Projects

Project Status

A positive Preliminary Economic Assessment (PEA) or Scoping Study released in April 2009 examined a proposed "pure silver" mine producing an average of 5 million ounces for the first six years of an estimated 12-year mine life. Santa Ana is the ideal compliment to the development of the Corani Project as it represents a "faster-track" project requiring significantly lower capital costs with a shorter lead time for construction and commissioning.

Current Resources

Based on 15 g/t Ag cutoff and Prudent Open-Pit Constraints - July 12 2010

						Contained Metal
Deposit	Category	Ktonnes	Silver Gm/t	Lead %	Zinc %	Silver Million Ozs	Lead Million Lbs	Zinc Million Lbs
Santa Ana	Measured	22,337	43.8	0.33	0.57	31.5	162.5	280.7
	Indicated	79,463	40.9	0.31	0.52	104.5	543.1	911.0
	Meas+Ind	101,800	41.5	0.31	0.53	136.0	705.6	1,191.7
	Inferred	21,632	40.6	0.32	0.49	28.2	152.6	233.7

Higher Grade Core Contained in Smaller Open Pit Shapes
Based on 19 g/t Ag cutoff and Prudent Open-Pit Constraints - July 12 2010

						Contained Metal
Deposit	Category	Ktonnes	Silver Gm/t	Lead %	Zinc %	Silver Million Ozs	Lead Million Lbs	Zinc Million Lbs
Santa Ana	Measured	16,543	48.6	0.34	0.61	25.8	124.0	222.5
	Indicated	52,198	45.3	0.32	0.55	76.0	368.2	632.9
	Meas+Ind	68,741	46.1	0.32	0.56	101.8	492.2	855.4
	Inferred	7,231	49.5	0.34	0.52	11.7	54.9	83.9

The updated resource estimation was completed in July 2010 by Independent Mining Consultants (IMC) of Tucson, Arizona, with John Marek, P.E. acting as the Independent Qualified Person under NI 43-101. The resource estimate is based upon 348 diamond drill holes totaling 60,458 meters completed through June. The estimation is presented below using two cutoff grades. The global resource assumes a $16 per ounce silver price applied to mineralized material contained within a pit determined by 70% silver recoveries under heap leaching and operating costs established in the Preliminary Economic Assessment ("PEA") prepared by IMC in April 2009 (see news release dated 20 April 2009). Lead and zinc are not recovered in heap leaching and not considered in the resource estimation. Lead and zinc grades are reported as they are elevated and could become economically significant with additional exploration. To determine the final pit limits for the higher grade area $13 per ounce for silver was used. This results in a pit that generates higher grades and less tonnes than the global resource.

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 Marc Leduc, P.Eng., COO and/or the President and CEO, Andrew Swarthout, P.Geo., Christian Rios, P.Geo., Exploration Manager who serve as the Qualified Persons under the definitions of NI 43-101. The block model estimate was 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 resources are consistent with the CIM Best Practices Guidelines for the estimation of mineral resources and mineral reserves. The method used in the resource calculation is equivalent to the method used in the resource calculation shown in our, May 26, 2009 Technical Report. 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 current metal markets, Assumptions used in the resource model by IMC. Silver Price= $16.00/oz; Silver Recovery= 70%; Zinc Recovery= 0%; Lead Recovery= 0%; Smelter charges: Silver= $0.40 per ounce; Mining Costs per tonne= $1.67; Process plus G&A cost per tonne= $5.30; Pit Slopes= 40 degrees in all rock types. 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.

Location and Infrastructure

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The wholly owned Santa Ana Project is located 140 kilometers south of the city of Puno in the Department of Puno, and roughly 8 kilometers south of the paved highway connecting to the port of Ilo on the Pacific Coast. The 5,400-hectare project has excellent infrastructure, including available water and two power supply alternatives. The site is well laid out for all the needed site facilities such as the heap leach, waste rock piles, silver recovery plant and crusher pads. Relations with local communities in the region are favorable and the company is working closely with the local communities to ensure the project is developed to maximize long-term sustainable growth for the region.

Ownership

The Santa Ana Project is 100% owned by Bear Creek Mining.

Geology and Mineralization

Santa Ana is a volcanic-hosted, epithermal system hosting large volumes of exposed, primarily oxide silver mineralization. Mineralization is contained within numerous structural feeders and in widespread crackle breccias (with disseminated carbonate and barite) that crosscut and replace bedding in the volcanic sequence. Tertiary andesite flows and pyroclastics have been intruded by sub-volcanic quartz feldspar porphyries and hydrothermal breccias. Dacite domes and breccias play an important role in ore deposition at the San Cristobal silver deposit being developed by Apex Silver Mines in neighboring Bolivia.

Bulk-tonnage silver deposits such as Santa Ana are uncommon; however,there are several examples of heap-leachable ore bodies proving to be very successful operations due to the simplicity of operations and low operating and capital costs. One of the best examples is Couer-Rochester, Nevada which has recovered silver in cyanide leaching successfully for several decades.

