Table of Contents

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

For the month of, January 2011

Commission File Number 000-13727

 

Pan American Silver Corp

(Translation of registrant’s name into English)

 

1500-625 Howe Street, Vancouver BC Canada V6C 2T6

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40F:

 

Form 20-F o

Form 40-F x

 

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes o

No x

 

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):  82-       

 

 

 



Table of Contents

 

DOCUMENTS INCLUDED AS PART OF THIS REPORT

 

Document

 

 

 

 

 

1

 

Technical Report for Navidad Property

 

2



Table of Contents

 

Document 1

 

M3-PN100019

 

January 14, 2011

 

 

 

 

 

 

PAN AMERICAN SILVER CORP.NAVIDAD PROJECT

 

 

Chubut Province, Argentina:
Preliminay Assessment

 

Prepared For:

 

 

 

 

M3 Engineering & Technology Corporation · 2051 West Sunset Road, Tucson, AZ 85704 · 520.293.1488

 



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

TABLE OF CONTENTS

 

SECTION

 

PAGE

 

 

 

 

PRELIMINARY ASSESSMENT

 

 

 

 

1

TITLE PAGE

1

 

 

 

2

TABLE OF CONTENTS

1

 

 

 

3

SUMMARY

1

 

 

 

 

3.1

ABSTRACT OF THE BASE CASE

1

 

3.2

BASE CASE DEFINITION

2

 

3.3

CAPITAL COST ESTIMATE

3

 

3.4

MINING RESERVES

3

 

3.5

MINERAL RESOURCES

3

 

3.6

METALLURGICAL RECOVERIES FOR ORES

4

 

3.7

ORE GRADES

5

 

3.8

CAPITAL COST SUMMARY

6

 

3.9

OPERATING COST SUMMARY

8

 

3.10

SCHEDULE

8

 

3.11

FINANCIAL MODEL

10

 

3.12

SENSITIVITIES

10

 

3.13

PROJECT OPERATIONS AND PRODUCTION

10

 

3.14

PROJECT DESCRIPTION AND LOCATION

12

 

3.15

PROJECT DEVELOPMENT PLAN

14

 

3.16

RESOURCE TABULATION

15

 

3.17

RESERVE TABULATION

18

 

3.18

FACILITIES

18

 

3.19

INFRASTRUCTURE

18

 

3.20

METALLURGICAL TEST PROGRAM

19

 

3.21

REFINERIES

19

 

3.22

CONCLUSIONS AND RECOMMENDATIONS

19

 

 

 

 

4

INTRODUCTION

21

 

 

 

 

4.1

PURPOSE AND BACKGROUND

21

 

4.2

SOURCES OF INFORMATION

21

 

4.3

LIST OF QUALIFIED PERSONS

22

 

4.4

PERSONAL INSPECTIONS

22

 

4.5

UNITS

23

 

 

 

5

RELIANCE ON OTHER EXPERTS

28

 

 

 

6

PROPERTY DESCRIPTION & LOCATION

28

 

 

 

 

6.1

LOCATION

28

 

6.2

PROPERTY DESCRIPTION

31

 

 

M3-PN100019
14 January 2011

 

i



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

 

6.3

MINERAL TENURE

31

 

6.4

OPTION AGREEMENTS

33

 

6.5

AGREEMENTS AND ROYALTIES

33

 

 

 

7

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

35

 

 

 

 

7.1

ACCESSIBILITY

35

 

7.2

CLIMATE

35

 

7.3

INFRASTRUCTURE AND LOCAL RESOURCES

35

 

7.4

LAND ACCESS

36

 

7.5

PHYSIOGRAPHY

36

 

 

 

8

HISTORY

36

 

 

 

9

GEOLOGICAL SETTING

38

 

 

 

 

9.1

REGIONAL GEOLOGY

38

 

9.2

LOCAL GEOLOGY

38

 

9.3

PROPERTY GEOLOGY

39

 

 

 

10

DEPOSIT TYPES

39

 

 

 

11

MINERALISATION

40

 

 

 

 

11.1

CALCITE NW

41

 

11.2

CALCITE HILL

41

 

11.3

NAVIDAD HILL

41

 

11.4

CONNECTOR ZONE

42

 

11.5

GALENA HILL

42

 

11.6

BARITE HILL

42

 

11.7

LOMA DE LA PLATA

42

 

11.8

VALLE ESPERANZA

43

 

 

 

 

12

EXPLORATION

43

 

 

 

 

12.1

EXPLORATION BY NORMANDY MINING

43

 

12.2

EXPLORATION BY IMA

43

 

 

 

 

 

 

12.2.1

Geological Mapping and topographical Surveys

43

 

 

12.2.2

Geophysical Exploration

43

 

 

12.2.3

Geochemical Exploration

44

 

 

12.2.4

Diamond Drilling

44

 

 

12.2.5

Other Work

44

 

 

12.2.6

Mineral Resource Estimates

45

 

 

 

 

12.3

EXPLORATION BY AQUILINE FROM OCTOBER 2006 TO JUNE 2009

45

 

 

 

 

 

12.3.1

Geophysical Exploration

45

 

 

12.3.2

Geochemical Exploration

47

 

 

12.3.3

Geological Mapping

47

 

 

12.3.4

Mineral Resource Estimates

47

 

 

M3-PN100019
14 January 2011

 

ii



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

 

12.4

EXPLORATION BY PAS IN 2010

48

 

 

 

13

DRILLING

51

 

 

 

 

13.1

DIAMOND DRILLING METHODS

51

 

13.2

DRILLHOLE COLLAR SURVEYS

51

 

13.3

DOWNHOLE SURVEYS

51

 

13.4

DRILL INTERCEPTS

52

 

 

 

 

 

 

13.4.1

Southern Argenta Trend (Yanquetru)

52

 

 

13.4.2

Marcasite Hill

52

 

 

13.4.3

Bajo del Plomo and Filo del Plomo

52

 

 

13.4.4

Bajo del Plomo Inferior

53

 

 

13.4.5

Sector Z and Valle La Plata

53

 

 

 

14

SAMPLING METHOD AND APPROACH

53

 

 

 

 

14.1

CORE LOGGING

54

 

14.2

SAMPLING

54

 

14.3

DENSITY DETERMINATIONS

55

 

14.4

QP STATEMENT ON SAMPLING METHODS

56

 

 

 

