Ore Reserve Estimation and Feasibility Study of Silangan Project
PMRC Competent Person Report
July 2019
Silangan Project July 2019
Chapter 2.0
Silangan Project July 2019
2.0 CERTIFICATES AND CONSENTS OF CPs FOR TECHNICAL REPORTS
2.1 Certificates and Consents of CPs for Technical Reports
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Silangan Project July 2019
I, Eulalio B. Austin Jr., Bachelor of Science, and Professional Mining Engineer, with office address at 2F LaunchPad, Reliance cor. Sheridan Sts, Mandaluyong City do hereby certify that:
I am President, Chief Operating Officer and a Director of Philex Mining Corporation and Silangan Mindanao Mining Company Inc.
The title of this report is “Ore Reserve Estimation and Feasibility Study of Silangan” July 31, 2019.
I graduated with a Bachelor of Science degree in Mining Engineering on March 1982 from Saint Louis University, Baguio City, Philippines with PRC license no. 01814.
I have practiced my profession as a mining engineer continually for the last 35 years as an employee of Philex Mining Corporation.
I am a designated Competent Person (CP) as defined by the Philippine Society of Mining Engineers with CP reference number EM 01814-01810. I have spent 35 years working in various capacities in the Padcal Mine.
The Technical Report has been prepared in compliance with Philippine Mineral Reporting Code (PMRC).
I own and control securities in Philex Mining Corporation and I am not independent of the issuer (Philex Mining Corporation).
I consent to the use of this Technical Report as a filing with the Philippine Stock Exchange or Regulatory Authority.
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I, Venancio Gel A. Romero., Bachelor of Science, and Professional Mining Engineer, with office address at 2F LaunchPad, Reliance cor. Sheridan Sts, Mandaluyong City, do hereby certify that:
I am the Division Manager for Corporate Technical Services and Business Development, of Philex Mining Corporation and the Project Coordinator for the Silangan Project.
The title of this report is “Ore Reserve Estimation and Feasibility Study of Silangan” dated July 31, 2019.
I graduated with a Bachelor of Science degree in Mining Engineering on October 2001 from the University of the Philippines, Quezon City, Philippines with PRC license no. 02697.
I have practiced my profession as a mining engineer continually for the last 16 years as an employee of Philex Mining Corporation.
I am a designated Competent Person (CP) as defined by the Philippine Society of Mining Engineers with CP reference number EM 02697-141/19. I have spent 16 years working in various capacities in the Padcal Mine and the PMC corporate office.
I am responsible for all the technical reports done in my capacity as the Division Manager for Corporate Technical Services and Business Development
The Technical Report has been prepared in compliance with Philippine Mineral Reporting Code (PMRC).
I consent to the use of this Technical Report as a filing with the Philippine Stock Exchange or Regulatory Authority.
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Silangan Project July 2019 2.2 Scope of Work of each CP involved
Mr. Eulalio B. Austin Jr., a CP Mining Engineer for Copper and Gold Deposit, has the primary role in this Technical Report. He reviewed the process of estimating the ore reserve of the Boyongan orebody based on the mineral resource provided by the CP Geologist.
He has verified the capital costs used in the financial analysis using his more than 25 years of experience in the Padcal mine.
Mr. Venancio Gel A. Romero., a CP Mining Engineer for Mining Engineering, has the primary role of preparing this Technical Report. He has worked and oversaw the works done by employed technical experts relied to in this study. He managed the process of estimating the ore reserve of the Boyongan orebody based on the mineral resource provided by the CP Geologist.
He has verified the capital costs used in the financial analysis using his 10 years of experience in the Padcal mine.
2.3 Reliance on Other Experts indicating therein objective, nature and coverage
A number of senior engineers and scientists employed in the Padcal mine have contributed in this Technical Report and to this effect the term Experts apply. These Experts and their coverage are identified below.
Mr. Ricardo S. Dolipas II, a Professional Mining Engineer, is currently the Mine Division Manager whose functions includes the short and long term planning of the underground operations and the mining engineering aspects. He is also an accredited CP by PSEM for copper deposit under the PMRC guidelines.
At one time he held the position of senior geotechnical engineer to which he designed the underground rock support systems for various geotechnical conditions.
His expertise was used to validate the efficiency of the current mining operations to attain the mine development schedules, sustainable ore extraction rates, health and safety parameters and the projected operating and capital costs in the technical and financial assessment of the mining operation.
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Silangan Project July 2019 Mr. Noel C. Oliveros., a Professional Geologist, is currently the OIC for Corporate Exploration and Geology. He is tasked to verify and validate historical and current relevant information; review of mining tenements rights, geology and mineralization, exploration works undertaken and estimate the remaining mineral resource.
His findings are reported in a separate document, which will be referred to as the CP report for mineral resource estimate.
Ms. Dulce S. Romero, a Professional Metallurgical Engineer, is currently the Silangan Project Metallurgist and has been with the project for 7 years. She oversaw the metallurgical testing done on the Boyongan orebody since the start of the feasibility studies in 2010 and has helped designed the metallurgical flowsheet described in this report. Prior to this, she held various positions at Padcal, the last as Mill Metallurgy Department Manager where her responsibility includes maintaining the operational parameters of a 25,000 tons per day copper flotation plant as well as research and development. She is an active member of the Society of Metallurgical Engineers of the Philippines (SMEP).
The company employed international technical consultants as part of the feasibility study to incorporate international standards. The output of the technical consultants are the primary basis for the cost estimates used in this study. The identity of these group and individuals along with their scope of work are summarized below.
Table 2-1: Technical Consultants
Group Consultants Scope of Work AUSENCO Pty, Ltd in Duncan Dodds Ausenco designed and estimated the processing Brisbane, Australia Angus Wilkinson plant based on the copper flotation, copper Haley Mc Iver leaching and gold leaching flowsheet. The group also designed and estimated the related infrastructures for the project including the TSF based on the design of the technical expert. Pells, Sullivan, Meynink Mark Eggers PSM designed and supervised the field and (PSM) in Brisbane, Ian Brunner geotechnical field investigation done. Their Australia output are geotechnical, hydrogeological and geologic structural model used in designing the underground mine. Mining Plus (MP) in Aaron Spong MP designed the sub-level cave mine including Brisbane, Australia the development and production infrastructures. The mine design then served as the basis for the
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Silangan Project July 2019
Chapter 3.0
Silangan Project
July 2019 3.0 EXECUTIVE SUMMARY
The Competent Persons, in behalf of Philex Mining Corporation (PMC), is responsible for this Philippine Mineral Reporting Code (PMRC) compliant technical report on the mineral reserve estimates and feasibility study for the Silangan Project. The report was prepared by Venancio Gel A. Romero, Professional Mining Engineer, Division Manager Corporate Technical Services and Business Development; under the supervision of Eulalio B. Austin Jr., Professional Mining Engineer, President and Chief Operating Officer of PMC and Silangan Mindanao Mining Company Inc. (SMMCI). Both are acting as the Competent Persons for this report.
Under the articles of incorporation and the guidelines of the Security and Exchange Commission (SEC), a publicly listed company is required to disclose any material information that will affect its financial status. The completion of this feasibility study and ore reserve estimation is considered material information for PMC. Following the guidelines of the Philippine Stock Exchange (PSE), as provided under the PSE Memo on “Documentary Requirements for Mining Companies” issued on October 2, 2007, the disclosure will be thru a Competent Person’s Report that is compliant with the requirements of the Philippine Mineral Reporting Code (PMRC) on public reporting in the country of exploration results, mineral resources and ore reserves, including the economic viability, of the relevant mineral properties. The PMRC was founded on the Australian’s Joint Ore Reserves Committee (JORC) standards.
The project is located in the mineral rich region of Surigao del Norte, which also hosts a number of mining companies exploring, operating or under care and maintenance including Nickel Asia Corporation, Siana Gold and Manila Mining Corporation. The Silangan project is owned and being operated by SMMCI. PMC owns 100% stake in SMMCI.
Accessibility to the project site can be thru Surigao City using air and water means of transportation. From the city, the project site is around 30 kilometers south via land. Butuan City in the province of Agusan del Norte is another option and preferred for air travel. It is around 120 kilometers Northeast and 3 hours of land travel following the AH26 highway.
Silangan has 2 major orebodies, Boyongan and Bayugo. Boyongan orebody is under Mineral Production Sharing Agreement (MPSA) 149. A MPSA is a contract entered to by a mining company with the government which gives the rights to undertake mining activities in a bounded area. MPSA 149 was approved in December 1999 and is valid for 25 year, renewable for
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Silangan Project
July 2019 another 25 years. Bayugo on the other hand has some portions inside MPSA 149 and in Exploration Permit (EP) 13. This feasibility study will only include Boyongan.
Boyongan shows all the characteristics of a copper-gold porphyry deposit, with distinct high grade centers. Mineralogy-wise, it is described as complex, as both oxide minerals and sulfide minerals are interlocked even at depth. Extensive geo-metallurgy evaluation has lead to the application of the “catch-all” metallurgical process involving copper flotation, copper leaching and gold leaching in series.
The geotechnical and hydrogeological environments for Boyongan present another challenge in mining. The host rock units surrounding the deposit exhibits poorer quality, which can be gauged by having a Mining Rock Mass Rating (MRMR) in the range of 20-30. This however improves at deeper levels of the deposit. Avoiding some of the poorer rock units were prioritized in the mining plan. The rock supports designed will cater to every geotechnical unit that wil be encountered following established mining engineering principles.
Two major aquifers were discovered to affect any mining operation in Boyongan, separated by a mudstone layer called Tugunan formation. The shallower aquifer is called the cover sequence aquifer, this groundwater naturally drains to the stream and river systems in the area. To keep water off the mine, the cover sequence aquifer will be pumped out thru surface boreholes. The deeper aquifer is the basement aquifer. To manage water coming from this, a combination of dewatering thru surface boreholes and an underground sump-pump systems. The combined water inflow for both aquifers is estimated to be around 550 liters per second. The design of the dewatering
Selection of mining method, is limited to underground methods because of the current regulatory environment. Porphyry deposits can most economically be mined using caving techniques. For Boyongan, a sub-level cave mining operation was designed, which has a number of advantages over block cave mining. Access declines will be developed to reach the initial production level (ore) after which the development of production drifts and fanhole drilling will be undertaken. When sufficient production drifts have been developed, the fanholes will be blasted the blasted ore will be hauled by Load-Haul-Dump (LHD) units and tipped to a raise. The ore from the raise will be collected by mine trucks which will then transport the ore to the processing plant. The mining operation is pegged at 4 Million tons per year.
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Silangan Project
July 2019 The run-of-mine ore will be crushed and ground at the surface using mineral sizer and SAG mill. In Year 1-2, only the copper leaching and gold leaching sections will be available. From Year 3 onwards, the copper flotation section will be operational. The processing plant will produce a LME grade (99.999%) copper cathode, gold-silver dore and copper concentrates with gold and silver.
Waste from the processing plant will be stored and managed using a Tailings Storage Facility (TSF) which is designed following the ANCOLD standard.
Adequate infrastructures were incorporated in the overall project development including, a jetty port for abnormally large cargoes, power systems to accept power from the grid and distribute throughout the site and administration buildings.
The recent mineral resource estimate in Table 3-1 was prepared by Noel C. Oliveros, a Competent Persons under the Geological Society of the Philippines (GSP).
Table 3-1: Mineral Resource
Tonnes, Au, g Boyongan Classification Cu, % Cu M t Au M oz M T Au/MT 908 ML Measured 143 0.61 0.93 0.9 4.3 Indicated 75 0.43 0.58 0.3 1.4 Sub-Total 217 0.55 0.81 1.2 5.7 Inferred 145 0.40 0.55 0.6 2.6 Total 363 0.49 0.71 1.8 8.2
Notes:
1. Ordinary Kriging used 2. CuEq (Copper Equivalent) = %Cu + 0.686 x g/t Au 3. Metal Prices: a. Copper – 3.20 US Dollar per pound b. Gold – 1,342 US Dollar per ounce 4. Operating Cost: 31 USD per ton 5. Cut-off grade: 0.548 % CuEq
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July 2019 The resulting mineable reserve estimate in Table 3-2 is the culmination of the study. After applying appropriate modifiers to the mineral resource, the competent persons for this report has delineated 81 Million tons as mineable.
Table 3-2: Mineable Reserve
Recoverable Ore Cu, Recoverable Cu Tonnes, MT Au, g Au/MT Au Sources % (‘000 pounds) (ounces) East Cave 34 0.75 1.39 450,814 1,41,895 West Cave 38 0.56 1.10 391,023 1,301,085 Deeps 9 0.45 0.98 75,836 276,681 Total 81 0.63 1.20 917,673 2,995,661 Reserves
Notes:
1. Metal Prices: a. Copper – 3.20 US Dollar per pound b. Gold – 1,342 US Dollar per ounce 2. Metal Recoveries: a. Copper – 82 percent b. Gold – 95 percent 3. Forex: 53 Philippine Peso to 1 US Dollar 4. Cash operating Cost per Metric Ton: 31 US Dollar 5. Conversion Factor for Gold to Copper Equivalent: 0.700 6. Cut-off Grade (percent Copper Equivalent): 0.548 7. Category: Probable
Development will take 2.5 years and will cost $ 745 M, this will involve building the processing plant, developing the initial production drift and TSF embankment.
The mineable reserve will be mined in 21 years at a rate of 4 Million tons per year. The cost involved to mine and sustain mining is $ 3,349 M as detailed in Table 3.3.
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Silangan Project
July 2019
Table 3-3: Life of Mine Costs
In US $ Operating Cost Sustaining Capital Cost Mining 928 337 Processing (including TSF) 1,537 272 G&A/Others 182 93 Total 2,647 702 Total Operating and Sustaining Cost 3,349
Table 3-4 summarizes the key cost and production input to the ensuing financial analysis.
Table 3-4: Life of Mine Costs
Economic Parameters Units Value
Years of ore processing years 21
Total ore processed Mt 81.44
Average gold grade mined g/t 1.20
Average copper grade mined % 0.63
Average silver grade mined g/t 1.33
Average gold recovery % 95.22%
Average copper recovery % 81.62%
Average silver recovery % 70.00%
Total gold recovered M oz 3.00
Total copper recovered M lb 917.82
Total silver recovered M oz 2.43
Average annual equivalent gold production M oz/y 0.14
Average annual equivalent copper production M lb/y 43.87
Average annual equivalent silver production M oz/y 0.12
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Silangan Project
July 2019 Average LoM operating cash costs, including royalties $/oz Au eq (C1) 600
Average LomM all-in cash costs (including operating costs, royalties, sustaining and 3 year developments $/oz Au eq 851 costs)
Table 3-5 presents the results of the financial analysis, which indicates the project’s viability.
Table 3-5: Financial Analysis Results
Economic Parameters Units Volume
Undiscounted Free Cash Flow to the Project US$M 1,962
After-tax NPV (8% discount rate) US$M 615
After-tax IRR % 20.47%
Initial development capital cost. This includes 12% vat and 10% contingency allowance US$M 745
Total initial and sustaining capital US$M 1,447
Undiscounted project equity payback period Production year 4.2
As part of PMC’s Corporate Social Responsibility, the following is incorporated to the financial model appearing as costs.
Table 3-6: CSR Costs
In US $ Social Development and Management Program (SDMP) 71 Environmental Protection and Enhancement Program (EPEP) 23 Final Mine Rehabilitation and Decommissioning Program (FMRDP) 6 Total 100
Government’s share in the project is represented by taxes that goes to the local and national coffers. This is tabulated in Table 3-7.
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July 2019 Table 3-7: Government Proceeds
In US $ Income Tax 532 Excise Tax 277 Local Business Tax 34 Total 843
The government proceeds, social and environmental costs and the generation of more than 3,000 new jobs are the tangible beneficial effects that the project brings to the nation. There is a cascading effect as well and should not be discounted, as seen in most of the operating mines in the Philippines. particularly the growth of businesses in the community surrounding the mine and improvement in the mining industry in general.
With the positive results, it is recommended that the next steps should move forward towards the completion of the detailed designs of the processing plant and TSF as well as getting ahead of the mine dewatering to prepare the mine underground for development.
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Chapter 4.0
Silangan Project July 2019
4.0 TABLE OF CONTENTS
TABLE OF CONTENTS- CHAPTER 2 2.0 CERTIFICATES AND CONSENTS OF CPs FOR TECHNICAL REPORTS ...... 1 2.1 Certificates and Consents of CPs for Technical Reports ...... 1 2.2 Scope of Work of Each CP Involved ...... 6 2.3 Reliance on Other Experts Indicating therein Objective, Nature and Coverage...... 6 2.4 Signature of CP ...... 9
TABLE OF CONTENTS- CHAPTER 3 3.0 EXECUTIVE SUMMARY ...... 1 Table 3-1: Mineral Resource ...... 3 Table 3-2: Mineable Reserve ...... 4 Table 3-3: Life of Mine Costs ...... 5 Table 3-4: Life of Mine Costs ...... 5 Table 3-5: Financial Analysis Results ...... 6 Table 3-6: CSR Costs ...... 6 Table 3-7: Government Proceeds ...... 7
TABLE OF CONTENTS- CHAPTER 5 5.0 INTRODUCTION ...... 1 5.1 Who commissioned the report preparation and to whom it should be submitted? ...... 1 5.2 Purpose for which report was prepared ...... 1 5.3 Scope of Work or Terms of Reference ...... 1 5.4 Duration of the preparation, including field visits and verification ...... 1 5.5 Members of the technical report preparation team ...... 2 5.6 Host Company Representative ...... 2 5.7 Compliance of report with PMRC ...... 3
TABLE OF CONTENTS- CHAPTER 6 5.0 RELIANCE ON OTHER EXPERTS OR CPs ...... 1
TABLE OF CONTENTS- CHAPTER 7 7.0 TENEMENT AND MINERAL RIGHTS ...... 1 7.1 Description of Mineral Rights ...... 1 7.1.1 Location of Area, Barangay, Municipality, Province ...... 1 7.1.2 Coordinate Locations as per MGB ...... 2 7.1.3 Number of Claims and Hectares covered by EP/MPSA/FTAA mode of agreement ...... 4
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7.1.4 Type of Permit or Agreement with the Government ...... 4 7.2 History of Mineral Rights ...... 5 7.3 Current Owners of Mineral Rights ...... 6 7.4 Validity of Current Mineral Rights ...... 7 7.5 Agreemens with respect to Mineral Rights ...... 7 7.6 Royalties, taxes, advances and similar payments paid or to be paid by the company to the mineralrights holder, joint venture partner(s), government, Indigenous People,local government, and others ...... 7
TABLE OF CONTENTS- CHAPTER 8 8.0 GEOGRAPHIC FEATURES...... 1 8.1 Location and accessibility ...... 1 8.2 Topography, Physiography, Drainage and Vegetation ...... 2 8.3 Climate, Population ...... 3 8.3.1 Climate ...... 3 8.3.2 Population and Socio-Economic Environment ...... 4 8.4 Land Use ...... 6
TABLE OF CONTENTS- CHAPTER 9 9.0 PREVIOUS WORK ...... 1 9.1 PFS for Underground Mine ...... 1 9.2 Concept Study for Open Pit Mine ...... 3 9.3 Open Pit Mine Study ...... 5
TABLE OF CONTENTS- CHAPTER 10 10.0 HISTORY OF PRODUCTION ...... 1
TABLE OF CONTENTS- CHAPTER 11 11.0 GEOLOGY ...... 1 11.1 Geological Setting ...... 2 11.1.1 Regional Geological Setting ...... 2 11.1.2 Project Geology ...... 6 11.1.3 Boyongan Orebody Geology ...... 7 11.2 Local Lithology ...... 9 11.2.1 Pre-mineralization Host Rocks ...... 10 11.2.2 Boyongan Intrusives ...... 11 11.2.3 Post-mineralization Rocks ...... 11
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11.3 Structural Geology ...... 20 11.4 Hydrogeology ...... 25 11.5 Alteration ...... 28 11.6 Mineralization Location and General Description ...... 28
TABLE OF CONTENTS- CHAPTER 12 12.0 MINERAL PROPERTY GEOLOGY ...... 1 12.1 Geological work undertaken by the company in the property ...... 1 12.1.1 Exploration Work Summary ...... 1 12.1.2 Boyongan Exploration ...... 2 12.1.3 Bayugo and Boyongan Drilling Programs ...... 3 12.2 Laboratory Testing Done on Exploration Samples ...... 4
TABLE OF CONTENTS- CHAPTER 13 13.0 MINERALIZATION ...... 1 12.1 Hypogene Mineralization ...... 2 12.2 Supergene Mineralization ...... 3
TABLE OF CONTENTS- CHAPTER 17 17.0 ECONOMIC ASSESSMENT OF THE MINING PROJECT ...... 1 17.1 Description of Mineral Resources Estimates used as Basis for Conversion to Ore Reserves ... 1 17.2 Type and Level of Feasibility Study ...... 1 17.3 Brief Description of the Project ...... 3 17.3.1 Mining and Processing Operations ...... 3 17.3.2 Mining Method and Capacity ...... 3 17.3.3 Processing Method and Capacity ...... 3 17.3.4 Ore to be Mined/Product to be produced ...... 3 17.3.5 Prospective Markets or Buyers ...... 4 17.3.6 Estimated Mine Life ...... 5 17.3.7 Total Project Cost/Financing ...... 5 17.3.8 Production Cost/Production Schedule ...... 5 17.4 Marketing Aspects ...... 6 17.4.1 World Demand and Prices of Metals for the Last Ten Years ...... 6 17.4.1.1 Gold ...... 6 17.4.1.2 Copper ...... 8 17.4.2 Prospective Markets or Buyers ...... 12 17.4.2.1 Gold ...... 12
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17.4.2.2 Copper ...... 13 17.4.3 ProductR Specifications ...... 14 17.4.4 Price and Volume Forecasts ...... 14 17.4.4.1 Gold ...... 14 17.4.4.1.1 Fundamental Analysis ...... 14 17.4.3.1.2 Technical Analysis ...... 16 17.4.3.1.3 Bank Forecasts ...... 16 17.4.4.2 Copper ...... 17 17.4.4.2.1 Fundamental Analysis ...... 18 17.4.4.2.2 Technical Analysis ...... 18 17.4.4.2.3 Bank Forecasts ...... 18 17.4.5 Sales Contract ...... 19 17.4.5.1 Market ...... 19 17.4.5.1.1 Copper Concentrate Offtakers ...... 20 17.4.5.1.2 Copper Cathode Trader Selection ...... 21 17.4.5.1.3 Gold-Silver Dore ...... 21 17.4.5.1.4 Copper Cathode Pricing ...... 22 17.4.5.1.5 Gold-Silver Refinery Pricing ...... 22 17.4.6 Marketing Cost Assumptions ...... 23 17.5 Technical Aspects ...... 24 17.5.1 Mining Plans ...... 24 17.5.1.1 Mining Method ...... 24 17.5.1.2 Mine Design/Mining Parameters/Geotechnical Parameters ...... 27 17.5.1.2.1 Geotechnical Parameters ...... 27 17.5.1.2.2 Caving Assessment ...... 28 17.5.1.2.3 Ground Support Assumptions ...... 29 17.5.1.2.4 Size of Openings ...... 31 17.5.1.2.5 Panel Dimensions ...... 33 17.5.1.2.6 Subsidence Zones ...... 33 17.5.1.2.7 Groundwater Considerations ...... 35 17.5.1.3 Mine Design ...... 37 17.5.1.4 Mining Parameters ...... 42 17.5.1.4.1 Ore Extraction and Transport ...... 42 17.5.1.4.2 Ventilation ...... 47 17.5.1.4.2.1 Design Criteria ...... 47 17.5.1.4.2.2 Airflow Requirements ...... 47 17.5.1.4.2.3 Workplace Environmental Control ...... 48
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17.5.1.4.2.4 Ventilation Circuit Development ...... 49 17.5.1.4.2.5 Ventilation Fan Duties ...... 50 17.5.1.4.3 Dewatering ...... 51 17.5.1.4.3.1 Water Inflow Estimate ...... 51 17.5.1.4.3.2 Dewatering System ...... 52 17.5.1.4.3.2.1 Surface Dewatering...... 52 17.5.1.4.3.2.2 Underground Dewatering ...... 54 17.5.1.4.4 Subsidence ...... 55 17.5.1.5 Mining Recovery, Dilution, and Losses ...... 55 17.5.1.5.1 Draw Model ...... 55 17.5.1.5.2 Recovery and Dilution Tonnage ...... 57 17.5.1.5.3 Dilution Grade ...... 58 17.5.1.6 Mining Equipment and Infrastructure ...... 59 17.5.1.6.1 Underground Power Supply ...... 61 17.5.1.6.2 Supply Voltage Reticulation ...... 61 17.5.1.6.3 Compressed Air ...... 62 17.5.1.6.4 Service Water ...... 62 17.5.1.6.5 Service Network ...... 62 17.5.1.6.6 Crib Room ...... 63 17.5.1.6.7 Secondary Means of Egress ...... 63 17.5.1.7 Mine Development Plans and Schedule ...... 64 17.5.2 Processing Plans...... 69 17.5.2.1 Metallurgical Process Flowsheet/Process Plant Design ...... 70 17.5.2.1.1 Crushing ...... 71 17.5.2.1.2 Grinding and Classification ...... 72 17.5.2.1.3 Flotation ...... 73 17.5.2.1.4 Concentrate Handling ...... 74 17.5.2.1.5 Atmospheric Leach ...... 75 17.5.2.1.6 Counter Current Decantation ...... 77 17.5.1.2.7 PLS Clarification and Cooling ...... 78 17.5.1.2.8 Raffinate Neutralization and Thickening ...... 79 17.5.1.2.9 Solvent Extraction ...... 80 17.5.1.2.9.1 Ponds ...... 80 17.5.1.2.9.2 Mixers Settlers ...... 81 17.5.2.1.9.3 HG Extraction ...... 82 17.5.2.1.9.4 LG Extraction ...... 82
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17.5.2.1.9.5 Wash ...... 83 17.5.2.1.9.6 Strip ...... 83 17.5.2.1.9.7 Crud Removal and Treatment ...... 83 17.5.2.1.9.8 Organic Storage and Handling ...... 83 17.5.2.1.9.9 SX Fire Traps ...... 84 17.5.2.1.10 Copper Electrowinning ...... 84 17.5.2.1.10.1 Electrolyte Filtration...... 84 17.5.2.1.10.2 Electrolyte Heat Exchangers ...... 85 17.5.2.1.10.3 Electrowinning ...... 85 17.5.2.1.10.4 Cathode Washing and Stripping ...... 86 17.5.2.1.11 Gold Leach Neutralization ...... 87 17.5.2.1.12 Gold Leach Adsorption ...... 87 17.5.2.1.12.1 Leach Tanks ...... 87 17.5.2.1.12.2 Adsorption Tanks ...... 88 17.5.2.1.13 Gold Desorption and Carbon Regeneration ...... 89 17.5.2.1.13.1 Acid Wash ...... 89 17.5.2.1.13.2 Elution ...... 89 17.5.2.1.13.3 Carbon Regeneration ...... 90 17.5.2.1.14 Gold Electrowinning and Smelting ...... 90 17.5.2.1.14.1 Gold Electrowinning ...... 90 17.5.2.1.14.2 Smelting ...... 91 17.5.2.1.15 Cyanide Detoxification ...... 91 17.5.2.1.16 Tailings Thickening ...... 92 17.5.2.2 Metallurgical Test Works Results ...... 92 17.5.2.3 Materials Balance ...... 94 17.5.2.3.1 Inputs ...... 94 17.5.2.3.2 Sulphide Flotation ...... 95 17.5.2.3.3 Atmospheric Leach ...... 96 17.5.2.3.3.1 Heat Exchanger ...... 96 17.5.2.3.3.2 Copper Minerals ...... 96 17.5.2.3.3.3 Copper Silicates ...... 97 17.5.2.3.3.4 Carbonates ...... 97 17.5.2.3.3.5 Copper Oxides ...... 97 17.5.2.3.3.6 Sulphides ...... 97 17.5.2.3.3.7 Ferric:Ferrous Ratio ...... 97 17.5.2.3.3.8 Gangue ...... 97
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17.5.2.3.3.8 Calcium ...... 98 17.5.2.3.3.9 Pyrite ...... 98 17.5.2.3.3.10 Sulphur ...... 99 17.5.2.3.3.11 Chlorite ...... 99 17.5.2.3.3.12 Selenium ...... 99 17.5.2.3.4 Residue Thickening and CCD’s ...... 99 17.5.2.3.5 Solvent Extraction ...... 99 17.5.2.3.6 Copper Electrowinning / EW Cooling Towers ...... 99 17.5.2.3.7 Gold Leach ...... 100 17.5.2.4 Plant Capacity/Production Schedule ...... 101 17.5.2.5 Plant Working Schedule ...... 107 17.5.2.6 Product Specification...... 107 17.5.2.7 Tailings Specification...... 108 17.5.2.8 Tailings Dam Siting ...... 109 17.5.2.9 List of Mill Machineries and Auxiliary Equipment ...... 110 17.5.2.4 Mill Plant Layout ...... 112 17.5.3 Mine Support Services ...... 113 17.5.3.1 Site Preparation and Bulk Earthworks ...... 114 17.5.3.1.1 Plant Pads ...... 114 17.5.3.1.2 Camp Pads ...... 114 17.534.1.3 Diversion Drains ...... 115 17.5.3.1.4 Topsoil and Spoil Management ...... 115 17.5.3.2 Water Supply and Distribution ...... 117 17.5.3.3 Power Supply ...... 118 17.5.3.4 Port Requirements ...... 118 17.5.4 Environmental Protection and Management Plan ...... 120 17.5.4.1 Environmental Impacts ...... 120 17.5.4.2 Environmental Mitigating Measures ...... 121 17.5.4.2.1 The Land ...... 122 17.5.4.2.1.1 Land Use and Classification ...... 122 17.5.4.2.1.1.1 Change in Land Use ...... 122 17.5.4.2.1.1.2 Change in Land Use ...... 122 17.5.4.2.1.1.3 Devaluation of Land ...... 122 17.5.4.2.1.1.4 Impact on Environment Critical Areas...... 123 17.5.4.2.1.2 Soils and Land Capability ...... 123 17.5.4.2.1.2.1 Soils and Land Capability ...... 123 17.5.4.2.1.2.2 Change in Soil Quality / Fertility ...... 124
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17.5.4.2.2 The Water ...... 125 17.5.4.2.2.1 Water Quality ...... 125 17.5.4.2.2.1.1 Degradation of Surface Water Quality ...... 125 17.5.4.2.2.1.1.1 Siltation and Erosion of the Hingasa-an, Magpayang and Bad- as/Amoslog Cathcments ...... 125 17.5.4.2.2.1.1.2 Stream Contamination by Contact Water from Quarries and TSF 126 17.5.4.2.2.1.1.3 Potential Seepage from the TSF ...... 126 17.5.4.2.2.1.1.4 Dewatering of Surface Mine and Diversion of Boyongan and Timamana Creeks ...... 126 17.5.4.2.2.1.1.5 Discharge from the Spillway of the TSF ...... 126 17.5.4.2.2.1.1.6 Effluent from the TSF and Discharge from the Process Plant ...... 126 17.5.4.2.2.1.1.7 Dam Breach and Overtopping ...... 127 17.5.4.2.2.1.1.8 Hydrocardbon and Chemical Spills and Leaks ...... 127 17.5.4.2.2.1.2 Degradation of Lake Water Quality ...... 127 17.5.4.2.2.1.3 Degradation of Marine Water Quality ...... 128 17.5.4.2.2.1.4 Degradation of Groundwater Quality ...... 128 17.5.4.2.2.2 Aquatic Ecology ...... 128 17.5.4.2.2.2.1 Alteration of Hydrological Regimes ...... 128 17.5.4.2.2.2.2 Change in Water Quality ...... 128 17.5.4.2.2.2.3 Loss of Important Species ...... 129 17.5.4.2.3 Loss of Habitat ...... 129 17.5.4.2.4 The Air ...... 130 17.5.4.2.4.1 Climate and Meteorology ...... 130 17.5.4.2.4.2 Air Quality and Greenhouse Gas ...... 130 17.5.4.2.4.2.1 Air Quality ...... 130 17.5.4.2.4.2.2 Greenhouse Gas ...... 131 17.5.4.2.4.3 Ambient Noise ...... 132 17.5.4.2.5 The People ...... 133 17.5.4.2.5.1 Socio-Economic Environment ...... 133 17.5.4.2.5.1. In-migration and Cultural/Lifestyle Change ...... 133 17.5.4.2.5.2. Generation of Local Benefits from the Project ...... 133 17.5.4.2.5.3. Traffic Congestion ...... 133 17.5.4.3 Environmental Infrastructures ...... 133 17.5.4.3.1 Tailings Storage Facility (TSF) ...... 134 17.5.4.3.1.1 Site Characteristics ...... 136 17.5.4.3.1.2 Tailings Characteristics ...... 136 17.5.4.3.1.3 Ground Conditions ...... 136
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17.5.4.3.1.4 Design Principles ...... 137 17.5.4.3.1.5 Water Management and Deposition Modelling ...... 140 17.5.4.3.1.6 Construction ...... 140 17.5.4.4 Mine Closure Plan ...... 141 17.5.5 Mine Safety and Health Plan ...... 144 17.6 Financial Aspects ...... 145 17.6.1 Summary of Financial Analysis ...... 145 17.6.2 Data Assumptions ...... 146 17.6.3 Presentation of Results ...... 150 17.6.3.1 Financial Key Performance Indicators ...... 150 17.6.3.1.1 Life of Mine Valuation Metric ...... 150 17.6.3.1.2 Life of Mine Estimates ...... 151 17.6.3.1.3 Mine Production Schedule ...... 152 17.6.3.1.4 After-Tax Cash Flows...... 153 17.6.3.1.5 Annual Cash Costs and Margin ...... 154 17.6.3.1.6 Project Funding ...... 157 17.6.3.2 Financial Model-Detailed Results ...... 158 17.6.3.2.1 Critical Financial Risks ...... 158 17.6.3.2.2 Potential Issues Causing the Project Sanction Decision to be Deferred of Cancelled ...... 158 17.6.3.3 Sensitivity Analysis ...... 159 17.6.3.4 Debt and Equity Drawdown ...... 163 17.6.3.5 Working and Sustaining Capital ...... 163 17.6.3.5.1 Working Capital ...... 163 17.6.3.5.2 Sustaining Capital ...... 163 17.6.3.6 Taxation ...... 165 17.6.3.6.1 Excise Tax and Royalties ...... 165 17.6.3.6.2 Income Tax ...... 165 17.6.3.6.3 Value-Added Tax ...... 165 17.6.3.6.4 Withholding Tax and Duties ...... 165 17.7 Economic Aspects ...... 166 17.7.1 Employment/Management ...... 166 17.7.1.1 Number, Nationality, Positions and Annual Payroll (salaries and allowances) ... 166 17.7.1.2 Detailed List of Key Personnel and Their Qualifications ...... 167 17.7.1.3 Personnel Policies for Pay Scales and Allowances for Local and Foreign Personnel 170 17.7.1.4 Table of Organization ...... 170 17.7.1.5 Availability of Technical and Skilled Worker ...... 173
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17.7.1.6 Township/Housing ...... 173 17.7.2 Community Development Plan ...... 174
17.7.3 Socio-Economic Contributions ...... 174 17.8 Project Schedule ...... 174 17.8.1 State of Development ...... 174 17.8.2 Description of Planned Activities ...... 174 17.8.2.1 Camp, Offices and Relocation Sites ...... 174 17.8.2.2 Power ...... 175 17.8.2.3 Haul Roads to TSF ...... 176 17.8.2.4 Port ...... 176 17.8.2.5 Mine ...... 176 17.8.2.6 Processing Plant ...... 177 17.8.2.7 Tailings Storage Facility ...... 178 17.8.3 Gantt Chart ………………………………………………………………………………..179
17.8.4 EPCM Contract ………………………………………………………………………………..180
LIST OF FIGURES
Figure 17- 1: Mining Cost ...... 6
Figure 17-2: Gold Demand Drivers ...... 6 Figure 17-3: Fitch Solutions Estimate and Forecast for Copper Production ...... 7 Figure 17-4: Historical Copper Price Chart ...... 8 Figure 17.5: Copper Supply Demand Balance (2012) ...... 11 Figure 17-6: Decelerating China ...... 11
Figure 17-7: Central Bank Net Gold Purchases (2010-2018) ...... 15 Figure 17-8: Technical Analysis for Gold Price-Strong Fundamentals Indication ...... 16
Figure 17-9: Bloomberg Normalized Gold Price Projections ...... 17 Figure 17-10: Historical Copper Price ...... 18 Figure 17-11: Bloomberg Normalized Copper Price Projection ...... 19
Figure 17-12: Sublevel Caving Mining Method ...... 26 Figure 17-13: Silangan Project RMUs and Modelled Faults (PSM 2018) ...... 28 Figure 17-14: Silangan Project Caving Assessment Chart ...... 28 Figure 17-15: Rock Mass Quality and Recommended Support Systems ...... 30
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Figure 17-16: Example of Cave Subsidence Model- Subsidence Subzone West ...... 34 Figure 17-17: Boyongan Subsidence Zones ...... 35 Figure 17-18: Core Photographs from HGTDH14, 577.8 m to 585.15 m Showing Highly Fractured Rock and Shearing Near and Around the Basalt/Diorite Contact ...... 36 Figure 17-19: Boyongan Groundwater Section...... 37 Figure 17-20: SLC Production Drifts Design ...... 38 Figure 17-21: Sublevel Cave Spacing ...... 39 Figure 17-22: Sublevel Cave Extraction Ellipsoid Dimensions by Ore Fragmentation ...... 40 Figure 17-23: LHD Specifications ...... 43 Figure 17-24: Typical Grizzly Configuration in a SLC Level ...... 44 Figure 17-25: Mine Truck Specifications ...... 45 Figure 17-26: Ore Pass System ...... 46 Figure 17-27: Second Materials Handling Decline ...... 46 Figure 17-28: Mine Airflow Requirements ...... 48 Figure 17-29: Grundfos SP Series Performance Curves ...... 53 Figure 17-30: Underground Dewatering Setup ...... 54 Figure 17-31: Concept on Draw Widths ...... 55 Figure 17-32: Draw Column Widths vs. Mined Tonnages ...... 56 Figure 17-33: Draw Principles ...... 56 Figure 17-34: Dilution and Recovery Principles ...... 57 Figure 17-35: Dilution and Recovery Principles ...... 58 Figure 17-36: Dilution Solid ...... 59 Figure 17-37: Heavy Equipment Fleet Schedule ...... 60 Figure 17-38: Support Equipment Fleet Schedule ...... 61 Figure 17-39: Typical Services Layout ...... 63 Figure 17-40: Milestone Y0M0: Start of Decline ...... 65 Figure 17-41: Milestone Y1M3: Start of First Ore Drive in East Zone; Completion of Vent Return Shaft ...... 65 Figure 17-42: Milestone Y1M6: Start of First Ore Drive in West Zone; Completion of Fresh Vent Shaft ...... 66 Figure 17-43: Milestone Y2M0: First Stope in East Zone ...... 66 Figure 17-44: Milestone Y2M1: First Stope in West Zone ...... 67 Figure 17-45: Milestone Y3M0: East Zone at Full Production; Mine at Full Production ...... 67 Figure 17-46: Milestone Y6M0: West Zone at Full Production; East Zone Ramping Down ...... 68 Figure 17-47: Milestone Y15M8: First Stope in Deeps Zone ...... 68
Figure 17-48: Metallurgical Flowsheet ...... 71 Figure 17-49: Grinding and Classification Area ...... 73 Figure 17-50: Flotation Area ...... 74 Figure 17-51: Concentrate Handling Area ...... 75 Figure 17-52: Atmospheric Leach Area ...... 76 Figure 17-53: Atmospheric Leach Residue Thickener and CCD Circuit ...... 78 Figure 17-54: Raffinate Neutralization Area ...... 80 Figure 17-55: Solvent Extraction ...... 84 Figure 17-56: Copper Electrowinning ...... 87 Figure 17-57: Gold Leach, Adsorption and Cyanide Destruction Area ...... 89 Figure 17-58: Representation of Resource Area and Metallurgical Drill-Hole Sample Locations ...... 93 Figure 17-59: Calcium Solubility in Copper Sulfate Solution ...... 98 Figure 17-60: TSF Location and General Layout...... 110 Figure 17-61: Process Plant Layout ...... 112 Figure 17-62: General Layout ...... 112
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Figure 17-63: Road Typical Cross Section ...... 115
Figure 17-64: Overall Water Balance ...... 117 Figure 17-65: Nasipit Port Location ...... 119 Figure 17-66: Extension of the Nasipit Port ...... 119 Figure 17-67: TSF Construction Design ...... 139
Figure 17-68 Safety Organization ...... 144 Figure 17-69: Production Schedule ...... 153 Figure 17-70: Cash Flow ...... 153 Figure 17-71: All-In Cash Costs ...... 156 Figure 17-72: All-in Cash Cost per Ounce of Gold ...... 157 Figure 17-73: Sensitivity to Key Assumptions...... 161 Figure 17-74: Change in NPV for +/- 5% Change in Each Parameter ...... 161 Figure 17-75: Change in NPV for +/- 20% Change in Each Parameter ...... 162 Figure 17-76: Sustaining Capital Schedule ...... 164
Figure 17-77: Executive Management Team Structure ...... 171 Figure 17-78: Site Functional Management Team Structure ...... 171 Figure 17-79: Head Office Functional Management Team Structure ...... 172
LIST OF TABLES
Table 17- 1: Basis of Level of Study ...... 1
Table 17-2: Initial Capital Costs ...... 5 Table 17-3: Planned Production Program ...... 6
Table 17-4: Ten-Year Historical Gold Demand ...... 13
Table 17-5: Concentrate Marketing Costs ...... 23 Table 17-6 Gold-Silver Dore Marketing Costs ...... 24 Table 17-7: Cathode Marketing Costs ...... 24
Table 17-8: Rock Mass Units for Boyongan ...... 27 Table 17-9: Rock Mass Units and Corresponding Ground Support Regimes ...... 31 Table 17-10: Standard Excavation Profiles ...... 32 Table 17-11: Excavation Profiles ...... 32 Table 17-12: Factors Affecting Caving Subsidence (Flores & Karzulovic, 2003) ...... 33 Table 17-13: SLC Design Parameters ...... 38 Table 17-14: Planned Dimensions of Underground Openings ...... 41 Table 17-15: Mine Ventilation Design Parameters ...... 47
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Table 17-16: Primary Intake Cooling Summary ...... 48 Table 17-17: Primary Ventilation Circuit Phases ...... 49 Table 17-18: Primary Fan Duties ...... 50 Table 17-19: Peak Auxiliary Fan Requirements ...... 50 Table 17-20: Estimated Water Inflows ...... 51 Table 17-21: Surface Dewatering Details ...... 51 Table 17-22: Underground Dewatering Details...... 54 Table 17-23: Mobile Equipment ...... 59 Table 17-24: Project Milestones ...... 64 Table 17-25: Development Rates ...... 69
Table 17-26: Metallurgical Tests ...... 92 Table 17-27: Sulphide Flotation Copper Reporting to Concentrate ...... 95 Table 17-28: Copper Leach Chemistry and Extents ...... 96 Table 17-29: Gangue Metal Leach Chemistry and Extraction Amounts ...... 98 Table 17-30: Process Plant Design Throughput ...... 101 Table 17-31: Process Plant Availability ...... 101 Table 17-32: Key Grade and Production Design Criteria ...... 101 Table 17-33: Key Comminution Design Criteria...... 102 Table 17-34: Flotation Design Criteria ...... 102 Table 17-35: Concentrate Thickener/ Filter Design Criteria ...... 102 Table 17-36: Viscosity Design Criteria ...... 103 Table 17-37: Atmospheric Leach Design Criteria ...... 103 Table 17-38: Thickner/Clarifier Underflow Densities ...... 103 Table 17-39: Solvent Extraction Design Criteria ...... 104 Table 17-40: Electrowinning Design Criteria...... 104 Table 17-41: Gold Neutralization Design Criteria ...... 104 Table 17-42: Gold Leach / CIP Design Criteria...... 104 Table 17-43: Cyanide Destruction Criteria ...... 105 Table 17-44: Elution Design Criteria ...... 105 Table 17-45: Carbon Regeneration Design Criteria ...... 105 Table 17-46: Gold Room and Electrowinning Design Criteria ...... 105 Table 17-47: Production Schedule ...... 106 Table 17-48: Copper Cathode Data ...... 108 Table 17-49: Gold Dore Data ...... 108 Table 17-50: Copper Concentrate Data ...... 108 Table 17-51: Major Process Plant Equipment ...... 110
Table 17-52: Road Design Criteria ...... 114
Table 17-53: Earthwork Quantities for Site Preparation ...... 116 Table 17-54: Summary of Soil Monitoring Program ...... 128 Table 17-55: Summary of Freshwater Ecology Monitoring ...... 129 Table 17-56: TSF Design Basis ...... 134 Table 17-57: Deposition Modeling Summary ...... 140 Table 17-58: Mine Closure Plan Components ...... 141 Table 17-59: Mine Closure Plan Components ...... 142 Table 17-60: Final Land Use ...... 142
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Table 17-61: Key Financial Assumptions and Parameters ...... 146 Table 17-62: Financial Analysis Highlights ...... 151 Table 17-63: Mining Inputs and Economic Estimates ...... 151 Table 17-64: EBITDA Margin ...... 155 Table 17-65: Sensitivity to Metal Prices ...... 160 Table 17-66: Sensitivity of NPV to ITH Duration (all scenarios consider refund of VAT input on sunk cost and development capital costs) ...... 162 Table 17-67: Sustaining Capital Summary ...... 164
Table 17-68: Position, Number and Annual Payroll ...... 166 Table 17-69: Detailed List of Key Personnel and Their Qualifications ...... 167
TABLE OF CONTENTS-CHAPTER 18
18.0 ORE RESERVE ESTIMATES ...... 1 18.1 Database Used ...... 1 18.2 Integrity of Database ...... 1 18.3 Data Verification and Validation (limitations) ...... 1 18.4 Ore Reserve Estimation Method Used ...... 1 18.5 Ore Reserve Estimations ...... 23 18.5.1 Ore Specific Gravity/Density ...... 23 18.5.2 Mining Plans/Mining Recovery/Dilution Factor/Mining Losses ...... 23 18.5.3 Relevant Production Costs Considered ...... 25 18.5.4 Basis of Revenue Calculation ...... 25 18.5.5 Cutoff Grade Determination ...... 26 18.4 Ore Reserve Classification Used ...... 26 18.5 Ore Reserve Estimates ...... 26
TABLE OF CONTENTS-CHAPTER 19
19.0 INTERPRETATION AND CONCLUSIONS...... 1 19.1 Synthesis of all the Data ...... 1 19.2 Discuss the adequacy of data, overall data integrity and areas of uncertainties ...... 2 19.3 Overall Conclusions by the CP ...... 2
TABLE OF CONTENTS-CHAPTER 20
20.0 RECOMMENDATIONS ...... 1
TABLE OF CONTENTS-CHAPTER 21
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21.0 REFERENCES ...... 1
ANNEX A1: PRODUCTION AND REVENUE WORKSHEETS
ANNEX A2: FINANCIAL WORKSHEETS
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Chapter 5.0
Silangan Project July 2019 5.0 INTRODUCTION
5.1 Who commissioned the report preparation and to whom it should be submitted
This Technical Report was commissioned by Silangan Mindanao Mining Company Inc. (SMMCI) for submission to the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE).
5.2 Purpose for which the report was prepared
The Company has completed a feasibility study and has identified mineable ore in its Boyongan orebody. The materiality of this finding requires a public declaration, in this case thru the SEC, as its parent company Philex Mining Corporation (PMC) is listed on the PSE. It is written under PSE Memo on “Documentary Requirements for Mining Companies” Issued on October 2, 2007, that mining companies making such declaration should submit a Competent Person’s Report that is compliant with the requirements of the PMRC on public reporting in the country of exploration results, mineral resources and ore reserves, including the economic viability, of the relevant mineral properties
5.3 Scope of Work or Terms of Reference
This report was prepared internally but used the results of studies done by third party consultants. The scope of work of each the consultants was summarized in Chapter 2.
5.4 Duration of the preparation, including field visits and verification
The preparation of the report took twelve months from June 2018 to July 2019. The preparers are all personnel of PMC and SMMCI. They regularly verify information used in this report as part of their job functions throughout the course of the study.
5.5 Members of the technical report preparation team
The following composed the technical preparation team for this Report.
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Silangan Project July 2019 Table 5-1: List of Technical preparation team
Name Background Scope
Venancio Gel A. Romero Reg. Mining Eng. Over-all coordinator
Ricardo S. Dolipas II Reg. Mining Eng. Peer reviewer Mining aspects including the Amando O Reyes IV Reg. Mining Eng. ore reserve estimation Dulce S. Romero Reg. Metallurgical Eng. Mill and metallurgical aspects Claro Jose C. Manipon Reg. Geologist Geology Glen Jason R. Coderis Reg. Geologist Geotechnical Roy Ronald C. Luis Reg. Geologist Hydrogeology Mark Jourdan G. Casela Reg. Civil Eng. Tailings storage facility aspects Auxiliary facilities aspects Alexander M. Oggang Prof. Electrical Engineer including power Community Development with Community and Victor A. Francisco Masters on Environment Environmental aspects Abner D. Silorio Reg. Forester Environmental aspects Masters on Community Community development Lari Angelo E. Dalit Development aspects Eileen C. Rodriguez Financial aspects and Cert. Public Accountant Yolanda D. Remolar economic analysis
5.6 Host company representative
This report was developed internally.
5.7 Compliance of report with PMRC
This Technical Report complies with the PMRC standard of reporting.
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Chapter 6.0
Silangan Project July 2019 6.0 RELIANCE ON OTHER EXPERTS OR CPs
The competent persons for the report has relied on Experts to prepare the report. Except the mineral resource estimation, all are under his direct guidance. He is responsible for the correctness and truthfulness of this report with the aforementioned exception.
The resource estimate is contained in a separate CP report done by geologists. The resource model is the basis in mine planning to estimate the remaining mineable reserve.
International technical experts were tapped to infuse global standards to the study and their scope of work were indicated in Chapter 2.
- Left Intentionally Blank -
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Chapter 7.0
Silangan Project July 2019 7.0 TENEMENT AND MINERAL RIGHTS
7.1 Description of mineral rights
The Company solely owns the rights to the MPSA 149 which envelopes the Boyongan orebody. MPSA 149 has a total area of 2,022 hectares
7.1.1 Location of area, Barangay, Municipality, Province
The Boyongan Cu-Au project lies within the Municipalities of Sison, Tagana-an, Mainit, Tubod and Placer, Surigao del Norte as described in Figure 7-1. The barangay units where the key components of the project will be built are tabulated in Table 7-1.
Table 7-1: Host Local Government Units
Region Province Municipality Barangay
CARAGA Surigao del Norte Placer Anislagan, Boyongan, San Administrative Isidro, Sta. Cruz & Region Macalaya
(Region XIII) Sison Lower Patag, Upper Patag & San Pedro
Tagana-an Upper Libas
Tubod San Isidro & Timamana
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Silangan Project July 2019 Figure 7-1: Project Location Map
7.1.2 Coordinate locations as per MGB
The four parcels of MPSA 149 as depicted in red shade in Figure 7-2 are bounded within the coordinates 9.6501520 to the North, 125.51670 to the west, 9.5502990 to the south and 125.84340 to the east. Specific coordinates for each parcels are found below.
