Executive Summary LPF Process

DON MARIO MINE - UMZ PROJECT
LPF PROCESS
Santa Cruz - Bolivia
EXECUTIVE SUMMARY
OCTOBER 2009
UMZ PROJECT . LPF PROCESS | Empresa Minera Paititi S.A. Santa Cruz Bolivia 1
EXECUTIVE SUMMARY
1. Background..1
2. Mineral resources ..4
3. Mining5
4. Metallurgy. LPF Process7
5. Processing9
6. Capital cost estimate.11
7. Operating cost13
8. Engineering, Procurement, Construction Management and
Project Schedule14
9. Financial evaluation..15
EXECUTIVE SUMARY
1. Background
The Don Mario mine started operations in July 2003 extracting 740t/d from the
Low Mineralized Zone (LMZ) underground mine. The ore reserves were depleted
on August 2009. Total accumulated production was 421,711 ounces of gold.
Since August 2009 the mill ore supply is being provided by Las Tojas, a small
mineral deposit close to the Don Mario mill facilities that is being mined as an
open pit. The operation is expected to be depleted in July 2010.
The Upper Mineralized Zone (UMZ) of the Don Mario Mine has a diluted mineral
resource of 6.3 million tons with an average content of 1.38% Cu, 1.32 g/t Au y
42.52 g/t Ag. Three types of mineralization were identified: oxides, transition and
sulfides.
A prefeasibility study was prepared by the Chilean consulting company NCL

during year 2006. This study considered acid leaching for the recovery of copper
in the oxides and flotation for the recovery of copper and gold in the transition and
sulfides zones.
Kappes Cassiday and Associates (KCA) of Reno, Nevada were engaged to

prepare a feasibility study in 2007. A preliminary report indicated that the project
was not feasible due to the high capital cost ($us134 million).
A second approach was undertaken to assess if the only flotation process was
feasible. On December 2008, KCA designed a 1,900 tpd flotation concentrator for
the treatment of the sulfide ore to produce a copper sulfide concentrate. The
project had an internal rate of return of 24.8% with a capital expenditure of $us
26.4 million.
Regrettably, the recovery of copper and gold of the oxide ore was not considered
and another option was pursued. Mountain States R&D International, Inc.
(MSRDI) continued to investigate processing options for the treatment of oxide
and transition ores of the Don Mario Project.
On June 2009, Roshan Bhappu of MSRDI suggested the
process Leaching-Precipitation-Flotation to treat the oxides and transition ore
types. This versatile process was used in the past for small deposits, under
similar circumstances faced by the Don Mario Project. MSRDI has considered the
LPF process for the treatment of sulfide, transition, and oxide ore, without regard
to ore type ratio.The 1,900 tpd crushing, grinding and flotation concentrator along
with the equipment available in the existing cyanidation plant are used for the
treatment of all ore types. Thus, the project life is extended to about 9 years from
four years of the earlier option.
Currently, test work is being carried out by Mountains States. In parallel, technical
personnel of Empresa Minera Paititi has undertaken a series of tests of the LPF
process with satisfactory results.
The estimated capital cost to build the LPF process, flotation and convert the
cyanide leaching tanks into acid leaching and ancillary facilities amount $us19.2
million.
During the life of the project 9 years, copper concentrates will be produced
containing:
Copper 75,000 tons

