preliminary economic assessment for the ... preliminary economic assessment for the cerro maricunga...

Mar-12

PRELIMINARY ECONOMIC ASSESSMENT

FOR THE CERRO MARICUNGA OXIDE GOLD PROJECT,

III REGION, CHILE

Technical Report NI 43-101

Submitted by

Carlos Guzmán, Mining Engineer, Registered Member of the Chilean Mining Commission, FAusIMM

Eduardo Magri, Ph.D, MSc, FSAIMM

John Wells, Metallurgy Engineer, FSAIMM, Member CIMM

Effective Date:

March 15, 2013

CERTIFICATE OF QUALIFIED PERSON

I, Carlos Guzmán, Mining Engineer do hereby certify that:

1. I am Principal and Project Director with the firm NCL Ingenieria y Construccion Ltda, Santiago, Chile. My

address is General del Canto 235, Providencia, Santiago, Chile.

2. This certificate applies to the technical report titled “Preliminary Economic Assessment for the Cerro

Maricunga Oxide Gold Project, III Region, Chile” dated effective March 14, 2013 (the “Technical Report”)

with respect to the Cerro Maricunga Gold Project in III Region, Chile (the “Property”).

3. I am a practicing mining engineer, a Fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM,

No. 229036); and a Registered Member of the Chilean Mining Commission.

4. I am a graduate of the Universidad de Chile and hold a Mining Engineer title (1995).

5. I have practiced my profession continuously since 1995.

6. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify

that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past

relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

7. I most recently personally inspected the Property in February 2012, for one day.

8. I am responsible for the preparation of mining study, economic analysis and overall compilation of the

Technical Report.

9. I am independent of Atacama Pacific Gold Corporation as described in section 1.5 of NI 43-101.

10. I do not have had prior involvement with the Property.

11. I have read NI 43-101 and the sections of the Technical Report for which I am responsible have been

prepared in compliance with that instrument.

12. As at the effective date of this report, I certify to the best of my knowledge, information and belief, this

technical report contains all of the scientific and technical information that is required to be disclosed to

make the technical report not misleading. I certify that I have actively participated in the following activities:

mining study and economical analysis. Not being a professional geologist, I have relied entirely on other

experts in all matters related to the geological conditions of Cerro Maricunga and the determination of the

resouce estimate. Further I have relied on input from metallurigical and processing consultants for

information related to metallurgy, gold recoveries and associated processing related matters as well as

environmental consultants for information on the environmental conditions of the Cerro Maricunga area.

13. I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and

any publication by them, including electronic publication in the public company files on their websites

accessible to the public of the Technical Report.

Dated this 15th day of March, 2013.

_____________________________

Carlos Guzmán

CERTIFICATE OF QUALIFIED PERSON

I, Eduardo Magri, do hereby certify that:

1. I am a consulting mining engineer to the mining and mineral exploration industry with an office at Don Carlos

2939, Office 613, Las Condes, Santiago, Chile; Tel: (56‐2) 3344226; Email: [email protected].

a. I obtained the following university a degrees:

b. Mining Engineer from the University of Chile, Santiago in 1970.

c. MSc in Mining Engineering from Colorado School of Mines in 1972.

d. Bachelor Honours in Operations Research form the University of South Africa in 1976.

e. PhD in Mining Engineering from the University of the Witwatersrand in 1983.

f. Citation in Applied Geostatistics from the University of Alberta, Canada in 2003.

2. I am a registered and active Fellow of the South African Institute of Mining and Metallurgy since 2004.

3. I have been continuously practicing my profession as a Mining Engineer and consultant since 1972.

4. I have read the definition of “qualified person” set out in National Instrument 43‐101 (“NI 43‐101”) and certify

that by reason of my education, affiliation with a professional association (as defined in NI43‐101) and past

relevant work experience, I fulfill the requirement of “qualified person” for purposes of NI 43‐101.

5. As at the effective date of this report and certificate to the best of my knowledge, information and belief, the

technical report contains all of the scientific and technical information that is required to be disclosed to

make the technical report not misleading. I certify that I have actively participated in the following activities:

the design and implementation of the sample preparation protocol and QA/QC system; analyses of QA/QC

and twin‐hole data; geostatistical analyses and geological resource estimation and categorization. Not being

a professional geologist, I have relied entirely on other experts in all matters other than the ones mentioned

above.

6. I am independent of the issuer as set out in Section 1.5 of the Canadian National Instrument 43‐101

“Standards of Disclosure for Mineral Projects”.

7. I, or any affiliated entity of mine, has not earned the majority of our income during the preceding three years

from Atacama Pacific Gold Corporation, or any associated or affiliated companies.

8. I have no interest in the subject property, either directly or indirectly. I, or any affiliated entity of mine, do not

own, directly or indirectly, nor expect to receive, any interest in the properties or securities of Atacama or any

associated or affiliated companies.

9. I have read National Instrument 43‐101 Form 43‐101F1 and certify that this Technical Report has been

prepared in compliance with the foregoing Instrument and Format.

10. I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and

any publication by them, including electronic publication in the public company files on their websites

accessible to the public of the Technical Report.

Dated this 15th day of March, 2013.

_________________________________

Eduardo Magri, PhD Mining Engineering

TABLE OF CONTENTS

1. SUMMARY

2. INTRODUCTION

3. RELIANCE ON OTHER EXPERTS

4. PROPERTY DESCRIPTION AND LOCATION

5. ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

6. HISTORY

7. GEOLOGICAL SETTING AND MINERALIZATION

8. DEPOSIT TYPES

9. EXPLORATION

10. DRILLING

11. SAMPLE PREPARATION, ANALYSIS AND SECURITY

12. DATA VERIFICATION

13. MINERAL PROCESSING AND METALLURGICAL TESTING

14. MINERAL RESOURCE ESTIMATES

15. MINERAL RESERVE ESTIMATES

16. MINING METHODS

17. RECOVERY METHODS

18. PROJECT INFRASTRUCTURE

19. MARKET STUDIES AND CONTRACTS

20. ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT

21. CAPITAL AND OPERATING COSTS

22. ECONOMIC ANALYSIS

23. ADJACENT PROPERTIES

24. OTHER RELEVANT DATA AND INFORMATION

25. INTERPRETATION AND CONCLUSIONS

26. RECOMMENDATIONS

27. REFERENCES

TABLE OF CONTENTS

1. SUMMARY ............................................................................................................................................ 17

1.1 Introduction ......................................................................................................................................... 17

1.2 Property and Location ........................................................................................................................ 17

1.3 Geology and Mineralization ............................................................................................................... 19

1.4 Exploration .......................................................................................................................................... 21

1.5 Mineral Resource Estimation ............................................................................................................. 21

1.6 Preliminary Mining Studies ................................................................................................................ 22

1.7 Metallurgical Testing Summary ......................................................................................................... 22

1.8 Mineral Processing and Recovery Methods ..................................................................................... 23

1.9 Mine Geotechnical .............................................................................................................................. 24

1.10 Plant Site Geotechnical ...................................................................................................................... 24

1.11 Site Infrastructure ............................................................................................................................... 25

1.11.1 Power Supply ........................................................................................................................................ 25

1.11.2 Site Access Roads ................................................................................................................................ 25

1.11.3 Water Supply and Sewerage Treatment ............................................................................................... 25

1.11.4 Mine Infrastructure ................................................................................................................................ 25

1.11.5 Cerro Maricunga Administration ............................................................................................................ 25

1.12 Project Implementation ...................................................................................................................... 25

1.13 Capital and Operating Cost Estimates .............................................................................................. 26

1.14 Economic Analysis ............................................................................................................................. 28

1.15 Conclusions ......................................................................................................................................... 29

1.15.1 Mineral Resource .................................................................................................................................. 29

1.15.2 Mining Studies ....................................................................................................................................... 29

1.15.3 Metallurgical Processing ....................................................................................................................... 30

1.15.4 Preliminary Economic Assessment Results .......................................................................................... 30

1.16 Recommendations .............................................................................................................................. 30

2. INTRODUCTION AND TERMS OF REFERENCE ............................................................................... 32

2.1 Introduction ......................................................................................................................................... 32

2.2 Qualified Persons ................................................................................................................................ 32

2.3 Frequently Used Acronyms, Abbreviations, Definitions, and Units of Measure ........................... 33

3. RELIANCE ON OTHER EXPERTS ...................................................................................................... 34

3.1 Qualified Persons ................................................................................................................................ 34

3.2 Other Independent Expert Persons ................................................................................................... 34

4. PROPERTY DESCRIPTION AND LOCATION .................................................................................... 35

4.1 Location ............................................................................................................................................... 35

4.2 Land Area............................................................................................................................................. 35

5. ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY .............. 39

5.1 Access.................................................................................................................................................. 39

5.2 Climate ................................................................................................................................................. 39

5.3 Local Resources and Infrastructure .................................................................................................. 39

5.4 Physiography ...................................................................................................................................... 40

6. HISTORY .............................................................................................................................................. 41

6.1 Cerro Maricunga History .................................................................................................................... 41

6.2 Recent Exploration at Cerro Maricunga ............................................................................................ 41

7. GEOLOGY ............................................................................................................................................ 42

7.1 Regional Geology ................................................................................................................................ 42

7.2 Local Geology ..................................................................................................................................... 43

7.3 Deposit Geology and Mineralization ................................................................................................. 45

8. DEPOSIT TYPES .................................................................................................................................. 47

9. EXPLORATION .................................................................................................................................... 48

10. DRILLING ............................................................................................................................................. 49

11. SAMPLE PREPARATION, ANALYSES AND SECURITY ................................................................... 51

11.1 Sample Preparation ............................................................................................................................ 51

11.2 Analysis and Security ......................................................................................................................... 54

12. DATA VERIFICATION .......................................................................................................................... 55

12.1 Data Management ............................................................................................................................... 55

12.2 Analysis of Duplicate Samples .......................................................................................................... 55

12.3 Analysis of Standard Samples and Blank acquired at Geostats Pty .............................................. 57

12.4 Analysis of In-House Blank Samples ................................................................................................ 61

12.5 Analysis of Commercial Blank Samples ........................................................................................... 62

13. MINERAL PROCESSING AND METALLURGICAL TESTING ............................................................ 64

13.1 Characterization of samples .............................................................................................................. 64

13.1.1 Physical characterization ...................................................................................................................... 64

13.1.2 Chemical characterization ..................................................................................................................... 64

13.2 CYANIDATION Tests ........................................................................................................................... 65

13.2.1 Bottle Roll Tests (BRT) ......................................................................................................................... 65

13.2.2 Column percolation leach testwork (CLT) ............................................................................................. 73

13.2.3 Effect of grade in gold extraction ........................................................................................................... 74

13.2.4 Conclusions ........................................................................................................................................... 75

14. MINERAL RESOURCE ESTIMATE ..................................................................................................... 76

14.1 Modelling Procedure ........................................................................................................................... 76

14.2 Exploratory Data Analyses ................................................................................................................. 77

14.3 Database Description ......................................................................................................................... 78

14.4 Compositing, Statistics, Outliers, Declustering and Estimation Domains .................................... 79

14.5 Variography ......................................................................................................................................... 82

14.6 Block Model and Resource Estimation ............................................................................................. 82

14.7 Validations ........................................................................................................................................... 85

14.8 Specific Gravity Model ........................................................................................................................ 86

14.9 Resource Categorization .................................................................................................................... 87

14.10 Resource Tabulation ........................................................................................................................... 91

15. MINERAL RESERVES ESTIMATE ...................................................................................................... 94

16. MINING METHODS .............................................................................................................................. 95

16.1 Summary .............................................................................................................................................. 95

16.2 Geotechnical Studies .......................................................................................................................... 95

16.3 Pit Optimization and Mine Design ..................................................................................................... 96

16.3.1 Whittle Pit Optimization Model Construction ......................................................................................... 96

16.3.2 Base Parameters .................................................................................................................................. 97

16.3.3 Whittle Four-X Economic Shells Results ............................................................................................... 98

16.3.4 Pit Design .............................................................................................................................................. 98

16.4 Mine Production Schedule ............................................................................................................... 101

16.5 Waste Storage Area .......................................................................................................................... 103

16.6 Mine Equipment ................................................................................................................................ 104

16.7 Mine Personnel .................................................................................................................................. 105

17. MINERAL PROCESSING AND RECOVERY METHODS .................................................................. 107

17.1 Primary Crushing and Coarse Stockpile ......................................................................................... 107

17.2 Secondary and Tertiary Crushing .................................................................................................... 111

17.3 Heap Leaching ................................................................................................................................... 111

17.4 ADR, EW, and Smelting .................................................................................................................... 112

18. PROJECT INFRASTURUCTURE ....................................................................................................... 113

18.1 Introduction ....................................................................................................................................... 113

18.1.1 Water Supply ....................................................................................................................................... 113

18.1.2 Process Plant Earthworks ................................................................................................................... 113

18.1.3 Roads .................................................................................................................................................. 113

18.1.4 Site Accommodation ........................................................................................................................... 114

18.1.5 Power Supply ...................................................................................................................................... 114

18.1.6 Maintenance Facilities and Fuel Storage ............................................................................................ 115

18.1.7 Potable Water Supply ......................................................................................................................... 115

18.1.8 Waste Treatment ................................................................................................................................. 115

18.1.9 Vehicle Washdown .............................................................................................................................. 115

18.1.10 Heavy Vehicle Workshop .................................................................................................................... 115

18.1.11 Administration Office Complex ............................................................................................................ 115

18.1.12 Laboratory and Reagents Plant .......................................................................................................... 115

18.1.13 Communications ................................................................................................................................. 116

18.2 Mining Facilities ................................................................................................................................ 116

18.2.1 Magazine & Fuel Storage .................................................................................................................... 116

18.2.2 Workshop ............................................................................................................................................ 116

19. MARKETING ...................................................................................................................................... 117

20. ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT ................. 118

20.1 Summary ............................................................................................................................................ 118

20.2 Social.................................................................................................................................................. 118

20.2.1 Social Monitoring Programs ................................................................................................................ 119

20.3 Hydrology .......................................................................................................................................... 119

20.4 Biological Component ...................................................................................................................... 120

20.4.1 Biological Monitoring Programs .......................................................................................................... 121

20.5 Protected Areas ................................................................................................................................. 121

20.6 Environmental Issues ....................................................................................................................... 122

20.7 Closure and Reclamation ................................................................................................................. 123

21. CAPITAL AND OPERATING COSTS ................................................................................................ 124

21.1 Capital ................................................................................................................................................ 124

21.1.1 Process Plant and Infrastructure ......................................................................................................... 124

21.1.2 Mining.................................................................................................................................................. 131

21.1.3 EPCM .................................................................................................................................................. 133

21.1.4 Contingencies ..................................................................................................................................... 133

21.2 Operating ........................................................................................................................................... 133

21.2.1 Process Plant ...................................................................................................................................... 133

21.2.2 Mining.................................................................................................................................................. 135

21.2.3 General and Administrative (G&A) Costs ............................................................................................ 137

22. ECONOMIC ANALYSIS ..................................................................................................................... 138

22.1 Taxes and Royalties .......................................................................................................................... 138

22.2 Economic Analysis ........................................................................................................................... 139

22.3 Sensitivity Analysis .......................................................................................................................... 144

23. ADJACENT PROPERTIES ................................................................................................................ 145

24. OTHER RELEVANT DATA ................................................................................................................ 146

24.1 Plant Geotechnical ............................................................................................................................ 146

24.2 Operations Project Organisation ..................................................................................................... 147

24.3 Project Implementation .................................................................................................................... 148

24.4 Hydrogeology – Water Exploration ................................................................................................. 149

25. INTERPRETATION AND CONCLUSIONS ........................................................................................ 151

25.1 Mineral Resource .............................................................................................................................. 151

25.2 Mining Studies ................................................................................................................................... 151

25.3 Metallurgical Information and Process Design .............................................................................. 151

25.4 Preliminary Economic Assessment Results .................................................................................. 152

26. RECOMMENDATIONS ....................................................................................................................... 153

26.1 Drilling ................................................................................................................................................ 153

26.2 Mining................................................................................................................................................. 153

26.3 Proposed Budget .............................................................................................................................. 153

27. REFERENCES .................................................................................................................................... 154

LIST OF FIGURES

Figure 1 Location and Access Map .................................................................................................................................... 18

Figure 2 Geology of Cerro Maricunga (Dietrich, 2010) ....................................................................................................... 20

Figure 3 Detailed Location Map of the Cerro Maricunga Gold Project (source SBX) ......................................................... 35

Figure 4 Cerro Maricunga Concession Map (source SBX) ................................................................................................. 36

Figure 5 Regional Geology Map (source SBX) ................................................................................................................... 43

Figure 6 Local Geology Map (source SBX) ........................................................................................................................ 45

Figure 7 Litho - Stratigraphic Map (source SBX) ................................................................................................................ 46

Figure 8 Maricunga Project – Drill Hole Plan – Phases I to III (source SBX) ..................................................................... 50

Figure 9 Sample Preparation Protocol – RC and QA/QC ................................................................................................... 52

Figure 10 Sample Preparation Protocol – DDH and QA/QC ........................................................................................... 53

Figure 11 Results for all standards .................................................................................................................................. 58

Figure 12 Control chart for standard G303-8 ................................................................................................................... 59




Figure 16 Gold Grade Values per Lot – In House Blanks ................................................................................................ 61

Figure 17 Time Sequenced Au Values – In House Blanks .............................................................................................. 62

Figure 18 Geostats Blank Certified Material- Au .............................................................................................................. 63

Figure 19 Effect of mineralized material particle size distribution on gold extraction. Bottle roll tests. ............................ 72

Figure 20 Gold extraction versus gold head grade. Column testwork at 19 mm ............................................................. 75

Figure 21 Three-D View of Cerro Maricunga’s Mineralized Zones .................................................................................. 77

Figure 22 Cell Declustering for Lynx, Phoenix, Pollux and Crux zones separately ......................................................... 80

Figure 23 Cell declustering for the northern and all Mineralised zones combined .......................................................... 81

Figure 24 Cell declustering for all samples lying outside the mineralized envelopes ...................................................... 81

Figure 25 Distribution of Specific Gravity Values (North=1, Central=2, South=3) ........................................................... 87

Figure 26 Lynx Resource Categorization Cross Section (2150) ...................................................................................... 90

Figure 27 Phoenix Resource Categorization Cross Section (1550) ................................................................................ 90

Figure 28 Phoenix plus Pollux Resource Categorization Cross Section (1150) .............................................................. 91

Figure 29 Crux Resource Categorization Cross Section (550) ........................................................................................ 91

Figure 30 Final Pit Design ................................................................................................................................................ 99

Figure 31 Mining Phases ............................................................................................................................................... 100

Figure 32 General Mine Layout ..................................................................................................................................... 104

Figure 33 General Processing Schematic Diagram. ...................................................................................................... 108

Figure 34 Schematic Diagram (Crushing Stage) ........................................................................................................... 109

Figure 35 Plan of the Processing Operations ................................................................................................................ 110

Figure 36 Heap Leaching Area ...................................................................................................................................... 112

Figure 37 Cerro Maricunga projected road .................................................................................................................... 114

Figure 38 Gold Spot Price – February 23, 2008 to February 22, 2013 (Source: www.kitco.com) ................................. 117

Figure 39 Watersheds and ravines in the Project Area of Influence (ARCADIS, August 2011) .................................... 120

Figure 40 Project Area in relation to the NevadoTres Cruces Priority Site (green) and the National Park (yellow)

situated within the Priority Site (ARCADIS, May 2011). ......................................................................................................... 122

Figure 41 Properties Adjacent to the Maricunga Project ............................................................................................... 145

Figure 42 Approximate location of trial pits .................................................................................................................... 146

Figure 43 Water Exploration Zone ................................................................................................................................. 149

LIST OF TABLES

Table 1 Summary of Drilling Stages .................................................................................................................................. 21

Table 2 Global Mineral Resource Estimate-Cerro Maricunga - November, 2012 ............................................................. 21

Table 3 Mine Schedule Summary ..................................................................................................................................... 22

Table 4 Mine, Process Plant and Infrastructure CAPEX Summary ................................................................................... 26

Table 5 Process Plant Operating Cost Per Tonnes Summary (US$/t processed) ............................................................ 27

Table 6 Mining Operating Cost per Tonne Summary (US$/t mined) ................................................................................. 27

Table 7 Leasing Option (Mining Equipment & Power Supply) ........................................................................................... 27

Table 8 Economical Evaluation Results Summary ............................................................................................................ 28

Table 9 Technical Report Responsibility Matrix ................................................................................................................ 32

Table 10 Frequently used acronyms and abbreviations ...................................................................................................... 33

Table 11 Maricunga Mining Concessions ............................................................................................................................ 36

Table 12 Cerro Maricunga Exploration Concessions .......................................................................................................... 37

Table 13 Cerro Maricunga Drilling Phases – Meters Drilled & Meters Assayed ................................................................. 49

Table 14 Cerro Maricunga Database Quality Assessment and Quality Control .................................................................. 55

Table 15 Summary of QA-QC results for duplicate samples – Au ...................................................................................... 56

Table 16 Summary of QAQC results for duplicate samples ≥0.1 ppm-Au .......................................................................... 57

Table 17 QA-QC criteria and results for Au duplicates. ....................................................................................................... 57

Table 18 Summary for Standard Samples .......................................................................................................................... 58

Table 19 Blanks used for quality control and assurance ..................................................................................................... 61

Table 20 Hardness and abrasion index results ................................................................................................................... 64

Table 21 Sample head grad ................................................................................................................................................ 65

Table 22 Bottle roll tests results of Composite 1 ................................................................................................................. 66







Table 29 Columns percolation leach testwork ..................................................................................................................... 73

Table 30 Column test results after 57 days, P80 = 19 mm .................................................................................................. 74

Table 31 Cerro Maricunga Drilling Phases – Meters Drilled & Meters Assayed ................................................................. 78

Table 32 Basic Sample Statistics ........................................................................................................................................ 79

Table 33 Cerro Maricunga Correlogram calculation parameters ......................................................................................... 82

Table 34 Cerro Maricunga Correlogram modeling parameters ........................................................................................... 82

Table 35 Au Estimation Plan parameters ............................................................................................................................ 84

Table 36 Estimated Block Model Statistics .......................................................................................................................... 85

Table 37 Statistics – Specific Gravity Determinations ......................................................................................................... 86

Table 38 Specific Gravity Estimation Plan ........................................................................................................................... 87

Table 39 Additional Data used for Resource Categorization ............................................................................................... 88

Table 40 Kriging Errors for 50 x 50 and 50 x 100 grids ....................................................................................................... 89

Table 41 Kriging Estimation Variances for 50 x 50 and 50 x 100 grids ............................................................................... 89

Table 42 CerroMaricunga Project – Geological Resources November, 2012 - Summary .................................................. 92

Table 43 CerroMaricunga Project – Geological Resources November, 2012 – per Sector ................................................ 92

Table 44 Cerro Maricunga Oxide Gold Project Pit Constrained Resource Estimate ........................................................... 93

Table 45 Tonnage/Grade for In-Situ and Diluted Models .................................................................................................... 97

Table 46 Initial Lerch-Grossman Optimization Parameters ................................................................................................. 97

Table 47 Pit Optimization Results ....................................................................................................................................... 98

Table 48 Total Pit Constrained Mineralization ................................................................................................................... 100

Table 49 Pit Constrained Mineralization in Mining Phases at Various Cut-Off Grades ..................................................... 101

Table 50 Mine Production Schedule .................................................................................................................................. 103

Table 51 Mining Equipment Requirement ......................................................................................................................... 105

Table 52 Overall Capital Costs .......................................................................................................................................... 124

Table 53 Areas included in the cost estimation ................................................................................................................. 125

Table 54 General overview of initial infrastructure capital cost ......................................................................................... 126

Table 55 General overview of process plant initial capital costs ....................................................................................... 127

Table 56 Infrastructure initial capital costs summary ......................................................................................................... 128

Table 57 Initial process plant capital costs summary ........................................................................................................ 129

Table 58 Heap leaching on-going capital costs summary ................................................................................................. 130

Table 59 Mining Support Equipment and Initial Works ...................................................................................................... 132

Table 60 Leasing of Mining Equipment ............................................................................................................................. 133

Table 61 Plant operating costs .......................................................................................................................................... 134

Table 62 Mining Operating Cost (US$ ‘000) ...................................................................................................................... 136

Table 63 Mining Operating Costs (US$/t mined) ............................................................................................................... 136

Table 64 G&A operating costs ........................................................................................................................................... 137

Table 65 Economical model general parameters .............................................................................................................. 138

Table 66 Economical Evaluation Results Summary .......................................................................................................... 139

Table 67 Cash Flow Economical Model ............................................................................................................................ 140

Table 68 Sensitivity – Gold Price and Discount Rate ........................................................................................................ 144

Table 69 Sensitivity – Gold Price and Operating Cost ...................................................................................................... 144

Table 70 Sensitivity – Gold Price and Capital Cost ........................................................................................................... 144

Table 71 Main Adjacent Properties to Cerro Maricunga .................................................................................................... 145

Table 72 Process plant personnel ..................................................................................................................................... 148

Table 73 Economical Evaluation Results Summary .......................................................................................................... 152

Atacama Pacific Gold Corporation Cerro Maricunga Oxide Gold Project Preliminary Economic Assessment

1. SUMMARY

1.1 Introduction

This technical report describes the Cerro Maricunga Oxide Gold Project (the “Project” or “Cerro

Maricunga Project”), which is located in the Copiapó Province, III Region, Chile and summarizes the

results of a Preliminary Economic Assessment (“PEA”) undertaken on the Cerro Maricunga deposit.

The Project is held by Atacama Pacific through its local subsidiary Minera Atacama Pacific Gold Chile

Limitada (“Atacama”, “Atacama Pacific”, or “the Company”).

Gold mineralization at Cerro Maricunga is confined to a NW-SE trending corridor consisting of a

porphyry and breccia complex bounded by fault structures. The mineralization has been recognized

along a 2,300m NW-SE trending strike, over widths of up to 700m in a NE-SW direction and to depths

of over 550m (up to 4,400masl) and remains open at depth.

Three mineralized sectors have been distinguished, based on gold distribution on trenches, outcrops

and drill holes; LYNX zone (NW sector), PHOENIX zone (central sector) and CRUX zone (SE sector),

and approximately coincide with the three faulted block defined by Dietrich (2010). A fourth zone, the

POLLUX zone, represents a subzone of the Phoenix zone.

This technical report considers the potential development options for the Project and is based upon

the November, 9, 2012, NI 43-101 compliant mineral resource estimate prepared by Magri which, in

turn, took into account results presented in NI 43-101 reports on the Cerro Maricunga Project dated

October 7, 2011 and August 20, 2010.

1.2 Property and Location

The Maricunga Project is located in the high Andes approximately 117 straight-line km northeast of the

city of Copiapó as depicted in Figure 1.1. Road access to the project area is generally good. Although

there is a producing silver-gold mine (La Coipa) and other former producing mines in relatively close

proximity to Maricunga, there is no significant infrastructure in the immediate area of the Project.

