Projects

Project Status

Subject to disclosure from June 25th 2011 press release

A positive feasibility study ("the "Feasibility Study" or FS"), as defined by National Instrument 43-101 ("NI 43-101"), was released October 7th 2010 for our 100% owned Santa Ana silver deposit located in southern Peru. On January 19th, 2011 Bear Creek announced an update to the silver recovery.

Highlights of the Feasibility Study and update include (all figures are in US dollars):

• The planned development of Santa Ana by 2012 is an important step towards Bear Creek becoming a 20 million ounce a year silver producer with the addition of production from the planned Corani deposit in 2014.
• Proven and Probable Mineral Reserves containing 63.2 million ounces of silver at Santa Ana bringing the Company's total reserves to over 321 million ounces.
• Santa Ana Project pre-tax NPV of $107 million at a 5% discount rate and IRR of 29.9% at $14.50 per ounce silver. After tax net present value of $80.2 million and IRR 24.9%.
  • Santa Ana Project pre-tax NPV of $515 million at a 5% discount rate and IRR of 98% at $27.00 per ounce silver. After tax net present value of $344 million and IRR 71%.
• 11 year mine life producing 47.4 million ounces of silver.
• Average annual saleable silver production of 5.0 million ounces per year for the first 6 years.
• Cash cost of $8.72 per ounce silver for the 11 years LOM.
• Capital costs of $70.8 million with Capital Payback in 3.0 years at $14.50/ oz Ag.
• Numerous upside opportunities being explored including reductions in cash costs, and an extended mine life plan to include an additional 35.7 million ounces silver. The Santa Ana deposit remains open, mainly at depth and to the north where the northernmost holes contain up to 22 meters @ 124 g/t Ag from surface.

Project Summary (after update to crushing assumption and increased silver recoveries)

The project has a pre-tax internal rate of return ("IRR") of 29.9%, a net present value of $106.9 million at a 5% discount rate and earnings before interest, taxes, depreciation and amortization ("EBITDA") of $173 million over the 11 year life based upon $14.50 per ounce silver. Recovered silver production in the first six years now averages 5.0 million ounces per year and the project is expected to produce an average of 4.3 million payable ounces of silver per year over the 11 year mine-life. The deposit remains open laterally to the north, northwest, and at depth. Pre-production capital investment in the project is estimated to be $70.8 million and sustaining capital expenditures are estimated at an average $1.4 million per year over the 11-year life of the mine. Based upon a $14.50 silver price, the project achieves payback of capital in approximately 3.0 years and at the spot silver price of $29.22 per ounce, the payback is 1.1 year. The Feasibility Study has been prepared using cost bids and estimates and production forecasts provided by qualified engineering consulting groups.

Project Upside

Preliminary mine plans show that the mine life could be extended on the order of 50%, potentially adding 35.7 million contained silver ounces (30MT @ 37g/t Measured + Indicated Resources) to the current 63 million contained silver ounces of reserve.

Current Reserves & Resources

Mineral Reserves, Cutoff Grade, Variable 27 to 24 g/t Silver by Year
Category	Ktonnes	Silver g/t	Lead %	Zinc %	Contained Silver Million Ozs
Proven	8,951	57.6	0.37	0.66	16.6
Prob	28,126	51.5	0.33	0.55	46.6
Prov+Prob	37,077	53.0	0.34	0.58	63.2

Mineral Resources in Addition to Reserves, Cutoff Grade = 15 g/t Silver
Category	Ktonnes	Silver g/t	Lead %	Zinc %	Contained Silver Million Ozs
Measured	13,386	34.6	0.30	0.51	14.9
Indicated	51,337	35.1	0.30	0.50	57.9
Meas+Ind	64,723	35.0	0.30	0.50	72.8
Inferred	21,632	40.6	0.32	0.49	28.2

The Feasibility Study is based upon an updated resource estimation described in the press release dated 12 July 2010. The mine sequencing performed in September 2010 by IMC is based upon 60,458 meters of drilling and assays in 348 diamond drill holes and trenches completed through August 2009. Measured and Indicated Resources contained within the Feasibility Study design pit were used to determine final pit limits and thus converted respectively into Proven and Probable Reserves. In addition to reserves, 72.8 million ounces of silver remain in measured and indicated resources occurring outside of the Feasibility Study pit.


Regulatory footnotes:

All of Bear Creek's exploration programs and pertinent disclosure of a technical or scientific nature, including the scientific and technical information contained in this news release, are prepared by or prepared under the direct supervision of, and reviewed and approved by, Marc Leduc, P. Eng., COO of the Company and Andrew Swarthout, P.Geo., the President and CEO of the Company, who serve as the Qualified Persons under NI 43-101 ("QP"). The block model estimate, mine design and schedules for the Feasibility Study were prepared by Independent Mining Consultants of Tucson Arizona, with John Marek, P.E. acting as the independent QP 43-101. Additionally, the methods used in determining and reporting the mineral reserves and resources are consistent with the CIM Best Practices Guidelines.

