Technical Report – Tejamen Silver Property Durango State, Mexico Preliminary Mining Assessment Oremex Resources 3Rd October 20
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Technical Report – Tejamen Silver Property Durango State, Mexico Preliminary Mining Assessment Oremex Resources 3rd October 2006 Prepared by Allan Polk, P.Eng Senior Consultant, Mining Co-Author Alex Trueman, MAUSIMM Principal Consultant, Resource Estimation Co-Author John Fox, P.Eng President and Principal Consultant, Laurion Consultants, Inc. Office Locations This report has been prepared by Snowden Mining Industry Consultants Inc. (‘Snowden’) on behalf of Oremex Resources Inc. Perth 87 Colin Street 2006 West Perth WA 6005 PO Box 77 All rights are reserved. No part of this document may be reproduced, West Perth WA 6872 stored in a retrieval system, or transmitted in any form or by any AUSTRALIA means, electronic, mechanical, photocopying, recording or otherwise, Tel: +61 8 9481 6690 without the prior written permission of Snowden, except as required Fax: +61 8 9322 2576 under Canadian Securities Regulations ABN 99 085 319 562 [email protected] Brisbane Level 15, 300 Adelaide Street Brisbane QLD 4000 PO Box 2207 Brisbane QLD 4001 AUSTRALIA Tel: +61 7 3231 3800 Fax: +61 7 3211 9815 ABN 99 085 319 562 [email protected] Vancouver Suite 550 1090 West Pender Street Vancouver BC V6E 2N7 CANADA Tel: +1 604 683 7645 Fax: +1 604 683 7929 Reg No. 557150 [email protected] Johannesburg Technology House Greenacres Office Park Cnr. Victory and Rustenburg Roads Victory Park Johannesburg 2195 SOUTH AFRICA PO Box 2613 Parklands 2121 SOUTH AFRICA Tel: + 27 11 782 2379 Fax: + 27 11 782 2396 Reg No. 1998/023556/07 [email protected] London Issued by: Vancouver Office Abbey House Doc Ref: 111706_V505_Oremex_Tejamen_Techreport_Oct3.doc Wellington Way Weybridge Surrey KT13 0TT, UK Tel: + 44 (0) 1932 268 701 Fax: + 44 (0) 1932 268 702 [email protected] Internet http://www.snowdengroup.com Technical Report - Tejamen Silver Property, Durango State, Mexico Oremex Resources 1 SUMMARY......................................................................................................................6 2 INTRODUCTION ............................................................................................................9 3 RELIANCE ON OTHER EXPERTS ..............................................................................11 4 PROPERTY DESCRIPTION AND LOCATION.............................................................12 4.1 Location of Mineralization and Workings.......................................................13 4.2 Terms of Agreements....................................................................................13 5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY .........................................................................................................14 6 HISTORY ......................................................................................................................16 7 GEOLOGICAL SETTING..............................................................................................18 7.1 Regional Geological Setting..........................................................................18 7.2 Property and Local Geology..........................................................................18 7.2.1 Lithology..........................................................................................18 7.2.2 Structure..........................................................................................19 8 DEPOSIT TYPE............................................................................................................20 9 MINERALIZATION........................................................................................................21 10 EXPLORATION ............................................................................................................22 11 DRILLING .....................................................................................................................23 12 SAMPLING METHOD AND APPROACH .....................................................................24 13 SAMPLE PREPARATION, ANALYSIS AND SECURITY .............................................25 14 DATA VERIFICATION ..................................................................................................28 15 ADJACENT PROPERTIES...........................................................................................29 16 MINERAL PROCESSING AND METALLURGICAL TESTING.....................................30 16.1 Background Information and Recovery Assumptions ...................................30 16.2 Process Description (by John Fox of Laurion Consulting) ............................30 17 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES................................33 18 OTHER DATA AND INFORMATION ............................................................................34 18.1 Background ...................................................................................................34 18.2 Mineral Resources ........................................................................................35 18.2.1 Property Geology ............................................................................36 3rd October 2006 3 of 68 Technical Report - Tejamen Silver Property, Durango State, Mexico Oremex Resources 18.3 Pit Optimisation .............................................................................................36 18.3.1 Geotechnical ...................................................................................36 18.3.2 Open Pit Design Parameters...........................................................37 18.3.3 Optimisation Results – Base Case..................................................37 18.3.4 Selection of Pit ................................................................................38 18.4 Project Definition and Plan............................................................................40 18.4.1 Material Movement Forecast...........................................................43 18.4.2 Project Operating Assumptions.......................................................44 18.4.3 Mine Operations + Equipment.........................................................44 18.4.4 Processing.......................................................................................46 18.4.5 Manpower Requirements ................................................................50 18.4.6 Misc. Project Requirements ............................................................51 18.5 Cash flow Analysis ........................................................................................52 18.5.1 Summary of Operating Costs ..........................................................52 18.5.2 Summary of Capital Costs...............................................................54 18.5.3 Cash flow Summary and NPV.........................................................55 18.6 Project Sensitivity..........................................................................................56 18.7 NPV Sensitivity with Base Case Pit Size.......................................................61 19 INTERPRETATION AND CONCLUSIONS...................................................................63 20 RECOMMENDATIONS.................................................................................................64 20.1.1 Mineralogy, High Grades, and Process Recovery ..........................64 20.1.2 Geotechnical ...................................................................................65 20.1.3 Environmental / Social Impacts .......................................................65 21 REFERENCES .............................................................................................................67 22 DATE AND SIGNATURES ...........................................................................................68 Tables Table 2.1 Qualified Persons + Section Responsibility ........................................ 10 Table 17.1 Tejamén project Mineral Resources (effective 13 April 2006) ............ 33 Table 18.1 Mineral Resource Estimate, Wardrop 2006 ........................................ 35 Table 18.2 Surface Mining Optimisation Parameters – BASE CASE ................... 37 Table 18.3 Base Case Pit Optimisation Results ................................................... 38 Table 18.4 Material Movement Forecast – Tejamen Project ................................ 43 Table 18.5 General Operating Assumptions......................................................... 44 Table 18.6 Hauling and Loading Assumptions ..................................................... 45 Table 18.7 Drilling and Blasting Assumptions....................................................... 45 Table 18.8 Ancillary Equipment for Mine .............................................................. 46 Table 18.9 Capital Costs for Processing............................................................... 50 3rd October 2006 4 of 68 Technical Report - Tejamen Silver Property, Durango State, Mexico Oremex Resources Table 18.10 Hourly Manpower Requirements ........................................................ 50 Table 18.11 Staff Manpower Requirements ........................................................... 51 Table 18.12 Summary of Operating Costs.............................................................. 53 Table 18.13 Summary of Capital Costs .................................................................. 54 Table 18.14 Cash Flow Summary for the Tejamen Project .................................... 55 Table 18.15 NPV Sensitivity