Ni 43 — 101 Technical Report
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NI 43 — 101 TECHNICAL REPORT PULACAYO PROJECT FEASIBILITY STUDY Pulacayo Pb – Ag – Zn Project Phase I, 1 000 t/d Pulacayo, Potosi, Bolivia TWP Sudamérica S.A. (TWP) Ryan Illingworth, Pr. Eng. Av. La Encalada 1257, Office 801, Surco, Michael Cullen, P.Geo. Lima, Peru, Peter Webster, P.Geo. Eugene Puritch, P.Eng. Jim Porter, FSAIMM Graeme Farr, FSAIMM Mark Smith, P.E. Effective Date: 17 January 2013 TWP Project No: 090644 Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report 090644-3-0000-20-IFI-100 TABLE OF CONTENTS 1 SUMMARY 1 1.1 Introduction 1 1.2 Location and Property Description 1 1.3 Geology and Mineral Resources 3 1.4 Mining Methodology and Reserve Statement 6 1.5 Mineral Processing and Metallurgical Testing 7 1.6 Infrastructure 5 1.7 Social and Environmental Aspects 8 1.8 Capital and Operating Costs 9 1.9 Financial Analysis 11 1.10 Conclusions and Recommendations 12 2 INTRODUCTION 13 2.1 Terms of Reference 14 2.2 Qualified Persons 14 2.3 Site Visits and Scope of Personal Inspection 15 2.4 Effective Dates 16 2.5 Information Sources and References 16 2.6 Previous Technical Reports 16 3 RELIANCE ON OTHER EXPERTS 16 4 PROPERTY DESCRIPTION AND LOCATION 17 4.1 Location 17 4.2 Property Status 18 5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY 27 5.1 Access 27 5.2 Climate and Physiography 28 5.3 Local Resources and Infrastructure 29 6 HISTORY 32 6.1 Introduction 32 6.2 Summarized Exploration History 32 7 GEOLOGICAL SETTING 34 7.1 Regional Geology 34 7.2 Local Geology 35 7.3 Structure 38 7.4 Alteration 39 7.5 Mineralization 39 8 DEPOSIT TYPE 42 9 EXPLORATION 43 9.1 Introduction 43 9.2 Work Programs During 2006 to 2012 Period 43 10 DRILLING 54 10.1 Introduction 54 10.2 ASC Bolivia LDC Drilling (2002-2005) 55 10.3 Apogee Drilling (January 2006 – May 2008) 55 10.4 Apogee Drilling (January 2010 – December 2011) 56 10.5 Apogee Drilling Logistics 58 11 SAMPLE PREPARATION, ANALYSIS AND SECURITY 60 11.1 Sample Preparation from 2006 to 2012 Apogee Programs 60 11.2 Sample Preparation from 2002 to 2003 ASC Programs 61 TWP Sudamérica S.A. 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Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473 Page i Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report 090644-3-0000-20-IFI-100 11.3 Drill Core Analysis from 2006 to 2012 Apogee Programs 61 11.4 Drill Core Analysis from 2002 to 2003 ASC Programs 62 11.5 Quality Assurance and Control from 2006 to 2012 Apogee Programs 62 11.6 Quality Control and Assurance for ASC 2002-2003 Programs 63 12 DATA VERIFICATION 64 12.1 Review and Validation of Project Data Sets 64 12.2 Site Visits by Mercator 64 12.3 Quality Control and Quality Assurance (QAQC) 68 13 MINERAL PROCESSING AND METALLURGICAL TESTING 97 13.1 Resource Development Inc (RDi) Metallurgical Test Program (Stage 1) 97 13.2 UTO Metallurgical Test Program (Stage 2) 100 13.3 ED&ED Lab Metallurgical Test Program (Stage 3) 105 13.4 FLSmidth Paste Thickening Testwork 106 13.5 SGS Lead and Zinc Concentrate Assays 107 13.6 Concentrate Filtration Test work 107 13.7 UTO Metallurgical Test program (Stage 4) 107 13.8 MAELGWYN Metallurgical Test program (Stage 4) 109 14 MINERAL RESOURCE ESTIMATE 112 14.1 General 112 14.2 Geological Interpretation Used In Resource Estimation 112 14.3 Methodology of Resource Estimation 113 15 MINERAL RESERVES 142 15.1 Introduction 142 15.2 Methodology 142 15.3 Stope Generation and Mining Cut-off Grades 142 15.4 Modifying Factors 143 15.5 Mineral Reserves 143 15.6 Comparison of Resource to Reserve 144 16 MINING 144 16.1 Mining Method Selection 144 16.2 Mine Design and Layout 145 16.3 Mine Production 151 16.4 Hydrogeology 152 16.5 Geotechnical 152 16.6 Mine Development 154 16.7 Backfill 156 16.8 Ventilation 158 16.9 Mining Productivity 160 16.10 Mine Equipment Fleet Requirements 163 16.11 Manpower Requirements 164 16.12 Underground Infrastructure and Mine Services 166 17 RECOVERY METHODS 168 17.1 Process Design Criteria 168 18 INFRASTRUCTURE 181 18.1 Site Roads 181 18.2 Power Supply 181 18.3 Power Distribution 184 18.4 Site Buildings 186 18.5 Water Storage and Distribution 187 18.6 Sewage Collection 189 18.7 Communications 189 18.8 Fuel and Lubricant Storage and Distribution 189 18.9 Tailings Disposal Facility 189 18.10 Waste Rock Management 205 TWP Sudamérica S.A. 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Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473 Page ii Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report 090644-3-0000-20-IFI-100 18.11 Security 205 19 MARKETING AND LOGISTICS 205 19.1 Introduction 205 19.2 Payable Metal Price Assumptions 206 19.3 Pulacayo-Paca Project 223 19.3.2 Concentrate Production Schedule and Quality 223 19.4 Concentrate Contract Sales Terms 227 19.5 Concentrate Logistics 234 19.6 Conclusions 238 20 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT FOR PULACAYO PROJECT FEASIBILITY STUDY 240 20.1 General Description of the Project 240 20.2 Description of Available Information 240 20.3 Potential Environmental Impacts and Proposed Mitigation Measures 242 20.4 Environmental Management Plans 245 20.5 Legislation Applicable 250 20.6 Environmental Achievements 252 20.7 Social, Community and Cultural Aspects 253 20.8 Agreements with Institutions 253 20.9 Recommendations 254 21 CAPITAL AND OPERATING COSTS 254 21.1 Capital Cost Estimate 254 21.2 Operating Cost Estimate 267 22 ECONOMIC ANALYSIS 276 22.1 Introduction 276 22.2 Assumptions 276 22.3 Financial Modeling 276 22.4 Results of the Technical Financial Model 279 22.5 Sensitivity Analysis 282 23 ADJACENT PROPERTIES 282 24 PROJECT EXECUTION PLAN 282 24.1 Project Outline 282 25 INTERPRATION AND CONCLUSIONS 287 25.1 Project Feasibility 287 25.2 Risk and Opportunities 292 26 RECOMMENDATIONS 293 26.1 Geology 293 26.2 Mining 293 26.3 Metallurgy and Mineral Processing 294 26.4 Infrastructure 294 26.5 Financial Analysis 295 26.6 Environmental and Permitting 295 26.7 Water Management 295 27 REFERENCES 296 TWP Sudamérica S.A. 