Parcel I Parcel II
Corner Latitude Longitude Corner Latitude Longitude
1 9°39'00" 125°31'00" 1 9º36’30" 125º32’30"
2 9°39'00" 125°32'30" 2 9º36’30" 125º33’30"
3 9°38'49" 125°32'40" 3 9º36’00" 125º33’30"
4 9°38'34" 125°32'45" 4 9º36’00" 125º33’45"
5 9°38'30" 125°33'00" 5 9º35’30" 125º34’00"
6 9°37'30" 125°33'00" 6 9º35’30" 125º32’30"
7 9°37'30" 125°32'00"
8 9°37'00" 125°32'00"
9 9°37'00" 125°31'00"
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Parcel III Parcel IV
Corner Latitude Longitude Corner Latitude Longitude
1 9º36’30" 125º34’00" 1 9º33’00" 125º32’00"
2 9º36’30" 125º35’00" 2 9º34’30" 125º32’00"
3 9º35’30" 125º35’30" 3 9º34’30" 125º33’00"
4 9º35’30" 125º34’22.50" 4 9º33’00" 125º33’00"
Figure 7-2: Project Location Map
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Silangan Project July 2019 7.1.3 Number of claims and hectares covered by EP/MPSA/FTAA mode of agreement
The Company has ownership of a number of mining tenements in the province of Surigao del Norte. MPSA 149 is where the Boyongan orebody lies on. Boyongan orebody is the subject of this feasibility study report. EP 13 is in close proximity to MPSA 149 and bounds the Bayugo orebody. EP14B is a joint venture between SMMCI and Manila Mining Corporation (MMC) and is also in close proximity to MPSA 149 and EP 13. SMMCI’s parent company PMC owns the Lascogon Project in MPSA 148. The details of these mining tenements are found in Table 7-2.
Table 7-2: Number of claims and hectares
Claim Application Area (Has) Date Filed MPSA-149-1999-XIII 2,022 12-29-99 EP-XIII-13 4,999 04-__-97 EP-XIII-14B 286 MPSA-148-1999-XIII 2,306 12-29-99 EPA-000039-XIII 6,308 03-__-00 EPA-000012-XIII 1,755 04-15-97
7.1.4 Type of permit or agreement with the government
The mineral rights are controlled by SMMCI under MPSA implemented by the Philippine Mining Act of 1995. Under the current system, SMMCI has entered into a mineral agreement with the Philippine government wherein the Government grants to the company the exclusive rights to conduct mining operations within the contract area for a term of 25 years that is renewable for another 25 years, but does not transfer title to the minerals or surface to the company. Mining operations allowed include exploration, development and utilization of mineral resources. Under an MPSA, the government shares in the production of the contractor, in kind or in value, as owner of the minerals. The company provides the necessary financing, technology, management and personnel for the mining project. For the project, the government’s share is in the form of a 4% excise tax on gross value (net refining costs) of the mineral produced.
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Silangan Project July 2019 7.2 History of mineral rights
MPSA 149-99-XIII was granted to Philex Gold Philippines. Inc. (PGPI) on December 29, 1999. On May 12, 2000 PGPI and SMMCI executed a Deed of Assignment that was approved by the DENR Secretary on October 24, 2000 in favor of SMMCI. The term of the MPSA is twenty five years effective from December 29, 1999 and may be further renewed thereafter for a period of twenty five years.
The MPSA encompasses an amended area of 2,202 hectares. The primary purpose of the MPSA was to enable the commercial utilization of gold, copper and other mineral deposits within the MPSA area. The MPSA allowed PGPI to undertake exploration and evaluation of the property for a maximum of six years and three years for development and construction. However, the Regional Director of the Mines and Geosciences Bureau can recommend extensions to the duration of the exploration and development periods be granted.
On October 13, 2008, SMMCI requested the Mines and Geosciences Bureau (MGB) to grant an additional two-year exploration period in order for SMMCI to complete the preliminary assessment on the Boyongan and Bayugo deposits and complete the Declaration of Mining Project Feasibility (DMPF). The last two year Exploration Period renewal for MPSA 149-99-XIII was granted to SMMCI on December 15, 2008, with a requirement to submit the DMPF by December 15, 2010.
On December 3, 2010, SMMCI requested a further two-year Exploration Period extension. The extension was granted on February 28, 2011, valid until February 28, 2013.
While the exploration works and exploration decline was continuously developed, on May 24, 2013, the DENR Environment Management Bureau (EMB) granted an Environmental Compliance Certificate (ECC) for an underground block cave mine in favor of SMMCI. The DMPF was approved on April 13, 2015.
However, due to operational challenges during the exploration and per-mine development phase of the Project, SMMCI shifted its mining method from underground to surface /open pit and also included the production of pure metal as an end product. The DENR EMB granted the amended ECC on March 15, 2016 and the amended DMPF on May 6, 2016.
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Silangan Project July 2019 In 2017, the DENR issued Department Administrative Order (DAO) 2017-10 banning open pit mining in the Philippines. Although, it is still being challenged to date, the order hasn’t been recalled and still in effect. SMMCI began to reconsider an underground mining method and completed a feasiblity study in 2018 for a sub level caving mining operations. It is now in the process of ammending its existing ECC and DMPF to include the option of utilizing this mining method to mine Boyongan orebody.
7.3 Current owners of mineral rights
On September 2, 1999, Philex Gold Philippines, Inc. (PGPI), a 100% indirectly owned subsidiary of Philex Mining Corporation (PMC), entered into a joint venture with Anglo American Exploration Philippines Inc (AAEPI) to accelerate exploration of PGPI’s Surigao del Norte mineral tenements, now referred to as the Silangan Copper-Gold Project (the Project). At this time, Silangan Mindanao Exploration Co., Inc. (SMECI) was incorporated and a Shareholders Agreement was executed, pursuant to which Anglo was to fund all exploration costs up to feasibility studies, if warranted, in return for equity in the tenements.
On December 29, 1999, final government approval of PGPI’s respective mining tenements in the form of an MPSA was granted.
In 2000, Silangan Mindanao Mining Co., Inc. (SMMCI) was incorporated, as a 100% subsidiary of SMECI and PGPI transferred its rights and interest in the MPSA to SMMCI.
The exploration work of Anglo led to the discovery of the Boyongan copper-gold deposit in August 2000.
In 2001, AAEPI exceeded the required threshold of expenditures and earned a 40% equity interest in SMECI and also purchased a further 10% equity interest from PGPI.
AAEPI completed its pre-feasibility study of the Boyongan deposit in December 2007 which concluded that a mining operation based on the then defined resources, proposed open pit mining and processing methods, assumed long-term copper and gold prices, and estimated capital and operating costs would not provide an acceptable rate of the return on the Project investment. PMC, however, had differing points of view from Anglo on a number of assumptions and conclusions made in the feasibility study.
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Silangan Project July 2019 On February 6, 2009, PMC acquired AAEPI’s 50% equity interest in the Project under SMECI and SMMCI. Subsequently in April 2010, PMC obtained 100% interest in the Project upon acquisition of the 19% minority interest in Philex Gold Inc. (PGI), a Canadian company listed on the TSX Venture. Exchange which was previously 81%-owned by PMC.
7.4 Validity of current mineral rights
Under the Mining Act of 1995 or R.A. No. 7942, MPSA 149 have a 25 year term and renewable for another 25 years. The first 25 years will end on 2024.
7.5 Agreements with respect to mineral rights.
Aside from the MPSA with the Philippine government, SMMCI has no other obligations with respect to the ownership of MPSA 149.
7.6 Royalties, taxes, advances and similar payments paid or to be paid by the company to the mineral rights holder, joint venture partner(s), government, Indigenous People, local government, and others
SMMCI owns the exclusive rights for MPSA 149 and is therefore not mandated to pay additional royalties, taxes and advances other than what is stipulated in the MPSA.
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Silangan Project July 2019
Chapter 8.0
Silangan Project July 2019 8.0 GEOGRAPHIC FEATURES
8.1 Location and accessibility
The Project is situated at the northeastern tip of Mindanao Island approximately 750 km southeast of Manila. Main ports leading to the island are in Surigao City, approximately 30 km north of the Project area. Cities further south of Surigao del Norte, Butuan (100 km away) and Cagayan de Oro City (250 km away), also serve as entry points to the prospect area through air and sea ports and a combination of sealed national and provincial roads. Airlines flying from Manila and Cebu operate daily in Surigao City, Butuan and Cagayan airports. Passenger and cargo ships from Manila also dock in the above mentioned cities.
From Surigao City, the Project is accessed via the well-paved Philippine-Japan ‘Friendship’ Highway (Asian Highway) to the municipality of Tubod. Then, a network of unsealed private roads connects the national highway to the Project area in Brgy. Timamana, Tubod. A provincial road in the adjacent barangay, Brgy. San Isidro, Tubod is an alternative route. All unsealed roads at the site are accessible by light vehicles during the dry season and 4x4 service trucks during the rainy season. A separate route for heavy equipment has been made to avoid destruction of the service roads. Refer to Figure 8-1.
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Silangan Project July 2019 Figure 8-1: Project Accessibility Map
8.2 Topography, physiography, drainage and vegetation
Generally, rolling hills with karstic features and a central flatland characterise the topography within the vicinity of the Boyongan orebody. The central flatland is bound to the east and west by two prominent topographic highs forming the Mainit Graben. The Malimono Range is a north-northwest structurally controlled mountain range that traverses the western coast of the graben. The Eastern Highlands (Diwata Range) runs along the entire eastern Mindanao seaboard from Surigao down south to Davao. Karstic features dominate on the northern segment of the Diwata Range representing the underlying Timamana Limestone unit. Internal drainage and steep to sub-vertical slopes descending into the adjacent non- calcareous lithological units are also distinctive. The Mainit Graben functions as the catch basin of the bounding highlands’ drainage systems flowing into Lake Mainit.
Major rivers trend in the north-south direction. Surigao River drains mostly the lowland areas and Magpayang River flows southward into Lake Mainit draining most of the Eastern range.
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Silangan Project July 2019 The Boyongan prospect is within a volcanic centre that rises within the Mainit Graben. Other prominent peaks in the area are Mt. Maniayao, 644 m RL, located south of Bayugo and Mt. Silop at 664 m RL, the highest point in the project area, located west of Bayugo.
8.3 Climate, population
8.3.1. Climate
The climate is classified as Type II based on the Modified Corona Classification of the Philippine Atmospheric, Geophysical and Astronomical Services Administration (‘PAGASA’). This climate type has no distinct dry season with a very pronounced maximum rain period from December to February. The amount of rainfall starts to increase during the month of October with maximum rain period from November to March then subsides during the month of April. The monthly rainfall ranges from 133.9 mm to 609.4 mm at the PAGASA synoptic weather station in Surigao City. The total annual rainfall amounts to 3,652 mm with annual average number of rainy days of 220 days or approximately 60 percent of the year.
The monthly mean temperature shows a uniform pattern that ranges from a high of 32.7 C in the months of May, August and September to a low of 23.3 C during the month of January. The average wind speed at the PAGASA synoptic weather station in Surigao City ranges from 2 – 3 m/s. Southwesterly winds predominantly occur during the months of June until August and shifts to a westerly direction in September and October. Easterly winds transpire during the months of November and February to May; with northeasterly winds in December and January.
Approximately one tropical cyclone passes the region in a year or 12 cyclones in 12 years. Error! Reference source not found. lists the three climate stations that were used in deriving baseline design climate estimates.
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Silangan Project July 2019 Table 8-1: Rain Gauge Monitoring Stations
Climate Geographic Elevation Distance First Last Data Station Co-ordinates (m) From Site Reading Reading Source
PAGASA/ Surigao City 9.79°N 125.49°E 39 17.0 km N Jan 1955 Nov 2014 RDA Mainit 9.53°N 125.52°E 90 12.1 km S Jun 1980 Dec 2007 GHD
Bago Oshiro 7.04°N 125.52°E 9 288 km S Jan 1976 Jul 2013 PAGASA
In addition to the main climate stations, data from local rainfall gauges were used to assess localised variations in precipitation.
During the rainy season between October until April the average rainfall is approximately 3,700 mm and can be as high as 600 mm in a single month. The dryer months’ record approximately 125 mm of precipitation.
The climate is very warm and averages 28.4°C during months May to September. The coldest and wettest month is January with an average temperature of 26.9°C. The average temperature is 27°C during the remainder of the year.
The high temperature and the precipitation is a challenge to the underground mine ventilation. The conditions will require strict underground and surface management and may necessitate higher airflow or an underground cooler plant.
8.3.2. Population and Socio Economic Environment
The project is located within the several government jurisdiction including one region and province of the national government, four municipalities and 11 barangays as presented in Table 8-2. Being located in a mineral reservation area, the primary industry for the province is mining. The major mining corporations in the area are Taganito Mining Corporation, Hinatuan Mining Coroporation, Cagdianao Corporation, PHILNCO Processing Corporation, Manila Mining Corporation, Platinum Group Metals Corportation/Surigao Integrated Res. Corporation and Greenstone Resources Corporation/RED 5 Asia Corporation and a mineral processing plant – Taganito Hydrometallurgical Processing Plant of Nickel Asia Corporation.
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Silangan Project July 2019 Table 8-2: Project’s Host Province, Municipalities and Barangays
Region Province Municipality Barangay
Anislagan
Boyongan
Placer Macalaya
San Isidro
Sta. Cruz Region XIII Surigao Del Norte San Pedro (Caraga) Sison Lower Patag
Upper Patag
Timamana Tubod San Isidro
Timamana Upper Libas
There are no members of Indigenous People (IP)/Indigenous Cultural Communities (ICC) that are indigenous in the project areas and the direct/indirect impact communities. There are, however, IPs who have settled in Barangay Timamana and Silop-Marayag areas in Mainit. These IPs, however, are migrants and are not indigenous in these barangays. For example, the IPs in Barangay Timamana are originally from Barangay Taganito in Claver, Surgiao del Norte.
The existing social setting for the host LGUs is characterized by predominantly rural lifestyle and low standard of living. The main land use of the project site is forestry, agro-forestry for coconut and falcate plantations, agriculture and grassland.
People from the host barangays have a high incidence of poverty line while 60% are also below the food threshold. These findings keep them out of poverty. More than 80% of the host communities have access to basic services like water source, electricity, communication, and sanitation facilities. Burning is still the most common waste disposal method available to the host barangays.
The most frequently mentioned source of income for the host barangays are employment in the private sector and farming. Other sources of income available are self-employment, contract labour, employment in public sector and pension/remittances and fishing. The
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Silangan Project July 2019 household income for all host barangays is PHP 70,000 per annum at an average roughly PHP 6,000 per month.
In terms of food security, food supplies of the host communities, such as vegetables and spices, mostly come from the provinces of Cagayan de Oro, Davao, Agusan del Norte and Agusan del Sur. Although there is adequate supply from the areas, the unpredictable weather in the region causes unequal distribution of the supplies. Placer is noted for the highest production of grain and Sison for vegetable production but both municipalities still experience supply shortages.
The peace and order situation in the four host municipalities is relatively stable. Each municipality has its own main police station and each host barangays have community auxiliaries composed of Barangay safety officers and civilian volunteers who help promote and maintain the safety of the community members.
8.4 Land Use
The Philippine Land Classification is categorized into two groups namely Alienable and Disposable (A&D) and Forestland/Timberland. The Lands Management Bureau of the Department of Environment and Natural Resources has the mandate to classify land in the Philippines. Present classifications were a result of a series of national forest resources inventories and mapping efforts by the government in collaboration with private and international agencies from 1969 to 2010. A&D lands can be titled and are open for public disposition.
The entirety of project site is categorized as A&D. Figure 8-2 presents the land classification map of the project site
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Silangan Project July 2019 Figure 8-2: Land Classification
.
Majority of the land within the project site is utilized for regular viable agricultural activities. Field verification on site shows occasional coconut and rice farming. At present, majority of the lands where the mine footprint will be situated has been acquired. Coconut plantations are maintained at the buffers. Figure 8-3 presents the regional land use map of the project site based on the Provincial Development and Physical Framework Plan of Surigao del Norte.
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Silangan Project July 2019 Figure 8-3: Land Use Map
A number of large diameter forest trees within the project site were noted as remnant stands of what is believed to be a lowland evergreen forest dominated by dipterocarps. Forest over limestone was also observed particularly in the Municipality of Tubod. Indicator tree species were not encountered in any of the other sampled quadrats except within the forest over limestone quadrats. Moreover, intermediate brushed and shrubs associated with forest over limestone were found to grow abundantly. Kaong or sugar palm, an economically important palm, was also observed to thrive successfully on these limestone hills but was seldom encountered in other parts of the project site.
Five vegetation communities were identified within the vicinity of the mine footprint based on the Environmental Baseline studies conducted in 2012 to 2015. These are agroforest, agricultural areas, brush/shrub lands, grasslands and open areas with built up portions. Residual forests or secondary growth that thrived after the removal of the original forest cover, are found within the province but in other municipalities significantly far from the project site and the watershed encroaching it. Within the actual surface disturbace area fro the underground mine and quarried, there are only four broad vegetation types namely:
1. Agricultural areas 2. Brush and shrub lands 3. Grasslands; and
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Silangan Project July 2019 4. Open areas/built up areas
Agricultural areas are within the fairly flat areas within the project site near watercourses and river embankments. The topography had been modified to support the cultivation of paddy rice. Here, the native vegetation had entirely been cleared due largely to the intensive land preparation necessary for rice production.
Brush and shrub lands cover majority of the project site. The vegetation community is characterized by the dominance of woody vegetation that does not attain more than five meters in height at maturity (FAO, 2001). The presence of this vegetation indicated a poor ecological state that characterizes major portion of the project site. This is shown by past and ongoing anthropogenic disturbance such as fuel wood gathering, catthel gazing and stie clearing to give way to agriculture.
Grassland communities were recorded at the north-western part of Barangay, San Isidro in the municipality of Tubod. This vegetation community represents the initial stage of colonization succession, it is likely that these portions have been completely cleared by previous anthropogenic activities (e.g. logging and agriculture) and then abandoned.
The open areas was noted mainly in the proposed TSF and mine infrastructure locations. It is characterized as generally bare/open most likely as a result of previous logging activities and slash and burn farming. Insignificant patches of shrubs which cover approximately 5% of the open area and some undergrowth were recorded.
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Silangan Project July 2019
Chapter 9.0
Silangan Project July 2019 9.0 PREVIOUS WORK
A number of feasibility studies have already been done for the project, the more recent ones are the PFS for an underground mine and DFS open pit mine and peer reviewed DFS. Relevant data from the underground mine PFS were used in this study.
9.1 PFS for Underground Mine
This was completed in October 2014 with AECOM Australia in the lead. The highlight includes a number of block caves on Boyongan and East Bayugo orebodies. Mine development and ore extraction will be done with specialized mechanical equipment, examples of which are Jumbos and LHD. The ore will be conveyed from underground to surface and transition to surface conveying until it reached the ROM stockpile.
Owing to the complexity of the ore’s mineralogy, six metallurgical processes were evaluated all aiming to maximize the recovery of copper and gold from sulphide, oxides and mixed ore types. Later on, Process 4 (P4) was recommended which consists of:
1. flotation and pressure oxidation of sulphide minerals to produce copper concentrate; 2. pressurized acid leaching to produce copper cathode and 3. Cyanide leach to produce gold dore.
Tailings will be stored at a facility north of the ore body. The TSF was designed as a water retaining dam with a maximum tailings storage capacity of 200 Million metric tons.
Using 3 US Dollar per pound copper and 1,200 US Dollar per ounce gold prices and costs in Table 9-1, the resulting IRR of the underground mine is 9.5%
Table 9-1: OC for PFS UG Mine
Operating Cost – LOM Average
$/t ore milled
Mining 3.24
Mining Infrastructure 3.13
Sub-Total Mining 6.37
Milling and Processing 14.54
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Silangan Project July 2019 Operating Cost – LOM Average
G&A 2.65
Treatment and Refining 0.01
Distribution Costs 0.23
Royalties 0.91
Total Cash Operating Costs 24.70
Table 9-2: Production Parameters for PFS UG Mine
PFS UG Highlights – Boyongan Only
Ore Mined M t 224
Cu Head Grade % 0.45
Au Head Grade g/t 0.63
Cu Recovery (to Cathode) % 81.8
Au Recovery (to Dore) % 90.0
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Silangan Project July 2019 9.2 Concept Study for Open Pit Mine
With the marginal financial result of the underground mine, a concept study for an open pit was done to demonstrate the potential of this mining method for Boyongan only.
Using geotechnical and hydrological information and processing options identified from the underground PFS as well as metal prices of 3 US Dollar per pound copper and 1,200 US Dollar per ounce gold, a number of pit optimization were done and resulted to these staged development scenarios.
Table 9-3: Optimization Parameters for Concept Study of Open Pit Mine
Development Stages
M t Ore Cu (%) Au (g/t) M t Waste Strip Ratio
Stage 1 – Pit 5 30 0.87 1.29 111 3.7
Stage 2 – Pit 14 68 0.73. 1.02 237 3.5
Stage 3 – Pit 20 131 0.61 0.81 431 3.3
Stage 4 – Pit 27 194 0.55 0.73 656 3.4
Process 2 (P2) was selected because of the slight advantage over P4. P2 uses copper sulphide flotation to produce copper concentrate, followed by acid leaching of sulphide flotation tailings, neutralization, and cyanide leaching of neutralized tailings. Copper cathode production from the clarified pregnant leach solution is thru a solvent extraction then electrowinning process. Gold bullion will be produced via elution, electrowinning and smelting.
Tailings management will use the same storage facility north of the orebody.
The study then further evaluated 5 and 7 Million metric tons per year processing rates to see if the project will benefit from a higher mill throughput which appears to be positive as shown by Table 9-4.
Results were subjected to more detailed studies to validate the results.
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Silangan Project July 2019 Table 9-4: Concept Study of Open Pit Mine
Concept Open Pit Highlights
Pit Phase 1 Pit Phase 2 Pit Phase 1 Pit Phase 2
5 Mtpa 5 Mtpa 5-7 Mtpa 5-7 Mtpa
Ore Mined M t 135 201 135 201
Waste Mined M t 427 649 427 649
Strip Ratio t:t 3.2 3.2 3.2 3.2
Cu Head Grade % 0.60 0.54 0.60 0.54
Au Head Grade g/t 0.79 0.71 0.79 0.71
Cu Recovery (to Cathode) % 85 86
Au Recovery (to Dore) % 95 92
Recovered Copper K t 688 942
Recovered Gold K oz 3,300 4,400
Project Life Y 34 37 27 37
Development & Y 3 3 3 3 Construction
Production Y 31 44 24 34
Free Cashflow
(Undiscounted, Pre-Tax)
Gross Sales Revenue $ M 8,227 11,189 8,227 11,189
Total Operating Costs $ M (4,338) (6,510) (4,182) (6,254)
Operating Cash Flow $ M 3,939 4,679 4,095 4,935
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Silangan Project July 2019 Initial Capital $ M (840) (840) (840) (840)
Expansion & Sustaining $ M (376) (607) (400) (599) Capital
Free Cashflow $ M 2,723 3,232 2,855 3,496
NPV @ 8% Pre Tax $ M 674 659 802 834
IRR % 18.2 17.9 19.4 19.3
Payback period (from start Y 3 3 3 3 of production)
9.3 Open Pit Mine Study
More trade off studies with regards to increasing pit limits and milling rates were done after the concept study but only resulted to higher generated mine waste that increased cost. In the end, starting small presented a better project value.
Milling will be at 5 Million metric tons per annum. Copper and gold are recovered by acid leaching to produce copper cathode and cyanide leaching to come up with gold dore.
The location of the TSF is same as the previous studies.
Economic runs used the same 3 US Dollar per pound copper price but lower gold price of 1,160 US Dollar per ounce. The NPV and IRR are leveraged.
Table 9-5: Operating Cost for Open Pit Study
Operating Cost – LOM Average
$/t ore milled
Mining 9.58
Milling and Processing 17.53
G&A 2.42
TC/RC, Shipping & Insurance 0.33
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Silangan Project July 2019 Operating Cost – LOM Average
Total Cash Operating Costs 29.86
Table 9-6: Financial Highlights of Open Pit Mine
Peer Review OP Highlights
Ore Mined M t 52
Waste Mined M t 223
Strip Ratio t:t 4.31
Cu Head Grade % 0.67
Au Head Grade g/t 1.07
Cu Recovery (to Cathode) % 77
Au Recovery (to Dore) % 93.5
Recovered Copper K t 589
Recovered Gold K oz 1,658
Project Life Y 13
Development & Construction Y 3
Production Y 10
Free Cashflow (Undiscounted,
Pre-Tax)
Gross Sales Revenue $ M 3,810
Total Operating Costs $ M (1,529)
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Silangan Project July 2019 Operating Cash Flow $ M 1,379
Initial Capital $ M (169)
Expansion & Sustaining Capital $ M (84)
Free Cashflow $ M 1,379
NPV @ 8% Post Tax $ M 396
IRR % 26
Payback period (from start of Y 4 production)
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Silangan Project July 2019
Chapter 10.0
Silangan Project July 2019 10.0 HISTORY OF PRODUCTION
The project is a greenfield project and therefore has not entered to full development phase much more production. Start of commercial operations is targeted to be by year 2023.
The planned mining and milling rate as well as copper and gold production will be discussed in Chapter 17.
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Silangan Project July 2019
Chapter 11.0
Silangan Project
July 2019 11.0 GEOLOGY
The Project is located in the CARAGA Region, of the Mindanao Island, and within the broader physiographic framework of the Philippine archipelago. The Boyongan porphyry copper-gold deposit is part of an emerging belt of intrusion-centred gold-rich deposits in the Surigao Mining District. The diorite porphyry copper-gold systems occur within cylindrical composite stockworks and are typical of island-arc style deposits.
The region occupies the northern most portion of the Eastern Mindanao Ridge or Mindanao, Pacific Cordillera, a north-north-west to south-south-east trending orogenic belt that extends more than 400 km. The Mindanao, Pacific Cordillera is bounded by two major structures that played a key role in the neotectonic evolution of the Philippine Mobile Belt, namely the Philippine Trench and the Philippine Fault Zone Figure 11-1.
Figure 11-1: Major Geologic Structures
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July 2019 11.1 Geological Setting
11.1.1 Regional Geological Setting
The Project is located within the Circum-Pacific belt, a 40,000 km horseshoe-shaped basin that is associated with a nearly continuous series of oceanic trenches, volcanic arcs, volcanic belts and/or plate movements. Recognition of the belt is due to the large number of earthquakes and volcanic eruptions that occur around the Pacific Ocean where activity is driven by plate tectonics and the movement and collisions of lithospheric plates (Figure 11-2 and Figure 11-3).
The Circum-Pacific belt contains 452 active volcanoes and is home to more than 75 percent of the world's active and dormant volcanoes while about 90 percent of the world's earthquakes, including 81 percent of the world's largest earthquakes occur along the boundaries. The plate tectonics in the Philippines is complex and includes plate boundaries that change rapidly.
Figure 11-2: Relative Location of the Project to Circum-Pacific Belt
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July 2019 Figure 11-3: Subduction in the Circum-Pacific Belt
Arc terranes that underwent compressive tectonism and consequent high rates of uplift and exhumation during mantle-derived magmatic activity host the largest and highest hypogene grade porphyry copper deposits worldwide (Figure 5). In the context of the Philippines, the Luzon Central Cordillera and the Eastern Mindanao, Pacific Cordillera are regarded as two main porphyry copper-gold belts that were generated under these tectonic conditions (Anglo 2008a). The Pacific Cordillera underwent compressive tectonism as a result of its accretion to the rest of Mindanao. These tectonic events were initiated less than 6 Ma ago and the resulting porphyry copper deposits are dated at less than3 Ma (Anglo 2008a).
The Surigao Mining District within the CARAGA Region occupies the northern most portion of the Eastern Mindanao Ridge or Eastern Mindanao, Pacific Cordillera, a more than 400 km, north-north-west to south-south-east trending orogenic belt. The Eastern Mindanao, Pacific Cordillera is bounded by two major structures that played a key role in the neotectonic evolution
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July 2019 of the Philippine Mobile Belt, namely the Philippine Trench and the Philippine Fault Zone Figure 11-4.
The north-north-west trending, transcurrent Philippine Fault Zone runs most of the length of the Philippines. It extends from Davao Gulf in the south, bisecting the Caraga region in northeast Mindanao at the Agusan River basin. It crosses to Leyte and Masbate islands and traverses Quezon province in eastern Luzon before passing through Nueva Ecija and up to the Ilocos region in north-west Luzon. The Philippine Fault Zone is actively moving and is related to the subduction of the oceanic Philippines Sea Plate under the Eurasian Continental Margin and is an inter-related system of faults, primarily caused by tectonic forces compressing the Philippine Mobile Belt.
Aurelio (2001) assessed the annual displacement of the Surigao block due to movement both at the Philippines subduction zone and movement along the Philippines Fault. This work determined motion vectors computed from GPS observations of the GEODYSSEA network and concluded that the Surigao block of north-east Mindanao was moving at an average of 2.6 cm per year in a north-west direction.
Figure 11-4: Philippine Mobile Belt
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July 2019 Later work by Aurelio, et al. (2012) assessed the regional tectonic-structural regime and associated volcanism as well as the association with the Boyongan and Bayugo copper-gold deposits. Unlike Quebral, et al. (1996) who concluded that the Surigao Valley is within a compressional regime from the Pliocene to the Present, Aurelio emphasised a dilatational regime in the Surigao Valley. This has regional implications for understanding both the magnitude and direction of displacement for the major structures for the Project. Located north-west of the Diwata Range in the northern tip of the Pacific Cordillera, the Surigao Mining District is known for high-grade epithermal gold in veins (e.g. Mabuhay Deposit, Placer epithermal vein system) and sediments (e.g. Siana Deposit). Similar occurrences of gold mineralisation can be observed further south in the provinces of Agusan del Sur, Surigao del Sur and Compostela Valley.
Gold-silver and associated minor base-metal mineralisation in the Surigao Mining District is intimately related to pervasively hydrothermally altered Pliocene sub-volcanic andesite porphyries. Mineralisation is of a low-sulphidation epithermal affinity dominantly, though spatially and genetically related to andesitic intrusives. The gold mineralisation is manifested as auriferous quartz veins, veinlet-arrays, stockworks, and stratiform replacements within calcareous units and within hydrothermal breccias.
The Boyongan Deposit contains high grade copper and gold values and is hosted by a complex of composite diorite porphyry stocks and diatreme breccias, emplaced into volcanic and sedimentary rocks of late Pliocene age. The deposit shows typical porphyry system alteration patterns. Potassic alteration is pervasive. Illitesmectite-pyrite alteration usually associated with argillic alteration overprints the potassic zone to various degrees. Skarn alteration is observed along the contacts between carbonate-rich units and intrusive rocks. Propylitic alteration is well developed along the periphery of the diorite stocks and dissipates outwards.
Boyongan porphyry copper-gold deposit is part of the belt of gold-rich copper deposits in the Surigao Mining District of north-east Mindanao Island, Philippines. The district lies within a well- defined, transtensional segment of a Pliocene-Quaternary volcano-plutonic arc related to subduction of the oceanic Philippine Sea Plate at the Philippine Trench.
The 1,200 km long, sinistral, north-north-west trending, transcurrent Philippine Fault Zone is located approximately eight kilometres to the east of the Boyongan Deposit. District-wide
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July 2019 structures related to mineralisation consist of north-east to south-west and north-west to south- east fault sets.
Whilst most mineral deposits are located fewer than 10 km east of the Philippine Fault, there is evidence that intrusions in Surigao del Norte were emplaced along other structures. North- north-west, easterly and north-east trending faults localise mineralisation, particularly where jogs, flexures and dilational zones occur along north north-west to north-west trending faults. Where dated, gold and copper-gold mineralisation is seemingly of mid to late Pliocene in age (Braxton 2007).
11.1.2 Project Geology
The eastern portion of Mindanao is divided into two terranes separated by the Philippine Fault Zone, the Agusan-Davao Basin to the west and the 700 km long Pacific Cordillera mountain range to the east, which includes the Surigao Mining District (Figure 7). The east-facing Pacific Cordillera is composed of Neogene volcanic arcs overlying Cretaceous-Paleogene ophiolite, arc-volcanic and metamorphic basement rocks forming part of the Philippine Arc System.
Pliocene to Quaternary volcanics in the region represent a response to the initiation of subduction in the past six million years along the Philippine Trench, which is located approximately 100 km offshore to the west. Quaternary uplift of the Cordillera has been rapid with Pliocene limestones now widely exposed at elevations of 1,000 to 2,000 m.
The Agusan-Davao Basin is a north-south trending sedimentary basin comprising basal Late Oligocene limestones overlying Paleogene arcvolcanic basement. The Basin comprises approximately 12,000 m of sedimentary fill and includes gently folded Miocene clastic sequences as well as Pliocene to Recent conglomerates, sands, marls and limestones. The origin of the Basin is enigmatic, although it has been interpreted as a fore-arc basin formed during subduction beneath the Central or Pacific Cordilleras ((Mitchell and Leach (1991) in Anglo (2008a).
In the Pacific Cordillera, arc magmatism was active during the mid-Miocene to Pliocene, generating monzonitic and dioritic stocks as well as plutons and hornblende andesite porphyry intrusions. In areas away from paleovolcanic centres, thick sedimentary clastic rocks with
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July 2019 sporadic limestone horizons and intercalated calcareous sediments, marls and/or coal seams were formed during the Miocene to Pliocene. The limestone, some of which is in dubious stratigraphic position and may represent exhalative deposits, have been age dated to occur between the Miocene to Plio-Pleistocene (5.4 Ma to 3.3 Ma). The Paco-Maniayao volcanic complex, (Maniayao Highlands) north of Lake Mainit represents the latest Quaternary volcanism in the region.
In the Silangan region, intrusions of andesite porphyry and dioritic plutons are widespread. Dating by ANU-PRISE (ANU-Prise is an externally funded group within the Research School of Earth Sciences at the Australian National University) for Anglo returned mid to late-Pliocene ages for most altered or mineralised intrusions (Anglo 2008a). The majority of intrusions from the Pacific Cordillera exhibit andesitic to trachyandesitic compositions, but also include a relatively minor component of basaltic andesites, dacites and monzonites of calc-alkaline and high-K calc-alkaline affinity.
Porphyry intrusions commonly occur as plugs, dykes and sills of hornblende andesite porphyry, generally within a 20 km wide belt, which includes the majority of the known epithermal gold and copper-gold porphyry deposits and prospects. The igneous activity is closely related to splays off the Philippine Fault, probably because the fault exploited hotter rocks along the axial zone of the magmatic arc (Anglo 2008a).
Intrusive clusters occur along major structural lineaments and at the intersection of lineaments. The Maniayao Highlands immediately north of Lake Mainit forms the largest igneous complex in the Surigao District and is situated in an area of maximum extension within a pull-apart basin. Other clusters of intrusive rocks in the area tend to comprise of five to ten individual intrusions occurring as individual conical hills. There are several such clusters in the Surigao District, each covering an area of 20 – 40 km2. Each cluster of intrusives is thought to represent a single magmatic plumbing system that converges at depth on a common magma chamber. The mineralogy of most intrusive rocks in the Surigao District suggests that they crystallised from andesitic to dacitic melts.
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July 2019 11.1.3 Boyongan Orebody Geology
The blind porphyry deposits carry high-grade copper and gold values and are hosted by a complex of composite diorite porphyry stocks and diatreme breccias. The composite diorite porphyry stocks and diatreme breccias were emplaced into volcanic and sedimentary rocks of the Bacuag Formation (Upper Oligocene – Lower Miocene age basalts, volcanic breccias and limestones) and the Motherlode Turbidite Formation (Upper Miocene age, silty mudstones). Intense quartz stockwork veining developed within the stocks and the adjacent breccia wallrocks.
The Boyongan and Bayugo deposits are centred on two related early-mineralisation cylindrical composite diorite porphyry stocks and are typical of island-arc style deposits. Emplacement appears to have taken place in conjunction with the earliest phase of mineralising fluids. Since their late Pliocene emplacement (2.3–2.1 Ma; sensitive high resolution ion microprobe uranium- lead-zircon dating) at depths of 1.2 – 2 km, these deposits were exhumed, deeply weathered and buried (Braxton et al, 2009).
At both deposits, hypogene copper and gold are concentrated in two distinct eastern and western zones flanking discrete, high-aspect ratio ('pencil-shaped') stocks. Intense quartz stockwork veining has developed within the stocks and the adjacent breccia wallrocks.
The porphyry hosts underwent pervasive potassium-silicate alteration and have been affected by a weakly developed illite-chlorite-smectite alteration event and by localised zones of illite- pyrite and vuggy quartz related to phyllic and advanced argillic overprints, respectively.
In the Boyongan Deposit, the deep supergene profile contains malachite, azurite, chysocolla and cuprite as the principal copper phases, and importantly, copper in silicates such as kaolinite, dickite, biotite and phlogopite. Chalcopyrite and bornite are the dominant hypogene sulphides and pyrite is minimal. The Boyongan Deposit is hosted by potassic altered diorite porphyry. Copper and gold mineralisation occurs as quartz veins disseminated within porphyritic intrusions. The sulphide zone is dominated by chalcopyrite and weak bornite, whilst the main gold species are pure gold, electrum, gold and silver tellurides locked in pyrite, bornite and on rare occasions within chalcopyrite.
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July 2019 An early middle Pleistocene supergene event followed a period of rapid uplift and exhumation in north-east Mindanao at a rate of 2.5 km/Ma. Rapid subsidence and burial followed at a rate of ≥3.4 km/Ma (Braxton 2007). During this period, debris flows, volcanic material and fluvio- lacustrine sediments accumulating in the actively extending Mainit Graben covered the weathered deposits, which preserved the supergene profiles beneath 50 – 500 m of cover.
11.2 Local Lithology
The Boyongan diorite porphyry copper-gold system occurs in cylindrical composite stockworks, typical of islandarc style deposits. The narrow, sub vertical composite stocks (a series of early mineralisation, inter-mineralisation and late-mineralisation intrusions) are centred on two early- mineralisation porphyry stocks, which are interpreted to have been emplaced in conjunction with the mineralising fluids.
The Boyongan Deposit is unusually deeply oxidised, particularly on its western side where oxidation is recorded to a depth below the top of bedrock of about 600 m (TSD-24). Boyongan is approximately 600 m wide on its northeast to south-west axis and 500 m wide on its north-west to south-east axis. The eastern high grade zone is approximately 100 m from the western high grade zone. The thickness of the defined ore body ranges from 400 m to 600 m (AECOM 2014).
The Boyongan Quaternary cover sequence includes recent fluvio-laucustrine sediments, the Maniayao Andesite and associated hillslope debris colluvium as well as the underlying unconsolidated sediments of the Tugunan Clastics Formation, which includes volcaniclastics, debris flow materials and lake sediments.
The diorite complex hosting the deposit is situated below the defined Quaternary paleosurface. It intrudes basement lithologies including basalts and limestone hosts assigned to the Oligocene-Miocene Bacuag Formation, mudstones of the Miocene Motherlode Turbidite Formation, volcano sedimentary sequences including andesite-dacite volcanoclastic breccias, wackes and conglomerates of the Mabuhay Clastics as well as carbonates of the Pliocene Timamana Limestone.
At least seven intrusive lithologies have been identified: three pre-mineralisation diorite porphyries; three mineralisation phases (two early mineralisation porphyries and an
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July 2019 intermineralisation porphyry) related to the intense K-silicate alteration and mineralisation; and the late-mineralisation diorite dykes.
The deposit shows typical porphyry system alteration patterns. Potassic alteration is pervasive. Illite-smectitepyrite alteration usually associated with argillic alteration overprints the potassic zone to various degrees. Skarn alteration is observed along the contacts between carbonate- rich units and intrusive rocks. Propylitic alteration is well developed along the periphery of the diorite stocks and dissipates outwards.
Intense quartz stockworking was developed within early-mineralisation coarse-grained diorite porphyries and the adjacent breccia wall rocks. These two approximately cylindrical stocks were emplaced into a diatreme breccia complex and formed eastern and western mineralisation zones. The two mineralised zones are separated by a north-south trending upward-flared polylithic breccia, approximately 150 m wide, which may have acted as an impermeable wall rock preventing much of the mineralising fluids from flowing further outward and upward from the fluid conduits. This breccia localised the main high-grade copper-gold zones. After the emplacement of all the diorite phases, the system was tectonically exhumed exposing its upper portion to oxidation and weathering processes. During this stage, the top portion of the deposit was eroded and the ore body experienced oxidation and remobilisation of copper metal. An area of exotic copper mineralisation to the north to north-west of the western Boyongan Deposit mineralisation is interpreted to have been derived by leaching and lateral dispersion of copper from the Bayugo Deposit (Braxton, 2007).
11.2.1 Pre-mineralization Host Rocks
The local pre-mineralisation basement rocks consist of late Oligocene to late Pliocene volcano- sedimentary sequences of the following formations:
1. Bacuag Formation: The Bacuag Formation is considered as the local basement rock unit in the prospect area. It is a heterolithic sequence of interstratified basaltic volcanics, limestones and coarse clastic rocks, and includes the San Isidro Formation, Siana Formation and Bacuag Series. The Bacuag Formation underlies most of the Diwata Range and occurs as isolated outcrops in the Surigao Lowlands and the Western Range. Stratigraphic relationships between sub-units are not well understood as many contacts are hidden or faulted.
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2. Motherlode Turbidite Formation: The Motherlode Turbidite Formation is a gently folded sequence of silty mudstones, wackes and basalt-dominated turbiditic units that underlies much of the north-eastern Surigao Peninsula. A basal unconformity separates the Motherlode Turbidite Formation and the underlying Bacuag Formation in the Libas River valley, one kilometre south-west of the Motherlode mine. In the vicinity of the Boyongan and Bayugo prospects, dark, finely laminated, silty mudstones containing thin calcisiltite beds (TSD30) dominate the drill intersections of the Motherlode Turbidite Formation, north-west of the Maniayao Volcanic Complex.
The Motherlode Turbidite Formation contains a thick marl sequence variably termed the Taganaan Marl, or the Libas Marl. (Mitchell and Leach (1991) in Anglo (2008a)).
3. Mabuhay Clastic Formation: In the Surigao region andesitic clastic, Volcaniclastic rocks and rare andesite flows crop out in north-eastern Surigao and on Masapelid Island. These rocks constitute the Mabuhay Clastics Formation; the most important host sequence for epithermal veins in the Surigao District. Evidence for the Mabuhay Clastics Formation is equivocal in the vicinity of the Boyongan and Bayugo porphyry deposits.
4. Timamana Limestone: The Timamana Limestone consists of massive, cream- white, fossiliferous limestone forming prominent cliffs in the northern Diwata Range east and north-east of Lake Mainit. In this region, limestone exposures unconformably overlie the Bacuag Formation, capping peaks exceeding 900 m above sea level. In smaller exposures west of the Mapaso mine, a similar limestone unconformably overlies the Motherlode Formation. Deposition of the Timamana Limestone is inferred to have occurred immediately prior to the mineralising events in the Surigao District.
11.2.2 Boyongan Intrusives
The Boyongan Deposit is centered on a complex of composite diorite stocks and diatreme breccias emplaced into volcanic and sedimentary rocks. The intrusions share a common phenocryst assemblage containing plagioclase and hornblende locally with minor (fewer than
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July 2019 two percent volume) biotite and/or clinopyroxene. They lack igneous quartz. The diorite complex at the Boyongan Deposit contains at least seven discrete diorite phases, distinguished on the basis of texture and timing relationships to veining, alteration and brecciation. Mineralising and brecciation events serve to subdivide diorite emplacement into temporally distinct episodes. Initial magmatism formed an early diorite complex consisting of at least three intrusive phases: bird’s-eye diorite porphyry, medium-grained diorite porphyry, and fine grained diorite. These intrusive events pre-dated copper-gold mineralisation.
A large, pre-mineralisation silt-sand-matrix breccia complex partially fragmented the early diorite complex and surrounding wallrock. A series of ECD then intruded the silt-sand-matrix breccia complex. These intrusions bear a spatial relationship to elevated copper-gold grades and quartz-vein stockworks. Quartz-magnetite-cemented breccias formed in spatial and temporal relation to the ECD-series intrusions.
A series of moderately-altered inter-mineralisation and late-mineralisation diorite porphyry stocks and dykes cut the ECD porphyry stocks. At the Boyongan Deposit, these are the inter- mineralisation diorite porphyry stock and the late-mineralisation diorite porphyry dykes.
A second significant phase of brecciation, (intermineralisation hydrothermally cemented breccia), developed in association with the ECD porphyries, following the formation of the diatreme breccia complex. During the emplacement of ECD-series intrusions, volumetrically significant quartz-magnetite-cemented breccias formed in the Boyongan Deposit’s eastern high- grade zone.
The following intrusive descriptions draw on Anglo geology experience between 2002 and 2008. Braxton’s (2007) description of the individual composite diorite stocks and diatreme breccias are detailed below:
1. Early Diorite Complex: Three texturally distinctive diorite porphyry stocks characterise the earliest phases of magmatism in the Boyongan-Bayugo complex. They all intruded prior to the emplacement of the silt-sand matrix breccia complex and include the bird’s- eye diorite porphyry, medium-grained diorite porphyry, and fine-grained diorite porphyry.
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July 2019 2. Bird’s-Eye Diorite Porphyry: This porphyry is a coarse-grained, plagioclase- phyric and hornblende-phyric diorite stock named for its distinctive feldspar megacrysts resembling bird eyes. This intrusive has been used as a marker for determining source of clasts in the debris mass flow units of the cover sequence.
3. Medium-Grained Diorite Porphyry: This porphyry is a crowded, plagioclase- phyric and hornblende-phyric diorite intrusion locally containing minor biotite. This phase forms a large irregular stock near the approximate centre of the Boyongan intrusive complex where the largest contiguous body measures 1,200 m by 400 m in plan. The texture is seriate and finer-grained near its intrusive contacts with the basalt host rock such as on the north-east side of the Boyongan complex. The younger diorite intrusions of Bayugo bound the medium-grained diorite stock to the north, while the Boyongan silt-sand matrix breccia complex forms the southern limit. Clasts of the medium-grained diorite in the silt- sand matrix breccia complex indicate that its emplacement pre-dated breccia formation.
4. Fine-Grained Diorite Porphyry: This porphyry is a plagioclase-phyric diorite with fine (less than one millimetre) plagioclase phenocrysts displaying a strong alignment and suggesting flow banding. Replacement by hydrothermal biotite and/or chlorite of the fine mafic phenocrysts (possibility hornblende) has obscured its original character. The fine- grained diorite occurs primarily as fragments and large blocks within the silt-sand matrix breccia complex.
5. Boyongan Silt-Sand Matrix Diatreme Breccia Complex: Brecciation of a large portion of the early diorite complex and surrounding host rock occurred prior to the emplacement of the progenitor ECD series at Boyongan. The breccia complex is a polyphase, silt-sand-matrix breccia pipe of generally cylindrical shape. As exposed at the pre-Quaternary surface the breccia complex footprint describes a roughly circular feature with a diameter exceeding 900 m.
The breccia complex varies between matrix-supported and clast-supported. It generally lacks stratification or other internal organisation. The leucocratic breccia matrix is comprised of fine (less than 0.5 mm) sand andsilt-sized fragments. Alteration and weathering have largely obscured the nature of the breccia matrix.
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July 2019 Most of the facies within the complex contain two or more clast types and five breccia facies were distinguished on the basis of the volumetrically dominant clast type:
basalt-dominated breccia mudstone-dominated breccia medium-grained diorite porphyry-dominated breccia fine-grained diorite porphyry-dominated breccia polymict breccia.
6. Basalt-Clast-Rich Breccia: Basalt-clast-rich breccia is abundant at depth, where the breccia complex contacts Bacuag Formation basalts and is generally clast-supported (70-90 percent clasts). It contains angular-sub-rounded clasts of dark aphanitic basaltic fragments in a melanocratic fragmental silt-sand sized matrix.
7. Sedimentary-Clast-Rich Breccia: Breccia with abundant mudstone clasts was intersected only in hole TSD54 (148.75 m to 256 m) on the southern portion of the breccia complex. This breccia facies is clast-supported with approximately 20 percent matrix material. More than 90 percent of the clasts in the upper breccia sequence (148.75 m to 219.2 m) consist of fine, green-grey mudstone together with angular clasts of basalt and diorite porphyry. The matrix interval is mud-sized and grey-green in colour.
8. Medium-Grained-Diorite-Clast-Rich Breccia: Abundant clasts of medium-grained diorite porphyry with clasts of fine-grained diorite locally form a significant sub-population. Clasts of basalt and bird’s-eye diorite porphyry are common but generally make up less than five percent of the clast population. Basalt is also present as xenoliths in larger clasts of medium-grained diorite and it is likely that many of the basalt clasts in the medium-grained-diorite-clast-rich breccia facies were derived from xenoliths. Clast- matrix proportions vary between 50 percent in matrix-supported intervals and 90 percent in clast-supported zones. The matrix is sand-silt sized and leucocratic.
9. Fine-Grained-Diorite-Clast-Rich Breccia: Breccia rich in fine-grained diorite clasts occurs in the central, south-eastern, and north-eastern regions of the breccia complex. This facies grades laterally into polymict breccia to the east and west and into medium- grained-diorite-clast-rich breccia facies to the north-west. The most abundant clast type
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July 2019 within the fine-grained-diorite-clast-rich breccia facies is fine-grained diorite with clasts of medium-grained diorite porphyry representing a significant clast sub-population. The breccia matrix is silt-sand sized and leucocratic.
10. Polymict Breccia: Clasts of basalt and early diorite complex intrusions are present in roughly equal proportions. Marginal and deeper phases contain more basalt clasts while the clast proportion of medium and fine grained diorite increases relative to basalt toward the centre of the breccia complex. The matrix is sand-silt-sized and leucocratic with clast-matrix proportions varying between 50 percent in matrix-supported intervals and 90 percent in clast-supported zones.
11. Early- Inter- and Late-Mineralisation Diorite Porphyry Intrusions: At Boyongan copper- gold grades are highest in and around two phases of plagioclase-hornblende-phyric diorite intrusions emplaced into the silt-sand matrix breccia complex. Individual ECD phases are distinguished on the basis of texture, cross-cutting relationships, internal chilled contacts, abrupt changes in quartz vein density, copper or gold grades and by the presence and type of refractory vein-quartz xenoliths. The two principal intrusive phases, termed the early mineralisation diorite porphyries (ECD1-ECD2), were emplaced in two roughly cylindrical composite stocks measuring 100 m to 200 m in diameter. The two intrusive centres and associated copper-gold grades define two distinct mineralised zones termed the eastern and western high-grade zones.
12. Progenitor Intrusions in the Western High-grade Zone (ECD1-ECD2): Two phases of crowded plagioclase-hornblende-phyric early-mineralisation diorite (ECD1 and ECD2) occur in the western high grade zone. A distinctive ribbon-textured quartz-vein stockwork (average 23 percent quartz, cuts ECD1bodies and extends out into the adjacent silt- sand matrix breccia. A large body of ECD2 subsequently intruded the western high- grade zone, truncating the ECD1 intrusion and associated stockwork. Subsequently, the ECD1 and ECD2 intrusions and surrounding host rock of the western high-grade zone were cut by a lower density quartz-vein stockwork (average 15 percent quartz) and lack the distinctive ribbon-textured veins. The ECD2 stock is the most significant intrusion in the western high-grade zone in terms of volume and spatial relationship to elevated copper-gold grades.
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July 2019 13. Progenitor Intrusions in the Eastern High-Grade Zone (ECD1-ECD2): At least two early- mineralisation diorite porphyry intrusions (ECD1 and ECD2) occur in the eastern high- grade zone. The intrusions are texturally similar to, and display the same spatial relationship to, copper-gold mineralisation as those of the western high-grade zone. The earliest recognised phase (ECD1) has a crowded texture, displays an intense quartz- stockwork. It occurs as roof pendants and stope blocks in the cupola and on the margin of the younger ECD2 stock. The ECD2 stock also has a crowded texture and is volumetrically the most significant intrusion in the eastern high-grade zone. Both ECD1 and ECD2 host significant quartz-vein stockworks (average 42 percent and 14 percent quartz respectively).
14. Boyongan Intermineralisation Diorite Porphyry: This porphyry stock is a larger (greater than 250 m diameter) crowded plagioclase-phyric and hornblende-phyric diorite stock truncating the ECD series at depth. The stock represents the deepest intrusion encountered in the Boyongan intrusive complex. Quartz veining and copper-gold mineralisation affected this intrusion, albeit with a lower grade and abundance of quartz veining (average two percent quartz) than the ECD series. Internal fine-grained contacts are present locally and may suggest more than one phase of magma emplacement. Textural similarities between discrete intermineralisation diorite porphyry intrusions away from contacts precluded the mapping of individual phases.