15

SAMPLE PREPARATION, ANALYSIS AND SECURITY

56

 

 

 

 

15.1

SAMPLE PREPARATION, ANALYSES, AND SECURITY

56

 

 

 

 

 

 

 

15.1.1

Laboratory

56

 

 

15.1.2

Sample Preparation

56

 

 

15.1.3

QP Statement of Navidad Quality Control Samples

57

 

 

 

16

DATA VERIFICATION

57

 

 

 

 

16.1

FIELD AND LABORATORY QUALITY CONTROL DATA REVIEWS

57

 

16.2

QP SITE VISITS

58

 

 

 

 

 

 

 

16.2.1

QP Review and Sampling of Mineralized Intersections

59

 

 

16.2.2

QP Review of Drillhole Collar Locations

59

 

 

16.2.3

QP Review of Original Assay Certificates

59

 

 

 

17

ADJACENT PROPERTIES

60

 

 

 

18

MINERAL PROCESSING AND METALLURGICAL TESTING

60

 

 

 

 

18.1

INTRODUCTION

60

 

18.2

MINERALOGY

69

 

18.3

FLOTATION AND RECOVERY TESTWORK

70

 

18.4

GRINDING TESTWORK

70

 

18.5

VARIABILITY TESTWORK AND RESULTS

71

 

 

 

 

 

18.5.1

Loma de La Plata Variability Testwork and Results

72

 

 

18.5.2

Barite Hill and Galena Hill Variability Testwork and Results

73

 

 

18.5.3

Galena Hill High Pyrite Zone Variability Testwork and Results

74

 

 

18.5.4

Galena Hill Variability Testwork and Results

74

 

 

18.5.5

Calcite Hill Testwork and Results

75

 

 

M3-PN100019
14 January 2011

 

iii



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

 

 

18.5.6

Navidad Hill Variability Testwork and Results

75

 

 

18.5.7

Connector Zone Variability Testwork and Results

76

 

 

18.5.8

Summary of Testwork Results and Conclusions

76

 

 

 

 

18.6

METALLURGICAL MODEL DEVELOPMENT

77

 

 

 

 

 

18.6.1

Metallurgical Performance Models

78

 

 

18.6.2

Discussion of Results

87

 

 

18.6.3

Metallurgical Recovery Matrix

89

 

 

 

 

18.7

PROCESS REAGENTS

91

 

 

 

19

MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

92

 

 

 

 

19.1

DISCLOSURE

92

 

 

 

 

 

19.1.1

Known Issues that Materially Affect the Mineral Resources

92

 

 

 

 

19.2

ASSUMPTIONS, METHODS AND PARAMETERS — 2009 MINERAL RESOURCE ESTIMATES

93

 

 

 

 

19.3

DATA PREPARATION AND DATA VALIDATION

93

 

 

 

 

 

19.3.1

Data Preparation

93

 

 

19.3.2

Data Validation

95

 

 

 

 

 

 

19.4

GEOLOGICAL INTERPRETATION, MODELLING, AND DOMAINING

95

 

 

 

 

 

19.4.1

Geological Interpretation and Modelling

95

 

 

19.4.2

Definition of Grade Estimation Domains

96

 

 

 

 

19.5

SAMPLE STATISTICS

96

 

 

 

 

 

19.5.1

Sample Compositing

96

 

 

19.5.2

Extreme Value Treatment

96

 

 

19.5.3

Input Sample Statistics

96

 

 

 

 

19.6

VARIOGRAPHY

97

 

 

 

 

 

 

 

19.6.1

Continuity Analysis

97

 

 

19.6.2

Variogram Modelling

97

 

 

 

 

 

 

19.7

ESTIMATION PARAMETERS

97

 

 

 

 

 

 

 

19.7.1

Kriging Parameters

97

 

 

19.7.2

Block Size Selection

97

 

 

19.7.3

Sample Search Parameters

98

 

 

19.7.4

Block Model Set Up

98

 

 

19.7.5

Grade Interpolation and Boundary Conditions

99

 

 

 

 

19.8

SPECIFIC GRAVITY

100

 

19.9

ESTIMATION VALIDATION

102

 

 

 

 

 

 

19.9.1

Domain Statistics and Visual Validation

102

 

 

19.9.2

Slice Validation Plots

103

 

 

 

 

 

 

19.10

MINERAL RESOURCE CLASSIFICATION

103

 

 

M3-PN100019
14 January 2011

 

iv



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

 

 

19.10.1

Geological Continuity and Understanding

103

 

 

19.10.2

Data Density and Orientation

103

 

 

19.10.3

Data Accuracy and Precision

103

 

 

19.10.4

Spatial Grade Continuity

104

 

 

19.10.5

Estimation Quality

104

 

 

19.10.6

Classification Process

104

 

 

 

 

 

 

19.11

MINERAL RESOURCE REPORTING

105

 

 

 

20

OTHER RELEVANT DATA AND INFORMATION

108

 

 

 

 

20.1

GEOTECHNICAL — SITE CONDITIONS AND FOUNDATION DESIGN

108

 

20.2

TAILINGS STORAGE FACILITY (TSF)

108

 

 

 

 

 

 

 

20.2.1

Siting Study

108

 

 

20.2.2

Tailings Storage Facility Pre-Feasibility Study

108

 

 

 

 

 

 

20.3

NON-ECONOMICAL MATERIAL STORAGE

109

 

20.4

CUT SLOPES

109

 

20.5

MINE PLAN

109

 

 

 

 

 

 

 

20.5.1

Open Cut Design

111

 

 

20.5.2

Open Cut and Phase Design

114

 

 

20.5.3

Mine Production Schedule

121

 

 

20.5.4

Non-Economical Material Storage Facilities

132

 

 

20.5.5

Mine Equipment

134

 

 

20.5.6

Mine Personnel

137

 

 

 

 

20.6

15,000 MTPD CONCENTRATOR

137

 

20.7

OFF SITE INFRASTRUCTURE

144

 

 

 

 

 

20.7.1

Roads

144

 

 

20.7.2

Ports

144

 

 

20.7.3

Power

145

 

 

20.7.4

Transportation

145

 

 

 

 

20.8

ON-SITE INFRASTRUCTURE

145

 

 

 

 

 

20.8.1

Power

145

 

 

20.8.2

Roads

145

 

 

20.8.3

Domestic Sewage

146

 

