Preliminary Economic Assessment: Dated July 22, 2011
This National Instrument 43-101 compliant PEA is based on the revised mineral resource estimate for the Carmen and Veta Minitas deposits at Monterde detailed in the NI 43-101 technical report by Micon International and released on May 1, 2011. The PEA was prepared with a focus on a combination of open pit and underground mining for mill feed of high grade gold-silver mineralization at the Monterde deposits.
The following are highlights of the Monterde PEA:
- Mill Production over 15.5 years
o 11.68 M tonnes – 744,000 oz gold and 20.2 M oz silver
o Open Pit - 5.95 M tonnes grading 1.12 g/t gold and 98.7 g/t silver
o Underground - 5.73 M tonnes grading 3.16 g/t gold and 85 g/t silver
o LOM recovery average: gold 95% and silver 60%
o LOM recoverable grade: 2.02 g/t gold and 55.67 g/t silver
o Cash cost of US$450/gold eq oz and total cost US$538/gold eq oz
o Average production 58,400oz/yr gold plus 1.9 M oz/yr silver over first nine years
- After tax (at prices of US$1,100 per ounce of gold and US$19 per ounce of silver):
- IRR of 40.6% with undiscounted net cash flows of US$430 million;
- Project NPV (at an 8% discount rate) of US$ 211.9 million;
- After tax (at near spot prices of US$1,500 per ounce of gold and US$35.00 per ounce of silver):
- IRR of 71.9% with undiscounted net cash flows of US$876.9 million;
- Project NPV (at an 8% discount rate) of US$471.8 million;
- PEA Pre-production capital of US$100.1 million, with total life-of-mine capital cost of US$119.3 million, including a total contingency amount of US$28.3 million.
The PEA includes inferred mineral resources as part of the mine plan. It is noted that CIM Mineral Resource Definition Standards dated November 22, 2005 states that “due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration.”