15. Boyongan Late-Mineralisation Diorite Porphyry Dykes: The latest phase of magmatism in the Boyongan intrusive complex takes the form of narrow (less than one metre to 15 m), sub-vertical, late-mineralisation plagioclase-phyric and hornblende-phyric diorite dykes. The greater abundance of groundmass, lower density of quartz veining (average 0.6 percent quartz), flow-banded contacts and clear cross-cutting relationships distinguish this phase from earlier intrusions at Boyongan.
16. Intermineralisation Hydrothermally Cemented Breccias: A second significant phase of brecciation developed in association with the ECD porphyries following the formation of the diatreme breccia complex. Volumetrically significant quartz-magnetite-cemented breccias formed in Boyongan’s eastern high-grade zone during the emplacement of these ECD-series intrusions.
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July 2019 The presence of hydrothermal quartz and/or magnetite cement in the infill distinguishes these breccias from the silt-sand-matrix breccias of the diatreme breccia complex. The largest hydrothermally cemented breccia body developed in the cupola of the ECD2 stock in the eastern high-grade zone. This breccia body is roughly cylindrical, measures 90 m in diameter and has a minimum vertical extent of 150 m. Contacts with the wallrock are sub-vertical and sharp with narrow (one metre to two metres) crackled margins. The breccia is texturally massive, unsorted, clast-supported and contains dominantly sub- angular fragments derived from quartz veins, ECD1, ECD2 and the diatreme breccia complex. Most clasts range between 2 millimeters and 64 mm, with generally less than 10 percent of clasts coarser than 64 mm. The characterisation of breccias exclusively in drill core has probably precluded identification of boulder sized clasts. The infill ranges between 20 percent and 30 percent of the rock and consists of a matrix of silt-sized fragments cemented by quartz and subordinate hematite after magnetite.
In the eastern high-grade zone below -300 mRL, a quartz-magnetite cemented breccia body is present along the margin of the ECD2 stock. This breccia contains fragments of vein quartz, ECD2, and basalt in varying proportions and the matrix and clast grain size distribution is similar to that of the shallow breccia body. The deeper breccia is generally clast supported, although narrow (0.1 m to one metre) intervals of infill-supported breccia occur. Clasts are dominantly sub-angular, although marginal facies commonly show a higher degree of rounding.
In the deeper breccia, broad (greater than 50 m) zones of low-density magnetite-quartz cemented crackle breccia occur in the ECD2 stock above the deep breccia body. Hole TSD14 intersected a quartz-magnetite cemented breccia to the north of the ECD2 stock. This clast-supported breccia contains moderately rounded fragments of fine grained diorite and basalt with minor open-space interstices. Outside the eastern highgrade zone, drilling intersected narrow (0.1 m – 15 m) intervals of similar quartz-magnetite- cemented and magnetite-cemented breccias within the medium-grained diorite and the diatreme breccia complex in the western high-grade zone.
Hydrothermal K-feldspar occurs in association with the quartz-magnetite and magnetite- cemented breccias.K-feldspar occurs as halos on the breccia margins and on the edges of larger clasts. K-feldspar also replaced the smaller clasts and sand-sized and silt-sized
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July 2019 matrix material (other than vein quartz fragments) in the quartz-magnetite-cemented and magnetite-cemented breccias, locally giving the impression of Kfeldspar cement.
11.2.3 Post-mineralization Rocks
The Boyongan Deposit is entirely covered above the Quaternary paleosurface by post- mineralisation rocks of at least 50 m thickness, which thickens towards the west to greater than 600 m. Cover rocks consist of Quaternary andesitic lava flows and mass debris flow deposits, Maniayao Andesite and sediments of the Tugunan Formation, which now underlie the present surface. These rocks are collectively referred to as the cover sequence.
The cover sequence formations were subject to significant evaluation during the DFS as the lithology units have significant impact on the hydrogeology and geotechnical engineering properties of the Boyongan open pit slope design. The Maniayao Andesite has two primary units that were the focus of investigation including the Hill Slope Colluvium and andesite lava subunits separated by thin sandy interbeds. The Maniayao overlies the sediments of the Tugunan Formation.
Surface diamond drilling over a 40 km2 region around the Boyongan and Bayugo deposits enabled definition of the following lithofacies:
1. Recent Fluvio-Lacustrine Sediments: Unconsolidated gravel, sand, silt, and mud cover much of the lowlying areas of the Surigao Peninsula. In the Bagacay and Magpayang areas, clasts of quartz-veinstockworked diorite porphyry are a common component of the gravels due to the reworking of debris flows and conglomerates by active streams. The sediments are similar in composition and depositional patterns to the fluvial and lacustrine facies of the Tugunan Formation.
2. Hill Slope Colluvium: This unit was initially defined as part of the AMC evaluation of the Boyongan cover sequence and is characterised as coarse-grained sequences of unstratified, chaotic, generally matrix supported debris flows in which sub-rounded andesite plus occasional pyrite-altered clasts of intrusions and associated pre- Quaternary host rocks occur (AMC 2015c). Clasts are generally supported in a brown orange to white clay-rich (illite ± smectite ± chlorite ± kaolinite ± pyrophyllite) matrix.
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July 2019 Drilling intersections range from thin veneers of fewer than 10 m to locally exceeding 100 m in apparent thickness. SRK (2015) noted that the Hill Slope Colluvium tends to be clay rich and of low water transmissivity. Re-evaluation of drillhole and water bore data indicates that the Hill Slope Colluvium is host to the upper aquifer above the Boyongan Deposit. This unit is laterally extensive across the Boyongan Deposit.
3. Volcanic Facies: Clastic and coherent andesitic rocks of the Maniayao Andesite form the prominent volcanic landforms in the Maniayao volcanic complex north of Lake Mainit. Although exposures are poor, several positive topographic features within the Maniayao complex suggest that there are multiple vent locations or sub-volcanic plugs.
The most prominent structure is the large (two kilometre) circular depression near the centre of the complex, cored by a rounded hill. These two features appear to be an eruptive crater and resurgent dome, respectively, and based on their high degree of preservation have an estimated age not exceeding 0.1 Ma. A broad apron of volcaniclastic material surrounds the volcanic hills covering much of the area between Lake Mainit and the Surigao Lowlands. Extensive drilling on the eastern margin of the Maniayao complex revealed that the volcanic package thickens to more than 700 m westward.
During geotechnical assessment of the cover sequence, AMC provided additional interpretation of cover sequence lithologies and defined domains of hill-slope debris forming from predominantly andesitic clast and colluvium accumulating in paleo gullies on the western side of the site and forming finer grained outflow fans to the east of Mount Maniayao.
4. Tugunan Formation: The sediments of the Tugunan Formation are regionally extensive across both the Boyongan and Bayugo deposits. Thickness ranges from 10 m and 20 m to more than 100 m on both the eastern and western edges of the Boyongan Deposit. The sediments consist of lahar, mudstones, poorly consolidated gravels and sands as well as a basal mass debris flow deposit along the flanks of the paleosurface topography highs.
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July 2019 5. Fluvial Facies: The fluvial facies includes poorly consolidated to unconsolidated gravels, sands and silts. The gravels commonly occur as five metre to 10 m thick lenses within massive sands and silty sands and are well rounded, moderately well-sorted and clast-supported with a sandy matrix. Clasts of pre-Quaternary rock units dominate the gravel composition near the base of the Tugunan Formation including mineralized and/or altered intrusive rocks most likely derived from the Boyongan and Bayugo deposits. Andesite clasts occur at higher stratigraphic intervals and are the dominant clast type in the uppermost gravels. Sands and silts are most abundant east of Boyongan and Bayugo and gravel accumulations are greatest to the north-west and the south of the deposits. In addition to bedding structures, the clast types, rounding and distribution relative to inferred principal source areas (Boyongan/Bayugo and Maniayao) are consistent with transport and deposition within a fluvial setting.
Wood and leaf fragments commonly occur within the fluvial facies, particularly near the pre-Quaternary unconformity. Radio isotopic Carbon14 dating of leaves (30,080 ± 1,270 years before present) has shown that the final stages of burial of the Boyongan Deposit occurred in the latest Pleistocene to Holocene.
6. Lacustrine Facies: The lacustrine facies contain silty carbonaceous and locally bioturbated mud characteristic of a low-energy depositional setting. The muds vary from well laminated to massive and commonly contain shells of gastropods (high and low- spire) and bivalves. The muds thicken southward toward Lake Mainit. However, in the vicinity of Bayugo, local thick accumulations suggest isolated, structurally-controlled basins. Because of the region’s low elevation and proximity to the ocean, deposition in an estuarine environment is a possibility for some of these fine-grained sediments.
7. Illite-Pyrite-Altered Debris Flow Facies: Close to Boyongan and Bayugo, coarse-grained sequences of un-stratified, chaotic, generally matrix supported debris flows containing sub-rounded illite plus pyrite-altered clasts of intrusions and associated pre-Quaternary host rocks occur. Clasts are generally supported in a white clay-rich (illite ± smectite ± chlorite ± kaolinite ± pyrophyllite), pyritised matrix. Drilling intersections locally exceed 100 m in apparent thickness (DDH JSD09). The clast types, clay alteration and the spatialdistribution are consistent with derivation from an incompetent clay-dominated
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July 2019 lithocap that is inferred to have overlain and/or occurred adjacent to the Boyongan/Bayugo mineralised complex. The thick sequences of mass-wasting deposits attest to catastrophic slope failure in environments of high relief. The high reliefprobably reflects rapid surface displacement along normal faults associated with the Mainit surface inflation related to shallow magma movement beneath the Maniayao volcanic complex may also have played a role.
11.3 Structural Geology
The evaluation of the structural geology of the Project region is immature by nature of the independent and largely uncoordinated phases of evaluation completed since the late 1960s. This study has compiled each of the structural geology evaluation phases to enable sufficient regional to district scale structural data to be available for use by the studies package consultants. The compilation of an evaluation for the major known structural domains has also resulted in an evaluation of the structural setting related to infrastructure including waste and tailings storage land forms.
AECOM (2014) reported that there has been no complete and systematic structural geology study related to the occurrence of mineralisation in the Project area. Broadly, deformation features within the deposit area are grouped into the tectonic structures associated with older west-verging thrust faults with marginal slips (mid Miocene to late Miocene) and the younger strike slip faulting and related structures triggered by the Philippine Fault (starting since late Miocene-early Pliocene). In addition to the tectonic deformation features, structures associated with volcanism are also evident, with multiple caldera events and shear faulting affecting the Quaternary deposits.
As part of the DFS, a Geology and Structure working group was assembled in August 2015 to assess and compile the structural information associated with the Boyongan Deposit and local infrastructure.
The DFS Geology and structure working group compiled all of the structural data for the Project area into a single composite GIS file and Identified areas of common structures that could be grouped into similar structural groups (Figure 83). This was the first time that all MGB, Philex,
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July 2019 SMMCI, Anglo, Aurelio, et al. (2012), Quebral, et al. (1996) and SRK structural data had been compiled into a single layer.
The working group identified and compiled information from the key data sets compiled since the early 1970s for the Project area. The earliest work in the area was completed by the Philippines MGB Mainit Quadrangle Geological Map. The work was completed as a series of 1:50,000 scale mapping quadrants and included desktop and field mapping programs completed by 1986. This work was rudimentary, however, major regional structures including the Philippines Fault and a regional scale structure through the present day TSF site were identified. A tectonic-structural study work was completed in 1992 by Pubellier et al and reported in the 1985 to 1992 Neotectonic map of Mindanao (1:250,000). Pubellier et al (1992) defined seismic activity, scale, movement rates and sense of rotation along regional structures, This work confirmed the location of the major regional structures, and identified the relationship of earthquake epicentres, with respect to the Project area. This work also identified some of the regional faults displacement attributes.
In 2001, Aurelio published work including an assessment of the annual displacement of the Project area due to movement both at the Philippines subduction zone and movement along the Philippines Fault. This work consisted of determination of motion vectors computed from GPS observations of the GEODYSSEA network.
Data was collected continuously for seven days every year for five years. The Surigao block of north-eastern Mindanao is cited as moving 2.6 cm/year in a north-west direction.
Quebral notes that the Pre-Quaternary tectonic environment underwent compression to the east of Silangan with thrusting forming the Northern Pacific Cordillera. This thrust front is several kilometres to the east of the study area. The regional fault pattern was later refined by Aurelio (2010). The sinistral north-south Philippine Fault system borders a Riedel fault system (R), with sinistral northwest-striking R faults dominating over dextral eastnorth-east to north-east-striking R faults.
A structural model was prepared by SRK in 2011. Using limited drilling data, the model was revised and extended in 2013 to cover the entire Bayugo and Boyongan deposits using new
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July 2019 Boyongan drilling data and new structural logs derived from photographic logging. The information gathered from photographic logging from the Boyongan area core was crucial in identifying the orientation and persistence of smaller scale faulting. The SRK (2013) final 3D geological interpretation produced a total of 43 fault surfaces. The surfaces were named genetically, in terms of both orientation groups and whether or not they were considered major through-going structures. Those labelled as ‘major’ were interpreted as likely being sub-regionally persistent fault systems.
These ‘major’ fault systems are generally through-going, with a persistence of 3,500 m to more than 4,000 m and extend across the entire study area. SRK (2013) noted that the systems may not consist of one continuous fault plane (as modelled), however, these are more likely to be a more complex network of linked fault segments. The smaller second and third order faults generally had a persistence of 200 m to 500 m with a few exceeding 500 m.
The faults interpreted in the study area were divided into four main groups:
1. major east-west trending faults, with continuity of several kilometres 2. major north-east striking faults, with continuity of several kilometres 3. the major north-east and east-west faults may be mutually cross-cutting on a local to subregional scale 4. north-west to north-south striking faults, which accommodate the majority of the vertical offset in the areaand are related to the caldera subsidence. These are labelled Caldera faults.
The north-west trending faults are likely to be sub-regionally represented and are expected to be continuous where located beyond limits of the current model.
Second-order and third-order east-west and north-south faults have the same trend as major faults, however, these are truncated against other structures. These faults control deformation within the blocks bounded by major faults.
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July 2019 Figure 11-5: Structural Model
The analysis shows a strong north-east trending data set with a regional strike continuity greater than two kilometres transecting the Boyongan open pit area. The structural analysis has a high confidence in the Boyongan open pit area, based on the SRK (2013) assessment.
North-east and north-west trending faults are mapped along the mountains east of the Mainit Graben. The northeast trending faults are believed to be complementary to the Philippine Fault Zone. North-west trending faults are believed to be younger and are relaxation structures in reaction to the movements in the Philippine Fault Zone.
Locally, around the Silangan Deposit, the most-prominent controlling faults, within the SRK study area, were interpreted to be the east-north-east to east--west striking R’ faults. These faults defined the boundaries of several fault blocks and truncated the majority of the faults within the area. They were interpreted to be pre to synsedimentation, normal-oblique-dextral
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July 2019 strike-slip faults and SRK (2013) noted that this would explain the juxtaposition of the broadly contemporaneous sediments and andesite in the Bayugo area.
The north-west to north-north-west striking faults (or Caldera faults) are interpreted to be local reactivated R- and P-Riedel faults. These faults accommodate the majority of the vertical offset and may have been reactivated by the caldera formation processes (SRK, 2013).
Increasingly localised deformation within individual sub-blocks is defined by second-order and third-order level faults although they follow the overall trend of the dominant faulting in the area.
No evidence was found during the SRK (2013) analysis to support the existence of large scale, low angle faults and analysis of stereonet data showed that the dominant structural orientations are sub-vertical, with only a minor population of low angle structures. In 2013, Philex completed an in-house evaluation of available structural data and included underground mapping data from their Boyongan Decline Project. This work included mapping that identified the existence of low angle thrust faulting.
SRK (2013) interpreted fault network was aligned with the current structural understanding of the area following the predicted Riedel fault patterns and showed strong evidence of re- activation by the adjacent volcanic system.
11.4 Hydrogeology
From 2010 to 2015, SRK conducted hydrogeological investigations at the Boyongan Project. Early investigations focused on deep basement aquifers as mine planning anticipated deep block-cave mining at the site.
In mid-2014, SMMCI considered open pit methods for the development of the Boyongan Deposit, resulting in groundwater flow through the cover-sequence rocks as being more directly relevant to mine dewatering.
In August 2015, AECOM, SRK, SMMCI, and Right Solutions reviewed existing geologic and hydrogeologic data. Around the Boyongan Project area, drillhole data along with lithology was combined with spring and structural geology information. The evaluation enabled the
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July 2019 development of a first pass estimate of water table depths in the vicinity of the Boyongan Deposit along with an interim conceptual model of the hydrogeology within the cover sequence rocks.
At Boyongan, the overlying cover sequence includes clastic sedimentary deposits of the Tugunan Formation, overlain by the Maniayao Andesites, which consists of andesite flows, interbedded tuffs and clastic sediments. Both units represent a sequence of basin filling, following uplift and deep erosion of the Silangan mineralized system. In general, the Maniayao Formation hosts a relatively transmissive aquifer, whereas the Tugunan and underlying weathered basement represents an aquitard between the surface aquifer and a deep basement aquifer. These units generally form a barrier to recharge to the basement rocks.
At least three zones related to the hydrogeology may be present in the cover sequence:
1. A weathered and mass-wasted cap (Hill Slope Colluvium), up to 50 m thick that covers much of the hillsides and valleys. 2. An intermediate zone of rocky, fractured Maniayao Andesites that extends to 300 m but may be deeper beneath volcanic promontories. This zone includes “sandy” interbeds representing flow boundaries, interbedded fluvial sediments or weathered zones. 3. A saturated zone of mixed rocky, clay-altered, and inter-volcanic muds occurring in the deeper volcanic basins, which may include interbedded lacustrine and fluvial sediments and extensive debris flow material. This zone is located to the west of the deposit (MW13-1 and MW13-14A).
From the August 2015 review, three aquifers were recognized:
1. An upper aquifer associated within the Hill Slope Colluvium domain, defined as mass debris flow, supported by matrix dominated clay. The base of this unit has a higher clay content that reduces the permeability of the unit. The unit is typically less than 40 m thick and hosts the important perched aquifer community water sources. 2. A regionally extensive aquifer hosted in the cover sequence and fractured and highly permeable Maniayao Andesites above the Tugunan Formation. 3. The basement aquifer below the base of the proposed Boyongan open cut mine and the focus of past dewatering studies associated with underground mining.
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The August 2015 review found that:
1. The Hill Slope Colluvium from surface to about 50 m below surface is dominated by weathering to claymatrix debris flow and rubble deposits, and is relatively impermeable. Water levels range from about 10 mbgs to approximately30 mbgs. Groundwater gradients show a general eastward flow and follow topography. 2. Below the rubble zones, the Maniayao Andesites is “stoney” and brittle, and tends to show high permeability. The vertical hydraulic conductivity of the Maniayao Andesites is uncertain, however interbedded zones in the close vicinity of the Boyongan open pit tend to be sandy and may enhance the transmissivity. 3. Deeper Maniayao Andesites west of the mineralised area generally indicates a higher concentration of clay alteration, possibly because the Maniayao Andesites, inter-volcanic muds and debris flow material was deposited sub-aqueously. 4. Water levels in the Maniayao Andesites are approximately 225 mRL with a relatively flat gradient. A review of existing spring locations indicates a correlation between the discharge points of the Maniayao Andesites water table where the highly permeable Maniayao Andesites intersects relatively thin zones of Hill Slope Colluvium, at the toe of most slopes. 5. The areas of the Maniayao Andesites not overlain with Hill Slope Colluvium are likely receiving 30 to 40 percent of meteoric recharge (1,620 mm/year) and feed surrounding springs. Areas covered in thick Hill Slope Colluvium receive less recharge from precipitation. 6. The cover sequence rocks will outcrop significantly in the western and southern high- walls of an open pit at Boyongan. Highwall exposures of the cover sequence may be 500 m thick in the west and approximately 40 m thick in the east. The north and south highwalls may each have 200 m to 250 m of cover sequence. 7. The eastern boundary of the Maniayao Andesites is related to a topographic high of the low permeable Tugunan/weathered basement surface. 8. The incorporation of structures specifically to the west and south of the Project area are being evaluated and may be incorporated into the hydrogeological conceptual model.
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11.5 Alteration
The Boyongan Deposit displays typical porphyry system alteration patterns. Pervasive potassic alteration is observed within the parent intrusive rocks with illite-smectite-pyrite alteration usually associated with argillic alteration overprinting the potassic zone in various degrees. Skarn alteration is observed along the contacts between carbonate-rich units and intrusive rocks. Propylitic alteration is well developed along the periphery of the diorite stocks and dissipates outwards.
Mineralisation is concentrated on the intrusive stocks associated with K-silicate or Potassic alteration in early coarse grained diorite porphyries with copper and gold values decreasing systematically toward the wall rock.
The Boyongan Deposit shows typical porphyry style mineralisation with a characteristic magmatic hydrothermal alteration pattern. The potassic alteration zone is clearly defined and associated with the mineralising phase. Other overprinting alteration assemblages have also been recognised but they do not contribute significantly to the mineralisation. Skarn alteration has also been mapped at depth where the hydrothermal fluids come in contact with carbonate- rich horizons, or controlled by structural features.
11.6 Mineralization location and general description
Initially, the Boyongan Deposit formed by hypogene mineralisation processes, displaying mineralization characteristics and vein paragenesis consistent with the porphyry vein classification of Braxton (2007), Corbett and Leach (1997) and Sillitoe (2000).
The main geological features and controls on the mineralisation are the early coarse-grained diorite porphyries, which form the focus for the copper and gold mineralisation. Drill core logging enabled the definition of three principal intrusive phases emplaced in the early diorite complex. The ECD porphyries are the intrusive phases associated with intense quartz-vein stockworks and elevated copper-gold grades. Drillhole data indicates that these bodies are roughly cylindrical at depth and broaden towards the upper 250 m to 300 m. At Boyongan, the diatreme breccia complex and the ECD series are the main host to mineralisation. A series of moderately-altered inter-mineralisation and late-mineralisation diorite porphyry stocks and dykes
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July 2019 cut the progenitor porphyry stocks. The mineralisation associated with the porphyry stocks terminate at the Quaternary paleosurface.
The deposits show typical porphyry style mineralisation with characteristic magmatic hydrothermal alteration patterns. A pervasive potassic alteration zone is clearly defined in the progenitor intrusive rocks and associated with the mineralising phase. Illite-smectite-pyrite alteration, usually associated with argillic alteration, overprints the potassic zone in various degrees. Skarn alteration is observed along the contacts between carbonate-rich units and intrusive rocks. Propylitic alteration is well developed along the periphery of the diorite stocks and dissipates outwards.
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Chapter 12.0
Silangan Project July 2019 12.0 MINERAL PROPERTY GEOLOGY
12.1 Geological work undertaken by the company in the property
12.1.1 Exploration Work Summary
During the period 2004-2012, the company has undertaken numerous geological work across 8 prospects enclosed in its three tenement claims: Sto. Tomas II in MPSA-276-2009-CAR; Bumolo, Southwest, Bumolo 2, Butan, Midway and Copper Queen in MPSA-156-2000-CAR; and Tapaya in MPSA-157-2000-CAR. Focus of the discussion is on the Sto. Tomas II orebody.
The Boyongan and Bayugo deposits have been explored since 1998. Initially exploration was directed by Anglo until 2008, when SMMCI gained full control of the tenements (MPSA149-99- XIII and EP XIII-13) covering Boyongan and the southern part of Bayugo. A complete and final exploration report covering these tenements to the end of 2012 was compiled for the DMPF and has been included as Appendix E.
The exploration that led to the discovery of the Boyongan and the Bayugo deposits consisted of various exploration stages from 1998 including conventional drainage geochemistry, geological mapping, geophysical survey and drilling programs. Based on the distribution of mineralised boulders and the geological mapping it was hypothesised that a gold rich porphyry copper deposit may be preserved, largely intact beneath the Quaternary cover.
The Boyongan Deposit was discovered in August 2000 with the sixth diamond hole, TSD06 intersecting 365 m of 0.81 percent copper and 1.90 g/t gold of essentially oxide mineralisation. This drilling followed on from a drilling program that intersected weak copper-gold mineralisation in an earlier diamond hole (TSD02), drilled on a peak chargeability anomaly from a dipole-dipole Induced Polarisation survey. Anglo continued to drill Boyongan on a semi regular 100 m by 100 m grid and completed up to 72 holes during the following two years. From 2005 to 2008 an additional 44 infill holes were drilled to a nominal 50 m by 50 m grid.
In early 2003, an aggressive drilling campaign aimed at locating additional porphyry copper and gold resources adjacent to Boyongan was planned and implemented. The Bayugo mineralised zone was discovered when a hypogene zone was intercepted in diamond hole JSD15 (including 131 m at 0.53 percent copper and 0.48 g/t gold) and diamond hole TSD29 (including 49 m of 1.18 percent copper).
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Silangan Project July 2019 The available drilling data confirms there is significant mineralisation with a projected surface expression of approximately 30 ha around the Boyongan and Bayugo deposits. The thickness of the defined orebody ranges from 400 to 600 m. However, the roots of the DIO2 stocks in West Bayugo or the path of mineralisation are still not well understood within the deeper portions of the deposit. Laterally, mineralisation dissipates away from the ECD and DIO2 progenitor stocks. The better mineralised portions have been covered by detailed drilling.
Additional drilling could facilitate an upgrading of the confidence level of the near surface resources, particularly the improved understanding of the spatial extents and genetic understanding of mineralisation within the Exotic Zone. Deep drilling and exploration drilling between Boyongan and Bayugo may also provide additional resources.
12.1.2 Boyongan Exploration
During the 1998 geochemical survey, the drainages within the Boyongan area yielded third order - 80 mesh stream sediment anomalies of 209 and 258 parts per billion gold. Follow-up work in May 2000 on the drainage anomalies located cobble to boulder sized drainage floats of diorite porphyry with stockwork veining. Significant assays from these boulders returned 2.49 percent copper and 3.99 g/t gold, as well as 2.18 percent copper and 0.64 g/t gold.
To determine the source of the anomalous samples, detailed stream sediment sampling coupled with mineralized boulder sampling was undertaken covering an area of over 11 km². Subsequent soil geochemistry in June 2000 covered 13 km of ridge and spur lines. The soil survey yielded significant gold-silver-lead-zinc anomalies reflecting some peripheral epithermal copper-gold mineralisation within the Pliocene inliers known around the Surigao District. At the same time, a dipole-dipole Induced Polarisation and magnetic geophysical survey wasundertaken in the Boyongan area.
Hole number TSD02 was drilled on a peak chargeability anomaly and indicated weak mineralisation intersected over 200 m of mineralised andesitic pyroclastics which was interpreted to be peripheral to porphyry copper systems. Primary and secondary copper minerals were also observed. A 93 m intercept in TSD02 yielded 0.57 percent copper and 0.17 g/t gold from 245 m to the end of hole. Subsequent step out drilling was continued and in August 2000, hole TSD06, approximately 500 m west of TSD02, intersected a malachite and azurite-bearing,
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Silangan Project July 2019 potassically altered diorite porphyry with 365 m of 0.81 percent copper and 1.90 g/t gold. An additional six more holes were completed within the year. The program continued on a semi regular 100 m by 100 m grid completing up to 72 holes with a total meterage of 38,421 m. These were used to estimate an inferred oxide and sulphide resource of 219 Mt at 0.51 percent copper and 0.74 g/t gold.
12.1.3 Bayugo and Boyongan Drilling Programs
The Boyongan and Bayugo deposits were initially explored under the direction of Anglo. Exploration of the Boyongan Deposit was undertaken from 2000 to 2003 and continued from late 2005 to 2008. The Bayugo Prospect was initially drilled in 2003 and again in 2007 to 2008. Anglo relinquished its joint venture equity to Philex in February 2009 and turned over the data, samples and associated infrastructure to Philex. Infill drilling of Boyongan at this time had already been completed.
Immediately after the transfer, SMMCI embarked on a two-year exploration plan for Bayugo in order to define the boundaries of mineralisation. The projected results of the program were used to supplement the data required in order to advance the prospect into the pre-feasibility and feasibility stage. Additional drilling to define the northern part of Bayugo followed a joint venture agreement with Manila Mining and KCGRI.
A total of 253 holes with a cumulative meterage of 152,878 m have been drilled from reconnaissance to infill drilling of the Boyongan Deposit and adjacent areas during the 15-year exploration history. Table 7 displays the diamond holes used for the MRE2015 October mineral resource estimate.
Table 12-1: Exploration Regimes
Operator Year Holes Length (m) First Hole ID Last Hole ID Anglo 2000 12 4,130 TSD01 TSD12 2001 20 11,334 TSD13 TSD32 2002 33 19,027 JSD03 TSD59 2003 19 11,789 TSD66 JSD24 2004 _ 2005 2 1,180 TSD79 TSD80 2006 20 12,984 TSD81 TSD101
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Silangan Project July 2019 2007 21 13,803 TSD102 TSD122 2008 10 10,206 TSD123 TSD130 Sub-total 137 84,453 SMMCI 2009 17 14,141 TSD138 TSD 157 2010 41 28,915 TSD158 EX24 2011 5 2,250 EX26 KEB01 2012 14 7,886 MDH01 MDH03 2013 12 7,535 MDH04 MW13-8 2014 15 4,175 BD01 MDH15 2015 12 3,523 MDH13 MUDH009 Sub-total 68,426 Total 253 152,880
12.2 Laboratory Testing Done on Exploration Samples
The details of this section is discussed in the Geology and Mineral Resource competent person’s report.
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Chapter 13.0
Silangan Project July 2019 13.0 MINERALIZATION
Initially, the Boyongan Deposit formed by hypogene mineralisation processes, displaying mineralization characteristics and vein paragenesis consistent with the porphyry vein classification of Braxton (2007), Corbett and Leach (1997) and Sillitoe (2000).
The main geological features and controls on the mineralisation are the early coarse-grained diorite porphyries, which form the focus for the copper and gold mineralisation. Drill core logging enabled the definition of three principal intrusive phases emplaced in the early diorite complex. The ECD porphyries are the intrusive phases associated with intense quartz-vein stockworks and elevated copper-gold grades. Drillhole data indicates that these bodies are roughly cylindrical at depth and broaden towards the upper 250 m to 300 m. At Boyongan, the diatreme breccia complex and the ECD series are the main host to mineralisation. A series of moderately-altered inter-mineralisation and late-mineralisation diorite porphyry stocks and dykes cut the progenitor porphyry stocks. The mineralisation associated with the porphyry stocks terminate at the Quaternary paleosurface.
The deposits show typical porphyry style mineralisation with characteristic magmatic hydrothermal alteration patterns. A pervasive potassic alteration zone is clearly defined in the progenitor intrusive rocks and associated with the mineralising phase. Illite-smectite-pyrite alteration, usually associated with argillic alteration, overprints the potassic zone in various degrees. Skarn alteration is observed along the contacts between carbonate-rich units and intrusive rocks. Propylitic alteration is well developed along the periphery of the diorite stocks and dissipates outwards.
Primary mineralisation occurs as both sulphide dissemination and sulphide in quartz veins. Chalcopyrite dominates as the primary copper mineral in the sulphide zone with rare to weak bornite. Hypogene gold occurs as pure gold, electrum and gold-silver tellurides locked in pyrite, bornite and rarely in chalcopyrite. Pyrite is widespread though it is more common in the Bayugo Deposit than in the Boyongan Deposit.
The tendency is for the gold to be concentrated closer to the intrusions while the copper is found slightly "outboard" of the gold as well as being coincident with it. Later oxidation and weathering processes resulted in the remobilisation of the copper distribution in the ore body generating a
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Silangan Project July 2019 greater dispersion of copper metal in upper levels of the ore deposit and variable secondary copper speciation.
The remobilised exotic copper zone was deposited to the south-east of the Bayugo Deposit (north-west of Boyongan) where the groundwater was hypothesised to flow during that particular time (Braxton, et al. 2009).
Minor mineralisation is noted in the cover sequence material directly above the paleosurface, which is understood to have been transported in a sub-horizontal direction after the mineralisation was uncovered by erosion.
11.6.1 Hypogene Mineralization
Elevated copper and gold values at Boyongan are associated with the Early Mineral Diorite Porphyries (ECDs). The hydrothermal breccias spatially related to the ECD rocks also bear significant copper and gold mineralisation. Primary mineralisation occurs as both sulphide dissemination and sulphide in quartz veins. Chalcopyrite dominates as the primary copper mineral in the sulphide zone with rare to weak bornite. Hypogene gold occurs as pure gold, electrum and gold-silver tellurides locked in pyrite, bornite and rarely in chalcopyrite. Pyrite is widespread though it is more common in Bayugo than in Boyongan.
A number of sources have reported on the vein styles and paragenesis including Braxton (2007), Ignacio (2005) and recently the petrography of SMMCI (2015c). Ignacio (2005) identified five main stages of veining comprising:
1. Stage One veins at Boyongan are hairline, wispy, discontinuous magnetite-biotite veinlets that contain minor chalcopyrite. These veins have been cut by all later vein generations. 2. Stage Two veins are irregular quartz-magnetite veins (quartz veins with magnetite rims). Some Stage Two veins have a distinctive ‘crackled’ texture with sulphides locally occupying the fractures that define the crackled texture. 3. Stage Three veins display a banded or ribbon-like vein texture (Figure 85). Assay data indicates that most of the high grade copper and gold is associated with these Stage
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Silangan Project July 2019 Three veins. The Stage Three veins are likely to have re-opened several times to produce the composite banded texture. 4. Stage Four veins display a quartz comb texture. These veins are characterised by centre lines with local void space, where euhedral quartz crystals have terminated after growing inwards from the vein margins. Stage Four quartz veins contain minor chalcopyrite ± bornite ± molybdenite ± specularite. 5. Stage Five present the final stage of hypogene hydrothermal vein mineralisation and are the massive sulphide veins, which consists of pyrite ± chalcopyrite ± bornite. They are locally associated with quartzsericite alteration halos.
Copper-iron sulphides and gold occur primarily within Stage Three and Stage Four quartz veins at Boyongan with the sulphides dominated by chalcopyrite with lesser bornite and pyrite. Sulphides occur as fracture-fill, vug-fill, disseminations, veinlets in quartz veins and locally as replacements in the altered wallrocks. Massive chalcopyrite ± bornite veins have been observed. Braxton (2007) acknowledged that a simple four or five stage paragenetic sequence may have been repeated multiple times with successive intrusions, making for numerous discrete, but mineralogically and texturally similar, vein and breccia events. The spatial coincidence of multiple overprinting fertile magmatic-hydrothermal cycles may help to explain the development of extremely high copper (greater than three percent) and gold (greater than nine g/t) grades in the eastern high grade zone. Molybdenite is minor and appears to be associated with Stage Four cock comb quartz veins. The abundance of pyrite increases away from the main copper mineralisation forming a pyrite halo typical of most porphyry copper deposits.
11.6.2 Supergene Mineralization
After the emplacement of all the diorite phases the system was tectonically exhumed exposing its upper portion into supergene processes. During this stage, the top portion of the deposit was eroded and the ore body experienced supergene oxidation and enrichment. Supergene processes mobilised the leached copper forming secondary chalcocite and native copper (Figure 87). At Boyongan, oxidation extends deeply (up to 600 m) in the western part of the deposit creating an oxidised zone and a localised zone of secondary enrichment. Groundwater flow is the dominant controlling factor in the profile and the intense brecciation in the western portion of Boyongan deepened the base of oxidation below -250 mRL.
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The deep oxidation profile in the western portion of Boyongan was formed in an environment of high topographic relief immediately next to a prominent escarpment (Braxton, et al. 2009). The permeability of the breccia complex favoured a depressed water table which gave rise to a thick unsaturated zone. The unsaturated zone promoted in-situ oxidation of hypogene minerals in both deposits. Copper was remobilised and then precipitated as secondary copper minerals into areas where the paleo-groundwater flowed. However, the low pyrite character at Boyongan limited the leaching and remobilisation of copper, resulting in the restricted distribution of secondary sulphides in the oxidised profile (Braxton, et al, 2009).
At Boyongan, the oxide zone is dominated by azurite, malachite and cuprite with minor chrysocolla and copper in silicates (Figure 88). Iron oxides such as limonite, hematite and specularite are also common in this zone. Secondary sulphides such as chalcocite with minor covellite and digenite and native copper enrichment is usually observed as discontinuous lenses within the oxidised profile.
The mixed zone at Boyongan represents a zone near the base of oxidation where partial or incomplete oxidation took place. This resulted in the co-occurrence of both hypogene copper sulphides and the supergene-produced copper oxides. Chalcocite and native copper are also commonly found in this zone reflecting the capillary fringes or the transition zone from the vadose zone into the saturated water table.
Gold is found in all the supergene zones occurring either as free pure phases or as discrete phases associated with pyrite and chalcocite. If not removed by oxidation, 23 percent of gold occurs as Au-Ag tellurides. Pure phases are common in the oxide zone while gold associated with pyrite and chalcocite is observed to be more abundant in the enriched zones.
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Chapter 14.0
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Chapter 15.0
Silangan Project July 2019
Chapter 16.0
Silangan Project July 2019
Chapter 17.0
` Silangan Project July 2019 17.0 ECONOMIC ASSESSMENT OF THE MINING PROJECT
17.1 Description of Mineral Resources estimates used as basis for conversion to Ore Reserves
The mineral resource modeling was done by Company geologists under the supervision of a CP Geologist. It has undergone a number of iterations done with the guidance of the Joint Ore Reserve Committee (JORC) standard.
The mineral resource estimate used in this Technical Report is done to a definitive feasibility study level and reported separately using the PMRC standards.
17.2 Type and Level of Feasibility Study
This report is done to a Definitive Feasibility Study (DFS) level such that the cost estimates are within +/- 15%. Table 17-1 summarizes the basis for the following key parameters.
Table 17-1: Basis for Level of Study
Parameters Basis Geology and Resource Based on exploration drill holes with adequate spacing and sufficient laboratory testing procedures and results. Proper QA/QC procedures and documentation in the Mineral Resource report. Validation by JORC competent persons were also done in some aspects, particularly the QA/QC of sampling and conduct of tests. Geotechnical 18 geotechnical holes were drilled in 2018-2019 to update pre- feasibility study level (PFS) geotechnical studies done in 2012- 2015. Samples of these new geotechnical holes were tested and analyzed to arrive to an updated geotechnical model. The holes covered the final mine infrastructures. Hydrogeological 2 deep and 2 shallow were drilled and subjected to pumping test. The response of the aquifer was monitored via 8 monitoring boreholes, drilled for the purpose, spread across the mine area to complete an aquifer stress analysis. This new study updated the PFS level hydrogeological study that was done in 2012-2015 for deeper levels of the orebody and the DFS level hydrogeological study that was completed in 2016-2017 for the shallower levels as part of the surface mine DFS.
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` Silangan Project July 2019 Mine Design Sub level cave mine design was based on DFS Geotechnical and Hydrogeological studies. Principles from Philex Mining Corporation’s Padcal block cave operations were also adapted to the mine design. Milling and Processing Sufficient laboratory tests done covering copper flotation, copper leaching and gold leaching done for the project. Tests were done covering variability of samples representing varying oxide and sulfide that will be delivered to the plant at different stages of the operation, including a pilot plant scale test for copper leaching. TSF Previous DFS design was used for the study with slight modification. In one of the variation, a design for 200 Million tons storage capacity TSF was completed to a PFS level. Tailings characterization tests were conducted to confirm non-acid forming (NAF) characteristics of the tailings and design the water treatment plant for the effluent. Environment A full Environmental Impact Study (EIS) was conducted, primarily to facilitate amendment of previously approved surface mining and underground block caving ECC’s. The Environmental Protection and Enhancement Program (EPEP) and Final Mine Rehabilitation and Decommissioning Plan (FMRDP) are on the advanced stage of approval. Prior to this, the EPEP and FMRDP for both the surface mine and underground block cave mine were approved by the MGB. The results of the EIS, EPEP and FMRDP were incorporated in the cost estimation of environmental protection programs in this study, including the final mine rehabilitation program. Financial Contractors budgetary proposals were obtained for cost estimation of construction and development costs. Major equipment, materials and supplies cost were updated by obtaining budgetary quotations from suppliers. A Memorandum of Understanding (MoU) with at least 2 power supply provider was formalized as basis for the power unit cost. Latest approved tax regulations were also adapted in the study. Mineable Reserve Only measured and indicated mineral resources were converted to mineable ore using relevant modifying factors.
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` Silangan Project July 2019 17.3 Brief Description of the Project
17.3.1 Mining and processing operations
Silangan will employ an underground mining method called Sub-level Caving. Load-Haul- Dump (LHD) units will be utilized to extract the ore from the production drifts after which ore will be trucked from underground to the processing plant at the surface. Initially copper and gold will be recovered thru a series of copper leaching and gold leaching process which produces copper cathode and gold-silver dore respectively. At year 3 of operations, copper flotation will be added to the process and will produce copper concentrate containing copper and gold as the sulfides parts of the orebody are started to be mined. The mill tailings will be stored in the TSF.
17.3.2 Mining Method and capacity
The planned underground mining method for the Project is Sub-level Caving. Mine production rate is determined by the rate of development and commissioning of production drifts and sublevels. In each production drifts, the critical path to sustained production rate is the precision in drilling and blasting production drill holes and equal drawing from the production drifts to promote desired caving. The mine will operate at an annual production rate of 4 Million metric tons.
17.3.3 Processing Method and capacity
The crushing, grinding, copper flotation, copper leaching, gold leaching and tailings impoundment processes of the metallurgical plant will be designed to match the 4 Million metric tons per year output of the sub-level cave mine.
17.3.4 Ore to be Mined / Product to be Produced
Silangan’s ore is a mix of copper oxide and sulfide minerals. This complex mineralogy dictated the employment of an intricate metallurgical flowsheet, which results to three saleable products. The Run-of-Mine (ROM) ore will average to 0.63 percent copper and 1.20 grams per metric ton gold. After processing, ROM will be converted to the following saleable products:
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` Silangan Project July 2019 1. a copper concentrate with an average grade of 20 percent copper and 58 grams per metric ton gold; 2. a 99.999 percent copper, copper cathode sheets and 3. a gold and silver dore with ratio ranging from 39-61 percent gold and 33-69 percent silver.
17.3.5 Prospective Markets or Buyers
Copper concentrates produced by mining companies in the Philippines are sold to smelters and refiners (“Offtakers”), either abroad or to Philippine Associated Smelter and Refinery (“PASAR”) in the Philippines. Sales contracts, either spot or long-term, with Offtakers are typically denominated in US dollars following the global prices of metals, which are also denominated in US dollars, as in the London Metal Exchange (LME) which is usually the basis of pricing contracts. The final value of metals from concentrates sold is determined following agreed quotational period, typically one to three months from the delivery of concentrates to Offtakers.
Offtakers who treat the concentrates and refine the copper, collect treatment charges (TCs) in US$ per dry metric ton and refining charges (RCs) in cents per pound. Additional charges are also collected for other metals refined such as gold or silver. These treatment and refining charges are usually negotiated but generally are based on the benchmark rates arrived at annually by major Japanese smelters with their suppliers of concentrates.
Philex, who owns the Silangan Project, has two current Offtakers for its copper concentrates, namely Pan Pacific Copper Co. Ltd. and Louis Dreyfus Commodities Metals Suisse SA.
Copper cathodes could be directly sold to LME or to foreign Offtakers and Traders. A group, in the name of Heraeus Materials Singapore Pte Ltd has expressed interest in entering into a copper cathodes offtake agreement with Silangan.
Similarly, gold and silver dore are marketed to foreign Offtakers. Recently, the Bangko Sentral ng Pilipinas (BSP) has launched programs to increase its gold reserves. Initial discussions were held to explore the sale of Silangan’s gold dore.
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` Silangan Project July 2019 17.3.6 Estimated Mine Life
The technical report illustrates an economic mine life of twenty-one years excluding a two year development period.
17.3.7 Total Project Cost/Financing
The estimated cost of investment to bring the mine to full production, consisting of underground mine development, preparation of process plant and associated infrastructure for a nominal 4 Mt/y mine including all direct and indirect costs, commencing from the date of the Final Investment Decision (FID) is PHP 43,174 Million (USD 758 Million), as summarized below Table 17-2.
Table 17-2: Initial Capital Costs
Description Cost ($ M) Cost (Php M)
Mine 156 8,268
Process Plant 220 11,660
Tailings Storage Facility 21 1,113
Infrastructure 82 4,346
Power Transmission and Distribution 20 1,060
Project Indirect Costs 72 3,816
Owners Costs 33 1,749
Contingency 61 3,233
Taxes 80 4,240
TOTAL 745 39,503
17.3.8 Production Cost / Production Schedule
A 4 Million metric ton per year mine production schedule was generated using GEMS and SURPAC softwares. Production will start after a 2.5-year development and construction period. A rapid ramp up to 4 Million tons wil happen on the first two years, afterwhich the production rate will be maintained for most of the 21-year mine life until it wanes. Table 17-3 shows the annual production targets.
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` Silangan Project July 2019 Table 17-3: Planned Production Program Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Metric Tons 2.8 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 Ore, Millions Copper, % Cu 1.07 1.07 1.08 0.92 0.69 0.66 0.63 0.58 0.59 0.58 0.56 Gold, g Au / t 1.71 1.83 1.82 1.42 1.37 1.35 1.54 1.41 1.45 1.19 1.15
Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20 Y21 TOTAL Metric Tons 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 3.8 2.6 81.4 Ore, Millions Copper, % Cu 0.54 0.52 0.51 0.45 0.45 0.56 0.48 0.46 0.41 0.42 0.63 Gold, g Au / t 1.04 1.03 0.98 0.93 0.93 0.94 0.93 0.82 0.64 0.66 1.20
To mine and process a sustained rate of 4.0 Million tons per annum for the majority of the operating Silangan will spend USD 2.6 Billion or will spend PHP 140 Billion throughout its mine life as outlined below in Figure 17-1.
Figure 17-1: Mining Cost
MINE CASH COSTS
Mining Processing G&A+LBT
160
140 10 10 9 9 9 9 9 9 9 9 8 8 8 120 9 8 9 8 8 8 8 100 80 76 74 73 74 74 74 74 74 74 73 73 73 80 64 74 74 74 74 74 75 4 60 62 40 53 53 50 20 48 48 48 47 45 44 45 44 39 40 41 43 43 46 47 45 42 16 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
17.4 Marketing Aspects
PMC and SMMCI conducted market researches throughout the study period. This section summarizes the result of studies done.
17.4.1 World Supply and Demand Situation
17.4.1.1 Gold
The modern gold market is a picture of diversity and growth. Since the early 1970s, the volume of gold produced each year has tripled, the amount of gold bought annually has
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` Silangan Project July 2019 quadrupled and gold markets have flourished across the globe. Gold is now bought by a far more diverse set of consumers and investors than at any previous time in history.
Gold has emotional, cultural and financial value and various people across the globe purchase gold for different reasons, often influenced by a range of local market conditions, national socio-cultural factors and wider macro-economic drivers.
Its diverse uses, particularly in jewelry, technology and by central banks and investors mean that mining gold may rise to prominence at different points in the global economic cycle. This diversity of demand and self-balancing nature of gold market underpin gold’s robust qualities as investment asset.
India, China and recently, global central banks, have been the major sources of gold demand for the last ten years. China and India, because of their special affinity and cultural connections with gold, contribute about 50% of global gold consumption, according to the World Gold Council (WGC). Central banks on the other hand have become net buyers of gold since 2009, after many years of net selling.
In terms of investment demand, gold has unique properties as an asset class. Modest allocations to gold can be proven to protect and enhance the performance of an investment portfolio. Even so, globally, gold still only makes up less than one per cent of investment portfolios. However, this is changing and investors of all sorts are coming to accept gold as a reliable, tangible long-term store of value that has moved independently of other assets. The annual volume of gold bought by investors has increased by at least 235% over the last three decades.
The past decade has seen a fundamental shift in central banks’ behavior with respect to gold, prompted by reappraisal of its role and relevance after the 2008 financial crisis. Emerging market central banks have increased their official gold purchasing, while European banks have ceased selling, and the sector now represents a significant source of annual demand for gold.
Central Banks sold 7,853 tonnes of gold between 1987 and 2009; between 2010 and 2016 they bought 3,297 tonnes.
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` Silangan Project July 2019 Gold has long been central to innovation in electronics. Today the unique properties of gold and the advent of ‘nanotechnology’ are driving new uses in medicine, engineering and environmental management. Gold can be used to build highly-targeted methods for delivering drugs into the human body, to create conducting plastics and specialized pigments, or advanced catalysts that can purify water or air. It has also been used in dentistry for centuries. Although most technological applications use low volumes of gold, their impacts are very diverse and wide-reaching. Figure 17-2 shows breakdown of worldwide gold use derived from World Gold Council. Demand for gold as illustrated by the graph can be summarized as follows:
Figure 17-2: Gold Demand Drivers
17.4.1.2 Copper
Global refined copper consumption will register steady growth over the coming years, driven by demand from the power industry, rising electric vehicle (EV) production and a positive global economic growth outlook, a new copper supply and demand outlook by Fitch Solutions is shown in Figure 17-3.
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` Silangan Project July 2019 Figure 17-3: Fitch Solutions Copper Supply –Demand Chart
Fitch forecasts that global copper demand will increase from 23.6mnt in 2018 to 29 .8mnt by 2027, at 2.6% annual growth.
But the global copper market will see persistent undersupply in the coming years, as global consumption, driven by China's power and infrastructure sectors and increasing EV production, continues to outpace supply growth, Fitch warns.
Based on Fitch’s data, global refined copper demand will outpace production and the market will be in deficit over the next few years. Fitch specifically forecasts the global refined copper balance to register a deficit of 247kt in 2018, and to remain under-supplied through to 2021.
Mining companies are searching worldwide for copper projects amid the forecasts that demand for the red metal will significantly outstrip supply from 2020 (there are 300 kg of copper in an electric bus and nine tonnes per wind farm megawatt).
That is the short-term forecast, but over the long term, Fitch expects the global copper deficit to shrink, and predicts that the market will shift to oversupply, as copper producers invest in new projects and output increases.
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` Silangan Project July 2019 Table 17-4: Historical Copper Price Chart
Forecasts by Commodity Resource Unit (CRU) on copper’s supply-demand balance are surpluses beginning from 2014 to around 2021, due to the expected commencement of new brownfield and greenfield projects during the period as depicted in Figure 17-5 Supply is expected to start declining beyond that period. Industry experts like CRU see a huge supply- demand gap moving forward unless more new mine projects are developed. This outlook supports the position that copper prices may start to decline from current levels by 2014, due to the forecast excess supply, and pick up again beyond 2021 when the supply-demand gap materializes.
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` Silangan Project July 2019 Table 17-5: Copper Supply Demand Balance (2012)
Top copper consumer China, (40% of global consumption) is showing signs of deceleration as illustrated in Figure 17-6. A soft landing of 7.5% growth is expected in 2012, from a 9.2% growth rate in 2011. This can be attributed to the current global economic crisis and the strong growth that China exhibited in the previous years. This slowing demand further adds to the excess supply pressure on copper prices. Nevertheless, the country is taking steps to stimulate its economy through monetary and fiscal policies. Recently, China approved 1 trillion Yuan (USD 157 billion) worth of infrastructure projects, providing a spur for copper demand and some price support, given copper is a major component in construction.
Figure 17-6: Decelerating China
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` Silangan Project July 2019 The legal and regulatory environments, political instability and growing resource nationalism are proving to be more complex for the mining industry moving forward. The desire of governments to get more share of mining revenues is discouraging for investors and the industry. Ore grades have also been declining. CRU expects the average grade to be even lower for the next generation of mines. These lower grades lead to higher unit operating costs which further aggravate the already rising costs in the mining industry.
The aforementioned problems may have led to the shift in CRUs forecast surplus years in their studies between 2011 and 2012 and this supply delay should be supportive of copper prices near term.
17.4.2 Prospective Markets or Buyers
17.4.2.1 Gold
According to BDO Capital & Investment Corp. President Eduardo Francisco, investors in the Philippines do not have access to gold bars and coins, consequently Filipinos wanting to invest in gold choose alternatively to invest in stocks of gold mining companies. Local demand in the Philippines comes from the Bangko Sentral ng Pilipinas (BSP), which purchases from small-scale miners in the country. In accordance with Republic Act No. 7076 (People's Small Scale Mining Act of 1991), all gold and silver produced by small-scale miners must be sold to the BSP.
