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The Company's 100% owned Lindero project is a porphyry gold deposit located 250 kilometres west of the city of Salta, northwestern Argentina. Access is by all-weather road from the City of Salta or Chile.
Mineralization on the property was initially discovered by the Company's exploration team in September 1999. Gold mineralization at Lindero is hosted in a dioritic porphyry with ore grade gold mineralization in the main zone principally hosted in an intense magnetite and quartz-magnetite stockwork coincident with strong potassic alteration. Strong mineralization correlates with strong potassic alteration. To date, work at Lindero has included geologic mapping, soil geochem, metallurgy, trenching and 115 holes of diamond drilling.
In 2002, Rio Tinto Mining and Exploration Limited ("Rio Tinto") conducted two diamond drill programs comprising 3,278 metres in ten holes at Lindero. In September 2003, the Company announced the results of an independent resource estimate. The estimate was audited by Roscoe Postle Associates Inc. ("RPA"), an international company of consulting mining and geological engineers, and was based upon drilling, assay data, and block models generated by Rio Tinto.
In March 2010, AMEC Americas Limited ("AMEC") completed a prefeasibility study on Lindero (the "Study"). Results of the study indicate that at US$850/oz gold, Lindero is a very financially attractive gold deposit capable of producing 161,000 oz of gold per year at a cash cost of US$373 over the initial 5 years of production.
Highlights of the project economic estimates are summarized below.
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Pre-tax Project Economics(1)(2)
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Gold price
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Net Present Value (US$ million)
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IRR
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Payback
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($US/oz)
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Discount Rate (%)
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(%)
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(years)
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4.0%
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6.0%
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8.0%
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$850(3)
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$237
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$194
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$157
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25.9%
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2.8
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$975
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$363
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$305
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$256
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35.4%
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2.2
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$1,100
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$490
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$416
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$355
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44.1%
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1.9
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1. Project economics have been reported by AMEC on a pre-tax basis.
2. Project economics include a 3% provincial royalty.
3. Base case project scenario.
Operating Summary
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Years 1-5
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Life of Mine
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Life of Mine
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Annual
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Annual
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Total
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Average
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Average
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Ore Production
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million tonnes
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101.1
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10.7
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10.6
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Waste Production
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million tonnes
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90.5
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13.1
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9.5
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Strip Ratio
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(waste:ore)
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0.90
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0.82
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0.88
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Gold Head
Grade
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g/t
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0.59
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0.72
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0.59
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Metallurgical
Recovery
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%
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70.31
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Payable
Gold Production1
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000 oz
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1,357
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161
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124
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Mining
Cost2
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US$/tonne
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1.11
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0.98
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1.11
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Processing
Cost
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US$/tonne
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2.24
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2.19
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2.24
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G&A
Cost
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US$/tonne
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0.85
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0.84
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0.85
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Cash Operating
Cost
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US$/oz
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407
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373
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407
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1. After refining and treatment charges.
2. Considering total material moved.
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Capital Costs
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Initial capital(3)
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US$
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213 million
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Sustaining capital
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US$
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15 million
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3. Includes a contingency of US$18 million.
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Reserves and Resources(1)(2)(3)(4)(5)
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Cut Off
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Average
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Contained
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Grade
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Tonnes
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Grade
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Gold
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(g/t)
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(000's)
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(g/t)
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(M oz)
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Proven Reserve
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0.19
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27,929
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0.76
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0.69
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Probable Reserve
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0.19
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73,169
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0.52
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1.24
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Proven & Probable Reserve
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0.19
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101,098
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0.59
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1.92
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Measured
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0.20
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28,400
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0.76
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0.70
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Indicated
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0.20
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94,200
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0.50
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1.50
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Measured & Indicated
Resource
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0.20
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122,600
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0.56
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2.20
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Inferred Resource
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0.20
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59,000
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0.40
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0.75
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Measured
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0.40
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23,800
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0.85
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0.65
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Indicated
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0.40
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48,100
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0.68
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1.06
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Measured & Indicated
Resource
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0.40
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71,900
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0.74
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1.71
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Inferred Resource
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0.40
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19,400
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0.59
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0.37
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1. CIM definitions were followed for estimation of Mineral Resources and Mineral Reserves.
2. Mineral Resources were constrained within an economic open pit shell, generated using a gold price of US$890 per ounce of gold, a processing cost of $3.07 per tonne, a mining cost of $1.10, a sales cost of $12 per ounce and a metallurgical recovery of 70%.
3. Mineral Reserves are estimated using a cut-off grade of 0.19 g/t Au, based on a gold price of US$775 per ounce.
4. Mineral Resources are inclusive of Mineral Reserves.
5. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Additional Details
The Study projects a 9.5 year mine life with cumulative production of 1.357 million ounces of payable gold based on the National Instrument 43-101 compliant Reserve Estimate. Ore will be mined at an annual rate of 10.8 million tonnes, and due to favourable topography the life of mine strip ratio is 0.9:1 (waste to ore). The topography is also favourable for the location of the leach pads and waste dumps with minimal earthworks required.
The current life of mine metallurgical recovery is estimated at 70.31% weighted average for all domains in Reserves based on a two stage conventional crushing and grind circuit with a grind size of a -3/8 inch p80 = 7mm. Reagent consumption is expected to be modest (cyanide consumption of 0.436 Kg/tonne and lime of 2.75 Kg/tonne). Limestone will be sourced locally and lime produced in a calcining plant. Recent test work utilizing high pressure grinding roll (HPGR) crushers has demonstrated the potential for gold recoveries above the estimated life of mine average recoveries of 70.3% and at potentially lower operating costs.
Power will be generated utilizing natural gas supplied by a 130km connection to the regional Gasoducto de la Puna gas pipeline which was built by the Salta government to encourage mining and other economic development in the Puna region. The estimated capital cost of the natural gas connection is US$9.9 million. Power cost is estimated at US$0.062 per kwh based on a natural gas price of US$5 per MMBTU.
Environmental, Permitting, and Community Relations
The Company is advancing the permitting process with significant base line environmental monitoring and other work completed to date. Estimates and results from the Study will be a significant input for the final permitting applications. The Company has also focused efforts on consultation with local communities and other stakeholders to ensure that concerns are properly addressed.
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