 

20.8.4

Communications

146

 

 

20.8.5

Construction Camp

146

 

 

20.8.6

Owner’s Camp

146

 

 

20.8.7

Mine Site Airstrip

146

 

 

20.8.8

Medical Clinic

146

 

 

20.8.9

Fire Protection

146

 

 

 

 

20.9

PERMITS

146

 

20.10

ENVIRONMENTAL CONSIDERATIONS

147

 

20.11

RECLAMATION AND CLOSURE

150

 

20.12

MARKETS AND CONTRACTS

150

 

 

M3-PN100019
14 January 2011

 

v



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

 

 

20.12.1

Markets

150

 

 

20.12.2

Contracts

151

 

 

 

 

20.13

ECONOMICS

151

 

 

 

 

 

20.13.1

Introduction

151

 

 

20.13.2

Mine Production Statistics

152

 

 

20.13.3

Plant Production Statistics

152

 

 

20.13.4

Smelter Return Factors

154

 

 

20.13.5

Revenue

158

 

 

20.13.6

Staffing

158

 

 

20.13.7

Cash Operating Cost

158

 

 

20.13.8

Total Cash Cost

160

 

 

20.13.9

Taxation

161

 

 

20.13.10

Project Financing

161

 

 

20.13.11

Net Income After Tax

161

 

 

20.13.12

NPV and IRR

162

 

 

 

 

20.14

RISKS AND OPPORTUNITIES

163

 

 

 

 

 

20.14.1

Risks

163

 

 

20.14.2

Opportunities

163

 

 

 

21

INTERPRETATION AND CONCLUSIONS

164

 

 

 

22

RECOMMENDATIONS

165

 

 

 

23

REFERENCES

167

 

 

 

24

DATE AND SIGNATURES PAGE

169

 

 

 

25

ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES

177

 

 

 

26

ILLUSTRATIONS

178

 

 

M3-PN100019
14 January 2011

 

vi



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

LIST OF TABLES

 

TABLE NO.

 

DESCRIPTION

 

 

 

Table 3-1: Navidad April 2009 Mineral Resources Reported Above a 50 g/t Ag Equivalent (AgEQ) Cut-off Grade

 

4

 

 

 

Table 3-2: Average Navidad Recoveries and Grades for Copper-Silver Ore

 

5

 

 

 

Table 3-3: Average Navidad Recoveries and Grade for Lead-Silver Ore

 

5

 

 

 

Table 3-4: Cash Operating Cost Over the Life of Navidad Operations

 

8

 

 

 

Table 3-5: Financial Model Economic Summary

 

10

 

 

 

Table 3-6: Mine Production Plan (Years -1 to 5)

 

11

 

 

 

Table 3-7: Mine Production Plan (Years 6 to 11)

 

11

 

 

 

Table 3-8: Mine Production Plan (Years 12 to 17)

 

12

 

 

 

Table 3-9: Navidad 2009 Mineral Resources Reported Above a Cut-Off Grade of 50 g/t AgEQ

 

15

 

 

 

Table 3-10: Recommended Feasibility Study Budget

 

20

 

 

 

Table 4-1: List of Qualified Persons

 

22

 

 

 

Table 4-2: Project Term Abbreviations and Descriptions

 

24

 

 

 

Table 12-1: Diamond Drillholes Completed by IMA from 2003 to 2006

 

44

 

 

 

Table 12-2: Diamond Drillholes Completed by Pan American Silver in 2010

 

49

 

 

 

Table 12-3: Summary of Drilling Performed on the Navidad Project

 

49

 

 

 

Table 13-1: Downhole Survey Methods at the Navidad Project

 

52

 

 

 

Table 18-1: Average Navidad Recoveries and Grades for Copper-Silver

 

70

 

 

 

Table 18-2: Average Navidad Recoveries and Grades for Lead-Silver

 

70

 

 

 

Table 18-3: SGS Grinding Testwork Results

 

71

 

 

 

Table 18-4: Summary of 2010 Test Data

 

72

 

 

 

Table 18-5: Key Metallurgical Results and Design Criteria Inputs

 

77

 

 

 

Table 18-6: Recovery and Mass Pull Functions – Navidad PA Base Case

 

90

 

 

M3-PN100019
14 January 2011

 

vii



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

Table 18-7: Reagent Consumptions

 

91

 

 

 

Table 18-8: Grinding Media and Wear Parts

 

91

 

 

 

Table 19-1: Number of Drillholes Used in the Navidad April 2009 Mineral Resource Estimates

 

95

 

 

 

Table 19-2: Navidad Block Model Parameters

 

99

 

 

 

Table 19-3: Navidad Block Model Densities

 

101

 

 

 

Table 19-4: Navidad April 2009 Mineral Resources Reported Above a Cut-Off Grade of 50 g/t AgEQ

 

106

 

 

 

Table 20-1: Resource Tonnage and Grade Included in the PA Mine Plan

 

110

 

 

 

Table 20-2: Mine Cost Inputs for Cut Definition (excluding hauling)

 

112

 

 

 

Table 20-3: Haul Portion of the Mine Cost Inputs for Cut Definition

 

112

 

 

 

Table 20-4: Cut Definition Leach Grossman Shell Used for Cut Design Guidance

 

114

 

 

 

Table 20-5: Ore Tonnage and Relative Percent by Ore Type in Phase Designs

 

116

 

 

 

Table 20-6: Summary of Phase Tonnage

 

117

 

 

 

Table 20-7: PA Mine Production Schedule

 

123

 

 

 

Table 20-8: PA Production Schedule – Ore and Non-Economic Material Tonnage by Mining Phase

 

125

 

 

 

Table 20-9: Non-Economic Material Tonnage by Year and by Storage Facility Locations

 

133

 

 

 

Table 20-10: Mine Equipment Fleet Requirements and Equipment Fleet on the Property

 

136

 

 

 

Table 20-11: Life of Mine Ore, Non-Economic Material Quantities, and Ore Grade

 

152

 

 

 

Table 20-12: Metal Recovery Factors

 

152

 

 

 

Table 20-13: Navidad Project Annual Metal Production

 

153

 

 

 

Table 20-14: Smelter Return Factors

 

154

 

 

 

Table 20-15: Total Project Capital Cost Summary

 

156

 

 

 

Table 20-16: Operating Cost Over Life of Navidad Operations

 

159

 

 

 

Table 20-17: Operating Cost –Summary

 

160

 

 

M3-PN100019
14 January 2011

 

viii



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

Table 20-18: Sensitivity Analysis ($000)

 

162

 

 

 

Table 20-19: Sensitivity Analysis for Capital Cost, Operating Cost and Silver Recovery

 

162

 

 

 

Table 22-1: Recommended Feasibility Study Budget

 

165

 

 

M3-PN100019
14 January 2011

 

ix



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

1                                                                 TITLE PAGE

 

This report is classified as a Preliminary Assessment (PA) and is formatted and prepared in accordance with the Canadian National Instrument 43-101 (NI 43-101) Standards of Disclosure for Mineral Projects.  The first two items of this 26-item outline are the Title Page and Table of Contents. For ease of cross-referencing during review, the first two subsections of this report (1 and 2) are incorporated into the format for this report.