Gold 185,000 Oz Troy
Silver 6,600,000 Oz Troy
KCA estimated a total production of 29,000 Tons of copper.
2. Mineral Resources
The following table shows the mineable resource with a dilution of 2%. The strip
ratio in the pit will be 1:0.4
3. Mining
The mine plan was designed to extract all the ore zones at a rate sufficient to ensure
a adequate blend of ore to feed the mill at the rate of 1,900 tpd.
Table. 3.1. Mine Plan
Drilling and blasting will be undertaking with the existing mining
equipment and is planned to start on March 2010. One additional drill rig will be
acquired to complete the mining fleet.
PIT DESIGN
3D View
Phase 2
Phase 3 Phase 1
Phase 4
Phase 5
4. Metallurgy. LPF Process
The LPF process was used for commercial copper recovery from copper oxide
ores as early as 1929. It is particularly suited for mixed sulfide-oxide ores.In
general, after crushing and grinding the ore is subjected to an acidic leach to
dissolve the copper oxides. Sulfuric acid is used for acidification. This treatment
does not affect the copper sulfide minerals. After dissolution, sponge iron is added
to the leached slurry to precipitate the copper as fine flakes of metallic copper.
The iron is oxidized and passes into solution. The slurry is then neutralized by the
addition of milk of lime, prior to being sent to froth flotation.
In the neutralization step some of the iron may be precipitated and, thus, reports
Final pit view
to the tailings. It is doubtful that there will be a build-up of dissolved iron in the
circulating process water, because there is a natural bleed with the water
impounded with the tailings.
Metallurgical test work was undertaken with oxide and
transition composite samples. Results are included in the following table.
Table 4.1. Oxide and transition ore concentrate grades and recoveries
Results of sulfide tests of Flotation from KCA, are included in the following table
Table 4.2. Sulfide ore concentrate grades and recoveries
Table 4.3. Recoveries considered for production calculation
Table 4.4. Recoveries applied to the live of the project
5. Processing
From the attached flowsheet it is seen that the entire leaching and precipitation
process is inserted between current crushing and grinding facilities and the
flotation concentrator.
After comminution the ground slurry is pumped to the first leaching tank. The
leaching, is carried out in three of the existing 212 cubic meter capacity leach
tanks currently used for the cyanide leaching of gold ore. It is necessary to
provide rubber linings in these tanks, as well as new rubber lined agitators and
piping to prevent corrosion from the acidic slurry being leached. Leach testing
may prove that only two of the existing tanks may be needed for leaching, which
results in a capital cost reduction.
Sulfuric acid for leaching, will be produced on site from sulfur burning. There are
local suppliers for sulfur in western Bolivia.
Precipitation of copper with sponge iron flakes will progress in the fourth existing
gold leach tank. As with the leach tanks, rubber linings must
be installed at all wetted equipment. The facilities for sponge iron handling are all
new and include the unloading of super sacks, belt conveyor transport, storage in
bin and conveying to the precipitation tank. There is also provision for the
handling of recycled un-reacted sponge iron recovered by a drum wet magnetic
separator downstream of the precipitation tank. The magnetic separator facilities
are also new facilities.
From the precipitation tank the leached and precipitated slurry flows to the fifth
existing gold leach tank for pH adjustment. As with the other existing tanks,
rubber linings are installed in the tank and rubber lined agitator and piping is
provided. A new facility for the preparation of milk of lime will be installed, thus
funds have been included for slaking the lime and pumping the lime slurry up to
the leach tank top for addition to the leached slurry.
The pH adjustment tank the leached and precipitated slurry is pumped to the
flotation concentrator. In this process both sulfide and metallic (cement) copper
are separated from the slurry by flotation.
6. Capital Cost Estimate
A summary and details of development of the capital cost estimate are shown in
the Capital cost summary LPF process Table 6.1. It includes the purchasing and
installation of a sulfur burner and sulfuric acid plant for the required leaching.
The estimates costs $US 10 million for flotation and $us 9.2 million for leaching
and precipitation, the total capital cost is $US 19.2 million.
Table. 6.1 Capital cost Summary LPF process
As described in the table, most of the capital expenditure is for the construction of
the flotation mill and the installation of the sulfur burner and acid plant facility.
Rubber lining of the leaching equipment is other area that will
require heavy expenditure.
7. Operating Costs.
The average operating cost per tonne of ore processed is summarized in table
7.1.
Table. 7.1 Average operating costs
The operating costs were estimated taking into consideration the average
costs in the Don Mario operation during year 2,009. Costs for the LPF
process were estimated based upon:
Metallurgical test work and processing engineering.

Budgetary quotations from potential suppliers of project operating
and maintenance supplies and materials.
Orvana experience at Don Mario and other
Bolivian mining operations.
8. Engineering, Procurement, Construction Management and Project

Schedule.
The detailed design of the mill concentrator was engaged with the Bolivian
engineering company EPCM and the construction is being undertaken by EMIPA
personnel. The mechanical and electrical installation will be a shared
responsibility of EMIPA and EPCM.
Rubber lining of the leaching equipment will be hired from Vulco, a Chilean rubber
manufacturer.
The acid plant will be purchased from a Chinese manufacturer. The agreement
with the equipment supplier includes a turn-key contract.
Start up and commissioning will be carried out by EMIPA personnel with the
participation of the acid plant manufacturer.
Construction milestones are as follows:
Flotation field construction activities - May 2009

