less likely to see MDAs as necessary to securing their interests. In its report, WEF expresses the hope is the recommendations “can help to advance countries and communities towards that transparent, inclusive and trusting environment”. LOW IMPACT EXPLORATION DRILLING · SOCIALLY AND ENVIRONMENTALLY RESPONSIBLE · AFRICA, ASIA, MIDDLE EAST, CENTRAL AND SOUTH AMERICA · LIGHT WEIGHT AND MOBILE RIG FLEET, CONSTRUCTED FROM A FULLY MODULAR COMPONENT DESIGN, ALLOWING FOR RIG MOBILISATION THROUGHOUT THE WORLD. ENERGOLD DRILLING GROUP Energold is a socially and environmentally responsible contract drilling company servicing the international mining sector. The Company and its subsidiaries have experience drilling in diverse terrains such as at 5,500m altitude in the Andes, the Amazon jungle and the desert in Mauritania. Continents operated on include Africa, Asia, South America, Central America, as well as the Caribbean and the Middle East. CALL: +44 192 665 0376 Europe + 1 604 681 9501 North America E: INFO@ENERGOLD.COM WWW.ENERGOLD.COM <strong>Mining</strong> <strong>Journal</strong> special publication – PDAC 33
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