 

2                                                                 TABLE OF CONTENTS

 

See discussion in subsection 1.

 

3                                                                 SUMMARY

 

Pan American Silver Corp. (PAS) acquired the Navidad Project with the purchase of Aquiline Resources Inc. (Aquiline) in December 2009.  PAS is headquartered in Vancouver, Canada.  Its wholly-owned Argentine subsidiary, Minera Argenta, S.A. (MASA), is headquartered in Buenos Aires, Argentina and controls 100% interest in the Navidad Project.  The Navidad properties are located in north central Chubut Province in Argentina. Several deposits of silver, lead, zinc and copper minerals have been identified along three northwest striking parallel mineral trends, known as the Navidad, Esperanza, and Argenta trends, all within a 5 km by 4 km rectangle. Mineral Resource estimates have been completed for eight of these deposits, including Calcite NW, Calcite Hill, Navidad Hill, Connector Zone, Galena Hill, Barite Hill, Loma de La Plata, and Valle Esperanza.

 

A Preliminary Economic Assessment (PEA) for the Loma de La Plata deposit was completed in 2008 based on resource estimates as at December 2007 (Snowden, 2007). The results of the 2008 PEA have been superseded by additional resource drilling, updated resource estimates as at April 2009 (Snowden, 2009), and the findings presented in this Technical Report. This Technical Report discloses the results of a Preliminary Assessment (PA) based on Mineral Resources at seven adjacent deposits as well as Loma de La Plata and is expanded to encompass the potential development items, as PAS intends to proceed with the preparation of an Environmental Impact Study (EIA) and Feasibility Study.

 

M3 Engineering & Technology Corporation (M3) led the PA with assistance from PAS, Independent Mining Consultants (IMC), Golder Associates (Golder), and others.

 

3.1                                                       ABSTRACT OF THE BASE CASE

 

The daily ore production rate is 15,000 tonnes per day (tpd) and the ore is scheduled to be produced from the eight deposits. The ore will be mined and transported in 150 tonne (t) trucks to the crusher.

 

The process plant consists of a 54-inch gyratory crusher, a stockpile and a 15,000 tpd semi-autogenous (SAG) mill/ball mill/flotation/filtration facility. The process plant is capable of treating two basic ore types from the Navidad deposits: copper-silver ore and lead-silver ore, using the same circuit on a campaign treatment basis. Two different concentrates will be

 

 

M3-PN100019
14 January 2011

 

1



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

produced in campaigns of the two basic ore types: copper-silver and lead-silver.  The copper-silver concentrates will be bagged and placed in containers and likely trucked 320 km east to Puerto Madryn in the Province of Chubut, on the Atlantic.  The lead-silver bulk concentrate will be trucked in enclosed bulk transport or container trailers to ports in Argentina or Chile. The concentrates will be exported for treatment and recovery of contained metal, as adequate smelter and refinery facilities do not exist in Argentina.

 

Electric power will be provided from existing twin 330 kV power lines presently located 80 km to the south of the Project. SPT SRL Electrical Power Consultants (SPT), an Argentine power line consultant, has produced a preliminary report for the supply of power that has been incorporated into the PA.

 

Mine dewatering is expected to be the principal source of water makeup for processing. The Project is designed to minimize fresh water make-up by optimizing water recycle and using water conservation technology. A local well field will supply additional water if required.

 

3.2                                                       BASE CASE DEFINITION

 

A conventional open cut mining operation, followed by SAG mill grinding and froth flotation are defined in this study.  Multiple open cuts have been designed by PAS and the mining consultant IMC of Tucson, Arizona.  The average ore production rate is 15,000 tpd and the average life-of-mine strip ratio is 4.8 to 1. Golder (Golder, 2010a and Golder, 2010b) evaluated alternative tailings dam types and locations and the owner determined that a conventional slurry discharge facility using a rockfill dam and engineered systems to protect surface and groundwater resources surrounding the facilities is the preferred approach considering both environmental and economic aspects.

 

The Montgomery Watson Harza (MWH) Buenos Aires office has been retained by PAS to complete baseline studies and prepare an environmental impact assessment.  The same team was responsible for similar work for PAS’s Manantial Espejo mine in Santa Cruz Province to the south of Navidad.

 

Southmark Logistics, S.A. delivered a scoping level concentrate shipping study (Southmark, 2010). Other port and logistics specialists are further developing the details.

 

A marketing study is in progress and initial estimates for concentrate Treatment Charge/Refining Charge (TC/RC) have been assembled from data collected from interested third party smelters. This preliminary information is incorporated into this PA.

 

There is currently a law in Chubut Province prohibiting open cut mining and the use of cyanide in mining that, as currently enacted, would severely restrict and likely prohibit the future construction and development of the Navidad Project defined in this PA which employs the use of surface mining methods.  PAS has advised that it intends to demonstrate to the Provincial Government, local population and other stakeholders that it can develop the Navidad Project in a socially and environmentally sensitive manner and believes this will stimulate reform to the open-cut mining prohibition allowing the development of the Navidad Project.

 

 

M3-PN100019
14 January 2011

 

2



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

3.3                                                       CAPITAL COST ESTIMATE

 

Eight (8) open cut mines and a 15,000 tpd plant with a single grinding line were chosen for this study.

 

A preliminary estimate to an accuracy of -10% to +30% has been calculated.  Approximately 50 drawings were completed in support of this PA study.