Atacama Pacific is a Canadian exploration company with expertise in the identification, acquisition,

exploration and development of precious metal mining projects. Through its Chilean subsidiary,

Minera Atacama Pacific Gold Chile Limitada (“Atacama Chile”, or “Atacama”), owns and controls the

Maricunga property.


Figure 1 Location and Access Map

On October 24, 2008, Atacama Chile, (the 99.99% owned Chilean subsidiary of Atacama Pacific)

entered into an agreement with the SBX Consultores Limitada (“SBX”) to purchase the Cerro

Maricunga 1-22 Concessions which form the basis for the Cerro Maricunga property. These

concessions were sold to Atacama for a total price of 1,000 Chilean “Unidades de Fomento” (“UF”).

Further purchase agreements were reached on December 3, 2009 and January 13, 2010 for the Mary

1-10 (US$ 250,000) and Elionora 1-18 (US$ 795,381) concessions respectively. T

The Cerro Maricunga property concessions are 100% controlled by Atacama Pacific Gold. The Cerro

Maricunga concessions combined comprise a total of (in part overlapping) of 24,641 hectares of which

15,840 hectares are continuous. There are no third party royalties applicable to the Cerro Maricunga

concessions purchased from SBX.

On August 31st, 2011, Atacama entered into a purchase-option agreement for the Santa Teresa

property (473 has) which is located to the northwest of the Cerro Maricunga deposits and within the

Cerro Maricunga concession block The terms call for a total price to of $3,000,000 to be paid over a 3

year period, and contain a 1.5% NSR royalty clause of which 50% can be purchased for $1,000,000.


1.3 Geology and Mineralization

Geological background presented herein this section is based on studies carried out by the following

geologists: Andreas Dietrich (2010), Andrew Hodgkin (2010-2011), Sergio Díaz (2009-2011), Pablo

Villegas (2010-2011), and Pamela Castillo (2011). Furthermore, petrographical descriptions were

carried out by Paula Cornejo (2010-2012) and gold deportment studies by AMTEL (2010-2011).

Lithology

Surface mapping, trenching and drilling indicate that gold mineralization at Cerro Maricunga is

confined to a NW-SE trending corridor consisting of a porphyry and breccia complex bounded by fault

structures. The mineralization has been recognized along a 2,300m NW-SE-trending strike over

widths of up to 700m in a NE-SW direction and to depths of over 550m in depth (up to 4,400 masl)

and remains open at depth.

Three mineralized sectors have been distinguished, based on gold distribution on trenches, outcrops

and drillholes; LYNX zone (NW sector), PHOENIX zone (central sector) and CRUX zone (SE sector),

and approximately coincide with the three faulted block defined by Dietrich (2010). A fourth zone, the

POLLUX zone, represents a subzone of the Phoenix zone. Mineralization is still open to the N, NW

and S of Lynx zone; W of Phoenix zone and to the SE towards Crux zone connection, and N of Crux

zone.

Gold mineralization at Cerro Maricunga is hosted in a porphyry and breccia complex, usually

associated to black banded veinlets (BBV).


Figure 2 Geology of Cerro Maricunga (Dietrich, 2010)

Mineralization

Gold mineralization at Cerro Maricunga is generally associated to black and grey banded veinlets

(BBV) and to early chlorite-magnetite-quartz veinlets occurring in porphyry units, breccia and

surrounding andesitic dikes and plugs. These characteristics are consistent with other Maricunga Belt

gold porphyry deposits (i.e. El Volcán, Refugio, Marte-Lobo, etc.).

Gold deportment studies carried out in AMTEL have shown that gold mineralization in Cerro

Maricunga occurs as fine (less than 10 microns) native gold of high purity, approximately 97%, with

minor silver up to 6%. Gold is preferentially associated with iron oxides; however, rock mineral

particles are principal carriers of gold. Sulfides, essentially pyrite and minor covellite were rarely

observed (<0.1%).


1.4 Exploration

The work that Atacama has conducted at Cerro Maricunga consisting of trenching, mapping,

geophysics, and 3 stages of drilling, has been designed to explore for gold mineralization and to

initiate and advance the development of mineral resources. A summary of exploration drilling is

presented in Table 1.

Table 1 Summary of Drilling Stages

PHASE YEARS N° RC-Meters N° DDH-Meters N° RC + DDH-Meters

Holes Drilled Recovered Holes Drilled Recovered Holes Drilled Recovered

I 2010 5 1,422.0 1,422.0 3 719.9 719.9 8 2,141.90 2,141.9

II 2010-2011 60 24,570.0 24,564.0 22 6,880.6 6,880.6 82 31,450.6 31,444.6

III 2011-2012 92 31,614.0 31,584.0 38 14,361.7 14,361.7 130 45,975.7 45,945.7

TOTAL

157 57,606.0 57,570.0 63 21,962.1 21,962.1 220 79,568.1 79,532.1

The Company is currently undertaking a Phase IV drilling program, consisting of approximately 20,000

meters of diamond and reverse circulation drilling focused mainly on increasing the measured and

indicated mineral resources.

1.5 Mineral Resource Estimation

Using a cut-off grade of 0.2 ppm Au, a resource estimate of 248 million tonnes at a grade 0.42 g/t Au

(3.3 million ounces of contained gold) in the measured and indicated categories and 226 million

tonnes grading 0.36 g/t Au in Inferred resource has been established. Table 2 summarizes the

resource estimate at cut-off grades ranging between 0.0 and 0.8 g/t Au.

Table 2 Global Mineral Resource Estimate-Cerro Maricunga - November, 2012

Cut-Off Measured Indicated Measured + Indicated Inferred

Au-g/t Mtonnes Au g/t Moz Mtonnes

Au g/t Moz Mtonnes

Au g/t Moz Mtonnes

Au g/t Moz

0.0 66.6 0.41 0.9 202.6 0.4 2.6 269.2 0.40 3.5 271.6 0.33 2.9

0.1 66.6 0.41 0.9 202.6 0.4 2.6 269.1 0.40 3.5 271.3 0.33 2.9

0.2 60.4 0.44 0.9 187.5 0.41 2.5 247.9 0.42 3.3 226.3 0.36 2.6

0.3 40.7 0.53 0.7 123.1 0.5 2.0 163.9 0.51 2.7 120.7 0.47 1.8

0.4 24.5 0.64 0.5 71.2 0.61 1.4 95.8 0.62 1.9 57.8 0.6 1.1

0.5 15.1 0.77 0.4 42.8 0.72 1.0 57.9 0.73 1.4 32.3 0.73 0.8

0.6 9.9 0.88 0.3 26.3 0.84 0.7 36.3 0.85 1.0 19.7 0.84 0.5

0.7 6.8 1.00 0.2 16.4 0.95 0.5 23.2 0.96 0.7 12.8 0.95 0.4

0.8 4.6 1.12 0.2 10.5 1.07 0.4 15.1 1.09 0.5 8.1 1.06 0.3


The PEA takes into account the mining and processing of 261 million tonnes of the mineral resources

noted in Table 2 confined within the boundaries of an open pit prepared at a gold price of $1,400 per

ounce. The overall grade of the 261 million tonnes of pit confined mineralization is estimated to be

0.40 g/t Au. See Table 3

1.6 Preliminary Mining Studies

This study is based on Magri’s November, 2012, mineral resource statement for Cerro Maricunga

which includes Measured, Indicated and Inferred Category Mineral Resources.

The reader is cautioned that the mining study is a preliminary assessment and it 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. There is

no certainty that the preliminary assessment will be realized. No Mineral Reserves have been

estimated.

The mining study utilizes an open pit mining method. The open pits will be mined by a conventional

(owner-operated) method, using hydraulic excavators and 290t mining trucks, together with the usual

auxiliary support fleet such as graders, bulldozers, etc, to produce a total maximum material flow of

84.55 million tonnes per year for the 80,000 tpd plant feed.

The average open pit operating cost is estimated to be US$1.42 per tonne of mined material.

Table 3 Mine Schedule Summary

Year

Mineralized Material Waste Total

Plant Feed

t '000 Au (g/t)

Contained gold (koz)

t '000 t '000

t '000 Au (g/t)


Average Recovery (%)

Recovered Gold (koz)

Pre-strip 6,624 0.38 81 4,776 11,400

Y1 22,576 0.44 319 27,874 50,450

29,200 0.43 400 79.6% 318

Y2 29,200 0.41 389 55,350 84,550

29,200 0.41 389 79.5% 309

Y3 29,200 0.41 384 55,350 84,550

29,200 0.41 384 79.5% 305

Y4 29,200 0.40 374 55,350 84,550

29,200 0.40 374 79.4% 297

Y5 29,200 0.35 330 55,350 84,550

29,200 0.35 330 79.0% 261

Y6 29,200 0.36 340 55,273 84,473

29,200 0.36 340 79.1% 269

Y7 29,200 0.38 357 49,929 79,129

29,200 0.38 357 79.2% 283

Y8 26,759 0.40 340 41,040 67,799

26,759 0.40 340 79.4% 270

Y9 20,685 0.47 309 18,615 39,300

20,685 0.47 309 80.0% 247

Y10 8,537 0.58 159 3,132 11,670

8,537 0.58 159 81.0% 129

Y11 742 0.66 16 118 860

742 0.66 16 81.7% 13

TOTAL 261,123 0.40 3,397 422,158 683,281

261,123 0.40 3,397 79.5% 2,700

1.7 Metallurgical Testing Summary

Several testwork campaigns have been carried out with Cerro Maricunga mineralized material, in

order to determine its metallurgical behaviour in the projected conventional heap leach process plant.


The main objective of these campaigns was to study the material behaviour in a cyanidation process,

and hence Bottle Rolled Tests (“BRT”) and Column Leaching Test (“CLT”) were performed, under

different conditions.

Although numerous metallurgical testing campaigns have been completed, for consistency proposes

only those tests completed on seven composited samples collected from throughout the Cerro

Maricunga deposits have been used to estimate a gold recovery for a proposed heap leaching

processing facility. The results from the other testing programs are similar to those achieved from the

seven composite samples and are presented and/or referenced in the November 9, 2012 technical

report.

For BRT seven composites were tested, whose head grades range from 0.28 to 1.45 g/t Au. Several

particle size distributions were analysed, from P80 50 mm to P80 0.1 mm. All other conditions, such

as cyanide concentration, solids percentage and pH level, were maintained identical for all tests. The

tests were run between 4 and 10 days.

The results of the BRT tests show a correlation between the gold extraction in cyanidation and the

material P80 crush size; gold extraction increases when the crush size decreases. However, at this

time, little differences in the gold extraction are observed for coarser material (P80 over 12.5 mm).

Column tests were performed on 6 of the 7 samples (composite 3 was not considered for this

campaign). The tests also contemplated different material sizes, from P80 100 mm to P80 19 mm. All

other conditions were maintained the same for all tests, which were run for 57 or 87 days.

The results show that for a P80 of 19 mm a gold extraction of 80% can be expected, when the

mineralized material head grade is over 0.5 g/t Au. When the gold extractions in all tests are

calculated for a common time residence of 57 days, a correlation is found between the gold extraction

and the gold grade in the material. This correlation has been used to estimate the gold to be

produced, considering the gold grade defined in the proposed mining plan. The average overall gold

recovery estimated for the proposed mining plan is 79.5%, including 99.5% for EW and 99.5% for

refining..

1.8 Mineral Processing and Recovery Methods

The processing operation was designed for a nominal throughput of 80,000 tonne per day (tpd) with

an average head grade of 0.4 g/t of Au. Resources are estimated about 261 Mt, givining 10 years of

project life.

It is considered an average of 80.3% of the gold will be recovered through heap cyanidation. The

recovery for the EW and smelting is considered to be 99.5% for each stage. The overall gold recovery

is considered to be an average of 79.5%.

The final product of the process plant corresponds to dore bullion, with at least 80% of gold content.


The following stages comprised in the process plant:

Crushing

Heap leaching

Solution management

ADR, EW and smelting

The average processing cost is estimated to be US$2.56 per tonne of processed material.

1.9 Mine Geotechnical

Santiago-based A. Karzulovic & Assoc Ltd (“AKL”) carried out the geotechnical evaluation and

determined the geomechanical parameters to be used in the proposed open pit and underground

mining operations at Cerro Maricunga.

In general rock conditions in proposed mining areas appear to be stable and largely free from any

significant structures.

AKL has recommended an overall pit slope 45° for all the pits at Cerro Maricunga.

1.10 Plant Site Geotechnical

A geotechnical study has been developed in the area where the leaching pad and ADR plant will be

located.

The subsurface stratigraphy of the site is mainly formed by a single type of material; silty sandy gravel

with blocks, which only distinguishing characteristic is the coloring change in the upper part caused by

a higher content of fine material, without significant granulometric or structural differences, all through

its depth and areal distribution.

According to the above, the natural soil stratum can be used as a foundation soil, from the minimal

seal depth established (0.5 m) and as long as the contact pressures are restricted to the

recommended values.

It is convenient that the foundations support is constructed over a layer of equal or higher stiffness

than the intact natural soil; it is recommended that once the excavations reach the seal depth, a

mechanical compacting shall be performed over the superficial material of the seal, in order to reach

at least a 95% of the maximum density obtained in the Procter test.


1.11 Site Infrastructure

1.11.1 Power Supply

The electrical study considers an area for a supply connection from the Carrera Pinto substation,

which belongs to the Sistema Interconectado Central (SIC) and a three-phase transmission line in a

simple circuit of 220 kV with a length of 70km that goes to a final substation, located near the plant

site.

1.11.2 Site Access Roads

For the access road it has been considered to design a 22km road, connected from the International

Ch 31 road and over an existing trace.

1.11.3 Water Supply and Sewerage Treatment

The project considers a saline water pumping system from wells located in an area nearby the Salar

de Pedernales, located approximately 100km north of the Cerro Maricunga property.

1.11.4 Mine Infrastructure

It is anticipated that the vendors will provide storage for fuel, lubricants, and explosives as part of their

contract of work and that the prices for these items are included in the delivered price.

Truck workshop is planned to be built near the mine, close to the primary crusher area. A local

experienced manufacturer was contacted to provide a 4 bays facility.

1.11.5 Cerro Maricunga Administration

The following administration and plant buildings will be newly constructed for the Project:

Main administration building with medical centre, rescue room and training room

Security office and gatehouse

Laboratory

Metallurgical office/laboratory

Plant crib room and training room

Plant workshop and warehouse

Reagent and sodium cyanide storage

Office space requirements have been defined by the proposed departmental staffing structures.

1.12 Project Implementation

Atacama Pacific must complete an environmental impact study, a feasibility study and an EPCM

contract, in order to meet all the required technical studies for the Cerro Maricunga project

development to commence.


Once the regional authorities approve the environmental impact study, a construction program and

pre-stripping activities can commence.

The construction phase of the Cerro Maricunga Project is estimated to last 19 months, beginning in

August 2015. The climatic conditions and altitude are of consideration, with major foundation work to

be completed during the early summer months. A proposed development timeline is presented below.

Advanced Economic Studies July 2013 – April 2014

Environmental Impact Preparation August 2013 – June 2014

Permitting / EPCM Contract August 2013 – August 2015

Construction August 2015 – March 2017

Start up and Commissioning March 2017 – June 2017

Start of Operations June 2017

1.13 Capital and Operating Cost Estimates

The total initial capital investment for the mining, process plant and infrastructure, in addition to the

expected life of Project sustaining capital, has been summarized in Table 4.

The total process plant operating costs are estimated to be US$2.56 per tonne processed and

summarized in Table 5. The average mining operating costs are estimated to be US$1.43 per tonne

mined and summarized in Table 6. General and Administrative costs are estimated to be US$0.53 per

tonne processed. The project assumes and takes into account that main mining equipment fleet will be

acquired through a manufacture lease arrangement payable over periods of 10 and five years, upon a

quote received from Komatsu. The main electrical delivery infrastructure will be supplied under a lease

arrangement as well. Table 7 summarizes the lease costs.

Table 4 Mine, Process Plant and Infrastructure CAPEX Summary

Category (MUS$)Category (MUS$) Initial

Capital Sustaining

Capital Total

Capital

Direct Costs

Mining Support Equipment & Initial Works 27.6 7.5 35.1

Infrastructure 98.6 98.6

Plant 286.5 286.5

Heap Leaching 224.6 224.6

Closure 5.0 5.0

Subtotal Direct Costs 412.6 237.2 649.8

EPCM 28.9 28.9

Contingency 41.3 11.9 53.1

Subtotal 482.7 249.0 731.8

Pre-stripping 17.1 17.1

Leasing Main Mining Equipment 14.7 14.7

TOTAL 514.6 249.0 763.6


Table 5 Process Plant Operating Cost Per Tonnes Summary (US$/t processed)

Item Unit

Primary, Secondary and

Tertiary Crushing

Heap Leaching

ADR - EW - Smelting

Total

Labour US$/t 0.05 0.02 0.01 0.08

Power US$/t 0.19 0.14 0.09 0.42

Reagents and consumables US$/t 0.28 0.94 0.34 1.55

Maintenance US$/t 0.13 0.09 0.05 0.28

Miscellaneous US$/t 0.04 0.07 0.03 0.14

Others US$/t 0.02 0.04 0.02 0.08

TOTAL US$/t 0.72 1.29 0.54 2.56

Table 6 Mining Operating Cost per Tonne Summary (US$/t mined)

Mining Item US$/t

Loading US$/t 0.19

Hauling US$/t 0.50

Drilling US$/t 0.15

Blasting US$/t 0.21

Ancillary US$/t 0.11

Support US$/t 0.04

Engineering and Administration US$/t 0.07

Labour US$/t 0.16

TOTAL US$/t 1.42

Table 7 Leasing Option (Mining Equipment & Power Supply)

Item US$ ' 0000 US$/t Fed toPlant

Leasing (Mining Equipment)

Hydraulic Excavator (38yd3) 64,995 0.25

Trucks (290t) 110,660 0.42

Bulldozer (type 1 580hp) 6,129 0.02

Wheel dozer (type 1 500hp) 3,319 0.01

Motor grader (type 1 300hp) 2,363 0.01

Water truck (HD 785-7) 2,972 0.01

Diesel Drill Rigs (10 5/8") 21,931 0.08

Tires handler 1,731 0.01

TOTAL 214,100 0.82

Electrical Supply 0.08


1.14 Economic Analysis

This technical report includes mineral resources that are not mineral reserves and therefore do not

have demonstrated economic viability.

The reader is cautioned that the preliminary economic assessment is preliminary in nature and

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. No Mineral Reserves have been estimated. There is no certainty that the preliminary

economic assessment will be realized. The preliminary economic assessment is preliminary in nature

and is not a preliminary feasibility study or feasibility study. The parameters of the mining study were

used to develop the constrained resource.

There is no certainty that the PEA results will be realized. Since the analysis is based on a cash flow

estimate, it should be expected that actual economic results might vary from these results. The PEA

has been completed to a level of accuracy of +35% to -10%. The PEA is not a preliminary feasibility

study or feasibility study. NCL is not a financial adviser, and these models are indicative only, based

on NCL’s experiences. NCL recommends that the Company and other readers of this report seek their

own financial and tax advice before taking action in relation to the financial matters herein.

The total estimated initial capital cost of the Project is US$514.6 million, which comprises

i) US$412.7 millio for all process plant and infrastructure ii) an additional $US70.1 million for EPCM

and contingencies; and iii) US$31.8 million for initial pre-stripping and leasing for main mining

equipment during the pre-production period. Adding sustaining capital (US$232.1 million) and closure

(US$5.0 million), along with sustaining contingency costs of US$11.9 million, the total capital cost over

the life of the Project is estimated to be US$ 763.6 million.

The base case financial model assumes gold price of US$ 1450 per ounce. Results of the discounted

cash flow modelling (NPV5% and NPV10%) for the Project, together with the projected Internal Rate of

Return (IRR) and payback period, are presented in Table 8.

Table 8 Economical Evaluation Results Summary

Financial Model

NPV5% Free cash flow (pre-tax) US$741 million

NPV5% Free cash flow (after tax) US$531 million

NPV10% Free cash flow (pre-tax) US$485 million

NPV10% Free cash flow (after tax) US$324 million

IRR Free cash flow(pre-tax) 33.9%

IRR Free cash flow(after tax) 26.6%

Payback Period - from start of production (free cash flow – 0% discount)

3.1 years


Sensitivity analysis was undertaken to measure the effect of variations in gold price, discount rate,

total operating cost and total capital cost, for after-tax and pre-tax cases. The obtained results are very

solid, with positive NPVs and attractive IRR for almost all the combinations, as included in Section 22.

1.15 Conclusions

1.15.1 Mineral Resource

Exploration results obtained at the Maricunga Project suggest that there may be potential to develop a

low grade heap leachable gold deposit which may be mined by open pit methods.

The work that was performed by Atacama during the exploration seasons for the period October, 2009

through June, 2012 has resulted in the estimation of Measured, Indicated and Inferred category

mineral resources.

Main conclusions that stem out from exploration and resource estimation are as follow:

The resource estimate supporting the conclusions of the Preliminary Economic Assessment

has been prepared in a professional manner and using standard industry practices.

Exploration work, database integrity, QA-QC, including twin-hole analysis, were carried out in a

professional manner.

Current total pit constrained resources in the Measured and Indicated categories, amount to

185.7 million tonnes grading 0.41 g/t Au, equivalent to 2.46 million ounces of gold.

Total pit constrained resources in the Inferred category at Cerro Maricunga, amount to 75.4

milllion tonnes grading 0.39 g/t Au, equivalent to 0.94 million ounces.

Further exploration and infill drilling is warranted.

1.15.2 Mining Studies

The preliminary Cerro Maricunga mining studies are based on Magri’s November, 2012 mineral

resource estimate which includes Measured, Indicated and Inferred category mineral resources.

The reader is cautioned that the mining study is a preliminary assessment and it 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. There is

no certainty that the preliminary assessment will be realized. No Mineral Reserves have been

estimated.

The mining study utilizes an open pit mining method. The mineral inventory is estimated at 261 million

tonnes at an average grade of 0.40 g Au/t, with operating costs estimated to be US$1.42 per tonne.


1.15.3 Metallurgical Processing

It is considered the mineralization will be crushed to 19 mm by way of a 3 stage crushing system and

stacked on a conventional leach pad. Average gold recoveries of of 80.3% are projected through

heap leach cyanidation. The recovery for the EW and smelting is considered to be 99.5% for each

stage. The overall gold recovery is considered to be an average of 79.5%.

Further metallurgical testwork is recommended in order to study a possible increase in the

crushing stage product size. Alquimia has information of projects located in the same area as

Cerro Maricunga, whose mineralized material is quite porous. A porous material has a direct

effect in improved cyanidation performance and thus coarser material may be used without a

significant lost in the extraction levels. This would lead to some savings in the crushing capital

and operating costs.

It is recommended to perform test with Cerro Maricunga material in order to confirm the

stability and the hydrodynamic modeling of the heap, with the objective of optimizing the

current design conditions.

1.15.4 Preliminary Economic Assessment Results

The basic cash flow financial models were created by NCL, based on its experience, utilizing the mine

production schedule, associated gold grades, gold recoveries estimated from the preliminary

metallurgical test program, and capital and operating costs as outlined in this technical study. Base

case gold price assumed in the financial modelling was US$ 1,450/oz gold. Total metal recovered

during the life of the Project are estimated to be 2.7 million of ounces. The results of this Preliminary

Economic Assessment support continued work on the Cerro Maricunga property and, contingent on

those results, more advanced feasibility level studies.

1.16 Recommendations

Recommendations for Cerro Maricunga are discussed in detailed in Section 26, however, the key

recommendations for both exploration activities and development-related studies going forward

include the following:

Continue the current balanced drilling strategy of targeted infill drilling to increase resource

confidence and extensional resource definition drilling to add additional mineral resources;

Continue to update relevant mineral resource estimates for all significant mineralized zones to

reflect ongoing changes to mineral resource confidence and the overall Cerro Maricunga

mineral resource base;


Continue mine engineering and planning studies to define and confirm the economic viability of

the Project, and move towards development stage;

Continue mining studies to refine the current mining model, optimize open pit material handling

options;

Carry on geotechnical test work and studies including drilling geotechnical holes for open pits;

Carry out extended water pumping tests at current bore-sites to determine sustainably flow

rates, in addition to continuing prospecting for water and testing of exploration hole if they

intersect substantive water flows;

Refine maximum demand studies for power and progress engineering designs for construction

of powerline; and,

Continue with further metallurgical test work.


2. INTRODUCTION AND TERMS OF REFERENCE

2.1 Introduction

Atacama Pacific commissioned NCL to prepare a Preliminary Economic Assessment (“PEA”) for Cerro

Maricungao. This PEA is based on an updated NI 43-101 compliant mineral resource estimate that

was completed in November, 2012, by Magri.

The study was completed by NCL through the compilation of information generated by consultants

and specialists appointed by Atacama Pacific. NCL was responsible for the compilation of information

from these experts and specialists and the assembly of the overall study.

This report and the resource estimate have been prepared in compliance with the disclosure and

reporting requirements set forth in NI 43-101, Companion Policy 43-101CP, and Form 43-101F1.

2.2 Qualified Persons

The following qualified persons have compiled this technical report:

Carlos Guzman, Principal / Project Director of NCL, was responsible for the mining sections of

the study, together with the financial modelling and compilation of the overall report;

Eduardo Magri, Principal Magri Consultores was responsible for the mineral resource

estimation as well as the resource categorization.

John Wells, Metallurgical Consultant, was resposible of the metallurgical and processing

sections of the Technical Report.

Kristof Fabian, Vice-President and Principal Geotechnical Engineer at ARCADIS, US was

responsible of environmental sections in the report.

Table 9 details the responsibility of the technical report sections to each of the persons involved.

Table 9 Technical Report Responsibility Matrix

Responsible Person Company

Carlos Guzmán NCL Mining study and economical analysis

Eduardo Magri Magri Consultores Limitada Mineral Resource Estimate

John Wells Alquimia Metallurgy

Kristof Fabian Arcadis Environment


2.3 Frequently Used Acronyms, Abbreviations, Definitions, and Units of Measure

Unless otherwise indicated, all references to currency in this report refer to United States dollars

(US$). Frequently used acronyms and abbreviations are listed in Table 10.

Table 10 Frequently used acronyms and abbreviations

Abbreviation Meaning

AAS atomic absorption spectrometry

Ag Silver

As Arsenic

Au Gold

Cu Copper

g/t grams per metric tonne

ha Hectare

Hg Mercury

ICMC International Cyanide Management Code

km Kilometers

l liters

m meters

masl meters above sea level

mm millimetres

oz, koz, Moz ounces, thousands of ounces, million of ounces

Pb Lead

ppm parts per million

QA/QC quality assurance and quality control

RC reverse-circulation drilling method

RQD rock-quality designation

Sb antimony

ºT degrees relative to true north

t, kt, Mt tonnes, kilotonnes, million tonnes

t/y tonnes per year

tpd tonnes per day

Zn Zinc

µm micrometer

µS/cm micro Siemens per centimeter


3. RELIANCE ON OTHER EXPERTS

3.1 Qualified Persons

The following four qualified persons have contributed to this technical report:

Carlos Guzman, Principal / Project Director of NCL, was responsible for the mining sections

of the study, together with the financial modelling and compilation of the overall report;

Eduardo Magri, Principal Magri Consultores was responsible for the mineral resource

estimation as well as the resource categorization.