According to the Department of Environment and Natural Resources (DENR), gold sold to the BSP declined 95 percent in the first 6 months of 2012 (786 kilograms) from levels seen in the same period of 2011 (15,000 kilograms). DENR said such a decrease indicates that the gold from small-scale miners is largely going to the black market and related activities.
Global gold demand in 2011 amounted to 4,067 tonnes, according to the World Gold Council, equivalent to 4.067 million kilograms. Considering the Philippines’ 17,389 kilograms of gold purchases in 2011, gold demand from the Philippines as a percentage of global gold demand is just a mere 0.4 percent and is therefore considered insignificant on a global perspective.
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` Silangan Project July 2019 Table 17-4: 10-Year Historical Gold Demand
17.4.2.2 Copper
In 2011, the Philippines imported a total of 56,500 tonnes of refined copper products (Source: National Statistics Office). During this period, global refined copper consumption amounted to 19.7 million tonnes (Source: Wood Mackenzie). This means that copper demand from the Philippines represents only 0.3 percent of copper consumption worldwide, which makes Philippine consumption much less compared to a global scale.
On copper concentrates, there is still no demand from the local market according to the Philippine Industry Roadmap for Copper published by the Board of Investments. Apparently, the source of demand of copper concentrates from PASAR is being filled by foreign companies from Papua New Guinea, Peru, Indonesia, Australia, Canada and Chile. This has been the case since the late 1990s when Philex Mining Corporation (PMC) and Atlas ceased to be members of the stockholders of PASAR.
On wires and cables, the same study mentions that 90 to 95 percent of local production is sold to the local market while the remainder is sold abroad, mostly to Taiwan and Korea. The domestic market is 60 percent supplied by local producers while 40 percent comes from imports including possibly smuggled products. Smuggling of rods, bars and profiles is estimated by the study to have a 1:1 ratio with imports while smuggled wires and cables were estimated to be 15 to 20 percent of the local market. The study estimated production of wire rods at about 30,000 MT per year, and is projected to grow by 2 to 3 percent annually. According to some manufacturers, wire and cable demand grew by an average of 10 percent recently due to the surge in private sector construction.
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` Silangan Project July 2019 17.4.3 Product Specifications
For the first two years of production the operations will produce two saleable products, copper cathode sheets that is 99.999% copper and gold-silver dore with composition varying from 33-63 percent gold and 39-61 percent silver at different periods of the mine.
Starting year three of production when the copper flotation plant is added to the processing plant, copper concentrate with 0.20% copper and 58 g/t gold will be produced.
17.4.4 Price and Volume Forecasts
17.4.4.1 Gold
The gold price assumption adopted for the financial evaluation of the remaining Life of Mine of Padcal in this report is USD 1,342 per ounce, based upon the fundamental and technical analysis presented below.
17.4.4.1.1 Fundamental Analysis
Official gold purchases reached a new record in 2018 as central banks continued to diversify away from the U.S. Dollar. Not only was 2018 a banner year for central bank gold purchases, but it was also the highest amount for more than five decades. Central banks haven’t bought this much gold in one year since Nixon ended the convertibility of the U.S. Dollar into gold in 1971.
The total central bank net gold purchases in 2018 were 651.5 mt, up nearly 75% from the year before. Thus, official gold purchases increased by a stunning 276 mt from the 375 mt in 2017:
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` Silangan Project July 2019 Figure 17-7: Central Bank Net Gold Purchases (2010-2018)
Since 2009, central banks have shifted from being net sellers to become net buyers of gold. This should be a good sign since the central banks themselves (which prints the money) are starting to shift their reserves to gold. It signals that they themselves are looking for a stable store of wealth for protection. This shift translates to less supply and more demand from these big institutions. Also, given the complexities, declining ore grades and rising costs in mining, gold supply may further be constrained. These factors should be supportive of gold prices over the long-term.
The price of gold increased by 0.3% since the start of the 2018 year closing April at the level of $1,334.76 per troy ounce. This strong recovery of gold prices happened due to the surge in demand of gold, that was up 21% year-on-year in the first quarter of 2016 reaching 1,290 tons. The main driver of this increase was huge in flow in exchange-traded funds (ETFs) – marketable securities traded on stock exchange which tracks commodity prices, including gold.
The main factor that fueled demand for the yellow metal is a high level of uncertainty observed in the global economy at the moment. People always rush towards refuge commodities like gold or silver when they think that something is going wrong with the economy. Now, there are at least three factors that undermined the confidence in traditional asset classes and therefore improved sentiment towards buying gold: negative interest rates implement in Europe and Japan, expectations about slowing of US interest rate rises, concern about Eurozone disintegration and China’s slowdown negative impact on global economy.
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` Silangan Project July 2019 As the analysis of World Gold Council shows gold returns in period of low interest rates are twice as high as their historical average. Moreover, in such environment gold seems to be more effective in portfolio diversification, mitigation of risk and long-term returns as compared to government bonds. So, in current conditions of low-to-negative interest rates demand on gold from investors and the central bank is going to continue strengthening moving the prices up.
17.4.4.1.2 Technical Analysis
Figure 17-8 below presents the historical gold price for the past 19 years and the corresponding moving averages (MA) over a variety of time periods. The selected price assumption of USD1,342/oz corresponds to a conservatively adjusted 3-year MA, typically considered as a reasonable price assumption for Canadian NI43-101 reports (Source: Craig Waldie et al., Ontario and British Columbia Securities Commission). A more optimistic price view could be considered based upon the 11-year bull run of gold, and the strong fundamentals discussed previously.
Figure 17-8: Technical Analysis for Gold Price-Strong Fundamentals Indication
17.4.4.1.3 Bank Forecasts
For comparison purposes, a summary of long-term bank forecasts, traditionally conservative with their price forecasts, is collated below.
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` Silangan Project July 2019
Figure 17-9 Bloomberg Normalized Gold Price Projections
17.4.4.2 Copper
The copper price assumption adopted for the financial evaluation of the Silangan Project in this report is USD3.20 per pound, based upon the fundamental and technical analysis presented below.
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` Silangan Project July 2019
17.4.4.2.1 Fundamental Analysis
Global copper demand will continue to rise in 2019. According to the latest analysis from Fitch Solutions, the market is under supplied with demand set to increase from 23.6mnt in 2018 to 29.8mnt by 2027 - at 2.6% annual growth. Fitch warns that global consumption, driven by the EV revolution and increasing demand from China’s power and infrastructure sectors, will continue to ramp, surging ahead of supply growth. Global copper mine production will see steady growth over the next few years, supported by markets with low operating costs and improving copper prices.
17.4.4.2.2 Technical Analysis
Figure 17-10 below presents the historical copper price for the past 10 years and the corresponding moving averages (MA) over a variety of time periods. The selected price assumption corresponds to the 8 year MA, a more conservative approach compared to the typical 3 year MA considered as a reasonable price assumption for Canadian NI43-101 reports (Source: Craig Waldie et al., Ontario and British Columbia Securities Commission).
Figure 17-10: Historical Copper Price
17.4.4.2.3 Bank Forecasts
For comparison purposes, various long-term bank forecasts, traditionally conservative with their price forecasts, are collated below.
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Figure 17-11: Bloomberg Normalized Copper Price Projection
Firm Analyst As Of 2018 2019 2020 2021 2022 Emirates NBD PJSC E. Bell 08FEB2018_00:00:00.0000006462.5 7062.5 Oxford Economics Ltd D. Smith 02FEB2018_00:00:00.0000006624.5 6344.75 6,428 6,871.83 Commerzbank AG E. Weinberg 02FEB2018_00:00:00.0000006700 6800 5850* Westpac Banking Corp J. Smirk 29JAN2018_00:00:00.0000006669.3638 5391.4414 5,848 BMI Research D. Snowdon 29JAN2018_00:00:00.0000006300 6400 6,600 7,000.00 5800* Natixis SA B. Dahdah 26JAN2018_00:00:00.0000007200 7400 Citigroup Inc T. Liao 26JAN2018_00:00:00.0000007125 7000 HSH Nordbank AG J. Edelmann 24JAN2018_00:00:00.0000006937.5 Deutsche Bank AG M. Hsueh 23JAN2018_00:00:00.0000007174.7998 7500.2119 7,714 7,550.00 7383.4 Itau Unibanco Holding SA A. Passos 17JAN2018_00:00:00.0000006870 6542.4053 6,621 6,631.26 6315.7 Intesa Sanpaolo SpA D. Corsini 16JAN2018_00:00:00.0000007125 7000 7,150 7,250.00 Market Risk Advisory Co Ltd N. Niimura 08JAN2018_00:00:00.0000006850 6750 6,900 7,100.00 7300 Capital Economics Ltd S. Gambarini 08JAN2018_00:00:00.0000006688.75 7500 Capital Economics Ltd C. Bain 05DEC2017_00:00:00.0000006187.5 8250* DZ Bank AG G. Vogel 04DEC2017_00:00:00.0000006450 Prestige Economics LLC J. Schenker 27NOV2017_00:00:00.0000007402.0205 Societe Generale SA R. Bhar 22NOV2017_00:00:00.0000006750 7000 7,500 7,750.00 8000 Toronto-Dominion Bank/TorontoB. Melek 16NOV2017_00:00:00.0000006762.5078 6912.5083 Cantor Fitzgerald LP R. Chang 26OCT2017_00:00:00.0000006239.0181 6172.8799 6,614 VTB Capital PLC W. Bielski 02OCT2017_00:00:00.0000005750 6500 7,000 VTB Capital PLC D. Glushakov 29SEP2017_00:00:00.0000005900 5900 6,000 7000* Promsvyazbank PJSC I. Nuzhdin 20SEP2017_00:00:00.0000005500 5750 6,000 6,000.00 Citigroup Inc N. Agate 31AUG2017_00:00:00.0000006415 6815 Standard Chartered Bank N. Snowdon 24AUG2017_00:00:00.0000006600 6700 7,000 Danske Bank A/S J. Pedersen 19JUN2017_00:00:00.0000006013* 6063* Citigroup Inc D. Wilson 30APR2017_00:00:00.0000006425* 6815* 7115* Barclays PLC D. Davis 26APR2017_00:00:00.0000005725* UniCredit Bank AG J. Hitzfeld 25APR2017_00:00:00.0000005350* ING Bank NV H. Khan 21MAR2017_00:00:00.0000006500* 6500* 7000* Deutsche Bank AG G. Sporre 16MAR2017_00:00:00.0000005725* 6800* 7800* 7605.5752* Australia & New Zealand BankingD. Hynes Group Ltd/Melbourne14FEB2017_00:00:00.0000006225* 6507* 6589* Reel Kapital Menkul Degerler E.AS Erkan 16DEC2016_00:00:00.0000005716* 6000* RBC Capital Markets F. Phillips 15DEC2016_00:00:00.0000005842* 6063* 6614* 6944* Bank of America Merrill LynchM. Widmer 17AUG2016_00:00:00.0000005000* 5250* BMO Capital Markets Corp/TorontoJ. Fung 06OCT2015_00:00:00.0000007054* 7054* Macquarie Group Ltd C. Hamilton 15MAY2015_00:00:00.0000007700* 8280* 8613* Australia & New Zealand BankingM. Pervan Group Ltd/Melbourne23FEB2015_00:00:00.0000006181* Numis Securities Ltd C. Barker 14JAN2015_00:00:00.0000005762.02* 5511.5* 5511.5* Deutsche Bank AG M. Lewis 30OCT2014_00:00:00.0000007759* UBS Warburg Ltd A. Staines 15OCT2013_00:00:00.0000006341* Deutsche Bank AG D. Brebner 08JAN2013_00:00:00.0000006312*
* Excluded from median calculation (Forecast made 180+ days ago) -bloomberg
Prepared by SMMCI: 2020 2021 2018 only: Median 6,904 3.13 6,750 3.06 6,621 3.00 7,050 3.20 Mean 6,888 3.12 6,703 3.04 6,752 3.06 7,067 3.21 Bloomberg official tally: Median 6,621 3.00 6,621 3.00 6,621 3.00 7,050 3.20 Mean 6,721 3.05 6,721 3.05 6,721 3.05 7,019 3.18
17.4.5 Sales Contract
17.4.5.1 Market
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17.4.5.1.1 Copper Concentrate Offtakers
Philex Mining Corporation has existing engagement to two off takers for Padcal’s copper concentrate.
Pan Pacific Copper Co., Ltd (Pan Pacific)
Pan Pacific, a joint venture company between Nippon Mining Co. Ltd. and Mitsui Mining and Smelting Co., Ltd., is the largest buyer of copper concentrate in the world, procuring approximately 1.7 million tonnes of concentrate . Its principal sources of concentrates include the Los Pelambres mine, Collahuasi mine and Escondida mine, the world’s largest, all in Chile, and Cadia Hill & Ridgeway Mines in Australia. The Padcal mine of Philex Mining Corporation also sells copper concentrate to Pan Pacific under a long-term gold and copper concentrates sales agreement whereby Philex Mining is committed to sell to Pan Pacific the concentrates produced from the Padcal Mine now at 60 percent of annual production up to end of mine life.
Copper concentrates are delivered to Pan Pacific’s Saganoseki smelter and refinery in Kyushu Island and Hitachi Works, and just recently to the Tamano smelter of Hibi Kyodo Smelting Co., Ltd., a subsidiary of Pan Pacific, to produce electrolytic copper. The aggregate production capacity of refined copper totals 710 thousand tons per year (Saganoseki and Hitachi for 450 thousand tons, and Tamano for 260 thousand tons), which is the largest in Japan and also one of the largest in the world.
Louise Dreyfus Commodities Metals Suisse SA (LDM)
Louis Dreyfus Commodities Metals Suisse SA (“LDM”) is part of the Louis Dreyfus Group, which is a French global conglomerate company involved in agriculture, oil, energy and commodities (global processing, trading and merchandising), as well as international shipping. It also owns and manages ocean vessels, develops and operates telecommunications infrastructures and is involved in real estate (development, management and ownership). The company was founded in 1851, in Alsace, by Leopold Louis-Dreyfus, who developed a fortune through cross-border cereal trading.
The Metals Platform began trading non-ferrous metals and raw materials in 2006. LD now originates, consolidates, exports and transports different metals, including copper, zinc, and lead concentrates, copper blister and refined base metals. As sales volumes have
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` Silangan Project July 2019 quadrupled since the inception of the Metals Platform, LD is now among the top 3 global merchandisers of Copper, Zinc and Lead Concentrates.
LDM also sends the copper concentrates to the Saganoseki smelting plant.
17.4.5.1.2 Copper Cathode Trader Selection
PMC/SMMCI does not currently produce a copper cathode from existing operations, and is currently in the process of evaluating potential traders. Expressions of interest have been received from the major traders, including:
1. LDC Metals (Louis Dreyfus Company) 2. Trafigura 3. Mitsui 4. Mitsubishi 5. Sojitz.
Several of the traders mentioned above have indicated that they have sufficient capacity to take all of the Silangan’s copper cathode production.
In addition to the above, initial discussions were held with Glencore/PASAR where interest for further discussions were expressed. This will be pursued in the next phase of the project.
17.4.5.1.3 Gold-Silver Dore
SMMCI does not currently produce a gold/silver doré from existing operations, and is currently in the process of evaluating potential refiners. For the purposes of this study it is assumed that the refinery will be Heraeus Limited’s’ Hong Hong operation. Heraeus Limited is a direct buyer of doré and currently has sufficient capacity to process all of Silangan product. However, this capacity can become restricted when third parties send large, unpredictable volumes of scrap metals to the refinery. Depending on the amount of metal produced at Silangan, SMMCI will determine whether the doré will be sent only to Heraeus or to multiple refiners. By sending the metal to more than one refinery, SMMCI spreads refiner credit risk and mitigates operational risks (e.g. shutdowns or strikes). The main disadvantage is that it is more cumbersome for administration.
SMMCI proposes to sell the gold/silver doré to the refiner and copper cathode to traders. Discussions with potential refiners/traders are still in the early stages, though a number have expressed interest. Initial engagement with each potential buyer who has expressed interest
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indicated that their trading capacity can take the whole production of SMMCI. Therefore, making Silangan Project lucrative to these potential buyers.
Competitors do not have a significant influence on the price or quality of gold, silver or copper cathode and, therefore, do not pose any threat to the development of the Silangan Project.
17.4.5.1.4 Copper Cathode Pricing
Copper cathode sale contracts will be based on a fixed price determined by the spot price on the date of the invoice. Actual payment terms will vary depending on the final agreement depending on the actual sale date and the hedging position taken by the traders. The actual terms have yet to be discussed with the potential traders.
17.4.5.1.5 Gold-Silver Refinery Pricing
Refinery pricing is expected to be set as described below, assuming that the doré composition as described in the Metallurgy discussion. If the doré composition materially differs from this assumption, refining terms can change significantly. Refining contracts are usually for two years, and can be extended or cancelled upon 30 days’ notice. Refinery pricing is as follows: treatment charge:
1. Au >30% to ≤45% US$ 0.85 per troy ounce of doré 2. Au >45% to ≤60% US$ 0.95 per troy ounce of doré metal return:
1. Au 99.9% 2. Ag 99.0%
extra charges apply to deleterious elements (not expected to impact SMMCI).
From the time of shipment, it is expected that the gold/silver metal will be available for sale within approximately seven business days. SMMCI plan to sell the gold directly to the refiner, using pricing based on the spot LBMA gold and silver prices.
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` Silangan Project July 2019 Gold, silver and copper are financial assets that are actively traded on global exchanges. Prices are set in the open markets and are easily established for the purposes of entering a purchase and sale agreement between Silangan and the metal buyers. The financial modelling documented in this report used the long-term prices of US$1,342 /ounce for gold, US$17 /ounce for silver and US$3.2 /lb (US$7050/t) for copper and undertook sensitivity analysis on price to simulate potential variations.
The World Gold Council (‘WGC’) has established a conflict-free gold standard that “provides a mechanism by which gold producers can assess and provide assurance that their gold has been extracted in a manner that does not cause, support or benefit unlawful armed conflict or contribute to serious human rights abuses or breaches of international humanitarian law.” LBMA has established a similar standard, and gold mining companies that comply with WGC’s standard are also deemed to comply with LBMA’s standard. Refineries are obligated to comply with the LBMA standard to maintain their LBMA accreditation. Therefore, all gold mining companies that send material to these refineries must also comply with the LBMA standard.
17.4.6 Marketing Cost Assumptions Philex has an extensive experience in marketing copper concentrates thru its Padcal operations. Table 17-5 tabulates projected marketing cost used in the study.
Table 17-5: Concentrate Marketing Cost
Description Unit Value
Saleable Concentrate % 18 Grade Limit
Concentrate Losses % DMT concentrate 0.25
Treatment Cost USD/DMT concentrate 70
Minimum Cu Deduction Unit 1.0
Maximum Payable Cu % of final Cu content 0.07 (after losses)
Minimum Au Deduction g/DMT 1.0
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` Silangan Project July 2019
Description Unit Value
Maximum Payable Au % of final Au content 97.5 (after losses)
Tables 17-6 and 17-7 summarizes proposed marketing costs for gold-silver dore and copper respectively based on proposals from smelters and refinery Philex reached out to as discussed previously.
Table 17-6: Gold-Silver Dore Marketing Cost
Description Unit Value
Au Shipping Losses % Au 0
Payable Au % Au (after losses) 99
Au Refining Charge USD/oz payable 0.9
‘
Table 17-6: Copper Cathode Marketing Costs
Description Unit Value
Cu Shipping Losses % Cu 0
Payable Cu % Cu (after losses) 100
17.5 Technical Aspects
PMC and SMMCI have tapped Ausenco Services Pty Ltd to undertake a technical study to produce the technical designs of the mine, processing plant, tailings storage facility and related surface infrastructures as part of a feasibility study. The technical designs and plans were used in this study to arrive at a mine production plan and cost estimations. The professional agreement between all parties is such that PMC and SMMCI have proprietary ownership of the results of Ausenco’s studies as well as all supporting details including the results of the studies of their sub-consultants, and is free of any obligation to dispose this information.
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` Silangan Project July 2019 17.5.1 Mining Plans
17.5.1.1 Mining method
The orientation of the orebody particularly its spatial configuration delineates the applicable mining methods favorable to the project. It is the economic valuation, however, that finally dictates which of the mining methods is best to move forward. In the case of the Silangan Project, because of the orebody’s porphyry mineralization characterized by its massiveness and fairly uniform grades in its entirety, any of the bulk mining methods can be selected.
In one of the feasibility studies conducted, underground Block caving using LHD units was being proposed. This mining method is currently being used at PMC’s Padcal mine which is also a copper porphyry deposit. In another feasibility study, surface mining method called open pit was proposed. Up until the open pit mining ban in the Philippines was imposed by the DENR, the later seen as the best way forward for the project.
SMMCI reverted its focus to underground mining and have selected sub-level cave mining method to mine the Boyongan orebody on account of the following.
1. Further scrutiny identified higher-grade portions of the Boyongan orebody are located at higher elevations such that a top-down mining approach is expected to provide better economic results. 2. Faster development rate as the initial production level is developed at the upper portions of the orebody versus developing the production level at the bottom of the orebody in a block cave mine. 3. Streamlined the metallurgical process as the initial ore mined at the first two years of operations are purely oxide ore which will require copper and gold leaching process only. The copper flotation plant that process sulfide ore will only be required in the third year of operation. Sub-level cave mining method is a top down mining method that requires significant upfront development. Each production levels are spaced nominally at 25 meter intervals and are progressively developed through lateral retreat and downward. Each production level, ore is broken by precision drilling and blasting of a series of up-hole after which the blasted ore is extracted by LHD units. Ore is tipped into a transfer raise where it will be loaded into hauling trucks that will ply the access decline to the processing plant at the surface. Sub- level cave mining method is shown diagrammatically Figure 17-12.
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` Silangan Project July 2019 Figure 17-12: SLC Mining Operations
Sub-level cave mining, in principle, is a method that is suitable for moderately fractured ore bodies, which when drilled and blasted will collapse by its own weight thereby creating fragments of rocks that are subsequently extracted.
The process consists of driving a series of evenly spaced openings called production drifts in a direction dictated by mining stresses and geological structures.
Broken rocks as a result of the caving process are then extracted at the production drifts. Ore is then hauled and subsequently dumped at strategically located ore passes, which are vertical openings used to direct the flow of ore by gravity. Ore Passes will be installed with grizzlies where over-sized boulders are reduced in size using mobile rock breakers.
All of the ore passing through transfer raises will report to a collecting bin and chute where it will by 60-tonner mine trucks to haul to the surface. There will be a collecting bin and similar truck loading facility at every four production levels.
Ore crushing and further resizing will all be done at the processing plant.
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` Silangan Project July 2019 17.5.1.2 Mine Design/Mining Parameters/Geotechnical Parameters
17.5.1.2.1 Geotechnical Parameters At least two geotechnical study regimes have been done for the Silangan Project. SRK Consulting, out of there Vancouver, Canada office, did the earlier work for the Block Caving study in 2015 and the latest is done by Pells Sulivan Meynink (PSM, Ausenco’s geotechnical and hydrogeological sub-consultant) of Brisbane, Australia. For this study’s purpose, the CP has relied on the latest study done by PSM.
There are eleven rock mass units (RMU’s) that have been defined for Boyongan tabulated Table 17-7. Of these, RMU’s 7 - 10 are considered dominant, covering the bulk of the area. Figure graphically displays RMU’s at the Silangan Project.
Table 17-7: Rock Mass Units for Boyongan
Rock Mass Typical Hydraulic RMU ID RMU Rating (RMR) Radius (m)
1 Overburden N/A N/A
2 Weathered Maniayao Volcanics 23 14
3 Coherent Andesite 37 22
4 Laharic Breccia 32 19
5 Intervolcanic Sediments 26 16
6 Tugunan Sediments 26 16
7 Argillic Boyongan Intrusives 25 15
8 Intermediate Boyongan Intrusives 32 19
Moderate Strength Boyongan 9 41 25 Intrusives
10 Bacuag Basalt 44 27
Weathered Weathered Basalt N/A N/A Basalt
Fault Zones Fault Zones 21 13
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` Silangan Project July 2019 Figure 17-13: Silangan Project RMUs and Modelled Faults (PSM 2018)
17.5.1.2.2 Caving Assessment
Generally, the expected rock mass rating (RMR) is considered weak and readily susceptible to caving Figure 17-4. Lack of competent (stable) rock mass requires the use of more robust ground support regimes for development excavations to ensure stability during production.
Figure 17-14: Silangan Project Caving Assessment Chart
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` Silangan Project July 2019 17.5.1.2.3 Ground Support Assumptions
Ground conditions were assessed based on geotechnical information provided by PSM and photographs of Ore Characterisation Drive (OCD) development. Given the similarities in Q values and percentages of development planned to occur in each rock mass unit, the 11 RMUs were divided into five categories used to define support standards. Table 17-8 lists the rock mass units and corresponding ground support regimes.
Table 17-8: Rock Mass Units and Corresponding Ground Support Regimes
Development Rock Mass Unit (RMU) Q Value Rock Quality (% of meters)
1 Overburden 0.01 N/A 0
2 Weathered Maniayao Volcanics 0.01 N/A 0
3 Coherent Andesite 5.78 Fair <1
4 Laharic Breccia 0.25 Very Poor 1
5 Intervolcanic Sediments 0.62 Very Poor <1
6 Tugunan Sediments 0.088 Very Poor 1
7 Argillic Boyongan Intrusives 0.01 Extremely Poor 8
8 Intermediate Boyongan Intrusives 1.25 Poor 37
Moderate Strength Boyongan 2.06 9 Poor 22 Intrusives
10 Bacuag Basalt 34.7 Fair 13
Weathered Basalt 0.66 N/A 0
Fault Zones 0.006 Extremely Poor 19
The Q-system rock support system, developed by the Norwegian Geotechnical Institute, was used to develop ground support standards for the planned underground excavations. Each of the rock mass or domain, when applicable, is designated a ground support regime and is tabulated in Table 17-9. This represents the minimum recommended ground support.
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` Silangan Project July 2019 Figure 17-15: Rock Mass Quality and Recommended support Systems
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` Silangan Project July 2019
Table 17-9: Ground Support Standards by RMU
Ground Support Ground Development Support Rock Mass Rock Development RMU (% of total Standard Quality Bolt Shotcrete (% of meters) meters) (GSS) Spacing (mm) (m)
Fair GS-1 3, 10 13 1.4 50 80 – 120 Ground
Poor GS-2 8, 9 59 1.2 75 80 Ground
Very Poor GS-3 4, 5, 6 1 1.2 120 60 Ground
Extremely GS-4 Poor 7 8 1.0 175 40 Ground
GS-5 Fault Zones Fault Zones 19 0.9 200 RSS 30
1, 2, Avoid N/A Weathered 0 N/A N/A N/A Development Basalt
Rock bolts to be installed from grade line (1.5 mm from floor) to grade line Shotcrete application floor to floor
22 mm threaded rebar bolts are recommended as standard. Where ground conditions permit (GS-1 and GS-2) 2.4 m long resin bolts may be used. Areas of poor ground require 3.0 m long cement grouted bolts to ensure full encapsulation in broken / fractured ground. Friction stabilizer bolts should only be used as interim support to pin mesh (where required) between coats of shotcrete.
Additional support mechanisms may be required in areas of extremely poor ground in addition to standard support listed in Table 17-9. This includes:
spiling bars (1.5 – 2.0 x development cut length) installed at 0.3 – 0.5 m centres along the drive perimeter in-cycle cable bolting using 6.0 mL twin strand 15.6 mm garland cables installed on a 2.0 x 2.0 m pattern.
17.5.1.2.4 Sizes of Openings
Drive profiles have remained unchanged from the prefeasibility study and are summarised, by design element, in Table 17-10. Table 17-11 lists the standard excavation profiles used for the Boyongan mine.
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` Silangan Project July 2019 Table 17-10: Standard Excavation Profiles
Profile Dimensions Purpose
A 6.0 mW x 6.0 mH - Arched Decline, Workshop
Fresh Air Drive, Return Air Drive, Magazine, B 5.0 mW x 5.0 mH - Arched Perimeter Drive, Stockpile, Sub Station
C 4.5 mW x 4.5 mH - Arched Escapeway Drive
H 5.0 mW x 5.0 mH - Square Ore Drive, Slot Drive, Crosscut
I 4.5 mW x 4.5 mH - Square Sump
X 1.5 m Diameter Raisebore Escapeway Rise, Fingerpass
Y 5.0 m Diameter Raisebore Return Air and Fresh Air Rises, Material Pass
6.0 mL twin strand 15.6 mm cable bolts required on a 2.0m x 2.0m pattern if excavation span exceeds 6.0 mW in addition to standard support
Table 17-11: Excavation Profiles
FS Design Excavation Dimensions
Design Arch Acronym Profile Width (m) Height (m) Description Radius (m)
Decline DEC A 6.0 6.0 1.8
Workshop WKS A 5.5 5.5 1.8
Fresh Air Drive FAD B 5.0 5.0 1.6
Magazine MAG B 5.0 5.0 1.6
Perimeter Drive PER B 5.0 5.0 1.6
Return Air Drive RAD B 5.0 5.0 1.6
Stockpile SP B 5.0 5.0 1.6
Substation SUB B 5.0 5.0 1.6
Level Stockpile SP B 5.0 5.0 1.6
Escapeway Drive EWD C 4.5 4.5 1.4
Ore Drive OD H 5.0 5.0 Square
Slot Drive SLD H 5.0 5.0 Square
Crosscut XC H 5.0 5.0 Square
Sump SMP I 4.0 4.0 Square
Slot SLT SLOT 5.0 20.0 Square
Escapeway Rise EWR X 1.5 0.0 Circle
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` Silangan Project July 2019 FS Design Excavation Dimensions
Finger Pass FP X 1.5 0.0 Circle
Fresh Air Rise FAR Y 5.0 0.0 Circle
Material Pass MP Y 5.0 0.0 Circle
Return Air Rise RAR Y 5.0 0.0 Circle
17.5.1.2.5 Panel Dimensions
Industry standard panel dimensions are used at the Boyongan deposits i.e. extraction drive spacing of 15 m, level spacing of 25 m, ore drive width of 5 m.
Standoff distances for work areas to caving zones are typically influenced by:
yielding and stress relaxation due to caving blast vibration
PSM recommends that all capital development is located at least 20 m outside of a zone defined by a 45° subsidence zone
For added conservatism, however the following parameters were applied based on industry standard practice and previous experience namely:
10 – 50 m for access drives > 70 m for primary underground infrastructure (declines, ventilation rises etc.)
17.5.1.2.6 Subsidence Zones
Predicting surface deformations is difficult as they tend to be discontinuous and asymmetric due to large movements around the cave controlled by geological structures, rock mass heterogeneity and topographic effects.
Factors that affect block caving subsidence and their relative importance are summarised in Table 17-12.
Table 17-12: Factors Affecting Caving Subsidence (Flores & Karzulovic 2003)
Information Type Relative Importance
Topography High
Geology Moderate
Structural Geology High
Geotechnical Engineering Moderate
In Situ Stress Field Low
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` Silangan Project July 2019 Information Type Relative Importance
Seismicity and Seismic Risk Low
It is common to express the effects of a cave using angles from the periphery of the SLC. While the cave angle can be quite steep, commonly 75° to 85°, the zone experiencing displacement is significantly wider. PSM has recommended the following angles for predicting deformation from caving (PSM2812-137R):
caving angle of 85° break-back angle of 75° subsidence angle of 45°
Subsidence profiles were modelled using the angles provided. Figure 17-16 shows a typical updated subsidence and deformation profile for Boyongan.
Figure 17-16: Example of Cave Subsidence Model – Subsidence Subzone West
The standoff distance from the cave to capital infrastructure such as shafts and access declines depends on the dimensions and geometry of the cave as well as the geotechnical characteristics. For the Boyongan deposit, the standoff distance for surface infrastructures is set at 75m based on industry practice and geotechnical and mine engineering principles.
Caving subsidence models were created for subzones East, West and Deeps. Since the Central zone has only three levels, a subsidence zone was not modelled. An overall view of all modelled subsidence zones is shown in Figure 17-17. All capital development is located outside of those zones.
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` Silangan Project July 2019 Figure 17-17: Boyongan Subsidence Zones
17.5.1.2.7 Ground Water Considerations
The surface and ground water regimes consider the following:
water inflow from Timamana Creek and sinks from Magpayang River (proven through the development of OCD). Flow is Eastward towards river systems water peaked at 315 l/sec when developing the OCD. Data from the OCD is the most representative information on likely dewatering requirements for steady state development settled to 135 L/sec once development ceased (peaked at 172 l/sec post- development) limited information available regarding areas hydraulics and functionality of the water table zone. Current modelling assumes there is no direct connection between surface water and the cave zone. limited groundwater data is available below the -150 mRL and presents a risk to the dewatering profile. This was addressed in the field hydro program when one of the borehole drilled reached the lower aquifer. given the geographical location, the open cave has the potential to act like a sink for regional water. Rainfall events may bring water inflows in the range of 1000 – 2000 L/sec to the operation. A diversion drain will be constructed at the subsidence area to keep most of the rainwater while the seepages will be collected underground away from the cave then pumped to the surface. core was obtained revealing heavily fractured ground
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` Silangan Project July 2019
Figure 17-18: Core Photographs from HGTDH14, 577.8 m to 585.15m Showing Highly Fractured Rock and Shearing Near and Around the Basalt/Diorite Contact
Due to the high rainfall and potential to break into the water table, the operation is to heavily consider ways to control the water inflow into and around the mine which includes dewatering bores and sump collection and pumping as available options. . Figure 17-19 denotes the groundwater present at Boyongan.
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` Silangan Project July 2019 Figure 17-19: Boyongan Groundwater Section
17.5.1.3 Mine Design The Sub-level cave mining design parameters for Boyongan have been selected based on the operating mines best practices and geotechnical information provided by a consultant. Equipment selection and planned operation production rates have been considered during the process. With the deposit’s relatively marginal grade characteristic, the aim of the design was to minimize the costs of the operation. Figure 17-20 illustrates the general sub- level caving arrangement including key design parameters listed in Table 17-13
Figure 17-20: SLC Production Drifts Design
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` Silangan Project July 2019 Table 17-13: SLC Design Parameters Parameter Description hs Ore drive vertical spacing/sub-level spacing (floor to floor) ht Total height (ore drive height + extraction ellipsoid height)
SD Ore drive horizontal spacing (centre to centre)
WD Ore drive width
WH Ore drive height W’ Extraction Ellipsoid Width
WT Extraction Ellipsoid Total Width
Ore drive dimension play a large part in the sub-level cave draw performance, with the width and height being a significant factor. The ore drive is designed with maximum width and minimum height with square shoulders maximizing wall strength and the active draw area.
The effective extraction width of the drawpoints was estimated to be between 75% and 85% from Figure 17-20 assuming shoulder radius of 0.5 meter, WD = 5 meter and r = 1/10.
Figure 17-20: Sub-level Cave Spacing
Sub level spacing was set at 25 meter hS and this is based on a review of existing SLC information from the Mining Plus (Ausenco’s mining sub-consultant) database. Sublevel spacing greater than 25 meter will lead to using specialized drill equipment.
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` Silangan Project July 2019 Estimated caving draw height (ht) of 37.5 m for each draw point was calculated using Equation 5-2.
Equation 5-2 – Estimated Caving Draw Height
ℎ푇 = ℎ푆 × 1.5
ℎ푇 = 37.5 푚
Figure 5.8-3 illustrates the Boyongan sublevel cave general arrangement including the sublevel extraction drive design parameters, where drive backs have been selected as square with slightly rounded corners. The basis for selecting these parameters allows for better cave flow and reduces the risks of overdraw and the inclusion of unwanted dilution.
The effective draw point extraction width (a) of 4 meter was calculated using Equation 5-3 using the shoulder radius of 0.5 meter (r) and Drive width of 5 meter.
Equation 5-3 – Effective Extraction Width
푎 = 푊퐷 − (푟 × 2)
The Sublevel cave Extraction Ellipsoid Width W’ was determined from Figure 17-21 reading the ore fragmentation W’ ranges using a hT of 37.5. W’ ranges from approximately 11 meter for larger Fragmentation to 16 meter for smaller fragmentation.
Figure 17-21: Boyongan Groundwater Section
An Extraction Ellipsoid Total Width (WT) of 13.2 meter was calculated using the equation below, using a W’ value of 11 meter and an Effective Extraction Width (a) of 4 meter.
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` Silangan Project July 2019 푊푇 = 푊′ + 푎 − 1.8
Estimation of the ore drive horizontal spacing was calculated using the equation below, using the relationship and principles of idealised gravity flow. k represents the extraction percentage of the loosening ellipsoid in a sublevel cave this ranges between 60% for ore drive vertical spacing less than 18 m and 65% for ore drive vertical spacing greater than 18 m. A k value of 65% was used to determine the ore horizontal spacing of 20 meter.
푆퐷 < 푊푇 / 푘
However, the basic principles of SLC design is to ensure that the sublevel spacing between levels (25 meter) is always greater than the spacing between the extraction drives.
Although the theoretical calculation, Equation 5-5, suggests a wider extraction drive spacing of 20 meter. Benchmarking data has shown the typically SLC mines with poor ground conditions, such as the Perseverance mine in Western Australia, a extraction drive spacing of 15 meter is a more practical and industry used spacing.
Drives and opening sizes are as follows.
Table 17-14: Planned Dimensions of Underground Openings
Item Value Comments
Excavation Dimensions
Declines 6.0 mW x 6.0 mH Arched
Sumps 4.5 mW x 4.5 mH Arched
Stockpiles / Ventilation Drives 5.0 mW x 5.5 mH Arched
Level Access / Stockpiles / Perimeter Drive / Infrastructure 5.0 mW x 5.0 mH Arched Development
Ore Drives 5.0 mW x.0 5 mH Square Profile
2 Return / Fresh Air Rises 5.0 m x 5.0 m 25m nominally. Rough Blasted
Escapeway Rises 1.2 m Diameter Raise bore
Major Capital Variable Pump Stations, Workshops
Gradients (Nominal)
Declines 1:7 Truck Haulage
Material Handling Decline 1:6 Prospective Conveyor
Sumps 1:6
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` Silangan Project July 2019 Item Value Comments
Stockpiles / Escape ways 1:50
Ventilation Drives 1:50
Major Infrastructure 1:50
Perimeter / Slot Drives 1:0 No gradient applied
Ore Drives 1:0 No gradient applied
Return / Fresh Air Rises 90 Deg
As per Philippines Mining Escapeway Rises 70 Deg Regulations
Offsets / Pillars
Parallel Development Offset 30 m CL to CL. Used for faults 1
Offset from Faults / Structures 30 m CL to CL
Vertical Offset / Level Spacing 25 m CL to CL
Perpendicular Development 20 m Nominally - Offset
i.e. 5 mW drive requires a 10 m Minimum Pillar Ratio 2:1 pillar to adjacent development
Ventilation Considerations
Fresh Air Intakes per Level 2 East and West Caves only
Return Airways per Level 2 East and West Caves only
General
Where required, development to Development Preference Through occur through at right angles as Avoid Primary Faults (1, 6, 7, 8) faults suspected to contain water and be poor ground.
Reduce vertical infrastructure in favour of lateral due to potential Vertical Development Preference Limit complications in rise stability and poorly defined ground conditions.
17.5.1.4 Mining Parameters
17.5.1.4.1 Ore Extraction and Transport
Ore from the production drifts will be extracted by Load-Haul-Dump (LHD) units. The LHD selected for ore hauling has a capacity of 21 metric tons offered by industry leaders Epiroc’s ST18 model and Sandvik’s LH621 model as sown in Figure 17-21. These models fit the 5 meter by 5 meter (W x H) profile of the production drift.
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` Silangan Project July 2019 Figure 17.21: LHD Specifications
Ore from the LHD is tipped to ore passes placed with metal grizzlies on top as in Figure 17- 22. Although it is not expected that large fragmentation of ore will report to the ore passes the grizzlies reduces the chance of hang-ups nonetheless.
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` Silangan Project July 2019 Figure 17.22: Typical Grizzly Configuration in a SLC Level
At the bottom of the ore pass, LHDs collects the ore and feed them to 60 metric tons capacity trucks, either Epiroc’s MT65 model or Sandvik’s TH663 model as shown in Figure 17-23. At some instances, the LHD will transfer ore from the ore pass bottom into designated stockpiles prior to loading into trucks.
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` Silangan Project July 2019 Figure 17.23: Mine Truck Specifications
Trucks will haul the ore from underground to the Run-of-Mine (ROM) stockpile at the surface. Figure 17-24 shows the ore pass system in orange and the spiral decline as ore haulage to surface in blue-green.
Sufficient truck fleet will be maintained to achieve 12,000 metric tons per day of ore hauled to the ROM stockpile.
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` Silangan Project July 2019
Figure 17.24: Ore Pass System
Some of the lower grade materials, after crushing at the surface will be hauled back underground to be backfilled as road base for the decline.
A second materials handling decline will be commissioned at a later time to augment truck route as orebody is mined deeper. This materials decline will also serve the adjacent orebody Bayugo when development commences. It is highlighted in red in Figure 17-25.
Figure 17.25: Second Materials handling Decline
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` Silangan Project July 2019 17.5.1.4.3 Ventilation
The design of the ventilation system is to provide all underground workings with sufficient fresh air and at the same time expel harmful gases and maintain a comfortable temperature for the workers to perform their tasks safely. Challenges of the Boyongan ventilation system are to address the high temperature expected when working below sea level, large amount of water going into the mine and extensive use of diesel equipment.
17.5.1.4.3.1 Design Criteria
The key design criteria used for determination of ventilation system layout and airflow requirements are
Table 17-15: Mine Ventilation Design Parameters
Amount of air to dilute exhaust emission from 0.06 m3/s/KW diesel engine equipment.
Air velocity to provide a degree of cooling to 1.0 m/s personnel and reduce residence time.
Maximum air velocity in any travel way or 6.0 m/s access
All ore will be hauled and crushed at the surface. Hauling will be done with diesel run LHD and trucks
Ventilation drives will be developed at the same time with SLC development.
Every SLC level will have an intake and exhaust conduits.
No production activities will start until ventilations systems are in place.
Air delivery temperature will be pegged at
25oC bulb
No facilities will be placed on major ventilation drives to ensure maximum air velocity flow.
17.5.1.4.3.2 Airflow Requirements
Simulation result shows maximum airflow requirement will occur in Year 19 of operation which will reach 1,145 m3/s primarily on the number of production equipment running while development will have declined significantly. Figure 17-26 breakdowns the predicted airflow requirements per year.
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` Silangan Project July 2019 Figure 17-26: Mine Airflow Requirements
As Year 19 approaches, management will have formulated a plan to either reduce airflow requirement by employing bigger trucks or electric ore hauling systems like a tram of ore hoists to reduce diesel fumes emission. Another way to improve the situation is to add another fresh air intake either a decline or a shaft.
17.5.1.4.3.3 Workplace Environmental Control
The ventilation system includes temperature controls as conditions such as working below sea-level and diesel intensive operations necessitates it.
Two approaches are industry standards in minimizing operational risks. The first is by cooling of intake air, either as a bulk-cooling arrangement or localised spot cooling and the second is the implementation of risk control strategies such as work-rest protocol, health screening and appropriate personal protective equipment.
Employing engineering controls in addressing working in heat risks still presents the best way forward. Cooling of intakes will allow for air to be delivered to most workplaces at temperatures at, or below, 25°C wet bulb. Each of the three intake airways will require cooling be applied on the surface. Table 17-16 identifies the cooling requirements of each intake and the sources of heat in each airway
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` Silangan Project July 2019 Table 17-16 – Primary Intake Cooling Summary
Max Airflow Cooling Requirement Airway Sources of Heat 3 (m /s) (MW(R))
- Groundwater. - Geothermal heat. East Decline - Diesel equipment. 180 5 - Electrical infrastructure. - Pumping infrastructure.
- Groundwater. - Geothermal heat. East Intake - Diesel equipment. 180 5 - Electrical infrastructure. - Pumping infrastructure.
- Groundwater. Intake Shaft 600 17 - Geothermal heat.
The close proximity of the intake airways, on the surface, will allow for a single refrigeration installation to be utilised, with each intake having a separate Bulk Air Cooler (BAC) installed. Practically, refrigeration piping can extend to distances of 1 km, or more, however, temperature gain of refrigerant in long pipe runs reduces overall system effectiveness. All intakes for the Boyongan project are closer than this.
Air temperature downstream of working LHDs in perimeter drives will exceed design temperatures. Personnel outside of equipment cabins cannot work downstream of operating LHDs without an independent supply of cooled air.
High diesel loading in the respective declines will result in high-temperature air being drawn into levels via accesses, particularly later in mine life as trucking fleet increases to maintain production rates. Air drawn onto levels from the decline must be blended with air from dedicated intakes to provide a mixed stream with a temperature at or below 25°C wet bulb.
Effective distribution of cooled air will be very important to the long-term operability of the mine. This requires effective controls to be installed and maintained.
17.5.1.4.3.4 Ventilation Circuit Development
The ventilation circuit will be developed in phases as the workings are expanded and key airways are commissioned. A brief description of each is shown in Table17-17.
Table 17-17 – Primary Ventilation Circuit Phases
Phase Description
Decline development. All ventilation provided via auxiliary ventilation Phase 1 systems (fan and duct), with fans located outside respective portals.
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` Silangan Project July 2019 Phase Description
Establishment of interim primary ventilation system upon connection between east access decline and west access decline via a connection Phase 2 through the workshop. The interim primary fan installation will constitute axial fans sealed in a wall across one of the declines or shop accesses.
Establishment of dedicated surface airway. This occurs when the exhaust Phase 3 shaft/raise breaks through to underground workings. At this time intake capacity is limited by the restrictions on the East Decline and West Decline.
Establishment of the dedicated intake shaft/raise. This allows for additional Phase 4 intake air to be drawn into the mine and commissioning of mine air cooling.
This phase represents the progressive expansion of the primary ventilation circuit to each of the production zones. The operating methodology remains Phase 5 the same. Fan duties will increase in line with the increased resistance of the mine.
17.5.1.4.3.5 Ventilation Fan Duties
Mechanical ventilation will play major roles in maintaining ample fresh air and workable environment in the production areas. A simulation was ran representing the development and production phases of the 21 year project. Table 17-18 outlines the requirement for the primary ventilation fans. Table 17-19 tabulates the peak requirement for auxiliary ventilation fans including 10% for spares to keep expected high mechanical availability.
Table 17-18 – Primary Fan Duties
Air Power Fan Efficiency Motor Power Airflow (m3/s) FSP (Pa) (kW) (%) (kW)
Exhaust 900 2720 2448 80 3060 Shaft
Intake Shaft 530 500# 265 80 331
Table 17-19 – Peak Auxiliary Fan Requirements
Installed Motor Units Required Fan Type Diameter (mm) Power (kW) (each)
Capital Development Axial - Twin- 1600 2 x 230 12 Fans stage
Ore Axial - Twin- Development/Production 1400 2 x 75 49 stage Fans
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` Silangan Project July 2019 17.5.1.4.4 Dewatering Mine dewatering will be key to the success of mine development and later on mine production as the mine is in a high rainfall environment. A hydrogeologic investigation was completed as part of the feasibility study which culminates to an estimate on the possible water inflows at every stage of the operation. The water inlfows will be the basis of the dewatering program to be implemented for the project.
17.5.1.4.4.1 Water Inflow Estimate
Three major sources of water coming into the underground mine are (1) water from the surface coming into the mine, (2) water used by the mining equipment and (3) existing groundwater. The investigations to date leads to the estimated water inflow in Table 17-20.
Table 17-20 – Estimated Water Inflows
Basement Zone Inflows Cave Zone Inflows Total Flows
Year Min (L/s) Max (L/s) Min (L/s) Max (L/s) Min (L/s) Max (L/s)
1 17 46 15 27 32 73
2 30 83 17 30 47 113
3 36 101 20 35 56 135
4 59 164 23 39 82 204
5 70 193 26 44 95 237
6 70 193 29 50 98 243
7 75 208 32 54 107 263
8 79 219 35 60 114 279
9 83 229 39 67 121 296
10 89 247 42 73 131 319
11 108 300 46 80 154 380
12 110 307 50 87 161 394
13 113 314 54 94 167 407
14 115 321 59 102 174 422
15 118 328 63 109 181 436
16 120 334 67 116 188 450
17 123 341 73 126 196 468
18 125 348 78 134 203 483
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` Silangan Project July 2019 Basement Zone Inflows Cave Zone Inflows Total Flows
19 128 355 83 144 211 499
20 130 362 89 153 219 515
21 133 369 94 162 227 531
22 135 375 100 172 235 547
The Basement Zone inflows relates to the water coming from the basement aquifer, which is recharged through rainfall and stream flows.
Cave Zone Inflows are the water entering the mine through the subsidence zone, and only considers rainfall intercepted in the subsidence zone
Total Inflow is the maximum amount of water expected to enter the mine during a high rainfall event if the subsidence zone has formed a surface water sink and intercepted surface water sources (i.e. streams and cover sequence aquifer)
The plan is to commission underground dewatering system to handle cave zone inflows and surface dewatering system or dewatering bores to handle the basement zone inflows. Incase the dewatering bores would not be effective, whatever water that could not be pumped out will be handled by the underground dewatering system.
The Tugunan mudstone, an aquitard, is believed to self heal during the mining operation such that it will continue to act as a barrier between water in the cover sequence and the sub-level cave operations.
17.5.1.4.4.2 Dewatering System
The plan is to dewater by using surface and underground methods. Both will be explained below.
17.5.1.4.4.2.1 Surface Dewatering
Surface dewatering will be facilitated thru a strategically placed dewatering boreholes to target recharge flow paths. The dewatering boreholes are designed to deal with the basement zone aquifer and prevent water from entering mine workings.
The program will be done in three phases in the life of mine. The first is to dewater workings at -50 m RL and above. The second targets to dewater workings between -50 m RL to -150 m RL and lastly tor workings -150 m RL and below.
Phase 1 and 2 will likely be done simultaneously from when the project will commence to ensure water table is lower than the planned SLC levels.
The number of dewatering boreholes will dictate what type and specifications of the dewatering pumps. For the project, drilling experience says that 0.3 m diameter boreholes are most feasible given the ground conditions. Table 17-21 provides the details for 0.3 m diameter boreholes.
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` Silangan Project July 2019 Table 17-21 – Surface Dewatering Details
Lined Borehole Pumping Rate Pumping Rate Pumping Rate Required Bores Diameter (m) (kL/d) per Bore (kL/d) per Bore (L/s)
0.3 32,500 4,320 8 50
For the determination of dewatering pumps, the performance curves of Grundfos SP Series was benchmarked in Figure 17-27. SP160 and SP215 models are both fit to handle the requirements to dewater the basement aquifer.
Figure 17.27: Grundfos SP Series Performance Curves
The lower end SP160 pumps will be installed in dewatering boreholes less than 300 m deep while the higher end SP215 deeper than 300 m. Location and final depth of the dewatering boreholes will be dictated by the structural geology.
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` Silangan Project July 2019 17.5.1.4.4.2.2 Underground Dewatering The inflow rates in Table 17-20 represents the entire mining area, which could be sub- divided into the East and West caves and the Deeps cave. East and west caves combine into the largest area between the two.
Inflows coming from the subsidence area will be split across the mining areas as depicted in Table 17-22. The peak subsidence flows will be the dewatering capacity required for the underground system. Other pump selection parameters includes ability to handle amounts of solids and to overcame 400 – 600 m static heads. All of these are leading to centrifugal pumps being the most suitable among pumps classifications. Figure 17-28 diagrammatically shows the underground dewatering plan.
Table 17-22 – Surface Dewatering Details
Peak % Av. Subsidence Mining Activity Av. Flow Total Subsidence District Share of Total kL/d L/s kL/d L/s kL/d L/s kL/d L/s
East 43% 6,000 70 1,700 20 7,800 90 51,800 600
West 43% 6,000 70 1,700 20 7,800 90 51,800 600
Deeps 14% 2,200 25 900 10 2,600 30 17,300 200
Figure 17.28: Underground Dewatering Set-up
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` Silangan Project July 2019 17.5.1.4.5 Subsidence 17.5.1.5 Mining Recovery, Dilution and Losses
The ensuing discussion is based on sub level cave principles and observations in Philex’ Padcal operations who has mined portions of its Sto.Tomas II orebody via SLC.