 

Budgetary bids were obtained for most major equipment. Other equipment and material costs were taken from the experience of M3, IMC, Golder, or PAS.  Piping, electrical and instrumentation are largely factored estimates. Labour rates were obtained from PAS and Argentine contractors.

 

The initial capital is estimated at US$759.7 million. The sustaining capital is estimated at US$161 million over the life of the operation.

 

3.4                                                       MINING RESERVES

 

This is a PA, thus no reserves have been declared.  As this work is ongoing, the reserves will be declared for the Feasibility Study.

 

3.5                                                       MINERAL RESOURCES

 

Mineral Resources as at April 2009, (Snowden, 2009) and summarized in Table 3-1 were utilized for this PA.  PAS updated the April 2009 resource models with estimates of Cu and utilized resources classified as Measured, Indicated, and Inferred Mineral Resources to develop a mine plan. This PA is preliminary in nature because of the inclusion of Inferred Mineral Resources that are considered too geologically speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. No mineral reserves have been estimated and there is no certainty that the PA will be realized.  The resource estimate does not include the 2010 drill hole results as the models are not complete.

 

 

M3-PN100019
14 January 2011

 

3



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

Table 3-1: Navidad April 2009 Mineral Resources Reported Above a 50 g/t Ag Equivalent (AgEQ) Cut-off Grade

 

Classification

 

Tonnes
(Mt)

 

AgEq
(g/t)

 

Ag
(g/t)

 

Pb
(%)

 

Cu%

 

Contained
Ag (Moz)

 

Contained
Pb (Mlb)

 

Contained
Cu (Mlb)

 

Measured

 

15.4

 

177

 

137

 

1.44

 

0.10

 

67

 

489

 

35

 

Indicated

 

139.8

 

147

 

126

 

0.79

 

0.04

 

565

 

2,425

 

127

 

Measured and Indicated

 

155.2

 

150

 

127

 

0.85

 

0.05

 

632

 

2,914

 

162

 

Inferred

 

45.9

 

97

 

81

 

0.57

 

0.02

 

119

 

580

 

22

 

 

Notes:

The most likely cut-off grade for Navidad is not known at this time and must be confirmed by the appropriate economic studies.

Silver equivalent grade values are calculated without consideration of variable metal recoveries for silver and lead. A silver price of US$12.52/oz and lead price of US$0.50/lb was used to derive an equivalence formula of AgEQ g/t = Ag g/t + (Pb% × 10,000/365). Silver prices were based on a three-year rolling average and lead prices were based on an approximate ten-year rolling average.

The estimated metal content does not include any consideration of mining, mineral processing, or metallurgical recoveries.

Tonnes, ounces, and pounds have been rounded and this may have resulted in minor discrepancies in the total.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. No Mineral Reserves have been estimated.

The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

Estimates of Cu were updated by Pan American Silver Corp. for the purposes of this PA.

 

IMC has developed a 17 year mine production schedule which will produce:

 

·                  52,874,000 tonnes of copper-silver Ore

·                  36,571,000 tonnes of lead-silver Ore

·                  418,083,000 tonnes of Non-Mineralised or Non-Economic Material

 

3.6                                                       METALLURGICAL RECOVERIES FOR ORES

 

The expected metallurgical performance for the Navidad ores was determined by laboratory bench-scale flotation test methods and a pilot plant test on one ore type.  There are two distinct ore types found in the Navidad Mineral Resources that have been defined as copper-silver ores and lead-silver ores.  The metal recoveries and the concentrate tonnage (portion of the ore feed that is estimated to be in the concentrate) for both the silver-copper ore and the lead-silver ore vary by the degree of oxidation, lithology, grade and cut. Recovery algorithms have been constructed for each cut and each ore type using a statistical analysis of the laboratory and pilot test results.  The algorithms are recorded to each Mineral Resource block to project recoveries by ore type, oxidation state (depth), lithology, grade and cut. The following tables (Table 3-2 and Table 3-3) show average life metal recoveries from the block model life of mine ore tonnes using

 

 

M3-PN100019
14 January 2011

 

4



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

the developed recovery matrix separated by the two distinct ore types, as well as average mine head grades and concentrate grades.

 

Table 3-2: Average Navidad Recoveries and Grades for Copper-Silver Ore

 

Cu-Ag Ore

 

Ag

 

Cu

 

Pb

 

Mine Head Grades

 

163.5 g/t

 

0.066

%

0.131

%

Flotation Recovery

 

77.76 g/t

 

51.93

%

56.55

%

Concentrate Grade

 

36,696 g/t

 

10.09

%

21.85

%

 

Table 3-3: Average Navidad Recoveries and Grade for Lead-Silver Ore

 

Pb — Ag Ore

 

Ag

 

Cu

 

Pb

 

Mine Head Grade

 

150.454 g/t

 

0.036

%

2.255

%

Flotation Recovery

 

33.58 g/t

 

32.60

%

76.57

%

Concentrate Grade

 

1,736 g/t

 

0.400

%

59.43

%

 

3.7                                                       ORE GRADES

 

IMC constructed optimized cut shells and an annual mine plan using the April 2009 Mineral Resource block models for each of the eight deposits of Navidad updated with the addition of Cu grades estimated by PAS. The anticipated annual mined and milled tonnages and feed grades are shown in Table 3-6, Table 3-7, and Table 3-8 in Section 3.13.  The mine schedule and plant production plan are shown in Section 3.13.

 

 

M3-PN100019
14 January 2011

 

5



Table of Contents

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

3.8                  CAPITAL COST SUMMARY

 

 

 

Pan American Silver Corporation/Minera Argenta SA

 

 

15,000 MTPD-Preliminary Economic Assessment Capital Cost Estimate

 

 

TOTAL PROJECT COST SUMMARY SHEET

 

 

Navidad Project       M3 PN 100019        October 27, 2010        Rev P-3

 

Plant

 

 

 

 

 

Plant

 

 

 

 

 

 

 

Construction

 

 

 

Area

 

Description

 

Man-hours

 

Equipment

 

Material

 

Labor

 

Subcontract

 

Equipment

 

Total

 

 

 

***DIRECT COST***

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

000

 

Site General

 

66,532

 

$

6,495,830

 

$

2,083,717

 

$

2,560,155

 

$

2,792,400

 

$

5,831,104

 

$

19,763,206

 

100

 

Mine (Equip.& Preproduction In Indirects)

 

15,461

 

$

0

 

$

165,274

 

$

604,169

 

