Volcan Summary
Location
Andina's 100%-owned Volcan Gold Project is located in Chile's Atacama Region approximately 120 kilometres east of Copiapo. The property is strategically located in the prolific Maricunga Gold Belt, which hosts a number of important gold deposits, including the Maricunga gold mine (Kinross) the La Coipa mine (Kinross), the Cerro Casale deposit (Kinross/Barrick), and the Lobo-Marte deposit (Kinross). In total, more than 70 million ounces of gold have been identified in the Maricunga Gold Belt.
Mineral Reserves
As of January 31, 2011, initial Proven and Probable Mineral Reserves for the Dorado deposits of the Volcan project are 6.6 million ounces of gold at an average grade of 0.726 grams per tonne gold (“g/t Au”) contained in 283 million tonnes of ore. This represents a sub-set of the Global Dorado Sector Resources that have been earmarked for Phase 1 Development.
Global Dorado Sector Mineral Resources
As of September 16, 2010, the updated resource for the Dorado deposits estimated measured and indicated mineral resources of 389.7 million tonnes at an average grade of 0.71 g/t Au for 8.9 million ounces of contained gold and inferred resources of 41.6 million tonnes at an average grade of 0.50 g/t Au for 671,000 ounces of contained gold. Both estimates are at a cut-off grade of approximately 0.4 g/t Au.
Also as at September 16, 2010, for the Dorado deposits, estimated Global geologic measured and indicated resources at a cut-off grade of 0.2 g/t gold are 11.7 million ounces of gold plus an additional 4.3 million ounces of gold in the inferred category.
In addition to the Dorado deposits, the Ojo de Agua area hosts an inferred resource of 18.6 million tonnes grading 0.85 g/t Au for total contained gold content of 510,000 ounces at a cut-off grade of 0.5 g/t (October 2008) at the Andrea and Florencia zones while drilling continues to define a resource at Ojo de Agua East.
2011 Pre-feasibility Study
- Based on a subset of in-pit gold resources from the Dorado deposits which targets 74% or 6.6 million contained ounces,
- Average annual gold production of approximately 283 million ounces,
- 15 years mine life,
- Average first 5 years cash operating costs of $584/oz Au,
- Average life-of-mine (“LOM”) cash operating costs of $615/oz Au,
- At $1,300/oz gold, using at a 5% discount rate, after-tax NPV of $863 million generating an IRR of 23%,
- Estimated construction capital costs of $547 million,
- Processing 55,000 tonnes per day (“tpd”) of ore,
- 11,000 tpd Milled (5,500 selected higher grade and 5,500 fines from leach feed)
- 44,000 tpd Heap Leach Pad
- Processing 55,000 tonnes per day (“tpd”) of ore,
- Waste to ore ratio of 2.48:1 LOM,
- Several opportunities to materially improve project economics were not incorporated into the PFS, including Flotation and SART technologies the subject of ongoing testwork and engineering.
Mining, Processing
Conventional open pit mining methods will be used to mine the two Dorado deposits. The operation is designed to use industry-proven mining practices and equipment. Mining will take place at a rate of 55,000 ore tonnes per day. Ore will be delivered to a primary crusher near the pit. The crushed ore discharged from the primary crusher will be transported via an overland conveying system to the plant site located approximately 6 km away. The ore will pass through secondary crushing and on to tertiary crushing which will be accomplished with high-pressure-grinding-rolls (“HPGR”). Ten percent of ore being the highest grade ore of the day will be campaigned on a daily basis through the crushing circuit and directed to the mill and agitated leach system. The fines (designated as the finest 10% portion by weight) from the remaining lower grade ore will be removed with an air sweep system and will also be directed to the mill. The mill will consist of a single stage ball mill followed by a carbon-in-leach circuit to treat a total of 11,000 t/d of the combined high grade and crusher fines. Mill tailings will be thickened to a paste and deposited in a geomembrane lined facility.
The remainder of the crushed ore, after fines removal, will be conveyed to a conventional leach pad and stacked in 10 meter lifts with a radial stacker at a rate of 44,000 t/d. A total of fifteen 10 meter lifts are planned for a maximum heap height of 150 meters in the deepest part of the heap. In both the agitated leach and the heap leach systems the gold will be dissolved with a dilute cyanide solution and adsorbed onto activated carbon. The gold will be stripped from the activated carbon via a standard Zadra pressure elution system and smelted to produce doré bars on site.
Development of Volcan is not complex and has comparatively low development costs for a resource of this magnitude based on: metallurgical testing to date, location in Chile, access to infrastructure and proximity to surface of the deposits, compared to other gold deposits of similar magnitude.