17.5.1.4.5.1 Draw Model
In SLC mines, it is observed that the flow of ore in a broken column is mostly vertical. This lead to the draw column above each drawpoint with a width between 5 - 7.5 m. As more tonnages are drawn from a drawpoint, more material can move horizontally leading to the draw column becoming slightly wider, up to 7.5 m as in Figure 17-29.
Figure 17-29: Concept on Draw Widths
The response of the draw column as to mining is depicted in Figure 17-30 based on the assumption that oreflow is mostly vertical and assessed against existing SLC operations.
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` Silangan Project July 2019 Figure 17-30: Draw Column Widths vs. Mined Tonnages
To simulate this, a draw percentage was defined for each stope, as a function of how many levels are mined directly above a given stope. The draw percentage of the top level was 50%, which means the only half of the stope tonnages will be extracted from the top levels. The draw factor gradually increases level by level until the sixth level or so where the draw factor increases to 120%. The recovery on the top level is kept low to avoid air blasts. Figure 17-31 shows the principles above.
Figure 17-31: Draw Principles
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` Silangan Project July 2019 17.5.1.4.5.2 Recovery and Dilution Tonnage The SME Mining Engineering handbook prescribes the curve shown in Figure 17-32 to show dilution development in SLC as a function of the volume of ore and the volume of extracted material (ore and waste).
Figure 17-32: Dilution and Recovery Principles
Ore (90%)
Waste (20%)
Curve A represents the ideal scenario wherein 100% of the ore can be extracted and that there will be 0 dilution. This is not a practical scenario for any mining operations. Curves I, II and III are made to represent the good, acceptable and bad extraction scenarios respectively. The good extraction curve shows a recovery of 83% with 27% of dilution for a draw source kept at 110% draw.
This was further evaluated against Padcal mine experience where its sub level cave mine in levels 860ML and some of the pillar robbing sites averaged on a mining recovery of close to 90%. Padcal is currently mining its 760 ML using SLC and while it is still a relatively young SLC, the latest fanholes blasted are showing a recovery of more than 90%.
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` Silangan Project July 2019 Figu re 17-32A: Dilution and Recovery Principles
Translated to the graph, maintaining a 110% draw will produce a mix of 90 parts of ore and 20 parts of dilution material. To apply these numbers, an example is given below.
1. The insitu tonnage and grades for Level -50 RL in the East cave is 1,414,653 t, 1.08 % copper and 1.80 g/t gold. 2. A 110% draw would mean 10% is added to the tonnage which means total tonnage extracted will be 1,556,118 t. 3. The tons drawn, per the discussion above is composed of 87% ore and 23% waste. 4. Normalizing the ore:waste partition ore will be 1,230,748 t and waste will be 325,370 t.
Dilution grade will be discussed in the next section.
17.5.1.4.5.3 Dilution Grade
A dilution solid was created by projecting a 80 degree angle from the bottom of the east and west caves as shown in Figure 17-33. The solid was evaluated in the GEMS software for its total tonnage and copper and grade values. Copper grade was found to be 0.20 % while gold grade is 0.18 g/t. These copper and gold grades will be grades of the diluting material which will be averaged by weight together with the ore from the SLC shapes to arrive at the total mineable reserve.
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` Silangan Project July 2019 Figure 17-33: Dilution Solid
17.5.1.6 Mining Equipment and Infrastructure
The mine will utilize a substantial amount of mobile and fixed equipment to develop the SLC and extract and haul ore from underground to surface. The mining equipment listed in Table 17-23 while Figures 17-34 and 17-35 graphically represents the fleet size per period in the mine
Table 17-23: Mobile Equipment
Description Make Model
Development Equipment
Bolting / Boring Jumbo Epiroc Boomer M2D
Development Charge Up Rig Normet Charmec
Spraymech Normet Spraymec
Agi Truck 10m3 Normet Agi 10m3
Cable Bolt Rig Epiroc Cabletec M
Development Loader Epiroc ST18
Production Equipment
Production Drill Rig Epiroc Simba M6C
Production Charge Up Rig Normet Charmec
Rock Breaker TBC
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` Silangan Project July 2019 Description Make Model
Production Loader Epiroc ST18
Haulage Equipment
Haul Truck Development and Epiroc MT65 Production
Ancillary Equipment
Development IT Volvo L120
Production IT Volvo L120
Services Truck TBC
Stores Flat Bed Truck TBC
Water Truck TBC
Grader Caterpillar 14M
Light Vehicle Toyota Hilux \
Figure 17-34: Heavy Equipment Fleet Schedule
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` Silangan Project July 2019 Figure 17-35: Support Equipment Fleet Schedule
Aside from the material handling, mine dewatering and ventilation infrastructures other key mining infrastructures includes the following.
17.5.1.6.1 Underground Power Supply
Main power supply to the mine will come from the 232 kVA on site. Appropriate step-down transformers shall be installed to serve different installations in the mine.
After the establishment of the major underground development access and the primary ventilation shafts, it is envisaged that a ‘ring-main’ system for underground power supply will be established. The ring main system is an electrical distribution technique in which cables are run in a loop around the underground workings usually emanating and terminating in the same supply location. One of the main advantages of the ring main system is the supply of uninterrupted power to the underground working even when the ring cable continuity has been cut.
17.5.1.6.2 Supply Voltage Reticulation
One thousand volt (1000 V) has been selected for electrical distribution in the underground mine. Sourcing of 1000 V equipment represents no issues from the supplier base of underground machinery and ancillary equipment.
Power will be fed from underground sub-stations to distribution boards, starter boxes and electrical plant at 1000 V. Two 120 mm2 cables will provide power from the sub-station to distribution boards and from the distribution boards, either 70 mm2 or 35 mm2 cables will be used to reticulate power to starter boxes, depending on their duty. The cable will be reclaimed and re-used where possible.
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` Silangan Project July 2019 The required operational power supply is based on the underground production and development equipment schedules; and associated infrastructure power requirements.
17.5.1.6.3 Compressed Air
Compressed air requirements for the mine will be provided by modular portable compressors. The units will be rotary screw type, mounted on a heavy-duty underground skid with air receivers and manufactured to suit the proposed underground voltage (1 kV).
The compressed air supply will be used for shotcreting, downhole drilling, cleaning production holes, blowing down for concrete pads and other miscellaneous uses.
The compressor(s) will initially be housed on the surface near the portal. As the mine extends deeper underground and mining of upper levels are completed, compressors can be moved to active areas to reduce the amount of pressure drop and leakage in the reticulation system. A compressor may be needed separately at the underground workshop should line resistance and leakage be encountered with the main compressor from the surface.
Compressed air will be reticulated along with the decline by 150 mm HDPE pipe, installed in- cycle along with water and pump lines. All level reticulation will be via 110 mm or 63 mm HDPE pipe, depending on the lateral extent of the level.
It must be noted that air compressors supplying fresh air to the refuge chambers via the steel pipes installed in the escapeway system. Intake for this fresh air supply system must be located on the surface to ensure air is not contaminated in the event of a fire.
17.5.1.6.4 Service Water
Water for drilling and dust suppression will be reticulated throughout the mine via HDPE pipe. Decline piping will utilise 110 mm diameter lines while reticulation to levels will be via 63 mm lines. Pressure reducing valves will be fitted where appropriate.
It is expected that demand will decrease in stages in line with production and development of the mine.
17.5.1.6.5 Service Network
The fore-mentioned mine services, namely the secondary ventilation ducting and fans, communication cabling, and air and water services, are to be reticulated along with provision on development backs. The positioning of these services must be given careful consideration regarding interaction with equipment, in order to optimise operation and serviceability. Air and water service must be located on drive walls so that they can be easily assessed for maintenance and modification, whilst being suitably situated away from areas of potential damage from equipment.
Ventilation Fans and ducting should be mounted away from the path of material in transit. This may require ducting to be installed closer to the shoulders, as opposed to installed at the arch apex. Vent ducting is best installed on the adjacent side to all level accesses or loading areas, in order to allow truck loading and haulage without interception with vent services.
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` Silangan Project July 2019 Services can be fixed or hung to rock bolt fixings or mesh. Ventilation ducting is to be clipped to steel wire to allow for ease of modification and to provide slack in the ducting system. Figure 17-36 below depicts a typical layout of services within a decline drive. This diagram details the interaction between services and large equipment.
Figure 17-36: Typical Services Layout
17.5.1.6.6 Crib Room
All underground crib rooms will be equipped as fresh air bases. In addition to this, they will be equipped with appropriate hand washing facilities, adequate seating and tables for underground workers to eat their meals. Amenities such as fridges, potable water and microwaves will be provided in order to maintain adequate hygiene standards.
Crib rooms will be located near the main underground workshops or service bays, and other convenient locations throughout the mine to minimise travel time for the workforce when taking their meal breaks.
17.5.1.6.7 Secondary Means of Egress
In order to maintain best practice, an alternative escape route will be provided. The Boyongan mine has escapeways in the footwall, off the footwall drift access. which is independent of main travel ways.
Escape ways are to be raise bored between levels. Typically escape ways are raise bored at 1.5 metres diameter containing an enclosed ladder way with platforms every 6 metres
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` Silangan Project July 2019 17.5.1.7 Mine Development Plans and Schedule The aim of mine development is to start and sustain production. Table 17-24 summarizes the milestones to be achieved to sustain 4 Million tons per year production up to Year 22
Table 17-24 – Project Milestone
Milestone Date
Start of development Y0 m0
Start of first ore drive in east zone Y1 m3
Completion of return vent shaft Y1 m3
Start of first ore drive in west zone Y1 m6
Completion of fresh vent shaft Y1 m7
First stope in east zone Y2 m0
First stope in west zone Y2 m1
East zone in full production Y3 m0
Mine at full production Y3 m0
West zone in full production Y6 m0
First stope in deeps zone Y15 m8
First stope in central zone Y18 m6
End of mine Y22 m6
Figures 17-37 to 17-44 shows in sequence the mine development sequence planned.
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` Silangan Project July 2019 Figure 17-37: Milestone Y0M0: Start of Decline
Figure 17-38: Milestone Y1M3: Start of First Ore Drive in East Zone; Completion of Vent Return Shaft
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` Silangan Project July 2019
Figure 17-39: Milestone Y1M6: Start of First Ore Drive in West Zone; Completion of Fresh Ven Shaft
Figure 17-40: Milestone Y2M0: First Stope in East Zone
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` Silangan Project July 2019
Figure 17-41: Milestone Y2M1: First Stope in West Zone
Figure 17-42: Milestone Y3M0: East Zone at Full Production; Mine at Full Production
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` Silangan Project July 2019 Figure 17-43: Milestone Y6M0: West Zone at Full Production; East Zone Ramping Down
Figure 17-44: Milestone Y15M8: First Stope in Deeps Zone
Scheduled activity rates are shown in Table 17-25. These are the maximum rates that the activity can be scheduled at. Typically, resourcing constraints will lead to lower rates than these being scheduled. Ground conditions are expected to have a major effect on the
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` Silangan Project July 2019 development rates that can be achieved, so the maximum rate per heading has been varied according to the ground type.
Table 17-25: Development Rates
Activity Type Ground Type Rate
Lateral Development High Priority BAC_BASALT 120 m/month
Lateral Development Medium Priority BAC_BASALT 75 m/ month
Lateral Development Standard BAC_BASALT 60 m/ month
Lateral Development Standard BYN_ISI 60 m/ month
Lateral Development Standard BYN_MSI 60 m/ month
Lateral Development Standard TUG_SED 30 m/ month
Lateral Development Standard FAULT 30 m/ month
Lateral Development Standard BYN_ARG 30 m/ month
Lateral Development Standard MAN_LB 30 m/ month
Vertical Development Large Diameter MAN_LB 1 m/day
Vertical Development Large Diameter TUG_SED 1 m/day
Vertical Development Large Diameter BAC_BASALT 4 m/day
Vertical Development Large Diameter BYN_ISI 4 m/day
Vertical Development Large Diameter BYN_ARG 4 m/day
Vertical Development Large Diameter BYN_MSI 4 m/day
Vertical Development Small Diameter 20 m/day
Slot 500 m/month
SLC Ring 500 t/day
17.5.2 Processing Plans
The intent of this study is to recover both oxides and mixed sulfides with an underground mine.
Initially, acid leachable copper and cyanide leachable gold will be recovered from oxide ore in a sequential hydrometallurgical process plant. This flowsheet configuration will be referred to as leach only (P7) herein. In the third year of production, as the mine progresses into the predominantly sulfide zone, copper sulfides and a portion of the gold will be recovered as a concentrate prior to the oxide plant. This flowsheet configuration will be referred to as flotation and leach (P2) herein.
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` Silangan Project July 2019
The Boyongan ore body is complex, an igneous porphyry intrusion associated with the Philippine Trench formed during the late Pliocene which underwent pervasive potassium- silicate alteration. The deposit was also affected by a weakly developed illite-chlorite- smectite alteration event and by localized zones of illite-pyrite and vuggy quartz related to phyllic and advanced argillic overprints respectively. Copper is distributed in sulfide, oxide/carbonate and silicate minerals, dominated mostly by sulfides with significant copper silicate and oxide contents, hence suited for acid leaching treatment.
Production rate for this study is 4 Mt/y and is limited by the mining method. The mining method selected for this study is Sub Level Cave (SLC) with trucking via a decline. This study is based on 81 Mt of ROM ore with a 21 year production life.
17.5.2.1 Metallurgical Process Flowsheet/Process Plant Design
The ensuing discussion was culled from Ausenco’s technical report. SMMCI employed Ausenco to undertake a feasibility of the project while being the technical experts in metallurgy and process plant design. As previously stated, their engagement is such that SMMCI will have proprietary ownership of all the study results.
The Metallurgical Flowsheet for Silangan is shown in Figure 17-45 and is composed of the following sub-processes.
- Crushing - Grinding ad classification (SAG Mill only) - Atmospheric leach - Counter current decantation - PLS clarification and cooling - Raffinate neutralization and thickening - Solvent extraction (“SX”) - Copper electrowinning (“EW”) - Gold leach neutralization - Gold leaching and adsorption - Gold desorption and carbon regeneration - Gold electrowinning and smelting - Cyanide detoxification - Tailings thickening - Reagent mixing and storage - Water treatment and distribution - Air services - Tailings storage facility and selenium treatment plant - Surface mine dewatering
In Year 3 the following will be added to recover copper and gold from mixed sulfide ore
- Flotation
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` Silangan Project July 2019 - Flotation reagents handling - Concentrate thickening and filtration - Concentrate handling
Figure 17-45: Metallurgical Flowsheet
17.5.2.1.1 Crushing
The Run-of-mine ore (ROM) from Boyongan underground mine is delivered to the ROM pad by rear-dump trucks. During normal operation, material from the underground mile will be directly dumped into the ROM bin. The ROM pad is designed to stockpile approximately 24 hours of ore to allow for storage of ROM material during maintenance or outages.
ROM ore, with a top size of 550 mm, is fed into the 120 t capacity ROM bin by a front end loader (FEL). Coarse ore is reclaimed at a controlled rate by an apron feeder and discharged into the primary crusher sizer.
Crushed ore, at < 80% passing (P80) 80 mm, discharges onto the SAG mill feed conveyor fitted with a weightometer and belt monitoring systems.
In the event of primary crusher sizer maintenance, ROM ore is loaded onto a mobile grizzly with a screen aperture of 600 mm by a FEL. The grizzly oversize is returned to the ROM pad, while the undersize material is transferred to the 18 hour emergency stockpile using rear-dump trucks. Ore from the stockpile is fed onto the SAG mill feed conveyor by FEL via an emergency reclaim hopper and emergence emergency reclaim belt feeder.
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` Silangan Project July 2019 17.5.2.1.2 Grinding and Classification
The grinding circuit consists of a SAG mill of 8.5 m diameter by 5.8 m EGL operating in closed circuit with a primary cyclone cluster. Crushed ore is fed to the SAG mill at a feed rate of 496 t/h (dry) at 4.0 Mt/y. Product from the grinding circuit (cyclone overflow) has a nominal density of 35% w/w solids and particle size P80 of 90 µm.
The SAG mill feed conveyor transfers crushed ore and scats recycle to the SAG mill feed chute where it is combined with mill feed dilution water to control the mill pulp density to approximately 70% w/w solids. The 6.2 MW SAG mill is fitted with a single pinion drive with variable speed drive.
The SAG mill product discharges via 40 mm discharge grates and trommel screen with 30 x 5 mm slotted aperture. Oversize from the SAG Mill trommel is transported by pebble recycle conveyors onto the SAG mill feed conveyor and returned to the SAG mill. Trommel undersize gravitates into the cyclone feed hopper and is pumped to the primary cyclone cluster using a variable speed cyclone feed pump .
The cyclone underflow reports to the SAG mill, while the overflow gravitates to the flotation circuit via a trash screen.
SAG mill grinding media is transferred, from the storage bunkers adjacent to the primary sizer, by FEL and loading into the SAG Mill Ball Feeder (2230-PK-004). The ball feeder has an indexer that feeds ball at a rate set by the plant operator.
A SAG mill liner handler and liner removal tools are provided for relining the mill.
Figure 17-46 presents the grinding and classification area showing the SAG mill feed conveyor, pebble recycle conveyor.
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` Silangan Project July 2019 Figure 17-46: Grinding and Classification Area
17.5.2.1.3 Flotation
Flotation feed gravitates to the rougher conditioning tank. From the conditioning tank the slurry is gravity fed into the rougher flotation circuit (5 x 100m3 cells)) with the tails directed into the rougher tails hopper.
Rougher flotation concentrate is pumped from the rougher concentrate hopper to the cleaner flotation circuit. This consists of three stages of cleaning and a cleaner scavenger to achieve final concentrate grade. Cleaner 1 and cleaner scavenger flotation cells (4 and 3 x 17 m3 cells respectively) and cleaner 2 and 3 flotation cells (4 and 3 x 3 m3 cells respectively). Cleaner concentrates are all pumped and tails flow by gravity to the next cell. Final concentrate from cleaner 3 concentrate hopper is pumped to the concentrate thickener.
Rougher tailings and cleaner scavenger tailings are pumped to the atmospheric leach feed thickener.
Figure 17-47 illustrates the flotation area, including the rougher, cleaner and cleaner scavenger flotation circuit.
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` Silangan Project July 2019 Figure 17-47: Flotation Area
17.5.2.1.4 Concentrate Handling
Cleaner 3 concentrate is pumped to the concentrate thickener feed tank and thereafter gravitates to the 7 m diameter high rate concentrate thickener where the concentrate is thickened and a thickener overflow is pumped to the mill water tank by the concentrate thickener O/F pump to the mill water circuit. Flocculant no. 1 (Magnafloc 5250) is added to the thickener feed to assist with solids settling and maintain overflow clarity.
Thickener underflow is pumped to the agitated concentrate surge tank by the concentrate thickener U/F pump.
The concentrate filter feed pump delivers thickened concentrate to the plate and frame concentrate filter.
Filtrate is collected in the filtrate tank and is pumped to the concentrate thickener feed tank by the filtrate pump. All other requirements for the filter operation will be supplied as part of the vendor package i.e. manifold flushing, cloth washing, pressing, drying air.
Concentrate is discharged to the bunker underneath the filter. From here it is loaded directly into 25t half height concentrate containers by FEL (CAT 980 or equivalent) and transported to the port. Storage of concentrate under the filter is approximately 7 days to allow for any trucking delays.
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` Silangan Project July 2019 At the port, concentrate containers are offloaded by forklift and stored ready for shipment. Trucks will transport the containers from the storage yard to the shipped berth from where they will be loaded on to 10,000 t ships via rotainer utilising the ship’s crane.
Figure 17-48 illustrates the concentrate thickening and handling area.
Figure 17-48: Concentrate Handling Area
17.5.2.1.5 Atmospheric Leach
The atmospheric leach circuit consists of an atmospheric leach thickener, seven spiral heat exchangers operating in parallel, followed by a series of five atmospheric leach tanks.
Atmospheric leach feed thickening consists of a 34 m diameter high compression thickener to thicken leach feed slurry. Flocculant no. 1 (Magnafloc 5250) is added to the thickener feed to assist with solids settling and maintain overflow clarity. Atmospheric leach feed thickener overflow reports to a dedicated mill water tank which provides water to grinding, classification and raffinate neutralisation.
Atmospheric leach feed thickener underflow is diluted with HG raffinate and (minor LG raffinate as make-up) in the atmospheric leach heat exchanger feed tank to achieve a slurry density of 35% w/w solids for high clay ores and 41% w/w solids for low clay ores to the spiral heat exchangers. Feed density is controlled to minimise blockages in the heat exchangers and maintain efficient heat transfer. Atmospheric leach feed slurry reaches approximately 50°C through waste heat recovery from hot atmospheric leach residue slurry.
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` Silangan Project July 2019 The slurry exiting the hot side of the heat exchanger reports to the atmospheric leach feed collection box where it is combined with sulphuric acid and ferrous sulphate to commence leaching of copper from ore.
The atmospheric leach tanks are arranged in cascade such that pulp from each tank overflows to the next tank in sequence. The five tanks provide approximately 18 hours total retention time. Bypass launders are provided for each tank in the train to allow individual tanks to be isolated and maintained while the rest remain online. The tanks are covered and hot vent gas is directed to a safe location above the working platform.
Blower air is supplied to each leach tank via a sparge ring system to provide oxygen for the copper leaching reactions. LP steam is also added into each tank at 150°C to maintain the required leach temperature of 60°C. Sulphuric acid can be added to the second and third leach tanks if required.
Slurry overflows from the final leach tank to the atmospheric leach residue heat exchanger feed tank from which it is pumped to the spiral heat exchangers. Cooled atmospheric leach residue slurry flows from the heat exchangers to the atmospheric leach residue thickener at approximately 48°C.
Figure 17-49 illustrates the atmospheric leach area including the atmospheric leach feed thickener, atmospheric leach tanks with heat exchangers in the foreground.
Figure 17-49: Atmospheric Leach Area
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` Silangan Project July 2019 17.5.2.1.6 Counter Current Decantation
The counter current decantation (CCD) circuit consists of an atmospheric leach residue thickener followed by six CCD thickeners.
Atmospheric leach residue thickening consists of a 30 m diameter high compression thickener to thicken leach feed slurry. The feed to the thickener comprises of atmospheric leach residue slurry and underflows from the HG dynamic bed clarifier and raffinate neutralisation thickener. Flocculant no. 2 (Magnafloc 333) is added to the thickener feed to assist with solids settling and maintain overflow clarity. Flocculant is diluted with atmospheric leach residue thickener overflow. Atmospheric leach residue thickener overflow is termed high grade pregnant leach solution (HG PLS) and is pumped to the HG PLS clarification and cooling circuit. The addition of raffinate neutralisation thickener underflow is controlled to increase the pH in the HG PLS stream as required to reduce degradation of organic in solvent extraction while maintaining a low enough pH to keep copper in solution.
Atmospheric leach residue thickener underflow is pumped to the CCD circuit, which consists of six 30 m diameter high rate thickeners operating in series. The purpose of the CCD circuit is to remove valuable copper, acid and iron, as well as remove sufficient cyanide soluble copper (CNSCu) from CCD6 underflow to protect the subsequent gold circuit from excessive cyanide consumption and potential gold losses. The solid underflow and clear overflow streams move in counter-current directions through the CCD train. The streams are mixed ahead of each thickener, in an agitated mix tank, to ensure efficient washing. Bypass lines are provided for each CCD to allow individual CCDs to be isolated and maintained while the rest remain online.
Washing of the solid material in the CCD circuit is achieved by contacting the solid underflow from the atmospheric leach residue thickener with raffinate neutralisation thickener overflow, which enters the circuit in the last CCD mix tank. The CCD wash water ratio, which is defined as the ratio of wash solution flow to CCD thickener underflow solids rate, is designed at 2.2:1. CNSCu can be reduced by increasing the CCD wash water ratio, but the trade-off is additional solution reporting to low grade solvent extraction circuit (LG SX) and raffinate neutralisation, resulting in increased limestone consumption. Therefore the wash ratio is operated within a defined range to maximise wash efficiency and copper concentration to LG SX.
Flocculant no. 2 is added to each CCD thickener to improve settling rates and maintain overflow clarity. The flocculation and resulting settling rate are sensitive to CCD feed density, which is controlled by an internal dilution pump in each thickener. Flocculant dilution is achieved using the following streams:
CCD1 – CCD1 overflow CCDs 2 to 5 – LG raffinate from the SX circuit CCD6 – neutralised raffinate
Overflow from the first CCD thickener is termed low grade pregnant leach solution (LG PLS), and is pumped to the LG PLS clarification circuit. Thickener underflow from the sixth CCD stage proceeds to carbon in pulp (CIP) neutralisation prior to gold leaching.
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` Silangan Project July 2019 Figure 17-50 presents the atmospheric leach residue high compression thickener (far right thickener) alongside the train of six high rate thickeners in CCD configuration.
Figure 17-50: Atmospheric Leach Residue Thickener and CCD Circuit
17.5.2.1.7 PLS Clarification and Cooling
The PLS clarification area consists of a PLS cooling tower, and HG and LG dynamic bed clarifiers (DBC).
The PLS cooling tower is designed to reduce the HG PLS temperature to less than 42°C to minimise organic degradation in the SX circuit. The cooled HG PLS is then pumped to the HG Dynamic Bed Clarifier (DBC).
The 11 m diameter HG and two 10.5 m diameter LG DBCs are designed to remove entrained fine solids from the HG and LG PLS at a design rise rate of 8 m/h, to achieve clarified overflow solids concentration of less than 40 ppm and underflow density of approximately 10% w/w solids. For each DBC, a dedicated recirculation pump recycles a portion of the underflow (20% v/v of fresh feed) to the DBC feed. The clarified solutions flow by gravity to the HG and LG PLS ponds respectively. The HG DBC underflow is returned to the atmospheric leach residue thickener feed tank, while the LG DBC underflow is pumped to the raffinate neutralisation circuit.
Two types of coagulant are added to the DBC. Coagulant no. 1 (RM1250) is specifically selected to remove colloidal silica, while Coagulant no. 2 (Bentonite clay) improves overflow clarity. The coagulants are added in the DBC feed tanks to ensure mixing with the fine solids prior to flocculant addition.
Flocculant no. 2 is added to the DBC feedwells to assist with solids settling and to maintain overflow clarity.
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` Silangan Project July 2019 17.5.2.1.8 Raffinate Neutralization and Thickening
The raffinate neutralisation and thickening area consists of four agitated neutralisation tanks and a neutralisation thickener.
The four neutralisation tanks provide approximately four hours total retention time. Feed to the tanks is comprised of LG DBC underflow, and excess HG and LG raffinate bleed from the circuit. The purpose of the circuit is to precipitate most of the copper and ferric (Fe3+) ions and neutralise most of the free acid with a target product pH of 4-5. The tanks are in a cascade arrangement such that pulp from each tank overflows to the next tank in the sequence. Upcomers are fitted to the overflow of each tank to limit short-circuiting and ensure that no build-up of large particulate material occurs. Bypass launders are provided for each tank in the train to allow individual tanks to be isolated and maintained while the rest remain online.
Blower air is supplied to each neutralisation tank to provide oxygen for ferrous ion oxidation. Limestone slurry is metered for pH neutralisation into the first two tanks and lime into the last two tanks, both from a circulating ring main, for pH neutralisation.
Neutralisation thickening consists of a 21 m diameter high rate thickener. Flocculant no. 1 is added to the thickener feed to assist with solids settling and maintain overflow clarity. Neutralisation thickener overflow reports to a dedicated overflow tank (2460-TK-030) and is pumped to the CCD circuit as wash water and CCD6 flocculant dilution, with excess overflow reporting to the tailings thickener.
Neutralisation thickener underflow is pumped to the following destinations: recirculation to atmospheric leach feed (recover copper and utilise ferric) recirculation to atmospheric leach residue thickener (to regulate HG PLS pH to SX) seed recycle to neutralisation tank no. 1 (to promote particle growth and minimise scale on tank walls) underflow gypsum to tailings thickener.
Figure 17-51 presents the raffinate neutralisation area.
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` Silangan Project July 2019 Figure 17-51: Atmospheric Leach Residue Thickener and CCD Circuit
17.5.2.1.9 Solvent Extraction
The raffinate neutralisation and thickening area consists of four agitated neutralisation tanks and a neutralisation thickener.
The SX circuit consists of HG and LG PLS and raffinate ponds, extraction, wash and strip mixer-settlers, crud treatment and organic handling. HG and LG PLS from the PLS cooling and clarification circuits are stored in their respective ponds and pumped to the extraction mixer-settlers. Copper is extracted from the PLS into the organic phase via two HG extraction stages (E1 and E2) and a LG extraction stage (EP1), producing low copper HG and LG raffinate streams, and a loaded organic stream. The loaded organic is passed through a wash stage (W1) and a strip stage (S1) to produce a high grade copper advance electrolyte solution.
17.5.2.1.9.1 Ponds
The SX circuit includes the following ponds:
HG PLS pond - provides approximately 6 hours residence time for HG PLS. HG PLS is pumped to the E1 primary mixing tank by the HG PLS feed pump. In the event the pond over-fills (most likely due to a high rainfall event), the HG PLS Pond overflows to the LG PLS pond via a HDPE lined trench.
HG raffinate presettler pond - HG raffinate from E2 settler tank contains valuable entrained organic, which coalesces over time on the pond surface. The organic is
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` Silangan Project July 2019 reclaimed to an IBC using the HG rope skimmer and returned to the crud treatment circuit, while the aqueous phase overflows directly into the HG raffinate pond. The pond has a polyethylene barrier (boom), to separate the organic phase from the aqueous phase, and to prevent organic overflowing from the HG presettler pond to the HG raffinate pond.
HG raffinate pond - provides approximately 6 hours residence time for HG raffinate. HG raffinate is distributed to the atmospheric leach and raffinate neutralisation circuits by the HG raffinate pump. In the event the pond over-fills, the HG raffinate pond overflows to the LG raffinate pond via a HDPE lined trench.
LG PLS pond - provides approximately 6 hours residence time for LG PLS. LG PLS is pumped to the EP1 primary mixing tank by the LG PLS feed pump. In the event the pond over-fills, the LG PLS Pond overflows to the HG Raffinate pond via a HDPE lined trench.
LG raffinate presettler pond - LG raffinate from EP1 settler tank contains valuable entrained organic, which coalesces over time on the pond surface. Organic is reclaimed to an IBC using the LG rope skimmer (2520-XM-089) and returned to the crud treatment circuit, while the aqueous phase overflows directly into the LG raffinate pond. The pond has a polyethylene barrier (boom), to separate the organic phase from the aqueous phase, and to prevent organic overflowing from the LG presettler pond to the LG raffinate pond.
LG raffinate pond - provides approximately 6 hours residence time for LG raffinate. LG raffinate is distributed to various plant areas by the LG raffinate pump). In the event the pond over-fills, the LG raffinate pond overflows to the SX event pond via a HDPE lined trench.
SX event pond - provides storage to allow a mixer-settler to be emptied for maintenance and to contain solution in the event of a catastrophic failure of a settler during a fire in SX.
The ponds are all lined HDPE, to prevent leakage of process solution into the groundwater.
All discharge pumps are self-priming. A strainer, foot valve and suction pipe float are fitted to the pump suction to keep the suction pipe off the pond floor.
17.5.2.1.9.2 Mixers Settlers
Mixer-settlers are used for each stage of the extraction, washing and stripping process. Each mixer-settler consists of the following equipment:
Primary mixing tank and agitator – the organic and aqueous streams are drawn and mixed by the variable speed pump mixer into the primary mixing tank. The extraction, washing or stripping mass transfer begins in this first tank.
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` Silangan Project July 2019 Secondary mixing tank and agitator – the organic and aqueous mixture overflows the primary mixing tank into the secondary mixing tank which provides additional residence time for the extraction, washing or stripping process to continue. This tank is fitted with a conventional agitator.
Tertiary mixing tank and agitator for EP1 only – to provide additional residence time for the LG extraction process. This tank is fitted with a conventional agitator.
Settler tank – the organic and aqueous mixture overflows the secondary (or tertiary) mixing tank into the settler, where the organic and aqueous streams separate into two separate phases due to a difference in density. The lower density organic stream overflows the organic weir and exits the settler. The heavier aqueous stream flows under the organic weir and over the aqueous weir.
The mixer-settlers each have an aqueous recycle line to allow them to run a 1:1 internal organic to aqueous ratio.
Crud from each settler tank is recovered using dedicated crud pumps. Crud is pumped to the crud treatment area for recovery of the valuable organic and aqueous streams.
17.5.2.1.9.3 HG Extraction
The HG extraction stages consist of two mixer-settlers, E1 and E2. E1 receives HG PLS from the HG PLS pond, and partially loaded organic from E2. Copper is extracted from HG PLS into the organic phase. The aqueous phase from E1 is transferred to E2, while the HG loaded organic flows by gravity into the loaded organic coalescer.
E2 receives partially extracted HG PLS from E1, and partially loaded organic from EP1. The HG extraction process continues in this stage. The barren aqueous solution leaving E2 is called HG raffinate, and flows by gravity to the HG raffinate presettler pond.
A high recovery of copper is targeted by the HG SX circuit to minimise the soluble copper loss to tailings. As copper is extracted onto the organic, acid is produced, thereby lowering the pH of the HG raffinate aqueous stream. Unavoidably, ferric iron is co-extracted onto the organic with the copper usually at a ratio of greater than 500:1 (Cu:Fe).
17.5.2.1.9.4 LG Extraction
The LG extraction stage consists of one mixer-settler, EP1, which receives LG PLS from the LG PLS pond, and stripped organic from S1. Copper is extracted from LG PLS onto the organic. The barren aqueous solution leaving EP1 is called LG raffinate, and flows by gravity to the LG raffinate presettler pond.
A high recovery of copper is targeted by the LG SX circuit, to minimise the soluble copper loss to tailings. As copper is extracted onto the organic, acid is produced, thereby lowering the pH of the LG raffinate aqueous stream. Ferric iron is co extracted onto the organic with the copper usually in a ratio of greater than 500:1 (Cu:Fe).
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` Silangan Project July 2019 As the LG PLS flowrate is significantly higher than the HG PLS flowrate, the LG mixer-settler consists of three mixing tanks and a larger settler.
17.5.2.1.9.5 Wash
The wash stage consists of one mixer-settler, W1, which receives loaded organic from the loaded organic tank, which is washed with raw water from the wash water tank. Spent electrolyte is also added at this stage. Iron is removed from the organic into the aqueous phase which gravitates back to the HG PLS pond. The washed organic is transferred to S1.
17.5.2.1.9.6 Strip
The strip stage consists of one mixer-settler, S1, which receives loaded organic from W1 and spent electrolyte from the electrowinning area. The spent electrolyte has a high concentration of sulphuric acid and is used to strip copper from the loaded organic. The aqueous phase leaving the strip stage is called advance electrolyte, and flows by gravity to the electrolyte filter feed tank. The stripped organic is transferred to EP1.
17.5.2.1.9.7 Crud Removal and Treatment
Crud recovered from the SX settler tanks, raffinate presettling ponds and electrowinning are collected in the agitated crud treatment tank prior to crud treatment. The crud is processed to separate the valuable organic and aqueous phases from the waste crud material. Clay is added in the tank to reactivate fouled extractant, and assist in the centrifuging process.
The crud centrifuge feed pump feeds the crud-clay mixture to the crud centrifuge, which produces three separate product fractions: solids (clay with adsorbed crud), organic-rich liquid, and an aqueous-rich liquid. The centrifuge discharges the solid product to the clay disposal skip, which is disposed of in a suitable location in the tailings dam. The organic-rich liquid and the aqueous-rich liquid are discharged into the crud recovered solution tank. The recovered organic and aqueous can be returned to the E1 Settler Tank or the S1 Settler Tank.
17.5.2.1.9.8 Organic Storage and Handling
Loaded organic from the E1 settler passes through the loaded organic coalescer, which is connected with the loaded organic tank by an equalisation line. The loaded organic is pumped from the loaded organic tank to the W1 primary mixing tank by the loaded organic pump.
Entrained aqueous that accumulates over time in the organic tanks is pumped out continuously via the lower suction lines to the E1 settler by the aqueous return pump.
The design diluent and extractant concentrations in the organic stream are 65% v/v and 35% v/v respectively. These concentrations are maintained by adding the reagents in the loaded organic tank as required to make-up for losses in the HG SX circuit.
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` Silangan Project July 2019 17. 5.2.1.9.9 SX Fire Traps The fire traps are designed to manage the failure of a mixer-settler. They are designed to direct the mixer-settler contents away from the SX bund, into the SX event pond. The fire traps prevent air entrainment in the diverted organic and aqueous phases as they discharge to the SX event pond, which will prevent flame propagation to the SX event pond.
Figure 17-52 presents the solvent extraction mixer settlers and crud handling system.
Figure 17-52: Solvent Extraction
17.5.2.1.10 Copper Electrowinning
The copper EW circuit consists of electrolyte filtration, electrolyte heat exchangers, EW cells, an OHET crane and a cathode washing and stripping machine. Advance electrolyte from the SX circuit is filtered and heated before being pumped to the tankhouse, where the copper is plated onto the cathodes in the EW cells. There are 86 EW cells with 69 cathodes and 70 anodes in each cell. Loaded cathodes are removed from the cells at regular intervals and stripped in the cathode washing and stripping machine. After sampling, stacking, weighing and labelling, the cathodes are stored ready for shipping. The EW process produces LME Grade A or equivalent copper cathodes. The process also produces spent electrolyte solution which is returned to the SX circuit.
17.5.2.1.10.1 Electrolyte Filtration
Advance electrolyte is pumped from the electrolyte filter feed tank to the three dual media electrolyte filters via the electrolyte filter feed pump. Suspended solids and entrained organic in the advance electrolyte are removed by the filters, and the filtered electrolyte discharges into the advance electrolyte tank. The filters each contain a layer of anthracite, garnet and sand to remove the organic and solids. The anthracite is used to remove the organic and some suspended solids, the garnet to remove the remaining fine suspended solids and the sand is used to support the garnet and anthracite layers.
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` Silangan Project July 2019 The filters operate in parallel and are backwashed with spent electrolyte supplied by the backwash pump. After a period of time (8 to 12 hours) in service, or because of a high differential pressure across the filter bed, one filter is backwashed, leaving the other two filters in service. The backwash solution discharges into the backwash filtrate, and is pumped via the backwash product pump to either EP1 settler or S1 settler.
An internal weir within the backwash filtrate tank, piped to the suction of the backwash product pump, allows accumulated organic to be recovered through manipulation of the tank level.
The electrolyte filter air scour blower provides low pressure air for electrolyte blowdown and scouring the filter media as part of the filter backwash sequence.
17.5.2.1.10.2 Electrolyte Heat Exchangers
The optimum operating temperature for the SX process is lower than the EW process. In order to achieve the required operating temperatures for the SX and EW circuits, heating and cooling is first achieved by the spent electrolyte heat exchanger, and finally by the electrolyte trim heat exchanger in combination with the EW cooling tower.
Under normal operation, the heat exchangers operate as follows:
Electrolyte Heat Exchanger o Hot side – spent electrolyte from EW to SX o Cold side – advance electrolyte from SX to EW.
This spent electrolyte heat exchanger utilises the waste energy stored in the spent electrolyte to preheat the advance electrolyte to the EW process.
Electrolyte Trim Heat Exchanger o Hot side – spent electrolyte from EW to SX after 2580-HX-022 o Cold side – cooling water from the cooling tower.
The electrolyte trim heat exchanger further cools the spent electrolyte stream returned to the SX circuit to 35°C.
If required (e.g. during plant start-up), the advance electrolyte from SX to EW can be heated, using hot water from the hot water heater The advance electrolyte will be heated to around 40°C for the EW process. In this case the heat exchanger operates with the following streams:
Hot side – hot water
Cold side – advance electrolyte from SX to EW.
17.5.2.1.10.3 Electrowinning
Smoothing agent and cobalt sulphate are added to the electrolyte circuit as reagents in the electrolyte circulation tank. Smoothing agent (non-ionic flocculant) is used as a cathode
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` Silangan Project July 2019 surface smoothing and densifying agent in the EW process. Cobalt sulphate stabilises the lead oxide layer on the anode surface. This prevents anode corrosion, which otherwise would result in the lead contaminating the copper cathode. Chloride, as common salt (NaCl), can also be added to the recirculating electrolyte stream, if the chloride levels are too low for optimum electrowinning. Polypropylene balls (BB’s) are placed in the cells to inhibit acid mist. Acid mist is caused by release of oxygen bubbles that tend to form on the anode.
Electrolyte is drawn from the electrolyte circulation tank by the electrolyte circulation pump) and is split into two streams, each feeding 86 EW cells. Each EW cell contains 69 stainless steel cathodes, and 70 lead alloy anodes. Copper is recovered from the electrolyte solution by connecting direct current between the lead anodes and the stainless steel cathodes. The electric current is fed to the electrolytic cells from rectifiers, using a busbar system that connects the individual cells. During the process, copper is deposited on the stainless steel cathodes, and oxygen is liberated at the anodes.
Spent electrolyte from the EW cells reports to the spent electrolyte tank. Concentrated sulphuric acid is added to the spent electrolyte tank to maintain the required acid concentration of 185 g/L for SX stripping. Make-up water is also added, as required, to the spent electrolyte tank from the RO water network. Spent electrolyte is pumped back to the SX circuit through the electrolyte heat exchangers. As the circulating electrolyte flow is greater than the spent electrolyte flow during normal operation, the excess flows from spent electrolyte tank to the electrolyte circulation tank via a large diameter equalising line. During the electrolyte filter backwash cycle, the spent electrolyte backwash is pumped from the spent electrolyte tank to the filter that is being backwashed.
Internal launders within the electrolyte circulation tank and spent electrolyte tank allow accumulated organic to be reclaimed through the manual manipulation of the tank levels. The reclaimed organic is manually drained into the sumps, and pumped to the HG raffinate presettler pond.
17.5.2.1.10.4 Cathode Washing and Stripping
Copper is plated onto the cathodes for seven days, after which the loaded cathodes are removed from the cells by the copper tankhouse crane, and transferred to the semi- automated, copper cathode washing and stripping plant. The loaded cathodes are washed using hot water from the hot water heater, and stripped of their copper sheets. The stripped cathodes are returned to the cells by the copper tankhouse crane. The stripped copper sheets are collected, weighed, banded and labelled, before they are stored ready for shipping.
Figure 17-53 presents the copper electrowinning building with copper reagents and filtration area in the foreground.
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` Silangan Project July 2019 Figure 17-53: Copper Electrowinning
17.5.2.1.11 Gold Leach Neutralization
Acidic slurry from CCD6 is pumped to the agitated CIP neutralisation tank. The tank provides approximately 1 hour retention time. The principal purpose of the circuit is to neutralise the free acid and raise the slurry pH to 8 via the addition of blower air and lime slurry, prior to gold leaching.
17.5.2.1.12 Gold Leach Adsorption
The gold CIP circuit consists of two leach tanks, which provide total leach residence time of 9 h; and six adsorption tanks, which provide total adsorption residence time of 9 h. The tanks are arranged in a cascade such that pulp from each tank overflows to the next in sequence.
Bypass facilities are provided for each tank in the train to allow individual tanks to be isolated and maintained whilst the rest remain online. All leach and adsorption tanks are equipped with a dual stage agitator to ensure uniform mixing.
17.5.2.1.12.1 Leach Tanks
Slurry from gold leach neutralisation is pumped to the gold leach tanks via the CIP cyanide leach feed box, where cyanide is added to commence leaching of gold and silver from solid into solution.
Lime slurry is added to gold leach tank no. 1 and 2 at a controlled rate to maintain the pH in the leach tanks at 9.5-10.5.
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` Silangan Project July 2019 Sodium cyanide is added at a controlled rate into the CIP cyanide leach feed box, or gold leach tank no. 2 if tank no. 1 is offline. An online CIP cyanide analyser measures the free cyanide concentration in gold leach tank no. 1. The operator has an option to choose automated cyanide addition based on cyanide ratio to leach feed rate or target cyanide concentration. Option for manual addition of sodium cyanide to gold leach tank no. 2 is also available. An online leach area HCN detector detects any potential hydrogen cyanide gas in the leach area.
Blower air is supplied to each leach tank through the agitator shafts to provide oxygen for the gold leaching reactions.
17.5.2.1.12.2 Adsorption Tanks
Gold and silver in solution is adsorbed onto carbon in the six adsorption tanks. Carbon flows in counter-current direction to slurry flow from adsorption tank no. 6 to no. 1 via recessed impeller vertical spindle carbon transfer pumps. Each adsorption tank is equipped with a mechanically swept wedgewire intertank screen to retain the carbon.
The vertical spindle loaded carbon recovery pump in adsorption tank no.1 transfers loaded carbon from the adsorption circuit to the 0.8 x 0.8 mm aperture loaded carbon recovery screen mounted above the acid wash column in the desorption circuit. The screen underflow gravitates back to adsorption tank no.1. There is an option to transfer carbon from adsorption tank no. 2 to the loaded carbon recovery screen if adsorption tank no. 1 is offline.
An adsorption tank gantry crane facilitates removal of intertank screens for routine cleaning and maintenance. A spare intertank screen is available for change-out for screen cleaning and maintenance.
Regenerated carbon from the carbon regeneration circuit is dewatered using the 1.0 x 1.0 mm aperture carbon sizing screen. The recovered water gravitates to the cyanide destruction circuit. The dewatered carbon is fed to adsorption tank no. 6.
Blower air is supplied to adsorption tank no. 1 and 2 through the agitator shafts to provide oxygen for residual gold leaching reactions. 2
CIP tailings overflow from adsorption tank no. 6 to the cyanide destruction circuit.
Figure 17-54 presents the two large gold leach tanks (right), six carbon adsorption tanks and two cyanide detoxification tanks (left). The overhead gantry crane facilitates removal of the CIP interstage screens for cleaning and maintenance. The bund is designed to contain 110% of the largest tank such that cyanide spillage is contained and does not report to the plant site pond which contains acidic spill.
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` Silangan Project July 2019 Figure 17-54: Gold Leach, Adsorption and Cyanide Destruction Area
17.5.2.1.13 Gold Desorption and Carbon Regeneration
Loaded carbon is processed through the desorption circuit comprising the acid wash column, elution column and regeneration circuit. The gold and silver rich pregnant eluate from desorption proceeds to gold electrowinning. Barren carbon is regenerated and returned to the gold adsorption circuit.
17.5.2.1.13.1 Acid Wash
Loaded carbon from loaded carbon recovery screen oversize discharges to the rubber lined acid wash column, with 10 t carbon capacity. The carbon is rinsed with filtered raw water to remove any further entrained solids prior to being washed with dilute hydrochloric acid (HCl). Concentrated acid (HCl at 32% w/w) is added to the acid column manifold with RO water to provide the required acid wash solution concentration of 3% w/w HCl. The acid wash solution is circulated through the acid wash column at two bed volumes (BV’s) per hour. One 3 bed volume equates to 21 m . Acid soluble foulants (mainly CaCO3), which have loaded onto the carbon are dissolved by the acid during this wash period.
Following acid solution contact, carbon is rinsed with filtered water to remove residual acid at two bed volumes (BV’s) per hour. The acid solution is discharged to the cyanide destruction circuit. Washed carbon is then hydraulically transferred to the elution column using RO water.
17.5.2.1.13.2 Elution
Prior to AARL stripping process, the carbon in the elution column is subjected to a cold cyanide rinse. The cold cyanide rinse removes the majority of copper that as loaded onto the carbon in the CIP circuit. Sodium hydroxide (NaOH) and cyanide is injected via mixers into the RO water line to the elution column manifold to provide the required cold cyanide wash solution concentration of 2% w/v cyanide and 3% w/v NaOH. Carbon is soaked for a preset time and rinsed. The wash effluent is discharged to the cyanide destruction circuit via the cold cyanide wash tank and pump.
The elution column is primed, injected with sodium hydroxide and cyanide, and recirculated as the heating circuit brings the solution up to stripping temperature. When the operating temperature is reached, the circuit automatically switches into elution mode, drawing strip
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` Silangan Project July 2019 solution from the strip solution tank, heating it, passing it through the elution column and discharging it to the selected pregnant solution tank. When the strip solution is consumed, the system draws RO water into the strip solution tank and passes the solution through the column to the pregnant solution tank until eight bed volumes are processed.
Prior to the strip cycle completing sodium hydroxide is dosed into the pregnant solution to maintain required caustic concentration for electrowinning. A cool down sequence is initiated prior to completion of the strip. This sequence is fully automated, and an alarm will advise the operator when the sequence is complete.
Elution column pressure control is achieved by a pressure control loop located on the discharge of the circuit to avoid possible flashing of the super-heated elution liquor.
When the elution sequence is complete the operator can direct the carbon CIP or regeneration by selecting the appropriate manual valves. The operator initiates the carbon transfer sequence from the SCADA system.
17.5.2.1.13.3 Carbon Regeneration
Barren carbon from the elution column is hydraulically transferred to the barren carbon dewatering screen. The screened carbon (screen oversize), is fed to the carbon regeneration kiln hopper. The screen undersize, which consists of mostly water, gravitates to the cyanide destruction circuit. Any residual water drains off the carbon in the kiln feed hopper.
Carbon is fed into the carbon regeneration kiln using the carbon regeneration kiln screw feeder. The kiln operates at temperatures of 650-700°C. Regenerated carbon exits the kiln and is quenched with filtered water in the carbon quench tank. The carbon is then pumped using the carbon transfer pump back to the carbon sizing screen in the CIP circuit.
Fresh carbon is loaded into the circuit using the carbon addition hoist via the quench tank.
17.5.2.1.14 Gold Electrowinning and Smelting
Gold electrowinning and smelting are located in the gold room, which is a secure area. Gold and silver are recovered from the pregnant eluate via electrowinning, with the gold/silver sludge being filtered and dried prior to smelting. The barren eluate from the electrowinning cells is returned to the gold leaching circuit.
17.5.2.1.14.1 Gold Electrowinning
Gold and silver recovery from pregnant eluate is achieved via the electrowinning circuit, which consists of four cells operating in parallel (3 duty / 1 standby). The design eluate volume to electrowinning for each strip is eight BVs or 170 m3.
The pregnant solution is pumped by the pregnant solution pump, fed from the in-service pregnant solution tank, via a common header to the electrowinning cells. Eluate from each of the electrowinning cells is combined in the eluate return hopper and pumped back to the in- service pregnant solution tank via the eluate return pump.
The cells contain 18 stainless steel framed cathodes and 19 stainless steel anodes. An electrowinning cycle takes approximately 12 hours to remove the gold and silver from solution. Gold/silver sludge is harvested from the stainless steel cathodes by manual high pressure washing.
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` Silangan Project July 2019 The electrowinning cells have dedicated 2,500 ampere electrowinning rectifiers to supply the required current to deposit the precious metals in the required time frame. Electrowinning cell off-gases are removed via fume hoods and extraction fans. Air flows into the cells through the laminated bus bars to provide airflow for fume capture and cooling for the bus bars. The fume hoods lift to facilitate cleaning of the cathodes.
Following completion of the electrowinning cycle, the barren eluate is pumped by the eluate return pump to the pregnant solution tanks (repurposed as barren eluate tanks), prior to being returned to the leach circuit via the eluate return pump.
17.5.2.1.14.2 Smelting
The recovered gold and silver bearing sludge from each electrowinning cell is filtered using two vacuum pan filters. The vacuum receiver is a vertical cylindrical receiver with a tangential inlet for the filtrate, a top outlet to the vacuum pump and a bottom drain to the gold room sump. The vacuum pump operates with a liquid ring seal from the seal tank in order to maintain sufficient vacuum in the receiver.
The filter cake (gold/silver sludge) is manually loaded from the pan filter into trays and dried in the drying oven. The dried and cooled sludge is weighed over flux platform scale then combined with fluxes (silica, nitre, borax and sodium carbonate). The sludge-flux mix is smelted in a diesel fired tilt gold furnace. The fluxes react with base metal oxides to form a low viscosity, free flowing slag, whilst the gold and silver remains as a molten metal.