$

1,625,712

 

$

17,965

 

$

2,413,121

 

160

 

Mine Waste Stockpiles

 

1,981

 

$

0

 

$

0

 

$

75,010

 

$

0

 

$

375,000

 

$

450,010

 

200

 

Open Pit Primary Crusher & Storage

 

607,768

 

$

11,191,482

 

$

15,368,578

 

$

23,332,202

 

$

448,128

 

$

1,596,674

 

$

51,937,064

 

250

 

SAG Feed Conveyors)

 

26,391

 

$

1,223,476

 

$

470,627

 

$

1,149,151

 

$

105,730

 

$

18,338

 

$

2,967,323

 

300

 

Grinding, Classification

 

571,339

 

$

28,256,791

 

$

19,467,055

 

$

22,211,645

 

$

2,115,603

 

$

1,454,398

 

$

73,505,491

 

400

 

Flotation & Regrind

 

250,413

 

$

13,606,848

 

$

12,793,944

 

$

9,655,399

 

$

0

 

$

1,104,464

 

$

37,160,654

 

500

 

Concentrate Thickening & Filtering

 

245,421

 

$

5,457,083

 

$

9,606,122

 

$

9,253,597

 

$

0

 

$

770,619

 

$

25,087,421

 

600

 

Tailings System

 

193,191

 

$

5,568,854

 

$

7,805,960

 

$

7,515,449

 

$

275,178

 

$

2,595,609

 

$

23,761,051

 

650

 

Fresh Water

 

62,981

 

$

2,314,245

 

$

2,384,130

 

$

2,502,331

 

$

500,000

 

$

160,408

 

$

7,861,114

 

700

 

Main Substation

 

28,252

 

$

5,033,400

 

$

1,538,087

 

$

1,130,189

 

$

100,000

 

$

151,096

 

$

7,952,772

 

750

 

Utility Substation & Power Lines

 

27,023

 

$

6,649,000

 

$

1,595,760

 

$

1,097,085

 

$

10,000,000

 

$

166,225

 

$

19,508,070

 

800

 

Reagents

 

17,689

 

$

1,350,958

 

$

353,396

 

$

716,325

 

$

0

 

$

111,346

 

$

2,532,024

 

900

 

Ancillary Facilities

 

42,458

 

$

0

 

$

4,469,397

 

$

1,650,062

 

$

16,725,595

 

$

679,010

 

$

23,524,065

 

910

 

Lab

 

2,082

 

$

0

 

$

2,274,826

 

$

82,293

 

$

1,338,235

 

$

38,718

 

$

3,734,071

 

940

 

Owner’s Camp Facilities

 

86,949

 

$

0

 

$

7,286,601

 

$

3,227,686

 

$

80,000

 

$

1,282,325

 

$

11,876,612

 

950

 

Construction Camp Facilities

 

14,481

 

$

0

 

$

8,604,480

 

$

578,800

 

$

1,979,258

 

$

0

 

$

11,162,538

 

960

 

Puerta Madryn

 

4,000

 

$

550,000

 

$

150,000

 

$

151,432

 

$

125,000

 

$

100,000

 

$

1,076,432

 

970

 

Bulk Port Facilities

 

200,000

 

$

10,214,000

 

$

0

 

$

7,571,600

 

$

0

 

$

199,400

 

$

17,985,000

 

 

Freight (8% domestic/materials 15% Import/equipment)

 

 

 

$

14,686,795

 

$

7,713,436

 

 

 

 

 

 

 

$

22,400,231

 

 

 

Import Duties & Custom Fees 1.5%

 

 

 

$

1,468,680

 

$

1,446,269

 

 

 

 

 

 

 

$

2,914,949

 

 

 

Subtotal DIRECT COST

 

2,464,412

 

$

114,067,442

 

$

105,577,658

 

$

95,064,580

 

$

38,210,840

 

$

16,652,700

 

$

369,573,220

 

 

 

M3-PN100019
14 January 2011

 

6



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 


NOTES:

 

 

(1)

 

Specific Indirect Field Costs have been added to the direct labor rates listed for each area. Indirects added contractor operating overheads and profit at 15%. Mobilization 0.5% of Total Direct Cost without Mine.

(2)

 

Camp & Busing Costs included in Owner’s Cost.

(3)

 

Contractors’ fee included in labor rates and Subcontract unit cost.

(4)

 

Engineering, Procurement & Construction Management included at 15% of Total Constructed Cost. Does not include Owner’s management team.

(5)

 

Mine & Mining Equipment costs provided by owner.

(6)

 

Operating spare parts included at 4.5% of Plant Equipment. Commissioning spares are included at 0.5% of plant equipment. Vender Commissioning at 1.5%. Initial fills and construction power in owner’s cost.

(7)

 

Contingency is included at 25% of Total Contracted cost & Commission/spare parts. Contingency is included at 15% of mine equipment, mine cost, tailings dam and owner’s costs.

(8)

 

Added Owners Cost - number provided by Owner.

(9)

 

IVA is not included in estimate.

(10)

 

All costs are in end of 3rd quarter 2010 US dollars with no escalation

(11)

 

Total Evaluated Project Cost is projected to be in the range of -10% to +30%.

 

 

Note: Construction Man-hours do not include subcontract hours.

 

 

Conversion Rates used for the estimate are as follows:

 

 

1 US$ Dollar =                          4              ARS

 

TOTAL DIRECT FIELD COST

 

$

369,573,220

 

 

 

 

 

TOTAL INDIRECT FIELD COST (1)

 

$

1,847,866

 

CAMP & BUSING COSTS (2)

 

$

0

 

 

 

 

 

FEE - CONTRACTOR (3)

 

$

0

 

 

 

 

 

TOTAL CONSTRUCTED COST

 

$

371,421,086

 

 

 

 

 

EPCM (4)

 

$

55,713,163

 

 

 

 

 

TOTAL CONTRACTED COST

 

$

427,134,249

 

 

 

 

 

MINE EQUIPMENT COST (5)

 

$

41,353,312

 

MINE COST (5)

 

$

21,205,000

 

TAILINGS DAM

 

$

46,300,000

 

COMMISSIONING AND SPARE PARTS (6)

 

$

7,414,384

 

Subtotal

 

$

543,406,945

 

 

 

 

 

ADDED OWNER’S COST (8)

 

$

79,383,333

 

CONTINGENCY (7)

 

$

136,873,405

 

TOTAL CONTRACTED & OWNER’S COST

 

$

759,663,682

 

IVA (9)

 

$

0

 

ESCALATION (10)

 

$

0

 

TOTAL EVALUATED PROJECT COST (11)

 

$

759,663,682

 

 

 

M3-PN100019
14 January 2011

 

7



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

3.9                                                       OPERATING COST SUMMARY

 

The average Cash Operating Cost over the life of the mine is estimated to be $27.40 per tonne of ore processed, excluding the cost of the capitalized pre-stripping.  Cash Operating Cost includes mine operations, process plant operations, general administrative cost, smelting and refining charges and shipping charges.  Table 3-4 below shows the estimated operating cost by category per tonne of ore processed.