John Wells, Metallurgical Consultant, was resposible of the metallurgical and processing

sections of the Technical Report.

Kristof Fabian, Vice-President and Principal Geotechnical Engineer at ARCADIS, US was

responsible of environmental sections in the report.

3.2 Other Independent Expert Persons

Other expert persons relied upon for the development of the study:

Natasha Tschischow (Principal NTK) and Antonio Couble (Principal NCL) were in part

responsible of the mineral resource estimation carried out in November, 2012, specifically

in Geology, QA/QC and Modeling.

Walter Cazenave, independent consultant for SBX assisted in the metallurgy and financial

modeling in this report.


4. PROPERTY DESCRIPTION AND LOCATION

4.1 Location

The Cerro Maricunga gold deposit is located in Chile’s III Region (Copiapó), approximately 117-km

(straight-line) north east of Copiapó. The property is centred at 7,013,000-N and 479,000-E;

approximately 20km south of Kinross Gold’s La Coipa Au-Ag mine, 60km north of Kinross’s Maricunga

(previously named Refugio) Gold Mine and 40km north of Hochschild’s’ Volcan Gold Project. The

Cerro Maricunga Project, including the Santa Teresa option concession, encompasses an area of

15,840 ha.

Figure 3 Detailed Location Map of the Cerro Maricunga Gold Project (source SBX)

4.2 Land Area

The Maricunga mineralization/deposits are contained within concessions Cerro 7 and 8, Mary 8 1/30,

Cerro Maricunga 13 1/30, 14 1/30, 20 1/30 and 21 1/30 as outlined in Figure 4.

As a result of overlapping concessions, the over-all concession area totals 24,641 hectares (as of

March 2013). The principal deposits are protected by mining concessions (3,800 hectares) with the

balance of the property comprising exploration concessions Table 11 lists the mining concessions and

Table 12 lists the “pedimentos” and exploration concessions, some of which are in the process of

being converted to mining concessions, which make up the Maricunga property.


Figure 4 Cerro Maricunga Concession Map (source SBX)

Table 11 Maricunga Mining Concessions

Mining Concessions Hectares Hectares

Cerro Maricunga 1 1/20 200







Mary 4 1/30 300

Mary 5 1/20 200

Mary 6 1/30 300

Mary 7 1/20 200

Mary 8 1/30 300

Mary 9 1/10 100

Mary 10 1/30 300

Mary Segunda 2 1/10 100

Mary Segunda 3 1/10 100

Total Hectares 3,800


Table 12 Cerro Maricunga Exploration Concessions

Concession Hectares Concession Hectares Concession Hectares Cerro Norte 6 200 Maricunga 1 300 Maricunga 29 300

Mary Tercera 1 300 Maricunga 2 300 Maricunga 30 300





Cerro 7 200 Maricunga 7 300 Maricunga 36 300



Manto Grande A 200 Maricunga 10 300 Maricunga 39 300

Santa Teresa A 100 Maricunga 11 300 Maricunga 32 300

Consuelo 1 300 Maricunga 12 300 Santa Teresa 1/20 200

Consuelo 2 200 Maricunga 13 300 Santa Teresa 21/40

191

Consuelo 3 300 Maricunga 14 300 Santa Teresa 41/50

100

Consuelo 4 300 Maricunga 15 300 Montogrande 1/10 50



Consuelo 7 300 Maricunga 18 300 Monica 1 200







Maricunga 25 300 Monica 8 200




TOTAL 21,041

The concessions have various dates at which the holding fees are due. Atacama Pacific confirmed

that the majority of the concessions are in good standing until April, 2013 at which time property

payments of Chilean Peso $32,232,349 are to be made by Atacama Pacific to keep the concessions

in good standing for the period April 2013 through April 2014. Some concessions, such as the Monica

concession group are presently in good standing until June 2013 at which time the appropriate

payments are due to keep the concession in good standing for an additional 12 month period. Per

data provided by Atacama, the total cost paid to maintain the Maricunga concessions, as they are

currently constituted, for the period 2012-2013 was Chilean Peso $37,445,342 (US$76,490.87).

Atacama filed for, and obtained, the appropriate permits which have allowed it to conduct two phases

of exploration at Maricunga to date. Atacama controls the surface rights at Maricunga, and has

prepared access to the Project. Atacama filed an Environmental Impact Declaration with CONEMA

which will allow it to conduct the proposed Phase III exploration (predominantly drilling) at Maricunga.

Arcadis Chile prepared and filed the Environmental Impact Declaration on behalf of Atacama. The

conclusions reached by Arcadis are as summarized following:


The Cerro Maricunga Project is not located near populations protected by special laws. No

indigenous communities were identified within or proximal to the project area and which could

be affected by the project.

The project doesn’t affect any officially protected area. The nearest protected area is the

National Park “NevadoTres Cruces”, located 2.3km in a straight line from the SE side of the

project area.

The project doesn’t affect any protected wetlands or glaciers.

The project area has neither touristic nor scenic value which could be affected. The project

area doesn’t contain Natural Monuments, Natural Sanctuaries or Historical Monuments.

Part of the project is located inside a semi-protected (buffer zone) Priority Site for biodiversity

conservation (“SitioPrioritario Regional NevadoTres Cruces”). Nevertheless, the exploration

activities will be located in areas which do not contain flora, vegetation, fauna, archeology or

biodiversity which would create a priority site.

The author is not aware of any significant factors and risks, including any environmental liabilities, that

may affect access, title, or the right or ability to perform work at Maricunga.


5. ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Access

The Cerro Maricunga gold project is accessed from the centre of Copiapó by a combination of paved

highway, two-lane asphalted road to (just before the La Coipa Mine), and then by maintained single

track dirt roads. Access to the property by pickup (standard or 4-wheel drive) takes approximately 2.5

hours (155km) from the centre of Copiapó. Directions to the property are as follows: from Copiapó,

travel southeast approximately 10km out of the centre of town towards the ENAMI Paipote smelter,

and then turning north on the Inca de Oro road for 15-km and then turning off NE along the salt-paved

road to Paso de San Francisco for 104km, and to the turn-off for La Coipa Mine. At approximately

800m south east of the La Coipa Mine turn-off, swing right to the south west and follow the dirt road

which follows the Quebrada (drainage) Pelada gulch for 25km to reach the project site.

5.2 Climate

Precipitation consists largely of snow during winter months of June through mid-September, with

sporadic, but intense, rain storms of short duration occurring during the summer and autumn months

(January to May). Strong winds may develop during these periods due the high altitude. White-outs,

termed “Bolivian Winter”, which can create hazardous conditions, may occur during the summer

months.

The average annual temperature is of the order of 11°Celsius, and ranges between -30°Celsius at

night in winter to 20°Celsius during the day in summer.

Precipitation in the Andes averages 200 to 300 mm/yr at an elevation of 4,000 masl, while evaporation

from surface water and soils varies between 1,500 to 2,000 mm/yr (Bartlett, et. al., 2004) resulting in

the extremely arid conditions observed in the various areas.

Local wildlife is sparse although vicuñas may occasionally be encountered.

The typical exploration field season at these elevations is from approximately October through May, or

a duration of 7 to 8 months. However, should a mine be put into production, the property could be

operated year round.

5.3 Local Resources and Infrastructure

The nearest major city to the Cerro Maricunga deposit is Copiapó, some 155km south west by road.

Copiapó has an approximate population of 150,000 people. Experienced mine and plant personnel

should be easily sourced from Copiapó, or elsewhere in Chile where a generally well trained and

experienced workforce exists. Furthermore, Copiapó is a well-established support and logistics centre

for mining activities in the region.


5.4 Physiography

The project is located approximately 40km west of the Argentine border in the high Andes and at

elevations of between 3,800 and 5,000 masl. The principal topographic features are the result of the

combination of horst and graben block tectonics in the Cordillera Occidental and the Cenozoic to

Recent volcanism that has produced the various strato volcanoes and dome complexes, which host

the alteration/mineralization that has been identified to date.


6. HISTORY

6.1 Cerro Maricunga History

Preliminary exploration conducted in the early 1980’s identified a “possible high level, high sulfidation

system” in the Ojo de Maricunga stratovolcano containing silica (opaline)-clay altered pyritic breccia,

tuff and quartz-feldspar porphyry.

In January and February, 2008 Minera Newcrest Chile Ltda (“MNCL”), the then Chilean subsidiary of

Newcrest Mining Inc., conducted a preliminary evaluation of the property during which time MNCL

took 325 samples which confirmed the presence of elevated gold mineralization along a NW-SE

trending zone. Newcrest elected not to continue exploration at Maricunga as a result of a change in

focus from gold to copper exploration.

In 2008, Gold Fields (GFC) entered into an exploration/joint venture/option agreement with SBX and

during which time they conducted trenching, mapping and channel sampling, and performed an

Induced Potential/Resistivity and Magnetic Survey during the 2008-2009 field season. The work

performed by GFC confirmed that Maricunga was a potential gold target, and that the property

warranted additional exploration including additional mapping, trenching/sampling and drilling.

6.2 Recent Exploration at Cerro Maricunga

During years 2008-2010 the Maricunga deposit and surroundings areas were extensively mapped and

sampled (rock chips and trenches). Local mapping, at a scale of 1:2,500, centered in the deposit, was

carried out by A. Hodgkin. Surroundings, totaling 163-km2, were mapped at scales of 1:10,000 and

1:25,000 by Dr. A. Dietrich. Petrographical studies have been performed by Dr. P. Cornejo on

approximately 50 samples taken from the field and drill core.

Exploration work, other than drilling and trenching were not carried out during 2011-2012 seasons.


7. GEOLOGY

7.1 Regional Geology

The basement rocks in the Maricunga Mineral Belt comprise a series of volcanic-plutonic-sedimentary

arcs of Mesozoic-Cenozoic age which are associated with the subuction of the Pacific Plate below the

South American Plate. A large volcanic caldera complex developed over basement rocks of

Paleozoic-Triassic and Mesozoic-Early Tertiary age and beginning with the development of large

andesitic (dacitic) stratovolcanoes starting in the Oligocene-Miocene (23-14 Ma – based on K/Ar

dates) and which developed principally on the western side of Lake Maricunga (Bartlett, 2004,

Geoexploraciones, 2003).

The Miocene volcanics and contained alteration and mineralization are subdivided into two partly

overlapping sub-belts – the western early Miocene (24-20 Ma) and the eastern middle Miocene (14-13

Ma) sub-belts. High angle reverse faulting occurred between the two epochs in response to regional

compression induced by subduction zone flattening. A northwest alignment is also prominent in the

belt as reflected by the strike of the several components of the alteration and mineralized zones.

Several hydrothermal systems developed during this time, which resulted in the formation of the

currently known deposits: Marte, La Pepa and La Coipa. The hydrothermal activity lasted through to

12 Ma when it is considered that Marte was being formed. Hydrothermal and solfataric activity resulted

in the generation of sulfur deposits above large numbers of argillized and silicified zones. The gold-(+/-

copper) porphyry-type mineralization is considered to be related to earlier (?) deeper seated

(telescoped) K-silicate alteration which is preserved at the Maricunga Mine and the Aldebaran (Cerro

Casale) deposit and which is most typically overprinted and obliterated by sericite-clay-chlorite

assemblages of intermediate argillic type. Vila, et al (1991) indicate that several of the porphyry-type

stockworks are overlain by “pyrite and alunite rich advanced argillic alteration carrying barite, native

sulfur, enargite and at La Pepa by high sulfidation, high grade epithermal vein-type gold

mineralization”. The quartz stockworks and advanced argillic caps are telescoped at Marte, La Pepa,

etc., and are separated by a chloritized zone transected by a swarm of gold-poor polymetallic veins

with quartz-alunite selvedges at Aldebaran.”

Figure 5 depicts the regional geology and relates Cerro Maricunga to various other Gold-Silver

deposits in the Maricunga Belt.


Figure 5 Regional Geology Map (source SBX)

7.2 Local Geology

The Cerro Maricunga volcanic centre (also known as Ojo de Maricunga volcano), which hosts the

Cerro Maricunga Oxide Gold Project, is underlain by folded Mesozoic sedimentary strata which are

exposed in to the north, northwest and southwest of the district (refer to Figure 5 to Figure 7). Within

the Maricunga property the Mesozoic “basement” rocks comprise (from oldest to youngest):


A siliciclastic sequence, mapped as Estratos del Mono Formation, which is equivalent to

the La Ternera Formation (Triassic – Lower Jurassic). At Cerro Maricunga it comprises coarse

arkosic sandstones intercalated with conglomerates, which areoverlain by a facies of coarse

arkosic sandstones intercalated with shaly siltstones.

A Carbonate sequence, which can be correlated with the Jurassic Lautaro Formation

(Iriarte et al) which consists of interbedded fossil-rich limestone intercalated with calcarenite, and

which lies on top of the siliciclastic sequence.

Two andesitic sequences overlie the Carbonate Sequence: an older andesite sequence,

consisting of andesitic tuff which is intercalated with minor andesitic lava flows, overlain by

another unit of prominent andesite lava flows (Carneros Andesite). Dietrich (2011) correlates both

units with the Quebrada Paipote and Las Pircas Formations (Late Cretaceous to Early Tertiary).

Cornejo et al mapped these units as the intermediate level of Estratos de Cerro Los Carneros

Formation, and obtained an age of 67 ± 2 Ma..

The Mesozoic sedimentary strata are folded along a NNE-striking and 25-30°NNE-plunging fold axis.

The Mesozoic units are intruded by plugs, dikes and possibly sills of monzodioritic to gabbroic

composition, and by ocoite dikes. They are described by Dietrich as being halocristalline rocks,

consisting of feldspars, pyroxene, minor hornblende, biotite and quartz. These units are unaltered and

apparently are not related to mineralization. However, an andesitic dike on the SW side of the district

is accompanied by a narrow halo of quartz veinlets which has a weak gold anomaly. A stock of

andesitic porphyry (or diorite) intrudes along the inferred anticline axis into the Mesozoic strata in the

Santa Teresa South area, and displays mineralization within the hornfels and calc-silicate contact-

metamorphic halo.

The Ojo de Maricunga volcanic centre is surrounded by a sub-horizontal blanket of un-altered, non- to

partially welded rhyodacitic ignimbrite, which has been named the “Maricunga Ignimbrite” by Cornejo

and Iriarte. They describe this unit as a pumiceous pyroclastic flow deposit, which is white to pink in

color, and is deposited in 5 m to 15m thick flow units which is covered by gravel deposits (Gravas de

Atacama unit) and pyroclastic deposits from the Ojo de Maricunga volcano and the unconformably

overlying the Mesozoic units.

The Maricunga Ignimbrite is composed of coarse lapilli rhyodacitic tuff, with abundant pumice and a

vitreous pumiceous matrix with accidental and crystal fragments of biotite and hornblende. The

Maricunga Ignimbrite has been dated (Cornejo et al; Iriarte et al) at 13.7 ± 2.6 Ma to 17.9 ± 1.4 Ma.


Figure 6 Local Geology Map (source SBX)

7.3 Deposit Geology and Mineralization

The following units are described by Dietrich (Dietrich, 2011) as forming part of the Ojo de Maricunga volcanic

edifice, which hosts at its centre the recognized Cerro Maricunga gold deposit:

Andesitic Cover sequence: the borders of the Cerro Maricunga mineralized complex are covered by

unaltered andesitic lava flows and thick wedges of epiclastic block flows of andesite material. The andesitic

lava flows are medium- to coarse grained hornblende-feldspar porphyries. The epiclastic block flows are

composed of blocks of up to car-size andesitic lava flow material which are set into a (reworked) andesitic


matrix. The block flows show bedding at larger scale and have been observed to occur as fault-bound

sequences which are up to 400m thick bonding the mineralized complex.

Dacite tuff sequence: this sequence is exposed beyond the limits of the Porphyry and Breccia Complex. The

dacite tuff sequence consists mainly of litho-and crystal tuffs and forms the host for the mineralized Porphyry

and Breccia complex. A broad propyllitic halo is developed about this complex.

Porphyry and Breccia Complex: it consists of several porphyry phases as well as a variety of breccias which

have been transected by andesitic dikes. The complex crops out along a NW-striking corridor 2,800m in

(strike) length and hosts the gold mineralization identified at Cerro Maricunga Project. The mineralized

complex appears to be controlled, and partially bound, by NW striking faults. The width of the complex is

variable between three principal fault blocks which are in turn offset by NE-strike faults, the northern block

has a width of approximately 400m, the central block has a width of approximately 600m, and, the southern

block has a width of approximately 700m.

Figure 7 Litho - Stratigraphic Map (source SBX)


8. DEPOSIT TYPES

The authors consider that Cerro Maricunga shares characteristics with similar to other known deposits

which occur within the Maricunga Gold-(Copper) Belt of Chile. The deposit type being explored for is a

porphyry / breccia gold deposit developed in, and associated with, Miocene domal intrusives. These

characteristics can include mineralization/alteration types which appear to be intimately associated

with, or occur below, high level, high sulfidation epithermal mineralizing systems developed in variably

eroded and collapsed Oligocene-Upper Miocene stratovolcanoes and within recurrent intrusive dacitic

domes. Hydrothermal and phreatic breccias are frequently developed flanking and transecting (and

below the steam heated zones) the domal intrusives and most commonly at fault intersections and/or

zones of dilation.


9. EXPLORATION

During years 2008-2010 the Maricunga deposit and surroundings areas were extensively mapped and

sampled (rock chips and trenches). Local mapping, at a scale of 1:2,500, centered in the deposit, was

carried out by A. Hodgkin. Surroundings, totaling 163-km2, were mapped at scales of 1:10,000 and

1:25,000 by Dr. A. Dietrich.

Geophysical surveys, both ground magnetics and induced polarization, were completed by the

Company over the Cerro Maricunga property. The survey results are summarizing in the October 7,

2011 technical report appropriately filed by Atacama Pacific.

During the Phase II program (November 2010 through to April 2011), Atacama Pacific continued with

a program of extensive surface trenching following up on results the period 2008 through 2010. These

results are summarized in the October 7, 2011 technical report.

Drilling represented the main exploration activity during the Phase III (November 2011 – May 2012)

program.

Atacama Pacific is currently undertaking a 20,000m Phase IV drilling program which commenced in

November 2012.


10. DRILLING

The November 2012 resource estimate which forms the basis for the Preliminary Economic

Assessment is based on a total of 220 drill holes, which have led to the definition of three major

mineralised zones aligned along a 2.3-km NW-SE trend. From north to south the bodies are: Lynx,

Phoenix and Crux. The Pollux zone, noted in the table below, forms a subzone of the Phoenix. Details

on the amount of drilling carried out in each zone are shown in Table 13. A plan depicting reverse

circulation and diamond drilling collars is shown in Figure 8.

Table 13 Cerro Maricunga Drilling Phases – Meters Drilled & Meters Assayed

ZONE PHASE RC-Meters DDH-Meters RC + DDH-Meters

N° Holes Drilled Assayed N° Holes Drilled Assayed N° Holes Drilled Assayed

CRUX

I 3 852.00 852.00 1 217.00 217.00 4 1069.00 1069.00

II 3 1,346.00 1,346.00 7 2,299.25 2,299.25 10 3,645.25 3,645.25

III 39 12,730.00 12,728.00 9 3,502.82 3,502.82 48 16,232.82 16,230.82

Sub-Total 45 14,928.00 14,926.00 17 6,019.07 6,019.07 62 20,947.07 20,945.07

I 2 570.00 570.00 1 321.05 321.05 3 891.05 891.05

PHOENIX & II 41 16,490.00 16,482.00 7 2,567.92 2,567.92 48 19,057.92 19,049.92

POLLUX III 39 13,972.00 13,942.00 20 7,812.49 7,812.49 59 21,784.49 21,754.49

Sub-Total 82 31,032.00 30,994.00 28 10,701.46 10,701.46 110 41,733.46 41,695.46

LYNX

I 0 0.00 0.00 1 181.85 181.85 1 181.85 181.85

II 16 6,734.00 6,734.00 8 2,384.30 2,384.30 24 9,118.30 9,118.30

III 14 4,912.00 4,912.00 9 3,046.35 3,046.35 23 7,958.35 7,958.35

Sub-Total 30 11,646.00 11,646.00 18 5,612.50 5,612.50 48 17,258.50 17,258.50

ALL ZONES

I 5 1,422.00 1,422.00 3 719.90 719.90 8 2141.90 2141.90

II 60 24,570.00 24,562.00 22 7,251.47 7,251.47 82 31,821.47 31,813.47

III 92 31,614.00 31,582.00 38 14,361.66 14,361.66 130 45,975.66 45,943.66

TOTAL 157 57,606.00 57,566.00 63 22,333.03 22,333.03 220 79,939.03 79,899.03


Figure 8 Maricunga Project – Drill Hole Plan – Phases I to III (source SBX)


11. SAMPLE PREPARATION, ANALYSES AND SECURITY

11.1 Sample Preparation

This section describes the handling of samples used in the resource estimation; drill-hole data-assays,

as well as procedures applied for quality control in sample preparation and analytical procedures. The

sample preparation for non-drill (core or RC) samples, such as trench, geochemical and hand samples

are not discussed in this section as the results have these samples have not been used in the

estimation of the resource..

The following paragraphs summarize the manner in which Atacama Pacific manages and prepares

reverse circulation and diamond drill hole samples:

Atacama uses a carefully designed and controlled QA/QC (Quality assessment/quality

control) program.

Drill core and cuttings are handled by Atacama personnel and/or SBX sub-contracted

personnel from the moment that the core/cuttings exit the drill. Core and cuttings are

transported weekly to the Atacama Paipote core logging and core/cuttings storage facility.

Reverse Circulation Holes - The RC cuttings are split in a standard cuttings splitter with ¼ of

the sample (17-18 kg) being put into a pre-labeled plastic bag under the supervision and

control of Atacama personnel at the drill site. At the RC drill rig, a geological technician

collects a representative sample (dust and cuttings) at 2-meters intervals in properly marked

and identified plastic “chip” trays, which are used for logging purposes. Field duplicate

samples are inserted at a rate of approximately 1 per 20 samples. Once the holes are

completed, samples are transported to the core shed located in Paipote.

At Paipote, 7kg bagged blank reference material are inserted after each duplicate and then

sent to the sample preparation facility run by Geoanalitica, located approximately 1-km from

ATM’s core shed. The sample preparation stream, as well as the QA/QC protocol is shown in

Figure 9.

Diamond Drill Holes - Diamond drill core is boxed in aluminum trays at the drill site, where it

is properly taken from the core barrel. The recovery, RQD, and fracture frequency are

measured by a geological technician. The core boxes are properly sealed such that there will

be no movement or separation of the core, and are then transported to the camp.

The core is pre-logged and marked for splitting at the camp by a senior geologist. Thereafter,

the geologist carefully selects “mineralized” 2-m samples for duplicates. Diamond saw

splitting is carried out in the ATM core shed located in Paipote.

One half of the core is returned to the core box for final logging and storage; the other half is

properly bagged and labeled, blanks are inserted, and delivered to Geoanalítica for

preparation together with the list of samples selected as duplicates. The sample preparation

stream for DDH is shown in Figure 10.


Figure 9 Sample Preparation Protocol – RC and QA/QC


Figure 10 Sample Preparation Protocol – DDH and QA/QC


11.2 Analysis and Security

Quality control protocols include the following:

Insertion of standards acquired at Geostats Pty.

Insertion of commercial blanks acquired at Geostats Pty (analytical control).

Insertion of in-house blank material (sample preparation control).

Insertion of field duplicates for reverse circulation holes.

Insertion of coarse rejects (-10#) for diamond drill holes.

Insertion of -150# pulp duplicates.

Analytical test work during the 2011-2012 campaign was carried out in Activation Laboratories located

in Coquimbo. Gold assays were performed utilizing 50-gr fire assay with an Atomic Absorption

Spectroscopy (AAS) finish and copper via acid digestion with an AAS finish.

Samples for specific gravity determinations are 10-cm core specimens taken every 50-m from

diamond drill holes.


12. DATA VERIFICATION

During drilling of 2010 through 2012 drilling campaigns, sample quality assurance and quality control

measures included the insertion of duplicates, standards and blanks. This section of the report

presents statistical analyses of data collected during Phase III (2011-2012) campaign. Analyses were

performed for the following: 655 field/coarse rejects, and 655 pulp duplicates (-150#) for chemical

laboratory analysis. Additionally, grade QAQC analyses were performed for 894 Geostats standards,

and 388 in-house and 265 Geostats blank samples. Further details are shown in Table 14.

Table 14 Cerro Maricunga Database Quality Assessment and Quality Control

PHASE I II III Total

Years 2010 2010-2011 2011-2012 2010-2012

N° Drillholes 8 82 130 220

Meters Assayed 2,141.90 31,444.57 45,945.66 79,532.13

N° Samples Assayed 1,072 15,722 22,974 39,768

QA - QC Assays

N° Standards 48 534 894 1,476

N° Blanks In-House 18 187 388 593

N° Blanks-Geostats 0 0 265 265

N° Field/Coarse Rejects 39 534 655 1,228

N° Pulp Duplicates 39 534 655 1,228

Total QA - QC Assays 144 1,789 2,857 4,790

% QA - QC Assays 13.4 11.4 12.4 12.0

Results indicate that sample preparation and analyses were acceptably precise and exact during the

2010-2012 drilling campaigns.

12.1 Data Management

The following action was taken in preparing the data for statistical analyses:

Values for Au reported as “<0.005” were replaced by “0.0025” (this corresponds to values below the 5

ppb detection limit for gold).

12.2 Analysis of Duplicate Samples

Table 15 summarizes the QA/QC results for all RC field duplicates, DDH coarse duplicates (10#) and

pulp duplicates.


Table 15 Summary of QA-QC results for duplicate samples – Au

Results

RC – Au (ppm) DDH – Au (ppm) Pulp – Au (ppm)

Original Duplicate Original Duplicate Original Duplicate

Number of samples 417 417 238 238 655 655

Minimum 0.003 0.003 0.009 0.009 0.003 0.003

Maximum 2.615 2.607 4.502 3.142 3.142 3.137

Mean 0.224 0.224 0.360 0.352 0.270 0.271

Std. Deviation 0.292 0.286 0.503 0.455 0.362 0.367

Test T (of the means) 0.19 1.10 -0.47

Mean Relative Error (%) 13.31 7.83 10.61

Correlation (r) 0.994 0.979 0.994

Intercept 0.005 0.033 -0.002

Slope 0.975 0.887 1.009

In all cases the original and duplicate data showed good agreement:

Results for the T Tests (all values are within [-1.96, 1.96]) show that the original and duplicate

means are not significantly different, based on 95% confidence intervals.

Mean relative errors are close to 13% for the RC field duplicates and around 8% for DDH

coarse duplicates. However, the mean relative error for pulp duplicates is 10.61%, which is

considerably higher than that for DDH coarse duplicates. The reason for this increase is due

to the fact that there are many low grade values in the pulp duplicates, which inflate the

relative errors.

In all three cases, correlation values are high (very close to 1), intercepts are low and slopes

are close to 1, indicating a high degree of correspondence between the original and duplicate

samples.