Assumptions used in the mineral reserve are consistent with the costs calculated used throughout the Feasibility Study and these are: Silver Price=$14.50/oz; Silver Recovery=70% to a doré bar; Mining Costs per tonne= $1.68; Process cost per tonne= $3.19; G&A per processed tonne= $1.17; Pit Slopes= 42 degrees in mineralized tuff and 46 degrees in post-mineralized tuff. A variable reserve cutoff of 24 to 27 g/t was used and this was employed to improve the IRR in the early years of operation. 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 FS design pit. The method used in the resource calculation is equivalent to the method used in the resource calculation shown in the Company's May 26, 2009 Technical Report on the Santa Ana project (available under the Company's profile at www.sedar.com). 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.

The Feasibility Study was prepared by a team of independent engineering consultants. The mining and block model portion was prepared by Independent Mining Consultants of Tucson Arizona, with John Marek, PE acting as QP. The process plant design was prepared by Ausenco Vector in Peru with the Metallurgy and Process design criteria developed by Resource Development Inc., with Deepak Malhotra, Ph.D acting as QP. Geotechnical, environmental, infrastructure, waste stockpile and heap leach designs and financial modeling were prepared by Ausenco Vector, with Scott Elfen, PE acting as the QP.

Onsite operating cost per ounce represent the sum of the mining, processing and site G&A divided by the silver ounces produced. Cash costs per ounce are consistent with the Gold Institute's definition, where in addition to the onsite costs; refining, dore transport and royalties are added and by-product credits are subtracted from the numerator of the calculation.

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

Click here for PDF version (High-Res)

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

Subject to disclosure from June 25th 2011 press release

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

The Santa Ana project will use a heap leach process to recover the silver from the ore. Heap leaching is a commonly used method for recovering metal from ore and it is safely used all over the world. Our operations and development team have built and operated several heap leach mines in Peru.

The Company has completed seven column leach test at McClelland Labs and over one-hundred leach amenability tests. The results have consistently demonstrated that the Santa Ana ore responds well to conventional heap leaching techniques. The recently completed column tests indicate that further improvements in recovery to 75% silver can be achieved by crushing the ore to minus 3/8 of an inch.

Feasibility Study and Project Economics

The reserve and resource estimates were updated for the Feasibility Study by Independent Mining Consultants ("IMC"), Tucson, AZ. and Ausenco Vector, Lima, Peru co-lead the study with support from Resource Development Inc. ("RDI") (processing), and McClelland Labs, Sparks, NV. (metallurgical testing). All are independent preeminent engineering and metallurgical testing firms with recent mine development and operating experience in Peru. Within the next 45 days the Company will be posting on SEDAR an updated 43-101 compliant Technical Report for the Santa Ana Project to support the disclosure in this news release.

The Feasibility Study is based upon mining assumptions derived from mine planning sequences completed by IMC and metallurgical test work performed by McClelland Labs. The mining sequence derives ore from the pit for 9.5 years and during the operation of the mine a 3 million tonne stock pile of ore is built up which is used as leach feed after mining has stopped. The mine will utilize conventional open pit methods with a waste to ore stripping ratio of 2:1. The crushing operation will run for 10.3 years with feed coming directly from the mine followed by crushing of the stock pile. Leaching of the ore and drain-down of the leach pad will continue for approximately one year after the addition of new ore has been stopped. The ultimate leach pad recoveries are expected to be at least 70% with 50% of the silver being recovered in the first month of leaching. The mine will produce a high purity silver doré bar that will be shipped off site for refining.

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	37,077,000
Average Silver Grade (g/t)	53.0 g/t
Recovered ounces of silver	44.2 million
Overall stripping ratio	1.96 to 1
Life of mine (mining only) years	9.5
Life of mine (processing) years	11.2

The silver price selected for the FS is $14.50 per ounce.

Case	IRR	NPV @ 5%	NPV @ 0%
Base Case	25%	$85.3M	$143.6M
Recovery +10%	34%	$127.4M	$203.5M
Recovery -10%	16%	$43.1M	$83.5M
Metal Price +10%	34%	$129.4M	$206.5M
Metal Price -10%	16%	$41.0M	$80.5M
Initial Capital Cost +10%	23%	$79.0M	$136.7M
Initial Capital Cost -10%	28%	$91.6M	$150.5M
Operating Cost +10%	20%	$59.1M	$106.6M
Operating Cost -10%	31%	$111.5M	$180.5M
Metal Prices  Oct. 6, 2010	70%	$341.1M	$508.0M

Note: Base case price is $14.50/oz Silver; London Silver spot price fix from October 6, 2010 = $22.92/oz Ag .All values are pre-tax

Feasibility Study Santa Ana Project Puno, Peru NI 43 101 Technical Report

• Feasibility Study Santa Ana Project 18.2MB

Maps & Photos

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