The molten metal is poured into 1000 oz carbon moulds using a gold pouring cascade trolley to form doré bars. The slag (non-precious metal compounds) is separated from the precious metal and collected in the slag cone at the bottom of the cascade trolley. The gold/silver doré solidifies and is quenched in water, cleaned to remove slag, stamped for identification, sampled for analysis, weighed on the bullion balance and stored in the gold room vault.
The acid wash, elution and carbon regeneration area are situated adjacent to the CIP circuit. The hydrochloric acid area is adjacent to the acid wash column and is isolated from cyanide solution and slurry. The elution heater is located beneath the carbon regeneration kiln in a building.
17.5.2.1.15 Cyanide Detoxification
The cyanide destruction circuit is designed to reduce free and weak acid dissociable cyanide CNWAD in the tailings to less than 5 ppm prior to deposition in the tailings storage facility. The circuit consists of two agitated cyanide destruction tanks (2600-TK-082/083) operating in series, with a total residence time of 2 hours.
SMBS solution (a source of SO2) is added into cyanide destruction tank no. 1 at a nominal dose rate of 4-4.5 g/g CN. Oxygen is introduced to both tanks via spargers at the bottom of the agitator shafts to maintain a high redox potential to maximise oxidation of the cyanide present. Lime slurry is also dosed into each tank to maintain the desired pH at 8.5.
The air/SO2 process is normally catalysed by the addition of copper sulphate, however the level of copper within the leach liquor is sufficient to promote cyanide destruction without further additions of copper. If copper levels are too low, manual dosing of copper sulphate will be required.
The detoxified slurry discharges from cyanide destruction tank no. 2 by gravity to tailings thickening via the 1 x 18 mm slotted aperture CIP safety screen. Oversize from the carbon
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` Silangan Project July 2019 safety screen is captured in the CIP safety screen trash bin and manually returned to the adsorption circuit. Undersize from the carbon safety screen gravitates to the tailing thickener feed tank.
The detox cyanide analyser automatically takes cyanide destruction feed sample from adsorption tank no. 6 and discharge slurry sample from CIP safety screen feed box (2630- DI-008), and measures the CNWAD concentration to monitor cyanide destruction efficiency. A detox HCN detector is provided to monitor the airborne concentration of HCN gas.
17.5.2.1.16 Tailings Thickening
Tailings thickening comprises a 36 m diameter high rate thickener. Flocculant no. 1 is added to the thickener feed to assist with solids settling and maintain overflow clarity. Tailings thickener overflow reports to the process water tank which provides water to the gold circuit sprays, lime and limestone milling. Tailings thickener underflow is pumped to the tailings storage facility.
17.5.2.2 Metallurgical Test Works Results
Comprehensive testwork programmes have been conducted on samples from the Boyongan ore body at Silangan since 2007.
Figure 17-26 summarises the key metallurgical testwork programmes conducted since 2007.
Table 17-26: Metallurgical Tests
Testwork Year Phase Owner Laboratory Focus Managed by
Water treatment pilot 2018 PFS Philex/SMMCI Ausenco BIPure (Canada) plant, confirm Se removal
High clay thickening, Se 2018 PFS Philex/SMMCI Ausenco ALS Perth WA speciation
Confirmation of selected 2017-2018 PFS Philex/SMMCI Ausenco ALS Perth WA Flowsheet settings
Flotation, acid leach, gold SNC Lavalin / 2015 DFS Philex/SMMCI ALS Perth WA leach variability and pilot of AECOM major ore types
Acid leach, flotation, POX, Lycopodium / cyanide leach; variability; 2013 - 2014 PFS Philex/SMMCI ALS Perth WA AECOM Material flow characterisation
Mineralogy, flotation, acid ALS Kamloops 2011 - 2012 DMPF Philex/SMMCI SRK leach; composites & (was G&T) variability
Mineralogy, comminution, flotation (oxide/mixed ore SGS (was 2009 - 2011 Study Philex/SMMCI KD Engineering and composite). Acid leach Metcon USA) and cyanide leach (mixed ore type)
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Testwork Year Phase Owner Laboratory Focus Managed by
Anglo Research Grind, flotation, acid leach, 2007 - 2008 PFS Anglo American Anglo South Africa cyanide leach (oxide ore)
The information generated in the testwork programmes is sufficient for:
ore characterisation
process selection
facility description
production scheduling
expenditure estimates.
Figure 17-55 shows the resource shell and sample locations with their corresponding classification for the various testwork phases listed in Error! Reference source not found.. The pink areas denote high sulphur and the blue denotes low sulphur.
Figure 17-55: Representation of Resource Area and Metallurgical Drill-Hole Sample Location
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17.5.2.3 Materials Balance
A Metsim mass, heat and energy balance was developed for this study. The complex ore types and mineralogy, from the mine schedule, were modelled on a year by year basis.
The Metsim models developed in previous studies (2017 Surface Mine Study (P7, leach only flowsheet) and 2018 Underground Extension (UGE) PFS (P2, flotation and leach flowsheet)) were utilised for this study’s mass balance. The Metsim outputs were imported into excel- based mass balances for the leach only (P7) and flotation and leach (P2) flowsheets. The flotation and leach (P2) excel mass balance includes additional manual calculations for the flotation and concentrate handling circuits. These additional calculations are required to determine the maximum concentrate handling requirements and mass balance information between each flotation stage.
Reagent consumption rates from the Metsim models have been utilised in the operating cost calculation.
A third party review of the Metsim model and its input components was completed as part of the 2017 surface mine study and a subsequent review was completed of the flotation and leach model. All actions from this review have been addressed.
No fundamental changes were made to the model during this study. And changes were operational and plant feed related from the development of the mine schedule.
17.5.2.3.1 Inputs
Process design criteria and testwork data were used for inputs into the Metsim model.
Data from the mine plan was used for ROM inputs into the model. Where this was not available, representative ROM feed mineralogy was compiled from the following sources:
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` Silangan Project July 2019 20161014Bauer_MDH_MUDH_OCD_GTH intervals
20170210_for sample selectionEdtd_ocd
Cores were excluded if they were outside the mine shape. Each interval of each core was cross referenced to the mine schedule to allow the mineralogy not already included in the mine schedule to vary by production year.
The following simplifications to the mineralogy were conducted for Metsim use.
Tennanite, Tetrahedrite, Atacamite, Pseudomalachite, Molybdenite, Ti minerals, Apatite, Feldspars were excluded as they were not expected to affect the heat and energy balance.
Copper silicates were combined and entered as biotite, KCu3(AlSi3O10)(OH)2.
Gangue minerals were configured as follows:
o FeOOH percentage controlled to target total Fe
o Al(OH)2 percentage controlled to target total Al
o MgO percentage controlled to target total Mg
o KAlSi3O8 (orthoclase) percentage controlled to target total K.
o Apatite, Calcium Carbonate, Calcium Oxide ratio varied by depth and total percentage controlled to target total Ca.
17.5.2.3.2 Sulphide Flotation
Sulphide flotation is required from year 3 of production onwards. The flotation model was configured with a single unit to represent the overall flotation circuit. The flotation cell was configured to achieve the 20% concentrate grade with the amount of each copper mineral reporting to concentrate summarised in Table 17-27.
Table 17-27: Sulphide Flotation Copper Reporting to Concentrate
Cu Mineral Recovery (%) Chrysocolla 1.0 Malachite / Azurite 25 Bornite 92 Chalcopyrite 92 Chalcocite 87 Copper Silicates 1.0 Covellite 87
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` Silangan Project July 2019 The P1 (flotation only) gold recovery equation was used to simulate the amount of gold recovered. Silver recovery was set to match the gold recovery value in the absence of testwork data.
Pyrite recovery was set to 94.5% to remove nominal amount of Sulphur prior to atmospheric leach.
17.5.2.3.3 Atmospheric Leach
Atmospheric leach was the most complex part of the model with complex chemistry that determined the amount of copper recovered. The leach circuit required a robust heat and energy balance to calculate steam addition and heat exchange to attain target leach temperature.
17.5.2.3.3.1 Heat Exchanger
The heat exchangers are used to exchange energy from the hot atmospheric leach discharge slurry to the cold atmospheric leach feed incoming slurry. The heat exchanger was set up with the following equation to automatically adjust the hot side temperature change based on the kaolinite content:
∆T = - 0.064 x Kaolinite % + 13.84
This equation was developed based on vendor data at two kaolinite concentrations.
17.5.2.3.3.2 Copper Minerals
Table 17-28 summarises the copper leach reactions entered into Metsim to simulate the leaching of copper from this ore along with their reaction extents.
Table 17-28: Copper Leach Chemistry and Extents
Extent Name Reaction (%)
Cuprite 2Cu2O + 4H2SO4 + O2 = 4H2O + 4CuSO4 96
Chrysocolla 2CuO●2SiO2●3H2O + H2SO4 = 1 aCuSO4 + 3 H2O + SiO2 99
Malachite / Azurite Cu2CH2O5+ 2H2SO4 = 2CuSO4 + 3H2O + CO2 99
Bornite Cu5FeS4 + 3O2 + 6H2SO4 = 5CuSO4 + FeSO4 + 6H2O + 4S 85
Chalcopyrite CuFeS2 + 1 O2 + 2H2SO4 = CuSO4 + FeSO4 + 2S + 2H2O 15
Chalcocite 2Cu2S + O2 + 2H2SO4 = 2CuS + 2CuSO4 + 2H2O 95
Copper Silicates KCu3●AlSi3O10● (OH)2+ 3H2SO4 = 3CuSO4 + 4H2O + KAlSi3O8 75
Native Copper 2Cu + 2H2SO4 + O2 = 2CuSO4 + 2H2O 97
Covellite CuS + 2H2SO4 + O2 = 2CuSO4 + 2S + 2H2O 97 Copper Bearing Iron CuO + H SO = CuSO + H O 15 Oxide 2 4 4 2
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` Silangan Project July 2019 17.5.2.3.3.3 Copper Silicates
The majority of copper is contained in copper silicates. Copper bearing silicates are comprised of biotite, chlorite, kaolinite, dickite, illite, montmorillonite, amphibole, goethite and muscovite. The mine plan and hence ROM feed input is based on the sum of these compounds, namely high copper bearing silicates. This was represented as Biotite copper, KCu3(AlSi3O10)(OH)2.
Chrysocolla is a minor copper silicate reported in the mine plan and included in Metsim.
17.5.2.3.3.3 Carbonates
Malachite, azurite and pseudomalachite are carbonates and are highly soluble in sulphuric acid. These are represented by malachite/azurite in the mineplan and Metsim.
17.5.2.3.3.4 Copper Oxides
Native copper and cuprite are copper oxides and are soluble in hot sulphuric acid and ferric.
17.5.2.3.3.5 Sulphides
Sulphide minerals bornite, chalcopyrite, covellite and chalcocite require hot acid leach with ferric. Bornite and chalcopyrite consume ferric in the leach. However, in Metsim, the chemistry was simplified.
17.5.2.3.3.6 Ferric:Ferrous Ratio
The ferrous – ferric reaction consumes oxygen to maintain enough Fe3+ ions in solution to leach the copper species. In Metsim, the leach model is set up such that:
1. All available ferrous is converted to ferric with the following reaction:
4FeSO4 + 2H2SO4 + O2 = 2Fe2(SO4)3 + 2H2O
2. Reverse reaction of ferric to ferrous is controlled to achieve the nominal Fe3+:Fe2+ ratio of 2.5, per this reaction:
2Fe2(SO4)3 + 2H2O = 4FeSO4 + 2H2SO4 + O2
3. Sulphides such as bornite that consume ferric were leached with sulphuric acid to simplify the model; however the ferrous from this reaction is converted to ferric.
17.5.2.3.3.7 Gangue
Gangue compounds were included in the leach chemistry to model acid consumption and gangue material dissolution. The reaction extents were controlled to achieve an overall metal extraction in accordance with testwork analysis and as stated in the process design criteria. This information is summarised in Table 17-29.
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` Silangan Project July 2019 Iron extraction is important to predict with accuracy as it has a significant impact on ferrous consumption and operating costs for the leach circuit.
Table 17-29: Gangue Metal Leach Chemistry and Extraction Amounts
Name Reaction Extraction (%) Extraction (%) Y1-Y2 Y3+
Aluminium 2Al(OH)3 + 3H2SO4 = Al2(SO4)3 + 6H2O 1.5 eqn
Magnesium MgO + H2SO4 = MgSO4 + H2O 10 eqn
Iron 2FeOOH + 3H2SO4 = Fe2(SO4)3 + 4H2O 2.5 eqn
Potassium 2KAlSi3O11H2O +10H2SO4 = 3Al2(SO4)3 + K2SO4 0.4 1.5 +12H2O + 6SiO2
17.5.2.3.3.8 Calcium
Limestone in leach feed will react with sulphuric acid via the following reaction:
CaCO3 + H2SO4 = CaSO4 + H2O + CO2
The relationship between calcium concentration and temperature shown in Figure 17-56 was used for calcium solubility in a copper sulphate solution.
CaSO4 + 2H2O = CaSO4●H2O
Figure 17-56: Calcium Solubility in CuSO4 Solution
17.5.2.3.3.9 Pyrite
Pyrite consumes acid and generates sulphur and ferrous. The following reaction is included in the leach model for pyrite at 0.1% reaction extent.
2FeS2 + 2H2SO4 + O2 = 2FeSO4 + 4S + 2H2O
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17.5.2.3.3.10 Sulphur
Sulphur reacts with oxygen and water to form sulphuric acid. The following reaction is included in the leach model at 0.03% reaction extent.
2S + 3O2 + 2H2O = 2H2SO4
17.5.2.3.3.11 Chlorite
The following reaction for chlorite at 1.7% reaction extent has been included in the model.
4Mg5Al2Si3O18H8 + 23H2SO4 = 3Mg3Si4O12H2 + 11MgSO4 + 4Al2(SO4)3 +36H2O
17.5.2.3.3.12 Selenium
Selenium is estimated to go into solution in acidic conditions. The following simplified reaction was included in the leach chemistry in Metsim.
Se (s) + H2O = Se (aq) + H2O
The reaction extent is related to copper extraction and defined by the following equation:
Selenium Extraction = [0.1209 x Cu Extraction (%)] -8.58
17.5.2.3.4 Residue Thickening and CCD’s
Metal hydroxides being recirculated from raffinate neutralisation thickener underflow are converted to aqueous metal sulphides with sulphuric acid in the atmospheric leach feed thickener feed box.
Atmospheric leach thickener and CCD1 s controlled to achieve 200 ppm solids in the overflow.
CCD wash water is controlled to achieve 0.02 g/L of Cu in solution to gold neutralisation.
Flocculant addition and dilution was controlled to match the PDC with the dilution being sourced to minimize addition of excess water to maintain high PLS Cu concentrations.
17.5.2.3.5 Solvent Extraction
Isotherm data from BASF Isocalc modelling was used in the Metsim model to simulate the performance of the solvent extraction mixer-settlers. The electrolyte bleed stream returning to the HG PLS pond is manually adjusted to maintain Fe concentration < 1.5 g/L in the circuit.
17.5.2.3.6 Copper Electrowinning / EW Cooling Towers
Cobalt sulphate addition was included in the electrowinning model to maintain a cobalt concentration of 120 mg/L (to prevent corrosion of lead anodes).
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` Silangan Project July 2019 Chloride burn-off was included in the electrowinning model (to prevent corrosion of lead anodes) with the following chemistry.
CuSO4 + NaCl (aq) = Cu (s) + Na2SO4 + Cl2 (g)
The reaction extent is controlled at 1.5 mg/L of chloride conversion to gas.
17.5.2.3.7 Gold Leach
A simple gold circuit was constructed to model reagent consumption and chemistry:
Gold recovery of 96 – 143 x CNSCu%
Silver recovery of 70%
Cyanide addition was calculated to either use the equation 0.95 + (35 x % CNSCu) or for high clays where this resulted in <200 ppm of WAD cyanide, cyanide addition was controlled to achieve 200 ppm of WAD cyanide in detox feed.
Scalar input for number of strips per day to ensure accurate reagent quantities were calculated for different production years.
SMBS addition to detox was controlled to achieve 2ppm WAD cyanide in the gold circuit tailings.
- Left intentionally blank.
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17.5.2.4 Plant Capacity/Production Schedule
The mill plant processes 4.0 million tons per annum. The plant processes an average of 12,000 tons per day at 0.63 % copper and 1.09 gram per ton gold. To achieve this, Tables 17-30 to 17-43 summarizes the design criteria for every section of the plant.
Table 17-30: Process Plant Design Throughput
Process Plant Plant Throughput
Boyongan Oxides (Year 1 and Year 2) 4.0 Mt/y (Kaolinite 8-13%)
Boyongan Mixed Sulphides (Year 3+) 4.0 Mt/y (Kaolinite <8%)
Table 17-31: Process Plant Availability
Process Plant Area Design Availability
Primary Crushing, Milling, Flotation and Leach Plant 92%
SX/EW 96%
Table 17-32: Key Grade and Production Design Criteria
Design Head Grade and Units Oxides (Y1-Y2) Production
Copper Head Grade % 1.31
Gold Head Grade g/t 2.21
Silver Head Grade g/t 3.41
Copper in Concentrate kt/y 13(Y3+)
Copper Concentrate Grade %Cu 20 (Y3+)
Copper Cathode kt/y 40
Gold in Doré t/y 8.4
Silver in Doré t/y 9.6
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Table 17-33: Key Comminution Design Criteria
Comminution Parameter Design
Ai, g 0.021
CWI. kWh/t 5.9
RWI, kWh/t 8.6
BWI, kWh/t 7.5
DWI, kWh/m3 2.1
1 Axb 118
SG, t/m3 2.5
Table 17-34: Flotation Design Criteria
Flotation - Residence Times (min) Design
Conditioning Tank 0.5
Rougher 25
Cleaner 1 12.5
Cleaner Scavenger 10
Cleaner 2 7.5
Cleaner 3 5
Table 17-35: Concentrate Thickener / Filter Design Criteria
Thickener / Filter Design
Thickener specific settling area, t/m2/h 0.25
Thickener U/F Density, % w/w 70
1 a lower Axb value is selected as the coarse ore competency value based on the values presented in
Table 17-33: Key Comminution Design Criteria (a lower Axb value, indicates a more competent ore); this is because the coarse ore competency test, the JK Drop Weight Test, is more suited for the harder ore (Axb < 60) to obtain any meaningful results; therefore the lowest Axb value is chosen to mitigate any risk to the comminution circuit flowsheet. Chapter 17 Page 101
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Thickener / Filter Design
Specific filtration rate, kg/m2.h 450
Concentrate moisture, % w/w 10
Concentrate TML, %w/w 12.7
Table 17-36: Viscosity Design Criteria
Viscosity Parameter 4.0 Mt/y, 8-13 % 4.0 Mt/y, < 8 % Kaolinite Kaolinite
Yield Stress, Pa 8.6 8.6
Plastic Viscosity, mPa.s 0.14 0.12
Table 17-37: Atmospheric Leach Design Criteria
Atm Leach Parameter 4.0 Mt/y, 8-13 % 4.0 Mt/y, < 8 % Kaolinite Kaolinite
Feed Slurry Density, % 35 41
Leach Temperature, ºC 60 60
Leach Residence Time, h 18 18
Oxygen Utilisation, % 15 15
Design Eh, mV 700 700
Leach Discharge Acid target, g/L 3.0 - 5.0 3.0 - 5.0
Leach Discharge Iron target, g/L 1.5 - 3.0 1.5 - 3.0
Leach Discharge Fe3+:Fe2+ Ratio 1.5 – 3.0 1.5 – 3.0
Table 17-38: Thickener /Clarifier underflow Densities
Thickener / Clarifier 4.0 Mt/y, 8-13 % 4.0 Mt/y, < 8 % Kaolinite Kaolinite
Atmospheric Leach Feed Thickener 57 59
Atmospheric Leach Residue Thickener 55 57
CCD 1 – 6 Thickeners 49 55
HG PLS Dynamic Bed Clarifier 10 10
LG PLS Dynamic Bed Clarifier 10 10
Raffinate Neutralisation Thickener 16 16
Tailings Thickener 42 44
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Table 17-39: Solvent Extraction Design Criteria
Solvent Extraction Parameter Value
SX Ponds Residence Time, h 6
Circuit Configuration Split Circuit – HG & LG 2E x 1EP x 1S x 1W
Organic Entrainment in Aqueous, ppm 50
Aqueous Entrainment in Organic, ppm 2000
Overall Copper Recovery, % 92.3
Table 17-40: Electrowinning Design Criteria
Electrowinning Parameter Value
Current Density, Nom / Max, A/m2 300 / 350
Cell Voltage, Nom / Max, V 2.0 / 2.2
Cathode Area per side, m2 1.1
Cathodes per Cell 69
Cell copper drop, g/L 3.0
Table 17-41: Gold Neutralization Design Criteria
Gold Neutralisation Parameter 4.0 Mt/y, 8-13 % 4.0 Mt/y, < 8 % Kaolinite Kaolinite
Feed Slurry Density, % 35 40
Target pH 8.0 8.0
Neutralisation Residence Time, min 60 60
Table 17-42: Gold Leach / CIP Design Criteria
Gold Leach / CIP Parameter 4.0 Mt/y, 8-13 % 4.0 Mt/y, < 8 % Kaolinite Kaolinite
Leach Residence Time, h 9.0 10.3
Oxygen Utilisation, % 15 15
Adsorption Residence Time, h 9.0 10.3
Carbon Batch Size, t 10 10
Strips per week, Nom / Max 6 / 9 6 / 8
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Table 17-43: Cyanide Destruction Criteria
Cyanide Destruction Parameter Value
Feed Free & WAD Cyanide, Nom / Max, g/L 200 / 300
Tails Free & WAD Cyanide, Nom / Max, g/L 2 / 5
SMBS Dose Rate, g / gCN 4.0 – 4.5
Residence Time, h 2.0
Oxygen Utilisation, % 15
Table 17-43: Elution Design Criteria
Elution Parameter 4.0 Mt/y, 8-13 % 4.0 Mt/y, < 8 % Kaolinite Kaolinite
System AARL AARL
Strips per day, design 1.5 1.3
Elution Temperature, Nom / Max, ºC 110 / 115 110 / 115
Table 17-43: Carbon Regeneration Design Criteria
Carbon Regeneration Parameter Value
Reactivation Temperature, ºC 650 - 700
Reactivation Atmosphere Steam
Kiln Capacity, t/d 15
Table 17-43: Gold Room and Electrowinning Design Criteria
Goldroom and Electrowinning Parameter Value
No. of Cells, duty / standby 3 / 1
Cathode size, m2 0.9
No. of Cathodes 18
Eluate Solution Temperature, ºC 60
Electrowinning Cycle Time, h 12
Current / Cell, A 2500
Smelting Temperature, ºC 1200
Smelting Time, h 6.0
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Table 17-44 shows the annual metal production schedule.
Table 17-44: Production Schedule
Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Metric Tons 2.8 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 Ore, Millions Copper, % Cu 1.06 1.07 1.08 0.92 0.69 0.66 0.63 0.58 0.59 0.58 0.56 Gold, g Au / t 1.71 1.83 1.82 1.42 1.37 1.35 1.54 1.41 1.45 1.19 1.15
Silver, g Ag/t 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33
Recoveries Copper(P7), % 73.3 73.3 73.3 73.3 73.3 73.3 73.3 73.3 73.3 73.3 73.3 Copper(P2), % 83.0 83.0 83.0 83.0 83.0 83.0 83.0 83.0 83.0 83.0 83.0 Copper(P1), % 22.2 22.2 22.2 22.2 22.2 22.2 22.2 22.2 22.2 22.2 22.2 Gold(P7), % 91.3 91.3 91.3 91.3 91.3 91.3 91.3 91.3 91.3 91.3 91.3 Gold(P2), % 95.9 95.9 95.9 95.9 95.9 95.9 95.9 95.9 95.9 95.9 95.9 Gold(P1), % 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 Silver(P7), % 69.8 69.8 69.8 69.8 69.8 69.8 69.8 69.8 69.8 69.8 69.8 Silver(P2), % 68.8 68.8 68.8 68.8 68.8 68.8 68.8 68.8 68.8 68.8 68.8 Silver(P1), % 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 Metals Copper(Total), 48 70 81 67 50 48 42 42 43 42 41 M lbs Copper(Conc), 0 0 21 49 14 13 11 11 11 11 11 M lbs Copper(Cath), 48 69 58 18 37 35 31 31 32 31 30 M lbs Gold(Total), K 141 215 224 175 169 167 191 174 179 147 141 ozs Gold(Conc), K 0 0 73 57 55 55 62 57 58 48 46 ozs Gold(Dore), K 141 215 151 118 114 112 128 117 120 99 95 ozs Silver(Total), 84 120 119 119 119 119 119 119 119 119 119 K ozs Silver(Conc), K 0 0 37 37 37 37 37 37 37 37 37 ozs Silver(Dore), K 84 120 83 83 83 83 83 83 83 83 83 ozs
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Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20 Y21 Total Metric Tons 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 3.8 2.6 81.4 Ore, Millions Copper, % Cu 0.54 0.52 0.51 0.45 0.45 0.56 0.48 0.46 0.41 0.42 0.63 Gold, g Au / t 1.04 1.03 0.98 0.93 0.93 0.94 0.93 0.82 0.64 0.66 1.20
Silver, g Ag/t 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33
Recoveries Copper(P7), % 73.3 73.3 73.3 73.3 73.3 73.3 73.3 73.3 73.3 73.3 73.3 Copper(P2), % 83.0 83.0 83.0 83.0 83.0 83.0 83.0 83.0 83.0 83.0 83.0 Copper(P1), % 22.2 22.2 22.2 22.2 22.2 22.2 22.2 22.2 22.2 22.2 22.2 Gold(P7), % 91.3 91.3 91.3 91.3 91.3 91.3 91.3 91.3 91.3 91.3 91.3 Gold(P2), % 95.9 95.9 95.9 95.9 95.9 95.9 95.9 95.9 95.9 95.9 95.9 Gold(P1), % 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 Silver(P7), % 69.8 69.8 69.8 69.8 69.8 69.8 69.8 69.8 69.8 69.8 69.8 Silver(P2), % 68.8 68.8 68.8 68.8 68.8 68.8 68.8 68.8 68.8 68.8 68.8 Silver(P1), % 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 Metals Copper(Total), 39 38 37 33 33 41 35 33 30 20 917 M lbs Copper(Conc), 10 10 10 9 9 11 9 9 8 5 215 M lbs Copper(Cath), 29 28 27 24 24 30 26 24 22 15 703 M lbs Gold(Total), K 129 127 107 115 115 116 114 102 80 54 2,996 ozs Gold(Conc), K 42 41 40 38 38 38 37 33 26 18 862 ozs Gold(Dore), K 87 85 82 78 78 78 77 68 54 36 2,133 ozs Silver(Total), 119 119 119 119 119 119 119 119 119 78 2,428 K ozs Silver(Conc), K 37 37 37 37 37 37 37 37 37 24 684 ozs Silver(Dore), K 83 83 83 83 83 83 83 83 83 54 1,744 ozs
17.5.2.5 Plant Working Schedule
Same discussion was made in Section 17.5.2.4
17.5.2.6 Product Specification
The metallurgical process will produce 3 marketable products.
1. Copper cathode produced in the pilot plant test met the London Metal Exchange (LME) grade 99.999% Copper. The elemental analysis is listed in Table 17-45.
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Table 17-45: Copper Cathode Data
COPPER CATHODE ANALYSIS
OCD-01 OCD-02 Cat hode Cat hode LME Grade A Analyt e Unit s (Sample Code (Sample Code Specification A) B)
Cu % by diff. 99.9996 99.9991 Al % <0.0001 0.0001 N/a Pb % <0.0001 0.0004 0.0005 max Ni % <0.0001 0.0001 See Note 3 O % 0.0055 0.0247 N/a Si % 0.0001 0.0001 See Note 3 S % 0.0002 <0.0001 0.0015 max
2. Gold-silver dore produced in the laboratory varies periodically in the mine life, the range is listed in Table 17-46.
Table 17-46: Gold Dore Data
GOLD DORE PROJECTION
Element* Unit s Range
Au % 2833-5463
Ag % 4231--6869
3. Copper and gold grades in concentrate is listed in Table 17-47.
Table 17-47: Copper Concentrate Data
COPPER CONCENTRATE PROJECTION
Element* Unit s Range
Cu % 21-24
Au % 42-68
17.5.2.7 Tailings Specification
A total of four tailings samples were provided to Knight Piezold (KP), Ausenco’s Tailings Storage Facility sub-consultant, in July and August 2015 for physical and geochemical testing. Classification testing showed that the tailings are non-plastic sandy silt with a trace
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` Silangan Project July 2019 of clay and would be classified as ML in accordance with the Unified Soil Classification System. Tailings densities are estimated to vary between 1.0 t/m3 (initial) and 1.25 t/m3 (final) with permeabilities in the range 5 x 10-7 to 5 x 10-8 m/s. Settling is expected to occur at a moderate rate.
Some elemental enrichment of As, Cu, Hg and Se is likely in the tailings slurry with elevated concentrations in the supernatant. Arsenic and selenium concentrations measured in available supernatant samples to date have indicated that treatment will be required to reduce concentrations in order to discharge surplus water to the environment.
Cyanide is to be used in the processing of the ore with a detoxification step and concentrations of between 1 and 5 ppm WAD cyanide are expected in the tailings slurry reporting to the TSF. The tailings will be non-acid forming.
One further tailings sample was provided in September 2018 for acid forming potential and multi-element analysis of solids and supernatant. The sample confirmed the NAF status of the tailings with a negative net acid producing potential (‘NAPP’) and a circum neutral net acid generation (‘NAG’) test. The multi-element analysis confirmed the elevated concentrations in the supernatant of some elements which were targeted in the supernatant water treatment testwork program undertaken during the study.
Further test work is required to confirm that the supernatant assays undertaken to date are representative and to confirm that the TSF seepage control measures adopted are appropriate. A testwork program is scheduled as part of the Early Works Program.
17.5.2.8 Tailings Dam Siting
The original TSF site selection process was undertaken by SMMCI and Golder Associates during the period 2009 to 2012. The preferred location for the TSF was within the East Patag tenement area. A TSF layout was developed by KP as part of the 2014 AECOM PFS. This design provided for circa 200 Mt of tailings storage capacity at an average throughput of 10 Mt/y.
With the reduction in throughput to approximately 4 Mt/y and a total tailings volume of 83 Mt, the TSF location was refined, with the preferred option located at the northern end of the tenement area due to ease of initial construction, availability of construction materials within the TSF basin, lower embankment heights and lower LOM costs. The final layout for the TSF and its location with respect to the process plant is shown in Figure 17-57.
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Figure 17-57: TSF Location and General Layout
17.5.2.9 List of Mill Machineries and Auxiliary Equipment
A structured summary of mill equipment and machinery is tabulated in Table 17-48.
Table 17-48: Major Process Plant Equipment
Number of Equipment Description Use Units 625 Series Roll Sizer, 500t/h, Mineral Sizer 4T x 8R Scroll 1 Primary Crushing
Single Stage SAG Mill, Dia.
SAG Mill 8.53m x 5.79m EGL (28'x19'), Grinding 1 6.2 MW, Atmospheric Leach Flat bottom vertical tank, Tanks agitated, D 18m x H 17.2m; Copper Leaching Live vol 4150m3, SAF2507, 5 316L, VE roof Pregnant Solution Flat bottom vertical tank with 2 Copper Leaching Tanks roof, 187 m3 live vol, Dia 6.2m x 7.3m H, CS
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CCD Thickeners High Rate, on-ground, 30m diam; 6 Copper Leaching High rate, SAF2205 rake, SAF2205 tank Cathode Cell 86 cells with 69 cathodes each Copper Cathode Production = 5 934 cathodes, plus 138 Spares, TOTAL = 6 072, 990mmx1100mm Deposit, 3mm Thick, 316SS Blade, 304SS Hanger Bar
Gold Electrowinning 75EC18, 304 SS Body, 3 Gold- Electrowinning Cells Polypropylene Liner, C110 Copper Bus Bar, Integral Ventilation Hood, Includes 20 SS 304 Anodes, 18 Cathodes Gold Adsorption Tanks Flat bottom vertical Tank with 6 Gold Leaching agitator, 1,634m3; 12.8m D x 13.2m H, CS 12.8 m D x 13.9 m H, 1,724m3
Gold Furnace 200-T, Diesel, Hydraulic Tilt, 1 Dore Production 2100 °F [1148.9 °C], 1.2 ft3 [33.4 L] Rougher Cells CSRL, 100m3, D 7m x H 7m, 5 Copper Flotation Fixed Speed
Cleaner Cells CSRL, 600ft3, D 7m x H 7m, 4 Copper Flotation Fixed Speed
Tailings Thickener High Rate, on-ground, Diam 1 Tailings 36m; High Rate, CS, epoxy coated
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17.5.2.10 Mill Plant Layouts
Figure 17-58 shows a perspective layout of the processing plant.
Figure 17-58: Process Plant
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Silangan Project July 2019 17.5.3 Mine Support Services
The site infrastructures required to support the underground mine and upgraded process plant facilities include:
Site preparation and bulk earthworks Roads and road upgrades Camps and buildings Water supply and distribution Supernatant treatment facility Power supply and reticulation Port facilities Process Plant infrastructure IT and communications Logistics and Warehouse Facility
The Overall Site Layout Plan- Life of Mine (Year 21) is shown in Figure 17-59.
Figure 17-59: General Layout
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Silangan Project July 2019 17.5.3.1 Site Preparation and Bulk Earthworks
17.5.3.1.1 Plant Pads
The process plant pad and run-of-mine (ROM) pad will be constructed as a single facility. The MIA pad will be aligned with the main truck decline portal location. All pads will be designed to balance cut and fill where practical. Where borrowed fill is required it will be sourced from local borrows to be identified as part of the geotechnical studies in the detail design phase. An earthen barge landing, south of Placer, will be constructed for use during construction as one of the distant facilities supporting the process plant.
17.5.3.1.2 Camp Pads
The permanent village, which includes the permanent accommodation and associated facilities, is located on the north side of the previous mine access road, adjacent to the cemetery. This fenced pad slopes to the north where the sewage treatment plant will be located. The bulk earthworks contractor will develop this pad as part of early works.
The mining contractor camp is located on the north side of the access road.
The TSF camp pad is located on the Pan Philippine Highway to the east of the TSF. The camp pad accommodates the TSF construction contractor during the starter dam construction and subsequent embankment lifts.
17.5.3.1.3 Roads
Site inspections were carried out in previous studies where access roads and exploration roads where assessed. The road box cuts/batters stood up at steeper angles than the internal standard design criteria. Materials have to be sourced offsite. The design criteria for site roads are listed in Table 17-49. Peripheral design parameters, such as drains and safety berms are illustrated in Figure 17-60
Table 17-49: Road Design Criteria
Units Maintenance Track Minor In-Plant Site Access Access Road Road Road
Pavement Width m 4.0 6.0 8.0 8.0
Overall mm 150 290 370 420 Pavement Depth
Base Course mm nil nil 150 150 Depth (CBR60)
Sub-Base Course mm 150 290 220 270 Depth (CBR45)
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Grade % 4 4 4 4
Figure 17-60: Typical Road Cross Section
17.5.3.1.4 Ponds
Dirty and clean water ponds are located alongside the ROM pad close to the mine portal. The dirty water pond receives the sump pumping from underground while the clean water pond receives water from the production bores or existing decline as required making up raw water flows in the MIA and process plant. Any excess clean water is returned to the environment. Major sediment control structures are located to the east side of the process plant site.
17.5.3.1.5 Diversion Drains
Three diversion drains manage surface water around the project. The two main diversion drains are around the mine subsidence zone and process plant discharges to Timamana River catchment. The third diversion drain is part of the TSF development.
17.5.3.1.6 Topsoil and Spoil Management
The topsoil is stored alongside the quarry pad on the south east side of the TSF alongside the process plant to TSF pipe corridor. Spoil sites are also required for unsuitable excavated material.
The cut and fill material quantities required for site preparation and bulk earthworks are summarized in Table 17-50.
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Table 17-50: Earthworks Quantities
Surface Facility Disturbed area Total Cut Required Total Fill Required (m2) (m3) (m3)
Plant Pad
MIA Pad 49 900 115 500 117 200
Process Plant ROM Pad 320 700 734 300 1 087 700
Supernatant WTP Pad 24 500 28 300 82 000
Quarry Pad 40400 101 900 50200
TSF Go Line 31 600 95 700 40 600
Barge Landing 500 200 500
Camp Pad
Permanent Camp 34 300 91 300 27 900
Mining Contractor Camp 29 000 28 600 24 900
TSF Camp 16 300 21 300 26 300
Construction Camp 28 200 26 600 22 900
Pond
Sediment Pond 13 800 13 800 73 300
Diversion Drain (around subsidence and mill area)
Northwest Diversion Drain 47 600 746 900 25 300
Southwest Diversion Drain 45 700 163 100 66 400
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Silangan Project July 2019 17.5.3.2 Water Supply and Distribution
The site has a net positive water balance as shown in Figure 17-61. As such, there is no requirement for additional water supply infrastructure; all make-up water required on site is obtained from mine dewatering or precipitation runoff within the limits of the mine operating area.
Figure 17-61: Overall Water Balance
Surface water will be diverted around the mine subsidence area to minimize water entering the mine and to maintain local stream flows. This diversion is sized to accommodate a 1:100 flood on the catchment area.
The TSF decant water to the process plant consists of a pontoon mounted pump along with a booster pump on land to pump decant water to the process water tank. The TSF decant water to the supernatant water treatment feed consists of a pontoon mounted pump along with a booster pump on land to pump decant water to the treatment plant. The TSF decant water to Amoslog Weir consists of a pontoon mounted pump along with a booster pump on land to pump decant water to the clean water discharge line from the supernatant water treatment plant. A decant discharge pipeline is installed along Bad-As creek to discharge downstream of the weir in Amoslog river.
The project will produce a large surplus of water which must be managed and discharged to the environment. Discharge is necessary, as the surplus volume cannot be stored from both a risk of breaching the TSF walls and ensuring capacity is available to collect run-off water during rain events. Manageable concentrations of residue elements (selenium, arsenic, copper and mercury) in the supernatant water stored on the TSF are seen to be present which consequently necessitates a water treatment prior to discharge to the Amoslog River.
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Silangan Project July 2019 The water treatment plant is nominally labelled the Supernatant Treatment. The solid salt residues from the evaporator/crystallizer of the RO plant will be stored in the TSF. The high quality purified water from the RO system (permeate) and from the evaporation/crystallization system (distillate) will be discharged to the Amoslog River.
17.5.3.3 Power Supply
Power supply is supplied from Anislagan substation via a 2.3 km 69 kV supply to the HV switchyard located at the northern end of the process plant. Power is distributed at 23 kV from the main 23 kV switchboard. 23 kV feeders distribute power underground to various distribution transformers located around the process plant area. Remote location such as the TSF, camps and the mine are supplied by overhead transmission lines and stepped down locally. Power to the mine and mine infrastructure includes the portal of the underground mine, ventilation shafts and advance dewatering bore locations. The total installed power is 77.6 MW with a continuous load of 61.4 MW.
Emergency power station is located adjacent to the main substation and will provide 13.5 MW of power to the site if grid supply fails. In this eventuality, sufficient power is required to support agitated equipment, thickeners and the tailings line for this equipment to be shut down in a controlled manner (if the power outage is extended), as well as personnel safety.
17.5.3.4 Port Requirements
Nasipit Port will be used for the import of commodities for both operational and execution phases. The port has the capability to handle import bulk liquid diesel, bulk liquid acid, lime (bulk-a-bag) and large volumes of containers. Location of port relative to mine site is shown in Figure 17-62.
Consumables will be stored at both the port facility area and the process plant. The additional consumables required for the underground mine and the flotation circuit in the process plant can be accommodated by the consumables handling strategy developed for the surface mine phase of the Project.
Approximately 650 half-height 20’ concentrate containers are required to be stored at or close to the port. 650 containers x (L) 5.8 M x (W) 2.3 m equates to ~9000 m2 of storage area. Containers may also be double-stacked to reduce storage area requirement. Silangan have the option to either utilize future expansion capacity at the port or purchase/rent land adjacent to the port site as shown in Figure 17-62.
Ships will be required from Year 3 of production. Initially, shipping requirements will be minimal and increase over the life of mine. Shipping will reach a peak of one ship approximately every two months to meet production rates. Loading of the ships will be completed using a retainer that can be connected to the ship’s crane. Container movement for ship loading will be via container forklift and designated trucks.
Surigao Port will be used for the export of copper cathode. Surigao is close to the mine site and currently has a low utilization and high available capacity for mine requirements. During the extreme weather restrictions (Nov-Feb) when the port is exposed to typhoons, vessels will shelter in Nasipit Bay or other safe havens.
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Figure 17-62: Nasipit Port Location
Figure 17-63: Planned Expansion of Nasipit Port Location
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Silangan Project July 2019 17.5.4 Environmental Protection and Management Plan
17.5.4.1 Environmental Impacts
The category of the project is mining which entails huge amount of earthmoving of the underground extraction and processing of ore materials and the subsequent dumping of mine wastes to selected areas and containment of mill tailings, backfilling of the overburden to the subsidence and hauling of the copper concentrates to the shipping port.
The overall environmental effects of the project could be summarized into two (2) categories, namely: adverse effects and favorable effects.
Adverse Environmental Effects
Destruction of the ground and vegetation on areas directly affected by mining operations; Alteration of original land configuration; Change of atmosphere and air quality in the immediate vicinities; Exploration of natural resources; Destruction and alteration of the habitats of wildlife; Reduction of water resources; and Displacement of some families living within the project area In-migration to the host municipalities and barangays
Favorable Environmental Effects
Increased dollar reserves and/or income of both the national and local governments derived from taxes; Improvement and addition of roads, bridges, power lines, communication and transport systems and other infrastructures; Increased and/or generation of employment; Improvement of lifestyles and standard of living of people in the communities; Increased literacy rate due to establishment of educational facilities; Promotion of small business and medium scale industries that usually co-exist with mining operation of the project component; Improvement of water supply system sewerage facilities; Improvement of the health condition of the community and development of social services like family planning, housing, education and recreational facilities; and Introduction and promotion of Company-assisted income generating projects to help residents near the mining area to be self-reliant and self-manageable communities.
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Silangan Project July 2019 17.5.4.2 Environmental Mitigating Measures
The Environmental Management Program (EMP) contained in the EIS for the mine serves as the documentation of the mitigation measures and monitoring program that the project will implement in compliance to the conditions stipulated in its ECC. An expanded version of the EMP containing management plans, activities related to mitigation, protection or enhancement measures, and the corresponding financial requirements is submitted as part of the approved Declaration of Mining Project Feasibility (DMPF). This document, the Environmental Protection and Enhancement Program (EPEP) serves as the implementation document of the EMP and is reviewed and updated annually by the proponent, the regulatory offices (DENR and MGB), and representatives of the stakeholders to reflect accomplishments or changes to the committed EMP and conditions in the ECC. The EMP presented here presents a summary of the EMP and the EPEP approved by the DENR and the MGB as part of the attachments to the issued ECC and DMPF.
As a result of the Environment Impact Assessment (EIA), SMMCI proposed several management plans to address concerns in the different environmental aspects that may be affected by its project activities. These consist of plans for:
Land Use and Visual Aesthetics; Topography and Geomorphology; Soil Erosion and Quality; Waste Management (Mine and Non-Mine Wastes); Hydrology; Water Resources Management; Aquatic Ecology Monitoring; Air Quality Monitoring; Noise and Vibration Management; Biodiversity Management; Social Development and Management Plan; Public Health Monitoring; and Traffic and Security Management.
The management plans include prevention and mitigation measures for the avoidance or reduction of deleterious effects to the environment, and monitoring and reporting protocols to evaluate environmental performance. These will be developed to comply with applicable regulatory requirements and/or best environmental management practices.
Each of the management plans will have the succeeding general outline, whenever applicable:
Potential impacts during construction, development, mining operations and processing; Control strategies for the prevention and mitigation of potential deleterious impacts; and Monitoring program for the evaluation of the project’s environmental performance.
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Silangan Project July 2019 17.5.4.2.1 The Land
17.5.4.2.1.1 Land Use and Classification
17.5.4.2.1.1.1 Change in Land Use
The significant impacts of the Project on the land use will be mostly mitigated through close coordination with the stakeholders and key government agencies such as DENR and MGB. Rehabilitation strategies and final land use will be discussed in accordance with the FMRDP that will be developed for the project in consultation with key stakeholders and in fulfilment of the requirements of the DMPF prior to construction.
17.5.4.2.1.1.2 Change in Land Use
Because of the greenfield nature of most mining projects, it is inevitable to have disturbance in many areas. In these places, progressive development will take place. As much as possible, slope re-grading and rehabilitation will be performed in conjunction with most clearing and stockpiling activities to ensure stability and visual aesthetics. Thus, mine components like the TSF and quarries shall be constructed in stages, in consideration of safety and appearance, aside from the mining program. Where progressive rehabilitation would be implemented, the methods and designs to be enforced shall be consistent with applicable regulations on mine safety and environmental sustainability.
Towards end of mine life and closure, engineering and environmental measures to rehabilitate the disturbed landscape, especially in the subsidence zone, TSF and quarries, shall be implemented. Rehabilitation of these areas may either be through restoration to conditions that mimic the original, pre-Project aesthetics or use of the land, or re-purposing of the land consistent with post-mine use to be agreed and finalized as the Project progresses. An FMRDP will be prepared to provide an integrated approach in the geomorphic and topographic rehabilitation of the disturbed land in preparation for the Closure Phase of the mine.
17.5.4.2.1.1.3 Devaluation of Land
To prevent erosion, dust generation, and sedimentation from the soil stockpile, the stockpile can be covered with coco matting and graded to a stable relief. Erosion prevention permaculture practices such as planting vetiver grass and related shrubbery can also be applied to prevent mass wasting of the soil stockpile. The planted shrubs or grass will eventually add nutrients and organic matter to the soil increasing soil stability during rehabilitation.
Soil contamination will be prevented through proper waste management and housekeeping measures (i.e. collection and containment of waste oil and lubricants from vehicles and equipment, strict implementation of solid and domestic waste management, containment and transport of hazardous wastes, and placement of disposal bins strategic locations within the mine development area).
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Silangan Project July 2019 17.5.4.2.1.1.4 Impact on Environment Critical Areas
All relevant permits will be secured from concerned agencies prior to tree cutting activities. As part of the proponent’s environmental protection programs and its compliance to the requirements of the Tree Cutting Permit, a detailed tree inventory will be conducted for areas that will be cleared.
Observance of safe working slope gradient and placement of landslide control measures will be implemented in susceptible areas where work needs to be undertaken.
Contamination of water bodies proximal to the Project site will be prevented through proper waste management and housekeeping measures.
Protection of freshwater and terrestrial habitats and management of habitat loss will be implemented in areas where disturbance may occur. Maintenance of a nursery will aid in the conservation and protection of habitats through re-vegetation and re-greening activities for progressive rehabilitation of disturbed areas or for vegetation offsetting. The nursery may also serve as temporary housing of encountered wildlife whenever applicable.
17.5.4.2.1.2 Soils and Land Capability
A detailed Topsoil Management Plan (TMP) will be prepared for the project prior to the start of construction works. The TMP will be based on detailed design plans for the mine components and facilities. It will specifically address topsoil stripping, depths and methods, stockpiling, the development of topsoil inventories for the project site, re-spreading, soil amelioration, and seedbed preparation.
To address concerns regarding potential impacts of the Project on soil conditions, as previously enumerated, indicative mitigation and management measures are proposed below.
17.5.4.2.1.2.1 Soils and Land Capability
Where practical, ground clearing and preparation will be conducted progressively to minimize the total area of soil cover and land that will be disturbed. Conversely, progressive soil rehabilitation should be conducted in disturbed areas that will not be used for further development to reduce the potential amount of soil cover that may be eroded.
From the topsoil that is planned to be removed during the clearing and mining, a great portion can be conserved and stockpiled for use in future rehabilitation activities. Surface erosion and downstream sedimentation will be managed using sediment controls such as stockpile re-grading, installation of drainage networks within the vicinity of stockpile and working areas to channel surface run-off away from cleared areas, installation of sedimentation ponds at the bench toes of work areas, installation of sediment control devices such as coconut matting when needed, and application of erosion permaculture measures such as the planting of vetiver grass and related shrubbery in soil stockpile areas.
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Silangan Project July 2019 17.5.4.2.1.2.2 Change in Soil Quality / Fertility
Stockpile soil quality will be improved through conservation management programs and soil quality improvement processes during stockpiling. Progressive soil rehabilitation will be conducted in disturbed or cleared areas that will not be used for further development over the course of the project to reduce the potential amount of soil cover that may be exposed or eroded. Vegetative cover will be used during rehabilitation to expedite and enhance the recovery of soil quality. Rehabilitated sites will be conditioned prior to seeding with native trees, shrubs, and grass (where applicable) to enhance successful germination and improve plant survival rate. If necessary, soil conditioners and organic fertilizers will be added to the soil to ensure plant growth.
Proper handling of contaminants and potentially contaminated materials will be observed at all times during the mine life. Periodic training of all personnel involved with transport of ore and non-pre materials will be required to ensure safe and effective material transport operations and reduce contamination risks. Waste oils, lubricants, and chemicals will be placed in designated storage tanks. Disposal of these wastes will be managed in accordance with the project’s waste management plan for non-mine wastes. Spill kits will be available for use in mitigating occurrences of chemical and oil spills. Soils contaminated with process chemicals will be removed and subject to decontamination and/or treatment prior to reuse or disposal to the TSF. Soils contaminated with fuel and lubricants will be collected and submitted to a third-party contractor that will perform decontamination offsite. Appropriate stockpiled soil will be utilized to replace contaminated soil in the affected areas, if required.
To detect for possible degradation of soil quality and fertility in the project area, a monitoring program consistent with the baseline survey of the EIA shall be implemented. Monitoring stations will be established from selected EIA sampling stations near major components of the mine. Only parameters related to soil pollution and nutrient content will be analysed, to detect possible contamination and loss of fertility, in consideration for future rehabilitative use of the soil. Table 17-51 summarizes the monitoring program for soil.
Table 17-51: Summary of Soil Monitoring Program
Aspect Parameters Frequency pH, Total Organic Matter Total Nitrogen, Total Nutrient Content Semi-annual Phosphorus, Potassium Metals: Al, As, Ca, Cd, Co, Cr, Cu, Fe, Mg, Mn, Mo, Ni, Contamination Semi-annual Pb, Se, Zn. Hg
17.5.4.2.1.2.3 Enhancement of Climate Change Impacts
Flood mitigating structural measures will be emplaced to mitigate the impact of climate to the soils in the project site. A continuous progressive rehabilitation is recommended, where practical and needed, to minimize deforestation once mine operation starts. Engineering best management practices, including details on soil excavation slope and surface drainage
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Silangan Project July 2019 management and stockpiling requirements, will be implemented to manage erosion in all development/construction sites.
The significant ecological impacts of the project will be mitigated through a range of strategies particularly progressive vegetation clearing, biodiversity offsets and, eventually, on-site rehabilitation.
A pre-clearing plan will be developed to cover all areas where vegetation clearing will take place. This would incorporate the clearing schedule for progressive vegetation removal along with handling/translocation procedures not only for vegetation and wildlife but also for other transportable habitat features such as logs and boulders. Areas to be cleared should be properly delineated and a Tree Cutting Permit should be secured from the DENR – Forest Management Bureau (DENR-FMB) prior to any vegetation clearing activities. As a requirement to the permit, a 100% tree inventory will be conducted to determine corresponding number of replacement trees to compensate for the loss. Offset sites, similar in vegetation and wildlife assemblage to the affected areas will be identified together with the DENR-FMB. Plant nurseries will be established to raise wildings and saplings for future revegetation requirements.
A Biodiversity Management Plan (BMP) will be developed and implemented prior to construction. The plan will provide a comprehensive framework for the implementation of the biodiversity impact mitigation measures and monitoring requirements for the project. It will aim to determine the scale of the ecological impact on species and habitats and quantify the change in biodiversity over time in the project site.
Identified indirect effects will be mitigated through dust suppression activities, mechanical upgrades to minimize noise and light impact, and implementing protocols such as proper driving speed, scheduling of activities and regular maintenance measures.