The effect of low grade samples on the mean relative error for pulp (and other) duplicates was verified

by repeating the statistical analyses presented in Table 15 after pairs with an average Au value lower

than 0.1 ppm had been eliminated. Results of this reanalysis are presented in Table 16. A threshold of

0.1 ppm was selected because samples with grades lower than this are not likely to be of interest for

modeling the resources for open pit planning, and they contribute large amounts of relative error as

many of them are close to the gold detection limit.

As can be seen, 178 RC duplicates, 78 DDH duplicates and 256 pulp duplicates were eliminated,

indicating that a considerable amount of the data was below 0.1 ppm Au.

Eliminating low grade duplicates had the following effects:


The mean Au grades increased from 0.224 to 0.355 ppm for RC, from 0.352 to 0.497ppm for

DDH and from 0.271 to 0.413 ppm for pulps.

The mean relative errors decreased. This was especially notorious for pulp duplicates, where

the mean relative error decreased from 10.61 to 6.21%.

The elimination of low grade samples also affected the percentage of data meeting the

absolute relative difference criteria, as summarized in Table 17.

Table 16 Summary of QAQC results for duplicate samples ≥0.1 ppm-Au

Results

RC – Au (ppm) DDH – Au (ppm) Pulp – Au (ppm)

Original Duplicate Original Duplicate Original Duplicate

Number of samples 239 239 160 160 399 399

Minimum 0.093 0.094 0.099 0.101 0.098 0.055

Maximum 2.615 2.607 4.502 3.142 3.142 3.137

Mean 0.355 0.355 0.508 0.497 0.412 0.413

Std. Deviation 0.328 0.319 0.556 0.495 0.404 0.412

Test T (of the means) -0.05 1.11 -0.33

Mean Relative Error (%) 7.78 6.44 6.21

Correlation (r) 0.992 0.974 0.993

Intercept 0.013 0.056 -0.004

Slope 0.964 0.867 1.011

Table 17 QA-QC criteria and results for Au duplicates.

Duplicate type Criteria Result for all Au data Result for Au >0.1 ppm

Reverse circulation drilling 90% data have | rel diff| < 20% 91.3 % data 96.5 % data

Diamond drilling 90% data have | rel diff| < 15% 93.5 % data 96.8 % data

Chemical laboratory pulp 90% data have | rel diff| < 10% 87.3 % data 95.4 % data

Acceptability criteria were not met for pulp duplicates when all the data were analyzed, most likely due

to a large dispersion of relative difference values for low grade samples. When low grade samples

(<0.1 ppm Au) were excluded, all three types of samples met the acceptability criteria.

In general, statistical analyses of all Au duplicate data examined (reverse circulation field duplicates,

diamond drillhole 10# duplicates and duplicate assays), especially those above 0.1 ppm Au show

good precision, indicating that the protocols used for sample preparation and assaying were adequate.

12.3 Analysis of Standard Samples and Blank acquired at Geostats Pty

Characteristics of the standard samples used for quality control are shown in Table 18.


Table 18 Summary for Standard Samples

Parameter G303-8 G909-7 G907-2 G907-7

Number 227 226 221 220

Observed mean 0.273 0.491 0.897 1.504

Nominal value 0.261 0.495 0.890 1.541

Bias (%) 4.60 -0.81 0.79 -2.40

Bias (%) was calculated as:

(Observed mean – Nominal value) / Nominal value x 100.

The observed bias for the lowest grade standard (G303-8) is slightly high. Standards G909-7 and

G907-2, which represent a relevant portion of the resources behaved very well. The high grade

standard (G907-7) showed a consistent negative bias, however it affects less than 3% of the samples.

The overall bias amounted to -0.68%, which is perfectly acceptable.

Results of the QAQC analyses of all three standard samples and blank are shown in Figure 11

through Figure 15.

Figure 11 Results for all standards

The slope of the regression line (with an intercept fixed to zero) should ideally be equal to 1.000. In

this case, the observed slope was 0.986, which is 1.4% lower than the desired value, which is


acceptable. The correlation coefficient is very high (0.999), indicating that the deviations from the

regression line are low. Additionally, dispersions of the assay values for all three standards are low,

indicating good assay accuracy.

Figure 12 Control chart for standard G303-8





The control charts show, as is expected, a few samples that lie beyond the 2 standard deviation upper

and lower limits. These occur for standards G909-7, G907-2 and G907-7. The following results

(highlighted in red circles in the corresponding figures shown above) are cause for concern:

For standard G909-7, sample N° 40876 (CMD182) has a value of 0.397 and Sample

N° 41255 (CMD200) has a value of 0.402. Both values exceed three (3) standard

deviations from the mean.

For standard G907-2, Sample N° 26623 (CMD104) has a value of 0.751 and Sample

N° 42936 (CMR155B) has a value of 1027. Both values exceed three (3) standard

deviations from the mean.


In conclusion, except for the 4 samples mentioned previously, the analyses of standards used in the

2011 – 2012 exploration campaigns show acceptable accuracy and therefore drilling results used for

resource modeling and estimation are reliable.

12.4 Analysis of In-House Blank Samples

Blank samples were inserted into the sample preparation facility in order to assess if there was any

contamination between samples. Seven types of blanks were used, as shown in Table 19. The lots

were produced by homogenizing different batches of low grade material, taken from late ignimbrites at

site (younger than mineralization processes).

Table 19 Blanks used for quality control and assurance

Lot Number used Mean Au value (ppm)

Lot 1 - AP 91 0.0074

Lot 2 - AP 83 0.0093

Lot 3 - AP 84 0.0052

Lot 4 - AP 51 0.0053

Lot 5 - AP 42 0.0086

Lot C 11 0.0046

Lot D 26 0.0059

Figure 16 shows Au grade dispersion within each lot and Figure 17 a sequential Au assay plot for

blank samples inserted during the 2011 – 2012 drilling campaign.

Figure 16 Gold Grade Values per Lot – In House Blanks


Figure 17 Time Sequenced Au Values – In House Blanks

Five anomalous values were encountered (marked with red dots in Figure 17):

N° LOT Au Assay Preceding Au Assay Hole-ID Sample

1 1 0.256 0.054 CMR113 23345

2 1 0.051 0.138 CMD096 22925

3 2 0.067 0.718 CMD111 26198

4 2 0.071 0.534 CMD104 25506

5 5 0.138 0.392 CMD145 36741

Value N°1 probably corresponds to Standard G303-8, which was misplaced. The remaining

anomalous values may be due to slight contamination of four (4) out of some 23,000 samples assayed

during Phase III.

12.5 Analysis of Commercial Blank Samples

A set of 265 500-g sachets of blank certified material, acquired at Geostats Pty, were inserted to

control possible contamination in the analytical laboratory.

Figure 18 shows assayed gold values. The first plot (top) includes an anomalous results that

corresponds to a sample of standard G-308-3 (0.250 g/t) which was mislabeled; the second (bottom)

graph corresponds to gold values obtained for the remaining 264 samples. Results are reasonably

good.


Figure 18 Geostats Blank Certified Material- Au

Overall conclusions drawn from the QAQC analyses are as follows:

Analyses of duplicates show good precision, indicating that the protocols used

for sample preparation and assaying were adequate.

Analyses of standards used during exploration show good accuracy.

Analyses of blanks show no serious contamination problems between

samples.

The overall conclusion is that QAQC data generated throughout the 2011 – 2012 drilling campaigns at

Cerro Maricunga meets acceptability criteria and therefore the exploration data used complies with

required confidence for resource modeling and estimation.


13. MINERAL PROCESSING AND METALLURGICAL TESTING

A number of metallurgical test campaigns have been undertaken on mineralized material from Cerro

Maricunga with 14 column tests and over 100 bottle roll tests completed. The test work has been

completed by established mineral processing laboratories: Kappes, Cassidy and Associates (“KCA”),

Reno, Nevada; Laboratorio Plenge, Lima, Peru; and, AMTEL (Advanced Mineral Technology

Laboratory Ltd), London, Canada. The results from the metallurgical test work completed to date are

described in Company’s November 9, 2012 technical report.

The following summarizes the results from metallurgical tests completed on seven composites

samples of Cerro Maricunga mineralized material completed in the KCA facilities in Reno (2010 and

2011). Tests results were reviewed and summarized by AMTEL. The key results are shown as

following.

13.1 Characterization of samples

Chemical, physical and mineralogical analyses were carried out on some of the samples. The

corresponding results are shown in the following sections.

13.1.1 Physical characterization

Hardness estimation (BWi) and abrasion characterization was conducted to some of the samples by

SGS laboratories. The following table shows the results.

Table 20 Hardness and abrasion index results

13.1.2 Chemical characterization

A chemical analysis was carried out on all seven samples. The following table shows the samples

head grades for Au, Ag and Cu.

Bwi

KWh/t

1 10.63 0.0669

2 11.26 0.1239

3 --- ---

4 10.67 ---

5 10.49 ---

6 9.77 ---

7 ---

Composite Ai


Table 21 Sample head grad

13.2 CYANIDATION Tests

13.2.1 Bottle Roll Tests (BRT)

Bottle roll tests were conducted on all samples. Each test was carried out in duplicate (test N° ending

on A and B, see tables below).

Every test was carried out under the following experimental conditions: solids 50% (w/w), 1 g/l NaCN,

and pH 10 to 11.

Different particle size distributions were tested for every sample.

Table 22 to Table 28 show the results obtained in the test performed on composites 1 to 7.

Au (g/t) Ag (g/t) Cu (g/t)

1 1.10 0.40 376

2 0.77 0.40 247

3 1.45 0.60 291

4 0.28 --- 123

5 0.50 --- 257

6 0.58 --- 194

7 0.22 --- 136

CompositeHead Grade


BRT for Composite 1

Table 22 Bottle roll tests results of Composite 1

Test N° = (A, B) correspond to the same test in duplicate

For composite 1, gold extraction increases from 81% to 88% when the P80 is reduced from 19 mm to

1 mm (for a residence time of 10 days). A gold extraction of 92 % is achieved after 4 days for P80 0.1

mm.

Sodium cyanide (NaCN) consumption is very low and within the range 0.07 through 0.31 kg/t.

Test N° P80

Calc. Head

Grade

(Sol + Tails)

Gold

Extraction

Residence

Time

NaCN

Consumption

Addition of

Ca(OH)2

Addition of

CaO

mm g/t Au % days Kg/t Kg/t Kg/t

45206 A 19.0 1.06 81 10 0.23 2.5 1.9

45206 B 19.0 1.13 81 10 0.26 2.5 1.9

45207 A 12.5 1.13 83 10 0.28 2.8 2.1

45207 B 12.5 1.11 83 10 0.31 2.8 2.1

45208 A 9.5 1.07 86 10 0.12 3.0 2.3

45208 B 9.5 1.02 85 10 0.12 3.0 2.3

45209 A 6.3 1.03 85 10 < 0,01 3.5 2.6

45209 B 6.3 1.36 80 10 0.19 3.0 2.3

45210 A 1.0 1.05 88 10 0.12 3.5 2.6

45210 B 1.0 1.06 88 10 0.11 3.5 2.6

45238 A 0.1 1.35 92 4 0.07 3.5 2.6

45238 B 0.1 1.13 91 4 0.17 3.5 2.6


BRT for Composite 2




1 mm (for a residence time of 10 days). A gold extraction of 82 % is achieved after 4 days for P80 0.1

mm.

Sodium cyanide (NaCN) consumption is within the range 0.03 through 0.23 kg/t.

BRT for Composite 3


For composite 3, gold extraction increases from 82% to 89% when the P80 is reduced from 1.7 mm to

0.1 mm (for a residence time of 4 days).


Test N° P80

Calc. Head

Grade

(Sol + Tails)

Gold

Extraction

Residence

Time

NaCN

Consumption

Addition of

Ca(OH)2

Addition of

CaO


45168 A 19.0 0.79 76 10 0.15 2.5 1.9

45168 B 19.0 0.81 75 10 0.16 2.5 1.9

45169 A 12.5 0.78 77 10 0.08 2.9 2.2

45169 B 12.5 0.76 75 10 0.23 2.8 2.1

45170 A 9.5 0.75 78 10 0.10 3.0 2.3

45170 B 9.5 0.81 77 10 0.03 3.0 2.3

45171 A 6.3 0.75 79 10 0.21 3.0 2.3

45171 B 6.3 0.74 78 10 0.13 3.0 2.3

45172 A 1.0 0.76 80 10 0.03 4.0 3.0

45172 B 1.0 0.75 79 10 0.08 4.0 3.0

45238 A 0.1 0.74 82 4 0.19 3.0 2.3

45238 B 0.1 0.78 82 4 0.19 3.0 2.3

Test N° P80

Calc. Head

Grade

(Sol + Tails)

Gold

Extraction

Residence

Time

NaCN

Consumption

Addition of

Ca(OH)2

Addition of

CaO


45277 A 1.7 1.40 82 4 0.13 4 3.0

45277 B 0.2 1.39 88 4 0.09 3.5 2.6

45277 C 0.1 1.45 89 4 0.19 3.5 2.6


BRT for Composite 4





Sodium cyanide (NaCN) consumption is very low and consistently below 0.14 kg/t.

Copper extraction is low; from 1% to 5% as the P80 decreases from 50 to 0.3 mm.

Test N° P80

Calc. Head

Grade

(Sol + Tails)

Gold

Extraction

Residence

Time

NaCN

Consumption

Addition of

Ca(OH)2

Addition of

CaO

Copper

Extraction

mm g/t Au % days Kg/t Kg/t Kg/t %

60010 A 50.0 0.288 66 6 0.14 1.5 1.1 1.0

60010 B 50.0 0.276 65 6 0.09 0.5 0.4 1.0

60011 A 25.0 0.301 69 6 0.09 1.8 1.4 1.0

60011 B 25.0 0.286 73 6 0.07 1.8 1.4 1.0

60012 A 12.5 0.295 74 6 0.02 2.5 1.9 1.0

60012 B 12.5 0.279 75 6 0.02 2.0 1.5 1.0

60013 A 6.3 0.283 75 6 0.04 2.5 1.9 1.0

60013 B 6.3 0.278 77 6 0.01 2.5 1.9 1.0

60014 A 1.0 0.273 84 6 0.08 2.5 1.9 3.0

60014 B 1.0 0.273 82 6 0.03 2.5 1.9 2.0

60031 A 0.3 0.26 76 6 0.02 3.0 2.3 5.0

60031 B 0.3 0.264 73 6 0.02 3.0 2.3 5.0

60015 A 0.1 0.286 85 6 0.01 3.0 2.3 4.0

60015 B 0.1 0.303 88 6 <0,01 3.0 2.3 4.0


BRT for Composite 5






Copper extraction is in a low range. It goes from 1% to 6% when the P80 decreases from 50 to 0.3

mm.

Test N° P80

Calc. Head

Grade

(Sol + Tails)

Gold

Extraction

Residence

Time

NaCN

Consumption

Addition of

Ca(OH)2

Addition of

CaO

Copper

Extraction


60016 A 50.0 0.546 64 6 0.08 1.0 0.8 1.0

60016 B 50.0 0.445 66 6 0.08 1.0 0.8 1.0

60017 A 25.0 0.508 65 6 0.16 1.0 0.8 1.0

60017 B 25.0 0.558 69 6 0.13 1.0 0.8 1.0

60018 A 12.5 0.469 79 6 0.1 1.5 1.1 2.0

60018 B 12.5 0.448 82 6 0.06 1.5 1.1 2.0

60019 A 6.3 0.474 82 6 0.02 2.0 1.5 3.0

60019 B 6.3 0.477 82 6 0.03 2.0 1.5 3.0

60020 A 1.0 0.513 74 6 0.12 2.5 1.9 4.0

60020 B 1.0 0.488 79 6 0.04 2.5 1.9 4.0

60032 A 0.3 0.505 82 6 <0,01 2.5 1.9 6.0

60032 B 0.3 0.491 84 6 <0,01 2.5 1.9 6.0

60021 A 0.1 0.513 92 6 0.025 1.5 1.1 5.0

60021 B 0.1 0.577 86 6 0.02 1.5 1.1 5.0


BRT for Composite 6






Copper extraction is in a low range. It goes from 1% to 3% when the P80 decreases from 50 to 0.1

mm, and some of the samples don’t show copper extraction.

Test N° P80

Calc. Head

Grade

(Sol + Tails)

Gold

Extraction

Residence

Time

NaCN

Consumption

Addition of

Ca(OH)2

Addition of

CaO

Copper

Extraction


60004 A 50.0 0.561 56 6 0.06 4.2 3.2 1.0

60004 B 50.0 0.58 54 6 0.07 4.0 3.0 0.0

60005 A 25.0 0.538 59 6 0.09 4.5 3.4 1.0

60005 B 25.0 0.579 58 6 0.08 5.1 3.9 0.0

60006 A 12.5 0.549 60 6 0.01 5.0 3.8 0.0

60006 B 12.5 0.582 66 6 0.04 5.5 4.2 0.0

60007 A 6.3 0.559 70 6 0.09 6.0 4.5 1.0

60007 B 6.3 0.597 66 6 0.03 6.0 4.5 0.0

60008 A 1.0 0.584 79 6 0.05 6.0 4.5 1.0

60008 B 1.0 0.569 79 6 0.01 6.0 4.5 1.0

60030 A 0.3 0.564 77 6 <0,01 6.0 4.5 2.0

60030 B 0.3 0.73 73 6 <0,01 6.0 4.5 2.0

60009 A 0.1 0.643 80 6 <0,01 7.0 5.3 3.0

60009 B 0.1 0.623 83 6 <0,01 7.0 5.3 3.0


BRT for Composite 7






Copper extraction is low, being 1.0% for some of the samples; the rest show no extraction at all.

For P80 over 12.5 mm it is possible to conclude from the roll bottle tests of all composites:

Copper extraction was below 1%,

Sodium cyanide (NaCN) consumption as an average is 0.15 kg/t.

Calcium oxide or quicklime (CaO) consumption as an average is 2 kg/t.

Figure 19 shows the effect of the mineralized material particle size distribution on gold extraction, for

the seven composites. As it might be seen in the figure, gold extraction decreases when the particle

size increases. There is little difference in gold extraction at coarse sizes (over 12.5 mm) for all

composites.

Test N° P80

Calc. Head

Grade

(Sol + Tails)

Gold

Extraction

Residence

Time

NaCN

Consumption

Addition of

Ca(OH)2

Addition of

CaO

Copper

Extraction


60027 A 19.0 0.176 71 6 0.19 2.7 2.0 1.0

60027 B 19.0 0.22 71 6 0.19 2.7 2.0 0.0

60028 A 12.5 0.207 75 6 0.03 3.0 2.3 0.0

60028 B 12.5 0.221 71 6 0.05 3.0 2.3 0.0

60029 A 6.3 0.215 73 6 0.04 3.5 2.6 1.0

60029 B 6.3 0.207 76 6 0.06 3.5 2.6 1.0


Figure 19 Effect of mineralized material particle size distribution on gold extraction. Bottle roll tests.

50

55

60

65

70

75

80

85

90

95

100

00 05 10 15 20 25 30 35 40 45 50

Gold

Extr

acti

on (

%)

P80 (mm)

Composite 1 BRT 1.08 g/t Au Composite 2 BRT 0.78 g/t Au Composite 3 BRT 1.45 g/t Au

Composite 4 BRT 0.28 g/t Au Composite 5 BRT 0.50 g/t Au Composite 6 BRT 0.58 g/t Au

Composite 7 BRT 0.22 g/t Au


13.2.2 Column percolation leach testwork (CLT)

Column percolation leach testwork was conducted on six of the seven composites (composite 3 was

not tested). Columns of 12.7 cm diameter and 170 cm height were utilized for every test. Residence

time was 57 days for composites 1 and 2, and 87 days for composites 4 through 7.

Different particle size distributions were tested.

Results of column testwork, are shown Table 29

Table 29 Columns percolation leach testwork

Gold extraction for composite 1 at P80 19 mm was 89%.

Gold extraction for composite 2 at P80 19 mm was 79%. A minor increment is observed when P80

decreases to 9.5 mm (80% of extraction).

The average gold extraction for composite 4 at P80 19 mm was 81%.

The average gold extraction for composite 5 at P80 19 mm was 85%.

Gold extraction for composite 6 at P80 19 mm was 80%. Gold extraction decreases to 78% when P80

is increased to 50 mm and to 77% when P80 is increased to 100 mm.

Gold extraction for composite 7 at P80 19 mm was 78%.

Sodium cyanide (NaCN) consumption as an average of all composite for P80= 19 mm is 0.8 Kg/t.

Calcium oxide (CaO) addition as an average of all composite is 2.7 Kg/t.

Analyzing the results obtained in both BTR and CLT test, the following can be concluded:

For an average material grade of 0.57 g/t Au and P80 50 mm, gold extraction reaches 56% in a

bottle leaching test and 79% in a column test.

Test N° Ore Composite P80

Calc. Head

Grade

(Sol + Tails)

Gold

Extraction

Residence

Time

NaCN

Consumption

Addition of

Ca(OH)2

Addition of

Ca(OH)2

Av/composite

Addition of

CaO

Av/composite

mm g/t Au % días Kg/t Kg/t Kg/t Kg/t

45640 Compósito 1 19,0 1,13 89 57 1,0 3,1 3,1 2,3

45643 Compósito 2 19,0 0,76 79 57 1,1 3,1

45646 Compósito 2 9,5 0,79 80 57 1,2 3,1

60042 Compósito 4 19,0 0,28 80 87 0,8 2,5

60045 Compósito 4 19,0 0,25 82 87 0,5 2,5

60048 Compósito 5 19,0 0,46 86 87 0,7 2,0

60051 Compósito 5 19,0 0,43 84 87 1,0 2,0

60033 Compósito 6 100 0,53 77 87 0,1 6,6

60036 Compósito 6 50,0 0,46 78 87 0,1 6,7

60039 Compósito 6 19,0 0,43 80 87 0,4 6,5

60054 Compósito 7 19,0 0,16 78 87 0,6 4,0 4,0 3,0

2,3

1,9

1,5

5,0

3,1

2,5

2,0

6,6


For a material grade between 0.78 and 1.08 g/t Au and P80 19 mm, gold extractions are 76%

to 81% in bottle leaching tests. For the same conditions, gold extractions are 79% to 89% in

column tests.

For an average material grade of 0.79 g/t Au and P80 9.5 mm, gold recovery reaches 78% in a

bottle leaching test and 80% in a column test.

For a material composite with 0.5 g/t Au and P80 19 mm an extraction of 85% was achieved in

a column test.

In view of the results obtained from the laboratory testwork, it is considered possible to achieve a gold

extraction of 80% in an industrial cyanidation heap process for a particle size of P80 19 mm, for gold

head grades starting from 0.5 g/t.

13.2.3 Effect of grade in gold extraction

The following Table 30 shows the results for columns test at P80 19 mm. In order to compare the test at

a same reaction time, the cyanidation kinetics for composites 4 to 7 were interpolated and gold

extraction obtained at 57 days.

Table 30 Column test results after 57 days, P80 = 19 mm

Test N° Ore Composite P80

Calc. Head

Grade

(Sol + Tails)

Gold

Extraction

Residence

Time

mm g/t Au % days

45640 Composite 1 19.0 1.13 89 57

45643 Composite 2 19.0 0.76 79 57

60042 Composite 4 19.0 0.28 80 57

60045 Composite 4 19.0 0.25 82 57

60048 Composite 5 19.0 0.46 86 57

60051 Composite 5 19.0 0.43 84 57

60039 Composite 6 19.0 0.43 80 57

60054 Composite 7 19.0 0.16 78 57


The following Figure 20 shows the relationship between gold extraction and gold head grade for all

composites.

Figure 20 Gold extraction versus gold head grade. Column testwork at 19 mm

13.2.4 Conclusions

The following model can predict gold extraction for column testwork, for a particle size P80 of

19 mm. Gold head grade should be in range 0.16 to 1.08 g/t. No other variables are included in

the model:

Gold Extraction, % = 9.1653 · gold head grade + 76.534

According to the column tests results, a gold extraction around 81% could be achieved, for 0.5

g/t Au and a P80 of 19 mm.

y = 9.1653x + 76.534

40

50

60

70

80

90

100

0.0 0.2 0.4 0.6 0.8 1.0 1.2

Gold

extr

acti

on (

%)

Head grade (g/t Au)

Gold extraction vs. gold grade at P80 19 mm


14. MINERAL RESOURCE ESTIMATE

The global mineral resource estimate, used as the basis for the preparation of the preliminary

economic assessment, was prepared by Magri Consultores Limitada and presented in the NI 43-101

compliant technical report “Technical Report on the Cerro Maricunga Gold Project, Region III, Chile”

dated November 9, 2012. The report can be found appropriately filed on the System for Electronic

Document Analysis and Retrieval at www.sedar.com.

The November 9, 2012 technical report includes details regarding the following items noted below and

should be reference for further information on the methodology used to prepare the current global

resource estimate:

QA/QC

Modeling Procedure

Exploratory data analysis - EDA

Variography

Block model and resource estimation

Model validation

Specific gravity model

Resource classification

Resource tabulation

The following sections briefly summarize methodology used to prepare the current resource estimate.

14.1 Modelling Procedure

The global resource model was generated using the following data from surface maps and geological

descriptions from diamond drill core and RC chip logging. The data was used to prepare 48 sections

and 12 plans spaced at 50m intervals using a ± 25m influence. A grade-shell of 150 ppb was

contoured and interpolated, as well as known barren porphyry units were modelled.

Four (4) main mineralized areas were defined (from north to south): Lynx , Phoenix, Pollux and Crux.

Each solid was assigned a specific code: Lynx = 1, Phoenix = 2, Crux = 3 and Pollux = 4. Barren zone

surrounding these solids are referred to as “Outside” and assigned a code = 5.

Figure 21 shows a three-dimensional view of the final solids.

As can be seen, the Lynx and Phoenix are separated by an approximately NS, sub-vertical porphyry

dike, which hosts low-grade Au mineralization. In general, Lynx, Phoenix and Pollux have a NW

http://www.sedar.com/


structural pattern (the “apparent” NS structural pattern observed in Phoenix corresponds to the

orientation of the sections). The structural pattern of Crux differs from the above, since faults have a

marked ESW trend.

Figure 21 Three-D View of Cerro Maricunga’s Mineralized Zones

14.2 Exploratory Data Analyses

Data used for the resource estimation consisted of reverse circulation and diamond drill hole samples

that are detailed in Table 31. Forty metres within reverse circulation holes were not assayed due to

poor cutting recovery.