Flotation mill equipment delivery December 2009
Flotation mill installation May 2010
Acid plant purchase order October 2009
Acid plant delivery March 2010
Acid plant installation July 2010
Rubber lining purchase order November 2009
Rubber lining completed May 2010
Start up and commissioning August 2010
9. Financial evaluation
For the purposes of the after tax cash flow analysis, a financial model has been
used assuming that all pre-production cost occurs in year 2010. Mining, milling of
oxides, transition and sulfide ores commence in March 2010. All mining and
milling of oxides, transition and sulfide ores are completed in
Year 2019. Reclamation and closure are completed in Year 2020.
This Project requires an initial investment of US$ 19.3 Million, as described in

table 6.1. It includes a contingency of US$2.23 million, 11.6% of the total cost.
The existing plant, property and equipment book value (US$ 13.7 million), and
mining property (US$ 1.29 million) have been included for the cash flow analyses.
The inventory of supplies at the end of fiscal year 2,009 (US$ 5.18 million) is
considered as working capital in the project.
A total of US$ 9.3 million of sustaining capital is included in the cash flow model.
The salvage value at the end of the project is US$ 1.2 million.
The project generates an after tax cash flow of US$ 108.6 million, and shows a
43.5% aftertax return on investment.
9.1 Project Parameters
Ore tonnages and grades are taken from de mine model as presented
in table 3.1 on page 5.
Metallurgical recoveries and concentrate grade are as presented in
section 4.
Capital and operating Costs are presented in their respective section of
this report.
Metal prices used in this summary report are as follows.
Realization costs for the concentrates produced and
shipped are based on sale of the concentrate through Glencore under
the below conditions.
Cu Concentrate Treatment Charge : US$ 50 /t concentrate

Au/Ag Dore Refining Charge : 0.5%
Au in Cu Concentrate : 5% Treatment Charge
Ag in Cu Concentrate : 14.5% Treatment Charge
Concentrate Shipment : US$ 134/t(Don Mario-Antof.)
Concentrate Shipment : US$ 75/t(Antofagasta-Callao)
Concentrate Shipment : US$ 140/t(Callao-China)
Copper Refining Charges : US$ 110/t
Penalties (Pb, Zn, Cd, Bi) : US$ 100/t
Payable Cu : 96.5%
Ag, Au Dore is readily marketable and the sale of this product will not
be an issue. A cost of US$ 0.15 per ounce of gold and silver has been
included to cover all sales costs.
The project assumes that the concentrate produced will contain 38%
copper in average.
9.1.1 Depreciation
All capital items included in this report were grouped in to the following
categories for depreciation at different rates.
Mine & Mobile Equipment

Process Facility Equipment
Tailings
Buildings
The total annual depreciation of each of these items was substracted

from de profit before the application of any profit tax.
9.1.2 Royalties
Royalty payments of 3% of net gold sales payable.
9.1.3 Taxes
Taxes, including IUE (25%), AAIUE (12.5%), and RM (7% in Au, 6% in

Ag & 5% in Cu) have been included in this analysis for the annual cash
flow. Bolivian transaction taxes and fees have also been included.
Transaction taxes and Bolivian fees are applied to the installation costs
at rates of 3% and 25% respectively.
The VAT tax has not been included in this analysis. VAT is charged
against all goods and services used for the project. The VAT will be
refunded because the project produces a product that is exported.
There is, for all intents and purposes, no value added tax for the
project.
9.2 Sensitivity Analysis
To estimate the relative strength of the project, sensitive analysis has been
completed analyzing the effect on the principal economic indicators, like
variations in revenue (changes in metal prices, metal recoveries and / or ore
grades), the capital cost and operating costs. The sensitivity analyses were
conducted from 85% to 115% of the base case parameters. The analysis
indicates the project is more sensitive to revenues than to capital or operating
cost.

Executive Summary LPF Process

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Executive Summary LPF Process

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DON MARIO MINE - UMZ PROJECT

Santa Cruz - Bolivia

A prefeasibility study was prepared by the Chilean consulting company NCL

Kappes Cassiday and Associates (KCA) of Reno, Nevada were engaged to

Copper 75,000 tons

KCA estimated a total production of 29,000 Tons of copper.

Table. 3.1. Mine Plan

4. Metallurgy. LPF Process

Table 4.2. Sulfide ore concentrate grades and recoveries

Table 4.3. Recoveries considered for production calculation

Table. 6.1 Capital cost Summary LPF process

Table. 7.1 Average operating costs

Metallurgical test work and processing engineering.

8. Engineering, Procurement, Construction Management and Project

Construction milestones are as follows:

Flotation field construction activities - May 2009

This Project requires an initial investment of US$ 19.3 Million, as described in

9.1 Project Parameters

Cu Concentrate Treatment Charge : US$ 50 /t concentrate

Mine & Mobile Equipment

The total annual depreciation of each of these items was substracted

Royalty payments of 3% of net gold sales payable.

Taxes, including IUE (25%), AAIUE (12.5%), and RM (7% in Au, 6% in

9.2 Sensitivity Analysis

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