17.5.4.2.2 The Water
17.5.4.2.2.1 Water Quality
17.5.4.2.2.1.1 Degradation of Surface Water Quality
17.5.4.2.2.1.1.1 Siltation and Erosion of the Hingasa-an, Magpayang and Bad-as/ Amoslog Cathcments
Sediment and erosion control measures, stockpile management, and drainage systems will be applied during the construction phase and extending to the operation phase to prevent the contamination of adjacent and downstream water bodies within the Hinagasa-an, Magpayang and Bad-as/Amoslog. Sediment and erosion control measures include the stabilization of banks and slopes of primary impact waterways, installation of silt traps, settling ponds and gullies, and revegetation rehabilitation of exposed areas. Use of vegetation to reduce and regulate the change in depth, volume and flow will also be considered. Earthworks, if necessary, will be undertaken preferably during dry weather. Stockpile will be distant from water courses, with protection against natural weather and environmental elements to prevent the soil dispersion and sedimentation of streams. During construction, water trucks shall sprinkle the access roads to reduce windblown debris from
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Silangan Project July 2019 getting into the waterways. Primary impact creeks and streams will be monitored regularly for BOD, TSS, TDS, pH and DO during the construction phase and covering additional relevant parameters such as metals during the operation stage. Water quality monitoring will be conducted on a monthly basis during the construction phase and quarterly during the operation phase of the project.
17.5.4.2.2.1.1.2 Stream Contamination by Contact Water from Quarries and TSF
There will be a progressive rehabilitation of the quarries to prevent erosion and stream contamination. To segregate the clean surface runoff and contact water from the TSF and quarries, runoff diversion channels and weirs will be established. Clean water diversions will be provided to catch clean surface runoff. Upstream diversion channels will be utilized to divert water away from the tailings area and back into local watercourses.
Monthly and Quarterly monitoring of the primary impact and adjacent water bodies will be maintained during the construction and operation phase, respectively, to ensure conformance to the water quality guidelines.
17.5.4.2.2.1.1.3 Potential Seepage from the TSF
The integrity of the TSF is ensured to adhere to acceptable standards and withstand extreme weather events to prevent any seepage. TSF seepage and management shall include the installation of pumped underdrainage system, filter/drainage zones of the low permeability core, and seepage collection towers. The effectiveness of these measures shall be observed by monitoring the surface water quality of the established stations on a quarterly basis during the operation phase of the project.
17.5.4.2.2.1.1.4 Dewatering of Surface Mine and Diversion of Boyongan and Timamana Creeks
Sediment traps and control including the use of vegetation will be installed to prevent the siltation and regulate the change in water depth, volume and flow of Boyongan and Timamana Creeks during the process of diversion. Release of water during the dewatering of the Surface Mine will be regulated to control the outflow into the Boyongan and Timamana Creeks, and to sustain the carrying capacity of these downstream water bodies. Both creeks, including their tributaries, will be monitored monthly during the construction phase to ensure conformance to the DAO 1990-34 water quality guidelines.
17.5.4.2.2.1.1.5 Discharge from the Spillway of the TSF
Release from the spillway of the TSF will only occur during emergency cases such as a multiple high intensity rainfall event. The pond capacity of the TSF may mitigate potential flooding to an extent prior to spillway discharge. High rainfall events and decant pump failure would increase flood risk downstream.
17.5.4.2.2.1.1.6 Effluent from the TSF and Discharge from the Process Plant
The Process Plant includes a neutralization and cyanide destruction process before the tailings are discharged to the TSF. These processes will ensure the cyanide content and other chemicals are significantly reduced, if not removed, before impoundment in the TSF.
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Silangan Project July 2019 The cyanide concentration of the discharge from the mill plant is lower than the set standard limit for effluent for all water body classifications. Cyanide will be further disintegrated by sunlight in the TSF. Effluent from the mining facilities will be monitored, as well as the receiving water bodies to maintain the integrity of the surface waters within the Hinagasa-an and Bad-as/Amoslog Catchments and the marine water quality of Sabong Bay.
17.5.4.2.2.1.1.7 Dam Breach and Overtopping
Both the TSF and WRD will be designed to meet internationally accepted standards on safe design and operating standards. Safety precautions to withstand seismicity, potential geo- hazards, and maximum rainfall and flood events in the area will also be integrated in the dam design. The integrity of the structures will be checked regularly even up to mine closure and rehabilitation. In the unlikely event of dam breach and overtopping, an emergency response plan will be in place to manage any spills and leaks, and to contain the contaminated wastewater. Quarterly water quality monitoring of the surrounding water bodies will be implemented during the operation phase.
17.5.4.2.2.1.1.8 Hydrocardbon and Chemical Spills and Leaks
There will be a provision for proper drainage in the motorpool area, maintenance workshop, and fuel storage area. Bunds and sorbents will be placed in the fuel and oil storage areas. Good housekeeping practices will be enforced at all times and workers will be trained to properly handle hydrocarbons and other hazardous materials. Waste oils, oily water and other hazardous wastes will be collected and disposed offsite by an accredited third party waste hauler. Monitoring systems will be in place to immediately address any leakage.
17.5.4.2.2.1.1.9 Non-mine Wastwater and Solid Wastes
Sewage and other domestic discharges will not be treated onsite; Storage will be in the form of septic tanks and hauled by an accredited third party hauler.
Solid non-mine wastes that may potentially clog the waterways will be sorted, disposed and managed through the following methods: ecological composting of biodegradable wastes, Material Recovery Facility (MRF) for recyclable wastes, temporary holding facility for off-site waste disposal, and on-site sanitary landfill. A Waste Management Plan will be developed to address collection, handling, transport, treatment and disposal of generated wastes, considering relevant statutory requirements.
17.5.4.2.2.1.2 Degradation of Lake Water Quality
The WRDs and Surface Mine will be designed to meet internationally accepted standards on safe design and operating standards, while considering the potential geo-hazards and occurrence of extremities in the area. Potential impact to the lakes will be addressed by establishing Sediment Collection Ponds and Drainage Systems within the perimeter of the WRD which include drains and sumps to prevent water ponding. Waste rocks in the WRD will be contained and managed. The Guinob-an and Mainit Lakes will be monitored quarterly to assess their quality during the construction and operation phases. An emergency response plan will be rolled out to immediately address and manage any possible dam breach and operation failure.
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Silangan Project July 2019 17.5.4.2.2.1.3 Degradation of Marine Water Quality
The water quality of Sabong Bay will be monitored quarterly during the operation phase, as well as the effluent from the TSF tailings pipeline to ensure compliance to regulatory guidelines and standards. The monitoring frequency may be increased as the need arises.
17.5.4.2.2.1.4 Degradation of Groundwater Quality
To prevent the infiltration of contact water, the site water management strategies will include the:
Establishment of vertical clay core protected by a downstream crushed rock filter zone within the TSF embankment to contain the contaminated tailings water; Stable TSF basin, with thick non-acid forming layer; and Installation of drains and sumps downstream of the embankment to control any potential seepage and sediment runoff from the TSF during operations.
Dam structures will adhere to internationally-accepted standards on safe design, engineering and operating standards to prevent any potential seepage or leakage. The design of the TSF will also consider the seismicity, potential geo-hazards, maximum rainfall and flood events in the area. The integrity of these structures will be monitored regularly even after mine closure and rehabilitation.
In the unlikely event of dam breach and overtopping, an emergency response plan will be in place to manage and contain the seepage and address the leaks. Ground water quality monitoring of the wells installed across the site shall be conducted on a quarterly basis during operation.
17.5.4.2.2.2 Aquatic Ecology
17.5.4.2.2.2.1 Alteration of Hydrological Regimes
A comprehensive monitoring plan in accordance with the environmental monitoring plan in the approved EIS will be implemented to assess the potential impacts of the project on the aquatic habitat and biota during construction and operation phases. Aquatic biota monitoring will include monitoring of abundance and composition of periphyton, macrobenthos, and fish in stations established during the baseline studies, focusing on stations that will be directly affected by the proposed project. Furthermore, to minimize effects of inundation in the Boyongan and Timamana Creeks, enhancement of the riparian vegetation along these creeks will be undertaken in line with the Biodiversity Management Plan. Maintenance of healthy riparian zones are crucial to aquatic ecosystems as they provide sediment filtering, bank stabilization, water storage and release, and aquifer recharge. Also, riparian zones provide important habitat for wildlife.
17.5.4.2.2.2.2 Change in Water Quality
Change in water quality due to mine-induced erosion will be minimized by following the best practice on sediment and erosion control plan, which will be designed and implemented prior to construction activities. The drainage channel or gallery for dewatering of the underground mine and maintenance of the subsidence pit floor and drainage will also be provided with
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Silangan Project July 2019 impediments to reduce sediment levels prior to discharge to Timamana and Boyongan Creeks. In addition, sediment treatment ponds will be strategically located in the channel to further minimize sediment input to these waterways. Potential leaching from PAFs that in case encountered will be mitigated via disposal in the TSF and TSF and seepage ponds will be established to capture seepage from the waste containment facilities. Wastewater treatment plant will also be constructed to ensure that the quality of the water discharged to adjacent waterways will be in accordance with the DENR standards and will not significantly impact the aquatic biota.
As aforementioned, a comprehensive monitoring plan in accordance with the environmental monitoring plan in the approved EIS will be implemented to assess the potential impacts of the project on the aquatic habitat and biota during construction and operation phases. Monitoring stations will be coincident with the water quality monitoring stations. Monitoring of Lake Mainit will also be conducted in concurrence with the water quality monitoring stations.
17.5.4.2.2.2.2 Loss of Important Species
Reduction in volumetric flow is unavoidable but potential impacts will be minimized by identification of conservation areas for management, where feasible, through the aforementioned monitoring plan. Furthermore, enhancement and maintenance of riparian zone along the Timamana and Boyongan Creek will be enhanced according to the Biodiversity Management Plan.
Monitoring of freshwater biota will be undertaken in order to determine the possible effects of project activities to freshwater ecology. It will be carried out in accordance with the detailed Environmental Monitoring Plan which was developed as part of the environmental compliance of the project stated in the EIS. Table 17-52 provides the summary of the proposed freshwater ecology monitoring program for the construction and operation phases of the project.
Table 17-52: Summary of Freshwater Ecology Monitoring
Parameters Methods Frequency Aspect Macroinvertebrates Abundance and Kick – net Semi – annual composition Presence of pollution indicator species Periphyton Abundance and Substrate scraping Semi – annual composition Presence of pollution indicator species Fish Status of endemic species (i.e. Interviews with the Semi – annual A. marmorata) locals
17.5.4.2.3 Loss of Habitat
Partial or complete loss of headwater portions due to construction of mine facilities is unavoidable but potential impacts will be minimized by offset areas for conservation,
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Silangan Project July 2019 progressive rehabilitation and enhancement of riparian vegetation along the Timamana and Boyongan. A comprehensive monitoring plan, in accordance with the approved environmental plan in the EIS will be implemented to assess the potential impacts of the project to both aquatic habitat and biota during construction and operation phases.
17.5.4.2.4 The Air
17.5.4.2.4.1 Climate and Meteorology
Though the Project’s impact to local climate is minimal, mitigating measures will still be implemented to further improve the quality of the area. The mitigating measures that will be used to address the identified impacts will use the principles of avoidance, mitigation, and compensation. Avoidance measures include:
Designing infrastructure in such a way that vegetation clearing will be reduced. If If vegetation clearing is unavoidable, easement of the major components especially pipelines and access roads should be reduced or limited to maintain considerable amount of vegetation cover; and Wherever feasible, vegetation communities classified as brush and shrub lands that are known to be derivatives of previous residual forests should be maintained and rehabilitated for possible sources of propagules for forest nursery establishment.
To mitigate the effects of vegetation removal, SMMCI will contain the area of disturbance where the extent shall be clearly identified on the plans and on the ground prior to construction activities. As part of the DENR-FMB statutory requirements, relevant permits (e.g. Special Tree Cutting Permit) will be secured from concerned agencies prior to any cutting activities. Buffer zones will be established around identified stepping corridors to provide protection to remaining sources of propagules.
In order to compensate for the removal of vegetation due to the construction and operation of the Project, progressive rehabilitation will be undertaken as soon as areas for rehabilitation become available. Rehabilitation areas will at least be equivalent to the areas cleared of vegetation. Open areas and grasslands that will not be affected by the Project shall be revegetated where feasible. Forests communities outside the project site shall be identified. Long term protection of the identified sites shall be provided to serve as compensatory measures to offset the project’s impacts to local climate. The areas that shall be identified as biodiversity offset, ideally, shall contain vegetation communities that are similar to areas to be cleared for the project. Resident forester/s shall be engaged to oversee and manage the revegetation/regeneration works as appropriate and reference sites will be established to quantify and better understand the impacts resulting from mining activities will also be established. Regular monitoring of vegetation within the project site and reference sites to quantify the change over time will also be implemented. Monitoring of change in local microclimate will also be performed, following the frequency of ambient air monitoring.
17.5.4.2.4.2 Air Quality and Greenhouse Gas
17.5.4.2.4.2.1 Air Quality
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Silangan Project July 2019 Fugitive emissions by the project is the most significant source of dust and particulate pollutants (trace metals (Hg, Pb, Cd, As, and Cr), TSP, and PM10) during construction and operation phases. Measures to manage this would include:
Fugitive dust from vehicular traffic and material handling activities will be controlled by management of vehicle speeds and application of regular water suppression to unpaved haul roads and stockpiles whenever visible dust is observed; and Regular dust monitoring will be conducted within the project site and near the sensitive receptors. The sampling stations as shown in Error! Reference source not found. may be used as monitoring stations once the project goes into construction and operations phase. Particulates and gaseous pollutants may be emitted by the Project through consumption of fossil fuel by vehicles, mining equipment, and processing. Minimising fuel consumption is not only economic; it may also have the potential to reduce GHG emissions and particulate and gaseous pollutants. Measures to achieve this include:
Requiring sub-contractors to undergo and pass the government vehicle emission tests prior to contract award. Exhaust fumes from vehicles, mining equipment, and other fuel burning equipment will be managed through the use of low sulphur fuel where possible. Traffic management guidelines will be incorporated in worker’s and subcontractor’s induction seminar. Guidelines will include control in vehicle speed and spraying of road routes and work sites as well as transport routes near the host communities. Fuel efficiency will be maximised through scheduling of vehicle and equipment movements in order to minimise both idle time and distances travelled. Equipment and vehicle loadings will be optimised through accurate monitoring and calculation of fuel requirements in order to reduce fuel weight and improve fuel efficiency. Vehicles and mining equipment will be regularly maintained in order to increase efficiency, reduce fuel use, and help reduce costs associated with equipment downtime. Regular air quality monitoring will be conducted within the project site and near the sensitive receptors. Detailed management of air quality impacts will be addressed in an EMP.
17.5.4.2.4.2.2 Greenhouse Gas
Greenhouse gas emissions over the life of the mine are predominantly from the combustion of fossil fuels. Minimising fuel consumption is an economic as well as an environmental driver for the Project, and a number of good practice measures to achieve this are already accounted for from which the emissions calculations are derived. These measures include:
Fuel and equipment efficiency will be considered prior to construction and operation activities. Accounting, reporting, and reduction program/campaign will be undertaken to remove or minimize unnecessary GHG emissions.
Low sulphur fuel will be utilized for use in order to minimize emissions and maximize equipment efficiency. Fuel efficiency will be maximised through scheduling of vehicle and equipment movements in order to minimise both idle time and distances travelled.
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Equipment and vehicle loadings will be optimised through accurate monitoring and calculation of fuel requirements in order to reduce fuel weight and improve fuel efficiency. Vehicles and mining equipment will be regularly maintained in order to increase efficiency, reduce fuel use, and help reduce costs associated with equipment downtime.
Equipment dispatch will be monitored closely in order to eliminate unnecessary use and to increase efficiency of use. To mitigate/minimise emissions from vegetation clearing and land use change, SMMCI will:
Design infrastructure in such a way that vegetation clearing will be reduced. If vegetation clearing is unavoidable, easement of the major components especially pipelines and access roads should be reduced or limited to maintain considerable amount of vegetation cover, wherever possible Wherever feasible, vegetation communities classified as brush and shrub lands that are known to be derivatives of previous residual forests should be maintained and rehabilitated for possible sources of propagules for forest nursery establishment. To contain the area of disturbance, the extent of disturbance shall be clearly identified on the plans and on the ground prior to construction activities. As part of the Forest Management Bureau (FMB)-Department of Environment and Natural Resources (DENR) statutory requirements, all relevant permits (e.g. Special Tree Cutting Permit) will be secured from concerned agencies prior to any cutting activities. Establishment of buffer zones Progressively rehabilitate (within or outside the project site) as soon as areas for rehabilitation become available. Rehabilitation areas will at least be equivalent to the areas cleared of vegetation. Open areas and grasslands that will not be affected by the Project shall be revegetated where feasible. Identify forests communities outside the project site. Long term protection of the identified sites shall be provided to serve as compensatory measures to offset the project’s GHG emissions from vegetation clearing. The areas that shall be identified as biodiversity offset, ideally, shall contain vegetation communities that are similar to areas to be cleared for the project. Engage resident forester/s to oversee and manage the revegetation/regeneration works as appropriate. Establish appropriate reference sites to quantify and better understand the impacts resulting from mining activities will also be established. Conduct regular monitoring of vegetation within the project site and reference sites to quantify the change over time will also be implemented.
In addition to these measures, SMMCI will continually seek opportunities in order to reduce further GHG emissions by the Project
17.5.4.2.4.3 Ambient Noise
Mitigating measures include constantly informing the host communities of the duration and timing of any noisy construction works and blasting activities. Movement of equipment and blasting activities will be scheduled to avoid sensitive times wherever possible. Speed of vehicles will be limited on roads, and vehicle horn signals will be kept at a low volume, if
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Silangan Project July 2019 necessary, such that the noise generated by the ingress and egress of vehicles will be minimized.
Appropriate personal protective equipment (PPE) that conforms to the Procedural Guidelines Governing Occupational Safety and Health in the Construction Industry as per Department of Labor and Employment – Bureau of Working Conditions (BWC-DOLE) Department Order (DO) 1998-13 will be provided to operators and workers who handle heavy equipment that generates high levels of noise. Work involving handling of noisy and/or vibrating power tools/equipment shall be a maximum of 2 hours per day (for 8-hour work, duty cycle should be 1:4) in conformity to the requirements of BWC-DOLE DO 1998-13 and the Occupational Safety and Health Standards (as amended, 1989).
Regular maintenance of all vehicles, machinery, and heavy equipment will be ensured and noise generating equipment will be controlled by installation of noise damping barriers/guards.
To mitigate impacts to noise-sensitive wildlife, SMMCI will establish a buffer zone which is a vegetated area or a natural buffer to accommodate wildlife. Ambient noise level monitoring will be done regularly within the perimeter of the Silangan Project and near the sensitive receptors in the baseline sampling stations to control noise levels and meet the recommended criterion.
17.5.4.2.5 The People
17.5.4.2.5.1 Socio-Economic Environment
17.5.4.2.5.1. In-migration and Cultural/Lifestyle Change
SMMCI will develop protocols and guidelines for worker behavior and conduct especially in local host communities and these will be strictly followed. Strengthening value-formation among current residents of host communities through seminars and other culturally- appropriate forms of meetings and workshops.
17.5.4.2.5.2. Generation of Local Benefits from the Project
SMMCI will assist the local governments (particularly at the barangay, municipal and provincial levels) to develop and to assist their respective Barangay Employment Service Offices (BESOs) and Public Employment Services Offices (PESOs). Institute a system of verification regarding local residency in respect to hiring. Training programs will be held for residents of the host communities to develop the required skills to be hired and also training programs for local government on revenue generation and management will be conducted.
17.5.4.2.5.3. Traffic Congestion
SMMCI will draw up a traffic management plan with local authorities at the barangay and municipal levels that includes the participation of community leaders, e.g., local school heads, establish appropriate signage i.e., road warning devices, undertake safety education for drivers of vehicles and pedestrian and regular maintenance of roads.
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Silangan Project July 2019 17.5.4.3 Environmental Infrastructures
The following infrastructures will be constructed, operated and maintained to the highest quality or standards to address some of the environmental effects of its operations.
17.5.4.3.1 Tailings Storage Facility (TSF)
The tailings storage facility (TSF), located in the East Patag area, has been designed to hold a total of 83 Mt of tailings at the end of mine life. The main embankment will be constructed as a zoned earthfill embankment, with an overall downstream slope of 3.5H:1V (i.e. 3H:1V with 5 m benches at 10 m vertical intervals and an upstream batter slope of 2.5H:1V. Construction will be sequenced to maintain sufficient freeboard to be able to hold a rainfall event with a 100 year average return interval (ARI).
The TSF will comprise a zoned earth fill embankment, approximately 70 m high and constructed predominantly from selected fill won from local borrows within the impoundment area. The majority of filters, aggregates and rock armoring will be sourced and processed from a quarry or imported as required. The embankment will be continuously raised over the life of the project using downstream construction methods and the staged design will allow for construction and operation to occur concurrently.
The basin will be provided with a compacted soil liner to reduce and control the rate of seepage from the facility. Seepage interception systems will be installed downstream of the facility to intercept shallow seepage.
The design basis of key TSF design parameters are summarized in Table 17-53.
Table 17-53: TSF Design Basis
17.5.4.3.1.1 Site Characteristics
Description Value Source
TAILINGS PROPERTIES
Density 1.00 t/m3 initial Laboratory testing of 1.20 t/m3 final pilot plant samples
Underdrainage Release (Seepage) 5 to 10%
Supernatant Release 28 to 36%
Permeability 5 x 10-7 m/s to 5 x 10-8 m/s
2 Consolidation Rate Rapid (cv > 100 m /yr)
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Description Value Source
Geochemistry Elemental enrichment of As, Cu, Hg and Se
Cyanide (<5 ppm WAD)
EMBANKMENT GEOMETRY
Slopes Overall: 1V:2.5H Knight Piesold Design Downstream: 1V:3.5H
Construction method Downstream
Construction materials Sourced from TSF basin borrow and/or most economic source
Basin liner system Reworked in situ soils with partial basin underdrainage piped network
Maximum embankment height- ~25 m Stage 1
Maximum embankment height- ~70 m Final
Population Offset Minimum 200 m from SMMCI embankment toe
FACILITY CAPACITY
Stage 1 (Starter) Year 1 and 2 - 6.2 Mt Ausenco
Final Year 21- 78.3 Mt (Max 80 Mt)
Throughput 3.1- 3.8 Mt/y (average)
Design storm event Range of storms varying from 72 hrs to 6 month 100 yr ARI
Spillway Capacity PMF Knight Piesold
Stage 1 embankment volume 1.5 Mm3
Final embankment volume 23.4 Mm3
SEISMICITY
OBE 0.61 g Knight Piesold
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Description Value Source
MCE 0.68 g
The proposed TSF area is located in the northern extent of Mindanao Island, situated generally steep topography within the Project area, becoming flatter to the north approaching the coast. The land within the proposed TSF footprint is currently a mixture of jungle in the steep terrain within coconut plantations in the lower valley areas.
The climate is tropical in nature with no pronounced dry season and an average annual rainfall of 3700 mm. The area has high seismic risk with design peak acceleration (PGA’s) of 0.61 g and 0.68 g for Operating Basis Earthquake (OBE) and Maximum Credible Earthquake (MCE), respectively.
17.5.4.3.1.2 Tailings Characteristics
Some elemental enrichment of arsenic (As), copper (Cu), mercury (Hg) and selenium (Se) are likely in the tailings slurry with potentially elevated concentrations in the supernatant. Arsenic and selenium concentrations measured in available supernatant samples to date have indicated that treatment will be required to reduce concentrations in order to discharge surplus water to the environment.
Cyanide will be used in the processing of the ore with a detoxification step resulting in concentrations of less than 5 ppm weak acid dissociable (WAD) cyanide in the tailings slurry reporting to the TSF. The tailings will be non-acid forming (NAF).
17.5.4.3.1.3 Ground Conditions
The underlying geology at the TSF site can be broadly characterized into three different units:
The Tugunan Formation comprises of interbedded layers of sandstone, siltstone, mudstone and rare conglomerates. The Motherlode formation comprises of mudstone/shale, sandstone and conglomerates. Both these geologic units are generally low permeability. They are present at shallow depth over much of the TSF embankment and basin area, dipping below Maniayao Volcanics in the south.
The Maniayao Volcanics are divided into Andesite Porphyry (sandstone) and Laharic breccia. The lahric breccia comprises of silty clays with frequent and sometimes extensive bands of sand and gravel. There is the potential for the Maniayao Volcanics to have a much higher permeability than the Tugunan and Motherlode formations. Depth to groundwater is variable but is typically located between 5 and 10 m below ground surface except near permanent creek alignments where groundwater is present at shallow depth.
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Silangan Project July 2019 17.5.4.3.1.4 Design Principles
The TSF has a consequence category of ‘Extreme’ as assessed in accordance with ANCOLD guidelines. The principal driver for the category is the population inhabiting the area immediately downstream of the facility.
During the initial facility development and after extreme storm events, significant volumes of water will be stored on the TSF for extended periods.
As a result, a water retaining embankment geometry has been adopted for the initial development of the facility and maintained until such time that sufficient storage is available on the tailings beach to accommodate minor storms. The TSF will comprise a zoned earth fill embankment, ~ 70 m high, constructed predominantly from selected fill won derived from local borrows located within the TSF basin footprint.
The majority of filters, aggregates and rock armouring will be sourced and processed from a local quarry or imported as required, and potentially some mine waste selected from Non Acid Forming (NAF) soils and rocks. The embankment will be continuously raised over the life of the Project using downstream construction methods and the staged design will allow for construction and operation to occur concurrently.
A surface water diversion system has been incorporated into the design to reduce the area of catchment to the south reporting to the TSF during the initial phases of development (developed as borrow in Stage 1). For the purposes of design, this diversion system was assumed to fail during extreme storm events.
Tailings will typically be discharged into the facility using a combination of banks of spigots at regular intervals and single point discharges from specified locations around the perimeter of the facility to maximize control of the supernatant pond. Initially deposition will be sub- aqueous using a single point discharge in the northeast corner of the TSF. As the facility develops a beach, deposition will switch to spigot dropper methods, and deposition will become sub-aerial.
Seepage will occur from the facility. Underdrainage and toe drain systems will be installed within the lower basin and at the upstream embankment toe respectively. These will serve to partially control and reduce seepage from the facility to manageable levels and lower the phreatic surface at the embankment to improve overall stability.
In order to reduce the rate of seepage from the facility, both from an embankment stability and environmental protection perspective, a compacted oil liner will be installed across the basin area. Freeboard will be maintained throughout construction and operation such that a Probable Maximum Flood (PMF) event can be managed via attenuation in the basin and release via the emergency spillway. The TSF cross-section showing contingency freeboard dimensions is shown in Figure 17-64.
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Figure 17-64: TSF Construction Design
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17.5.4.3.1.5 Water Management and Deposition Modelling
There will be a significant quantity of surplus water generated by mining operations overall. The process plant will source process water from the various sources around the site, predominantly TSF decant return and mine dewatering as required.
A water balance model was created for the site and modelled for different climate scenarios up to and including 100 year ARI wet and dry sequences.
In order to maintain adequate freeboard, maintain control of the rate of accumulation of water within the TSF and reduce the risk of the spillway operating, a constant pumped discharge is required from the facility. The water treatment plant is proposed to be commissioned in phases with a capacity of 750 m3/h capacity installed for the first year of TSF operation increasing to 1,000 m3/h as underground dewatering inflows become more significant. Modelling of water quality of the discharge stream indicates that dilution alone will be insufficient to meet the relevant discharge criteria and treatment of surplus water will be required prior to discharge and a water treatment plant has been included on this basis.
A tailings deposition model was generated for the facility to determine the tailings beach levels and associated required TSF embankment crest elevations for the lift of the operation. This modelling included as assessment of the water storage and freeboard provisions required to contain the normal operational pond and design storm events with the summary of the results shown in Table 17-54.
Table 17-54: Deposition Modelling Summary
Stage Tailings Tailings Beach Spillway Invert Embankment Pond Tonnage (Mt) Level (mRL) Level (mRL) Crest Level Freeboard (mRL) (m)
Starter 6.2 66.3 67.9 71.2 4.9
Final 78.3 114.1 114.5 118.0 3.9
17.5.4.3.1.6 Construction
Over the mine life, an estimated 60 % of construction materials can be sourced from borrow areas within TSF basin which will subsequently be flooded by tailings. The remaining fill will be predominately won from borrows adjacent the TSF. These materials include: Zone A (low permeability fill) and Zone C (structural fill). The remaining materials (Zone F1 and F2 filters, Zone E and G rock and gravel base course) are to be sourced from the processing of local quarried material or imported as required
Detailed construction and closure quantities have been determined which are considered to be accurate within +/- 25% for construction quantities and within +/-40% accuracy for the closure quantities. These will be used in the project financial model to generate costs for the facility.
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A closure and rehabilitation plan has been developed which includes capping of the tailings surface and revegetation of the site. The facility is designed to be water shedding (dry cover) with a closure spillway sized to convey flows generated during a peak maximum flood (PMF).
17.5.4.4 Mine Closure Plan
DENR Administrative Order 2010-21, as amended, states that in the determination of a post-mining land use: “Mine site decommissioning and rehabilitation shall aim to establish a land use capability that is functional and proximate to the land use prior to the disturbance of the mine area, unless other more beneficial land uses are predetermined and agreed in partnership with local communities and Local Government Units”. Hence, mine closure aims to bring back the conditions of the site to its general state prior to the mining operations. This however does not limit the options for improvements of land conditions coming up with land uses which are more beneficial and have been agreed upon from consultations with the local communities and local government units.
It is the commitment of SMMCI to undertake a continuous regular community consultation in determining an agreed final land use for the various components of the project. On the determination of this, each of the facilities or services can be ownership transferred, donated, divested, decommissioned and removed. This process is to be progressively planned throughout the life of the operation, with the review intended every two years. Table 17-55 lists the different project components that will be decommissioned at the end of mine life.
Table 17-55: Mine Closure Plan Components
Project Component Equipment/Assets to be Decommissioned Tailings Storage Facility (TSF) Tailings pipeline system (pipes, elbows, flanges, etc.) Mill Process plant crushers, tanks, thickeners, filter vessels, etc.) Mill pipelines Assay laboratory (laboratory equipment) Others Sewerage treatment plant Fuel storage (tanks) Gensets Power and communication lines directly above facilities to be decommissioned Other surface facilities when deemed necessary
When life of mine is approached and at the onset of the Mine Closure Phase, changes with respect to the pre-development appearance within the project footprint will be noticed. Table 6-2 summarizes the differences in visual appearance between stage 1 development and post-mining conditions. Representations of the two conditions are shown in Table 17.56.
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Table 17-56: Mine Closure Plan Components
Major Mine Component Physical Condition Pre-Development At Closure Subsidence Zone Mixed use areas (coconut Devoid of vegetation and plantations, shrubland) possible impoundment of water at the pit floor TSF Filled with tailings deposit Mill Area Brownfield site with industrial facilities erected
Mining, forestry, agriculture, recreation, housing and infrastructures all compete for land use within the mining site. After ore extraction and the completion of the Silangan Copper-Gold Project, SMMCI intends to adopt sustainable final land use program. Facilities such as subsidence area, tailing storage facility, and mill area will be reforested for suitable crops and vegetation. Pipeline route will be rehabilitated and maintained through widening to broaden the adjacent road access.
Table 17-57: Final Land Use
Final land use of Area Final Land Use Cropping Model the different mine components Mine Component Subsidence Zone 208 ha Reforested or None revegetated with a free draining pit floor to ensure stability of subsidence zone and prevent seepage to the underground. TSF 250 ha TSF to be drained with None remaining ponding areas to be planted with suitable crops and periphery converted to shrubland Mill Area 30 ha Mill decommissioned None and removed from site. Area will be revegetated with coconut to match baseline use or revegetated to match surroundings Pipeline Route Approximately Dismantle pipeline and None 5.44 km rehabilitate Mine access roads and haul roads Depending on location None and upon consultations with host communities, some roads will be turned over to barangays while minor haul roads will be
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rehabilitated and revegetated to match the surrounding environment
To implement the final mine rehabilitation plan and subsequent monitoring costs for a period of 10 years, SMMCI will allocate $ 6 Million or PHP 300 Million.
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Silangan Project July 2019 17.5.5 Mine Safety and Health Plan
A Central Health and Safety Council (CHSC) will be established for the Project to govern the safety and health programs required in the operations as well as the policies of general camp administration. The Council is composed of assistant to division managers, including the Vice President and Resident Manager. The chart below depicts the organization of the CSHC. Figure 17-65: Safety Organization
The executive and administrative committee is composed of the chairman of the eight committees as well as the management of the Safety and Loss Control Department. The Planned Inspection Committee (PIC) and Safety Program and Audit Committee (SPAC) both have sub-committees that manage the programs for the underground and surface operations.
An annual Comprehensive Safety and Health Program document is disseminated by the Council thru the Safety and Loss Control Division covering the aspects of council leaderships and memberships, committee functions and operational safety goals. This document serves as the guidelines for the Council’s plans and programs each year.
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Silangan Project July 2019 17.6 Financial Aspects
The ensuing discussion was a result of a financial analysis done by qualified personnel of PMC for the project. The key assumptions are presented and discussed in details and are based on verified information.
17.6.1 Summary of Financial Analysis
The economics of the Silangan Copper-Gold Project were evaluated using a real (non- escalated), after-tax discounted cash flow (‘DCF’) model on a 100% project equity (unlevered) basis. Unless otherwise stated, all economic parameters are shown on an absolute basis (not incremental to existing operations). Production, revenues, operating costs, capital costs, royalties and taxes were considered in the financial model. All dollar figures are presented in US dollars (‘$’). The valuation date for the financial analysis was set for July 2019. All cash flows assumed for the purposes of this study are from this date onward.
The main economic assumptions are a $1,342 /oz gold price, $3.20 /lb copper price, silver price of $17.00 /oz, and an 8.00% discount rate, taking into account the mean discount rate from a selection of recent FS (6% to 10%).
The cash flow analysis was used to estimate the economics of the 4.0 Mt/y ore processing rate assuming first production in 2022, with ramp-up to full production in Q1 2023.
The unlevered net present value (‘NPV’) of the project was estimated to be approximately $ 615 M at a discount rate of 8%, with an internal rate of return (‘IRR’) of 20.5 %. The mine plan is expected to recover approximately 2,996 koz of gold, 917 Mlb copper and 2,428 koz of silver over the life of mine (‘LoM’) at an average annual rate of 143 koz/y gold, 44 M lb/y copper, and 116 koz/y silver over twenty-one years. The average LoM all-in cash costs (cash operating cost, selling expenses, excise tax, and development and sustaining capital costs) are expected to be approximately $851 /oz Au equivalent.
The project’s cash operating costs (composed of mining, processing and general administrative costs) using a co-production method are $600 /oz Au and $1.43 /lb Cu, respectively. Co-production are evaluated by converting the one metal to an equivalent of the other, usually expressed as copper metal equivalent or gold metal equivalent. This is done for mines having 2 or more metals in their products.
In terms of capital structure, although the project NPV value represents 100% unlevered equity, the project is expected to raise funds via a combination of equity and debt proceeds. The initial plan is for a 60:40 Debt - Equity ratio to fund the initial development cost of $745 M.
Figure 17-66 indicates that the project NPV is most sensitive to the gold price, grade, and recovery, followed by copper price, development capex and discount rate.
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Figure 17-66: Sensitivity Analysis of Key Financial Variables at 10% Change
Change in NPV for +/-10% change in each parameter
-10% +10%
Au Price, Grade and Recovery
(128.10) 1.08 g/t 1.32 g/t 127.90
Cu Price, Grade and Recovery
(95.50) 0.56% 0.69% 95.50
Devt Capex $ 741 M
833.15 681.67-
Discount Rate 8.00%
(54.98) 8.80% 7.20% 54.98
Processing Opex $ 20.63 / t ore
(47.73) $ 20.75 /t ore $ 15.09 /t ore 47.73
Mining Opex $11.53 / t mined
(30.03) $ 12.54 /t mined $ 10.26 /t mined 30.03
17.6.2 Data Assumptions
The basis for the financial analysis and the assumptions used to perform the analysis are listed in Table 17-59.
Table 17-59: Key Financial Assumption and Parameter
Parameter Assumption Description Remarks Plant throughput 4.0 Mt/y First ore in March 2022 ramping up to full Based on processing plan production in 2023. Variable plant capacity Reference document: 101573-0000- to address periods of high clay content in the MA-EST-008_D ore. Average Metal 82.58% Cu These are the calculated average metal Refer the Chapter 8, Section 8.3 for recoveries 95.59% Au recoveries based on the Cu recovery model detail. 70% Ag used for the FS. Mining years 21 years The number of years of mining operations Based on mining plan has been set by the mineable inventory (2022 is considered Year 1). Processing years 21 years The number of years of processing Based on processing plan operations was set by the mineable inventory and stockpiles (2022 is considered Year 1).
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Parameter Assumption Description Remarks Currency US dollars The capital and operating cost estimates were constructed using costs in their native currencies and converted to US dollars in the estimate calculation. The financial model is based on US dollars. Inflation None – All projected revenues and costs were real basis assumed to be in July 2019 real terms, with no inflation applied. Starting basis July 2019 All economic analyses were done on July 1, go-forward 2019, “go-forward” basis. Capital spending before this date was not considered in the project value, except for opening balances. Capital structure Unlevered The calculated financial results are based on unlevered project basis. No debt financing or interest payments have been assumed. A separate debt capital structure shall be adopted during project execution. Discount rate 8.00% All the NPVs shown in this report were Taking into account the mean discount calculated using a discount rate of 8.00%. rate from a selection of recent FS (6% to 10%) Commodity Prices and Foreign Exchange Rates Gold $1,342/oz Commodity prices were assumed to be Bloomberg normalize long term constant over the DCF timeframe forecasts as of Feb 2018, updated on July 2019 and compared also to JPM report as of April 2019 Copper $3.20 /lb Bloomberg normalize long term forecasts as of Feb 2018, updated on July 2019 and compared also to JPM report as of April 2019 Silver $17.00/oz 2016 CRU LT price forecast and Bank of America LT Price from its May 2017 report Diesel Price $0.78 /l Diesel price assumption based on Insular Oil Insular Oil quotation obtained 2019 quotation Power Rate PhP 4.70/ kwhr or Power rate was based on the proposal of San Proposal from San Miguel Power under $ 0.89/ kwhr Miguel Power, initially the most cost efficient a MOU signed in 2019 among the quotations received from a number of companies generating power within the Surigao area.
Philippine Peso PhP53.00 /$1 All national labour is assumed to be paid in Refer to Table 19.3-1 in Section 19 local (Philippine) currency. The exchange rates used in the study were derived from closing rate as of December 2018 rounded off to the nearest peso. This was checked/validated versus local banks’, Bloomberg’s and JPMorgan’s forecast for end 2019 as of June 2019 which is at an average of P53.15
Refining, Transport and Other Charges Doré refining $0.90/oz Au Au >30% to ≤60% US$ 0.90 per troy ounce Deductible to the total sales to Heraeus charge of doré upon final settlement
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Parameter Assumption Description Remarks Proposal from Heraeus Refining charge was applied on the payable Ref no: HMM-458-V01 Au content of the doré. Date: Jan 20, 2017 Doré transportation $81.66/kg Au A doré transportation charge was on the CIF terms payable Au content of the doré. Proposal from Heraeus Ref no: HMM-458-V01 Date: Jan 20, 2017 Doré transportation 0.04% of Doré A doré transportation insurance charge was Payment based on agreement insurance value applied on 100% of doré value based on Prudential quotation obtained payable metals. Marine Certificate of Insurance Date : Feb 12, 2016 Cathode $36.7/t A cathode transportation charge was applied CIF transportation on 100% of Cu expressed in metric tons to Proposal from Asian Consolidation (Mar cover freight of product from mine site to Freight) local port area. Date: May 18, 2016
Offshore shipment charge from local port area to destination outside of the Philippines is to be assumed by the off-taker/s.. Concentrate $70/DMT A treatment charge was applied on copper Rate is based on average prevailing treatment charge concentrate production expressed in dry rates of Philex Mining on its contracts metric ton (DMT). with off-takers for the contract year 2019. Concentrate $0.07/lb Cu A concentrate refining charge was applied on Rate is based on average prevailing refining charge $5.00/oz Au the payable Cu as well as on the payable Au rates of Philex Mining on its contracts of the copper concentrate. with off-takers for the contract year 2019. Concentrate $35.00/ WMT A combined concentrate charge to cover Rate is based on the prevailing rates of transportation and offshore transportation and insurance was Philex Mining for transportation and insurance applied on copper concentrate production insurance with additional provision for expressed in wet metric ton (WMT). the longer distance from the local port area to the offshore destination of the Trucking of concentrate from the mine site copper concentrate shipment. to the local port area is assumed in the operating costs of the project. Capital and Operating Costs Capital See relevant Details of the capital cost estimate are expenditures section presented in Section 19, Capital Costs. These are largely based on first principle calculations. Spending before June 2017 is excluded in the project valuation, except for depreciation of deferred exploration cost prior to June 2017. In the same manner, sustaining capital costs are also largely based on first principle calculations. Operating costs See relevant Operating costs are detailed in Section 20, section Operating Costs. Accounts receivable Accounts receivable assumes at any given period a receivable level equivalent to 75 days of revenues. Any remaining receivables are assumed to be collected at the end of mine life.
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Parameter Assumption Description Remarks Accounts payable Factored based Accounts payable assumes at any given on Operating period a payable level equivalent to 45 days spend of the project operating cash cost is maintained. Any remaining payable shall be assumed to be paid by end of mine life. Salvage value at the $ 0 No salvage value was applied to assets at the end-of-mine life end-of-mine life. Closure and $ 6 M Closure and final mine rehabilitation costs rehabilitation costs were estimated at $6 M over the life of the project. Social Development $ 71 M SDMP activities are for the social Requirement for annual spend on and Management development of the host and neighboring SDMP is at least 1.5% of operating costs Program communities with allocation on under DENR Administrative Order No. Development of host and neighboring 2010-21. communities (DHNC), Information Education Communication (IEC) and Development of Mining Technology and Geo-Sciences (DMTG) Taxes and Duties Income taxes 30% A corporate income tax rate of 30% was SMMCI was granted by the Board of applied on 100% of the annual taxable Investments a 7 years income tax income of the project except for the first 7 holiday (ITH) consisting of 6 regular ITH years of commercial operation when the and 1 bonus ITH from actual start of proportionate taxable income attributable to commercial operation or March 2025, copper cathode was subjected to income tax whichever comes first. The income holiday. qualified for ITH is limited to the . taxable income attributable to its copper cathode. SMMCI was upgraded from non-pioneer to pioneer status for its production of copper cathode. First Year of ITH entitlement in the financial model is year 2022 which is the first year of ore production. Excise tax 4% Excise tax was generally applied on gross The mining excise tax has been raised revenues for all products in the financial from 2% to 4%.under the new law Tax model. However for actual charging during Reform for Acceleration and Inclusion commercial operation, SMMCI can apply the (TRAIN), RA 10963, that took effect excise tax rate on copper concentrate net of starting January 1, 2018. selling costs as defined under existing tax rules.
No additional royalty charge has been included, in the absence on non-IP obligations Import duties No custom duties apply to capital importations of the project as one of its benefits under its BOI registration as provided under Executive Order 57. Value-added tax 12% A 12% input VAT rate was applied to all (‘VAT’) rate purchases of goods and services during the development period and commercial operation.
No output tax is recognized on account that all sales are considered as export, thus
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Parameter Assumption Description Remarks subject to zero-rated VAT. VAT recovery or 90% of input VAT No VAT recovery is assumed on the VAT Under the 2018 TRAIN law, VAT input refund amount input costs during the 3-year development refund is in the form of cash or tax period. credit certificate which refund the BIR or BOC has to implement within 90 Accumulated VAT input prior to commercial days from date of filing the claim for operation was assumed refunded by the BIR refund. or BOC over a maximum period of five years a year after start of commercial operation. Similarly, annual VAT input during commercial operation was assumed refunded by the BIR or BOC a year after incurrence.
A 10% disallowance was applied on all VAT input refund. Withholding tax Varying rates Cost of services, labor have been grossed up to reflect the respective withholding tax . Depreciation of Fixed Assets Methodology - Unless otherwise stated, depreciation was Deferred exploration costs prior to calculated on a unit of production method March 2019 has been amortized over basis. Depreciation is always applied in the the 22-year production period year it is incurred. Existing assets 22 years Depreciable life assumed All other capital 22 years or Depreciable life assumed spend remaining life of the project, whichever is lower
17.6.3 Presentation of Results
7.6.3.1 Financial Key Performance Indicators
7.6.3.1.1 Life of Mine Valuation Metrics
The key valuation metrics for the project on an unlevered basis is shown in Table 17-60.
Table 17-60: Financial Analysis Highlights
Economic Parameters Units Volume
Undiscounted Free Cash Flow to the Project US$M 1,962
After-tax NPV (8% discount rate) US$M 615
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After-tax IRR % 20.47%
Initial development capital cost. This includes 12% vat and 10% contingency allowance US$M 745
Total initial and sustaining capital US$M 1,447
Undiscounted project equity payback period Production year 4.2
The total initial go-forward capital cost (including applicable taxes) is estimated at $745 M. Other than the impact of the deprecation of capital spending before July 2019 (sunk cost) in the income tax, sunk cost is excluded in the computation of the project NPV / valuation.
7.6.3.1.1 Life of Mine Estimates
The key valuation metrics for the project on an unlevered basis is shown in Table 17-60.
The findings of the economic analysis are summarized in Table 17-61 along with some key mine planning assumptions.
Table 17-61: Mining Inputs and Economic Estimates
Economic Parameters Units Value
Years of ore processing years 21
Last year of ore processing actual year 2042
Total ore processed Mt 81.44
Average gold grade mined g/t 1.20
Average copper grade mined % 0.63
Average silver grade mined g/t 1.33
Average gold recovery % 95.22%
Average copper recovery % 81.62%
Average silver recovery % 70.00%
Total gold recovered M oz 3.00
Total copper recovered M lb 917.82
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Total silver recovered M oz 2.43
Average annual equivalent gold production M oz/y 0.14
Average annual equivalent copper production M lb/y 43.87
Average annual equivalent silver production M oz/y 0.12
Average LoM operating cash costs, including royalties (C1) $/oz Au eq 600
Average LomM all-in cash costs (including operating costs, $/oz Au eq 851 royalties, sustaining and 3 year developments costs)
3 year Development Costs (including applicable taxes) $ M 745
Closure and rehabilitation costs $ M 6
7.6.3.1.2 Mine Production Schedule
Detailed mine production schedules are provided in Section 17.5 of this Chapter.
Figure 17-67 depicting the LOM production profile, shows that production is expected to increase significantly in Y2 and Y3 as the process plant ramps up.with peak production in Y3.
Figure 17-67: Production Schedule
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250
200
150
100
50
- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Cu, M lbs Au, K ozs Au , K ozs
7.6.3.1.3 After-Tax Cash Flows
Detailed mine production schedules are provided in Section 17.5 of this Chapter.
The cumulative cash flow during the three year development period plus the twenty one production years is $ 2.0 B. The total initial capital cost is $745 M.
Figure 17-68: Cash Flow
7.6.3.1.4 Annual Cash Costs and Margin
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Based on annual ore milled, the EBITDA margin and cash costs are listed in Table 17-62. Expenditures for the EPEP are included either in the operating costs or capital costs of the project. While total all-in cash costs are illustrated annualized in Figure 17-70 and on a final product basis in Figure 17.69. For this chapter, the G&A others includes local business tax, real property tax, Social Development and Management Program (SDMP) cost, and Final Mine Rehabilitation and Decommissioning Plan (FMRDP) cost.
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Table 17-62: EBITDA Margin
Total Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20 Y21 Mine Production M t 81 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 3 %Cu 0.63 1.06 1.07 1.08 0.92 0.69 0.66 0.63 0.58 0.59 0.58 0.56 0.54 0.52 0.51 0.45 0.45 0.56 0.48 0.46 0.41 0.42 g/t Au 1.20 1.71 1.83 1.82 1.42 1.37 1.35 1.55 1.41 1.45 1.19 1.15 1.04 1.03 0.98 0.93 0.93 0.94 0.93 0.82 0.65 0.66 Revenue, M$ 6,917 344 509 551 446 386 375 399 367 375 331 318 297 290 280 259 259 286 265 242 202 136 Costs Mining, M$ (928) (48) (53) (53) (50) (48) (48) (47) (45) (44) (45) (44) (39) (40) (41) (43) (43) (46) (47) (45) (42) (16) Processing, M$ (1,537) (66) (80) (76) (74) (73) (74) (74) (74) (74) (74) (74) (74) (74) (74) (74) (74) (73) (73) (73) (75) (60) G&A (Corporate and Site), M$ (148) (7) (8) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (4) G&A Others, M$ (34) (2) (3) (3) (2) (2) (2) (2) (2) (2) (2) (2) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) Excise Tax, M$ (277) (14) (20) (22) (18) (15) (15) (16) (15) (15) (13) (13) (12) (12) (11) (10) (10) (11) (11) (10) (8) (5) Cash Cost, M$ (2,924) (136) (163) (161) (151) (145) (147) (147) (144) (142) (141) (140) (133) (134) (134) (135) (135) (139) (139) (136) (134) (87) EBITDA, M$ 3,993 207 345 390 295 240 228 252 223 232 190 179 164 156 146 124 124 147 126 106 68 50
Margin 58% 60% 68% 71% 66% 62% 61% 63% 61% 62% 57% 56% 55% 54% 52% 48% 48% 51% 47% 44% 34% 36%
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Figure 17-69: All in Cash Cost
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Figure 17-70: All in Cash Cost per Ounce of Gold
Ave= 851
The all-in cash costs includes:
mining operating costs processing operating costs general and administrative (G&A) costs selling costs excise tax development and sustaining capital costs
The analysis performed assumes a constant, real gold price of $1342 /oz, and made necessary estimates regarding the amount of mine development that can be capitalized.
17.6.3.1.5 Project Funding
The Project is being valued on un-levered basis (100% equity). However, for purposes of financing the project, a 60:40 debt equity plan or an acceptable capital structure alternative is envisioned by the project sponsors (parent company - Philex Mining).
In terms of equity fund-raising, (40% of initial development cost: US$300 M) SMMCI is currently in discussion with its equity advisor in seeking interested equity partners.
On debt financing (60% of initial project development cost: US$458 M), SMMCI is also in discussion with a number of international financial institutions, who could also provide SMMCI a list of potential equity partners as well as product off-takers who, in turn, shall be able to approach banks for project financing possibilities.
It is assumed that an initial equity infusion will need to come in prior to any project financing funds to flow in the project.
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The sustaining capital costs US$702M, will be covered by the net cash flow from operations during SMMCI’s production years.
17.6.3.2 Financial Model – Detailed Results
Detailed financial models were created to evaluate and optimize the project’s viability. A more detailed summary of the annual production and financial metrics can be found in the Financial Model in ANNEX B.
17.6.3.2.1 Critical Financial Risks
The critical financial risks to the project are grouped into the following four categories:
A change in key project assumptions: This risk includes any negative changes to the current expectations regarding geology, mine plans, operating costs and capital costs. Some of the inputs have been tested further through sensitivity analyses, and are presented in earlier sections. Non-controllable macroeconomic factors: These risks include non-project specific factors, such as gold and oil prices, general capital and operating cost escalation, unfavourable foreign exchange movement and commodity prices (e.g. cyanide, lime and other consumables). Most of these factors are outside the control of the project group. Changes in these assumptions could have a significant impact to project valuations. Country-specific risk factors: These risks relate to the policy of operating in the Philippines. Specific risks include changes to the mining regime, a change in the tax legislation that is currently used as the basis for planning, or other legislative or regulatory changes that would adversely impact the project economics. These changes could be initiated by either the existing or a new government. Project execution risk: These risks occur in the project execution stage (e.g. capital cost overrun and schedule delays resulting from various factors including extreme weather events).