Table 31 Cerro Maricunga Drilling Phases – Meters Drilled & Meters Assayed

ZONE PHASE RC-Meters DDH-Meters RC + DDH-Meters

N° Holes Drilled Assayed N° Holes Drilled Assayed N° Holes Drilled Assayed

CRUX

I 3 852.00 852.00 1 217.00 217.00 4 1069.00 1069.00

II 3 1,346.00 1,346.00 7 2,299.25 2,299.25 10 3,645.25 3,645.25

III 39 12,730.00 12,728.00 9 3,502.82 3,502.82 48 16,232.82 16,230.82

Sub-Total 45 14,928.00 14,926.00 17 6,019.07 6,019.07 62 20,947.07 20,945.07

I 2 570.00 570.00 1 321.05 321.05 3 891.05 891.05

PHOENIX & II 41 16,490.00 16,482.00 7 2,567.92 2,567.92 48 19,057.92 19,049.92

POLLUX III 39 13,972.00 13,942.00 20 7,812.49 7,812.49 59 21,784.49 21,754.49

Sub-Total 82 31,032.00 30,994.00 28 10,701.46 10,701.46 110 41,733.46 41,695.46

LYNX

I 0 0.00 0.00 1 181.85 181.85 1 181.85 181.85

II 16 6,734.00 6,734.00 8 2,384.30 2,384.30 24 9,118.30 9,118.30

III 14 4,912.00 4,912.00 9 3,046.35 3,046.35 23 7,958.35 7,958.35

Sub-Total 30 11,646.00 11,646.00 18 5,612.50 5,612.50 48 17,258.50 17,258.50

ALL ZONES

I 5 1,422.00 1,422.00 3 719.90 719.90 8 2141.90 2141.90

II 60 24,570.00 24,562.00 22 7,251.47 7,251.47 82 31,821.47 31,813.47

III 92 31,614.00 31,582.00 38 14,361.66 14,361.66 130 45,975.66 45,943.66

TOTAL 157 57,606.00 57,566.00 63 22,333.03 22,333.03 220 79,939.03 79,899.03

14.3 Database Description

The drillhole database used for the resource estimation consisted of the following tables:

Collar Table:

DHID: Drillhole identification

X: East collar coordinate

Y: North collar coordinate

Z: Collar elevation

Survey Table:

From: Beginning of the interval

To: Ending of the interval


Azi: Azimuth of the interval

Dip: Dip of the interval

Assay Table:

From: Initial point of the sample

To: Final point of the sample

Au_ppm: Gold grade in ppm

Specific Gravity Table:

From: Initial point of the core specimen

To: Final point of the core specimen

SG: Specific gravity of the core specimen (g/cc)

14.4 Compositing, Statistics, Outliers, Declustering and Estimation Domains

As sampling was carried out almost consistently every 2.0m, coordinates were assigned to the center

of individual samples and the results were used directly in the resource estimation rather than

calculating equal length composites, thus avoiding unnecessary smoothing.

Table 32 shows basic sample statistics for each mineralized envelope as well as for some

combinations thereof and also for the samples lying outside all mineralized envelopes (code 5).

Table 32 Basic Sample Statistics

Mean grades within the mineralized envelopes range from 0.339 to 0.474 g/t Au, while data lying

outside the mineralized envelopes have a mean grade of 0.074 g/t Au. The means and the

distributions of gold grades within the mineralized envelopes are very similar thus indicating that the

four zones could be estimated as a single unit, however the North sector (comprising the Lynx,


Phoenix and Pollux zones) has a NW structural pattern while South sector (Crux zone) has an almost

EW pattern. It was decided, therefore, to estimate the North sector separately from South sector.

The area lying outside the mineralized envelopes was estimated separately in order to have an

estimation of the dilution material even though the mean grade is almost negligible.

As isolated high grades (outliers) may cause overestimation during the kriging process, relative high

grades were “capped”. The capping grade was set to 3.5 g/t for the northern zone as well as the

southern zone. This capping grade corresponds to the 99.83 and 99.90 percentiles respectively and

was chosen since slight deviations from the linear trend are present. Grade capping was introduced to

be slightly conservative and only affects 13 and 7 samples out of a total of 12,686 and 4,212 samples

available in the North and South sectors respectively. Outside the mineralized envelopes, a grade

capping of 1.2 g/t, equivalent to the 99.87 percentile was used.

As “higher” grade zones are more densely drilled than low grade zones, equal weighted sample

means usually produce a biased estimate of the global distribution average. These estimates are

generally too high and to avoid the effect of high grade clustering, the cell declustering technique was

used. The following mean versus cell size graphs were analyzed:

Figure 22 – Zones Lynx, Phoenix, Pollux and Crux separately. Figure 23 – Northern zone (Lynx-

Phoenix-Pollux) and all mineralised zones combined. Figure 24 – All samples lying outside the

mineralized envelopes.

Figure 22 Cell Declustering for Lynx, Phoenix, Pollux and Crux zones separately


Figure 23 Cell declustering for the northern and all Mineralised zones combined

Figure 24 Cell declustering for all samples lying outside the mineralized envelopes


14.5 Variography

Variography for the North and South sectors was approached through the use of correlograms, since

they are more stable than traditional variograms in the presence of outliers and mild trends that

usually exist.

The estimation of the nugget effect was done calculating and plotting “down the hole” correlograms.

Anisotropy was investigated through the calculation of directional variograms. Table 33 shows

correlogram calculation parameters and Table 34 shows final correlogram models.

Table 33 Cerro Maricunga Correlogram calculation parameters

Table 34 Cerro Maricunga Correlogram modeling parameters

Correlograms indicated that spatial continuity was somewhat limited as expected for this type gold

deposit. Correlograms rise sharply and practical ranges in the horizontal and vertical directions were

of the order of 40 and 100-meters respectively.

14.6 Block Model and Resource Estimation

Block model parameters and the gold estimation plan for the Cerro Maricunga deposit are detailed

below.


Block Model Definition

A gold block model consisting of 10 x 10 x 10-m blocks was created. Block model parameters are

given below:

X Origin: 480,000

Y Origin: 7,011,600

Z Origin: 5,150 (origin at the top of the model)

Bearing: 45° (anti clockwise starting from x-axis)

Plunge: 0°

Dip: 0°

Model Size X-Axis: 2,000 m

Model Size Y-Axis: 3,000 m

Model Sixe Z-Axis: 1,000 m

Block Size X: 10 m

Block Size Y: 10 m

Block Size Z: 10 m

Block Discretization: 3 x 3 x 3 (in X, Y and Z directions)

The most important variables of the model are:

Au: Estimated Au grade in g/t

Density: Block density

Corrida: Au estimation pass

NN: number of samples used in Au estimation

Var Au: Au kriging variance

Categ: Resource classification category

Au Estimation Plan

The grade estimation plan for Cerro Maricunga Project was carried out in four (4) passes. General

settings are detailed below:

The search radii for the first kriging pass were set at approximately the variogram ranges that

correspond to 90% of the total sill in each direction.


The search radii for the second and third kriging passes were set to 1.5 and 2.0 times the first

kriging passes respectively.

The search radii for the fourth kriging pass were set quite large in order to avoid leaving too

many blocks un-estimated. The blocks estimated in the fourth pass were reported in the

inferred category.

All the estimations were performed using the Ordinary Kriging method, including the low grade

zone lying outside the mineralized envelopes.

No anisotropy rotation angles were used for search ellipsoid in the northern zone since only

omni-horizontal and vertical variograms were used. Search ellipsoid anisotropy rotation angles

in line with the variogram anisotropy were used for the southern zone (280°, -66°, 0°)

Grade capping of 3.5 g/t and 1.2 g/t were used in the estimation of all mineralized zones and

outside respectively, while high yield restriction was not used.

The estimation plan parameters are shown in Table 35. Statistics of gold mean grades and tonnages

estimated in each kriging pass are shown in Table 36.

Table 35 Au Estimation Plan parameters

Zone Estimation

Pass

Samples used Max Samples

/ hole

Search Radius

Min Max X Y Z

Northern

1 8 16 6 30 30 60

2 8 16 6 45 45 90

3 4 16 - 60 60 120

4 4 16 - 150 150 300

Southern

1 8 16 6 25 70 30

2 8 16 6 37.5 105 45

3 4 16 - 50 140 60

4 4 16 - 100 280 120

Out 1 4 16 - 150 150 300


Table 36 Estimated Block Model Statistics

Zone Pass Total Tons Estim. Tonnes Non Estim.

Tonnes % Estim. Krig. Au Dec. Min

Dec.

Max

Northern (Lynx,

Phoenix

&Pollux)

1 436,684,083 34,555,710 402,128,373 7.91% 0.472

0.340 0.421

2 402,128,373 98,336,584 303,791,789 30.43% 0.428

3 303,791,789 196,520,222 107,271,567 75.43% 0.359

4 107,271,567 100,138,682 7,132,885 98.37% 0.313

Total 1 - 4 436,684,083 429,551,198 7,132,885 98.37% 0.373

Southern Zone

(Crux)

1 104,175,012 14,525,279 89,649,733 13.94% 0.519

0.355 0.439

2 89,649,733 32,408,996 57,240,736 45.05% 0.393

3 57,240,736 46,522,188 10,718,549 89.71% 0.314

4 10,718,549 10,659,161 59,388 99.94% 0.275

Total 1 - 4 104,175,012 104,115,624 59,388 99.94% 0.363

Total Out 1 7,644,982,531 2,802,302,815 4,842,679,716 36.66% 0.068 0.068 0.077

The percentage of estimated tonnages in the first 3 passes was 75.4% and 89.7% for the Northern

and Sothern zones respectively, which was reasonable. Total estimated tonnage percentages in all

passes amounted to 98.4 and 99.9% for the mineralized zones respectively.

The total percentage of tonnage estimated outside the mineralized envelopes amounted to 36.7%.

The cumulative average grade of blocks estimated in successive kriging passes decreased due to

clustering. However, for the northern sector, the mean grade of blocks estimated in the first three

kriging passes (0.359 g/t) lied within the declustered mean range. This was true for blocks estimated

in the first two kriging passes of the southern sector.

14.7 Validations

A series of block model validations were carried out. Details are as follow:

Global Bias

Block grades were estimated using ordinary kriging in four passes. Further, declustered means

obtained by nearest neighbour (NN) estimates were calculated. Global bias was assessed by

comparing the means of the two estimates mentioned above. This validation was carried out within

and outside the northern and southern mineralized envelopes.


Drift Analysis

Drift analyses were carried out only for measured plus indicated resources by comparing the average

kriging estimated block grades against the average nearest neighbor estimates along 50-m slices in

the X, Y and Z directions. These analyses were carried out for the North and South sectors.

The results from the drift analysis showed that kriging estimates have very similar behavior to the

declustered or nearest neighbor estimates, as both curves follow very similar trends and therefore,

results can be considered satisfactory.

Graphic Validation

Four cross sections were prepared in order to compare block estimates against drillhole sample

grades. One section was chosen for each of the following zones: Lynx, Phoenix, Phoenix plus Pollux,

and Crux. Generally, higher and lower grade intervals from drill holes were well reproduced in the

block model. Results were considered satisfactory.

14.8 Specific Gravity Model

A total of 391 10-cm core specimens were tested for specific gravity via the wax coated method. All

core specimens were photographed and described in detail for future use.

Statistics and distribution of specific gravity determinations are shown in Table 37 and Figure 25.

Table 37 Statistics – Specific Gravity Determinations

ZONE SPECIFIC GRAVITY DETERMINATIONS

N° Specimens Mean Minimum Maximum STD

Lynx 92 2.38 1.95 2.69 0.18

Phoenix 189 2.44 2.05 2.72 0.13

Crux 110 2.46 2.13 2.69 0.13

Total 391 2.43 1.95 2.72 0.15


Figure 25 Distribution of Specific Gravity Values (North=1, Central=2, South=3)

Estimation parameters used for specific gravity are shown in Table 38. General considerations are:

Specific Gravity was estimated using Inverse Distance Squared.

Specific gravity was estimated for each group with two passes.

Flat ellipsoids were used in order to avoid vertical drift.

Table 38 Specific Gravity Estimation Plan

ESTIMATION PLAN SPECIFIC GRAVITY - INVERSE DISTANCE SQUARED

ZONE Code Profile-ID Search Radii N° of Samples

X Y Z Min Max

Lynx-Phoenix-Pollux 1, 2,4 DENS124_1 200 200 100 1 12

DENS124_2 1000 1000 1000 1 8

Crux 3 DENS3_1 200 200 100 1 12

DENS3_2 1000 1000 1000 1 8

Out 5 Global mean assigned for dilution purposes: SG = 2.439

14.9 Resource Categorization

Resource categorization consists of assigning categories of Measured, Indicated and Inferred to the

estimated blocks within the block model. Denser drilling grids are associated with more reliable

category (Measured) and very sparse drilling grids will generate blocks that will be classified as

Inferred.


In order to associate drilling grid configurations to the measured, indicated and inferred categories, the

following statistical approach was used. This approach is considered to be compatible with the

NI 43-101.

Annual production grade and tonnage should be known with an error of ±15% with 90%

confidence in order for the resource to be classified as indicated.

Quarterly production should be known with an error of ±15% with 90% confidence in order for

the resource to be classified as measured.

Using these guidelines, idealized blocks approximating quarterly and annual production targets were

estimated using a single ordinary kriging calculation for different sampling grids. Gold correlograms

were used to estimate the ideal blocks. The resulting kriging variances were multiplied by the

population variance and then divided by the population mean squared in order to obtain relative

variances. Two independent loading points were assumed to obtain the final confidence limits. These

are expressed as percentages and are given by the following expression (assuming errors to be

normally distributed):

90% Central Limit = 1.646 * 100 * SQRT [(Kriging Variance * Variance / Mean ^2)]

Grid spacing which produced confidence limits less than 15.0 percent were selected as the basis for

the classification scheme.

A conservative production target of 60,000 tonnes per day was used for this analysis. Other

parameters are shown in Table 39.

Table 39 Additional Data used for Resource Categorization

Bench height 10 m

Production block height 20 m

Average Density 2.44 ton/m3

N° of Independent Loading Points 2

Tonnes/Day 60.000

Drilling grids of 50 x 50m and 50 x 100m were used. Samples along the drill holes were located every

2.0m. The 50 x 100m grid used was similar to the actual drilling grid used in the exploration

campaigns: drill hole lines were oriented in an N-E direction, were spaced every 50m and drill holes

within the lines were separated every 100m.


A single ordinary kriging calculation was performed for each block size and drilling grid. The kriging

variance was calculated in each case and the 90% central confidence limits were calculated using

equation above. Results for the Northern and Southern sectors are presented in Table 40.

Table 40 Kriging Errors for 50 x 50 and 50 x 100 grids

The results from the kriging show that:

Drilling grids of 50 x 100-m or 50 x 50-m are sufficient to define indicated resources for a large

daily production rate (60,000 tonnes or greater).

A drilling grid of 50 x 100m is not sufficient for defining measured resources, however a 50 X

50-m grid would be appropriate.

o The following procedure was developed in order to “paint” the 10 x 10 x 10m blocks

that were estimated within a 50 x 50m drilling grid (measured resources) or 50 x

100m grid (indicated resources).

o Plans and section showing estimated blocks and their kriging estimation variances

were inspected. The highest kriging estimation variances encountered in zones

drilled using approximate 50 x 50m grids were noted for the Northern and Southern

sectors. The procedure was repeated considering zones drilled using approximate 50

x 100m grids. The kriging variances determined are shown in Table 41

Finally, blocks estimated with kriging variances within the ranges shown in Table 41 were

categorized accordingly. All blocks estimated in the fourth kriging pass were reported as

inferred.

Table 41 Kriging Estimation Variances for 50 x 50 and 50 x 100 grids

Category Kriging Variance for passes 1 to 3

Northern Southern

Measured 0.00 - 0.35 0.00 - 0.45

Indicated 0.35 - 0.60 0.45 - 0.75

Inferred > 0.60 > 0.75


Results of the resource categorization procedure are shown graphically in four cross sections, shown

in Figure 26 to Figure 29. Yellow coloured blocks represent Measured plus Indicated category

resources and green coloured blocks represent Inferred category resources.

Figure 26 Lynx Resource Categorization Cross Section (2150)

Figure 27 Phoenix Resource Categorization Cross Section (1550)


Figure 28 Phoenix plus Pollux Resource Categorization Cross Section (1150)

Figure 29 Crux Resource Categorization Cross Section (550)

14.10 Resource Tabulation

Measured, Indicated, Measured plus Indicated and Inferred total resources for are shown in Table 42;

and Table 43 details for Lynx, Phoenix, Crux and Pollux zones. This resource represented global

resources which are not confined by a pit shell.


Table 42 CerroMaricunga Project – Geological Resources November, 2012 - Summary


Au-g/t Mtonnes Au-g/t Moz Mtonnes

Au-g/t Moz Mtonnes

Au-g/t Moz Mtonnes

Au-g/t Moz

0.0 66.6 0.41 0.9 202.6 0.4 2.6 269.2 0.40 3.5 271.6 0.33 2.9

0.1 66.6 0.41 0.9 202.6 0.4 2.6 269.1 0.40 3.5 271.3 0.33 2.9

0.2 60.4 0.44 0.9 187.5 0.41 2.5 247.9 0.42 3.3 226.3 0.36 2.6

0.3 40.7 0.53 0.7 123.1 0.5 2.0 163.9 0.51 2.7 120.7 0.47 1.8

0.4 24.5 0.64 0.5 71.2 0.61 1.4 95.8 0.62 1.9 57.8 0.6 1.1

0.5 15.1 0.77 0.4 42.8 0.72 1.0 57.9 0.73 1.4 32.3 0.73 0.8

0.6 9.9 0.88 0.3 26.3 0.84 0.7 36.3 0.85 1.0 19.7 0.84 0.5

0.7 6.8 1.00 0.2 16.4 0.95 0.5 23.2 0.96 0.7 12.8 0.95 0.4

0.8 4.6 1.12 0.2 10.5 1.07 0.4 15.1 1.09 0.5 8.1 1.06 0.3

Table 43 CerroMaricunga Project – Geological Resources November, 2012 – per Sector


Au-g/t Mtonnes Au-g/t

Moz Mtonnes Au-g/t

Moz Mtonnes Au-g/t

Moz Mtonnes Au-g/t

Moz

LYNX

0.0 14.6 0.45 0.2 48.8 0.43 0.7 63.4 0.43 0.9 45.4 0.37 0.5

0.1 14.6 0.45 0.2 48.8 0.43 0.7 63.4 0.43 0.9 45.4 0.37 0.5

0.2 13.5 0.47 0.2 45.6 0.45 0.7 59.1 0.45 0.9 40.2 0.39 0.5

0.3 9.1 0.58 0.2 30.8 0.55 0.5 39.8 0.56 0.7 19.6 0.54 0.3

0.4 5.8 0.71 0.1 19.9 0.66 0.4 25.7 0.67 0.6 11.5 0.69 0.3

0.5 4.0 0.83 0.1 13.5 0.76 0.3 17.6 0.78 0.4 8.0 0.8 0.2

0.6 3.0 0.92 0.1 9.0 0.86 0.2 12.0 0.87 0.3 6.0 0.88 0.2

0.7 2.2 1.03 0.1 5.9 0.97 0.2 8.1 0.99 0.3 4.5 0.96 0.1

0.8 1.5 1.15 0.1 3.9 1.1 0.1 5.4 1.11 0.2 2.7 1.09 0.1

PHOENIX

0.0 32.4 0.40 0.4 92.3 0.4 1.2 124.7 0.40 1.6 96.4 0.35 1.1

0.1 32.4 0.40 0.4 92.3 0.4 1.2 124.7 0.40 1.6 96.3 0.35 1.1

0.2 29.8 0.42 0.4 86.5 0.41 1.1 116.3 0.41 1.5 85.5 0.37 1.0

0.3 20.2 0.50 0.3 57.6 0.49 0.9 77.7 0.49 1.2 52.8 0.45 0.8

0.4 12.0 0.61 0.2 33.5 0.6 0.6 45.5 0.60 0.9 22.6 0.6 0.4

0.5 7.1 0.73 0.2 19.5 0.7 0.4 26.5 0.71 0.6 12.4 0.72 0.3

0.6 4.4 0.84 0.1 11.8 0.81 0.3 16.2 0.82 0.4 8.1 0.81 0.2

0.7 2.9 0.95 0.1 7.0 0.92 0.2 9.9 0.93 0.3 5.0 0.92 0.1

0.8 1.8 1.06 0.1 4.3 1.03 0.1 6.1 1.04 0.2 3.1 1.03 0.1

CRUX

0.0 14.4 0.42 0.2 44.5 0.38 0.5 58.9 0.39 0.7 45.3 0.33 0.5

0.1 14.4 0.42 0.2 44.5 0.38 0.5 58.8 0.39 0.7 45.0 0.33 0.5

0.2 12.8 0.45 0.2 41.3 0.4 0.5 54.1 0.41 0.7 38.2 0.36 0.4

0.3 8.8 0.54 0.2 26.5 0.48 0.4 35.3 0.49 0.6 19.6 0.46 0.3

0.4 5.5 0.66 0.1 13.9 0.6 0.3 19.4 0.62 0.4 9.8 0.59 0.2

0.5 3.4 0.79 0.1 7.6 0.73 0.2 10.9 0.75 0.3 5.0 0.73 0.1

0.6 2.1 0.92 0.1 4.2 0.88 0.1 6.4 0.89 0.2 2.6 0.9 0.1

0.7 1.4 1.06 0.0 2.7 1.01 0.1 4.1 1.03 0.1 1.7 1.04 0.1

0.8 1.0 1.18 0.0 1.8 1.13 0.1 2.9 1.15 0.1 1.2 1.15 0.0

POLLUX

0.0 5.2 0.35 0.1 17.0 0.34 0.2 22.2 0.34 0.2 84.6 0.3 0.8

0.1 5.2 0.35 0.1 17.0 0.34 0.2 22.2 0.34 0.2 84.6 0.3 0.8

0.2 4.3 0.38 0.1 14.1 0.37 0.2 18.4 0.37 0.2 62.4 0.34 0.7

0.3 2.7 0.46 0.0 8.3 0.46 0.1 11.0 0.46 0.2 28.8 0.44 0.4

0.4 1.3 0.60 0.0 3.9 0.58 0.1 5.2 0.58 0.1 13.9 0.55 0.2

0.5 0.7 0.73 0.0 2.2 0.69 0.0 2.9 0.70 0.1 7.0 0.65 0.1

0.6 0.4 0.84 0.0 1.2 0.81 0.0 1.7 0.82 0.0 3.0 0.79 0.1

0.7 0.3 0.93 0.0 0.8 0.9 0.0 1.1 0.91 0.0 1.7 0.9 0.0

0.8 0.2 1.01 0.0 0.6 0.95 0.0 0.8 0.97 0.0 1.1 1.0 0.0


Table 44, below, presents the resource estimate which includes those resources, which lie within the

boundary of a conceptual open pit designed at an average gold price of $1,400 using the mining and

processing parameters and associated costs outlined in this PEA. The pit constrained resource

estimate was determined using the Whittle Four-X model and carried out using Gems software (see

Section 16.3 for further details). The cut off grade determined by the Whittle Four-X model resource is

variable at 0.18 g/t Au up to the third year and at 0.15 g/t Au from year 4 to the end of the proposed

mine life. The pit constrained resource estimate was based upon the resource estimate presented

Table 42 and Table 43.

The pit constrained resource estimate includes approximately 75% of the Measured and Indicated and

33% Inferred resources from the global unconstrained resource estimate at a 0.2 g/t Au cut off grade.

Table 44 Cerro Maricunga Oxide Gold Project Pit Constrained Resource Estimate

Constrained at $1,400/oz Au Tonnes Grade Gold Ounces

(millions) (g/t Au) (Oz ‘000)

Measured 48.6 0.43 668

Indicated 137.1 0.41 1,791

Measured and Indicated 185.8 0.41 2,460

Inferred 75.4 0.39 938


15. MINERAL RESERVES ESTIMATE

The mineral resources at Cerro Maricunga have not been proven to a mineral reserve level at the

stage of writing this study.


16. MINING METHODS

16.1 Summary

The mineral resource estimate for Cerro Maricunga, established in Atacama Pacific’s NI 43-101

compliant technical report dated November 9, 2012 which includes Measured, Indicated and Inferred

category mineral resources, forms the basis for this Preliminary Economic Assessment.

The reader is cautioned that the mining study is part of a preliminary economic assessment that is

preliminary in nature and 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. There is no certainty that the preliminary economic assessment will

be realized. No Mineral Reserves have been estimated.

This study is categorised as a Preliminary Economic Assessment (PEA).

A mine plan was developed for Cerro Maricunga Oxide Gold Project to process 80,000 tpd of resource

material, as defined by the base case. The total required material movement was determined to

average 84.55 million tonnes per year for the first 5 years of the mine. The mine plan assumes run of

mine (ROM) is transported by haul trucks to the selected location for the primary crusher, located to

the immediate west of the Lynx zone, and to selected waste storage facilities. The mine is scheduled

to work seven days per week and 350 days per year (considering 15 days of weather delays). Each

day will consist of two 12-hour shifts. Four mining crews will cover the operation. Included in these

operations will be normal drilling, blasting, loading and hauling activities, as well as the supporting

functions of dewatering, grade control and equipment maintenance.

The study is based on operating the proposed Cerro Maricunga mine with hydraulic excavators of 38

cubic yards capacity and 290t haul trucks in 10 metre benches.

16.2 Geotechnical Studies

Atacama Pacific has engaged AKL Ingeniería & Geomecánica Ltda (AKL), a Chilean geotechnical

consultancy company, based in Santiago (www.akl.cl ), to carry out a geotechnical evaluation for the

designs of the pits.

The basis for this study was the collation and analysis of data by AKL professionals. A geotechnical

mapping was carried out of four partial drillholes and a review of the drillholes photographs database.

The results of these analysis enable AKL to classify the rock mass as “fairly good” to “good” and a

rock mass rating (RMR) of 55 to 65.

AKL recommendation for pit design is as follows:

Overall slope angle : 45° (42° used by NCL for modelling)

http://www.akl.cl/


Inter-ramp angle : 48°

Inter-ramp height : 160m

Bench height : 10m or more

Safety berm width : 30m.

All of the above parameters should be validated during the next stage of development of the studies.

16.3 Pit Optimization and Mine Design

Whittle Four-X pit optimization software was applied in conjunction with Gems for the mining model

preparation and pit optimization runs.

The economic parameters assume a nominal 29.2 million tonnes per year treatment plant throughput

rate.

16.3.1 Whittle Pit Optimization Model Construction

The mineral resource model was provided to NCL by Atacama Pacific and corresponds to November

9, 2012 mineral resource estimate, in the form of a Gems block model. Each block contains

information for gold, density, percentage within the mineralised zone and category.

NCL developed a diluted block model for pit optimization and mine planning purposes. The waste

portion of the blocks was estimated with the drill-holes gold grades outsides the mineralized zones,

and used to dilute the mineralized estimated material. The result at the calculated cut-off of 0.15 g/t Au

is an increase of 7.7% of the tonnage, 92.5% of the grade and consequently a 0.3% less contained

gold. Table 45 shows the tonnage/grade distribution for both models, in-situ and diluted.

The Whittle Four-X model development was carried out using Gems software. Whittle Four-X uses the

amount of metal in a block for assessment, rather than the block’s grade value. The process

calculates the grade from the supplied tonnage and metal content, which are provided for each model

block. The metal content for each block is calculated using the grade derived from the diluted model.