 

Table 3-4: Cash Operating Cost Over the Life of Navidad Operations

 

Operating Cost

 

$/ore tonne

 

Mine(1)

 

$

8.08

 

Process Plant

 

$

9.86

 

General Administration

 

$

2.00

 

Smelting/Refining Treatment

 

$

7.46

 

Total Operating Cost

 

$

27.40

 

 


(1) Based on a mining cost of $1.52 per tonne of material mined.

 

3.10                                                SCHEDULE

 

The overall development schedule for the Navidad Project as of this report is shown in Figure 3-1. The schedule assumes Project approvals to proceed in the second quarter of year 2, and approval of the Project EIA in the fourth quarter of year 2.  At present, a 30-month construction schedule is assumed, followed by a three-month commissioning and start-up period.

 

 

M3-PN100019
14 January 2011

 

8



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

 

Figure 3-1: Overall Development Schedule Summary

 

 

M3-PN100019
14 January 2011

 

9



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

3.11                                                FINANCIAL MODEL

 

A summary of the financial model is shown in Table 3-5.

 

Table 3-5: Financial Model Economic Summary

 

 

 

Base Case

 

Upside Case

 

Silver Price ($/oz)

 

$

18.00

 

$

25.00

 

Lead Price ($/tonne)

 

$

1,950

 

$

2,150

 

Copper Price ($/tonne)

 

$

6,500

 

$

8,150

 

 

 

 

 

 

 

After-tax NPV 0% (million)

 

$

1,089

 

$

2,019

 

After-tax NPV 5% (million)

 

$

524

 

$

1,157

 

After-tax IRR (%)

 

14.2

%

23.6

%

 

 

 

 

 

 

Payback (years)

 

5.5

 

3.7

 

Years 1-5 average Ag production (Moz)

 

19.8

 

19.8

 

Years 1-5 average cash cost ($/oz)

 

$

6.03

 

$

7.00

 

Years 1-5 average annual cash flow ($ million)

 

$

142

 

$

202

 

 

Approximately US$705 million of Argentine corporate taxes are projected to be paid over the life of the Project in the base case.

 

3.12                                                SENSITIVITIES

 

The Project is most sensitive to the silver price as shown in Table 3-5.  To a lesser extent the Project is sensitive to the estimation of silver grade and silver recovery as well as operating costs and capital costs.

 

3.13                                                PROJECT OPERATIONS AND PRODUCTION

 

IMC developed the PA mine production plan based on the April 2009 resource estimates (Snowden, 2009) updated by PAS to include estimates of Cu. The mine plan is summarized in Table 3-6 through Table 3-8, inclusive.

 

Mill feed in these tables was taken from the financial model and not the IMC mine production schedule.  The tonnage and silver grades match the mine schedule. Lead and copper grades are lower in the financial model than the mine schedule.  Thus, the values below are more conservative than the values in the mine schedule.

 

 

M3-PN100019
14 January 2011

 

10



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

Table 3-6: Mine Production Plan (Years -1 to 5)

 

 

 

Year -1

 

Year 1

 

Year 2

 

Year 3

 

Year 4

 

Year 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mining

 

 

 

 

 

 

 

 

 

 

 

 

 

Ore, kt

 

651

 

3,893

 

5,474

 

5,474

 

5,475

 

5,475

 

Low Grade to Stockpile, kt

 

0

 

0

 

0

 

0

 

2,248

 

1,301

 

Non-Economic Material, kt

 

6,349

 

11,107

 

14,526

 

24,526

 

32,277

 

33,224

 

Total Mining, kt

 

7,000

 

15,000

 

20,000

 

30,000

 

40,000

 

40,000

 

From Low Grade Stockpile, kt

 

0

 

0

 

0

 

0

 

0

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mill Feed

 

 

 

 

 

 

 

 

 

 

 

 

 

kt

 

 

 

4,544

 

5,475

 

5,474

 

5,474

 

5,474

 

Ag, ppm

 

 

 

226

 

208

 

167

 

189

 

204

 

Pb,%

 

 

 

0.441

 

1.016

 

0.737

 

1.431

 

1.308

 

Cu,%

 

 

 

0.026

 

0.019

 

0.038

 

0.053

 

0.105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of Mill Feed

 

 

 

 

 

 

 

 

 

 

 

 

 

Copper - Silver Ore

 

 

 

79

%

55

%

66

%

48

%

50

%

Lead - Silver Ore

 

 

 

21

%

45

%

34

%

52

%

50

%

 

Table 3-7: Mine Production Plan (Years 6 to 11)

 

 

 

Year 6

 

Year 7

 

Year 8

 

Year 9

 

Year 10

 

Year 11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mining

 

 

 

 

 

 

 

 

 

 

 

 

 

Ore, kt

 

5,475

 

5,475

 

5,475

 

5,475

 

5,476

 

5,475

 

Low Grade to Stockpile, kt

 

1,261

 

2,500

 

2,117

 

2,437

 

405

 

295

 

Non-Economic Material, kt

 

33,264

 

32,025

 

32,408

 

32,088

 

34,119

 

34,230

 

Total Mining, kt

 

40,000

 

40,000

 

40,000

 

40,000

 

40,000

 

40,000

 

From Low Grade Stockpile, kt

 

0

 

0

 

0

 

0

 

0

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mill Feed

 

 

 

 

 

 

 

 

 

 

 

 

 

kt

 

5,474

 

5,474

 

5,475

 

5,475

 

5,475

 

5,475

 

Ag, ppm

 

174

 

152

 

156

 

170

 

141

 

125

 

Pb,%

 

1.248

 

0.802

 

