A positive Pre-Feasibility Study (September 2009) examined a 15,000-tonne-per-day mine with average annual production of 10 million ounces silver for the first six years, or 6.4 million ounces silver annually over a 27-year mine life, plus by-product lead and zinc. Initial capital costs are estimated at US$339 million, with payback in less than three years. The study was based only on proven and probable reserves containing 258 million ounces of silver, plus 2.9 billion pounds of lead and 1.4 billion pounds of zinc. Cash costs of US$1.06 per ounce of silver are projected for the first 10 years, or US$2.87 per ounce life-of-mine, net of base metal credits. The study recommends that Corani proceed to a Bankable Feasibility Study.
Bear Creek Mining, Corani Project Silver Zone
Mineral Reserves and Resources
August 22, 2009
Mineral Reserves and Resources
August 22, 2009
Mineral Reserves, $9.10 NSR cut-off
| Contained Metal | Equivalent Ounces | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Category | Ktonnes | Silver Gm/t | Lead % | Zinc % | Silver Million Ozs | Lead Million Lbs | Zinc Million Lbs | Eq. Silver Million Ozs | Eq. Silver Gm/t |
| Proven | 27,957 | 70.2 | 1.08 | 0.59 | 63.1 | 665.7 | 363.6 | 115.0 | 127.9 |
| Probable | 111,666 | 54.3 | 0.90 | 0.43 | 194.9 | 2,215.6 | 1,058.6 | 360.3 | 100.4 |
| Proven + Probable | 139,623 | 57.5 | 0.94 | 0.46 | 258.0 | 2,881.3 | 1,422.2 | 475.3 | 105.9 |
Mineral Resources in Addition to Reserves, $7.85 NSR cut-off
| Contained Metal | Equivalent Ounces | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Category | Ktonnes | Silver Gm/t | Lead % | Zinc % | Silver Million Ozs | Lead Million Lbs | Zinc Million Lbs | Eq. Silver Million Ozs | Eq. Silver Gm/t |
| Measured | 10,791 | 16.7 | 0.43 | 0.45 | 5.8 | 102.3 | 107.1 | 16.2 | 46.8 |
| Indicated | 99,626 | 20.6 | 0.45 | 0.39 | 66.0 | 988.4 | 856.6 | 158.2 | 49.4 |
| Measured + Indicated | 110,417 | 20.2 | 0.45 | 0.40 | 71.8 | 1,090.7 | 963.7 | 174.4 | 49.1 |
| Inferred | 34,215 | 32.4 | 0.54 | 0.34 | 35.6 | 407.3 | 256.5 | 69.0 | 62.7 |
Regulatory Footnotes
All of Bear Creek's exploration programs and pertinent disclosure of a technical or scientific nature are prepared by or prepared under the direct supervision of Marc Leduc, P. Eng., Senior Vice President of Engineering and Development and the President and CEO, Andrew Swarthout, P.Geo., who serve as the Qualified Persons under the definitions of NI 43-101. The block model estimate, mine design and schedules were prepared by Independent Mining Consultants of Tucson Arizona. John Marek P.E. acted as the independent qualified person as defined by Canada's National Instrument 43-101. Additionally the methods used in determining and reporting the mineral reserves and resources are consistent with the CIM Best Practices Guidelines. The method used in the resource calculation is equivalent to the method used in the resource calculation shown in our August 23, 2006 Press Release. For this resource estimate we have used metal prices based on a 3-year backward average and a 2-year forward price based on the metal markets in July 2009.
Assumptions used in the mineral reserve and PFS model by IMC are: Silver Price=$13.00/oz; Zinc Price=$0.65/lb; Lead Price=$0.70/lb; Mixed Sulfide Material Silver Recovery=62% to lead con and 16% to the zinc con, Zinc Recovery=75% to zinc con and Lead Recovery=76% to lead con; Transitional Material Silver Recovery= 56% to lead con and 5% to the zinc con, Zinc Recovery= 20% to zinc con and Lead Recovery= 52% to lead con. Average smelter charges against saleable metal: Silver= $0.68 per ounce; Zinc= $0.348 per pound; Lead= $0.286 per pound; Mining Costs per tonne= $1.25; Process cost per tonne= $7.00; G&A per processed tonne= $0.85; Pit Slopes= 42 degrees in mineralized tuff and 46 degrees in post-mineralized tuff. The resulting mineral reserve cutoff is $9.10/tonne ore NSR. The mineral reserves are contained within a practical mining plan that utilized the 'floating-cone" method as an initial guide for design.
The mineral resource portion of the project is contained in a larger pit than the PFS design pit, which was a floating cone using the following input assumptions: Silver Price=$13.85/oz; Zinc Price=$0.693/lb; Lead Price=$0.746lb; Mixed Sulfide Material Silver Recovery=68% to lead con and 17% to the zinc con, all other recoveries remained the same. The Mineral Resource cut-off was $7.85/tonne which represents the internal process cutoff. All metallurgical material types were included in the resource. Silver Equivalency calculation represents the contained equivalent silver ounces sent to concentrate and is based on the resource metal prices assumptions of $13.00/oz Ag, 0.70/lb Pb and 0.65/lb Zn and recoveries to concentrate of 74.5% for silver and 71.7% for lead and 71.3% for zinc. The calculation does not take into account the net smelter payment terms for the different metals in the two separate concentrates. The resulting equivalency is 1 oz Ag = 19.3 lb Pb and 1 oz Ag = 20.9 lb Zn.
All diamond drilling has been performed using HQ diameter core with recoveries averaging greater than 95%. Core is logged and split on site under the supervision of Bear Creek geologists. Sampling is done on two-meter intervals and samples are transported by Company staff to Juliaca, Peru for direct shipping to ALS Chemex, Laboratories in Lima, Peru. ALS Chemex is an ISO 9001:2000-registered laboratory and is preparing for ISO 17025 certification. Silver, lead, and zinc assays utilize a multi-acid digestion with atomic absorption ("ore-grade assay method"). The QC/QA program includes the insertion every 20th sample of known standards prepared by SGS Laboratories, Lima. A section in Bear Creek's website is dedicated to sampling, assay and quality control procedures.
The remaining payments are:
- US$10M cash payable Dec 31, 2010
- US$10M cash payable Sept 30, 2011
- US$15M cash payable June 30, 2012