Table 45 Tonnage/Grade for In-Situ and Diluted Models

Cut-Off

In situ Block Model Diluted Block Model Dilution

Mineralized Material Contained gold Mineralized Material Contained gold tonnes grade contained gold

g/t Au Mt g/t Au Moz Mt g/t Au Moz

1.00 9.1 1.33 0.4 10.1 1.33 0.4 -10.1% 100.1% -10.0%

0.50 82.4 0.73 1.9 90.0 0.73 2.1 -8.4% 99.7% -8.7%

0.30 259.1 0.49 4.1 283.8 0.49 4.5 -8.7% 100.0% -8.8%

0.25 351.8 0.43 4.9 380.0 0.44 5.3 -7.4% 99.4% -7.9%

0.24 371.1 0.42 5.0 398.1 0.43 5.5 -6.8% 99.2% -7.6%

0.23 392.0 0.41 5.2 417.4 0.42 5.6 -6.1% 98.9% -7.2%

0.22 413.5 0.40 5.4 436.3 0.41 5.7 -5.2% 98.5% -6.7%

0.21 437.1 0.39 5.5 456.5 0.40 5.9 -4.3% 98.1% -6.1%

0.20 459.5 0.38 5.7 473.5 0.39 6.0 -3.0% 97.5% -5.4%

0.19 481.6 0.38 5.8 488.9 0.39 6.1 -1.5% 96.8% -4.6%

0.18 506.6 0.37 6.0 505.9 0.38 6.2 0.1% 96.1% -3.8%

0.15 575.3 0.34 6.3 534.0 0.37 6.3 7.7% 92.5% -0.3%

0.10 673.4 0.31 6.7 540.4 0.37 6.4 24.6% 84.6% 5.5%

0.00 728.8 0.29 6.9 540.9 0.37 6.4 34.7% 79.9% 7.6%

16.3.2 Base Parameters

Table 46 summarises the Base Case economic parameters used for Whittle Four-X economic shells

analysis and mine design.

The mining cost estimate for the pit optimization process is based on recent figures used by NCL for

other similar mining studies, also in Chile. The difference between waste and mineralized material

mining cost is because the primary crusher is planned to be located close to mine exit.

Table 46 Initial Lerch-Grossman Optimization Parameters

Mining Cost

Mineralized material US$/t 1.40

Waste US$/t 1.80

Processing Cost US$/t 3.0

Metallurgical Recovery % 81

Selling Cost US$/oz 300

Minimum cut-off g/t Au 0.18

Overall slope angle º 42

Gold price US$/oz 1,400


16.3.3 Whittle Four-X Economic Shells Results

Table 47 shows the results of the final optimization run. Pit shells were generated for several gold

prices; from US$600/oz to US$1,800/oz.

Pit 17, obtained for a gold price of US$1,400 per ounce (revenue factor 1), was the selected shell

used for final pit design. It contains 268 million tonnes of mineralized material at a gold grade of

0.42 g/t Au and a strip ratio of 1.61 to 1.

NOTE: the parameters shown in Table 46 are initial estimates, done at the beginning of the project, for

the purpose of starting the design process. They are not the final economic parameters developed for

this study.

Table 47 Pit Optimization Results

Pit Gold price

Total material

Mineralized Material Gold Strip Contained Gold (Moz)

Shell US$/oz t '000 t '000 g/t Ratio

9 1,000 225,271 129,006 0.46 0.75 1.9

10 1,050 253,461 140,689 0.45 0.80 2.0

11 1,100 289,013 154,479 0.44 0.87 2.2

12 1,150 329,215 169,035 0.43 0.95 2.4

13 1,200 483,684 211,201 0.43 1.29 2.9

14 1,250 557,894 230,942 0.43 1.42 3.2

15 1,300 602,142 242,716 0.42 1.48 3.3

16 1,350 659,796 257,450 0.42 1.56 3.5

17 1,400 700,127 267,933 0.42 1.61 3.6

18 1,450 717,899 272,015 0.42 1.64 3.6

19 1,500 744,935 278,473 0.41 1.68 3.7

20 1,550 795,633 289,715 0.41 1.75 3.8

21 1,600 828,119 297,128 0.41 1.79 3.9

22 1,650 874,081 306,714 0.41 1.85 4.0

23 1,700 929,685 318,434 0.40 1.92 4.1

24 1,750 1,015,064 335,043 0.40 2.03 4.3

25 1,800 1,046,760 341,557 0.40 2.06 4.3

16.3.4 Pit Design

The final pit design was based on the economic shell generated at US$1,400 per ounce with constant

slope angle 45 degrees. This shell was smoothed and narrow bottoms eliminated; adding ramps and

safety berms where necessary, to obtain an operative final pit with an overall slope angle of 42

degrees.


Figure 30 shows the final pit design. There are planned three exits on the west of the pit which give

accesses to the primary crusher and to the waste storage areas. From the top level, at 4980mRL,

down to 4610mRL the pit has accesses directly from topography (no ramping needed).

The final pit is 2500m long in the south-east north-west direction and up to 800m wide in the north-

east south-west direction. Four pit bottoms can be identified, from north to south at 4490mRL,

4470mRL, 4530mRL and 4540mRL. The highest wall is about 400 metres on the south side of the

central pit. The total area disturbed by the pit is about 167 hectares.

Figure 30 Final Pit Design

Mining Phases

NCL designed a set of 9 mining phases, or pushbacks, by analysing the Whittle Four-X series of

nested shells. Pit Bottoms were selected to project them to surface, applying the slopes

recommendation. Figure 2.1 6 shows the phases outlines on bench 4760, 4710, 4660 and 4610.

0 250m

N

4490

4470

4530

4540


Figure 31 Mining Phases

Pit Constrained Resources

Table 48 summarises the resources contained in the proposed final pit at several different gold cut-off

grades, and Table 49 is for the individual mining phases. The tables include “Inferred”.

Table 48 Total Pit Constrained Mineralization

Cut-off Au (g/t)

Mineralized Material Strip Ratio t '000 Au (g/t)

0.50 59,323 0.75 10.5

0.25 192,779 0.48 2.5

0.18 247,450 0.42 1.8

0.15 268,087 0.40 1.5

0.00 319,022 0.35 1.1

Total Material 683,281 t '000

0 250m

N

F09

F08

F08

F07

F06

F05

F04 F03

F02

F01

Level 4760

0 250m

N

F09

F08F07

F06

F05

F04F03

F02

F01

Level 4710

0 250m

N

F09

F08F07

F06

F04

F03

F01

Level 4660

0 250m

N

F09

F08F07

F06

F04

F03

Level 4610


Table 49 Pit Constrained Mineralization in Mining Phases at Various Cut-Off Grades

Cut-off (Au g/t) t '000 Au (g/t)

Strip Ratio

Cut-off (Au g/t) t '000 Au (g/t)

Strip Ratio

Mining Phase 1: Total t'000 40,697 Mining Phase 6: Total t'000 59,973

0.50 8,138 0.82 4.0 0.50 3,663 0.63 15.4

0.25 21,365 0.53 0.9 0.25 18,324 0.41 2.3

0.18 25,627 0.48 0.6 0.18 25,046 0.36 1.4

0.15 26,990 0.46 0.5 0.15 27,272 0.34 1.2

0.00 30,201 0.43 0.3 0.00 32,836 0.30 0.8


0.50 11,507 0.70 4.9 0.50 2,262 0.67 25.7

0.25 37,384 0.47 0.8 0.25 13,542 0.39 3.5

0.18 43,344 0.43 0.6 0.18 20,793 0.33 1.9

0.15 45,552 0.42 0.5 0.15 23,175 0.31 1.6

0.00 50,041 0.39 0.4 0.00 27,674 0.28 1.2


0.50 740 0.75 20.3 0.50 5,762 0.72 20.0

0.25 3,639 0.42 3.3 0.25 23,470 0.44 4.2

0.18 6,537 0.33 1.4 0.18 31,639 0.38 2.8

0.15 7,529 0.31 1.1 0.15 34,588 0.36 2.5

0.00 9,139 0.27 0.7 0.00 42,436 0.32 1.9


0.50 11,935 0.75 8.4 0.50 9,620 0.84 15.1

0.25 34,383 0.49 2.3 0.25 24,947 0.54 5.2

0.18 42,456 0.44 1.7 0.18 32,368 0.46 3.8

0.15 45,667 0.42 1.5 0.15 36,356 0.43 3.3

0.00 54,004 0.37 1.1 0.00 47,996 0.35 2.2

Mining Phase 5: Total t'000 49,696 Total Total t'000 683,281

0.50 5,697 0.75 7.7 0.50 59,323 0.75 10.5

0.25 15,725 0.49 2.2 0.25 192,779 0.48 2.5

0.18 19,640 0.44 1.5 0.18 247,450 0.42 1.8

0.15 20,957 0.42 1.4 0.15 268,087 0.40 1.5

0.00 24,695 0.37 1.0 0.00 319,022 0.35 1.1

16.4 Mine Production Schedule

A mine production schedule was developed for a throughput rate of 80,000 tonnes per day to show

the tonnes and grades of mineralized material, tonnes of waste material and tonnes of total material

by year for the life of the mine. The distribution of mineralized and waste materials contained in each

of the mining phases was used to develop the schedule, assuring that criteria such as continuous


exposure of material to feed the plant, mining accessibility, and consistent material movements were

met.

NCL used an in-house developed system to evaluate several potential mine production schedules.

Required annual tonnes and user specified annual total material movements are provided to the

algorithm, which then calculates the mine schedule. Several runs at various proposed total material

movement schedules and different operating cut-off grades for the year were carried out to determine

an efficient production schedule strategy. It is important to note that this program is not a simulation

package, but a tool for calculation the mine schedule and haulage profiles for a given set of phases

and constraints that must be set by the user.

The mine plans developed by NCL considers a diluted resources block model, including between 1%

and 8% dilution (Table 45).

Operational cut-off grades of 0.18 g/t Au during the first three years and 0.15 g/t Au from year four

were used as a strategy to improve the grade of the plant feed during production.

Table 50 shows the final production schedule and plant feed for each mining year. The schedule is

based on 29.2 million tonnes of ore per year for plant feed. The table also shows the total material

movement from the mine by year, which considers a total maximum mining rate of 84.55 million

tonnes per year. The limit on the production is the number of benches it is possible to mine in a year in

any single phase (sinking rate).

The preproduction period requires the mining of 11.4 million tonnes of total material to expose

sufficient material to provide reliable source for the start of production in Year 1. The preproduction

period will require approximately 12 months to complete, including the construction of initial accesses.

The resource material mined during preproduction will be stockpiled near the crusher to make up part

of Year 1 plant feed.


Table 50 Mine Production Schedule

Year

Mineralized Material Waste Total

Plant Feed

t '000 Au (g/t)


t '000 t '000

t '000 Au (g/t)


Average Recovery (%)

Recovered Gold (koz)

Pre-strip 6,624 0.38 81 4,776 11,400

Y1 22,576 0.44 319 27,874 50,450

29,200 0.43 400 79.6% 318

Y2 29,200 0.41 389 55,350 84,550

29,200 0.41 389 79.5% 309

Y3 29,200 0.41 384 55,350 84,550

29,200 0.41 384 79.5% 305

Y4 29,200 0.40 374 55,350 84,550

29,200 0.40 374 79.4% 297

Y5 29,200 0.35 330 55,350 84,550

29,200 0.35 330 79.0% 261

Y6 29,200 0.36 340 55,273 84,473

29,200 0.36 340 79.1% 269

Y7 29,200 0.38 357 49,929 79,129

29,200 0.38 357 79.2% 283

Y8 26,759 0.40 340 41,040 67,799

26,759 0.40 340 79.4% 270

Y9 20,685 0.47 309 18,615 39,300

20,685 0.47 309 80.0% 247

Y10 8,537 0.58 159 3,132 11,670

8,537 0.58 159 81.0% 129

Y11 742 0.66 16 118 860

742 0.66 16 81.7% 13

TOTAL 261,123 0.40 3,397 422,158 683,281

261,123 0.40 3,397 79.5% 2,700

16.5 Waste Storage Area

One waste rock storage area was designed for the Cerro Maricunga Project. The area available for

waste storage is located at the west of the pit. . The east of the pit was excluded to minimize impact of

the mine to the drainage basins.

The total extent of the pile is 2.7km by 1.2km and a maximum height of 315m. The final configuration

is shown on Figure 32.


Figure 32 General Mine Layout

16.6 Mine Equipment

The study is based on operating the Cerro Maricunga mine with hydraulic excavators of 38 cubic

yards capacity and 290 tonne haul trucks.

This fleet will be complemented with diesel drilling rigs for 10 5/8” diameter blast holes.

Auxiliary equipment includes, but is not limited to, bulldozers, motor graders, wheel dozer and water

truck.

Mine equipment requirements were calculated based on the annual mine production schedule, the

mine work schedule, and equipment annual production capacity estimates, and maintenance

downtime.

Table 51provides the yearly number of units required for preproduction and commercial production.

This represents the equipment necessary to perform the following duties:

Construct haul and access roads to the initial mining areas as well as to the crusher, waste

storage areas, and leach pads. Construct additional roads as needed to support mining

activity.


Perform the preproduction development required to expose material for initial.

Develop new mining faces for mineralized material extraction.

Mine and transport material to the crusher. Mine and transport waste material from the pit to

the appropriate storage areas.

Maintain all the mine work areas, in-pit haul roads, external haul roads, and maintain the waste

storage areas.

Table 51 Mining Equipment Requirement

Period Pre-strip

Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10 Y11

Main Equipment

Diesel Drill Rigs (10 5/8") 3 3 5 5 5 5 5 5 5 3 1 1

Hydraulic Excavator (38yd3) 2 4 5 5 5 5 5 5 4 3 1 1

Trucks (290t) 8 12 16 16 16 16 16 14 12 8 3 3

Auxiliary Equipment

Bulldozer (type 1 580hp) 3 4 5 5 5 5 5 5 4 4 3 3

Wheel dozer (type 1 500hp) 1 2 3 3 3 3 3 3 2 2 1 1

Motor grader (typo 1 300hp) 3 2 2 2 2 2 2 2 2 2 2 2

Water truck (HD 785-7) 1 1 2 2 1 2 2 1 1 1 1 1

16.7 Mine Personnel

Mine personnel includes all the salaried supervisory and staff people working in mine operations,

maintenance, and engineering and geology departments, and the hourly people required to operate

the drilling, loading, hauling, and mine support activities.

Salaried Staff

Mine salaried staff requirements consists of 38 persons for preproduction and 65 during commercial

production.

Hourly Labour

Mine total hourly personnel requirements is 100 during preproduction. The maximum number of

persons during commercial production is 171. From Year 8, personnel requirements reduce

significantly due to reduction of pit operations (lower strip ratio at the bottom of the pit).

The persons in mine operations are equipment operators. The number of operators for major

equipment was calculated based on equipment operating requirements.

There is not an allowance for blasting personnel in the estimate. Blasting will be performed by a

contractor and the personnel costs are included in the price of the service.


There is not an allowance for maintenance personnel in the estimate. Maintenance will be performed

by a contractor in MARC basis and the personnel costs are included in the hourly cost of the service.


17. MINERAL PROCESSING AND RECOVERY METHODS

The proposed processing operation is designed for a nominal throughput of 80,000 tpd with an average

head grade of 0.4 g/t of Au. Resources are estimated about 261 Mt, given 10.1 years of project life.

It is considered that 80.3% of the gold will be recovered through heap cyanidation. The recovery for the

EW and smelting stages is considered to be 99.5% (overall recovery of 79.5% to payable gold).

The final product of the process plant corresponds to dore bullion, with at least 80% of gold content.

All the stages comprised in the process plant will be described in the following sections, according to:

Crushing

Heap leaching

Solution management

ADR, EW and smelting

Figure 33 shows a general diagram of the selected process. Figure 34 shows a flowsheet of the

crushing stage. Figure 35 shows the plot plan of the project.

17.1 Primary Crushing and Coarse Stockpile

The plan is for the mineralized material from the mine to be transported by truck to the primary crushing

facility where will be unloaded into the dump pocket. The material will then reclaimed by an apron

feeder and a vibrating grizzly. The grizzly oversize feeds a 60” x 89” gyratory crusher (600 kW, open

side setting 165 mm - 6.5”). Crushed mineral size (P80) is estimated to be 128 mm. A rock breaker will

be available to break oversize fragments.

The crusher discharge and the grizzly undersize will be transported by a belt conveyor to the covered

coarse material stockpile (60,000 live tons, equivalent to 18 hours).

The primary crushing facility considers a dust management system by suppression and collection.

Suppression consists of wetting the generated dust with specially-designed spray nozzles, avoiding its

suspension in the atmosphere, and thus keeping it in the process. Collection consists of gathering the

generated dust through a bag filter system then sending it to a wet process.


Figure 33 General Processing Schematic Diagram.

PRIMARY CRUSHING

FINE CRUSHING

ILSPLS

BARREN SOLUTION

ADR Plant EW Dore bullion

SMELTING

Water

Sodium Cyanide

HEAP LEACHING

MineralizedMaterial

from mine


Figure 34 Schematic Diagram (Crushing Stage)

Main Equipment

Item Number Description Power HP Comments

Aa 1 600

Ab 1

Ac 3 100

Ad 3 1,000 Heavy Duty

Ae 3 100

Af 3 1,000 Heavy Duty

Ag 1 Covered Fines Stockpile 40 kt

Gyratory Crusher

Covered Coarse Stockpile 60 kt

Banana Sreener Double Deck 12' x 24'

Cone crusher type MP1000

Banana Sreener Double Deck 12' x 24'

Cone crusher type MP1000

Secondary Crushing

Mineralized Material

from Mine

To Heap Leaching

PrimaryCrushing

TertiaryCrushing

Aa

Ab

Ad Ad Ad

Af Af Af

AcAcAc

Ae Ae Ae

Ag


Figure 35 Plan of the Processing Operations


17.2 Secondary and Tertiary Crushing

The mineralized material will be reclaimed from the coarse material stockpile and feeds three (3)

secondary crushing banana screens (12’ x 24’, double deck, 75 kW each). The screen oversize is sent

to three (3) secondary cone crushers (type MP1000, 750 kW each), operating in open circuit. The

product of the secondary crushers will be conveyed towards intermediate bins.

Tertiary banana screens (12’ x 24’, double deck, 75 kW each) are fed from the bins. The screen

oversize is sent to three (3) tertiary cone crushers (type MP1000, 750 kW each), also operating in open

circuit. A belt conveyor collects the undersize of the secondary and tertiary screens, and the product of

the tertiary crushers, transporting them towards the fine material stockpile (40,000 live tons, equivalent

to 12 hours).

The crushing product final size (P80) will planned to be 19 mm.

The secondary and tertiary crushing facility shall also include a dust collection system. All equipment is

enclosed.

17.3 Heap Leaching

The P80 19mm crushed material will be sent to the heap leaching area, through a conveying system, to

build the heap modules. The material will be firstly fed to a tripper located on one side of the heap; the

tripper discharges the material into successive grasshoppers, which in turn transport the material to a

radial stacker, whose purpose is to build the heap. At the same time that the radial stacker moves the

heap forward, the piping that goes under the heap is being connected.

Prior to material stacking, the place where the heap will be located is modified to achieve the heap

stability grade, prepared, and covered by a geomembrane. Every five layers, a new waterproof

membrane is planned. The final heap height will be approximately 100 meters. The total estimated area

of the leach pad will be 2.7 million m2, which should allow the leaching of about 270 million ton of

mineralized material.

The heap operation starts with the irrigation of the material; for Cerro Maricunga, a twostage drip

irrigation has been considered, according to which solution is used: barren solution (“BLS”) or

IIntermediate Leaching Solution (“ILS”). An irrigation rate of 10 l/h/m2 has been considered, with an

evaporation rate of 8 l/d/m2 for the heap and 4 l/d/m2 for the process ponds.

Both solutions in the mineral leaching – the pregnant leaching solution (“PLS”) and ILS - percolate

through the heap and are collected in their respective ponds. The BLS, PLS and ILS ponds have a

residence time of 5 hours, each. An emergency pond has also been contemplated, with a residence

time of 2 days. The emergency pond is located next to the PLS pond.

The PLS contains the gold dissolved from the mineralized material. The PLS is pumped from the PLS

pond to the ADR plant.

Figure 36 shows a general view of the heap leaching area, including heaps and ponds.


Figure 36 Heap Leaching Area

17.4 ADR, EW, and Smelting

In order to recover gold from the PLS, the use of activated carbon has been considered. The process

will be applied in three stages: adsorption, desorption, and regeneration (ADR plant).

In the adsorption stage, activated carbon loads the gold contained in the PLS. The BLS obtained in

this stage is sent to a BLS pond for pad irrigation.

The loaded carbon is transferred to the elution circuit, where it is acid washed and desorbed

(desorption stage): gold is effectively removed from the carbon surface and are transferred to a rich

eluted solution. The stripped carbon is subsequently fed to a rotatory kiln when is reactivated and

returned to the adsorption columns.

Gold is recovered from the eluted solution in an electrowinning circuit, where it is deposited on the

electrowinning cathodes. Gold is then washed from the cathodes and is then smelted, where dore

bullion is produced as the final product.

Salar de

Maricunga

Heap Leaching Facility

(Cap.: 270 Mt)

Process Ponds

(PLS, ILS, BLS, and Emergency)

Process Plant


18. PROJECT INFRASTURUCTURE

18.1 Introduction

The Cerro Maricunga Project comprises significant infrastructure, which is principally used to sustain

the operation. Infrastructure includes roads, electrical supply, water supply, workshops, warehouse,

offices and camp facilities, among other facilities.

18.1.1 Water Supply

The project considers a water pumping system from wells located in the area of the Salar de

Pedernales, located approximately 100km north of Cerro Maricunga.

The pumping system contemplates to collect the water from a number of wells, using deep well pumps

and booster pumps, where required. The water will be pumped to the Cerro Maricunga plant, through

an Intermediate Pumping Station which in turn will drive the water by means of horizontal centrifugal

pumps.

18.1.2 Process Plant Earthworks

For ADR process plant platform, 72,900 m3 of excavations and 21,870 m3 of fillings are required.

18.1.3 Roads

For the access road it has been considered to design a 22km road, connected from the International

Ch 31 road and over an existing route. The following figure shows the projected road. The road has

8m of width and is built on a compacted, rolled bare over its entire length.


Figure 37 Cerro Maricunga projected road

18.1.4 Site Accommodation

The facilities associated with personnel housing comprises the following infrastructure: dining room,

individual dorms modules, bathroom facilities, collective dorms modules, polyclinic, administrative

offices and recreational room. It must be noted that accommodation contemplates all plant staff,

including mine, process plant and administrative personnel.

A permanent camp has been designed to accommodate a maximum of 200 personnel, necessary for

the operation of the plant, over an 11 years period. The total camp will cover an area of approximately

3,000 m2.

18.1.5 Power Supply

The project considers the design of an electrical transmission line, which provides the power

requirements of the Cerro Maricunga project.

The electrical study considers an area for a supply connection from the Carrera Pinto substation,

which belongs to the Sistema Interconectado Central (SIC) and a three-phase transmission line in a

simple circuit of 220 kV with a length of 70km that goes to a final substation, located near the plant

site.

The design considers the selection of an optimal route, together with the determination of the

economical tension level of transmission and the design of the line supporting structures. All

considerations cover topographic and accessibility aspects for the facilities construction,

operation and maintenance.

Cerro Maricunga

Projected road


The electrical study is developed at a prefeasibility level, and considers general information of the

geographic area and preliminary route sketch, but does not contemplate an environmental evaluation

(Base Line), lands registries or mining claims. The precision level of the study is around ±30%, in

accordance a prefeasibility level of accuracy.

18.1.6 Maintenance Facilities and Fuel Storage

The workshops contemplate the following facilities: maintenance shop, welding shop, warehouse,

cleaning shop, oiling shop, and tires change shop.

The buildings will have a steel structure with reinforced concrete foundations, and it will cover a

surface area of approximately 2,000 m2.

18.1.7 Potable Water Supply

The Project considers a desalination plant to treat the saline water from Salar de Pedernales.

18.1.8 Waste Treatment

All solid domestic wastes, industrial wastes and toxic wastes, generated by the plant, will be

temporally stored in the warehouse. A wastewater treatment plant is also included.

18.1.9 Vehicle Washdown

Included in maintenance facilities and fuel storage.

18.1.10 Heavy Vehicle Workshop

Included in maintenance facilities and fuel storage.

18.1.11 Administration Office Complex

A 5 people capacity administrative office module is contemplated.

18.1.12 Laboratory and Reagents Plant

A laboratory is projected for sample analysis, located in the electrowinning and smelting area.

A reagent plant has been considered for the storage and supply of the reagents.

Other facilities considered for the project include a drill core shed.


18.1.13 Communications

A satellite communication system is considered to transmit voice, data and video.

18.2 Mining Facilities

18.2.1 Magazine & Fuel Storage



18.2.2 Workshop

Truck workshop is planned to be built near the mine, close to the primary crusher area. A local

experienced manufacturer was contacted to quote a 4 bay facility.


19. MARKETING

Doré production from the Project could be sold either on the spot market or under agreements with

refineries. Sales and marketing considerations would be evaluated during feasibility-level studies. It is

expected that any sales and refining agreements would be negotiated in line with industry norms.

Changes in market price for gold will affect both cash flows and profitability of the Project. Figure 38

indicate the variability of gold price during the last 5 years (February 23, 2008, to February 22, 2013).

Gold prices during this period ranged from a low of US$ 724/oz (on October 31, 2008) to a high of

US$ 1,884/oz (on September 2, 2011) and consistently exceeded the price assumptions utilized in the

base case financial modelling for Cerro Maricunga, during the past two years.

Figure 38 Gold Spot Price – February 23, 2008 to February 22, 2013 (Source: www.kitco.com)


20. ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT

20.1 Summary

The legal framework for environmental, health and safety aspects related to the Cerro Maricunga

development project is comprised of general laws and decrees as well as sector specific regulatory

decrees.

As part of this process, on November 3, 2011, Atacama Pacific received approval of its Declaration of

Environmental Impact (“DIA”) by Resolution Number 232 by the Environmental Evaluation

Commission of the III Region, Republic of Chile and received an Environmental Resolution

Qualification allowing the Company to precede with advanced exploration activities. The DIA was

prepared by ARCADIS Chile on behalf of the Company.

The declaration was necessary as the scale of drilling planned for the Cerro Maricunga project had

progressed beyond what is considered by the Environmental Evaluation Commission as exploration.

The permit, which required the approval of various administrative bodies of the State, certified that the

Cerro Maricunga environmental declaration complied with the environmental regulations and

formalized the conditions for further advanced stage exploration activities.

The DIA took into account Air Quality, Light Contamination, Noise, Potable Water, Domestic

Wastewater, Solid and Hazardous Waste Management, Vehicle Weights on Public Roads, Terrestrial

Fauna, Flora, Cultural Heritage, Electrical utilities, Flammable Liquids and Land Planning. The DIA

demonstrated compliance with all respective regulations.

20.2 Social

With the exception of the La Coipa mining camp, all other surrounding population are at least 30km

away from the where the proposed activities will take place. Indigenous people closest to the Project

Area belong to the Pastos Grandes, Pai-Ote and Sinchi Waira communities. Based on the literature

review and field survey, there are no signs of nomadic activity, agriculture, or artisanal mining within

the project area. There are no lands assigned to indigenous communities per Law 19.253, nor are

there herding routes in the project area.

In terms of potential socioeconomic impacts, it is anticipate that a mining operation would not cause

any significant alteration in the distribution of nearby inhabitants or dwellings and it is not expected to

generate any cultural or anthropological changes of human groups near the area. Positive impacts are

anticipated in terms of local employment and the purchase of consumables, equipment and services

from local businesses whenever practicable. The development of a mining operation at Cerro

Maricunga Project would result in further long-term stable employment and support to local

businesses. Impacts to tourism have been evaluated to be minor, and there are potential opportunities

to provide support to tourism in the area.


20.2.1 Social Monitoring Programs

Social monitoring consists of monitoring stakeholder relations and perceptions towards the project.

Stakeholders include, but are not limited to nearby community members, general public (particularly

tourists in the area), and government authorities. At the institutional level, Atacama Pacific continues

to report to applicable government authorities to comply with permit requirements and modifications.

20.3 Hydrology

The Project is situated at the top of the Quebrada Paipote en Junta Quebrada San Andrés watershed.

The average annual surface runoff in these watersheds is less than 20 mm/year. The soil conditions

and typically steep slopes are not conducive to surface infiltration therefore practically all precipitation

either evaporates from accumulated snow or, to a lesser degree, becomes surface runoff.

The three main ravines (quebradas) in the Area of Influence of the Exploration Area of the Project are

Quebrada Larga, Quebrada Vizcachas and Quebrada de Maricunga (Figure 39). A smaller ravine,

Quebrada de la Pelada (not shown in Figure 39), parallels the access road and the current exploration

camp. These ravines are nearly always dry and when water flows do occur in the ravines, they are low

– typically on the order of 10 l/s. The Project area is bordered by the Quebrada San Andrés

watershed to the north and the Campo de Piedra Pomez y Río Lamas watershed to the east, which

drains to the large salt flat known as the Salar de Maricunga.

The Project area does not have any hydro-geological features of importance. Exploration drillings in

the deposit area, reaching as much as 600 m of vertical depth, have not intercepted groundwater. This

is further supported from the hydro-geological mapping which showed that the presence of an aquifer

in the Project area to be unlikely.

In contrast to the project area, the main hydro-geological features in the region are localized below the

Maricunga salt flat, which consists of an alluvial aquifer. This aquifer is located within in different water

shed and therefore no impact is expected from future activities.


Figure 39 Watersheds and ravines in the Project Area of Influence (ARCADIS, August 2011)

20.4 Biological Component

Most of the surface of the Project area is devoid of vegetation due to the extreme environmental

conditions, including particularly low temperatures, scant precipitation, strong winds, and altitudes of

4,000masl or more. The area is part of the Desert Steppe of Andean Salt Flats vegetal community.

Three natural vegetal formations exist within the project area, including: High Andean Matorral, High

Andean Prairie, and High Andean Spring. As part of the DIA process, a survey of the flora and fauna

of the area impacted by the exploration program was undertaken by ARCADIS Chile.

A total of 24 floral species, all native and 2 of which are endemic to Chile, were identified during the

field survey of the Study Area. None of the detected species are currently within the category of

conservation nor declared a natural monument.


Given that the Study area has very limited vegetative cover, an absence of waterbodies (and any kind

of aquatic ecosystems), and altitudes are typically above 4,000masl or more, the quantity and diversity

of fauna species is limited to select species. A survey of fauna in the area, undertaken during the DIA

noted the following:

Amphibians are unlikely to be found in the area due to the absence of surface water bodies.

A total of 10 bird species were recorded, none of which are listed for conservation

Camelids, such as guanacos (Lama guanicoe) and, in elevations above 4,000 msl, vicuñas

(Vicugna vicugna). Vicuñas were the only fauna species that were observed in the proposed

drill sites areas during the field survey. Possible carnivores include the Andean Fox

(Lycalopexculpaeus) and the Patagonian Fox or Grey Fox (Lycalopexgriseus), “quiques”

(Galictiscuja), pampas cats (Leoparduscolocolo) and pumas (Puma concolor). Rodents in the

Study Area may include the Atacama Tuco-tuco (Ctenomys fulvus), Darwin´s Leaf-Eared

Mouse (Phyllotis darwinii), the Andean Altiplano Mouse (Abrothrix andinus), the Southern

Viscacha (Lagidium viscacia), among other species. Although few mammal individuals were

found during the field survey, four (4) species of mammals were registered that are under

some category of conservation: the Vicuña (Vicugna vicugna) and the Guanaco (Lama

guanicoe) are Threatened; the Atacama Tuco-tuco (Ctenomysfulvus) is Vulnerable; and the

Patagonian Fox (Lycalopexgriseus) is considered to be Inadequately Known.

20.4.1 Biological Monitoring Programs

Atacama Pacific has been collecting baseline environment since late 2011 for the preparation of an

Environmental Impact Assessment.

Given the limited scope of the present exploration activities, the current monitoring program consists

of completing regular and unannounced compliance inspections as part of the overall Environmental

Health and Safety program. Additionally, per the request of Chile’s National Environmental

Commission (CONAMA), Atacama Pacific has implementing a biological monitoring program

specifically for guanacos and vicuñas in the area

20.5 Protected Areas

Part of the Project is located within the limits of the Nevado Tres Cruces Regional Priority Site, which was

defined by the Atacama Biodiversity Regional Strategy (2010 – 2017). The Priority Site (an area of

1,297.7 km²) encompasses the Santa Rosa and the del Negro Francisco Lagoons with the objective of

creating a biological corridor between these two lagoons. The Nevado Tres Cruces National Park, created

in 1994, is located within the boundaries of the Priority Site, as can be seen in the Figure 40 below.

The proposed mine and processing area does not exist within or near any areas that have been identified

as having special characteristics for biodiversity conservation (i.e. flora, vegetation, fauna, etc).


Figure 40 Project Area in relation to the NevadoTres Cruces Priority Site (green) and the National

Park (yellow) situated within the Priority Site (ARCADIS, May 2011).

20.6 Environmental Issues

No significant environmental issues have been identified which could hamper or halt the development of a

mining and associated heap leach processing facility at Cerro Maricunga. The use of cyanide in the

leach pad and the containment of solutions have been identified as a concern that has been addressed in

the current PEA.

The mine will be visible from International Ch 31 road for the first few years of development after which

development will be hidden from view by hills forming the volcanic complex hosting the deposit. The

processing facilities are not visible from any generally accessible site.

The generation of dust from mining and crushing has been identified as a concern and remediation steps

have been taken into account in the PEA.


20.7 Closure and Reclamation

The reclamation and closure activities will include removal of all buildings, power lines, pipe lines and

process components, securing the pit and waste rock storage facilities, ensuring that the spent leach

pad and tailings storage facility are chemically and structurally stabilized, and returning the area to its

previous land use. To the extent possible, reclamation will be carried out concurrently with operations.


21. CAPITAL AND OPERATING COSTS

21.1 Capital

The total initial capital investment for the mining, process plant and infrastructure, and the expected

life of Project sustaining capital, has been summarized in Table 52.

Table 52 Overall Capital Costs

Category (MUS$) Initial

Capital Sustaining

Capital Total

Capital

Direct Costs

Mining Support Equipment & Initial Works 27.6 7.5 35.1

Infrastructure 98.6 98.6

Process Plant 286.5 286.5

Heap Leaching 224.6 224.6

Closure 5.0 5.0

Subtotal Direct Costs 412.6 237.2 649.8

EPCM 28.9 28.9

Contingencies 41.3 11.9 53.1

Subtotal 482.7 249.0 731.8

Pre-stripping 17.1 17.1

Leasing Main Mining Equipment 14.7 14.7

TOTAL 514.6 249.0 763.6

21.1.1 Process Plant and Infrastructure

The capital estimate was calculated in Chilean pesos (CLP) and United States dollars (US$)

according to the source. The exchange rate (CLP/US$) used was 500.

Infrastructure and process plant main areas included in the cost estimate. For heap leaching, an

initial and on-going investment was considered; however, regardless of the work that must be done

in a particular period of time, it was contemplated the Company would employ a contractor for ten

years, for a fixed rate.


Table 53 Areas included in the cost estimation

The capital cost estimate is composed of the following:

Direct cost of construction and assembly: Acquisitions of equipment supply, labor, auxiliary

equipment for construction and building materials.

Indirect cost of construction and assembly: Temporary camp, surveillance and administration,

transportation and nutrition, general and financial cost and utilities of contractor.

Indirect costs of project: Transportation, insurance of equipment, and general spare parts.

Indirect costs of the project such as import duties, vendor’s representatives, detailed engineering,

EPCM, PEM and owner costs and contingency costs were not included in the capital costs

estimation and will be contemplated in the economic evaluation of the project.

A general overview of the initial infrastructure costs, estimated for the project, is presented on Table

54, while an overview of the plant capital cost is presented on Table 55.

Area Item

Workshop, warehouse, offices, etc.

Water supply

Electrical supply

Roads

Primary crushing

Coarse stock pile

Secondary crushing

Tertiary crushing

Fine stock pile

Heap leaching

ADR Plant

EW / Smelting

Infrastructure

Plant


Table 54 General overview of initial infrastructure capital cost

Area Initial Capital Costs

US$ '000

Infrastructure 95,461

Workshop, warehouse, offices, etc. 7,639

Water supply 84,855

Electrical supply 0

Roads 2,967

Construction and assembly indirect costs 2,766

Temporary Camp 387

Administration / Surveillance 830

Transportation / Nutrition 332

Construction Equipment 387

Offices + Financial expenditures 277

Utilility 553

Infrastructure indirect costs 327

Transportation, Insurance and Materials 317

General spare parts 10

Total 98,554

The US$184.9 M cost of the water supply represents the total cost of this item and includes the

indirect costs.


Table 55 General overview of process plant initial capital costs

Area Initial Capital Costs

US$ '000

Plant 230,904

Primary crushing 27,054

Coarse stock pile 17,202

Secondary crushing 25,570

Tertiary crushing 26,227

Fine stock pile 12,165

Heap leaching 93,230

ADR Plant 10,293

EW / Smelting 19,162

Construction and assembly indirect costs 39,475

Temporary Camp 5,526

Administration / Surveillance 11,842

Transportation / Nutrition 4,737

Construction Equipment 5,526

Offices + Financial expenditures 3,947

Utilility 7,895

Project indirect costs 16,105

Transportation, Insurances and Materials 9,302

General spare parts 6,803

Total 286,484

Infrastructure initial capital cost are summarized in Table 56

Initial process plant capital cost are summarized in Table 57.

The on-going capital costs estimate for the heap leaching item is presented in Table 58.


Table 56 Infrastructure initial capital costs summary

ITEM Unit Quantity

Equipment Supply Construction

TOTAL COST US$ '000

International National Materials Equipment Labour Cost

Total Cost Construction

US$ '000 Total Cost US$ '000

Total Cost US$ '000

Total Cost

US$ '000

Total Cost US$ '000

Totals HH

Cost US$ '000

DIRECT COSTS

Infrastructure

- Workshop, warehouse, offices, etc. Gl 1.0 0 5,074 253 592 73 1,719 2,565 7,639

- Water supply Gl 1.0 0 84,855 0 0 0 0 0 84,855

- Roads Gl 1.0 0 0 112 1,194 80 1,662 2,967 2,967

Subtotal 0 89,929 365 1,786 154 3,381 5,532 95,461

TOTAL DIRECT COST 0 89,929 365 1,786 154 3,381 5,532 95,461

INDIRECT COST OF CONSTRUCTION AND ASSEMBLY

- Temporary Camp Gl 0 0 0 387 0 0 387 387

- Administration / Surveillance Gl 0 0 0 0 24 830 830 830

- Transportation / Nutrition Gl 0 0 66 266 0 0 332 332

- Construction Equipment Gl 0 0 0 387 0 0 387 387

- Offices + Financial expenditures Gl 0 0 277 0 0 0 277 277

- Utilility Gl 0 0 553 0 0 0 553 553

TOTAL INDIRECT COST 0 0 896 1,040 24 830 2,766 2,766

TOTAL COST 0 89,929 1,261 2,826 177 4,210 8,298 98,227

PROJECT INDIRECT COSTS

- Transportation, Insurances and Materials Gl 0 254 63 0 0 0 63 317

- General spare parts Gl 0 10 0 0 0 0 0 10

TOTAL INDIRECT COST 0 264 63 0 0 0 63 327

TOTAL PROJECT COST 0 90,193 1,325 2,826 177 4,210 8,361 98,554


Table 57 Initial process plant capital costs summary

ITEM Unit Quantity


TOTAL COST US$ '000




Total Cost US$ '000

Total Cost

US$ '000

Total Cost US$ '000

Totals HH

Cost US$ '000

DIRECT COSTS

Plant

- Primary crushing Gl 1.0 21,091 1,203 404 178 4,356 5,963 27,054

- Coarse stock pile Gl 1.0 10,671 2,916 205 148 3,410 6,531 17,202

- Secondary crushing Gl 1.0 22,100 1,328 557 68 1,585 3,470 25,570

- Tertiary crushing Gl 1.0 22,294 1,463 586 81 1,883 3,932 26,227

- Fine stock pile Gl 1.0 7,076 2,211 140 119 2,739 5,090 12,165

- Heap leaching Gl 1.0 43,502 10,458 14,335 1,071 24,935 49,728 93,230

- ADR Plant Gl 1.0 8,425 694 278 39 897 1,869 10,293

- EW / Smelting Gl 1.0 16,796 1,031 345 43 990 2,366 19,162

Subtotal 0 151,954 21,305 16,850 1,747 40,794 78,949 230,904

TOTAL DIRECT COST 0 151,954 21,305 16,850 1,747 40,794 78,949 230,904


- Temporary Camp Gl 0 5,526 0 0 5,526 5,526

- Administration / Surveillance Gl 0 0 338 11,842 11,842 11,842

- Transportation / Nutrition Gl 947 3,790 0 0 4,737 4,737

- Construction Equipment Gl 0 5,526 0 0 5,526 5,526

- Offices + Financial expenditures Gl 3,947 0 0 0 3,947 3,947

- Utilility Gl 7,895 0 0 0 7,895 7,895

TOTAL INDIRECT COST 0 0 12,790 14,842 338 11,842 39,475 39,475

TOTAL COST 0 151,954 34,094 31,693 2,085 52,637 118,424 270,378


- Transportation, Insurances and Materials Gl 7,598 1,705 0 0 0 1,705 9,302

- General spare parts Gl 6,803 0 0 0 0 0 6,803

TOTAL INDIRECT COST 0 14,400 1,705 0 0 0 1,705 16,105

TOTAL PROJECT COST 0 14,400 1,705 0 0 0 1,705 286,484


Table 58 Heap leaching on-going capital costs summary

ITEM Unit Quantity


TOTAL COST US$ '000




Total Cost US$ '000

Total Cost

US$ '000

Total Cost US$ '000

Totals HH

Cost US$ '000

DIRECT COSTS

Heap Leaching

- Heap leaching - year 1 Gl 1.0 0 9,159 1,593 1,864 663 15,483 18,941 28,100

- Heap leaching - year 2 Gl 1.0 0 1,845 647 309 117 2,805 3,761 5,605



- Heap leaching - year 5 Gl 1.0 0 4,585 1,831 963 305 7,230 10,024 14,609

- Heap leaching - year 7 Gl 1.0 0 9,689 658 1,151 649 15,340 17,149 26,838

Subtotal 0 52,731 13,872 18,294 3,413 79,925 112,091 164,823

TOTAL DIRECT COST 0 52,731 13,872 18,294 3,413 79,925 112,091 164,823


- Temporary Camp Gl 0 0 0 7,846 0 0 7,846 7,846

- Administration / Surveillance Gl 0 0 0 0 480 16,814 16,814 16,814

- Transportation / Nutrition Gl 0 0 1,345 5,380 0 0 6,725 6,725

- Construction Equipment Gl 0 0 0 7,846 0 0 7,846 7,846

- Offices + Financial expenditures Gl 0 0 5,605 0 0 0 5,605 5,605

- Utilility Gl 0 0 11,209 0 0 0 11,209 11,209

TOTAL INDIRECT COST 0 0 18,159 21,073 480 16,814 56,046 56,046

TOTAL COST 0 52,731 32,031 39,367 3,894 96,739 168,137 220,868


- Transportation, Insurances and Materials Gl 0 2,637 801 0 0 0 801 3,437

- General spare parts Gl 0 328 0 0 0 0 0 328

TOTAL INDIRECT COST 0 2,964 801 0 0 0 801 3,765

TOTAL PROJECT COST 0 55,696 32,832 39,367 3,894 96,739 168,937 224,633


21.1.2 Mining

The estimated mine capital cost includes the following items:

Initial mine development

Support equipment.

Mine infrastructure.

The mine shop, offices, and warehouse.

This estimate does not include the following mine physical structures:

Fuel and lubricant storage facilities.

Explosive storage facilities.

Main mine equipment and ancillary fleets will be acquired through a manufacture lease arrangement

payable over periods of 10 and five years, respectively, upon a quote received from Komatsu.



Table 59 details the capital cost in mining support equipment and initial required works.

Table 60 shows the leasing strategy developed for the mining main equipment, prepared from a quote

received from Komatsu. The first payment, during pre-stripping is considered as part of the initial

capital and the payments during the following years as part of the operating costs.


Table 59 Mining Support Equipment and Initial Works

Period

Pre-strip Y01 Y02

Support Equipment

Support Drill rig (6 1/2") US$ 1,335,000 Purchase 1 0 1

Small backhoe US$ 105,374 Purchase 1 0 0

Fuel truck 85 m3 US$ 1,733,970 Purchase 1 0 0

Mobile crane 200t US$ 1,560,000 Purchase 1 0 0

Lowboy truck 110t US$ 322,353 Purchase 1 0 0

Mobile lighting tower 4x1000w US$ 10,981 Purchase 8 2 4

TOTAL SUPPORT EQUIPMENT MUS$ 5.1 0.0 1.4

OTHERS MUS$ 22.4 5.4 0.7

Rescue Truck MUS$ 0.3 0.0 0.0

FEL Cat 966 5yd3 MUS$ 0.0 0.4 0.0

Tires Truck 360t MUS$ 0.3 0.0 0.0

Tires Wheeldozer 834 MUS$ 0.0 0.0 0.0

Tires Motorgrader 16 M MUS$ 0.0 0.0 0.0

Tires Water Truck MUS$ 0.1 0.0 0.0

Forklift 4.5 t MUS$ 0.1 0.0 0.0

Forklift 23.5t MUS$ 0.0 0.1 0.0

Soil Compactor MUS$ 0.2 0.0 0.0

Extra Bucket for Hydraulic Shovel MUS$ 0.0 1.3 0.0

Extra Body for Truck MUS$ 0.0 0.2 0.0

Computer Equipment (Tech Service) MUS$ 0.0 0.0 0.0

Mining - Geology Soft Ware MUS$ 0.5 0.5 0.0

Furnitures MUS$ 0.2 0.0 0.0

Radio Equipment MUS$ 0.1 0.0 0.0

Handy radio equipment MUS$ 0.0 0.0 0.0

Spare parts (6% Main Equip.) MUS$ 3.4 0.0 0.0

Consulting / Engineering MUS$ 0.5 0.5 0.0

Survey Equipment MUS$ 0.6 0.0 0.0

Mining Haul Roads MUS$ 10.0 1.8 0.0

Light Vehicles (4x4 pick up) MUS$ 0.5 0.2 0.0

Crew Bus MUS$ 0.1 0.0 0.0

Truck Shop MUS$ 3.2 0.0 0.0

Dispatch MUS$ 2.3 0.6 0.7

TOTAL MINING CAPEX MUS$ 27.6 5.5 2.1


Table 60 Leasing of Mining Equipment

Leasing (Mining Equipment) Y00 Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10 Y11

Hydraulic Excavator (38yd3) US$ '000 3,271 6,425 7,825 7,532 7,239 6,945 6,652 8,510 7,051 4,574 2,242

Trucks (290t) US$ '000 7,108 10,407 13,579 13,069 12,559 12,049 17,384 14,247 10,652 4,909 1,805

Bulldozer (type 1 580hp) US$ '000 928 1,197 1,452 1,384 1,317 524 255

Wheel dozer (type 1 500hp) US$ '000 262 512 750 716 682 443 216

Motorgrader (type 1 300hp) US$ '000 663 634 605 576 547

Water truck (HD 785-7) US$ '000 366 350 699 667 635 318 302

Diesel Drill Rigs (10 5/8") US$ '000 1,605 1,605 2,675 2,675 2,675 2,675 2,675 2,675 2,675 1,605

Tires handler US$ '000 486 465 443 422 401

TOTAL LEASING US$ '000 14,688 21,593 28,029 27,042 26,054 22,954 27,483 25,431 20,378 11,088 4,047

21.1.3 EPCM

EPCM contracts have been considered as 7% of direct initial capital costs, and amounts to US$ 28.9

million.

21.1.4 Contingencies

A global contingency of 10% of direct initial capital has been considered, representing

US$41.3 million. Additionally, a contingency of 5% was considered for the sustaining capital, and

amounts to US$11.9 million over the life of the project.

21.2 Operating

21.2.1 Process Plant

The following assumptions have been used for estimating the operating costs of the process plant:

The costs items include:

Labor

Power

Reagents and Consumables

Maintenance

Miscellaneous

Others

The current mine plan, presented in Section 16.4, was used in the operating costs estimate.

A cost of 135 KUS$/year for Role A and 50 KUS$/year for Role B.

An energy cost of 115 US$/MWh has been considered.

The following main consumables and reagents are considered: steel, cyanide, lime, water,

carbon, among others.

A cyanide cost of 2,380 US$/ton has been considered.


A water cost of 2.64 US/m3 has been considered.

The rates and prices used to calculate the reagents and consumables costs are obtained from

Alquimia database for similar projects.

The annual cost of spare parts is calculated as 3% of the total direct capital cost. Annual

maintenance for electrical materials is calculated as 30% of the annual power cost.

Miscellaneous are calculated as 6% of labor, power, reagents and consumables and

maintenance total costs.

Others item is calculated as 3.5% of labor, power, reagents and consumables and

maintenance total costs.

The following table shows the plant operating costs estimation; average values are indicated

considering all the years of plant operation, according to the current mine plan.

Table 61 Plant operating costs

Item Unit Primary,

Secondary and Tertiary Crushing

Heap leaching, handling solutions

ADR - EW - Smelting

Total

Labour KUS$/year 1,242 415 296 1,953

Power KUS$/year 4,606 3,226 2,149 9,981

Reagents and consumables KUS$/year 6,647 22,261 7,996 36,903

Maintenance KUS$/year 3,145 2,104 1,305 6,554

Miscellaneous KUS$/year 938 1,680 705 3,323

Others KUS$/year 547 980 411 1,939

Total KUS$/year 17,125 30,667 12,861 60,653

Labour US$/t 0.05 0.02 0.01 0.08

Power US$/t 0.19 0.14 0.09 0.42

Reagents and consumables US$/t 0.28 0.94 0.34 1.55

Maintenance US$/t 0.13 0.09 0.05 0.28

Miscellaneous US$/t 0.04 0.07 0.03 0.14

Others US$/t 0.02 0.04 0.02 0.08

Total US$/t 0.72 1.29 0.54 2.56

Labour US$/oz Au 5 2 1 8

Power US$/oz Au 19 13 9 40

Reagents and consumables US$/oz Au 27 90 32 149

Maintenance US$/oz Au 13 8 5 26

Miscellaneous US$/oz Au 4 7 3 13

Others US$/oz Au 2 4 2 8


21.2.2 Mining

Mine operating costs were developed from the recommended equipment requirements and the

personnel requirements. The mine operating costs include all the parts, supplies, and labour costs

associated with mine supervision, operation, and maintenance.

Table 62 shows the yearly total mining expenses per item and Table 63 shows the yearly unit cost

(US$/t mined).


Table 62 Mining Operating Cost (US$ ‘000)

US$ '000 Year -1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 TOTAL

Mine Total Expenses US$ '000 17,132 77,447 110,892 120,121 114,500 113,787 115,175 106,898 92,874 66,902 34,811 2,871 973,411

Loading US$ '000 2,031 10,879 15,522 15,654 15,746 16,159 16,088 14,539 12,644 7,595 2,284 171 129,312

Hauling US$ '000 5,091 25,612 38,443 46,555 42,364 40,847 42,789 38,097 31,633 21,617 7,345 604 340,998

Drilling US$ '000 1,597 6,959 12,194 12,849 12,886 12,431 12,275 12,009 10,807 7,041 3,135 269 104,451

Blasting US$ '000 2,700 11,098 17,261 17,544 17,466 17,051 17,049 16,277 14,159 9,192 4,155 356 144,308

Ancillary US$ '000 1,520 5,950 8,465 8,607 7,218 8,401 8,237 7,413 6,317 5,633 4,266 351 72,379

Support US$ '000 748 2,412 2,584 2,580 2,579 2,657 2,497 2,634 2,450 2,388 2,290 188 26,009

Engineering and Administration US$ '000 1,101 4,238 4,587 4,574 4,560 4,560 4,560 4,514 4,332 4,058 3,614 298 44,996

Labour US$ '000 2,344 10,299 11,834 11,758 11,680 11,680 11,680 11,416 10,531 9,378 7,723 635 110,958

Table 63 Mining Operating Costs (US$/t mined)

US$/t Year -1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 TOTAL

Mining cost (t rom) US$/t 1.50 1.54 1.31 1.42 1.35 1.35 1.36 1.35 1.37 1.70 2.98 3.34 1.42

Loading US$/t 0.18 0.22 0.18 0.19 0.19 0.19 0.19 0.18 0.19 0.19 0.20 0.20 0.19

Hauling US$/t 0.45 0.51 0.45 0.55 0.50 0.48 0.51 0.48 0.47 0.55 0.63 0.70 0.50

Drilling US$/t 0.14 0.14 0.14 0.15 0.15 0.15 0.15 0.15 0.16 0.18 0.27 0.31 0.15

Blasting US$/t 0.24 0.22 0.20 0.21 0.21 0.20 0.20 0.21 0.21 0.23 0.36 0.41 0.21

Ancillary US$/t 0.13 0.12 0.10 0.10 0.09 0.10 0.10 0.09 0.09 0.14 0.37 0.41 0.11

Support US$/t 0.07 0.05 0.03 0.03 0.03 0.03 0.03 0.03 0.04 0.06 0.20 0.22 0.04

Engineering and Administration US$/t 0.10 0.08 0.05 0.05 0.05 0.05 0.05 0.06 0.06 0.10 0.31 0.35 0.07

Labour US$/t 0.21 0.20 0.14 0.14 0.14 0.14 0.14 0.14 0.16 0.24 0.66 0.74 0.16


21.2.3 General and Administrative (G&A) Costs

An estimate of G&A operating costs was developed. The more important items contemplated in the

G&A costs include following.

Administration

Laboratory

ISO normative

Security equipment

Community development

Winter operation issues

Communication costs

Software

Insurances

External advisors

Recruitment and training

Environmental monitoring

The following table shows the G&A operating cost estimate. The average unit cost was considered for

all the years of operation, according to the current mine plan.

Table 64 G&A operating costs

G&A OPEX Average Value Item Unit

G&A unit cost US$/t 0.53

Material to process plant ktpy 23,738

G&A opex KUS$/y 12,505

The average G&A costs equate to US$ 0.53/t.