0.790

 

0.550

 

1.468

 

1.830

 

Cu,%

 

0.034

 

0.032

 

0.034

 

0.054

 

0.016

 

0.012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of Mill Feed

 

 

 

 

 

 

 

 

 

 

 

 

 

Copper - Silver Ore

 

54

%

65

%

71

%

80

%

45

%

31

%

Lead - Silver Ore

 

46

%

35

%

29

%

20

%

55

%

69

%

 

 

M3-PN100019
14 January 2011

 

11



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

Table 3-8: Mine Production Plan (Years 12 to 17)

 

 

 

Year 12

 

Year 13

 

Year 14

 

Year 15

 

Year 16

 

Year 17

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mining

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ore, kt

 

5,474

 

2,136

 

4,879

 

5,099

 

0

 

0

 

76,881

 

Low Grade to Stockpile, kt

 

0

 

0

 

0

 

0

 

0

 

0

 

12,564

 

Non-Economic Material, kt

 

34,526

 

37,864

 

22,393

 

3,157

 

0

 

0

 

418,083

 

Total Mining, kt

 

40,000

 

40,000

 

27,272

 

8,256

 

0

 

0

 

507,528

 

From Low Grade Stockpile, kt

 

0

 

3,338

 

595

 

375

 

5,476

 

2,780

 

12,564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mill Feed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

kt

 

5,474

 

5,474

 

5,473

 

5,475

 

5,477

 

2,780

 

89,442

 

Ag, ppm

 

106

 

123

 

186

 

186

 

75

 

73

 

158

 

Pb,%

 

2.151

 

0.463

 

0.116

 

0.072

 

0.481

 

0.467

 

0.922

 

Cu,%

 

0.005

 

0.036

 

0.046

 

0.068

 

0.045

 

0.046

 

0.039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of Mill Feed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Copper - Silver Ore

 

9

%

66

%

86

%

90

%

57

%

57

%

59

%

Lead - Silver Ore

 

91

%

34

%

14

%

10

%

43

%

43

%

41

%

 

Over the 17-year life of the Navidad operations, the following quantities of metals (in concentrates) are projected to be produced:

 

Silver

 

275.5 million ounces

 

 

Lead

 

631.5 thousand tonnes

 

 

Copper

 

  18.2 thousand tonnes

 

 

 

A more detailed annual summary of this metal production is included in Section 20.5 of this report.

 

3.14                                                PROJECT DESCRIPTION AND LOCATION

 

The Project is located in the central plateau of northern Chubut province, 1,250 km southwest of Buenos Aires, Argentina.  The mine site is approximately 360 km west of Puerto Madryn and is served by graded Provincial Highway #4.  The site elevation is approximately 1,200 metres (m).

 

The area is semi-arid, windy and relatively cold. Sparse sheep ranching occurs in the area.  A regional location map for the Project is shown in Figure 3-2 and a local map is shown in Figure 3-3.

 

 

M3-PN100019
14 January 2011

 

12



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

 

Figure 3-2: Map of Argentina

 

 

M3-PN100019
14 January 2011

 

13



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

 

Figure 3-3: Project Location Map

 

3.15                                                PROJECT DEVELOPMENT PLAN

 

An environmental impact assessment is scheduled to be submitted as soon as provincial laws are changed or modified to permit development of open cut mining in the Navidad Meseta area of Chubut.  Once all permits are received, the Project will proceed immediately into construction.  Commercial production could start in 2014.

 

An Engineering, Procurement and Construction Management (EPCM) company will be contracted to manage the Project.  Argentine contractors will be used for the construction of the facilities.  Based on PAS’s recent construction experience at Manantial Espejo, a knowledge base of the existing Argentine contractors and suppliers is readily available, and will be advantageous in advancing the Project in an expedient manner.

 

 

M3-PN100019
14 January 2011

 

14



Table of Contents

 

 

NAVIDAD PROJECT

PRELIMINARY ASSESSMENT

 

3.16                                                RESOURCE TABULATION

 

Table 3-9 shows the April 2009 Navidad Mineral Resource estimates (Snowden, 2009) on a deposit basis above a 50 g/t AgEQ cut-off grade.

 

Table 3-9: Navidad 2009 Mineral Resources Reported Above a Cut-Off Grade of 50 g/t AgEQ

 

Deposit

 

Classification

 

Tonnes
(Mt)

 

AgEQ g/t

 

Ag g/t

 

Pb%

 

Cu%

 

Contained
Ag (Moz)

 

Contained
Pb (Mlb)

 

Contained
Cu (Mlb)

 

Calcite Hill NW

 

Measured

 

 

 

 

 

 

 

 

 

 

 

Indicated

 

14.8

 

94

 

78

 

0.59

 

0.03

 

37

 

194

 

9

 

 

 

Meas. + Ind.

 

14.8

 

94

 

78

 

0.59

 

0.03

 

37

 

194

 

9

 

 

 

Inferred

 

14.6

 

74

 

52

 

0.82

 

0.02

 

24

 

265

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calcite Hill

 

Measured

 

 

 

 

 

 

 

 

 

 

 

Indicated

 

17.5

 

115

 

100

 

0.55

 

0.06

 

56

 

212

 

24

 

 

 

Meas. + Ind.

 

17.5

 

115

 

100

 

0.55

 

0.06

 

56

 

212

 

24

 

 

 

Inferred

 

4.9

 

106

 

96

 

0.36

 

0.03

 

15

 

39

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Navidad Hill

 

Measured

 

8.4

 

122

 

109

 

0.46

 

0.16

 

29

 

85

 

29

 

 

 

Indicated

 

5.6

 

96

 

90

 

0.24

 

0.11

 

16

 

29

 

14

 

 

 

Meas. + Ind.

 

14

 

112

 

101

 

0.37

 

0.14

 

45

 

114

 

42

 

 

 

Inferred

 

1.8

 

81

 

70

 

0.41

 

0.08

 

4

 

16

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Connector Zone

 

Measured

 

 

 

 

 

 

 

 

 

 

 

Indicated

 

8.2

 

102

 

91

 

0.41

 

0.04

 

24

 

74

 

7

 

 

 

Meas. + Ind.

 

8.2

 

102

 

91

 

0.41

 

0.04

 

24

 

74

 

7

 

 

 

Inferred

 

9.9

 

88

 

74

 

0.49

 

0.03

 

24