Metallurgy

Extensive metallurgical test work including column tests and bottle rolls have been completed that shows the Santa Ana deposit is well suited to a conventional heap leach silver recovery method. This will result in the production of a high purity silver doré bar on site and thus eliminating the cost and revenue losses associated with shipping a concentrate to a smelter. Tests have shown that all the ore is amenable to leaching and that a crushed ore size of ¾ of an inch results in an overall recovery of 70% of the silver. During operations, the ore will be crushed using low cost semi-mobile crushing plants which reduce capital cost and offer greater operational flexibility. The recovery of the silver will be achieved using a conventional Merrill-Crowe plant.

As part of the ongoing feasibility study, test are being undertaken to establish the optimal crushed ore size with a goal of improving the already favorable process economics.

Project History and Milestones

Bear Creek Mining identified and staked the Santa Ana Property as a grassroots prospect in 2004, based on the presence of extensive, colonial-era mine workings and its geological potential to host a near-surface, bulk-tonnage silver deposit. Initial wide-spaced drilling programs confirmed the presence of a bulk-tonnage silver deposit amenable to low-cost heap-leaching and open-pit mining at a low stripping ratio. Subsequent drilling programs totaling over 50,000 meters defined sufficient resources (including high-grade zones) to warrant advancing the project to a Preliminary Economic Assessment (PEA) or scoping study to examine potential mining scenarios and economic parameters.

A positive scoping study released in April of 2009 examined a proposed pure silver mine producing an average of 4.6 million ounces annually over 11.8 years, including five million ounces per year for the first six years of operation. Capital costs for the proposed 10,000-tonne-per-day, heap-leach operation were estimated at US$51 million, with payback of capital in 2.6 years based on an average silver price of US$13 per ounce. Cash costs per ounce of silver were projected at US$7.47.

A PEA or scoping study is an important milestone for a mineral project, being the first step in an economic and technical examination of a proposed mine. The project is being optimized in the subsequent feasibility study stage, already underway and expected to be completed mid-2010. Bear Creek Mining believes that the Santa Ana Project has excellent upside to both silver prices and resource expansion as the scoping study was based on only 42.4 million tonnes of a global resource totaling 92.3 million tonnes (see table below). Another favorable feature is that metal dore would be produced on site, which eliminates costs associated with smelter contracts and concentrate shipping.

Importantly, the deposit remains open, particularly to the north and at depth where numerous drill holes end in strong silver mineralization. Exploration drilling is expected to increase the resource and test for the presence of bonanza-grade feeder structures underlying this very large, stockwork silver deposit.

Scoping Study and Preliminary Economic Assessment

The scoping study determines that the project has a number of favorable characteristics:

• Positive economics with excellent exposure to up-side silver prices
• Well-defined resources open to expansion and convertible to reserves
• 75% of the PEA resource is contained in measured and indicated categories
• Very straight forward construction and development
• Produce metal dore on site so smelter contracts and concentrate shipping is not an issue
• 61.9M ounces of silver contained within resource were not included in the PEA plan but will likely be incorporated into an expanded operation or added to the end of the mine life given the current strengthening silver prices
• Favorable infrastructure; power, access, and available water supply
• A project site with ample space and favorable terrain for all the needed site facilities such as the heap leach pad, plant site and waste rock piles
• Well-defined permitting path

The PEA is based upon mining assumptions derived from mine planning sequences completed by IMC and metallurgical test work performed by McClelland labs and reviewed by Resource Development Inc. The mining sequence derives ore from the higher-grade near surface parts of the deposit throughout the mine life and leaves 33.7 tonnes of measured and indicated tonnes of ore and 16.3 tonnes of inferred ore behind that could be produced by reduction of cutoff and extension to mine life should metal prices increase. The site infrastructure can easily be expanded to accommodate the inclusion of all the resources should economic conditions warrant the expansion of the project above what is shown in the PEA plan. All resource categories were used, including Inferred resources. Note that in the mine sequence, only 42.3M tonnes of the 92.3M contained in the global resource tonnes are processed.

Key Assumptions for the Santa Ana Project - Base Case
Item
Annual ore production - years 1 to end of life (tonnes)	3,600,000
Overall Process Recovery - Silver	70%
Total Processed Tonnes	42,350,000
Average Silver Grade (g/t)	56.7 g/t
Recovered ounces of silver (total)	54.0 million
Overall stripping ratio	2.0 to 1
Life of mine (processing) years	11.8

Sensitivity to silver prices

The following represents plus/minus 10% silver price variance:

Silver Price	IRR	NPV (7%)
$13	29%	$55M
$14.30	39%	$83M
$11.70	19%	$28M

Note: in accordance with NI43-101, mineral resources that are not mineral reserves do not have demonstrated economic viability. The preliminary assessment includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.

The Santa Ana Resource Update & Preliminary Economic Assessment Technical Report

• Santa Ana NI43-101 Technical Report 4.5MB

Maps & Photos

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