17.6.3.2.2 Potential Issues Causing the Project Sanction Decision to be Deferred of Cancelled
The project commencement could be deferred or cancelled because of a significant change in the project economics or a change in the SMMCI strategy as follows:
Economic factors: If factors, such as those described in earlier sectionsError! Reference source not found. materially change such that the expected economics of the project were significantly impaired. Management might decide to delay or cancel the project sanction until either the macroeconomic factors improve, or the project configuration can be changed to provide acceptable economics. Company strategy: The project owner’s senior leadership regularly makes decisions regarding capital allocation, with the overall goal of maximizing shareholder risk- adjusted returns. As such, senior leadership could choose to delay or cancel the project sanction for strategic reasons. Strategic factors could include the decision to invest in other assets or projects that are deemed to be a better fit with the SMMCI long-term strategy to deliver maximum risk-adjusted value to shareholders. In-country risks: Changes in government policies such as tax regimes and/or permitting that could adversely impact the project.
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Silangan Project July 2019 17.6.3.2.3 Detailed Financial Output
The detailed financial model is contained in the Financial Model in ANNEX B.
17.6.3.3 Sensitivity Analysis
A number of sensitivity analyses were conducted with the financial model to identify the variables that could have a significant impact on forecasted project returns. In particular, the analysis focused on:
metal prices, grades, and recoveries initial capital cost mining operating cost processing operating cost G&A costs discount rate
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Table 17-71 shows the project NPVs for different copper and gold prices. The base case unlevered NPV is $605 M at $1,342/oz Au and $3.20/lb Cu.
Figure 17-71: Sensitivity to Metal Prices
Cu Price 0% % Change Cu Price NPV 0% $ 3.20 /lb 605.13 -20% $ 2.56 /lb 413.51 -10% $ 2.88 /lb 509.64 -5% $ 3.04 /lb 557.39 5% $ 3.36 /lb 652.88 10% $ 3.52 /lb 700.63 20% $ 3.84 /lb 795.97
Au Price 0% % Change Au Price NPV 0% $ 1342.00 /oz 605.13 -20% $ 1073.60 /oz 347.81 -10% $ 1207.80 /oz 477.04 5% $ 1409.10 /oz 669.08 10% $ 1476.20 /oz 733.03 20% $ 1610.40 /oz 860.47
Figure 17-72 illustrates the overall project NPV sensitivity to fourteen other key inputs. The project NPV is most sensitive to gold price, grade, and recovery, followed by copper price, grade, and recovery, and followed by development capital cost. Figures 17-72 and 17-74 provide tornado graphs of the sensitivities at the various levels of change.
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Figure 17-72: Sensitivity to Key Assumptions
900 Cu Price/Grade/Recovery 800 Au Price
Discount Rate 700
Devt Capex 600 Mining Opex
500 Processing Opex NPV million in $ G&A Opex 400 Cu Grade
300 Au Grade/Price/Recovery Cu Recovery 200 -20% -10% -5% 0% 5% 10% 20% Au Recovery % change from baseline
Figure 17-73: Change in NPV for +/-5% Change in Each Parameter
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Figure 17-74: Change in NPV for +/-20% Change in Each Parameter
Change in NPV for +/-20% change in each parameter
-20% 20%
Au Grade 1.13 g/t
0.96 g/t 1.44 g/t
Cu Grade 0.75%
(191.62) 0.50% 0.75% 190.84
Dev t Capex $ 760 M
908.89 -605.93
Discount Rate 8.00%
(109.96) 9.60% 6.40% 109.96
Processing Opex $ 18.01 / t ore
(95.69) $ 22.64 /t ore $ 18.87 /t ore 95.46
Mining Opex $10.35 / t mined
(60.06) $ 13.68 /t mined $ 9.12 /t mined 60.06
Table 17-72 summarizes the impact of the income tax royalty on the project NPV, depending on the length of income tax holiday.
Table 17-72: Sensitivity of NPV to ITH Duration (all scenarios consider refund of VAT input on sunk cost and development capital costs)
17.6.3.4 Debt and Equity Drawdown
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All economic valuations have been calculated on an unlevered, 100% project equity basis.
17.6.3.5 Working and Sustaining Capital
The working capital assumptions were based on current practices at SMMCI and on industry standards.
17.6.3.5.1 Working Capital
All accounts payable, inventories and receivables are grouped into working capital. Stockpiles are viewed similarly to inventories. For tax calculation purposes, the costs of these inventories are expensed in the year that these tonnes are processed (and the metals are recovered).
Working capital groups are as follows:
Accounts payable: Accounts payable is assumed be 45 days outstanding equivalent of the annual operating cash cost Mining fuel: Shown as a separate category, but is treated similar to the inventory category above. The model assumes that there is no mining fuel is stranded at the end of the life of mine.
17.6.3.5.2 Sustaining Capital
Sustaining capital includes any non-initial capitalized costs to maintain the project’s operation. For the various categories of sustaining capital costs, detailed annual expenditures were estimated and included into the financial model.
Figure 17-75 provides the annual sustaining capital cost profile. The single largest sustaining capital cost for the mine is capitalized TSF cost over the life of mine. Table 17-73 shows the details of the sustaining capital estimates.
Figure 17-75: Sustaining Capital Schedule
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Table 17-73: Sustaining Capital Summary
Units Sustaining
Mine Development US$M 301
Subsidence Management US$M 75
Mine Dewatering US$M 8
Process Plant US$M 37
Tailings Storage Facility US$M 206
Sub-Total US$M 627
VAT US$M 75
Total US$M 702
17.6.3.6 Taxation
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There are no unique or special taxation issues or dividend repatriation other than the possible dividend payout to shareholders, the policy thereof to be determined prior to any equity infusion to the project.
Tax assumptions and policies used in the feasibility study financial model were based on guidance from the SMMCI government relations and tax teams. The financial model includes the tax items that are discussed in the following subsections.
17.6.3.6.1 Excise Tax and Royalties
The excise tax assumed was at 4% of gross revenues payable to the Government of the Philippines. No royalties were applied due to no Indigenous People (IP) commitment.
17.6.3.6.2 Income Tax
The regular corporate income (RCIT) tax rate is 30% of taxable income, and the minimum corporate income tax (MCIT) rate is 2% of annual revenues (excise tax to Government of the Philippines)
Taxable income is calculated by taking operating profits, with the following additional deductible expenses or adjustments as defined under existing tax rules:
Royalties Depreciation Any tax loss carry-forwards Non-deductible Expenses Capital Allowances Recoverable VAT Import IMF
Tax depreciation was calculated using the depreciation rates set out in the earlier assumptions. The economic model claims only the depreciation required to get each year’s ‘Earnings Before Tax’ to zero, and carries all other unclaimed depreciation to later years. This ensures that income tax is paid only in years where the EBITDA is greater than the unclaimed depreciation balance. In years where no income taxes are paid, the MCIT is paid.
17.6.3.6.3 Value-Added Tax
For purposes of the feasibility study financial modelling, the go-forward input VAT rate has been assumed to be 12%, of all purchases of goods and services under capital and operating costs of the project. During the production years, accumulated and annual input VAT is treated as a tax credit as a result of the company being a zero-rated VAT entity as all sales products are deemed exported.
17.6.3.6.4 Withholding Tax and Duties
All labor costs have been grossed up to include withholding tax.
No custom duties were charged as duty-free importation of capital equipment, accessories and spare parts is one of the benefits granted to SMMCI under its BOI registration pursuant to Executive Order No.57.
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Silangan Project July 2019 17.7 Economic Aspects
17.7.1 Employment/Management
17.7.1.1 Number, nationality, Position and Annual Payroll
The workforce during operations will be composed of 3,390 personnel with and annual cost of USD 4.0 M.
Table 17.74: Position, Number and Annual Payroll
Senior Junior Corporate Department Manager Supervisor Rank and Rank and Total Officer File File
Pay Scale GG16-GG17 GG12-GG15 GG9-GG11 GG7-GG8 GG1 – GG6
Site
Executive Office 1 1
Process 21 21 155 197
Process Maintenance 1 13 15 41 70
Mining (SMMCI) 5 29 4 63 101
Finance and IT 2 6 3 11
Health and Safety 1 9 2 12
Human Resources and 1 2 3 22 28 Administration
Security 2 8 1 11
Landbanking 1 2 3 4 10
Community Relations 1 2 4 5 12
Environment 3 1 4 9 17
Government and External 1 1 Affairs
Mining Contract Services 4 15 20 376 415
Mining Contract 2 24 32 559 617 Maintenance
EPCM & Construction 54 7 31 1949 2041
Supply Chain Management 1 6 4 11
Total Site 1 99 132 133 3190 3358
Manila Office
Executive Office 2 3 1 0 0 6
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Senior Junior Corporate Department Manager Supervisor Rank and Rank and Total Officer File File
Human Resources and 1 3 1 2 7 Administration
Corporate Finance 4 4 2 2 12
Supply Chain and 2 2 3 7 Contracts
Total Manila 2 10 8 5 7 32
Total 3 109 140 138 3197 3390
17.7.1.2 List of Key Personnel and Qualifications
Table 17.74A: Key Personnel Qualifications
Key Positions Qualifications
Project Director Professional graduate of science in mining/metallurgical engineering preferably with Master’s degree
10 years managerial experience
Report writing, leadership and management skills. Excellent oral and written communication skills Possess the ability to motivate and maintain effective working relationships with staff and partners. Ability to rely on experience and judgment to plan and accomplish goals. Ability to successfully work to reach company goals in an environment in which a wide degree of creativity and latitude is required of this position.
PRC License holder of mining engineering or equivalent
Operations Head Bachelor of Science in mining/metallurgical engineering
At least ten (10) years’ experience as mine/metallurgical manager preferably in sublevel caving operation.
Professional license / certifications required Registered mining engineer / Blaster’s License Leadership and management skills
Mine Operations Head Bachelor of Science in mining engineering
At least five (5) years’ experience as Mine Manager preferably in sublevel caving operations
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Key Positions Qualifications
Professional license / certifications required Registered mining engineer / Blaster’s License Leadership and management skills
Mill Operations Head Graduate of engineering course preferably mining, metallurgical or chemical
At least ten (10) years as mill operations manager and five (5) years exposure on metallurgy (quality control and research and development
Registered mining/metallurgical or chemical engineer Leadership and management skills
Finance Head Bachelor of Science in accountancy. Master in Business Administration (MBA) is preferred
Minimum of three (3) years management responsibility; five (5) years financial reporting, accounting, internal auditing. Mining industry experience is preferred
Professional license / certifications required License/certification: Must be Certified Public Accountant (CPA) Or Certified Management Accountant (CMA)
Proficiency in Generally Accepted Accounting Principles (GAAP). Ability to perform professional accounting works, examine, audit, analyze, interpret and verify records and reports. Leadership and management skills
Legal Head Bachelor of Laws Graduate / M.Sc. in Human Science courses
At least five (5) years in active practice of law and industrial relations administration
Bar Passer Leadership and management skills
Computer literate, proficiency in oral and written communication skills.
Maintenance Head Graduate of Bachelor of Science in Mechanical Engineering course
At least five (5) years as mechanical maintenance manager with exposure in power generation, mobile equipment maintenance / electrical services, and mill process plant equipment.
Professional license / certifications required Professional Mechanical Engineer (PME).
Safety and Loss Degree in an engineering discipline (or other related discipline)
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Key Positions Qualifications
Control, Health and 5 to 7 years extensive experience in health, safety and environment and Environment Head productivity and loss control
Knowledge and understanding of all legislative requirements relating to occupational health, safety and environment; Health and Safety issues and Codes of practice relevant to the industry; and The impact of failure of key systems and processes including loss of containment and threat to the environment. Leadership and management skills
Security Head Degree in criminology or management.
5 years or more in the same capacity.
Proficient in surveillance skills, analyzing information, staffing, coordination, tracking budget expenses, handles pressure, reporting skills, scheduling, dealing with complex issues. Leadership and management skills
HR Development and Degree in business management, psychology or other behavioral Administration Head science course ideally, candidate should have an h or administration degree/diploma.
A minimum of 5 years experience in a similar role in a mining environment is essential.
Must have experience in administration, human resource management, training and recruitment modules, & change management. Leadership and management skills
Business Systems A Bachelor of Business Administration or industrial engineering degree Improvement Head or equivalent.
5 to 7 years of experience in the same capacity.
Must have a comprehensive knowledge of management, support and diversity within a complex engineering/mining or construction environment. Leadership and management skills
Mine Engineering and Graduate and Licensed Mining Engineer Technical Services At least 10 years experience in mining operations with demonstrated Head aptitude in technical works and working knowledge in civil, mechanical, and mining engineering and mine operation processes. Good communication skills, oral and written with demonstrated capability to craft/draft technical reports and to interact with other mine officials. Demonstrates ability to lead, guide and check subordinates in the performance of their jobs. Leadership and management skills
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Key Positions Qualifications
Required mine dewatering and rock mechanics expertise
Corporate Affairs and Graduate in mass communication or community development. Community Relations Head Must have a background in mass media and communication; 5 to 8 years of experience in related field.
Must have superior communication, leadership, organizational, interpersonal, written, verbal and analytical skills, and be able to respond well under pressure. Leadership and management skills
17.7.1.3 Personnel Pay Scale
The personnel pay scale is defined by the following aspects.
Executive management team – President, Chief Financial Officer, and Project Director Functional management team – Community Relations, Environment, Landbanking, Finance, Audit, Government Relations, Legal, Health & Safety, Human Resources and Admin, Information Technology, Supply Chain Management, Security, Mine Division, Process Division and Assay Professional staff, support staff, operators, and maintainers.
17.7.1.4 Table of Organization
During project execution and operations will follow the organizational flow in Figures 17-76 to figure 17-78.
Figure 17-76: Executive Management Team Structure
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Project Director (1)
Figure 17-77: Site Functional Management Team Structure
Project Director (1)
Figure 17-78: Head Office Functional Management Team Structure
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The proposed organization design considers:
the mining technology required to operate the mine the environment inter-department structures that will need to exist and how they will work together at both functional and divisional level the cultural and community expectation and requirements legislative and legal requirements best business practice that is being applied in the mining industry around the world appropriate workflow accountabilities.
Pre-development stage is expected to transition into and form part of pioneering work during the operational mining stage, and it is anticipated that contractor employees will be afforded the opportunity to join SMMCI and be trained up into the larger mining fleet without adverse impact. The mining division within the organization structure has been designed to oversee a third party contractor. The organization ensures that production, mining support services, pioneering, and maintenance departments operate on the same level, and each department is required to interact with each other. The maintenance function has been split to provide support for each of the two different operational processes.
The mining maintenance and process maintenance functions require different skill sets.
Contract mining will be put in place to run the mine economically with an in-house mine division providing over-all direction to underground operations, quality control, long-term mine planning and running and management of the grade control section.
A Government, External Affairs and Environment Division has been developed as recognition to the importance of environment, government and community relations to the organization. The transition of the organization structure from construction execution phase to operational mining phase presents a risk to overall organizational effectiveness. To help manage this process, a Business Readiness Manager will be necessary to guide the operations discipline managers through the construction execution phase and into the operational phase. This step is integral to ensuring that the operations team members take responsibility for the assets as the mine construction execution and commissioning phases finish. Failure to achieve effective transfer of responsibility will risk poor operational readiness, planning and execution, leading to:
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unexpected equipment breakdowns; operating reactively with poorly prepared operating and asset management strategies; incomplete support infrastructure; a disengaged workforce; lack of capable personnel available at the right time; increased likelihood of injury; poor organisational culture; increased construction and operating costs which negatively impact on financial objectives; and degradation of reputation as a safe and reliable operator.
17.7.1.5 Availability of Technical and Skilled Worker
To ensure availability of skill for the project SMMCI’s recruitment strategies will need to employ a range of approaches to attract candidates to join the SMMCI’s mining operation.
The early stages of the construction execution works will require employees with mining experience to undertake the pioneering work as part of the early works. This will overlap recruitment activity for operations during the construction phase. If construction execution work is done by contractors, then a strategy will be required wherein SMMCI can approach contractors to transition contractor's employees across to SMMCI once construction execution work has been completed (refer to contractor relations section).
The demand on the Human Resources Department will depend on the schedule for getting the resources to site. A fully developed resourcing schedule will be required to be available at least six (and preferably 12) months prior to initiating a recruitment campaign.
Recruitment work for both Manila and site offices has been divided with focus on the nature or function of the role and appropriateness in the application of the strategy. It will be imperative that field trainers are recruited at the same time as the Business Readiness Manager, to ensure that they have sufficient lead time to develop the training matrix, the required modules, and to secure the necessary training equipment to deliver the field training and assessments for the operators as they are required. Additionally, arrangements will need to be made with the local physician for an increase in pre-employment medicals as SMMCI starts to man up construction execution and mining operations.
17.7.1.6 Township/Housing
Since the project is within an established barangay and very close to Surigao City, no housing will be allotted to its employee aside from the 100-bed dormitory allotted for single regular employees who are in roster. It is seen that the majority of the employees will seek residential arrangements within the municipalities of Tubod, Sison, Placer and Taga-naan.
17.7.2 Community Development Plan
SMMCI will follow the Social Development and Management Program (SDMP) framework in developing the host communities.
Collaborative approach. SMMCI will work with its 11 host and neighboring communities, regulatory agencies MGB and other government and non-government
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agencies in crafting programs that aims to create sustainable improvement of r living conditions opportunities. Welfare and Enablement Approach. Recognizing the capacity to define, drive and manage their own development, SMMCI employs welfare and enablement approach to its host and neighboring community.
17.7.3 Socio-economic Contributions
The project’s key contributions can be summarized into the following.
Job generation of close to 4,000 new jobs elevating the average household income by 54% within the host municipalities based on the estimated labor cost of lowest wage earner that will be employed for the project and the benchmarked monthly average household income during the conduct of the environmental baseline study. Following the Padcal mine model, the host municipalities Tubod, Sison, Placer and Taga-naan could become first class municipalities from the proceeds of the operations the same of the host municipalities of Padcal, Tuba and Itogon. Local business taxes paid to the hos barangays and municipalities close to USD 18 M. National taxes paid to the government close to USD 500 M through the mine life.
17.8 Project Schedule
17.8.1 State of Development
The project recently delineated and determined parameters necessary to refine modelling of the sublevel cave through geotechnical and hydrogeological drilling. The major risk that has to be addressed is the poor ground condition and for a design for development to be formulated, sufficient knowledge of the ground condition is essential.
17.8.2 Description of Planned Activities
17.8.2.1 Camp and Offices
Year 2020
Initial preparatory works such as acquisition of approved building permit, procurement of materials, tree cutting and topsoil stripping should be done prior to the construction of admin buildings, camps, villages and relocation sites. After a quarter of a year, all building permits will be acquired. Procurement of construction materials (i.e. cement, gravel, sand and steel) will commence by the initial part of the quarter and will be done throughout the year.
Tree cutting activities on the construction areas of the camps, offices and relocation sites will begin by the third quarter, and will be followed shortly by topsoil stripping.
As the building permits have already been acquired, the site can then be prepared prior to construction. Activities include preparation, clearing and brushing of roads and canal ditching. These activities will be followed by setting up of basic utilities such as electricity and water.
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Lastly, basic utilities will already be set and ready for distribution and will just wait for the construction of camps, offices and relocation sites. Construction is to start on the same quarter and will be continued throughout the year.
Year 2021
Construction of administration building will be completed. Procurement of construction materials will continue throughout the year as the other camps, offices and relocation sites will still be ongoing. Procurement of construction materials will end, while construction of remaining camps and sites are still to continue. Construction of mine camps, villages and relocation sites will be completed.
17.8.2.2 Power
Power will be supplied to the mine project facilities by connecting to the National Grid Corporation (NGCP) power grid through the 138 kV substation in Placer, Surigao del Norte.
Year 2019
Conduct of Systems Impact Studies (SIS) will be undertaken in support for and application for direct connection to NGCP will be conducted by second half of the year. Possible agreement with SURNECO on provision for initial 8-10 Megawatt power during construction will be finalized.
Year 2020
Procurement of electrical equipment and other long lead items will commence. These items will be needed to connect the mine project facilities to the NGCP power grid or to supply backup power in case of power outages.
Simultaneous with procurement activities, field surveys will be conducted in areas around the substations and paths where transmission lines will be laid out. Activities to procure long- lead items will continue.
Upon arrival of all long-lead items, substations will then be constructed at the mine site. Power lines will be laid out from the substations to the mine project facilities like the processing plant, equipment workshops, camps and offices.
For all early works prior to connection with the power grid, the construction contractors will be required to supply their own temporary power for all construction activities. There will not be any permanent power provided to the mine site in the first year of construction.
Year 2021
Power lines from the 138 kV substation in Placer to the mine site facilities will be ready for energization. The commissioning of the power distribution will be undertaken in stages that follow the construction schedule to facilitate a staged switch on of individual facilities as they are completed.
After the construction of the electrical facilities and wires, and prior to the initial ramp up of production, the power distribution network will need to be commissioned in its entirety under no load conditions. During the commissioning of mine plant and facilities, commissioning checks will be undertaken on the whole power network. A test of the essential services will also be undertaken utilizing the emergency power facilities like backup generators.
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Upon completion of all the construction activities, all commissioning checks and tests shall be performed prior to the initial switch on at the mine site. Representatives from the supply authority will have to sign off on the installation prior to energization.
17.8.2.3 Haul Roads to TSF
Year 2020
Site survey will be done prior to other activities to layout and establish the points where the haul roads are to be constructed. Tree cutting activities will then start from the open pit towards TSF and WRD. Topsoil stripping will commence shortly after the start of tree cutting activities, and will then be followed by road construction proper. Activities included in the construction of roads are cutting and filling, drainage construction, and ballasting and sheeting. Tree cutting and topsoil stripping will be completed for both roads going to TSF and WRD, and road construction activities will continue. Cut and fill, drainage construction, ballasting and sheeting will continue throughout the quarter.
Year 2021
Road construction will be completed by the middle of the quarter. The haul road from the open pit to the TSF will be around 5 km, while the distance from the open pit to the WRD will be around 2 km. All haul roads will be 40 m wide to accommodate 136 tonner CAT 785 trucks.
17.8.2.4 Mine
Year 2019
Front End Engineering and Design (FEED) will be undertaken on the mine infrastructures by second half of the year. This activity may require additional geotechnical and hydrogeological drilling at site and analysis by experts. Initial silt dams will be constructed in preparation for Year -2 construction and development activities.
Year 2020
The projected subsidence area will be prepared by stripping off the topsoil and cutting the trees. A peripheral drainage will also be constructed to divert water from the subsidence area. In addition, a wall of dewatering holes surrounding the subsidence area will also be installed to dewater the underground prior to advancing tunnels.
A decline will be developed some 100-200 meters away from the original exploration decline targeting the harder rocks. At some point in time, the decline will reach a chainage which will allow crosscuts for other rooms underground. While the ventilation shafts are still being driven, auxiliary ventilation will be employed until the vent shaft breaks through the main access decline.
Year 2021
By this year, the decline has already reached the zone of the orebody where ore is already beyond the cut-off grade. These materials, called incidental ores, will be stockpiled on the surface and readied for first ore to be processed during the initial stages of operating the process plant.
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Once within the caving zone, crosscuts and production drifts will now be constructed until the first production line is completed prior to production blasting operations. The ore recovered from the production drifts is still classified as incidental ore at this stage. Continuous and simultaneous with the production line driving is the decline ramp driving going down to the next elevation of production level.
Multiple production drifts will be ready at the end of the year so extraction of ore can now be expected based on the production schedule; the production rate will reach 3.8mtpa in this initial stage.
Year 2022
A ramp up in production rate is expected in the next six months of operation. The mine should be able to spew out 4.0mtpa of ore (12,000tpd) and the mill, by this period, will now be able to accommodate and process the same amount of ore. Any excess in mine production will be stockpiled in a 2-week production capacity stockpile area. This production rate will now be sustained until LOM.
17.8.2.5 Processing Plant
Year 2019
FEED will be undertaken on the mine infrastructures by second half of the year. This activity may require additional geotechnical drilling at site and analysis by experts. Initial silt dams will be constructed in preparation for Year -2 construction and development activities.
Year 2020
Engineering design for the processing plant will start. The output will include detailed equipment design, process plant facilities layout, and process flow sheet. The processing plant will be set-up based on these designs. Tree cutting and topsoil stripping in the area of the processing plant will commence. Roads to access the area of the processing plant will be developed. By this time, engineering design will have been completed.
Roads to access NGCP power transmission lines will be developed. Realignment of power transmission lines will begin. The power transmission lines will be transferred to areas outside the processing plant area.
Tree cutting and topsoil stripping of area for the processing plant will be completed. Realignment of power transmission lines will be completed.
The whole year will be spent on procurement of construction materials and long lead items for the processing plant. Construction materials that will be procured will include cement, sand, gravel, and rebars. Long lead items will include ore processing equipment like crushers, ball mills, and conveyor belts.
Upon arrival of construction materials, the construction of processing plant buildings will commence. Construction of processing plant buildings will continue. All long-lead equipment and supplies will have arrived.
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Construction of processing plant buildings will be completed. Ore processing plant equipment will then be assembled and set-up. The processing plant will be ready for commissioning. Commercial production is expected to begin in the first quarter of 2022.
Year 2022
Production will commence at 2.7mtpa (8,000tpd). The excess ore from the mine will be stockpiled at the adjacent stockpile area which can accommodate 2 weeks of production. While on the debugging stage, the SAG mill will also stockpile ground ore for emergency purposes like during SAG maintenance and breakdowns. Also in the same year, a ramp up of mill production is expected: from 3.8mtpa to 4.0mtpa.
17.8.2.6 TSF
FEED will be undertaken on the mine infrastructures by second half of the year. This activity may require additional geotechnical and hydrogeological drilling at site and analysis by experts. Initial silt dams will be constructed in preparation for Year -2 construction and development activities.
Year 2020
Sediment control structures in the downstream of the TSF will be first on the list of activities in the TSF construction. While at it, water diversion upstream will also be started. Once the diversion of the upstream waters is finished, borrowing materials from within the TSF can now be started; these materials will form an integral part of the embankment and will also increase the capacity of the containing pond. Finger drainages will also be installed at this stage after compacting the impoundment area (if geotextiles are not needed). Tree cutting in the embankment area will also commence at this stage including the areas for ancillary structures (spillway, water storage area, water treatment plant, bunkhouses etc.). Topsoil stripping will be on stages depending in which area the earthmoving is active. Procurement of long lead items that will be needed to construct the Tailings Storage Facility (TSF) will commence. These long-lead items will include pipes, low density polyethylene (LDPE) – to cover the TSF base, and pumps.
Access road construction will also commence. These access roads will be utilized for tree cutting and topsoil stripping as well as construction of the starter embankments. Development of the access roads will be completed.
Year 2021
All long lead items to construct the TSF are expected to arrive. Tree cutting and topsoil stripping will be completed. Construction of the starter embankment will start. This embankment, which will be located at the center of the TSF area, will contain the tailings during the first years of commercial production.
Topsoil stripping in the TSF area is expected to be completed. The starter embankment of the TSF will then be completed. Construction of the outer embankment will start. Initially, this embankment will be separate from the previously constructed starter embankment. It will be
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Silangan Project July 2019 located at the outer edge of the TSF area. The spillway system is already in place this time. A second set of temporary sediment control structures and surface water diversions will be constructed simultaneous with the construction of the outer embankment. Construction of the outer embankment of the TSF will be completed. The TSF will be ready for commissioning by the end of this year.
17.8.3 Gantt Chart
17.8.4 EPCM Contract
The costs in this study was built with the assumption that some of the project scopes will be under an EPCM engagement. PMC and SMMCI will further assess if it will proceed with a full EPCM engagement or utilize in-house capabilities in project management and procurement.
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Chapter 18.0
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18.0 ORE RESERVES ESTIMATES
18.1 Database Used
The mineral resource model is the primary database used in this Technical Report and for this report the latest PMRC compliant model done by Mr. Noel C. Oliveros, an accredited competent person by the Geological Society of the Philippines (GSP). A block model file named PX2015v6 was provided in GEMS format.
18.2 Integrity of Database
The parameters and methodologies used in the resulting resource model and estimates are thoroughly discussed in an independent technical report referred to here as the Geologist CP report.
18.3 Data Verification and Validation (limitations)
Data verification and validation were conducted using the GEMS program to check for validity of data in any drillhole or traverse workspace by checking data for inconsistencies, duplication and missing values and the check duplication of field data to check any type of workspace for duplicate data. The validation process will produce a record-by-record report of all inconsistencies.
18.4 Ore Reserve Estimation Method Used
In absence of a specific production planning software for sub-level caving, the GEMS and Microsoft Excel softwares were used in the evaluation. This method is being applied by PMC’s Padcal operations where sub-level caving mining is being done to portions of the Sto. Tomas II orebody. Figure 18-1 outlines the workflow done.
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Figure 18-1: Ore Reserve Estimation Workflow
Verification of the geologic model done in GEMS.
Definition of a copper equivalent to combine copper and gold grades to a copper equivalent
Delineation of an economic footprint based on 0.8% copper equivalent cut-off grade.
Importation of sub-level cave mine design by Ausenco/Mining Plus to GEMS.
Estimation of in-situ ore based on sub-level cave design out of the economic footprint.
Factoring of dilution done in Microsoft Excel.
Production sequnecing in Microsoft Excel
Final Mineable Reserve
Based on Table 18-1, the copper equivalent factor is 0.700. This factor is multiplied to the gold grade in a unit block then added to the copper grade to arrive at a copper equivalent grade expressed in percent copper equivalent. The copper equivalent factor takes into account projected metal recoveries and prices.
Table 18-1 also shows the break even grade to be 0.548 % copper equivalent. A higher cut-off grade was eventually used to delineate economic reserves. The break even grade takes into account projected operating cost, metal recoveries and prices.
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July 2019 Table 18-1: Copper Equivalent Factor
ASSUMPTIONS BOYONGAN
Metal Prices Cu 3.20 USD/lb Au 1342 USD/oz Metal Recoveries Cu 83.00% Au 95.00% Forex 53 PHP/USD Operating Cost 1700 PHP/MT
Calculated Values
Unit Revenue Cu 3103 PHP/MT-%Cu Au 2172 PHP/MT-gAu/t CuEq factor for Au 0.700 Break-even Grade 0.548 Total %CuEq
Figure 18-2 shows the economic shape based on a 0.8% copper equivalent cut-off grade superimposed to the sub-level cave mine design.
Figure 18-2: Economic Shape
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July 2019 To proceed with the reserve estimation, the following were done.
1. Copper and Gold grades of the model blocks classified as Measured and Indicated blocks are considered in the evaluation. Inferred blocks are dropped to zero. 2. The sub-level mine design containing the details below were imported to GEMS. a. Sub level cave vertical spacing – 25 m b. Production drift horizontal spacing – 15 m c. Fanhole ring spacing – 2.5 m d. 3 SLC – East, West and Deeps 3. The volume occupied by the sub-level cave design was estimated using GEMS to arrive at an in-situ economic reserve. The results is shown in Table 18-2 to Table 18-4. 4. The in-situ economic reserve were diluted following the sub-level cave principle of maintaining an average 110% draw and that for this particular draw 87% is ore and 23% is waste or dilution. This has been adjusted to 90% and 20% based on the average recovery rate in PMC’s Padcal Mine SLC blocks. The weights of 90% and 20% will translate to 81% recovery. 5. The dilution grade was estimated to be 0.20 %Cu and 0.183 g/t Au using the GEMS software. A more detailed discussion can be seen in the mining discussion in Chapter 17. The result after dilution can also be found in Tables 18-2 to Table 18-4. For purposes of ensuing discussion this will now be called production reserve. 6. Following the mine sequencing principle in the mining discussion in Chapter 17 an annual production schedule was simulated based on the production reserve. The result is tabulated in Table 18-5 to Table 18-7. 7. The initial production schedule was optimized to maintain the 4 Million tons annual production target. The result is the final production schedule and the combined annual tonnage and grade is the mineable reserve.
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July 2019 Figure 18-3: East Cave Economic Shape
Table 18-2: East Cave Economic and Production Reserves
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Figure 18-4: West Cave Economic Shape
Table 18-3: West Cave Economic and Production Reserves
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Figure 18-4: Deeps Cave Economic Shape
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July 2019 Table 18-4: Deeps Cave Economic and Production Reserves
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July 2019 Table 18-5: East Cave Annual Schedule
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July 2019 Table 18-6: West Cave Annual Schedule
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July 2019 Table 18-7: Deeps Cave Annual Schedule
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July 2019 18.5 Ore Reserve Estimations
18.5.1 Ore Specific Gravity / Density
The average specific gravity of Boyongan is 1.64. The specific gravity was determined and logged during core drilling in the exploration phase. The information was fed to the GEMS software along with copper and gold grades.
18.5.2 Mining Plans / Mining Recovery / Dilution Factor / Mining Losses
The discussion for this section has been tackled in Section 17.5.1.
Dilution Factor
The SME Mining Engineering handbook prescribes the curve shown in Figure 17-32 to show dilution development in SLC as a function of the volume of ore and the volume of extracted material (ore and waste).
Figure 18-4: Dilution and Recovery Principles
Curve A represents the ideal scenario wherein 100% of the ore can be extracted and that there will be 0 dilution. This is not a practical scenario for any mining operations. Curves I, II and III are made to represent the good, acceptable and bad extraction scenarios respectively. The
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July 2019 good extraction curve shows a recovery of 83% with 27% of dilution for a draw source kept at 110% draw.
This was further evaluated against Padcal mine experience where its sub level cave mine in levels 860ML and some of the pillar robbing sites averaged on a mining recovery of close to 90%. Translated to the graph, maintaining a 110% draw will produce a mix of 90 parts of ore and 20 parts of dilution material.
To estimate the dilution grade a dilution solid was created by projecting a 80 degree angle from the bottom of the east and west caves as shown in Figure 18-5. The solid was evaluated in the GEMS software for its total tonnage and copper and grade values. Copper grade was found to be 0.20 % while gold grade is 0.18 g/t. These copper and gold grades will be grades of the diluting material which will be averaged by weight together with the ore from the SLC shapes to arrive at the total mineable reserve.
Figure 18-5: Dilution Solid
18.5.3 Relevant Production Costs considered
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July 2019 The average cash operating cost for the project is 1,721 PHP/t using a 53 PHP:1USD exchange rate.
Table 18-4: Operating Cash Cost per Ton
USD/t PHP/t Mining 11.40 604.20 Processing 18.86 999.58 G&A 2.21 117.13 Total 32.47 1,720.91
18.5.4 Basis of Revenue Calculation
Metal Price Metal prices are assumed to be 3.20 US Dollar per pound of copper and 1,342 US Dollar per ounce of gold.
Metal Recovery The average copper recovery for the catch-all flotation and leaching process is 83% and for gold using the same process flow is 96%.
Unit Revenues
Based on these prices and recoveries, the unit revenues per metric ton per unit grade of each metal are calculated as 3,103 Pesos per metric ton for every percent copper grade and 2,172 Pesos per metric ton for every gram per ton gold grade
Copper Equivalent of Gold As the cut-off grade is normally expressed only in terms of copper, the revenue contribution of the gold metal has to be expressed in terms of its equivalent in copper. Taking the ratio of the unit revenue from copper and the unit revenue from gold gives the copper equivalent of each gram of gold per metric ton of ore. Thus, by adding the copper grade and the copper equivalent of the gold grade, the total percent copper equivalent (Total %CuEq) grade of a material is assessed. The copper equivalent of 1 gram gold per ton of material is 0.700 percent copper.
Currency Exchange Rate The currency exchange rate is pegged at 53 Pesos to a US Dollar over the life of the project.
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July 2019 Cut-Off Grades While the calculation in Table 18-1 shows a cut-off grade of 0.548 %CuEq, a higher cut-off grade of 0.80 %CuEq was chosen to delineate the economic footprint and reserve. The rationale is to maximize the revenue margin to offset the project’s high capital cost requirement.
18.5.5 Cut-off Grade Determination
The cut-off used for the evaluation of mineable reserve in total percent copper equivalent grade of 0.80.
18.6 Ore Reserve Classification Used
The declared ore reserves estimates are all classified as probable reserves. It is common industry practice that until mining has ensued, the more conservative classification is applied. This is the same reason why the classification of remaining mineable reserves of PMC’s Padcal are classified as proven reserves.
18.7 Ore Reserves Estimates
The resulting ore reserve estimate is tabulated below.
Table 18-5: Mineable Reserve Estimate
Tonnes Cu Au Recoverable Cu Recoverable Au ORE SOURCES MT % Grams/Tonne (000 lbs) (oz)
East Cave 33,707,628 0.753 1.378 450,814 1,417,895
West Cave 38,553,311 0.557 1.096 391,023 1,301,085
Deeps Cave 9,183,269 0.451 0.977 75,836 276,681
Total Reserves 81,444,208 0.626 1.200 917,673 2,995,661
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Chapter 19.0
Silangan Project July 2019 19.0 INTERPRETATION AND CONCLUSIONS
19.1 Synthesis of all the data
The Silangan Project and its orebodies have been a subject of extensive studies to evaluate its feasibility to mine. This latest iteration is mining the Boyongan deposit using an underground mining method called Sub-level caving.
Key geo-metallurgical, geotechnical and hydrogeological design risks were addressed in the study program and corresponding geotechnical and hydrogeological models are updated based on the field investigations, laboratory analysis, modelling and simulation done. The models were used by the mining engineers to come up with a sub-level cave mine design that can deliver ore to the mill at 4 Million tons per year.
Copper, gold and silver will be recovered via a “catch-all” metallurgical flowsheet composed of copper flotation-copper leaching and gold leaching processes. The complex mineralogy of Boyongan characterized by an equal abundance of oxide and sulfide minerals even at depth necessitates both sulfide and oxide minerals recovery processes. At the start of the mine, only copper leaching and gold leaching process are commissioned as the ore delivery will be composed predominantly of oxides. Copper cathode and gold-silver dore will be produced for said process correspondingly. In Year 3 of operations, the copper flotation plant will be commissioned and copper concentrate production production. Copper concentrates contain gold and silver. All three products are produced at a marketable state. Copper, gold and silver have high demands in the global market to address industrial globalization, demands for electric vehicles and the requirements of the jewelry industry.
The byproduct of the processing plant is called tailings and these will be stored in tailings storage facility adequately designed to store 83 Million tons of tailings and withstand extremes meteorological and seismic events. ANCOLD standards were applied in the design of the facility.
Key support infrastructures will be built to support the operations, inclusive of a jetty port to stage the bigger equipment like the SAG mill; water treatment plant to treat the effluent coming from the tailings storage facility power systems to accept and distribute power coming from the grid; administration buildings and a 100-bed keymens quarters.
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The cost estimates were supported with market quotations for key equipment and contractors budgetary proposals. The level of details required for a Definitive Feasibility Study (DFS) was observed.
The financial evaluation took into account expenditures for the environment prescribed by the 1995 Mining Act, including the Social Development and Management Program (SDMP), Environmental Protection and Enhancement Program (EPEP), provisions of the Environmental Clearance Certificate (ECC) and the Final Mine Rehabilitation and Decommissioning Plan (FMRDP). Adequate tax provisions and marketing assumptions are based on approved laws and recent market rates.
81 Million tons of Boyongan ore was assessed to be mineable and after passing a financial evaluation. The mineable reserve will be mined at a rate of 4 Million tons per year, making the mine life 21 years.
19.2 Discuss the adequacy of data, overall data integrity and areas of uncertainty.
All information leading to the mineable reserve estimation was deemed adequate which observed the level of details required for a DFS. As the DFS still leaves a level of risk (+/- 15% on the cost estimate), the next stage of the project should be able to address these, particularly
the amount of advance dewatering required in the mine to start development; details of the foundation of the processing plant and TSF and final provisions of the Declaration of Mining Project Feasibility (DMPF) that will be issued by the Mines and Geosciences Bureau.
19.3 Overall conclusions by the CP
The study supports a mineable reserve of 81 Million tons in Boyongan as discussed in Chapter 18 and the proof of feasibility discussed throughout this report. Hence the objectives set forth for this technical report have been met
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Chapter 20.0
Silangan Project July 2019 20.0 RECOMMENDATIONS
The following recommendations are offered as a result of the evaluation.
Continue the next level of studies required prior to commencement of construction. o Geotechnical drilling at key mine infrastructures, process plant and TSF o Conduct a hydrogeological investigation and advance dewatering for the mine. o Complete the Front End Engineering Design (FEED) required to complete the construction drawings and tender after the geotechnical drilling. Undertake the feasibility study of the adjacent orebody- Bayugo, to see when it can be mined to maximize the facilities already built when Bayongan operates. Acquire the surface rights of the remaining uncontrolled areas for the project.
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Chapter 21.0
Silangan Project July 2019 21.0 REFERENCES
Anonymous, Padcal Mine – Operations Report
Ausenco, 2015, Definitive Feasibility Study for Surface Mining Option fro Boyongan
Ausenco, 2017, Optimized Pre-feasibility Study for Boyongan and Bayugo Deposits
Ausenco, 2018, Pre-feasibility Study for Underground Only Option for Boyongan (Sub-Level Caving) and sub reports
Ausenco, 2019, Definitive Feasibility Study for Underground Only Option for Boyongan (Sub- Level Caving) and sub reports
Jacobs, 2019, Environmental Impact Assessment of the Sub Level Caving Project
Jacobs, 2019, Environmental Protection and Enhancement Programs for the Sub Level Caving Project
Jacobs, 2019, Final Mine Decommissioning and Rehabilitation Plan for the Sub Level Caving Project
Oliveros, 2019, Mineral Resource Estimate Report for Boyongan Deposit
Wikepedia, Wikepedia.org
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Annex A: Financial Analysis
SLC FS Cashflow Schedule FINAL Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 615 GRADES P7 P7 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 P2 Schedule Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Production Schedule Period SLCFS -3 -2 -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Physicals in Mt TOTAL (Mt) Cu Au Mill Feed TOTAL 81 0.63 1.20 2.8 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 2.6 1 Boyongan 81.4 0.63 1.20 2.8 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 2.6
Material 81 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 3 ROM grades Au (g/t) 1.20 1.71 1.83 1.82 1.42 1.37 1.35 1.55 1.41 1.45 1.19 1.15 1.04 1.03 0.98 0.93 0.93 0.94 0.93 0.82 0.65 0.66 Cu (%) 0.63 1.06 1.07 1.08 0.92 0.69 0.66 0.63 0.58 0.59 0.58 0.56 0.54 0.52 0.51 0.45 0.45 0.56 0.48 0.46 0.41 0.42 Recoveries Au (%) 0.95 91% 91% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% Cu (%) 0.82 73% 73% 83% 83% 83% 83% 83% 83% 83% 83% 83% 83% 83% 83% 83% 83% 83% 83% 83% 83% 83% Cashflows - in USD M Capital Cost TOTAL 1,292 53 300 312 70 67 32 20 21 34 28 24 25 30 35 20 32 22 26 33 27 27 25 24 4
Mining 457 23 45 88 58 21 20 10 9 24 16 12 12 9 14 4 17 7 11 16 9 12 10 8 1 Boyongan Development Capital 156 23 45 88 Boyongan Sustaining Capital 301 58 21 20 10 9 24 16 12 12 9 14 4 17 7 11 16 9 12 10 8 1 Processing 835 31 255 224 13 46 12 10 12 10 11 12 13 21 21 15 15 15 15 18 18 15 15 16 3 Oxide (P7) Process and Infrastructure Development Capital 509 31 255 224 2.62 TSF Sustaining Capital 206 8.9 7.6 7.6 9.0 9.0 9.1 9.2 9.6 9.6 15.6 15.6 10.1 10.1 9.8 9.8 12.3 12.4 9.8 9.8 10.7 - Sustaining Capital 120 3.7 38.1 4.2 1.1 3.0 1.4 2.0 2.7 3.4 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 2.6
Operating Cost TOTAL 2,465 114 133 129 124 121 123 122 120 118 119 118 112 114 115 117 117 119 120 118 118 77 Mining 928 48 53 53 50 48 48 47 45 44 45 44 39 40 41 43 43 46 47 45 42 16 11.40 Boyongan 928 48 53 53 50 48 48 47 45 44 45 44 39 40 41 43 43 46 47 45 42 16 Processing 1,537 66 80 76 74 73 74 74 74 74 74 74 74 74 74 74 74 73 73 73 75 60 18.87 Boyongan 1,537 66 80 76 74 73 74 74 74 74 74 74 74 74 74 74 74 73 73 73 75 60 Revenue TOTAL 6,917 344 509 551 446 386 375 399 367 375 331 318 297 290 280 259 259 286 265 242 202 136 84.9 Boyongan 6,917 344 509 551 446 386 375 399 367 375 331 318 297 290 280 259 259 286 265 242 202 136 Annual Revenue 6,917 - - - 344 509 551 446 386 375 399 367 375 331 318 297 290 280 259 259 286 265 242 202 136 Annual Expenditure 3,757 53 300 312 184 200 160 144 141 157 149 144 143 149 153 132 146 136 143 150 146 148 143 142 81 Annual Cash Flow 3,160 (53) (300) (312) 159 309 390 302 244 218 250 223 231 182 165 164 145 144 116 109 140 117 99 60 56 Cash Flow from SMMCI Model (79) (383) (306) 241 354 201 257 242 355 337 132 127 70 Cumulative Revenue - - - 344 853 1,403 1,849 2,235 2,610 3,009 3,376 3,751 4,082 4,400 4,697 4,987 5,267 5,526 5,786 6,071 6,336 6,579 6,780 6,917 Cumulative Expenditure 53 300 612 796 996 1,156 1,300 1,442 1,599 1,748 1,892 2,035 2,184 2,337 2,470 2,615 2,752 2,895 3,045 3,191 3,338 3,481 3,623 3,704 Cumulative Cash Flow (53) (300) (612) (452) (143) 247 549 793 1,011 1,261 1,484 1,716 1,897 2,063 2,227 2,372 2,516 2,632 2,741 2,881 2,998 3,097 3,157 3,213
Unit Rate G&A + Selling COST TOTAL 1.82 G&A Costs 148 7 8 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 4 1.13 Selling Costs 92 1 2 9 7 6 5 5 5 5 5 5 4 4 4 4 4 4 4 4 3 2 2.95 G&A + Selling Costs 240 9 10 16 14 13 13 12 12 12 12 12 11 11 11 11 11 12 11 11 10 6
Changes (from Ausenco); Capital Cost 0 1,292 1. Updated Mine Plan (Revenue) Operating Cost 0 2,465 2. Updated Mine Cost Revenue - 6,917 3. Updated processing operating cost Margin - 3,160 4. Updated Capex 5. Updated Sustaining Capex PFS BASE CASE DEVELOPMENT Operations -> PFS FULL UG Rate LOM -3 -2 -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Annual Revenue 6,917 - - - 344 509 551 446 386 375 399 367 375 331 318 297 290 280 259 259 286 265 242 202 136 - Selling costs (92) - - - (1) (2) (9) (7) (6) (5) (5) (5) (5) (5) (5) (4) (4) (4) (4) (4) (4) (4) (4) (3) (2) - Net Revenue 6,825 - - - 342 507 542 439 380 370 394 362 370 326 314 292 286 276 256 256 281 261 239 198 134 - Cost of Operations (from Ausenco) (2,465) - - - (114) (133) (129) (124) (121) (123) (122) (120) (118) (119) (118) (112) (114) (115) (117) (117) (119) (120) (118) (118) (77) Excise Tax (4% of Net Revenue) 4.0% (277) - - - (14) (20) (22) (18) (15) (15) (16) (15) (15) (13) (13) (12) (12) (11) (10) (10) (11) (11) (10) (8) (5) - Royalty (mining bill) ------LBT 0.5% (34) - - - (2) (3) (3) (2) (2) (2) (2) (2) (2) (2) (2) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) - G&A (148) - - - (7) (8) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (4) - Customs Duties 3.0% - FMRDP (6) - - - (1) (1) (1) (1) (1) (0) (0) (0) (0) (0) EPEP 3.0% - SDMP 1.5% (70) - - - (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (4) (4) (4) (4) (3) - EBITDA 3,825 - - - 202 339 377 284 231 219 243 215 224 182 171 156 149 139 117 117 139 118 99 61 45 - Depreciation (1,646) - - - (38) (57) (59) (60) (61) (63) (65) (67) (69) (71) (75) (77) (80) (83) (87) (93) (99) (106) (116) (130) (90) - Taxable Income(Loss) during the year 2,179 - - - 164 282 319 224 170 156 178 148 155 110 96 80 69 55 29 24 40 12 (17) (70) (45) - Income Tax (30% of Taxable Income - With Loss Carryforward b/w SM and OP) 30.0% (534) - - - (27) (48) (63) (43) (35) (33) (39) (44) (47) (33) (29) (24) (21) (17) (9) (7) (12) (3) - - - - NET INCOME (LOSS) AFTER TAX 1,645 - - - 137 234 255 180 135 123 139 104 109 77 67 56 48 39 21 17 28 8 (17) (70) (45) - CAPEX (VAT Exclusive) (1,292) (53) (300) (312) (70) (67) (32) (20) (21) (34) (28) (24) (25) (30) (35) (20) (32) (22) (26) (33) (27) (27) (25) (24) (4) - VAT (OUTFLOW) REFUND for DEV'T CAPEX (-Y3 to -Y1) 1 (6) (36) (37) - 46 14 13 7 ------VAT (disallowance)/net refund during operations (OPEX and SUSCAPEX Y1 to Y21) (38) (22) (4) 2 (0) (1) (4) (1) (1) (2) (2) (2) 1 (3) (1) (2) (3) (1) (2) (1) (2) 6 9 NET CASH FLOW (EBITDA less INCOME TAX less CAPEX) 1,962 (59) (336) (349) 82 266 299 233 180 149 176 145 151 116 105 113 93 99 79 74 98 85 73 35 47 9 Discounted Cash Flow-Combined with VAT REFUND 20.47% 615 (57) (299) (288) 63 188 196 141 101 77 85 65 62 44 37 37 28 28 21 18 22 18 14 6 8 1
IMPACT OF ZERO RATING OF TRAIN PBP 1.00 1.00 1.00 0.42 VAT Rate 12% Disallowance Rate 10% Hard encode VAT Tax Base VATABLE CAPEX 100% (1,292) (53) (300) (312) (70) (67) (32) (20) (21) (34) (28) (24) (25) (30) (35) (20) (32) (22) (26) (33) (27) (27) (25) (24) (4) - MINE OPEX 100% (928) - - - (48) (53) (53) (50) (48) (48) (47) (45) (44) (45) (44) (39) (40) (41) (43) (43) (46) (47) (45) (42) (16) - PROCESSING OPEX (Excl labor. Vtble % taken from DFS) 97% (1,492) - - - (64) (77) (74) (72) (71) (72) (72) (72) (72) (72) (72) (72) (72) (72) (72) (71) (71) (71) (71) (73) (59) - G&A (Excl government dues and labor. % taken from DFS) 63% (93) - - - (5) (5) (5) (4) (5) (5) (5) (5) (5) (5) (5) (4) (4) (4) (4) (4) (4.47) (4.45) (4.36) (4.40) (2.28) - TOTAL (3,805) (53) (300) (312) (187) (202) (163) (147) (144) (159) (152) (146) (146) (151) (156) (135) (148) (139) (145) (152) (148) (150) (145) (144) (81) - VAT Cash Outlow (377) - - - (22) (24) (20) (18) (17) (19) (18) (18) (17) (18) (19) (16) (18) (17) (17) (18) (18) (18) (17) (17) (10) - Refund (After 1 year, subjected to disallowance rate) 339 - - - - 20 22 18 16 16 17 16 16 16 16 17 15 16 15 16 16 16 16 16 16 9 Undiscounted Impact (Tax base x 12% x disallowance rate) (38) - - - (22) (4) 2 (0) (1) (4) (1) (1) (2) (2) (2) 1 (3) (1) (2) (3) (1.36) (1.97) (1.24) (1.58) 5.79 8.78
EPEP Computation 3% of Operating Opex 3 4 4 4 4 4 4 4 4 4 4 3 3 3 4 3 4 4 4 4 2 TSF Capital Costs 9 8 8 9 9 9 9 10 10 16 16 10 10 10 10 12 12 10 10 11 - Applicable EPEP (Note: EPEP from OP DFS was retained to be more conservative, need to update this in DFS) ------2