22. ECONOMIC ANALYSIS

This technical report includes mineral resources that are not mineral reserves and therefore do not

have demonstrated economic viability.

The reader is cautioned that the preliminary economic assessment is preliminary in nature and

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. No Mineral Reserves have been estimated. There is no certainty that the preliminary

economic assessment will be realized.

There is no certainty that the PEA results will be realized. Since the analysis is based on a cash flow

estimate, it should be expected that actual economic results might vary from these results. The PEA

has been completed to a level of accuracy of +35% to -10%. The PEA is not a preliminary feasibility

study or feasibility study.

NCL is not a financial adviser, and that these models are indicative only, based on NCL’s experiences.

NCL recommends that the Company and other readers of this report seeks their own financial and tax

advice before taking action in relation to the financial matters herein.

Economical parameters used for the evaluation are shown in Table 65.

Table 65 Economical model general parameters

Item Unit Value

Average Mining Costs Open Pit US$/tonne mined 1.42 (average)

Processing Cost US$/tonne 2.56 (avrage)

G&A US$/tonne 0.53

Base Case Prices Gold US$/oz Au 1,450

Transport, Freight, Insurance, Refining Gold US$/oz Au 10.00

Metallurgical Recovery Gold (%) 79.5% (average, overall)

Income Tax % 20

Royalties IEM: Chilean Specific Mining Tax 1.68% (average)

Depreciation During Project Life

22.1 Taxes and Royalties

Taxation and Chilean government royalties were applied as follows:

Income tax: A corporate tax rate of 20% was applied.

IEM (Chilean “Specific Mining Tax”): A variable tax rate is applicable, according to the yearly

production of "equivalent metrics tonnes of copper". An average 1.68% tax rate of the earnings before

interest, taxes, depreciation and amortization was applied.


22.2 Economic Analysis

The total estimated initial capital cost of the Project is US$514.6 million, which comprises

i) US$412.6 million for all plant, infrastructure, energy and open pit mining equipment; ii) an additional

$US70.1 million for EPCM and contingencies; and iii) US$32.1 million for initial pre-stripping and

leasing for main mining equipment during the pre-production period. Adding sustaining capital and

closure, the total capital cost for the life of the Project is estimated to be US$ 763.6 million.

It must be noted that this economical model considers a leasing option for the main mining equipment:

ten years for loading and hauling; and five years for auxiliary equipment.

The base case financial model assumes a gold price of US$ 1450 per ounce. Results of the

discounted cash flow modelling (NPV5% and NPV10%) for the PRoject, together with the projected

Internal Rate of Return (IRR) and payback period, are presented in Table 66.


Financial Model

NPV5% Free cash flow (pre-tax) US$ 741M

NPV5% Free cash flow (after tax) US$ 531M



IRR (pre-tax) 33.9%

IRR (after tax) 26.6%

Years to payback from start of production (pre-tax at 0% discount)

2.5

Years to payback from start of production (free cash flow at 0% discount)

3.1


Table 67 Cash Flow Economical Model

Year -1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 TOTAL

1 Mine PlanOpen Pit Mining

Mineralised material t 6,624,100 22,575,900 29,200,000 29,200,000 29,200,000 29,200,000 29,200,000 29,200,000 26,759,200 20,684,700 8,537,100 741,800 261,122,800

Gold Au g/t 0.38 0.44 0.41 0.41 0.40 0.35 0.36 0.38 0.40 0.47 0.58 0.66 0.40

Contained Gold oz 80,715 319,214 388,664 383,970 373,643 330,458 339,846 356,744 339,829 309,238 159,195 15,621 3,397,138

Waste t 4,775,900 27,874,100 55,350,000 55,350,000 55,350,000 55,350,000 55,272,800 49,929,400 41,039,700 18,615,300 3,132,400 118,300 422,157,900

Total Mined t 11,400,000 50,450,000 84,550,000 84,550,000 84,550,000 84,550,000 84,472,800 79,129,400 67,798,900 39,300,000 11,669,500 860,100 683,280,700

Total Mining

Mineralised material t 6,624,100 22,575,900 29,200,000 29,200,000 29,200,000 29,200,000 29,200,000 29,200,000 26,759,200 20,684,700 8,537,100 741,800 261,122,800

Gold Au g/t 0.38 0.44 0.41 0.41 0.40 0.35 0.36 0.38 0.40 0.47 0.58 0.66 0.40

Contained Gold oz 80,715 319,214 388,664 383,970 373,643 330,458 339,846 356,744 339,829 309,238 159,195 15,621 3,397,138

Plant Feed

Mineralised material t - 29,200,000 29,200,000 29,200,000 29,200,000 29,200,000 29,200,000 29,200,000 26,759,200 20,684,700 8,537,100 741,800 261,122,800

Gold Au g/t - 0.43 0.41 0.41 0.40 0.35 0.36 0.38 0.40 0.47 0.58 0.66 0.40

Contained Gold oz - 399,929 388,664 383,970 373,643 330,458 339,846 356,744 339,829 309,238 159,195 15,621 3,397,138

0.32 0.03

2 RecoveriesGlobal Recovery 79.6% 79.5% 79.5% 79.4% 79.0% 79.1% 79.2% 79.4% 80.0% 81.0% 81.7% 79.5%

3 ProductionGold oz 318,488 309,093 305,186 296,605 260,945 268,666 282,608 269,671 247,359 129,001 12,765 2,700,387

4 PricesGold US$/oz 1450 1450 1450 1450 1450 1450 1450 1450 1450 1450 1450 1450

5 Total revenueGold US$ - 461,807,383 448,185,081 442,519,621 430,077,348 378,369,893 389,566,178 409,781,743 391,022,649 358,670,959 187,051,536 18,509,008 3,915,561,399

Total Revenue US$ - 461,807,383 448,185,081 442,519,621 430,077,348 378,369,893 389,566,178 409,781,743 391,022,649 358,670,959 187,051,536 18,509,008 3,915,561,399


Table 67Cash Flow Economical Model (cont)


6 Operating CostsMining US$ 77,447,042 110,891,926 120,121,481 114,500,144 113,786,596 115,175,231 106,898,360 92,874,100 66,902,037 34,811,017 2,870,982 956,278,915

Processing US$ 72,758,713 72,758,713 72,758,713 72,758,713 72,758,713 72,758,713 72,758,713 68,654,552 58,440,389 26,673,314 4,105,581 667,184,826

G&A US$ 15,382,143 15,382,143 15,382,143 15,382,143 15,382,143 15,382,143 15,382,143 14,096,364 10,896,404 4,497,222 390,770 137,555,761

Total Operating Cost US$ 165,587,898 199,032,782 208,262,337 202,641,000 201,927,452 203,316,086 195,039,215 175,625,016 136,238,830 65,981,553 7,367,333 1,761,019,501

Total Operating Cost US$/t 7.33 6.82 7.13 6.94 6.92 6.96 6.68 6.56 6.59 7.73 9.93 6.74

7 Operating Cash Flow US$ - 296,219,486 249,152,299 234,257,284 227,436,349 176,442,442 186,250,091 214,742,527 215,397,633 222,432,128 121,069,983 11,141,675 2,154,541,898

8 Cash CostCash cost US$/oz - 519.92 643.92 682.41 683.20 773.83 756.76 690.14 651.26 550.77 511.48 577.16 652.14

9 LeasingElectrical Supply US$ 2,073,188 2,073,188 2,073,188 2,073,188 2,073,188 2,073,188 2,073,188 2,073,188 2,073,188 2,073,188 - 20,731,879

Mining Equipment US$ 21,593,325 28,029,042 27,041,764 26,054,486 22,954,027 27,483,155 25,431,379 20,377,821 11,088,183 4,047,007 - 214,100,191

Total Leasing US$ - 23,666,512 30,102,230 29,114,952 28,127,674 25,027,215 29,556,343 27,504,567 22,451,009 13,161,371 6,120,195 - 234,832,070

10 Transport + insuranceGold US$ - 3,184,879 3,090,932 3,051,859 2,966,051 2,609,448 2,686,663 2,826,081 2,696,708 2,473,593 1,290,011 127,648 27,003,872

Total Transport + insuranceUS$ - 3,184,879 3,090,932 3,051,859 2,966,051 2,609,448 2,686,663 2,826,081 2,696,708 2,473,593 1,290,011 127,648 27,003,872

11 Net Revenue US$ - 269,368,095 215,959,138 202,090,473 196,342,624 148,805,779 154,007,085 184,411,879 190,249,916 206,797,165 113,659,777 11,014,027 1,892,705,957

12 Total cost per ounce, including leasing and transport + insurance

Total cost per ounce US$/oz - 604.23 751.31 787.81 788.03 879.74 876.77 797.46 744.51 613.98 568.92 587.16 749.10

13 Total Gross Margin US$ - 269,368,095 215,959,138 202,090,473 196,342,624 148,805,779 154,007,085 184,411,879 190,249,916 206,797,165 113,659,777 11,014,027 1,892,705,957

14 Reclamation US$ -

15 EBITDA US$ - 269,368,095 215,959,138 202,090,473 196,342,624 148,805,779 154,007,085 184,411,879 190,249,916 206,797,165 113,659,777 11,014,027 1,892,705,957




16 Depreciation & AmortizationUS$ - 43,885,278 46,789,291 49,370,152 51,752,626 54,135,100 56,517,574 58,900,048 61,282,522 63,664,996 486,297,584

(see capex tab)

17 EBIT US$ - 225,482,817 169,169,847 152,720,321 144,589,998 94,670,679 97,489,511 125,511,832 128,967,394 143,132,169 113,659,777 11,014,027 1,406,408,373

18 Interests on debt US$ - - - - - - - - - - - - -

19 Sunk Costs US$ - 120,000,000 - - - - - - - - - - 120,000,000

20 EBT US$ - 105,482,817 169,169,847 152,720,321 144,589,998 94,670,679 97,489,511 125,511,832 128,967,394 143,132,169 113,659,777 11,014,027 1,286,408,373

21 TaxesChilean IEM (see IEM tab) - 5,753,788 4,457,786 4,108,490 3,851,504 2,175,451 2,319,569 2,913,412 2,876,024 2,848,561 439,685 - 31,744,270

Taxes (20%) US$ - 19,945,806 32,942,412 29,722,366 28,147,699 18,499,046 19,033,988 24,519,684 25,218,274 28,056,722 22,644,019 2,202,805 250,932,820

Total Taxes US$ - 25,699,594 37,400,198 33,830,856 31,999,203 20,674,496 21,353,557 27,433,096 28,094,298 30,905,283 23,083,703 2,202,805 282,677,091

22 Net Earnings US$ - 199,783,223 131,769,648 118,889,465 112,590,795 73,996,183 76,135,954 98,078,736 100,873,096 112,226,887 90,576,074 8,811,222 1,123,731,282

23 CASH FLOW US$ - 243,668,501 178,558,939 168,259,617 164,343,421 128,131,282 132,653,527 156,978,783 162,155,618 175,891,882 90,576,074 8,811,222 1,610,028,866

24 Net CapexCapex US$ 482,738,059 482,738,059

Pre-stripping US$ 17,131,893 17,131,893

Leasing US$ 14,687,913 14,687,913

Sustaining / Closure US$ 31,944,144 28,389,465 26,207,214 26,207,214 26,207,214 26,207,214 26,207,214 26,207,214 26,207,214 - 5,250,000 249,034,105

Total Capex US$ 514,557,865 31,944,144 28,389,465 26,207,214 26,207,214 26,207,214 26,207,214 26,207,214 26,207,214 26,207,214 - 5,250,000 763,591,971




25 Total cost per ounce, including capex

Total cost per

ounce, including

capex

US$/oz - 704.53 843.16 873.68 876.39 980.17 974.32 890.20 841.69 719.93 568.92 998.44 1,031.87

26 Net Free Cash Flow (yearly & cumulative)Net Free Cash Flow US$ (514,557,865) 211,724,357 150,169,475 142,052,403 138,136,207 101,924,068 106,446,314 130,771,569 135,948,404 149,684,668 90,576,074 3,561,222 846,436,895

Cumulative US$ (514,557,865) (302,833,508) (152,664,033) (10,611,631) 127,524,576 229,448,645 335,894,958 466,666,528 602,614,931 752,299,600 842,875,674 846,436,895

27 Net Present Value (NPV) 27 Payback (years)0% $ 846,436,895 3.1

5% $ 531,493,351 3.5

10% $ 324,228,460 4.0


22.3 Sensitivity Analysis

The Project’s sensitivity to changes in revenue, operating costs, capital costs and discount rate was

tested as described below. Note that all figures given in the following tables are after tax.

Table 68 Sensitivity – Gold Price and Discount Rate

NPV (MUS$)

Gold Price & Discount Rate

Gold Price (US$/oz)

1,200 1,450 1,700

Dis

cou

nt

Rat

e

0.0% 320 846 1,369

5.0% 137 532 923

10.0% 20 324 627

IRR (%) 11.1% 26.7% 40.5%

Table 69 Sensitivity – Gold Price and Operating Cost

NPV (M$)

Gold Price & Operating Cost

Gold Price (US$/oz)

1,200 1,450 1,700

Op

erat

ing

Co

st

-20% 467 858 1,246

Base Case

137 532 923

+20% 45 436 824

Table 70 Sensitivity – Gold Price and Capital Cost

NPV (M$)

Gold Price & Capital Cost

Gold Price (US$/oz)

1,200 1,450 1,700

Cap

ital

Co

st

-20% 253 658 1,063

Base Case

137 531.5 923

+20% 13 399 785


23. ADJACENT PROPERTIES

Figure 41 depicts the location of properties/projects which are adjacent to the Cerro Maricunga

Project. The more significant properties are as follows:

Table 71 Main Adjacent Properties to Cerro Maricunga

Property Status Ownership

La Coipa Mine Kinross Gold (100%)

Maricunga (Refugio) Mine Kinross Gold (100%)

Marte-Lobo Project Kinross Gold (100%)

Can Can Mine (Closed) Kinross Gold (100%)

La Pepa Project Yamana Gold (100%)

Volcan Project Hochschild Mining (100%)

Figure 41 Properties Adjacent to the Maricunga Project


24. OTHER RELEVANT DATA

24.1 Plant Geotechnical

A geotechnical study has been carried out in the area where the leaching pad and ADR plant will be

located.

Six trial pits have been performed in this area, which are shown in Figure 42. These pits were used to

conduct a geotechnical recognition of the superficial material, in order to establish a general

characterization and identify the eventual presence of low resistance soils, internal instability

conditions or deep waters outcrop, among others.

Figure 42 Approximate location of trial pits

From the geotechnical recognition of the site, performed through the trial pits, and from the laboratory

analysis of the soil characterization, the following comments and recommendation can be discussed:

The subsurface stratigraphy of the site is mainly formed by a single type of material; silty sandy gravel

with blocks, which only distinguishing characteristic is the colouring change in the upper part caused

by a higher content of fine material, without significant granulometric or structural differences, all

through its depth and areal distribution.


According to the above, the natural soil stratum can be used as a foundation soil, from the minimal

seal depth established (0.5 m) and as long as the contact pressures are restricted to the

recommended values.

It is convenient that the foundations support is constructed over a layer of equal or higher stiffness

than the intact natural soil; it is recommended that once the excavations reach the seal depth, a

mechanical compacting shall be performed over the superficial material of the seal, in order to reach

at least a 95% of the maximum density obtained in the Procter test.

24.2 Operations Project Organisation

The process plant personnel have been estimated as follows:

Operations and maintenance personnel were classified into two roles; (A) for managers/supervisors

and (B) for employees.

To determine role (A) human resources, an estimation was made of a typical administrative day’s work

as well as the number of workers necessary per shift, considering absenteeism, vacations and

substitute workers.

To determine role (B) human resources, the total allowance required by shift is estimated, considering

absenteeism, vacations and substitute workers.

For regular operations, four shifts are considered in order to satisfy the two shifts per day working

requirement, plus two “swing” shift.

For mechanical and electrical maintenance operations, four shifts are considered in order to satisfy the

two shifts per day working requirement, plus two “swing” shift.

Two supervisor and two instrumentation maintenance employees are considered, in order to satisfy

the one shift per day working requirement (one operating and the other one waiting for their shift).

The following table shows both the operations personnel and the maintenance personnel considered

for the process plant. The operations personnel are organized by plant areas, according to crushing,

heap leaching and solution management and ADR, EW and smelting.


Table 72 Process plant personnel

24.3 Project Implementation

Atacama Pacific must complete an environmental impact study, a feasibility study and an EPCM

contract, in order to meet all the required technical studies for the Cerro Maricunga project

development to commence.

Once the regional authorities approve the environmental impact study, a construction program and

pre-stripping activities can commence.

The construction phase of the Cerro Maricunga Project is estimated to last 19 months, beginning in

August 2015. The climatic conditions and altitude are of consideration, with major foundation work to

be completed during the early summer months.

Advanced Economic Studies July 2013 – April 2014

Environmental Impact Preparation August 2013 – June 2014

Permitting / EPCM Contract August 2013 – August 2015

Construction August 2015 – March 2017

Start up and Commissioning March 2017 – June 2017

Primary,

Secondary and

Tertiary Crushing

Heap leaching,

solution

management

ADR - EW -

SmeltingTotal

10 6 5 21Operation supervisor Role A 2 2 1 5Control room operator Role B 4 0 0 4Ground operator Role B 4 4 4 12

13 0 0 13Maintenance supervisor Role A 1 0 0 1Supervisors Role B 2 0 0 2Mechanics Role B 4 0 0 4Electricians Role B 4 0 0 4Instrumentalists Role B 2 0 0 2

23 6 5 34

10 6 5 21

2 2 1 5

8 4 4 16

13 0 0 13

1 0 0 1

12 0 0 12

23 6 5 34

3 2 1 6

20 4 4 28

Role A

Personnel

Operation

Maintenance

Total

Operation

Role B

Role B

Maintenance

Role A

Role B

Total

Role A


Start of Operations June 2017

Critical Path

The critical path items relate to development of more advanced engineering stages (feasibility and

EPCM) and the project construction.

It is possible to optimize the project implementation, by developing fast track studies, for example

incorporating the prefeasibility work into the final feasibility study. However it must be noted that the

environmental approval is also a limitation of the project, and hence if two stages are indeed

complemented with each other, the critical path will be to complete the environmental studies.

24.4 Hydrogeology – Water Exploration

Atacama signed an option contract with AMX de Chile in March, 2102 to explore underground water

resources in an area of approximately 267,000 hectares located 100km north of the Cerro Maricunga

Project as shown in Figure 43.

Figure 43 Water Exploration Zone


The option contract comprises three phases: geophysics, water exploration holes and water

production holes. The objective of the exploration program is to find a sustainable flow of 100 l/s,

which is the estimated minimum flow required to operate the Cerro Maricunga deposit.

The area explored consists of a closed watershed with irregular sedimentation, typical of Andean

Altiplanic drainage systems. According to evaluations carried out by the “Dirección General de Aguas”

(DGA S.D.T. N° 276-2009) the aquifer’s recharge in the area amounts 800 l/s or more.

Work carried out to date is as follows:

Phase I – Geophysics

• Geophysical studies using Electromagnetic Transients (EMT) to determine geo-electric

characteristics and define the level of the water table.

• A total of 224 stations were installed along 120 km. Results allowed generating 21

resistivity sections were stratifications were characterized down to 500-m depth.

• Eight targets were defined, the main being located in the central zone; Salar Grande.

Phase II – Exploration Holes

• A total of 3 holes rotary mud-8½” diameter holes have been bored:

Hole-ID Depth-m Water Level-m

PSGR-1 220 27

PSGR-2 181 115

PSGR-3 250 178

Phase III – Production Holes

ATM is currently drilling the first of three water production holes. Holes will be drilled down to 200-

250m.


25. INTERPRETATION AND CONCLUSIONS

25.1 Mineral Resource

25.2 Mining Studies

No mineral reserves have been declared within this current study.

Preliminary mining studies have been completed using the resource estimate as of November 9, 2012,

and include de following aspects:

Pit optimization using Whittle FX to determine the ultimate pits limits.

A final have been proposed for Cerro Maricunga. Bench and overall pit slope design was

based on recommendations by the geotechnical consultants (AKL).

Open pit contained mineral inventory amounts to 261 million tonnes at an average grade of

0.40 g/t Au. Inferred mineral resources have been included that are considered too speculative

geologically to have the economic considerations applied to them that would enable them to be

categorised as mineral reserves.

Waste storage areas close to the pits were designed in accordance with geotechnical

recommendations.

Identification of suitable mining equipment types and calculation of mining fleet requirements

for open pit mining.

Estimates of both mine capital (CAPEX) and operating (OPEX) costs. Capital costs consider

owner-operator mining, and include a provision for preproduction mining. Replacement and

additional equipment purchase costs have been included over the life of Project.

The mining operating cost (OPEX) estimate is dominated by equipment operating costs (fuel,

tyres, labour, and maintenance). Blasting, administration/management and services have also

been included.

25.3 Metallurgical Information and Process Design

Cerro Maricunga envisions a conventional plant for the treatment of its gold bearing material,

according to the following process: three stages crushing of the whole mineralized material, transport

of the crushed material to the leaching heap through a belt system, gold leaching in heaps with NaCN,

treatment of the pregnant leaching solution in an ADR plant (carbon adsorption) and gold recovery as

dore bullion through an electrowinning and smelting process.

To evaluate the feasibility of processing the material through heap leaching and to determine the

optimum design of the crushing plant, metallurgical testwork was carried out with Cerro Maricunga

mineralized material, according to:


Physical characterization of the mineralized material (Work Index and Abrasion Index

estimation).

Cyanidation through Bottle Roll Tests (BRT) for 7 sample composites and at different material

particle size distribution.

Cyanidation through Column Leaching Tests (CLT) for 6 sample composites and at different

material particle size distribution.

The main conclusions that can be obtained from the testwork results are the following:

BRT indicated a correlation between the material P80 and the gold extraction; the extraction

increases when the P80 decreases. However there are no significant losses for coarser

material (over P80 12.5 mm).

For a P80 of 19 mm a gold extraction of 80% can be expected in a cyanidation process, for

grades over 0.4 g/t Au.

The overall considered recovery to payable gold, including EW and refining, was 79.5%

For a P80 of 19 mm a correlation was found between the Au grade and the gold extraction in column

cyanidation tests. For higher Au grades, higher gold extractions are to be expected

25.4 Preliminary Economic Assessment Results

Simple cash flow financial models were created by NCL, based on its experience, utilizing the mine

production schedule, associated gold grades, gold recoveries estimated from the preliminary

metallurgical test program, and capital and operating costs as outlined in this technical study. Base

case gold price assumed in the financial modelling was US$ 1,450/oz gold. Total metal recovered

during the life of the Project are estimated to be 2.7 million of ounces. A summary of the discounted

cash flow modelling (NPV5% and NPV10%), together with the projected Internal Rate of Return (IRR)

and payback period, are presented in Economical Evaluation Results Summary.


Financial Model





IRR (pre-tax) 33.9%

IRR (after tax) 26.6%

Payback Period - from start of production 3.1


26. RECOMMENDATIONS

26.1 Drilling

Continue the current balanced drilling strategy of targeted infill drilling to increase resource

confidence and extensional resource definition drilling to add additional mineral resources;

Continue to update relevant mineral resource estimates for all significant mineralized zones to

reflect ongoing changes to mineral resource confidence and the overall Cerro Maricunga

mineral resource base;

26.2 Mining

Continue mine engineering and planning studies to define and confirm the economic viability of

the Project, and move towards development stage.

Define grade-control requirements for open pit.

Continue geotechnical testwork and studies including drilling geotechnical holes for open pit.

26.3 Proposed Budget

A budget of US$23 million is proposed to cover exploration and development-related studies at the

Project in 2013. This exploration program is budgeted to comprise approximately 20,000 metres of

drilling along with a program of bulk metallurgical sampling for bench plant test work. The majority of

the drill program (approximately 15,000 metres) will be dedicated to upgrade current Inferred

Resources. Exploration targets will also be tested and defined if warranted with the remaining

budgeted drilling metreage. In addition to drilling, the will include continued metallurgical test work,

with 14 column percolation leach tests presently underway, along with engineering studies and the

collection of environmental baseline data in support of future permitting.


27. REFERENCES

Bartlett, M.G., Chapman, D., and Harris, R., 2004; Snow and the Ground Temperature Record

of Climate Change: Journal of Geophysical Research, Vol. 109, pp. 10-29.

Cornejo, P., et al. 1998. Hoja Salar de Maricunga, Región de Atacama. Escala 1:100,000.

Servicio Nacional de Geología y Minería, Chile. Mapas Geológicos N°7.

Cornejo, P., 2008; Petrographic study of selected samples from Co. Maricunga.

Cornejo, P., 2011; Informe preliminar descripciones petrográficas de muestras de Proyecto

Cerro Maricunga. Unpublished Internal Report prepared for Minera Atacama Pacific Gold Chile

Ltda. June 2011.

Dietrich, A., Dec., 2010; Report October-December, 2010, Ojo de Maricunga Prospect;

prepared for Minera Atacama Pacific Gold Chile.

Dietrich, A., Apr., 2011; Report January-April, 2011, Reconnaissance Map at 1:25,000 scale of

the Ojo de Maricunga District Area; prepared for Minera Atacama Pacific Gold Chile.

Geoexploraciones Ltda, May, 2003; VolcanCopiapó Geology and Mineral Potential, Maricunga

District, Chile: Unpub. Report prepared for MineraCameco Chile Ltda.

Gold Fields Chile S.A. Exploration and Development; 30 April, 2009; Monthly Report – April,

2009, SBX Projects.

Gold Fields Chile S.A.; 30 June, 2009; Monthly Report – May, 2009, SBX Projects.

Gold Fields Chile S.A.; 9 July, 2009; Monthly Report – June, 2009, SBX Projects.

Gold Fields Chile S.A.; 6 August, 2009; Monthly Report – July, 2009, SBX Projects.

Ortuzar, A, July. 2011; Legal Opinion on the Status of the Cerro Maricunga Concessions;

prepared by Cruzát, Ortúzar, &MacKenna, Baker McKenzie International, on behalf of Atacama

Minerals Inc.

Vila, T., et al, 1991; Gold-rich Porphyry Systems in the Maricunga Belt, Northern Chile; Econ.

Geology; A special Issue devoted to the Gold deposits of the Chilean Andes; Vol. 86, No. 6.

Viteri, E., Aug., 2010; Santa Teresa Gold Silver Prospect.

Magri, E, November 2012; Technical Report on the Cerro Maricunga Gold Project, Region III

Chile.


AMTEL, “Evaluation of 2010 Leach Tests of Cerro Maricunga Gold Ores. Report 11/04”,

January 2011. It includes Kappes, Cassiday & Assoc. “Maricunga Project. Report of

Metallurgical Test Works”, November 2010.

AMTEL, “4th Process Report on Cerro Maricunga Ore Leach Testwork: Summary of BRT

Results (as of July 21, 2011). Report 11/31”, July 2011.

AMTEL, “Evaluation of 2011 Leach Tests of Cerro Maricunga Gold Ores”, December 2011.

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