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Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473 Page iii Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report 090644-3-0000-20-IFI-100 LIST OF TABLES Table 1.1: Pulacayo Deposit Mineral Resource, Prepared by Mercator – Effective 28 September 2012 5 Table 1.2: Mineral Reserve Statement prepared by TWP - Effective 17 January 2013 7 Table 1.3: LOM Initial Capital Estimate 9 Table 1.4: LOM Sustaining Capital Estimate 10 Table 1.5: LOM Total Operating Costs 10 Table 1.6 Key Assumptions and Results from the TFM 11 Table 2.1: Responsibility Matrix 14 Table 9.1: Historic MICON Mineral Resource Estimate - Effective 28 October 2008 51 Table 9.2: Historic MICON Mineral Resource Estimate - Effective 14 October 2009 51 Table 9.3: Historic Pulacayo Deposit Mineral Resource – 19 October 2011 52 Table 12.1: Certified Reference Materials Data for January 2010 to October 2011 Period 69 Table 12.2: Collar Coordinate Check Program Results 96 Table 13.1 Sample Composite Grades and Head Assays 98 Table 13.2 First Sample Composite Set Grades and Head Assays 101 Table 13.3 Bond Ball Work Index Tests Results Summary 101 Table 13.4 Specific Gravity Testwork Summary 102 Table 13.5 Second Sample Composite Set Grades and Head Assays 105 Table 13.6 Fourth Sample Composite Head Core Grades and Assays 108 Table 13.7 Samples Assays 110 Table 14.1: Silver, Lead and Zinc Statistics for Uncapped 1 m Composites 124 Table 14.2: Silver, Lead and Zinc Statistics for Capped 1.0 m Composites 124 Table 14.3: Summary of Pulacayo Deposit Block Model Parameters 130 Table 14.4: Density Statistics for 1 m Composites in Peripheral Domain Sulphide Zone 131 Table 14.5: Density Statistics For 1 m Composites in Peripheral Domain Oxide Zone 131 Table 14.6: Pulacayo Deposit Mineral Resource – Effective 28 September 2012 137 Table 14.7: Pulacayo Uncapped Underground Resource – 28 September 2012 138 Table 14.8: Comparison of Drillhole Composite Grades and Block Model Grades 141 Table 14.9: Additional Resource Parameters for Ordinary Kriging Check Model 141 Table 15.1: Mineral Reserve Statement prepared by TWP – Effective Date 17 January 2013 143 Table 15.2: Indicated Resources versus Probable Reserves 144 Table 16.1: Annual Mining Schedule 152 Table 16.2: Tendon Support Requirements for Different Excavations 154 Table 16.3: Mechanical Availability 162 Table 16.4: Effective Operating Hours 162 Table 16.5: Trackless Equipment Owned by Pulacayo Mine 163 Table 16.6: Additional Primary Trackless Equipment 164 Table 16.7: Additional Primary Trackless Equipment 164 Table 16.8: Annual Manpower Requirements for Pulacayo Mine 165 Table 17.1: Process Design Basis 168 Table 17.2: Reagent Consumption 175 Table 18.1: Tailings to the TSF by Year 190 Table 18.2: TSF Design Criteria 193 Table 18.3: Precipitacion (mm) 201 TWP Sudamérica S.A. Av. Encalada 1257 Of. 801, Santiago de Surco Lima 33, Perú (51-1) 4377473 Page iv Pulacayo 1 000 t/d Phase I Feasibility Study - NI 43-101 Technical Report 090644-3-0000-20-IFI-100 Table 18.4: Evaporation (mm) at the TSF 201 Table 18.5: Diversion Ditch Design Summary 202 Table 18.6: TSF Water Balance Results with 100-Year, 24 Hour Storm Event 203 Table 18.7: Summary of Geotechnical Properties used in Satability and Deformation Analyses204 Table 18.8: Static & Pseudo-Static Factors of Safety for the TSF (Slide 6.0) 204 Table 18.9: Earthquake-Induced Deformations, PGA= 0.2 g (Bray & Travasarou, 2007) 204 Table 19.1: Zinc Market Outlook (‘000 Mt Contained Zn) 214 Table 19.2: Zinc Price Outlook (USD/Lb) 214 Table 19.3: