Calcatreu 7

CALCATREU GOLD PROJECT
Initial Feasibility Study

Volume 1: Executive Summary
5 April 2007
Prepared by
www.snowdengroup.com
Perth, Brisbane, Vancouver, Johannesburg, London
Summary
The Calcatreu Project is owned by Aquiline Resources Incorporated (AQI). At this time,
legislative restrictions placed on the use of cyanide by the Rio Negro government mean
no economic or practical processing route for treating the Calcatreu mineralization is
available.
The scope of the Initial Feasibility Study (IFS) is to determine the potential for establishing
a project at Calcatreu assuming no impact from the restrictions on the use of cyanide.
The project scope entails mining ore containing gold and silver from open-pit mines at a
nominal rate of 750,000 tonnes per year and treating it in a conventional crushing,
grinding, and carbon-in-leach (CIL) process plant to produce gold/silver doré. The IFS
has been compiled with reference to USD currency throughout.
The mineral resource for the Vein 49 and Nelson zones at Calcatreu, at a cut-off of
0.55 g/t Au, is estimated to comprise:
• Indicated Mineral Resource – 6.155 Mt at 3.04 g/t Au and 28.1 g/t Ag
• Inferred Mineral Resource – 1.876 Mt at 2.10 g/t Au and 19.4 g/t Ag
The results of AQI’s drilling campaigns conducted since August 2004 are yet to be
included in estimating the mineral resource.
As no economic or practical processing route for treating the Calcatreu mineralization is
available at present, no estimate of a mineral reserve can be made. However, an
estimate has been made of the potential mining inventory which may become available in
the event that the restrictions are lifted.
The potential mining inventory derived from the Indicated Mineral Resource amenable to
treatment by cyanide tank leaching at a diluted cut-off of 1.12 g/t Au equivalent is
estimated to be 3.50 Mt at 3.86 g/t Au and 33.22 g/t Ag for 435 koz Au and 3,739 koz Ag.
Gold recovery is predicted by testwork to be 90% and silver recovery is 74%.
Operating costs are $31.50/t of ore and capital costs are $79.15 M.
A mine life of 4.7 years is projected.
Financial analysis shows that the Calcatreu Project has the potential to offer a modest
level of profitability using the assumptions and findings of the IFS. At a gold price of
$500/oz and a silver price of $8.00/oz, the project delivers free cashflow of $16.26 M and
an NPV of $6.07 M with an IRR of 14%. The financial analysis was also run at 6 month
(to 31 December 2006) average gold and silver prices of $624/oz and $12.38/oz. Free
cashflow, NPV and IRR of $73.54 M, $54.68 M and 74%, respectively, result.
Risk analysis using a multi-variate Monte Carlo simulation shows the project has a 37%
probability of delivering a positive NPV result and a 24% probability of delivering the IFS
NPV result.
Apart from resolving the acceptability of the use of cyanide, risk mitigation strategies
should be incorporated into the project before a decision is made to proceed with
development. In particular, the identification of additional mineral resources for
conversion into mining inventory, through discovery or upgrading the confidence
classification of existing mineral resources, provides an opportunity to significantly
improve the project risk profile. It is understood that Aquiline is pursuing this strategy.
Aquiline Resources Inc: Calcatreu Gold Project
1 Project description ............................................................................................... 1
2 Mineral Resources .............................................................................................. 2
3 Mining and Mineral Reserves .............................................................................. 3
4 Processing and site infrastructure ....................................................................... 4
5 Financial analysis ................................................................................................ 5
5 April 2007
1 Project description
The Calcatreu Project is located approximately 1,250 km southwest of Buenos Aires, the
national capital of Argentina, 165 km southeast (330 km by road) of the major regional
centre of San Carlos De Bariloche and 60 km south of the town of Ingeniero Jacobacci
(Jacobacci). The project area is about 1,300 m above sea level and consists of pampa
(treeless grassland or plains) in wide flat valleys between low rocky hills, which support
very low intensity sheep farming based on poor quality soil. Calcatreu is located in Rio
Negro Province close to the northern boundary of Chubut Province.
The project entails mining material containing gold and silver from open-pit mines at a
grinding, and carbon-in-leach (CIL) process plant to produce gold/silver doré. The project
site is devoid of infrastructure except for an unsealed road to Jacobacci. Provision is
made in the project scope for access, power, water, communications and on-site
accommodation.
5 April 2007 1 of 8
2 Mineral Resources
Precious metal-bearing quartz-calcite veining was discovered in the Calcatreu area in late
1997. Since discovery, vein systems at 11 prospects have been delineated within the
project area. The Vein 49/Nelson system, which has a strike length of over 2 km and
widths of up to 20 m, has been the most intensely investigated of these and is the
significant discovery at Calcatreu. At certain locations the vein system remains open
down dip and the structure hosting it remains open along strike. The possibility for the
discovery of additional mineralization exists.
Previous drilling at Calcatreu was completed in four campaigns, by La Source and
Normandy SA, between 1999 and 2001. Aquiline completed a brief due diligence drill
program in 2003 and is continuing an in-fill definition and exploration drilling program at
the property.
Micon International Limited (Micon) prepared a preliminary assessment study for Vein 49
and Nelson based on the results from drilling carried out up to August, 2004 (“A
Preliminary Assessment and Economic Evaluation for the Calcatreu Gold-Silver Project”
October 2004) which was filed by AQI with the Toronto Stock Exchange (TSX) in
October 2004.
As part of the preliminary assessment study, Micon estimated the mineral resource for the
Vein 49 and Nelson zones, at a cut-off of 0.55 g/t Au, to comprise:
• Indicated Mineral Resource – 6.155 Mt at 3.04 g/t Au and 28.1 g/t Ag
• Inferred Mineral Resource – 1.876 Mt at 2.10 g/t Au and 19.4 g/t Ag
included in estimating the mineral resource at Calcatreu.
5 April 2007 2 of 8
3 Mining and Mineral Reserves

At this time, no economic or practical processing route for treating the Calcatreu
mineralization is available due to legislative restrictions placed on the use of cyanide by
the Rio Negro government. Therefore no estimate of a mineral reserve can be made.
However, an estimate has been made of the potential mining inventory which may
become available in the event that the restrictions are lifted.
The potential mining inventory estimate is made based on a gold price of US$500 /oz and
a silver price of US$8 /oz.
The potential high grade mining inventory amenable to treatment by cyanide tank
leaching derived from the Indicated Mineral Resource at a diluted cut-off of 1.12 g/t Au
equivalent is estimated to be:
• 3.50 Mt at 3.86 g/t Au and 33.22 g/t Ag for 435 koz Au and 3,739 koz Ag.
The potential mining inventory estimate is considered to be at a medium level of
confidence due to the confidence level of the resource from which it was derived.
A potential low grade mining inventory which may be amenable to treatment by a passive
leaching process was derived from the Indicated Mineral Resource at a diluted cut-off of
0.48 g/t Au equivalent and is estimated to be:
• 1.37 Mt at 0.64 g/t Au and 9.19 g/t Ag for 33 koz Au and 405 koz Ag.
The potential low grade mining inventory is of a low level of confidence due to the
confidence level of the process and cost and cost assumptions used its determination.
A mine life of 4.7 years is achieved through mining and processing the potential high
grade mining inventory at the nominated throughput rate of 750,000 per year.
Operating costs associated with the mining part of the operation are $1.45/t of material
mined over the life of the project or $11.95/t of the high grade production material mined.
Capital costs associated with the mining operation are $12.7 M at start-up and $13.0 M
over the mine life.
Mining at Calcatreu is expected to be simple with no especially challenging or high cost
mining issues likely to be encountered.
Diligent grade control practices will be used to derive the greatest value from the project.
Control over the mining and dumping of pyritic waste will be exercised to manage the risk
of acid mine drainage being generated.
Recommendations
The mineral resource estimate for Calcatreu should be updated using the results of the
drilling campaigns conducted since 2004 to enable a more accurate and higher
confidence estimate of the potential mining inventory to be made.
Further work should be undertaken to confirm or modify the preliminary conclusions
regarding processing performance, hydrogeology and environmental matters which were
relied upon during the estimation of the potential mining inventory.
Processing investigations should be initiated to identify a technically and economically
feasible method for treating the low grade potential mining inventory estimated in the IFS.
5 April 2007 3 of 8
4 Processing and site infrastructure

The project entails mining and processing mineralised material at a nominal rate of
750,000 tonnes per year and treating it in a conventional crushing, grinding, and carbon-
in-leach (CIL) process plant to produce gold/silver doré.
A comprehensive metallurgical testwork programme demonstrated that the ore is “free
milling” and that high gold and silver recoveries can be achieved using a conventional
grinding and cyanidation process.
Grade versus leach residue relationships were developed and equate to a gold recovery
of 90% at the average head grade of 3.86 g/t and a silver recovery of 74% at the average
head grade of 33.2 g/t.
Cyanide detoxification tests were conducted on samples of leach residue tails and show
that the cyanide level in the leach residue tails can be readily detoxified to meet the
International Cyanide Management Code (ICMC) standard for the discharge of tailings
into a Tailing Storage Facility.
Electrical power will be provided by an owner-operated, power station using high-speed
diesel generator sets.
Site buildings will comprise process plant, mine workshop, reagent storage, core storage
and laboratory. Process water will be supplied from a site borefield.
On-site camp accommodation will be provided for the site personnel, who would generally
reside in Jacobacci.
The average annual cost for processing Calcatreu ore at a rate of 750,000 tonnes per
year over the life of the mine is $19.55/t.
The project initial capital cost for the process plant and site infrastructure is estimated at
$66.2 M.
The IFS also included a conceptual assessment of alternative process routes including a
non-cyanide gold and silver recovery process. Whilst this process route eliminates the
use of cyanide, the recoveries of gold and silver were significantly lower than those
achieved using a cyanide leach.
Recommendations
During the next phase of developing the Calcatreu project, AQI should obtain
environmental and mine permitting licenses, and conduct hydrological studies to
determine the source and quality of the raw water for the proposed processing facility.
It is imperative to establish whether the decision by the Rio Negro government can be
modified before embarking on the next phase of project development to make a definitive
process route selection for optimization.
5 April 2007 4 of 8
5 Financial analysis
The financial analysis shows that the Calcatreu Project offers a modest level of
profitability using the assumptions and findings of the IFS. At a gold price of $500/oz and
a silver price of $8.00/oz, the project delivers free cashflow of $16.26 M and NPV of $6.07
M with an IRR of 14%. Operating costs are $31.50/t of material processed and the capital
cost is $79.15 M.
The project as it stands does not have an attractive risk profile. When analysed by multi-
variate Monte Carlo simulation for the impact of identifiable significant risks, it is apparent
that there is only a 37% probability of the project delivering better than a break-even
financial result (i.e. zero NPV) and a 24% probability that the project will deliver the IFS
NPV or greater. The NPV of the project is particularly sensitive to variations in the
revenue factors (price, mined grade and recovery) over which AQI has limited control, and
the size of the mining inventory.
The financial analysis was also undertaken using the 6 month average (to 31 December
2006) gold and silver prices of $624/oz and $12.38/oz respectively. Under these
assumptions, the project delivers free cashflow of $73.54 M and NPV of $54.68 M with an
IRR of 74%.
Recommendations
Apart from resolving the acceptability of the use of cyanide, risk mitigation strategies
should be considered and incorporated into the project before a decision is made to
proceed with development. In particular, the identification of additional mineral resources
for conversion into mining inventory, through discovery or upgrading the confidence
classification of existing mineral resources, provides an opportunity to significantly
improve the risk profile. It is understood that AQI is pursuing this strategy.
5 April 2007 5 of 8

Volume 2: Mineral Resources
5 April 2007
Prepared by
Executive Summary
Precious metal-bearing quartz-calcite veining was discovered in the Calcatreu area in late
1997. Since discovery, vein systems at 11 prospects have been delineated within the
project area. The Vein 49/Nelson system, which has a strike length of over 2 km and
widths of up to 20 m, has been the most intensely investigated of these and is the
significant discovery at Calcatreu. At certain locations the vein system remains open
down dip and the structure hosting it remains open along strike. The possibility for the
discovery of additional mineralization exists.
Normandy SA, between 1999 and 2001. Aquiline Resources Incorporated (AQI)
completed a brief due diligence drill program in 2003 and is continuing an in-fill definition
and exploration drilling program at the property.
October 2004.
As part of the preliminary assessment study, Micon estimated the mineral resource for the
Vein 49 and Nelson zones, at a cut-off of 0.55 g/t Au, to comprise:
• Indicated Resource - 6.155 Mt at 3.04 g/t Au and 28.1 g/t Ag
• Inferred Resource - 1.876 Mt at 2.10 g/t Au and 19.4 g/t Ag
1 Introduction.......................................................................................................... 1
2 Mineral Resources .............................................................................................. 2
Tables
Table 2.1 Mineral Resource 0.55 g/t Au cut-off (Micon 2004B) .......................... 5
Figures
Figure 2.1 Location map – Argentina ................................................................... 3
Figure 2.2 Location Map – Calcatreu project area ............................................... 4
5 April 2007
1 Introduction
October 2004.
This report comprises extracts from Micon 2004 to provide context for the IFS prepared
for AQI during 2006 and 2007.
5 April 2007 1 of 8
2 Mineral Resources
The Calcatreu gold project (Calcatreu) is a largely contiguous collection of prospecting
licenses and mining claims comprising approximately 2,930 km2 in the Somuncura
Volcanic Massif of north central Patagonia, Argentina. It is located approximately 165 km
(330 km by road) southeast of San Carlos de Bariloche (Bariloche) and 1,500 km
southwest of Buenos Aires (see Figure 2.1). Calcatreu straddles the southern boundary of
Rio Negro Province and the northern boundary of Chubut Province. The closest town is
Ingeniero Jacobacci (Jacobacci), some 90 km away by road (see Figure 2.2). The project
area covers rolling pampa and low hills, which support very low intensity sheep farming
based on poor quality soil.
Calcatreu passed to Normandy Mining of Australia (Normandy) when it purchased La
Source Developpement Argentine (La Source) from the French Government in 1998.
Normandy, through its Argentine subsidiary Minera Normandy Argentina SA (Normandy
SA), completed most of the exploration on the property.
Newmont Mining Corporation (Newmont) purchased Normandy in 2002 and the project
passed into its hands in the deal. It was reported that Newmont determined that
Calcatreu did not meet corporate size objectives and they elected to dispose of Normandy
SA through an auction process in September, 2002. AQI of Toronto, Canada was the
winning bidder. The final agreement was signed by Aquiline in June, 2003 and allows it to
purchase 100% of the property and acquire Normandy SA by paying Newmont US$2.05
million in a series of staged payments over three years. The project is subject to a 2.5%
net smelter return royalty payable to Newmont on any production. Newmont also retains
a back-in right over much of the property however, the central mining claim areas of
Nabel, where Vein 49 and Nelson are located, are not subject to this right.
Geologically, Calcatreu occurs within bimodal calc-alkaline volcanic rocks of the Jurassic
Taquetren Formation within the massif. Low sulphidation, epithermal, precious metal-
bearing quartz-calcite veining was discovered in the Calcatreu area by La Source in late
1997 when a geologist sampled quartz float that he observed on the roadside while
visiting a prospect further to the west. As a result of the assays received and the vein
textures noted, two prospecting licenses were staked in 1997, and regional
reconnaissance activities commenced the following year.
To date vein systems at 11 prospects have been delineated within the project area. The
Vein 49/Nelson system, which has a strike length of over 2 km and widths of up to 20 m,
has been the most intensely investigated of these and is the significant discovery at
Calcatreu. It is a low sulphidation, quartz adularia gold deposit and its geological setting
has strong similarities with the Cerro Vanguardia and El Desquite projects also located in
southern Argentina. At certain locations it remains open down dip and the structure
hosting it remains open along strike. The possibility for the discovery of additional
mineralization exists.
5 April 2007 2 of 8
Figure 2.1 Location map – Argentina
5 April 2007 3 of 8
Figure 2.2 Location Map – Calcatreu project area

Normandy SA, between 1999 and 2001. AQI completed a brief due diligence drill
program in 2003 and is continuing an in-fill definition and exploration drilling program at
the property.
AQI retained Micon International Limited (Micon) to prepare a Preliminary Assessment
Study for Vein 49 and Nelson based on the results from drilling carried out up to August,
2004. As part of the study, Micon updated its previous mineral resource estimate for the
Vein 49 and Nelson zones, the methodology of which is described in the Micon 2004
report. A summary of that updated resource is presented in Table 2.1.
5 April 2007 4 of 8
Table 2.1 Mineral Resource 0.55 g/t Au cut-off (Micon 2004B)
INDICATED INFERRED
Zone/mineralisation type Tonnes Au g/t Ag g/t Au oz Ag oz Tonnes Au g/t Ag g/t Au oz Ag oz
Vein 49 Oxide
Quartz vein 758,000 5.34 32.9 130,14 801,800 3,000 1.72 10.2 170 1,000
Mineralised andesite 410,000 0.77 9.9 10,150 130,500 0 0.00 0.0 0 0
Vein 49 Primary
Quartz vein 2,998,00 3.79 37.8 365,32 3,643,50 997,000 2.76 25.5 88,470 817,400
Mineralised andesite 854,000 0.75 8.2 20,590 225,100 343,000 0.86 7.7 9,480 84,900
Subtotal Vein 49 5,020,00 3.26 29.8 526,20 4,800,90 1,343,00 2.27 20.9 98,120 903,300
Nelson Area Oxide

Quartz vein 338,000 2.83 20.5 30,750 222,800 53,000 1.54 12.8 2,620 21,800
Mineralised andesite 149,000 0.79 7.7 3,780 36,900 21,000 1.01 8.0 680 5,400
Nelson Area Primary

Quartz vein 510,000 2.35 28.4 38,530 465,700 405,000 1.80 17.4 23,440 226,600
Subtotal Nelson 1,135,00 2.09 21.1 76,340 768,400 524,000 1.65 15.6 27,800 263,100
Total Oxide 1,655,00 3.29 22.4 174,82 1,192,00 77,000 1.40 11.4 3,470 28,200
Total Primary 4,500,00 2.96 30.3 427,72 4,377,30 1,790,00 2.13 19.8 122,450 1,138,200
Grand Total 6,155,00 3.04 28.1 602,54 5,569,30 1,876,00 2.10 19.4 125,920 1,166,400
5 April 2007 5 of 8

Volume 3: Mining
5 April 2007
Prepared by
Summary (NI 43-101 Item 3)
Setting
national capital of Argentina, 165 km southeast (330 km by road) of the major regional
centre of San Carlos De Bariloche and 60 km south of the town of Ingeniero Jacobacci.
The project area is about 1,300 m above sea level and consists of pampa (treeless
grassland or plains) in wide flat valleys between low rocky hills.
The project was originally owned by La Source Developpement Argentine and was
acquired by Normandy Mining of Australia in 1998. Newmont Mining Corporation
purchased Normandy in 2002 gaining project ownership. An agreement to purchase
Normandy SA, the owning entity of the project, over a three year period, was reached with
Aquiline Resources Incorporated (AQI) in 2003.
The initial discoveries at Vein 49 and Nelson were made by regional geological mapping
and chip sampling. Trench and channel sampling with detailed geological mapping
followed with a number of mapping, sampling and drill programs having been conducted
since.
The mineral resource estimate used for this assessment was prepared in 2004. The
estimate was prepared using the ordinary kriging method. At a 0.55 g/t Au cut-off, the
mineral resource was estimated to contain an Indicated resource of 6.155 Mt at 3.04 g/t
Au and 28.1 g/t Ag. The results of AQI’s drilling campaigns conducted since August 2004
are yet to be included in estimating the mineral resource at Calcatreu.
Conclusions
At the time of reporting, no economic or practical processing route for treating the
Calcatreu mineralization is available due to legislative restrictions on the use of cyanide.
Therefore no estimate of a mineral reserve can be made. However, an estimate has
been made of the potential mining inventory which may become available in the event
that the legislative restrictions are lifted.
The potential mining inventory estimate is made based on costs estimated in US$, a gold
price of US$500 /oz and a silver price of US$8 /oz.
The potential high grade mining inventory amenable to treatment by cyanide tank
leaching is estimated to be:
The potential mining inventory estimate is at a medium level of confidence.
A potential low grade mining inventory which may be amenable to treatment by a passive
leaching process is estimated to be:
The potential low grade mining inventory is of a low level of confidence.
A mine life of 4.7 years is achieved through mining and processing the potential high
grade mining inventory at the nominated throughput rate of 750 ktpa.
Operating costs associated with the mining part of the operation are $1.45 /t of material
mined over the life of the project or $11.95 /t of the high grade production material mined.
Other parts of the operation including processing, engineering and administration will
incur additional costs not estimated as part of this study.
Capital costs associated with the mining operation are $12.7 M at start-up and $13.0 M
over the mine life. Other parts of the operation including processing, engineering and
administration will incur additional capital costs not estimated as part of this study.
Mining at Calcatreu will be simple with no especially challenging or high cost mining
issues likely to be encountered.
Diligent grade control practices will need to be employed to derive the greatest value from
the project.
Control over the mining and dumping of pyritic waste will need to be exercised to manage
the risk of acid mine drainage being generated.
Recommendations
The mineral resource estimate for Calcatreu should be updated using the results of the
drilling campaigns conducted since 2004 to enable a more accurate and higher
confidence estimate of the potential mining inventory to be made.
Further work should be undertaken to confirm or modify the preliminary conclusions
regarding processing performance, hydrogeology and environmental matters which were
relied upon during the estimation of the potential mining inventory.
Processing investigations should be initiated to identify a technically and economically
feasible processing method for the low grade potential mining inventory estimated in this
study.
Volume 3: Mining
1 Introduction (Item 4) ............................................................................................ 1
2 Reliance on Other Experts (Item 5) ..................................................................... 2
3 Property Description and Location (Item 6) ......................................................... 3
4 Accessibility, Climate, Local Resources, Infrastructure and Physiography

(Item 7) ................................................................................................................ 5
5 History (Item 8) .................................................................................................... 7
6 Geological Setting, Deposit Types, Mineralisation, Exploration, Drilling,

Sampling and Data Verification (Items 9, 10, 11, 12, 13, 14, 15 and 16) ............ 8
6.1 Geology, deposit types and mineralisation............................................ 8
6.2 Exploration, drilling, sampling and data verification............................... 8
6.3 Sampling Method and Approach ......................................................... 10
6.4 Sample Preparation, Analyses and Security ....................................... 10
6.5 Data Verification .................................................................................. 11
7 Adjacent Properties (Item 17)............................................................................ 12
8 Mineral Processing and Metallurgical Testing (Item 18).................................... 13
9 Mineral Resource and Mineral Reserve Estimates (Item 19) ............................ 15

9.1 Mineral Resource ................................................................................ 15
9.2 Mineral Reserve estimation ................................................................. 17
9.3 Mining method ..................................................................................... 17
9.4 Pit Optimisation ................................................................................... 18
9.5 Cut-off grade calculation...................................................................... 18
9.6 Pit design and mining inventory........................................................... 19
9.6.1 Pit Design .............................................................................. 19
9.6.2 Dilution evaluation ................................................................. 24
9.6.3 Waste dump design............................................................... 24
9.6.4 Dump Design method............................................................ 27
9.6.5 Backfill ................................................................................... 27
9.7 Mineral Reserve statement.................................................................. 28
10 Other Relevant Data and Information (Item 20) ................................................ 29

10.1 Production haulage fleet...................................................................... 29
10.1.1 Equipment options................................................................. 29
10.1.2 Haul cycle simulations ........................................................... 29
10.1.3 Equipment cost modelling ..................................................... 29
10.1.4 Selection Criteria ................................................................... 29
10.2 Drill and blast....................................................................................... 31
10.3 Manning............................................................................................... 33
5 April 2007
Volume 3: Mining
11 Interpretation and Conclusions (Item 21) .......................................................... 35
12 Recommendations (Item 22) ............................................................................. 37
13 References (Item 23)......................................................................................... 38
14 Date and Signature Page (Item 24)................................................................... 40
15 Additional Requirements for Technical Reports on Development Properties

and Production Properties (Item 25) ................................................................. 41
15.1 Mining Costs........................................................................................ 41
15.1.1 Input Parameters ................................................................... 41
15.1.2 Operating cost inputs............................................................. 42
15.1.3 Capital costs .......................................................................... 43
15.2 Mining Schedule .................................................................................. 44
15.3 Primary ore material type schedule ..................................................... 45
15.4 Dump construction schedule ............................................................... 46
16 Illustrations (Item 26) ......................................................................................... 48
Tables
Table 2.1 Expert references................................................................................ 2
Table 4.1 Climatic features ................................................................................. 6
Table 6.1 Drilling programs ................................................................................. 9
Table 9.1 Mineral Resource 0.55 g/t Au cut-off (Micon 2004B) ........................ 16
Table 9.2 Comparison of volumes and metal contents ..................................... 24
Table 9.3 Waste dump volumes........................................................................ 25
Table 10.1 Equipment selection comparison table ............................................. 30
Table 10.2 Drill and blast parameters ................................................................. 32
Table 10.3 Proportional application of drill and blast patterns ............................ 33
Table 10.4 Drilling requirements ......................................................................... 33
Table 10.5 Manning requirements ...................................................................... 33
Table 10.6 Manning Base Salary Levels............................................................. 34
Table 10.7 Manning Mainentance Salary Levels ................................................ 34
Table 15.1 Mining operating costs ...................................................................... 43
Table 15.2 Mining capital expenditure ................................................................ 44
Table 15.3 Mining Schedule for Life of Mine ....................................................... 45
Table 15.4 Scheduled primary ore catagorised by material type ........................ 46
Table 15.5 Dump construction schedule (BCM).................................................. 47
5 April 2007
Volume 3: Mining
Figures
Figure 3.1 Calcatreu project location plan............................................................ 3
Figure 4.1 Topography and vegetation typical of the project area ....................... 5
Figure 9.1 Optimum pit shell (Shell 25) .............................................................. 18
Figure 9.2 Typical vein 49 final pit cross section looking northeast.................... 20
Figure 9.3 Vein 49 pit design stages .................................................................. 22
Figure 9.4 Nelson pit designs............................................................................. 23
Figure 9.5 Interpreted pyritic waste solids.......................................................... 26
Figure 9.6 Pit design and dump locations .......................................................... 28
Appendices
A Pit Optimisation
B Drill and Blast Report
C Cost Model
D Equipment Specifications
5 April 2007
Volume 3: Mining
1 Introduction (Item 4)
AQI has retained Snowden Mining industry Consultants (Snowden) to prepare a mine
plan as part of an Initial Feasibility Study AQI is conducting on its Calcatreu Project in Rio
Negro province in Argentina, South America. The mine plan has been prepared with
considerable reliance on information supplied by AQI in the form of electronic documents
and data sources including:
• Micon 2003. “A Mineral Resource Estimate for the Vein 49 and Nelson Zones at
the Calcatreu Gold-Silver Project, North-Central Patagonia, Rio Negro Province,
Argentina”, November 2003*
• Micon 2004B: “A Preliminary Assessment and Economic Evaluation for the
Calcatreu Gold-Silver Project”; Micon International Ltd, October 2004*
• Golder 2005: “Pit Slope Design for Nelson and Vein 49 Open Pits Calcatreu
Project Argentina”; Golder Associates Ltd, November 2005
• “Block Model Data.zip”, “Drill Data.zip”, “Topo Pit and Mineralized Domains.zip”,
“Whittle Data.zip”; AQI, January 2006.
* Denotes documents previously lodged in accordance with NI 43-101.
AQI’s requirement is for the mine plan to satisfy the requirements of Canadian National
Instrument 43-101 (Standards of Disclosure for Mineral Projects) (NI 43-101) for technical
reports, feasibility studies and mineral reserve estimation.
The Calcatreu Project site was visited between 24 April 2006 and 26 April 2006 by
Snowden Divisional Manager Peter Myers who inspected the site and AQI’s offices in
Jacobacci, conducted enquiries with regard to issues relevant to the mining aspects of the
project.
5 April 2007 1 of 48
Volume 3: Mining
2 Reliance on Other Experts (Item 5)

In preparing this report, Snowden has relied on work undertaken and reported by experts
in fields other than the subject of this report. Those experts and the references supplied
by them are listed in Table 2.1. Snowden has not confirmed the accuracy or correctness
of the information provided in the expert references and accepts no responsibility for
outcomes resulting from any errors or inaccuracies contained in that information.
Table 2.1 Expert references
Field Expert Reference

Project overview Micon International Limited “A Review of the Calcatreu Gold-Silver
Project, North-Central Patagonia, Rio
Negro Province, Argentina”, October 2004*
Micon International Limited “A Preliminary Assessment and Economic
Evaluation for the Calcatreu Gold-Silver
Project”, October 2004*
Geology and Micon International Limited “A Mineral Resource Estimate for the
resource estimation Vein 49 and Nelson Zones at the Calcatreu
Gold-Silver Project, North-Central
Patagonia, Rio Negro Province, Argentina”,
November 2003*
Gene Puritch “Block Model Data.zip”, “Drill Data.zip”,
“Topo Pit and Mineralized Domains.zip”,
“Whittle Data.zip”; electronic data
Geotechnical and Golder Associates Ltd “Pit Slope Design for Nelson and Vein 49
hydrological Open Pits Calcatreu Project Argentina”;
engineering November 2005
Water Management Consultants “Preliminary dewatering analysis and
Chile Ltd recommendations, Calcatreu Project”,
memorandum to AQI, February 2005
Process engineering Ausenco Limited Calcatreu Gold Project Metal Extraction
Case Study, May 2006
*Denotes previously lodged in accordance with NI 43-101.
5 April 2007 2 of 48
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3 Property Description and Location (Item 6)

The property and its location have previously been described (Micon 2004B). A summary
description of the property and its location is presented below.
national capital, 165 km southeast (330 km by road) of the major regional centre of San
Carlos De Bariloche (Bariloche) and 60 km south of the town of Ingeniero Jacobacci
(Jacobacci). The Rio Negro – Chubut provincial border passes through adjacent
exploration tenements 12 km to the south of the project.
Jacobbaci is a town of 6,000 inhabitants and is located on the railway line connecting
Viedma, the Atlantic coastal capital of Rio Negro, with Bariloche.
Figure 3.1 Calcatreu project location plan
The coordinates of the centre point of the project area are reported by AQI to be
2,460,000E, 5,370,000N as defined in the Gauss Krugger Projection, Zone 2 with the
Campo Inchauspe Datum.
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There are two principal means of securing mineral rights in Argentina. The Cateo is an
exploration permit which is granted in up to 20 units of 500 ha each. There are various
time related conditions for size reduction and relinquishment.
A Cateo can be converted to a Mina or mining right after the declaration of the discovery
of a mineralized occurrence through a “Manifestacion de Descubrimiento” (manifestation
of discovery) or MD. Minas are granted for an unlimited time though are subject to
fulfilling expenditure and agreed work program commitments. The deposits which are the
focus of the Calcatreu Project Initial Feasibility Study, Vein 49 and Nelson, are reported
by AQI to be contained within the Nabel 4 and Rebecca Minas.
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4 Accessibility, Climate, Local Resources, Infrastructure and

Physiography (Item 7)
The accessibility, climate, local resources, infrastructure and physiography of the project
have been fully described in the Micon 2004B. A summary description of these aspects
of the project is presented below.
The Project area has well established access. The site is reached from Jacobacci by the
wide unsealed but maintained Ruta 314 which connects Jacobacci with Paso del Sapo in
Chubut Provence to the south. Road distance between Jacobacci and Calcatreu is
90 km.
Jacobacci is accessed by the railway line connecting Viedma with Bariloche or by
unsealed but maintained roads from Bariloche and Viedma. Bariloche and Viedma are
served by commercial jet services from Buenos Aires and Bariloche has access to
international jet services from Santiago (Chile) via Mendoza.
The project area is about 1,300 m above sea level and consists of pampa (treeless
grassland or plains) in wide flat valleys between low rocky hills. The area includes a
moderately well developed network of slow draining creeks, streams and swampy areas,
partly the result of the deposition of a high loading of wind borne dust including ash from
active volcanoes in Chile to the west. The topography and vegetation typical of the
project area are shown in Figure 4.1.
Figure 4.1 Topography and vegetation typical of the project area
The climate is classed as moderately cold continental and is characterised by the features
shown in Table 4.1.
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Table 4.1 Climatic features
Climatic feature Magnitude

Average annual temperature 10° Celsius
Average January temperature 20° Celsius
Average July temperature 4° Celsius
Principal wind direction From NW/W to SE/E
Average wind velocity 20 kph
Maximum wind velocity >100 kph in spring
Annual rain/snow fall 200 mm
The dominant local land use is sheep grazing with some additional stocking of cattle and
horses. The harsh climate, poor soils and increasing international competition has
resulted in the regional agricultural industry becoming severely depressed. AQI and
recent previous owners are reported to have maintained good relations with the land
holders.
There is no local power or communications infrastructure at the project site, with the
closest power and telecommunications located at Jacobacci.
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5 History (Item 8)
The history of the project has been previously described in Micon 2004B. A summary
description of the project history is presented below.
Anomalous gold mineralisation was first discovered about 15 km north of the Calc project
in 1997 at what were to become the Nabel and Nabelon prospects. Regional follow-up in
1998 lead to the discovery of a number of prospects, including Vein 49 and Nelson which
now form the Calcatreu Project.
The project was originally owned by French government entity, La Source
Developpement Argentine (La Source) and was acquired by Normandy Mining of
Australia (Normandy) with the purchase of La Source in 1998. Newmont Mining
Corporation purchased Normandy in 2002 gaining project ownership. An agreement to
purchase Normandy SA, the owning entity of the project, over a three year period, was
reached with AQI in 2003.
The initial discoveries at Vein 49 and Nelson were made by regional geological mapping
and chip sampling. Trench and channel sampling with detailed geological mapping
followed with an initial drilling program undertaken in April 1999. A number of follow-up
mapping, sampling and drill programs were completed by Normandy, the details of which
are reported in Micon 2004B.
Since acquiring the project in 2003, AQI has collected further information through
additional drilling. In 2004, AQI commissioned Micon International Limited (Micon) to
undertake an economic assessment study, the results of which were reported in “A
Preliminary Assessment and Economic Evaluation for the Calcatreu Gold-Silver Project”,
October 2004.
Since 2004, AQI has conducted more exploration work and in 2005, commissioned an
Initial Feasibility Study on the project, which is due for completion during 2006.
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6 Geological Setting, Deposit Types, Mineralisation, Exploration,

Drilling, Sampling and Data Verification (Items 9, 10, 11, 12, 13, 14,
15 and 16)
The details of the project geological setting, deposit types, mineralisation, exploration,
drilling, sampling methods, approach, preparation, analysis and security, and data
verification have previously been described in Micon 2004B. A summary of these aspects
is presented below.
6.1 Geology, deposit types and mineralisation

The western margin of southern Argentina is dominated by the Andean Cordillera, a
volcanic mountain belt. To the east of the Andean Cordillera lie the Somun Cura Massif
in the north and the Deseado Massif to the south. These large volcanic massifs are
separated and bordered by younger sediment-filled valleys containing major rivers
draining the eastern slopes of the Andes
The Calcatreu project is hosted in the calc-alkaline, bimodal Jurassic Taquetren
Formation volcanic rocks within the Somun Cura Massif. The local geology is complex
and attempts to describe it have been made by a number of authors (Nullo, Hodgkin,
Rivera, Franzeese, Cembrano) whose conclusions show less than complete agreement.
Hodgkin and Rivera (2001) conclude that the alteration and mineralisation encountered in
the project area is associated with a complex of intrusives and breccias emplaced at the
end of the last of four volcano-sedimentary cycles.
The Vein 49 and Nelson deposits at Calcatreu are of the epithermal gold/silver bearing
low sulphidation type. The mineralisation is hosted in altered (silicified and clay-altered)
brecciated host rock. The host is interpreted to be a porphyritic andesite lava.
Gold occurs as electrum and as free gold. Grades average about 3 g/t Au with Vein 49
being somewhat higher and Nelson somewhat lower. Individual assays can be up to 60
g/t Au over widths of 1 m to 5 m. Mineralisation is largely restricted to quartz and calcite
veins and stockworks. The zones of veining can be up to 20 m wide. Surrounding the
quartz veining is a zone of argillic (altered) andesite. These rocks generally show low
gold content, usually less than 0.5 g/t but locally in excess of 1.0 g/t, often when
accompanied by silicification or quartz veinlets. The silver:gold ratio is approximately
10:1. The mineralised system has a very low sulphide content with minor pyrite and
lesser galena and sphalerite present.
The mineralisation has been oxidised to an average depth of approximately 75 m, to a
maximum depth of 120 m. The surrounding host rocks have been oxidised to an average
of approximately 30 m depth.
The mineralized zone shows illite alteration and strong weathering near surface. The
main clays associated with the mineralisation are illite and smectite. Kaolinite is very well
developed in the hanging wall of the main Vein 49 structure and is interpreted to be the
result of supergene weathering.
6.2 Exploration, drilling, sampling and data verification

Various exploration programs have been undertaken as the project has developed. After
the initial discovery in May 1998 using regional mapping and chip sampling techniques,
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detailed mapping has been undertaken to enable an improved understanding of the

deposit geology to be gained.
Channel sampling in September 1998 returned encouraging results over an extended
strike length. A soil sampling and trenching program over a 700 m strike length of
Vein 49 and 300 m of Nelson were undertaken during 1999. A more detailed trenching
program was undertaken in 2000 which defined zones of continuous mineralisation.
Geophysical surveys were undertaken in 1999 (airborne magnetic and radiometric), 2000
and 2001 (time domain induced polarisation). These surveys assisted in identifying
targets for exploration drilling, some of which are yet to be explored.
To August 2004, six drilling campaigns had been conducted at the Calcatreu project and
were used in the compilation of the resource estimate described in Micon 2004B.
La Source/Normandy conducted four programs between 1999 and 2002. AQI completed
a small due diligence program in 2003 and has since completed further programs of
drilling at increasingly closer spacing. A summary of the drilling campaigns, undated to
December 2005, is shown in Table 6.1.
The Normandy drilling comprised reverse circulation (RC) ore-collars with diamond drill
(DD) coring below the collar. All quartz vein intercepts were with diamond coring. The
AQI drilling comprised RC or combined RC drilling to the water table changing to DD at
that point. Changes from RC to DD whilst in a vein were avoided.
Table 6.1 Drilling programs
Drill program Drilled by Date completed No. holes M drilled

1 La Source April 1999 11 1188.6
2 Normandy March 2000 20 1764.2
3 Normandy March 2001 11 1084
4 Normandy March 2002 9 1764
5 Aquiline July 2003 14 1274.5
6 Aquiline August 2004 185 19,583.75
7 Aquiline December 2005 55 6228
Approximately 92% of drilling to December 2005 was focused on the Vein 49 and Nelson
deposits, with the remainder focused on other prospects within the Calcatreu project area.
From December 2005 to the time of writing, an additional 90 holes for approximately
8,000 m have been drilled in the nearby Belen, Puesto, Nelson, Castro Sur and Viuda de
Castro prospects. The economic potential of these prospects has not been considered in
this assessment.
Records have been made of drilling campaigns using standard field techniques including
geological and geotechnical logging, photography and collar and down-hole surveys. A
number of different hole naming conventions have been used over the different programs.
AQI is taking care to avoid confusion emanating from the different naming conventions.
The results of AQI’s drilling campaigns since August 2004 have been periodically reported
but have not been used in the preparation of an updated estimate of the mineral resource
at Calcatreu. The area of economic interest has now been drilled with drill lines at
approximately 50 m spacings and mineralisation pierce points at 25 m to 50 m spacings.
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6.3 Sampling Method and Approach

La Source/Normandy commenced sampling DD core 6 m outside obvious veining with 2
m length (3 m for La Source) samples. Within veining, samples of 1 m length were
collected. Intervals of less than 1 m were allowed where vein widths were between 0.5 m
and 1 m. The geologist in charge marked sample intervals and the recommended
orientation for splitting during logging. RC drilling chips were automatically split at the rig
and collected as 20 kg samples.
AQI commences sampling DD core 5 m to 10 m before the start of obvious veins, or
veined or mineralised andesite, taking 2 m samples. Samples of 1 m length were taken
within veins. Samples of less than 1 m length were allowed by the geologist to honour
lithologic breaks. Sample intervals were marked by the geologist during logging. RC
drilling chips were collected in plastic bags and a small sample taken for logging by
binocular microscope examination. The logging geologist then determined which samples
should be split to make duplicate 2 kg samples for analysis and storage. All reject
cuttings are stored on site in an orderly fashion.
6.4 Sample Preparation, Analyses and Security

The same logging, storage and sample handling facilities in Jacobacci have been used by
Normandy and AQI. The facilities include an office and storage shed in a walled yard,
behind a locked gate. AQI’s consultants or staff geologists collect the samples in the
field, at the drill, and deliver them to the secure facility in Jacobacci. Diamond drill core is
logged, sawn in half and sampled, and RC samples split, at this facility. Sample splits
and half core are stored there or at another locked shed in town. Samples are stored
ready for shipment in a shed in the yard at the Jacobacci office. Samples are transported
from AQI’s field office by dedicated courier truck, under supervision of contracted
independent personnel, to the selected analytical facility, ALS Chemex, in Mendoza.
Normandy and AQI have used the services of reputable laboratory ALS Chemex to
undertake sample preparation and analysis work. Normandy used ALS Chemex facilities
in Mendoza, Argentina, for sample preparation and analysis, while AQI has used the
Mendoza facilities for sample preparation and the ALS Chemex facilities in Santiago,
Chile, for analysis. ALS Chemex offers a number of standard processes by which to
undertake analysis. The selection of the appropriate process is at the discretion of the
sample provider.
Normandy used a fire assay with AAS finish technique to determine gold concentration,
and multi-acid digestion followed by AAS for base metals determination.
AQI’s due diligence program used fire assay with AAS finish to determine gold and silver
content. Aqua regia digestion with ICP AES (inductively coupled argon plasma atomic
emission spectroscopy) was used to analyse for a large (34) suite of base metal and other
elements.
For the ongoing exploration and definition programs, AQI has specified the use of a fire
assay with AAS finish for gold and silver analysis. If high gold values are indicated (Au >
10 g/t), follow-up fire assay with gravity finish analysis is conducted. If high Ag values are
indicated (Ag > 50 g/t), a multi-acid digest with AAS method is used. For higher Ag
values (Ag > 350 g/t), a silver fire assay with gravity finish is used. A multi-acid ICP AES
method is used to analyse for an additional 27 elements including base metals.
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6.5 Data Verification

Normandy and AQI employed QAQC and data verification procedures during their
respective sampling programs.
Normandy made use of standards, duplicates, check assaying and re-sampling to ensure
reliable results. A process of database checking and verification was carried out and any
modifications to the database were restricted to the geologist in charge.
For the due diligence program, AQI relied on standards, duplicates and blanks inserted
into the sample stream by ALS Chemex. For the ongoing exploration program, AQI
developed its own routine of inserting filed duplicates, field blanks and standards into
sample batches for analysis by ALS Chemex, in addition to the QAQC procedures
managed by ALS Chemex. A single company officer is responsible for managing the
program and analysing its results. AQI has established an electronic database which
incorporates automated querying of the data to identify erroneous entries and to identify
data results of concern.
In 2003 AQI’s consultant, Micon, conducted a due diligence program of check sampling
and data validation as part of its consulting commission. Micon made some
recommendations for improvement but concluded that the assay database presented by
AQI was a suitable one for use in the estimation of a mineral resource.
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7 Adjacent Properties (Item 17)

AQI is the dominant mineral tenement holder in the region and there have been no
mineral discoveries of significance made in the immediate vicinity apart from those in
AQI’s portfolio.
The most significant occurrence of mineralisation with some proximity to Calcatreu is the
Navidad project located in Chubut Province approximately 100 km southeast of Calcatreu.
In July 2006, AQI gained ownership of Navidad through a court award.
Navidad comprises five deposits: Galena Hill, Connector Zone, Navidad Hill, Calcite Hill
and Calcite Hill NW Extension. These deposits are located on the Navidad Trend and
form nearly continuous, near-surface zones of mineralization over a strike length of 3.6
km. In 2006, Snowden estimated a total Measured and Indicated Resource at Navidad of
93.4 Mt at 102 g/t Ag and 1.41 % Pb reported at a 50 g/t Ag cut-off.
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8 Mineral Processing and Metallurgical Testing (Item 18)

The details of mineral processing and metallurgical testwork undertaken on Calcatreu
mineralization is fully described in the processing volume of the Initial Feasibility Study. A
summary of the conclusions reached is presented below.
The practical and operational aspects of metal extraction have been considered by AQI’s
processing consultant, Ausenco Limited, and comparative capital and operating cost
estimates developed for these three process options:
• Carbon-in-leach (CIL)
• Merrill Crowe
• A hybrid circuit, combining aspects of both CIL and Merrill Crowe.
The CIL option is estimated to have the lowest capital cost while Merrill Crowe has the
lowest estimated operating cost. There is no significant “net present cost” (NPC)
difference for the CIL and Merrill Crowe options, while the hybrid option has the highest.
Metallurgical testwork indicated potential for higher silver extraction when leaching in the
presence of carbon. This higher silver extraction has become more significant following
the recent rise in the silver price. Further testwork is required to quantify any higher silver
recovery, but this could offset the marginally lower NPC found for the Merrill Crowe
option.
For the CIL and hybrid options, the ability to achieve design carbon loadings may be
considered a process risk. The CIL option has been designed to handle a maximum
silver grade of 53 g/t and if ores with higher silver grades are to be processed, then this
will impact upon plant performance.
The solids settling rates of some of the variability samples were poor and this poses a
significant process risk for Merrill Crowe or hybrid options.
On a technical basis, the advantages and disadvantages of the three options appear to
balance out, giving no clear preferred option. Ausenco recommends the CIL option for
the Calcatreu Gold Project for the following reasons:
• It has lower risk than Merrill Crowe or hybrid options when processing ores with
poor settling characteristics.
• The “net present cost," is not significantly different to that for the Merrill Crowe
option over the expected five year life of mine.
• It has some potential for higher extraction of silver in the presence of carbon.
• It is better able to operate with variations in feed rate than a Merrill Crowe circuit.
• It has a lower capital cost for the short project life.
While CIL is the recommendation from this assessment, Ausenco recommends repeating
the process evaluation as a first step in any study of the project following on from this
assessment. Changes to the mine plan, mine life, head grade and silver price, will all
impact on selection of the optimum processing route.
Discussions with Ausenco concluded that plant feed grade variability is unlikely to present
an unacceptable risk to processing performance given the scale of operations and
Ausenco’s planned provision of a one month run-of-mine (ROM) stockpile.
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As this mining study was approaching completion, Ausenco advised that the most recent
metallurgical testwork indicated process recoveries suitable for use in mining studies are
91% for Au and 75% for Ag. The mining study reported here has used earlier advised
recoveries of 91% for Au and 66% for Ag. Applying the updated recoveries to the design
through metal equivalency and cut-off grade factors results in a less than 2% variation in
the high grade production inventory. This variation is within the accuracy of the existing
study .and so does not justify a re-estimation of the mining inventory considered in the
study for scheduling and costing purposes.
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9 Mineral Resource and Mineral Reserve Estimates (Item 19)

9.1 Mineral Resource
The mineral resource estimate and the methods used to prepare it are reported fully in
Micon 2004B. A brief summary of the methods employed and the results is presented
below.
Micon reports that the mineral resources were estimated using the Canadian Institute of
Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and
Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on
Reserve Definitions and adopted by CIM Council August 20, 2000.
Micon associate, qualified person Eugene Puritch, prepared an ordinary Kriged mineral
resource estimate for Calcatreu in a block model comprising blocks measuring 2.5 m in
the X direction, 5 m in the Y direction and 5 m in the Z direction. Measured and Indicated
interpolations were performed in two consecutive search ellipsoid passes. Inferred
resources were interpolated in 2 subsequent passes (Inferred 1 and 2) in order to fill the
model. Blocks not filled after each pass were interpolated in the subsequent ones. After
the first pass, search ellipse ranges were relaxed and after the second pass minimum
required samples for interpolation were relaxed. The Nelson and Vein 49 areas, as well
as the quartz and andesite domains, were interpolated separately in order to prevent use
of data outside of each vein or domain. Maximum search distances at Nelson were
selected so as to prevent data from Nelson East affecting the Nelson West vein and vice
versa.
Under the CIM definitions, a mineral resource must be potentially economic in that it must
be “in such form and quantity and of such a grade or quality that it has reasonable
prospects for economic extraction.” Puritch used a cut-off grade of 0.55g/t Au for the
reporting the mineral resources at the Calcatreu Project. This cut-off grade is reported to
have been based upon a simple review of the deposit geometry, local topography and the
assumption that open pit mining with processing by heap leaching would be employed to
exploit the marginal resource. A 0.55 g/t cut-off would represent US$7.00 per tonne
contained gold (at a price of US$396/oz) and, at reasonable heap leach type recoveries,
should render enough cash flow to approximately cover the cash costs of production. The
metallurgical and mining cost assumptions used were considered reasonable for the
reporting of a mineral resource at the time.
The block model was reported using the 0.55 g/t Au cut off to produce the mineral
resources reported in Table 9.1. The majority of the blocks were coded as indicated
resources and the geological domain model of the quartz vein showed good continuity
from hole to hole and section to section as well as good agreement between sectional
interpretation and the surface mapping. As a result, a majority of the mineralization
reported above cut-off is in the indicated category.
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Table 9.1 Mineral Resource 0.55 g/t Au cut-off (Micon 2004B)
INDICATED INFERRED
Zone/mineralisation type Tonnes Au g/t Ag g/t Au oz Ag oz Tonnes Au g/t Ag g/t Au oz Ag oz
Vein 49 Oxide
Quartz vein 758,000 5.34 32.9 130,14 801,800 3,000 1.72 10.2 170 1,000
Mineralised andesite 410,000 0.77 9.9 10,150 130,500 0 0.00 0.0 0 0
Vein 49 Primary
Quartz vein 2,998,00 3.79 37.8 365,32 3,643,50 997,000 2.76 25.5 88,470 817,400
Subtotal Vein 49 5,020,00 3.26 29.8 526,20 4,800,90 1,343,00 2.27 20.9 98,120 903,300
Nelson Area Oxide

Quartz vein 338,000 2.83 20.5 30,750 222,800 53,000 1.54 12.8 2,620 21,800
Mineralised andesite 149,000 0.79 7.7 3,780 36,900 21,000 1.01 8.0 680 5,400
Nelson Area Primary

Quartz vein 510,000 2.35 28.4 38,530 465,700 405,000 1.80 17.4 23,440 226,600
Subtotal Nelson 1,135,00 2.09 21.1 76,340 768,400 524,000 1.65 15.6 27,800 263,100
Total Oxide 1,655,00 3.29 22.4 174,82 1,192,00 77,000 1.40 11.4 3,470 28,200
Total Primary 4,500,00 2.96 30.3 427,72 4,377,30 1,790,00 2.13 19.8 122,450 1,138,200
Grand Total 6,155,00 3.04 28.1 602,54 5,569,30 1,876,00 2.10 19.4 125,920 1,166,400
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9.2 Mineral Reserve estimation

The purpose of this part of the Initial Feasibility Study is to describe the methods used
and to report the results of preparing the mineral reserve estimate. However, it is
apparent at the time of reporting that no economic or practical processing route for
treating the Calcatreu mineralization is available. This is due to legislative restrictions
having been placed on the use of cyanide in Rio Negro province. Under these
circumstances, no estimate and statement of a mineral reserve can be made. Under
direction from AQI, Snowden has completed the work required to estimate the potential
mining inventory which may become available in the event that the restrictions on the use
of cyanide are lifted. The remainder of this report describes the methods used and results
of the estimation of the potential mining inventory.
The potential mining inventory has been estimated using a structured process of
analysing the mineral resource estimate, identifying an appropriate mining method,
preparing an optimum ultimate mining outline, preparing a detailed mine plan consistent
with the optimum ultimate mining outline, estimating levels of dilution and mineral loss
expected with the chosen mining method, calculating a cut-off grade to use to report
potentially economic and waste materials in the pit design, selecting the material
resources (labour, equipment and materials) needed to execute the mining plan,
preparing mining and waste dumping schedules, and preparing capital and operating
schedules for the planned mining operation.
The mineral resource estimate used to prepare the mine plan and potential mineral
inventory estimate is described in Section 9.1 above, and fully in Micon 2004B. Most of
the mineral resource is classified as Indicated and none is classified as Measured.
Therefore any estimate of a potential mining inventory can only be made to a medium
level of confidence.
The mineral resource estimate is represented by a three dimensional block model which
includes separate models representing quartz and andesite mineralization. The estimate
of potential mining inventory is included in the mineral resource estimate.
9.3 Mining method

The Calcatreu project has been the subject of a preliminary assessment (Micon 2004B)
which described the potential for economic open pit mining of the Vein 49, Nelson East
and Nelson West mineralized zones. Micon 2004B also considered extraction of the
mineralisation which fell below the optimum pit shell, as determined by Micon, by
underground methods. The potential mining inventory estimate prepared by Snowden
has only considered mineralization which is accessible by open pit methods. Further
studies will be required to estimate a potential mining inventory suitable for extraction by
underground methods.
Micon 2004B considered project production rates of 1,500 tpd, 2,000 tpd and 2,500 tpd
and concluded that 2,000 tpd delivered the best balance of capital expenditure, operating
cost and mine life.
This study assumes mining by open pit methods with production material being delivered
to a ROM pad which has one month’s feed storage capacity. Any requirements for feed
blending will be managed by short term in-pit scheduling and ROM draw-down strategies.
There is no requirement for any other significant mining, stockpiling or feed blending
activity.
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9.4 Pit Optimisation

The optimum ultimate pit outline was identified using the well recognised Whittle 4X
optimization software (Whittle). Cyanide tank leaching was selected as the primary
processing method for application in the optimisation. The optimization process adopted
using Whittle is more fully described in Appendix A.
The Whittle optimisation routine identifies the combination of resource blocks that can be
exposed and recovered to deliver the greatest NPV in an open cut mine for a given set of
design, operating and economic assumptions. The resultant pit outline is thus the
optimum for the criteria used. The optimum pit shell can then be used as the basis for
preparing the detailed mine plan. The optimum pit shell is shown in Figure 9.1.
The pit shell selected as the basis for the detailed design is Shell 25 of the optimisation
sequence which contains 24.8 Mt of waste and 2.9 Mt of ore grading 4.56 g/t Au and
38.89 g/t Ag.
Figure 9.1 Optimum pit shell (Shell 25)
Nelson West Vein 49
Nelson East
The optimum shell shows a number of small pits in the Nelson area, in addition to the
large Vein 49 pit. Where possible, these will be incorporated into the detailed design.
9.5 Cut-off grade calculation

A cut-off grade is required to identify material within the detailed pit design that can be
processed and sold economically. The methodology used to calculate the cut-off grade is
described in detail in Appendix A.
The cut-off grade is calculated by normalising the recovered silver value to a recovered
gold equivalent and determining the cut-off in terms of the gold equivalent.
Based on metal prices of US$500 /oz for Au and US$8.00 /oz for Ag, the gold equivalency
formula for the cyanide leach process is:
• AuEq g/t = Au g/t + (Ag g/t/86.2).
The cut-off grade is 1.12 g/t AuEq.
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For the low grade stock for passive leaching, the gold equivalency formula is:
• AuEq g/t = Au g/t + (Ag g/t/117.2).
The cut-off grade is 0.48 g/t AuEq.
9.6 Pit design and mining inventory

Pit designs were prepared using Surpac software, based on the Whittle optimum Shell 25,
block model data imported from a gold equivalent model constructed using Gemcom
software, and geological ore solids and terrain contours supplied by AQI.
9.6.1 Pit Design

General Design method
The design process involves viewing the Whittle shell in horizontal sections at increments
common with mining benches spaced at intervals determined by geotechnical guidelines.
Floor outlines are initiated at the lowest mining depth at a minimum practical mining width.
Life-of-mine pit ramps are simulated to find the best starting point on the lowest pit floor.
Benches and associated ramps are then designed progressively bottom-up from toe to
crest and bench to bench using the following guidelines:
• Geotechnical pit wall slopes and berm widths as provided in Golder 2005
• Andesite and quartz sections used in conjunction with block model grades to
design maximum above cut-off mineralisation and minimal waste within the
optimum Whittle shell
• Minimum mining width of 10 m to incorporate the chosen mining fleet
• General ramp design at 1 in 10 gradient
• Single lane ramp of 12 m width to accommodate the Cat 777F, clearance either
side, and a bund at axle height
• Ramp outside turning radius of 17 m or greater in accordance with Cat
recommendations
• Designs must be practical
• Final design volumes and material types and grades must be within an acceptably
low variance of the Whittle Shell 25
• There are no special requirements for blending ex-pit
• Groundwater inflows are not expected to be significant based on the preliminary
analysis reported in Water Management Consultants 2005 and require no specific
provisions within the detailed designs.
Pit wall angles
The inter-ramp pit slope angles (excluding the ramps) are measured in terms of the slope
angle from bench crest to crest and are:
• 55 degrees for fresh material
• 48 degrees for oxide material
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These angles are derived from the specific final pit bench and berm dimensions:
• Bench height in fresh material is 20 m
• Berm width in fresh material is 8 m
• Bench heights in oxide material or material less than 30m below surface is 10 m
• Berm widths in oxide material or material less than 30m below surface is 6 m.
Narrow sections of the pits
Special design considerations are made for the design of the narrow sections at the base
of the open pits. The following methods were used to access as much mineralized
material at the base of the pits without widening the overall design and incurring
excessive overburden waste material:
• Ramping down on ore for the final benches
• Retreating by taking a final cut down with the excavator with dimensions 5 m deep
and 5 m or greater mining width.
Vein 49 pit
The main Vein 49 pit final ramp has been located to the foot wall of the mineralized zone
for the bulk of its length to allow for a push back on the hanging wall and to be in a
geotechnically favourable position. The ramp switches over to the hanging wall side of
the mineralized zone, past the pit saddle, to shorten haulage distances to the run-of-mine
(ROM) pad and waste dump.
The vertical extent of the Vein 49 final pit ranges from 1300 mRL to 1160 mRL, a depth of
.140 m. The pit is 1,000 m long and is 300 m wide at the crest. Overall slope angles are
48 degrees in oxide ore and 55 degrees in fresh ore. A typical cross section is shown in
Figure 9.2
Figure 9.2 Typical vein 49 final pit cross section looking northeast
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Vein 49 final pit is divided into three stages (Stage 1, Stage 2, and Stage 3, the Final
Stage) for efficient scheduling. These stages are based on the Whittle shells preceding
Shell 25, maximising the early extraction of more profitable material. The Vein 49 pit
design stages are shown in Figure 9.3.
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Figure 9.3 Vein 49 pit design stages
Vein 49 Stage 1
Vein 49 Stage 2
Vein 49 Stage 3 (Final)
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Nelson East and Nelson West pits

Five separate pits have been designed for the Nelson area. The Nelson East and Nelson
West pits are designed to reduce haul distance to the ROM pad and their respective
dump areas, and to reduce ramp length utilising the existing topography.
These pits are too small to justify push backs for separate mining stages. The Nelson pit
designs are shown in Figure 9.4. Their vertical extents range from 1300 mRL to
1220 mRL, a depth of 80 m.
Figure 9.4 Nelson pit designs
Nelson East 1 Nelson

East 2
Nelson Nelson
East 3 West 1
Nelson West 2 All Nelson Pits
To ensure the pit designs closely match the Whittle optimum pit shell, a comparison has
been prepared considering volumes and metal contents in each. The comparison is
shown in Table 9.2.
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Table 9.2 Comparison of volumes and metal contents
Location Pit design Shell 25 Difference
Volume Metal Au Volume Metal Au Vol Diff Metal

(bcm) (kg) (bcm) (kg) % Diff %
Vein 49 10,144,019 15,313 9,971,875 15,744 1.6% -2.8%
Nelson East 1 553,688 644 632,375 831 -14.2% -29.1%
Nelson East 2 222,250 162 198,750 227 10.6% -40.5%
Nelson East 3 25,375 24 32,000 32 -26.1% -31.5%
Nelson West 1 267,000 267 204,563 279 23.4% -4.7%
Nelson West 2 394,375 554 410,000 612 -4.0% -10.5%
Total 11,606,707 16,963 11,449,563 17,725 1.3% -4.5%
The overall metal discrepancy is less than 5% which Snowden considers to be

satisfactory. The Nelson pits display, in general, a higher discrepancy. This is due to the
very narrow and high grade characteristics of the mineralised material in the number of
small pits identified by the Whittle optimisation. This impinges on the creation of practical
pit designs which closely match the Whittle output.
Given the small proportion of total volume and ounces contained in the Nelson pits,
Snowden considers the overall result to be acceptable for the purposes of this mine plan,
and recognises that detailed planning during the operational phase may provide improved
results.
9.6.2 Dilution evaluation

The pit designs and geological interpretations of the mineralised structures were
assessed for possible dilution occurring during mining. This was done by examining
horizontal sections bench by bench and estimating the impacts of practical mining widths
achievable with the planned mining equipment and the geometry and nature of the
mineralisation. The following properties were calculated:
• High grade mineralisation diluted by an additional 5% volume of adjacent material
• The high grade mineralisation dilution grade is at the low grade mineralisation
average grades of 0.36 g/t Au and 4.93 g/t Ag, or at zero grade, depending on the
provenance of the dilution
• Low grade mineralisation diluted by an additional 8% volume at zero grade
• Ore loss from the low grade mineralisation of 2.5% to the high grade
mineralisation and 5% to waste material.
9.6.3 Waste dump design

The waste dumps are designed to accommodate the waste material reported by the cut-
off grade interrogation of the pit designs. Provision has been made to backfill the Nelson
East and West pits once they are completed. Two waste dumps are designed. The
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Vein 49 dump takes the bulk of the Vein 49 waste material, and the southern dump takes
the waste material from the Nelson East 1 and Nelson West 2 pits.
The topsoil dump is been designed to accommodate 0.5 m of topsoil to be stripped from
all cleared areas. The topsoil dump is located close to the plant and tailings dam areas
where it will be needed at the end of the mine life for rehabilitation purposes.
Table 9.3 lists the quantities for each dump and their respective sources.
Table 9.3 Waste dump volumes
Dump Waste material source Swell volume m3
South Nelson East 1 and Nelson West 2 waste 975,698

Vein 49 Vein 49 waste 10,119,370
Nelson pits Nelson and Vein 49 pits 1,462,697
Topsoil All pits 66,411
There is no differentiated dump design for oxide and fresh rock materials. AQI provided
geological interpretations of waste character domaining which identify zones comprising
medium (1% to 4%) and high (+4%) pyrite content in the Vein 49 and Nelson East 1 pits.
Snowden developed wireframe solids around these interpretations for the purpose of
scheduling the mining and dump deposition of the subject material. The quantity of pyritic
material assumed to be potentially acid generating has been scheduled to be dumped
either in mined out pits or encapsulated within one of the dumps. Encapsulation of the
quantity of pyritic waste will be manageable through short term planning and operating
practices. The interpreted pyritic waste solids are shown in Figure 9.5.
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Figure 9.5 Interpreted pyritic waste solids
Vein 49 pyrite
Nelson East 1 pyrite
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9.6.4 Dump Design method

The dump designs were created by first identifying a favourable location and defining the
ultimate footprint required to accommodate the waste volume requirements. The design
process was governed by the following guidelines:
• Provision of an abandonment bund zone in accordance with the Western
Australian Department of Industry and Resources Guideline “Safety bund walls
around abandoned open pit mines” (December 97)
• Final slope angles of 18 degrees toe to crest, and 10 m berm widths at intervals of
20 m bench height, as recommended by Snowden Geotechnical Division to
facilitate stable rehabilitation
• Volume requirement estimated by applying a swell factor of 30% to the broken
material to be accommodated
• Minimum impact on the natural drainage of the region
• Match the dump profile with the existing topography as closely as possible
• Keep waste haul distances as short as possible
• Waste dump designs to be practical and manageable.
9.6.5 Backfill
The Nelson East and West pits are scheduled to be backfilled entirely. The waste
material generated from the Nelson East 2, East 3, and West 1 pits is directly backfilled
into the Nelson East 1 and West 2 pits. The remaining void is filled waste material
generated from the Vein 49 pit at the later stage of its production. A high proportion of
pyritic waste is scheduled to be backfilled into the Nelson pits.
Pit and dump locations are shown in Figure 9.6.
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Figure 9.6 Pit design and dump locations
Vein 49 pit
Vein 49 Dump
Nelson West 2
Nelson West 1
Nelson East 3
ROM pad
Nelson East 1
Low grade
Southern Dump Stockpile
Topsoil Dump
Nelson East 2
9.7 Mineral Reserve statement

No statement of a mineral reserve can be made for the Calcatreu Project in accordance
with the requirements of NI 43-101 as a feasible processing method is yet to be identified.
A technically successful method of processing has been identified which currently cannot
be considered feasible due to the regulatory restrictions placed on the use of cyanide by
the Rio Negro provincial government.
However, this study has used a mineral resource estimated in accordance with NI 43-101
to estimate the potential high grade mining inventory which may become available in the
event the technically successful processing method can be implemented. Since the
mineral resource estimate is classified as being Indicated, the estimate of potential mining
inventory is at a medium level of confidence.
The estimated potential high grade mining inventory is:
This is not a mineral reserve and should not be interpreted as such.
An additional potential low grade mining inventory has been estimated which is contingent
on identifying a technically and economically feasible processing method. Due to the
Indicated classification of the mineral resource and the uncertainty of the processing
method, the potential low grade mining inventory is of a low level of confidence.
The potential low grade mining inventory is:
This is not a mineral reserve and should not be interpreted or reported as such.
5 April 2007 28 of 48
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10 Other Relevant Data and Information (Item 20)

Relevant information regarding equipment selection, drilling and blasting and manning
levels is presented below. Further details are provided in Appendix C.
Snowden is unaware of any other relevant data or information which has not been
considered in the preparation of this report or in reports previously lodged in accordance
with NI 43-101.
10.1 Production haulage fleet

10.1.1 Equipment options
The selection of production equipment is made based on productivity, operating and
capital cost considerations. Haul cycle times and base cost models were generated for a
range of possible combinations of production mining equipment. Inputs for this process
were the estimated schedule from Whittle, haul routes as generated from the Whittle
shells, and indicative costs which were drawn from a recent study with similar operational
features, economic climate and background.
Combinations of the following items of equipment were assessed:
• Caterpillar Haul trucks 773D, 775E, and 777F
• Caterpillar Excavators 5110B ME, and 5130B ME
• Komatsu Haul trucks HD485, and HD785
• Komatsu Excavators PC1250, PC1800, and PC3000
• O&K Excavator RH90.
10.1.2 Haul cycle simulations
Haul cycles were simulated using Talpac software. Talpac software matches its internal
library of equipment performance data to haul route profiles to determine cycle times for
selected equipment at various stages of the mine development.
10.1.3 Equipment cost modelling

Each combination of equipment and its performance was input into an independent cost
model to enable comparison of costs for the considered equipment options. Only load
and haul activities and other activities directly associated with the load and haul process
were included in the model to ensure a reliable comparison between each equipment type
could be made.
10.1.4 Selection Criteria

Inputs
• Equipment specifications as per manufacturers’ handbooks
• Manpower and maintenance costs estimated in similar past studies
• Schedule as provided from the Whittle output
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• Haul cycle times generated by Talpac

• Capital requirements for each equipment type
• Practical mining considerations.
Results
The Cat 777F and the O&K RH90 units are the most suitable combination for this project,
as shown in the Table 10.1. Key items influencing this choice are the start up capital
expenditure, the equipment utilisation and the operating cost. The comparative operating
cost was close to that of the Cat 777F and Cat 5130B ME combination but Cat has
advised that the 5130B ME excavator will not be available for future purchase. The
combination of truck size and number of excavator passes per truck load confirms the
suitability of the selected combination of equipment. The suppliers advise availability of all
major equipment to be less than 12 months ex-factory on placement of orders.
Table 10.1 Equipment selection comparison table
KOM HD465
KOM HD785
KOM HD785
KOM HD785
CAT 773D
CAT 775E
CAT 777F
CAT 777F
CAT 777F
Truck
CAT 5110B ME
CAT 5110B ME
CAT 5110B ME
CAT 5130B ME
KOM PC1250
KOM PC1250
KOM PC1800
KOM PC3000
O&K RH90
Loader
Truck capacity t 49.4 62.1 91.2 91.2 55 99 99 99 91.2

Fill factor % 95% 95% 95% 95% 95% 95% 95% 95% 95%
Heaped volume m3 35.2 41.2 60.1 60.1 33 55 55 55 60.1
Calc. vol. capacity m3 24.8 31.2 45.8 45.8 28 50 50 50 45.8
Bucket capacity t 20.36 20.36 20.36 28.5 13.0 13.0 20 30 28.5

Excav bucket vol. m3 6.2 6.2 6.2 10.2 6.5 6.5 10.1 15.0 10.3
Fill factor % 95 95 95 95 95 95 95 95 95
Calc. vol. capacity m3 10.2 10.2 10.2 14.3 6.5 6.5 10.1 15.1 14.3
Passes # 4.2 5.3 7.8 4.7 4.5 8.1 5.2 3.5 4.7
No. Excavators 2 2 2 1 2 3 2 1 1
Av. Utilisation % 79 75 71 78 87 80 63 69 81
No. Trucks 6 5 4 3 6 5 4 4 3
Av. Utilisation % 92 93 87 95 98 92 94 84 95
Capital expenditure $M 8.41 7.86 7.14 5.30 8.91 10.39 7.30 8.00 5.10
Operating
expenditure $M 21.09 19.97 18.45 16.80 23.52 24.42 18.00 16.89 16.78
Total expenditure $M 29.50 27.83 25.60 22.09 32.43 34.81 25.30 24.89 21.88
Operating cost $/t 0.63 0.60 0.55 0.50 0.70 0.73 0.54 0.51 0.50
Net Present Cost $M $26.06 $24.58 $22.61 $19.34 $28.60 $30.80 $22.38 $22.14 $19.13
Ranking 7 6 5 2 8 9 4 3 1
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10.2 Drill and blast

AQI’s geotechnical expert report (Golder 2005) was reviewed and considered with an
associate expert’s advice and Snowden’s experience with projects of a similar nature as
the basis for determining drill and blast parameters appropriate to the Calcatreu project.
Snowden’s associate blasting expert’s report is included as Appendix B.
The bench height in production material will be 5 m. This bench height is compatible with
the requirement for selective mining of high grade vein ore systems such as at Calcatreu.
It is also compatible with the selected mining equipment size which is matched to the
required production rate.
The bench height in waste will be 10 m, which offers improved economy of scale over the
lower production bench height and remains compatible with the selected mining
equipment and production rate.
Trim blasting is selected as the means of controlling excavation of final walls. This offers
a more cost effective approach than the sometimes used pre-split method though requires
more effort in the mechanical cleaning of back-break from final walls.
Selected blasthole diameters are 102 mm for production and at the production/waste
interface, and 127 mm in bulk waste. This ensures good geometric compatibility with the
bench height, required selectivity of production material and fleet size.
The parameters adopted for drilling and blasting the different rock types at Calcatreu are
shown in Table 10.2.
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Table 10.2 Drill and blast parameters
Parameter Unit Pattern

Pattern number 1 3 4 6 7 9 10 12
Ore/waste O/W O W O W O W O W
Ox/
Oxide/Fresh F Ox Ox Ox Ox F F F F
Wet
Wet/Dry /D D D Wet Wet D D Wet Wet
Bench height m 5 10 5 10 5 10 5 10
Diameter mm 102 127 102 127 102 127 102 127
Drilled depth m 5.6 10.8 5.6 10.8 5.7 10.9 5.7 10.9
Fallback m 0.1 0.2 0.1 0.2 0.1 0.2 0.1 0.2
Effective depth m 5.5 10.6 5.5 10.6 5.6 10.7 5.6 10.7
Effective
subdrill m 0.5 0.6 0.5 0.6 0.6 0.7 0.6 0.7
Stemming
length m 2.6 3.3 2.8 3.5 2.3 3.0 2.5 3.3
Charge length m 2.9 7.3 2.7 7.1 3.3 7.7 3.1 7.4
Explosive type Anfo Anfo Emul Emul Anfo Anfo Emul Emul
Explosive g/c
density m3 0.85 0.85 1.10 1.10 0.85 0.85 1.10 1.10
Charge weight kg 20.1 78.6 24.3 98.9 22.9 82.9 27.9 103.1
Drilled burden m 3.0 3.6 3.2 3.8 2.7 3.3 2.9 3.5
Drilled spacing m 3.8 4.6 4.0 4.8 3.4 4.1 3.6 4.4
kg/
Powder factor m3 0.35 0.47 0.38 0.54 0.50 0.61 0.53 0.67
Yield per hole 414.

@ 2.5 t/m3 t 142.5 0 160.0 456.0 114.8 338.3 130.5 385.0
Specific drilling
@ 2.5 t/m3 t/m 25.4 38.3 28.6 42.2 20.1 31.0 22.9 35.3
The proportions of each rock type to which each drill and blast pattern is applied to are
shown in Table 10.3.
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Table 10.3 Proportional application of drill and blast patterns
Rock type Pattern

1 3 4 6 7 9 10 12 Free dig
Quartz oxide 50% 20% 30%
Andesite
oxide 50% 20% 30%
Waste oxide 50% 20% 30%
Quartz fresh 90% 10%
Andesite
fresh 90% 10%
Waste fresh 90% 10%
The requirement for drilling is shown in Table 10.4. This requirement has been
determined to be achievable with 2 drill rigs at a moderate 65% utilisation. This provides
adequate back-up capacity in the event of major breakdown.
Table 10.4 Drilling requirements
Material Unit Year 1 Year 2 Year 3 Year 4 Year 5 Total

Production M 47,438 41,538 47,114 43,445 27,377 206,913
Waste M 155,135 194,925 134,691 142,166 36,250 663,167
Total M 202,573 236,463 181,805 185,611 63,628 870,080
10.3 Manning
Snowden has estimated the operational manning requirement for the planned mining
method and equipment fleet based on a four panel, three eight hour shift configuration.
Relief staffing is calculated as 6% of Operations and Maintenance personnel to allow for
15 vacation days per person per year. No relief staffing is provided for Mine Management
or Engineering/Geology personnel. No additional personnel are provided for training.
The manning schedule is shown in Table 10.5.
Table 10.5 Manning requirements
Position Year 1 Year 2 Year 3 Year 4 Year 5

Mine Management 6 6 6 6 6
Operations 46 46 46 46 33
Maintenance 14 14 14 14 14
Maintenance labour 20 20 20 20 20
Engineering/Geology 13 13 13 13 13
Total 99 99 99 99 86
The salary levels supplied by AQI to use for cost estimation are shown in Table 10.6 and
Table 10.7 in US$pa.
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Table 10.6 Manning Base Salary Levels
Classification Base Salary

Manager 140,400
Supervisor 114,075
Professional 49,140
Surveyor 38,610
Operator 21,060
Technician 17,550
Support/Clerical 10,530
Table 10.7 Manning Mainentance Salary Levels
Classification Base Salary

Maintenance Manager 96,525
Superintendent 66,690
Professional/Supervisor 38,610
Tradesman 29,835
Technician 15,795
Support/Clerical 10,530
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11 Interpretation and Conclusions (Item 21)

The conclusions reached by this study, which has prepared a mining plan for the
Calcatreu Project based on a mineral resource reported in Micon 2004B, are:
• At the time of reporting, no economic or practical processing route for treating the
Calcatreu mineralization is available due to legislative restrictions. Therefore no
estimate of a mineral reserve can be made. However, an estimate has been
made of the potential mining inventory which may become available in the event
that the legislative restrictions are lifted.
• The potential mining inventory amenable to treatment by cyanide tank leaching
has been estimated and is :
− 3.50 Mt at 3.86 g/t Au and 33.22 g/t Ag for 435 koz Au and 3,739 koz Ag
• The potential mining inventory is of a medium level of confidence.
• The potential low grade mining inventory which may be amenable to treatment by
a passive leach process has been estimated and is :
− 1.37 Mt at 0.64 g/t Au and 9.19 g/t Ag for 33 koz Au and 405 koz Ag
• The potential low grade mining inventory is of a low level of confidence.
• A mine life of 4.7 years is achieved through mining and processing the potential
mining inventory at the nominated throughput rate of 750 ktpa.
• Operating costs associated with the mining operation are $1.45 /t over the life of
the project or $11.95 /t of the high grade production material mined.
• Capital costs associated with the mining operation are $12.7 M at start-up and
$13.0 M over the mine life.
• Mining at Calcatreu will be simple with no especially challenging mining issues
likely to be encountered.
• Mining will be relatively low cost with no especially high cost aspects evident
which are atypical of projects of this type.
• Diligent grade control practices will need to be employed to derive the greatest
value from the project. Employing such practices will result in mining the optimum
combination of volume and grade with the minimum loss of economic material and
the minimum inclusion of diluting waste.
• Control over the mining and dumping of pyritic waste will need to be exercised to
ensure the potentially AMD generating material is effectively encapsulated in
neutral waste, in accordance with expert design recommendations yet to be
detailed.
• This study has used preliminary conclusions regarding:
− Processing performance
− Hydrogeology
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− Environmental matters.
There are no findings in the preliminary conclusions which are especially
unfavourable to the mine plan.
• This study has used a mineral resource estimate prepared in 2004 which has not
been updated with the results of drilling campaigns conducted since that time.
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12 Recommendations (Item 22)

Snowden recommends:
• The mineral resource estimate for Calcatreu should be updated using the results
of the drilling campaigns conducted since 2004. A more accurate and higher
confidence estimate of the potential mining inventory and potential low grade
mining inventory could be made using the results of all drilling campaigns.
• Further work should be undertaken to confirm or modify and restate the
preliminary conclusions referred to in Section 11 at a definitive level of confidence.
• When the preliminary conclusions referred to in Section 11 are confirmed or
modified and restated, the mine plan should be reviewed to identify the impact of
any changes, and modified to ensure its appropriateness.
• Processing investigations should be initiated to identify a technically and
economically feasible processing method for the low grade potential mining
inventory estimated in this study.
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13 References (Item 23)
Atlas Copco Mining and Construction, 2006: Quotations and equipment specifications for
Atlas Copco equipment, April 2006.
Ausenco Limited, 2006: Calcatreu Gold Project Metal Extraction Case Study, May 2006.
Finning Argentina, 2006: Quotations and equipment specifications for Caterpillar and
O&K equipment, April 2006.
Golder 2005: “Pit Slope Design for Nelson and Vein 49 Open Pits Calcatreu Project
Argentina”; Golder Associates Ltd, November 2005.
Hagan, T., 2006: Feasibility Study Of The Calcatreu Gold-Silver Project, Argentina –
Recommended Drilling And Blasting Operations, Tim Hagan Blasting Pty Ltd, April 2006
Komatsu Latin America Corp., 2006: Quotations and equipment specifications for
Komatsu equipment April 2006.
Micon International Limited, 2003. “A Mineral Resource Estimate for the Vein 49 and
Nelson Zones at the Calcatreu Gold-Silver Project, North-Central Patagonia, Rio Negro
Province, Argentina”, November 2003.
Micon International Limited, 2004: “A Review of the Calcatreu Gold-Silver Project, North-
Central Patagonia, Rio Negro Province, Argentina”, October 2004.
Micon International Limited, 2004B: “A Preliminary Assessment and Economic

Evaluation for the Calcatreu Gold-Silver Project”; October 2004.
Orica Argentina, 2006: Quotations and equipment specifications for Orica explosives
supply, April 2006.
Puritch G., 2006: “Block Model Data.zip”, “Drill Data.zip”, “Topo Pit and Mineralized
Domains.zip”, “Whittle Data.zip”; AQI, January 2006.
5 April 2007 38 of 48
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Sandvik Argentina, 2006: Quotations and equipment specifications for Sandvik and
Tamrock equipment, April 2006.
Secis, R., 2006: Calcatreu Pit Optimisation, Snowden Mining Industry Consultants, May
2006
Water Management Consultants Chile Ltd, 2005: “Preliminary dewatering analysis and
recommendations, Calcatreu Project”, memorandum to AQI, February 2005.
5 April 2007 39 of 48
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14 Date and Signature Page (Item 24)

This report and the work contributing to Sections 9.1, 9.2, 9.3, 9.4, 9.5, 9.6, 10, 11, 12, 15,
16, Appendix A, Appendix B, Appendix C and Appendix D of it have been prepared or
supervised by Peter Myers who is a Qualified Person in accordance with the definition
contained within NI 43-101.
Peter A Myers BEng (Mining)(Hons), MAusIMM

Divisional Manager
Snowden Mining Industry Consultants
5th March 2007
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15 Additional Requirements for Technical Reports on Development

Properties and Production Properties (Item 25)
The additional requirements for technical reports on development properties and
production properties required by NI 43-101 Item 25 not directly related to mining
activities have been reported previously in Micon 2004B or are reported elsewhere as part
of this Initial Feasibility Study.
The information from this study regarding mining operating and capital costs, mine labour
requirements, the production and waste mining schedule, and the dump construction
schedule is presented below.
15.1 Mining Costs

The mining cost estimate has been prepared by developing first principles estimates of
activity, consumption and performance for input into a comprehensive cost estimation
model. This ensures estimated costs are an accurate representation of actual operating
costs. Further details are included as Appendix C.
15.1.1 Input Parameters

Equipment fleet
The primary equipment fleet consists of:
• 2 Tamrock Pantera 1500 drill rigs
• 3 Cat 777F haul trucks for all material movement
• 1 O&K RH90 C excavator for all material loading.
Ancillary equipment consists of:

• 1 Cat D9T Track Dozer
• 1 Cat 14H Grader
• 1 Komatsu HD465 watercart.
Other shop and support equipment for which costs have bee estimated includes:
• Utility lift truck
• Fuel and lubrication truck
• Mechanical field truck
• Crew bus
• Light vehicles
• Dewatering pump system
• Lighting plants
• Mobile radio units
• Surveying equipment
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• Mining hardware and software.

Operating parameters
The operating parameters used for estimating the project costs are detailed in Appendix
C. The main operational aspects considered are:
• Scheduled hours available
• Non-productive time
• Material types
• Equipment availability
• Use of equipment availability
• Grade control requirements
• Drill productivity
• Blast hole drilling requirements
• Blasting
• Loading performance
• Haul cycle times
• Shop and support fleet
• Technical and managerial staff
15.1.2 Operating cost inputs

Operating cost estimate inputs have been sourced from:
• Supplier estimates acquired for this study
• Information provided by AQI
• Snowden’s database of cost estimates used in previous studies
Appendix C details the cost model inputs and cost estimate construction which is
generated from activity based production inputs including:
• Equipment available hours
• Equipment units required
• Production rates for all equipment
• Maintenance cost and consumable consumption rates for equipment
• Explosives consumption rates
• Labour utilisation
• Assay sampling costs
The summary operating costs by operational activity are shown in Table 15.1. Where
appropriate, contributory costs have been distributed over more than one operational
activity.
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The total unit cost is $1.45 for each tonne mined and averages $11.95 for each high
grade production tonne mined.
Table 15.1 Mining operating costs
Year
Item Unit Year 1 Year 2 Year 3 Year 4 Total
5
Grade Control $'000s 942 999 880 866 405 4,091
Production Drilling $'000s 885 1,101 1,038 1,146 509 4,678
Blasting $'000s 1,389 1,577 1,279 1,305 682 6,232
Load & Haul $'000s 2,532 2,918 2,607 2,699 1,481 12,237
Ancillary Equipment $'000s 1,236 1,258 1,192 1,245 953 5,883
Mine Services $'000s 1,119 1,119 1,178 1,178 935 5,528
Mine Supervision $'000s 641 641 641 641 633 3,197
Total operating cost $'000s 8,743 9,612 8,815 9,080 5,597 41,847
Total unit operating cost $/dmt 1.32 1.21 1.49 1.40 2.85 1.45
15.1.3 Capital costs

Capital cost estimates have been sourced from:
• Supplier estimates acquired for this study
• Snowden’s database of cost estimates used in other recent studies
Capital requirements
Updated equipment capacities, productivities and costs have been matched to the
detailed mine design to validate the equipment selections described in section 10.1.
Iterations of fleet make-up and the mining schedule were considered to develop the “best
balanced” fleet in accordance with Snowden’s experience.
Capital expenditure for main equipment is $11,624,020 in the first year. Due to the short
project life, no replacement of main fleet components is required in following years.
A further $1,047,939 is required in the first project year for supporting equipment. An
additional $278,875 is provided in the second year for expenditure for life of mine in-pit
roads. There is no requirement for future replacement purchases of main or supporting
equipment due to the short mine life.
These costs are exclusive of training, but include contingencies.
Details of the capital expenditure requirements are shown in Table 15.2.
5 April 2007 43 of 48
Volume 3: Mining
Table 15.2Mining capital expenditure

Number required
Unit cost Total
Year 1 Year 2 Year 3 Year 4 Year 5
TAMROCK
PANTERA
1500 Drill $698,691 2 - - - - 2
O&K RH90 $2,346,48
C Excavator 8 1 - - - - 1
Cat 777F $1,493,85
Haul Truck 7 3 - - - - 3
Cat D9T
Dozer $926,568 1 - - - - 1
Cat 14H
Grader $524,047 1 - - - - 1
Komatsu
HD465
Water Truck $790,000 1 - - - - 1
Cat 980
ROM Loader $500,000 1 - - - - 1
Support $1,047,93
equipment 9 1 1
Infrastructur
e - roads $278,875 1 1
Total Cost
(includes 6% $12,671,95 $278,87 $12,950,8
$0 $0 $0
escalation on 9 5 34
major items)
15.2 Mining Schedule

The mining schedule was created using Mine Works Planner software utilising the block
model reported by the pit designs, by cut-off grade categorised material (primary ore,
secondary ore, and waste materials), individual pits and pit stages, and in 20 m bench
increments. These material units were scheduled by the following criteria:
• Replicate the optimal economic schedule as generated in Whittle
• Mine as a priority higher grade regions with the least stripping ratios first
• Simulate practical open pit mining practices
• Manage production rates to ensure the mill feed is consistently supplied with the
nominated 750 ktpa of material
• Maintain realistic production rates that are appropriate for the selected mining
fleet.
Table 15.3 summaries the produced mining schedule by year. The emphasis at the start
of mining is on the Vein 49 Stage 2 with some production drawn from Vein 49 Stage 1.
The key push back for the Vein 49 Stage 3 is scheduled to start in the middle of the third
year of mining, using Vein 49 Stage 1 as the primary ore source during the push back
5 April 2007 44 of 48
Volume 3: Mining
period. The smaller Nelson East and West pits are scheduled for full extraction during the
fourth year. The Vein 49 Stage 3 is schedule to finish late in the fifth year. The detailed
mining schedule is located in Appendix D.
Table 15.3 Mining Schedule for Life of Mine
Year 1 Year 2 Year 3 Year 4 Year 5 Total
Primary
production bcm 306,065 307,774 304,562 302,801 192,762 1,413,964
Primary
production t 750,277 751,540 751,299 752,881 494,423 3,500,420
Au Grade g/t 4.33 4.43 4.23 2.98 3.08 3.86
Ag Grade g/t 25.92 35.03 44.72 26.33 34.59 33.22
Low grade
production bcm 137,368 80,466 135,814 136,288 63,165 553,101
Low grade
production t 338,244 195,843 335,961 339,361 161,982 1,371,391
Au Grade g/t 0.63 0.62 0.63 0.66 0.65 0.64
Ag Grade g/t 8.27 11.81 9.6 7.81 10.01 9.19
Waste bcm 2,227,610 2,797,662 1,933,149 2,160,922 520,301 9,639,644
Waste t 5,551,060 6,977,301 4,816,453 5,398,687 1,309,518 24,053,019
Total bcm 2,671,042 3,185,901 2,373,525 2,600,011 776,228 11,606,707
Total t 6,639,580 7,924,684 5,903,714 6,490,928 1,965,923 28,924,829
15.3 Primary ore material type schedule

Table 15.4 details the ore material types scheduled for delivery to processing.
5 April 2007 45 of 48
Volume 3: Mining
Table 15.4 Scheduled primary ore catagorised by material type
Primary Ore
Year 1 Year 2 Year 3 Year 4 Year 5 Total
Material
Split by Material
type
Quartz Oxide T 551,262 166,316 31,282 255,231 - 1,004,091
bcm 224,869 67,899 12,669 102,559 - 407,996
Quartz Fresh T 44,245 485,816 557,931 333,658 419,437 1,841,087
bcm 18,035 199,030 226,162 134,274 163,542 741,043
Andesite Oxide T 141,473 22,398 17,316 75,995 - 257,182
bcm 57,770 9,179 7,017 30,515 - 104,481
Andesite Fresh T 13,297 77,011 144,769 87,998 74,985 398,060
bcm 5,392 31,667 58,716 35,464 29,220 160,459
Total primary ore T 750,277 751,541 751,298 752,882 494,422 3,500,420
bcm 306,066 307,775 304,564 302,812 192,762 1,413,979
15.4 Dump construction schedule

The dump construction schedule is based on the various waste material types and the
final dump destination for each. The schedule criteria were:
• Minimise haul distance from source to dump
• Utilise completed pits
• Return pyritic waste to pits.
The resultant dump construction schedule is shown in Table 15.5.
5 April 2007 46 of 48
Volume 3: Mining
Table 15.5 Dump construction schedule (BCM)
Material
Destination Year 1 Year 2 Year 3 Year 4 Year 5 Total
source
Low grade Low grade 135,216 81,117 117,173 155,260 64,338 553,104
Non-pyritic Vein 49 dump 2,225,627 2,797,635 1,800,866 511,853 0 7,335,981

waste
Nelson dump 0 0 0 961,021 0 961,021
Nelson pits 0 0 0 481,750 277,383 759,133
Medium Vein 49 dump 1,983 27 132,283 68,520 0 202,813

pyritic
Nelson dump 0 0 0 14,677 0 14,677
waste
Nelson pits 0 0 0 0 109,248 109,248
High Vein 49 dump 0 0 0 0 0 0

pyritic
Nelson dump 0 0 0 0 0 0
waste
Nelson pits 0 0 0 123,101 133,670 256,771
Total Low grade 135,216 81,117 117,173 155,260 64,338 553,104

Vein 49 dump 2,227,610 2,797,662 1,933,149 580,373 0 7,538,794
Nelson dump 0 0 0 975,698 0 975,698
Nelson pits 0 0 0 604,851 520,301 1,125,152
Total All dumps 2,362,826 2,878,779 2,050,322 2,316,182 584,639 10,192,748
5 April 2007 47 of 48

Volume 4: Processing
5 April 2007
Prepared by
Ausenco Services Pty. Ltd

Level 2
44 St Georges Terrace
Perth • Western Australia
6000 • Australia
Executive Summary
Introduction
Aquiline Resources Incorporated (AQI) is evaluating the development of the Calcatreu
Gold Project (Calcatreu) located in north central Patagonia, Argentina. Calcatreu is
approximately 165 km southeast of San Carlos de Bariloche and about 1,300 km
southwest of Buenos Aires. The project area straddles the southern boundary of Rio
Negro Province and the northern boundary of Chubut Province. The mining and
processing plant would be located in the Rio Negro Province.
Calcatreu was previously explored by Normandy Mining of Australia (Normandy) through
its Argentine subsidiary Minera Normandy Argentina and later by Newmont Mining
Corporation (Newmont), having purchased Normandy. Newmont subsequently sold
Calcatreu to AQI during 2003 as the project did not meet Newmont’s corporate size
objectives.
In March 2005, AQI commissioned a Feasibility Study (FS) to evaluate the technical and
commercial viability of the project. In February 2006, AQI reduced the scope of the study
to an Initial Feasibility Study (IFS). The accuracy of the capital and operating cost
estimates for the IFS are set at ± 25%.
The project entails mining ore containing gold and silver from an open pit mine at a
grinding, and carbon-in-leach (CIL) process plant to produce gold/silver doré. The
operational life of the project is estimated to be 4.7 years.
The preparation of the IFS has been managed by Ausenco Services Pty. Ltd. (Ausenco)
from its Perth office in Western Australia.
Sub-consultant Vector Engineering (Vector), specialising in landfill design and closure,
has completed the design of the tailings storage facility (TSF). The cost for construction of
the TSF has been estimated by Ausenco using quantities provided by Vector, and
Argentinean labour, fabrication and construction rates developed by sub-consultant
engineering firm INDEC.
Ausenco developed the metallurgical testwork programme for the IFS. AMMTEC Pty. Ltd.
(AMMTEC) of Perth, Western Australia, conducted the testwork under the supervision of
Ausenco. The results of this testwork have been used to develop the process flowsheets,
engineering design, and cost estimates for extracting gold and silver from the Calcatreu
ore.
In light of the high concentration of silver relative to gold and the subsequent affect upon
the carbon inventory in a CIL circuit, the IFS included a conceptual assessment of
alternative gold and silver extraction processes. This took the form of a trade-off study
comparing CIL with Merrill Crowe technology and a hybrid circuit, combining aspects from
both technologies. Based on the short life of the project, potentially higher silver recovery
and lower capital cost, the CIL process route is favoured, and this forms the basis of the
IFS capital and operating cost estimate. However, this option entails a higher operating
cost than the Merrill Crowe option and any change to the design criteria may impact on
the selection.
The IFS also included a conceptual assessment of gold and silver recovery using heap
leach extractive technology as an alternative process route for treating the Calcatreu ore.
5 April 2007
The accuracy of capital and operating cost estimates for this study is considered to be ±
40%.
The IFS, at the request of AQI, also included a conceptual assessment of a non-cyanide
gold and silver recovery process. This process incorporated gravity concentration
followed by flotation of the tailing from the gravity circuit. Whilst this process route
eliminates the use of cyanide, the recoveries of gold and silver were significantly lower
than those achieved using a cyanide leach. The conceptual process flowsheet was
developed based on testwork done at AMMTEC and Gekko Systems Pty Ltd (Gekko).
The accuracy of capital and operating cost estimates for this study is considered to be ±
40%.
The Province of Rio Negro has imposed restrictions on the use of cyanide in mining
operations and AQI will define the final ore treatment method at a later date, after
negotiations with the Rio Negro government.
Project related areas such as geotechnical studies, resource and reserve estimations,
mining schedule, water management, environmental and social impact assessment, and
land acquisition are excluded from the Ausenco scope of work. These studies have been
performed by independent consultants acting on behalf of, and managed by AQI. This
work by others is reported separately.
Metallurgy
A comprehensive metallurgical testwork programme has been undertaken at AMMTEC
using drill core samples selected by AQI. The testwork demonstrated that the ore is “free
milling” and that high gold and silver recoveries can be achieved using a conventional
grinding and cyanidation process. For the purpose of designing and costing the process
plant, appropriate design criteria, recoveries and reagent consumption rates have been
developed from the testwork results obtained.
Grade versus leach residue relationships were developed from the results of the testwork.
These relationships equate to a gold recovery of 90% at the head grade of 3.86 g/t and a
silver recovery of 74% at a head grade of 33.2 g/t.
Cyanide detoxification tests were conducted on samples of leach residue tails. The
results show that the cyanide level in the leach residue tails can be readily detoxified to
meet the International Cyanide Management Code (ICMC) standards. The ICMC
standard for the discharge of tailings into a TSF is 50 mg/L weak acid dissociable cyanide
(CNWAD), which is deemed safe for livestock and bird life.
Processing
Ausenco has developed a process flowsheet based upon the AMMTEC testwork results
and a metal extraction case study. The run-of-mine (ROM) ore is crushed in a jaw
crusher, and then ground in a SAG and ball mill circuit. The ground ore then reports to a
CIL circuit consisting of eight tanks in series. Gold and silver values absorbed onto the
activated carbon are recovered in the carbon elution circuit. The resultant concentrated
strip liquor (“pregnant” eluate) is treated with zinc dust to precipitate gold and silver. The
precipitate is subsequently smelted into doré bars.
The tailings from the CIL circuit are thickened, treated in a cyanide destruction circuit and
discharged to the TSF. The cyanide concentration, after cyanide destruction, should be
50 mg/L or less.
5 April 2007
Allowing for maintenance downtime, the process plant ore throughput capacity will be
750,000 tonnes per year, over an estimated project life of 4.7 years.
The process plant will be located approximately 600 metres southeast of the Vein 49
open pit while the TSF will be located in a lacustrine basin area, about 700 metres
southeast of the process plant. The grinding area and gold room will be housed within a
building for wind weather protection. This building will incorporate plant maintenance
facilities, as well as plant offices, warehouse, ablution and change room facilities.
Infrastructure and Services

The Calcatreu site has no existing infrastructure except for an unsealed road between
Ingeniero Jacobacci (Jacobacci) and Paso del Sapo towns, which passes close to the
project site. The development of all necessary infrastructure to support the mine and
plant operations is therefore required. On-site camp accommodation will be provided for
the personnel, who would generally reside in Jacobacci.
No hydrogeological assessment has been undertaken in the area as part of this study.
Ausenco has made an allowance for piping water to the plant.
Electrical power shall be provided by an owner-operated, power station using high-speed
diesel generator sets. The decision to use site generate power was made on the basis
that the Argentine grid supply is too far away from the project area and the costs to deliver
power by overhead line would be prohibitive.
There will be a microwave link to Jacobacci for mobile phones and radios would be used
in the mine operations with a repeater station on the road to Jacobacci.
The site buildings will comprise process plant, mine workshop, reagent storage, core
storage and laboratory. These buildings will be of steel frame construction with galvanised
cold-rolled sections for purlins and grits, zincalume or colorbond steel cladding and
roofing, with concrete and bitumen floors.
Process Plant Operations and Administration

Personnel will be recruited locally to fill the majority of the available positions. Given the
requisite skills, or the ability to quickly acquire such skills, Argentinean nationals living in
the Río Negro province would be ideally placed to fill the available positions.
Those positions requiring experience in gold plant and related operations will be filled by
nationals with the suitable experience, in preference to expatriate labour. Expatriate
positions will account for a very small, but essential, proportion of the total personnel
employed.
Operating Cost Estimates

The operating cost estimates are presented in United States dollars (USD) and use prices
obtained in the second quarter of 2006 (2Q06). All references to dollars or $ are to USD.
In broad terms the estimate includes all site related operating costs associated with
processing ore to produce gold/silver doré bars. Details of operating cost estimates are
given in Section 5.
The overall accuracy of the project operating cost estimate is considered to be ±25%.
5 April 2007
The estimate excludes doré shipping, insurance and refining costs, mining, escalation,
accuracy provisions, corporate overhead charges (such as legal, banking and
insurances), financing costs, royalties, income taxes or similar imposts as well as
expenditure classified as capital, sustaining capital, or rehabilitation and closure costs.
Operating cost estimates were prepared by Ausenco with input from AQI and other
consultants for the various components of the Project. Major contributions to the estimate
were made by:
• AQI participated in advice about and enquiries to local suppliers and advised on
labour rates, labour loadings and manning schedules and security needs.
• Ausenco provided the operating cost components associated with the process
plant.
Ausenco has combined these separate inputs to create an operating cost estimate for the
processing plant and administration.
The average annual costs for processing Calcatreu ore at a rate of 750,000 tonnes per
year over the life of the mine are summarised in Table 1.
Table 1 Operating Cost Summary
Average Annual Costs Unit Cost
USD M/Year USD/t ore treated
Processing 11.16 14.89
Maintenance 1.30 1.74
General & Administration 2.19 2.92
Total 14.65 19.55
Capital Cost Estimates

The project initial capital cost estimate for the CIL option is presented in USD and has a
base date of the second quarter 2006 (2Q06). All references to dollars or $ are to USD.
The overall accuracy of the project initial capital cost estimate is considered to be ±25%.
In broad terms, the estimate includes design and construction of the plant access road,
power supply, mining infrastructure, process plant, TSF, water supply, on- and off-site
infrastructure costs. Details of the initial capital cost estimate are given in Section 6 and
the estimate is summarised in Table 2.
5 April 2007
Table 2 Capital Cost Summary

Cost Centre Estimated Cost
(USD M)
Process Plant 26.6

On Site Infrastructure and Utilities 10.4
Off Site Infrastructure and Utilities 8.1
Mining Infrastructure, Haul Roads and ROM Pad Construction 2.8
Mobile Equipment, First Fill Consumables and Capital Spares 3.9

Indirects Temporary Construction Facilities, EPCM, Start-Up and Commissioning 14.4
Total Capital Cost 66.2
The initial capital cost estimates exclude escalation, duties, taxes, mining costs, working
capital, Owner’s costs, sustaining capital, financing costs, rehabilitation and closure costs
and allowance for project growth.
Alternative Process Routes

In parallel with the IFS based on agitated cyanidation process, Ausenco has conducted
two concept studies, at the request of AQI, covering two alternative process routes.
These alternative process options are:
• Gravity concentration followed by flotation to recover gold/silver to a concentrate
for sale.
• Heap leach.
The findings of the conceptual studies covering these options are described in Section 8.
A summary showing operating cost comparison for these two options is given in Table 3.
These conceptual study operating cost estimates were done at ±40% accuracy and are
presented in USD as at the 2Q06. Details of operating costs for the two conceptual
options are given in Section 8.
Table 3 Summary of Operating Cost for Conceptual Studies
Average Annual Costs Unit Cost
USD M/Year USD/t ore treated
Gravity/Flotation Option 11.32 14.89
Heap leach Option 8.67 11.56
These estimates exclude doré shipping, insurance and refining costs, mining, escalation,
accuracy provisions, corporate overhead charges, financing costs, royalties, income taxes
or similar imposts as well as expenditures classified as capital, sustaining capital, or
rehabilitation and closure costs.
A summary of initial capital cost estimates for the two conceptual studies considering
heap leach and a non-cyanide recovery process is given in Table 4.
5 April 2007
These estimates are presented in USD as at the 2Q06 and are considered to have an
accuracy level of ±40%. Details of initial capital cost estimates for the two conceptual
options are given in Section 8.
Table 4 Summary of Capital Cost for Conceptual Studies
Gravity/Flotation
Heap leach Option
Option
Project Capital Cost USD M 60.5 56.1

Deferred capital USD M n/a 17.0
The initial capital cost estimates for all the options exclude escalation, duties, taxes,
mining costs, working capital, owner’s costs, sustaining capital, financing costs,
rehabilitation and closure costs and allowance for project growth.
Conclusions and Recommendations

The viability of using a conventional CIL cyanidation process for the recovery of gold and
silver from the Calcatreu ore has been demonstrated by a detailed testwork programme.
The proposed circuit would be designed according to World’s Best Practice, and comply
with the guidelines stipulated in the ICMC.
During the next phase of the FS, AQI should obtain environmental and mine permitting
licenses, and conduct hydrological studies to determine the source and quality of the raw
water for the proposed processing facility.
Preliminary testwork results from alternative gravity/flotation and heap leaching
flowsheets indicate significantly lower gold and silver recoveries from both options
compared to agitated cyanidation. The testwork for these alternative flowsheets,
however, was not sufficiently comprehensive to generate capital and operating cost
estimates to the same accuracy as the base case CIL circuit. The capital and operating
cost estimates derived for the alternate options are to an accuracy of ±40% and are
intended to provide AQI with a tool on which to base possible future flowsheet
development.
One of the predominant reasons for investigating the viability of a gravity/flotation circuit
option is the absence of cyanide within this processing route. Currently the local Rio
Negro government has banned the use of cyanide in mining operations within its
jurisdiction. It is, therefore, imperative to establish whether this decision is likely to be
reversed before progressing with the next Project phase.
Assuming the use of cyanide is sanctioned, there is need to review CIL versus Merrill
Crowe with updated design criteria. If CIL is the preferred option, further testwork would
be required to confirm the cyanide consumption in the leaching process and silver
extraction. As the settling characteristics of many of the samples tested to date were
poor, additional thickening testwork would be needed to provide greater definition for
equipment sizing.
If, on the other hand, the “no-cyanide” policy is upheld, the alternative gravity/flotation
circuit option will require further development. This would involve a comprehensive
testwork programme to establish design criteria on which to base equipment sizing, metal
recoveries, and reagent consumptions for accurate estimation of the capital and operating
costs. In addition, the source of the samples sent to San Juan for gravity/flotation testwork
would, firstly, need to be confirmed and then the reason(s) established for the higher gold
5 April 2007
and silver recoveries than those obtained by Gekko and AMMTEC. The flotation circuit
would require further development by conducting re-grinding, reagent and pH screening
tests and, ultimately, locked cycle flotation tests. In addition to the above testwork on the
gravity/flotation circuit, AQI must establish whether a low grade gold/silver flotation
concentrate could be sold directly to a third party for downstream processing.
5 April 2007
Table of Contents
1 Introduction.......................................................................................................... 1
1.1 Location and Access ............................................................................. 1
1.2 Topography, Climate and Vegetation .................................................... 2
1.3 Study Scope .......................................................................................... 3
1.4 Exclusions ............................................................................................. 5
1.5 Battery Limits......................................................................................... 5
1.6 Currency and Quantities........................................................................ 5
1.7 Disclaimer.............................................................................................. 5
2 METALLURGY .................................................................................................... 7
2.1 Introduction............................................................................................ 7
2.2 Previous Testwork ................................................................................. 8
2.3 Samples for AMMTEC (2005/6) ............................................................ 8
2.4 Ore and Water Characterisation.......................................................... 11
2.4.1 Head Assays – Leach Optimisation Samples At AMMTEC... 11
2.4.2 Mineralogy ............................................................................. 13
2.4.3 Site Water .............................................................................. 13
2.5 Leach Optimisation (2005) .................................................................. 14
2.5.1 Grind Size .............................................................................. 15
2.5.2 CIL ......................................................................................... 20
2.5.3 General Leach Conditions ..................................................... 21
2.5.4 Pulp Density Evaluation......................................................... 21
2.5.5 Cyanide Concentration Evaluation ........................................ 22
2.6 Variability Leach Testing ..................................................................... 23
2.7 Diagnostic Leaching ............................................................................ 25
2.8 Flotation Testwork ............................................................................... 25
2.9 Comminution Testing........................................................................... 26
2.9.1 Unconfined Compressive Strength ........................................ 26
2.9.2 Bond Rod and Ball Mill Work Indices and Abrasion
Indices ................................................................................... 27
2.9.3 Autogenous Media Competency Test ................................... 28
2.9.4 SMC Tests............................................................................. 29
2.10 Testing for Engineering Data............................................................... 30
2.10.1 Oxygen Uptake...................................................................... 30
2.10.2 Carbon Sequential Loading Test ........................................... 30
2.10.3 Viscosity Testing.................................................................... 30
2.10.4 Settling Tests......................................................................... 31
2.11 Cyanide Detoxification......................................................................... 31
2.12 Heap Leach Testing ............................................................................ 33
2.13 Material Handling Characterisation ..................................................... 33
5 April 2007
2.14 Vendor Testwork ................................................................................. 33

2.14.1 Outokumpu ............................................................................ 33
2.14.2 Delkor .................................................................................... 35
2.14.3 Gekko .................................................................................... 36
2.15 Testwork at Universidad Nacional de San Juan.................................. 38
2.16 Cyanide and Lime Consumption Estimates......................................... 41
2.17 Gold and Silver Recoveries ................................................................. 43
2.18 Recommendations for Further Work ................................................... 45
3 PROCESS PLANT ............................................................................................ 46

3.1 General................................................................................................ 46
3.2 Flowsheet Design Basis ...................................................................... 46
3.3 Flowsheet Development ...................................................................... 47
3.3.1 Comminution Circuit .............................................................. 47
3.3.2 Metal Extraction Circuit.......................................................... 50
3.4 Process Design Criteria Summary ...................................................... 52
3.5 Process Description............................................................................. 53
3.5.1 Crushing and Mill Feed.......................................................... 53
3.5.2 Grinding Circuit...................................................................... 55
3.5.3 CIL Circuit.............................................................................. 56
3.5.4 Elution and Precipitation ........................................................ 57
3.5.5 Cyanide Destruction and Tails Disposal ................................ 60
3.5.6 Reagents ............................................................................... 61
3.5.7 Plant Services – Water .......................................................... 63
3.5.8 Plant Services – Air ............................................................... 64
3.6 Control Philosophy .............................................................................. 65
3.6.1 General.................................................................................. 65
3.6.2 Drive Controls........................................................................ 67
3.6.3 Control Loops ........................................................................ 68
3.6.4 Crushing Circuit ..................................................................... 68
3.6.5 Milling Circuit ......................................................................... 68
3.6.6 Hybrid CIL Circuit .................................................................. 68
3.6.7 Elution Circuit ........................................................................ 69
3.6.8 Precipitation and Gold Room................................................. 69
3.6.9 Cyanide Destruction and Tails Disposal ................................ 70
3.6.10 Reagents ............................................................................... 70
3.6.11 Services................................................................................. 70
3.6.12 Control Interfaces .................................................................. 70
3.7 Metallurgical Accounting...................................................................... 73
4 INFRASTRUCTURE AND SERVICES.............................................................. 74

4.1.1 General.................................................................................. 74
5 April 2007
4.2 In-country Telecom/In-plant Communications ..................................... 74

4.3 Access Roads and On-Site Road Constructions................................. 74
4.3.1 Project Access and Bypass Roads........................................ 74
4.3.2 Mine Haul Roads ................................................................... 75
4.4 Water Supply and Distribution ............................................................. 75
4.4.1 Source of Supply ................................................................... 75
4.4.2 Raw Water System ................................................................ 76
4.4.3 Process Water System .......................................................... 76
4.4.4 Potable Water System ........................................................... 76
4.5 Effluent ................................................................................................ 77
4.5.1 Sources and Disposal............................................................ 77
4.6 Fuel Supply, Storage and Distribution ................................................. 77
4.6.1 Usage .................................................................................... 77
4.6.2 Fuel Source and Quality ........................................................ 77
4.6.3 Storage and Distribution ........................................................ 77
4.6.4 Security.................................................................................. 78
4.7 Vehicle Wash down Facilities .............................................................. 78
4.7.1 General Description ............................................................... 78
4.8 Power Supply and Reticulation............................................................ 78
4.8.1 Power Station ........................................................................ 78
4.8.2 Power Distribution ................................................................. 79
4.9 Buildings .............................................................................................. 79
4.9.1 Administration Buildings ........................................................ 79
4.9.2 Control Rooms....................................................................... 80
4.9.3 Industrial Buildings ................................................................ 80
4.9.4 Motor Control Centre Rooms................................................. 81
4.10 Man camp............................................................................................ 82
4.11 Fire Protection ..................................................................................... 82
4.12 Security................................................................................................ 83
4.12.1 Fencing and Gates ................................................................ 83
4.12.2 Secure Buildings.................................................................... 83
4.12.3 Fuel........................................................................................ 84
4.13 Plant Light Vehicles and Mobile Equipment ........................................ 84
5 PROCESS PLANT OPERATIONS AND ADMINISTRATION ........................... 85

5.1.1 General.................................................................................. 85
5.2 Administration...................................................................................... 85
5.3 Maintenance ........................................................................................ 87
6 OPERATING COST ESTIMATE ....................................................................... 89

6.1.1 Summary ............................................................................... 89
6.2 General Estimating Parameters .......................................................... 89
5 April 2007
6.2.1 Exchange Rates .................................................................... 89

6.2.2 Escalation .............................................................................. 90
6.2.3 Accuracy Provision ................................................................ 90
6.2.4 Inclusions............................................................................... 90
6.2.5 Exclusions ............................................................................. 91
6.3 Development of Estimated Rates and Costs....................................... 91
6.3.1 Labour ................................................................................... 91
6.3.2 Power .................................................................................... 91
6.3.3 Diesel Fuel............................................................................. 91
6.3.4 Grinding Media ...................................................................... 92
6.3.5 Reagents ............................................................................... 92
6.3.6 Estimate Basis....................................................................... 92
6.4 Process Plant ...................................................................................... 92
6.4.1 Operating Cost Estimate Summary ....................................... 92
6.4.2 Labour ................................................................................... 95
6.4.3 Light Vehicles and Mobile Equipment ................................... 95
6.4.4 Power .................................................................................... 97
6.4.5 Operating Consumables and Reagents ................................ 98
6.4.6 Maintenance Consumables ................................................. 100
6.4.7 Laboratory and Assaying ..................................................... 101
6.5 General and Administration ............................................................... 101
6.5.1 Operating Cost Estimate Summary ..................................... 101
6.5.2 General and Administration Expenses ................................ 101
6.5.3 Administrative Labour.......................................................... 103
7 CAPITAL COST ESTIMATE ........................................................................... 104

7.1.1 Summary ............................................................................. 104
7.2 General Estimate Parameters ........................................................... 104
7.2.1 Exchange Rates .................................................................. 104
7.2.2 Escalation ............................................................................ 105
7.2.3 Working Capital ................................................................... 105
7.2.4 Taxes and Duties................................................................. 105
7.2.5 Sustaining Capital, Rehabilitation and Closure Costs ......... 105
7.2.6 Project Growth Contingency ................................................ 105
7.2.7 Accuracy Provisions ............................................................ 105
7.2.8 Assumptions ........................................................................ 106
7.2.9 Exclusions ........................................................................... 106
7.3 Direct Cost Development and Detail ................................................. 107
7.3.1 Development of Supply Costs, Freight Costs and
Construction Rates .............................................................. 107
7.3.2 Direct Cost Estimate ............................................................ 107
7.3.3 Tailings Storage Facility ...................................................... 109
5 April 2007
7.3.4 Infrastructure ....................................................................... 109

7.4 Indirect Cost Development and Detail ............................................... 110
7.4.1 Indirect Costs Breakdown.................................................... 111
7.5 Owner’s Costs ................................................................................... 112
8 ALTERNATIVE PROCESS ROUTES ............................................................. 113

8.1.1 Summary ............................................................................. 113
8.2 Gravity and Flotation Process Option................................................ 114
8.2.1 Design Basis........................................................................ 114
8.2.2 Process Plant Description ................................................... 116
8.2.3 Operating Cost Estimate ..................................................... 118
8.2.4 Capital Cost Estimate .......................................................... 120
8.2.5 Direct Cost Development..................................................... 123
8.2.6 Recommendations............................................................... 126
8.3 Heap Leach Process Option.............................................................. 126
8.3.1 Design Basis........................................................................ 127
8.3.2 Process Description............................................................. 127
8.3.3 Operating Cost Estimate ..................................................... 130
8.3.4 Capital Cost Estimate .......................................................... 132
8.3.5 Recommendations............................................................... 132
Tables
Table 2.1 Variability leach samples..................................................................... 9
Table 2.2 Variability leach samples................................................................... 10
Table 2.3 Leach optimisation samples analysis ................................................ 11
Table 2.4 Head grade analysis for Cal-3 to Cal-40, Cal-49 and Cal-50. ........... 12
Table 2.5 Site Water Analysis ........................................................................... 14
Table 2.6 Oxidised Vein Leach Results at Various Grinds................................ 15
Table 2.7 Criteria Used for Grind Size Assessment.......................................... 16
Table 2.8 Oxidised Vein Size Optimisation ....................................................... 17
Table 2.9 Unoxidised Vein Leach Results at Various Grinds............................ 18
Table 2.10 Unoxidised Vein Size Optimisation ................................................... 19
Table 2.11 Carbon-in-Leach Test Results Summary .......................................... 20
Table 2.12 General Leach Conditions Test Results Summary ........................... 21
Table 2.13 Pulp Density Evaluation Result Summary......................................... 22
Table 2.14 Cyanide Concentration Evaluation Result Summary ........................ 23
Table 2.15 Variability Leach Test Results ........................................................... 24
Table 2.16 Flotation Results for Cal-1................................................................. 26
Table 2.17 Flotation Results for Cal-2................................................................. 26
5 April 2007
Table 2.18 UCS Test Results............................................................................. 27

Table 2.19 Bond Rod and Ball Mill Indices and Abrasion Indices ....................... 28
Table 2.20 AMC Test Results Summary ............................................................. 29
Table 2.21 SMC Test Results Summary ............................................................. 29
Table 2.22 Oxygen Uptake Results .................................................................... 30
Table 2.23 Carbon Loading Kinetics ................................................................... 30
Table 2.24 Viscosity Measurements ................................................................... 30
Table 2.25 Settling Test Results ......................................................................... 31
Table 2.26 Cyanide Detoxification Tests on Cal-1 .............................................. 32
Table 2.27 Cyanide Detoxification Tests on Cal-2 .............................................. 32
Table 2.28 Coarse Bottle Roll Leaches............................................................... 33
Table 2.29 Outokumpu Samples Laser Sizing Results ....................................... 34
Table 2.30 Outokumpu Dynamic Thickening Test Results ................................. 35
Table 2.31 Gekko Progressive Grind Table Test ................................................ 36
Table 2.32 Gekko Single Pass Table Test at 1.0 mm ......................................... 36
Table 2.33 Gekko Single Pass Table Test at 0.5 mm ......................................... 37
Table 2.34 Gekko Repeat Single Pass Table Test at 0.5 mm ............................ 37
Table 2.35 Gekko Falcon Test at 75 µm ............................................................. 37
Table 2.36 Gekko Flotation Test at 75 µm .......................................................... 38
Table 2.37 Gekko Combined Results ................................................................. 38
Table 2.38 UNSJ Gravity Concentration of Oxidised Vein at 400 µm ................. 39
Table 2.39 UNSJ Gravity Concentration of Unoxidised Vein at 400 µm ............. 39
Table 2.40 UNSJ Gravity Concentration of Oxidised Vein at 150 µm ................. 39
Table 2.41 UNSJ Gravity Concentration of Unoxidised Vein at 150 µm ............. 39
Table 2.42 UNSJ Flotation of Oxidised Vein at Natural pH................................. 40
Table 2.43 UNSJ Flotation of Unoxidised Vein at Natural pH ............................. 40
Table 2.44 UNSJ Flotation of Oxidised Vein at pH 10.5 ..................................... 40
Table 2.45 UNSJ Flotation of Unoxidised Vein at pH 10.5.................................. 41
Table 2.46 UNSJ Combined Results .................................................................. 41
Table 2.47 Cyanide and Lime Consumptions in Variability Tests ....................... 42
Table 2.48 Predicted Cyanide and Lime Consumptions ..................................... 43
Table 3.1 Mill Design Criteria ............................................................................ 48
Table 3.2 SAB Mill Grinding Power Demand .................................................... 49
Table 3.3 SAG and Ball Mill Sizing ................................................................... 49
Table 3.4 Summary of the Process Plant Design Criteria ................................. 53
Table 3.5 Drives to be controlled from Main Control Room .............................. 66
Table 3.6 Drives to be controlled from field-based panels ................................ 67
Table 4.1 Light vehicles to be supplied ............................................................. 84
5 April 2007
Table 4.2 Light vehicles to be supplied ............................................................. 84

Table 5.1 Administration Employment Numbers Operations Manning.............. 86
Table 5.2 Process Plant Employment Numbers ............................................... 87
Table 5.3 Process Plant Maintenance Employment Numbers .......................... 88
Table 6.1 Operating Cost Summary.................................................................. 89
Table 6.2 Currency Exchange Rates ................................................................ 90
Table 6.3 Summary of Processing Operating Costs by Cost Type ................... 93
Table 6.4 Summary of Operating Costs by Plant Area ..................................... 94
Table 6.5 Labour Cost Summary ...................................................................... 95
Table 6.6 Light Vehicle Fuel Use, Spares and Consumable Costs................... 95
Table 6.7 Light Vehicle Running Cost ............................................................... 96
Table 6.8 Mobile Equipment Fuel Use, Spares and Consumable Costs .......... 97
Table 6.9 Mobile Equipment Fuel, Spares and Consumable Costs.................. 97
Table 6.10 Power Cost Summary ....................................................................... 98
Table 6.11 Consumable and Reagent Costs Summary ...................................... 99
Table 6.12 Maintenance Consumables Annual Cost Factors ........................... 100
Table 6.13 Maintenance Consumable Costs .................................................... 100
Table 6.14 Summary of Administration Operating Costs by Cost Type ............ 101
Table 6.15 General and Administration Costs .................................................. 101
Table 7.1 Capital Cost Summary .................................................................... 104
Table 7.2 Exchange Rates.............................................................................. 105
Table 8.1 Summary of Key Project Indicators ................................................. 114
Table 8.2 Critical Design Parameters ............................................................. 115
Table 8.3 Operating Cost Estimates ............................................................... 119
Table 8.4 Breakdown of Capital Cost Estimate............................................... 121
Table 8.5 Operating Cost Estimates ............................................................... 130
Table 8.6 Breakdown of Capital Cost Estimates ............................................. 132
Figures
Figure 1.1 Location map, Calcatreu Project Area ................................................ 2
Figure 2.1 Oxidised Vein Leach Results at Various Grinds................................ 15
Figure 2.2 Oxidised Vein Size Optimisation ....................................................... 17
Figure 2.3 Unoxidised Vein Leach Results at Various Grinds............................ 18
Figure 2.4 Unoxidised Vein Size Optimisation ................................................... 19
Figure 2.5 Grade vs Leach Residue Relationship for Gold ................................ 44
Figure 2.6 Grade vs Leach Residue Relationship for Silver............................... 45
5 April 2007
Appendices
Appendix 1 Metal Extraction Case Study
Appendix 2 Metallurgical Testing
Appendix 3 Process Design Criteria and Diagrams
Appendix 4 Site Geotechnical Investigations
Appendix 5 Organisation
Appendix 6 Operating Cost Estimate
Appendix 7 Capital Cost Estimate
Appendix 8 Alternate Process Routes
Appendix 9 General Arrangement Drawings
Appendix 10 Tailings and Waste Disposal
5 April 2007
1 Introduction
The Calcatreu Gold Project (Calcatreu) is owned by Minera Aquiline Argentina S.A., a
fully owned subsidiary of Aquiline Resources Inc. (AQI). The project consists of a series of
epithermal gold and silver rich vein systems which encompass the Vein 49 and Nelson
vein systems, with approximately 3.36 Mt of ore grading 3.86 g/t of gold and 33.2 g/t of
silver. The Calcatreu Project area covers more than 73,000 hectares, straddling the
southern border of Rio Negro Province and the northern border of Chubut Province
(Figure 1.1). The mine and processing plant will be located in the Province of Rio Negro.
Calcatreu was discovered by La Source Developpement Argentine in 1997 and
subsequently acquired by Normandy Mining of Australia (Normandy), which explored the
project through its Argentinean subsidiary Normandy S.A. Newmont Mining Corporation
(Newmont) acquired Normandy and sold its interest in the Calcatreu Project to AQI, which
gained control of the tenements in June 2003.
Since acquisition, AQI has continued the exploration programme in the area and engaged
Micon International Limited (Micon) to provide a preliminary assessment and economic
evaluation for the Calcatreu Project. A report outlining Micon’s work was finalised in
October 2004 and a copy of the report is available on the AQI website.
1.1 Location and Access

Calcatreu comprises a set of mining properties in the northern part of the Somuncura
volcanic massif located in south-western Argentina, approximately 1,300 km southwest of
Buenos Aires. The project exploration and mining tenement area straddles the Rio Negro
and Chubut Province boundaries. The Vein 49 and Nelson vein system are located in the
Rio Negro Province and it is proposed that the processing plant be constructed adjacent
to these orebodies.
Major regional centres close to Calcatreu are San Carlos de Bariloche (Bariloche); which
is about 160 km northwest (about 330 km by road), the city of Neuquén, about 290 km
north, and the provincial capital of Rio Negro, Viedma, about 600 km to the east. The
closest town is Ingeniero Jacobacci (Jacobacci), about 55 km to the north (Figure 1.1).
Jacobacci has about 6,500 inhabitants and is used by AQI as the logistical support base
for the project. The town has a rural hospital, an airstrip, two hotels and a railway station.
The town is crossed by the railway line between the tourist city of Bariloche and Viedma.
Jacobacci is accessed by unsealed, but well maintained provincial roads from Bariloche
(about 3 hours drive), by train from Buenos Aires or Bariloche, or by light plane from
Viedma or Bariloche. Both Viedma and Bariloche are serviced by commercial flights from
Buenos Aires. Bariloche has an international airport and may be reached from Chile.
Provincial Road No. 76 transects the project area from north to south, linking the town of
Jacobacci in Rio Negro with Paso del Sapo in Chubut. This road is wide and unsealed,
but well maintained. Access around the project area is via a network of secondary public
roads and farm tracks connecting with No. 76.
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Figure 1.1 Location map, Calcatreu Project Area
1.2 Topography, Climate and Vegetation

The mine area is located on gentle hill slopes with typical rock exposures along major
ridgelines and peaks, with elevation varying between 1,200 m and 1,500 m above sea
level (ASL).
No defined surface water drainage geomorphic structures are formed in the mine area,
with the exception of the small intermittent lagoons, which occur in closed topographical
low areas. The valleys within the mine areas ultimately drain to the northwest of the site.
Several areas of these valleys accumulate water and ponds are formed during the wetter
months, although flows are low and slow moving, with no soil movement. Soil coverage is
limited on the peaks and high relief slopes, within the mine area.
Shallow soil development occurs in areas where the slopes are gentle, typically less than
a metre. In the valleys and in low topographical areas the soil development can occur to
several metres.
The climate in this part of Patagonia is cold and dominated by strong westerly winds, high
evaporation rates and scarce rainfall, with more precipitation in the winter months than in
summer. Minor sporadic snowfall may occur in the coldest months of winter. The closest
meteorological station is in the town of Maquinchao (888 m ASL), about 90 km to the
5 April 2007 2 of 133

northeast, and it could be considered representative of the project area. The data
measured is:
Extremes: Observed Maximum Temperature = 37°C (January)
Observed Minimum Temperature = - 25.6°C (June).
1961 to 1993 data average for day time highs:
Annual Temperature = 9.3°C
Maximum Temperature = 16.4°C
Minimum Temperature = 2.2°C
Principal Wind Direction = From NW/W to SE/E
Average Wind Velocity = 20 km/h
Maximum Wind Velocity = >100 km/h (spring)
Annual Rainfall/Snowfall = 200 mm.
AQI has set up a project weather station (1,343 m ASL), and although a complete data
set is not yet available, temperatures recorded between December 2004 and March 2006
are in the range of the temperatures indicated above. However, the prevailing wind
direction in the project area is from the southwest during summer, and for the rest of the
year is from the northwest as in the case of Maquinchao. The wind speed is higher than
in Maquinchao with average values of 29 km per hour and gusts of up to 125 km per hour
have been recorded for an average period of 15 minutes.
Low rainfall, low relative humidity and strong winds produce a desert to a semi-desert like
shrub steppe and shrub and grass steppe landscapes. The poor fertility of the soils,
coupled with ashes blown from recent eruptions of volcanoes located in Chile to the west
of the project area, makes the use of the local land confined to raising sheep and a few
horses and cattle. There are no national parks or protected reserve areas within or near
the project area.
1.3 Study Scope

In March 2005, AQI commissioned Ausenco Services Pty. Ltd. (Ausenco) to prepare a
Feasibility Study (FS) to evaluate the technical and commercial viability of Calcatreu. As
part of the scope, Ausenco designed a comprehensive metallurgical testwork programme
that was carried out during 2005 at the AMMTEC laboratories, in Perth, Western
Australia.
In February 2006, AQI reduced the scope of the study to an Initial Feasibility Study (IFS)
primarily because of changes in the regulations regarding the use of cyanide in Rio Negro
Province. The IFS includes capital and operating cost estimates produced to an accuracy
of plus/minus twenty five per cent (±25%) for a process flowsheet with extraction of gold
and silver by leaching in cyanide.
A technical and financial evaluation of three circuit types using cyanide for the recovery of
precious metal from ore was performed by Ausenco in order to select the most
appropriate for Calcatreu. The case study is included in Appendix 1.
The IFS also includes a conceptual assessment of recovery of gold and silver, by gravity
concentration plus flotation, and by heap leaching. It must be noted that insufficient
testwork has been performed at this time to develop either gravity-flotation or heap leach
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flowsheets to an IFS standard; and it was not possible, therefore, to develop optimised
flowsheets. However, conceptual flowsheets were developed for both process routes
based on Ausenco’s experience, and capital and operating costs were subsequently
compiled to an accuracy of ± 40%. There is insufficient information available to predict, to
any reasonable accuracy, the recovery of gold and silver by either gravity/flotation or heap
leaching. It is envisaged that the conceptual assessment of these process routes will
provide a tool for AQI to assess the value of developing either of these flowsheets further.
Ausenco’s scope of services is as follows:
• Metallurgy:
− Preparation of metallurgical testwork programme.
− Metallurgical testwork, supervision and reporting.
• Process engineering:
− Preparation of a case study to assess processing by CIL versus Merrill Crowe
and make recommendations to AQI on the process route on which to base the
IFS.
− The development of preliminary design criteria and preparation of preliminary
flow diagrams for the agitated leach flowsheet.
− The development of conceptual design criteria, preparation of conceptual
block flow diagram and conceptual equipment list for the gravity/flotation
flowsheet.
− The development of conceptual design criteria, preparation of conceptual
block flow diagram and conceptual equipment list for the heap leach
flowsheet.
• Engineering for agitated leach flowsheet
− Preparation of a preliminary mechanical equipment list from the process flow
diagrams.
− Preparation of site layout drawings with a plant general arrangement plan and
two general arrangement sections.
− Preparation of preliminary earthworks drawings in sufficient detail to provide
approximate quantities for estimations.
• Capital cost estimates:
− Development of capital cost estimates in US dollars to an overall accuracy of
± 25% for the agitated leach flowsheet.
− Development of capital cost estimates in US dollars to an overall accuracy of
± 40% for the conceptual heap leach and gravity plus flotation flowsheet.
• Operating cost estimates:
− Development of operating cost estimates in US dollars to an overall accuracy
of ± 25% for the agitated leach flowsheet.
− Development of operating cost estimates in US dollars to an overall accuracy
of ± 40% for the conceptual heap leach and gravity plus flotation flowsheet.
5 April 2007 4 of 133

1.4 Exclusions
The following are excluded from the scope of work:
• Resource and reserve estimations.
• Mining schedule and planning.
• Tailings storage facilities (TSF).
• Waste stockpiles.
• Hydrological studies.
• Environmental compliance.
• Financial analysis.
• Legal and regulatory.
• Permitting.
1.5 Battery Limits

The battery limits for the Calcatreu IFS are as follows:
• Ore – discharge of truck or front end loader at ROM dump station.
• Product – production of gold/silver doré bars in the gold room.
• Power supply – includes the use of diesel generators owned by AQI.
• Raw water (plant area) – intake to plant.
• Tailings – discharge at the TSF.
1.6 Currency and Quantities

All currency amounts are stated in United States dollars (USD). Quantities are expressed
in SI units, according to Australian and international practice, including metric tonnes
(tonnes, t), kilograms (kg) and grams (g) for weight, kilometres (km) or metres (m) for
distance, hectares (ha) or square metres (m2) for area and grams per metric tonne (g/t)
for gold and silver values (Au g/t, Ag g/t).
1.7 Disclaimer
Site visits were made by an Ausenco representative in both May 2005 and July 2005.
During the course of these visits the following activities occurred:
• AQI presented a selection of core and described the various types of material.
• The requirements for the samples to be used in the metallurgical testwork
programme were discussed with AQI geological personnel.
• The locations were agreed with AQI personnel for plant and infrastructure items.
This report and its conclusions are based on material submitted by the professional staff
of AQI or its consultants, a metallurgical testwork programme carried out in AMMTEC
laboratories in Australia, which was supervised by Ausenco, and metallurgical testwork
undertaken in Chile and Argentina that was not supervised by Ausenco.
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The metallurgical plant design is based on the results of the metallurgical testwork
programme, and geological information and mining production schedules supplied by AQI
and its consultants. Capital and operating costs have been developed by Ausenco
utilising quotations from major equipment suppliers, South American engineering firms,
Ausenco’s data base and experience.
The various agreements under which AQI holds title to the mineral lands for this project
have not been investigated or confirmed by Ausenco and Ausenco offers no opinion as to
the validity of the titled claimed.
While exercising all reasonable diligence in supervising the metallurgical testwork,
Ausenco has relied upon data presented by AQI and its consultants in formulating the
opinions in this report.
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2 METALLURGY
2.1 Introduction
A testwork programme was developed with the specific objectives to verify technical
feasibility and provide data for the preparation of the IFS. The programme is outlined in
Appendix 2. This work was awarded to AMMTEC in Perth, Western Australia and
commenced in 2005. The programme included testwork to establish:
• Optimum leach conditions for both oxidised vein and unoxidised vein composite
samples.
• Potential for recovery of gold and silver using a flotation process.
• Engineering data, including testing of oxygen uptake, carbon kinetics and slurry
viscosity properties of the oxidised vein and unoxidised vein composite samples.
• Performance of the SO2/air process for cyanide detoxification.
• Comminution characteristics of oxidised vein, unoxidised vein, oxidised
mineralised andesite and unoxidised mineralised andesite samples.
• Work indices and leach performance of 14 variability samples.
• Leach performance of 24 variability samples.
• Heap leaching performance of oxidised mineralised andesite and unoxidised
mineralised andesite samples.
In addition, AMMTEC prepared samples for dispatch to:
• Gekko Systems Pty Ltd (Gekko) for gravity plus flotation testing.
• Outokumpu Technology Pty Ltd (Outokumpu) for thickening testwork on the
oxidised vein and unoxidised vein composite samples and on composite samples
of oxidised mineralised andesite and unoxidised mineralised andesite.
• Delkor Pty Ltd (Delkor) for filtration testwork on the oxidised vein and unoxidised
vein composite samples.
• Coffey Geosciences Pty Ltd (Coffey) to establish physical and geochemical
characteristics of plant tailings.
• TUNRA Bulk Solids Handling Research Associates (TUNRA), to establish
materials handling characteristics of oxidised mineralised andesite.
AMMTEC’s work is reported in a document titled, “Metallurgical Testwork Programme on
Samples from Calcatreu, Argentina for Aquiline Resources, Report No. A9876, April
2006.”
Gravity concentration and flotation testwork is described in Gekko’s report, “Aquiline
Resources Gravity and Flotation Recovery Testwork,” dated 7th February 2006.
Thickening testwork is discussed in Outokumpu’s reports S748TA and S748TA_B and the
filtration testwork in Delkor’s report dated 1st February 2006.
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TUNRA’s report “Flow Properties of Calcatreu Ore,” dated October 2005, contains its
findings on the material handling characteristics of the ores.
Further samples of oxidised vein and unoxidised vein were collected and dispatched to
Universidad Nacional de San Juan (UNSJ) for gravity plus flotation testing. This work is
reported in a document titled, “Ensayos Metalúrgicos de Muestras Auríferas del Proyecto
Calcatreu.”
Copies of the above reports are in Appendix 2.
The testing of plant tailings conducted by Coffey, was supervised by Vector, and is
discussed in a separate report by Vector (Appendix 10).
2.2 Previous Testwork

Limited metallurgical testwork was undertaken in 2004 at SGS Lakefield Research, Chile
S.A. (SGS). Results from this work are contained in a report titled “Metallurgical testing
for Calcatreu Gold Deposit,” dated May 2004. The main objective of this programme was
to assess the amenability of the samples to gold and silver recovery through gravity
concentration and cyanidation.
In addition, SGS performed bottle roll tests on crushed samples to investigate the
potential for heap leaching Calcatreu ores. While no formal report has been issued on
these tests, preliminary results sheets have been made available (attached in Appendix
2). The results of this work were considered when developing the programme for this
phase of the study.
2.3 Samples for AMMTEC (2005/6)

Various samples were obtained specifically for the different elements of the testwork
programme. Ausenco identified the requirements for each sample and AQI geologists
selected the individual components to match Ausenco’s requirements. Ausenco was not
involved in the selection and composition of the metallurgical samples. The detailed
composition of each sample is listed in Appendix 2.
• Leach Optimisation Samples
− Approximately 200 kg of oxidised vein of average grade and typical
mineralisation, including 15% dilution obtained equally from the hanging and
foot walls, was composited. These samples were taken from existing split
core or whole core freshly drilled for the metallurgical samples. This oxidised
vein sample was all from Vein 49 and was designated Cal-1.
− The unoxidised vein sample (Cal-2), also entirely from Vein 49, was
composited in a similar fashion.
• Variability Leach Samples
− Approximately 6 kg of existing split core was used for each of the 24 samples,
in accordance with Table 2.1.
5 April 2007 8 of 133

Table 2.1 Variability leach samples
Target Grade,
Sample No. Classification Deposit
g/t
Cal-3 Oxidised vein ±1.5 Vein 49
Cal-9 Oxidised vein 6.0 – 8.0 Vein 49
Cal-11 Unoxidised vein ±1.5 Vein 49
Cal-12 Unoxidised vein ±1.5 Nelson
Cal-17 Unoxidised vein 6.0 – 8.0 Vein 49
Cal-19 Oxidised mineralised andesite ±0.9 Vein 49
Cal-21 Oxidised mineralised andesite ±1.5 Nelson
Cal-23 Unoxidised mineralised andesite ±0.9 Vein 49
Cal-25 Unoxidised mineralised andesite ±1.5 Nelson
• Variability Leach and Work Index Samples

− Approximately 50 kg of core was used for each of the 14 samples, in
accordance with Table 2.2. These samples comprised freshly drilled whole
core, except Cal-37 and Cal-38, which contained a mixture of existing split
and fresh whole core.
5 April 2007 9 of 133

Table 2.2 Variability leach samples
Sample No. Classification Target Grade, g/t Deposit

• Comminution Samples
A sample of oxidised vein (Cal-41) was collected from an outcrop on Vein 49.
Samples of unoxidised vein (Cal-42), oxidised mineralised andesite (Cal-43) and
unoxidised mineralised andesite (Cal-44) were prepared from whole core from Vein
49. These samples had masses in the range of 55 to 60 kg.
• Materials Handling Sample
A 78 kg sample of oxidised mineralised andesite was collected from material
exposed at the edge of drill pads on Vein 49, which was expected to display some
of the worst materials handling characteristics of the deposit.
• Advanced Media Competency Sample
A 209 kg sample of Vein 49 unoxidised vein was collected from freshly drilled PQ
core.
• Heap Leach Samples
Approximately 100 kg each of oxidised mineralised andesite and unoxidised
mineralised andesite was collected from whole core from Vein 49.
• Water Sample
500 L of water were collected from a bore at the project site.
5 April 2007 10 of 133

2.4 Ore and Water Characterisation

2.4.1 Head Assays – Leach Optimisation Samples At AMMTEC
The leach optimisation samples were submitted for comprehensive analysis. Results are
listed in Table 2.3.
Table 2.3 Leach optimisation samples analysis
Element Units Oxidised Vein: (Cal-1) Unoxidised Vein: (Cal-2)

Au-1 g/t 2.86 2.92
Au-2 g/t 3.56 3.12, 2.86
Au-3 g/t 3.14 3.48
Au-4 g/t 3.00 3.44, 3.56
As % 10, 10 <10
Ag ppm 33, 32 35
Al % 3.49, 3.46 1.45
Ba ppm 519, 511 158
Bi ppm <10, <10 <10
CORG % 0.04, 0.04 0.03
CTOTAL % 0.40, 0.39 2.85
Ca % 1.61, 1.58 8.06
Cd ppm 6, 7 7
Co ppm 10, 11 6
Cr ppm 210, 210 200
Cu ppm 101, 96 35
Fe % 1.81, 1.85 1.12
Hg ppb 50, 60 <10, <10
K % 0.76, 0.73 0.42
Li ppm 57, 50 35
Mg ppm 1524, 1580 2168
Mn ppm 304, 308 690
Mo ppm <5, <5 <5
Na ppm 400, 350 180
Ni ppm 72, 69 72
P ppm 400, 300 200
Pb ppm 465, 429 116
Sb ppm 3.7, 3.6 2.9, 2.9
Sr ppm 182, 176 101
STOTAL % 0.87, 0.85 0.56
Te ppm 0.2, 0.2 0.4, 0.2
Ti ppm 1440, 1362 619
V ppm 62, 58 20
Y ppm 7, 7 6
Zn ppm 400, 399 310
Zr ppm 21, 19 10
The specific gravity of Cal-1 was measured at 2.64 and Cal-2 at 2.65.
5 April 2007 11 of 133

Head assays for other samples are listed in Table 2.4.
Table 2.4 Head grade analysis for Cal-3 to Cal-40, Cal-49 and Cal-50.
Sample Au-1 Au-2

Cal-3 1.14 1.15, 1.35
Cal-4 1.87, 1.83 1.98
Cal-5 2.36 2.42
Cal-6 2.89 2.92
Cal-7 1.98 1.90
Cal-8 5.03 4.88
Cal-9 7.41 7.08
Cal-10 6.73 6.74
Cal-11 1.33 1.12
Cal-12 1.20 1.21
Cal-13 2.75 2.35
Cal-14 2.35 2.54
Cal-15 6.18 6.47
Cal-16 5.38 4.77
Cal-17 6.18 5.65, 5.82
Cal-18 5.33 3.80
Cal-19 1.07, 1.18 1.00
Cal-20 1.41 1.27
Cal-21 2.96 2.71
Cal-22 1.06 1.05
Cal-23 1.00 0.96
Cal-24 1.16 0.94
Cal-25 0.151 0.25
Cal-26 3.38 3.28
Cal-27 2.74 2.82
Cal-28 4.09 3.64
Cal-29 4.19 4.62, 4.36
Cal-30 3.42 3.53
Cal-31 4.48 4.59
Cal-32 5.32 5.77
Cal-33 5.21 5.08
Cal-34 8.09 7.32
Cal-35 0.39 0.50
Cal-36 0.65 0.59
Cal-37 0.95 0.88
Cal-38 0.09 0.14
Cal-39 0.44 0.42
Cal-40 1.62 1.75, 2.07
Cal-49 0.44 0.43
Cal-50 0.26 0.27, 0.30
5 April 2007 12 of 133

2.4.2 Mineralogy
Portions of Cal-1 and Cal-2 were screened at 0.1 mm and heavy minerals were separated
using heavy media liquid separation techniques with the “sinks” fractions mineralogically
examined.
Cal-1 Sample Sinks (+0.1 mm)
This fraction was observed to contain pyrite and goethite. Only one occurrence of gold
was detected, an irregular mass of liberated electrum (55 x 20 µm). There were a number
of examples of native silver, as irregular liberated grains, but none of these showed any
gold content. These had long dimensions of 170, 50 30 and 40 µm. The silver also
occurred as acanthite and iodargyrite, with the acanthite occurring as a rim to pyrite and
iodargyrite as fines in goethite.
Cal-1 Sample Sinks (-0.1 mm)
The finer Cal-1 fraction was observed to contain pyrite and iron “oxides.” No gold was
detected. Silver was present as native silver, acanthite and as an unidentified Cu/Pb/Ag
sulphide containing about 6% Se. The native silver occurred as discrete, irregular grains,
less than 0.1 mm in size. The acanthite occurred as an 80 µm discrete phase and as fines
in pyrite.
Cal-2 Sample Sinks (+0.1 mm)
This fraction of unoxidised vein was observed to contain more sulphides than oxides. The
sulphides were dominated by pyrite, occurring mostly as clusters of medium to fine grains
in quartz. Four examples of electrum were detected:
• A 4 µm electrum in goethite also containing pyrite.
• Two electrums of 10 and 8 µm in a 120 µm acanthite grain.
• A 15 µm electrum composite with sphalerite and chalcopyrite.
• A pair of electrums in a 50 µm pyrite also containing a rim of digenite.
Silver was also found to occur as native silver and acanthite. The native silver occurred as
fines in goethite and as a 50 µm grain attached to goethite in quartz. The acanthite was
composite with sphalerite and galena.
Cal-2 Sample Sinks (-0.1 mm)
Again, more sulphides were observed than oxides. The sulphides were dominated by
fresh discrete pyrite. One occurrence of electrum was detected, in jalpaite. Silver also
occurred as native silver, acanthite, and jalpaite. Native silver was present at 55 µm and
as a core in a 120 µm strip of acanthite. The jalpaite was a 140 µm grain hosting a 20 µm
electrum grain.
2.4.3 Site Water

The analysis of site water is presented in Table 2.5.
5 April 2007 13 of 133

Table 2.5 Site Water Analysis
Analyte Unit Value

Ag mg/L <0.02
Al mg/L <0.20
Ba mg/L <0.05
Bi mg/L <0.10
Ca mg/L 740
Cd mg/L <0.05
Co mg/L <0.05
Cr mg/L <0.10
Cu mg/L <0.02
Fe mg/L <0.10
K mg/L 2.6
Li mg/L 0.10
Mg mg/L 70
Mn mg/L 0.31
Mo mg/L <0.05
Na mg/L 160
Ni mg/L <0.05
P mg/L <1.0
Pb mg/L <0.05
Sr mg/L 3.4
Ti mg/L <0.10
V mg/L <0.02
Y mg/L <0.01
Zn mg/L 0.02
Zr mg/L <0.05
HCO3 mg/L as CaCO3 115
CO3 mg/lL as CaCO3 0.0
Cl mg/L <100
SO4 mg/L 1660
TDS mg/L 2590
pH 8.13
Conductivity (ms/cm) 2.70
2.5 Leach Optimisation (2005)

The leach optimisation at AMMTEC was approached in four rounds of tests:
• Optimisation of grind size.
• Optimisation of general conditions.
• Evaluation of effect of pulp density.
• Optimisation of cyanide concentration.
5 April 2007 14 of 133

Prior to commencing a round of tests, the results from the previous round were assessed
and conditions selected for the subsequent work.
2.5.1 Grind Size

Oxidised Vein
Portions of the oxidised leach optimisation composite sample were leached at various
grind sizes. All tests were conducted at 40% pulp density, pH 10.5 and an initial cyanide
concentration of 0.05%, with cyanide concentration maintained above 0.025%. Table 2.6
summarises the results for extractions after 24 hours and 48 hours.
Table 2.6 Oxidised Vein Leach Results at Various Grinds
Target Grind µm 38 53 75 106 106 150

Actual Grind µm - 45 71 92 106 149
24 h Au extraction % 93.4 90.0 89.1 89.0 85.4 80.4

48 h Au extraction % 96.3 94.3 92.4 91.4 89.5 87.0
24 h Ag extraction % 76.2 72.7 73.4 74.6 66.4 69.1
48 h Ag extraction % 81.3 77.5 78.5 80.3 78.9 75.4
There is a trend of increasing extraction with decreasing grind size. The actual sizing of
the material with a target grind of 38 µm was suspect and as this size is below any likely
selection for the project, the results have not been included in the assessment. Results
from the remaining tests are plotted in Figure 2.1.
Figure 2.1 Oxidised Vein Leach Results at Various Grinds
5 April 2007 15 of 133

Linear trendlines were fitted to the results and leach extraction versus grind relationships
established for use in the grind assessment.
The criteria shown in Table 2.7 were used to compare the value of increased extraction of
gold and silver with the cost of grinding finer.
While some of these criteria have since been superseded, they represented the best
information available at the time of the assessment.
Table 2.7 Criteria Used for Grind Size Assessment
Criterion Unit Value Source
Project throughput tpa 730 000 Preliminary assessment: process design basis
Gold head grade g/t 3.4 Preliminary assessment: mineral resources
Silver head grade g/t 30 Preliminary assessment: mineral resources
Gold price $/oz 500 Spot price at time of assessment
Silver price $/oz 8.50 Spot price at time of assessment
Bond ball mill work index – kWh/t 19.4 Preliminary AMMTEC results
oxidised vein
Bond ball mill work index – kWh/t 18.5 Preliminary AMMTEC results
unoxidised vein
Abrasion index – oxidised 0.6 Preliminary AMMTEC results
and unoxidised vein
Preliminary assessment, adjusted for fuel price
Power cost $/kWh 0.15
increase
Grinding media cost $/t 700 Ausenco database
Mill liner cost $/t 5000 Ausenco database
Mill capital cost $/kW 1000 Rule-of-thumb
Application of the leach extraction versus grind relationships to these criteria is presented
in Table 2.8. All costs and revenues are calculated on an incremental basis for grinding
finer than 149 µm. As a means of introducing the mill capital cost to the assessment,
which is otherwise incremental revenue less incremental operating cost, an approximate
incremental mill capital cost is depreciated over a period of two years and converted to a
“$/t” basis.
5 April 2007 16 of 133

Table 2.8 Oxidised Vein Size Optimisation
Actual Grind µm 45 71 92 106 149

Costs
Incremental power kWh/t 13.98 7.13 4.33 2.95 -
Incremental power cost US$/t 2.10 1.07 0.65 0.44 -
Incremental media cost US$/t 0.77 0.39 0.24 0.16 -
Incremental liner cost US$/t 0.55 0.28 0.17 0.12 -
Incremental mill size kW 1276 651 395 269 -
Incremental mill capital cost $/t 0.87 0.45 0.27 0.18 -
Overall incremental cost $/t 4.30 2.19 1.33 0.91 -
Revenue - 24 h Leach Basis
Incremental gold extraction % 10.0 7.5 5.5 4.1 -
Incremental silver extraction % 5.2 3.9 2.8 2.1 -
Incremental revenue $/t 5.87 4.40 3.21 2.42 -
Incremental revenue less cost $/t 1.57 2.21 1.88 1.52 -
Incremental revenue less cost $/t -0.08 0.97 0.98 0.84 -
The incremental revenue less cost figures are plotted in Figure 2.2. It should be noted
that the graph only compares incremental revenue and cost between the grind size and
149 µm and does not provide any comparison of leach residence times.
Figure 2.2 Oxidised Vein Size Optimisation
5 April 2007 17 of 133

Unoxidised Vein
Portions of the unoxidised leach optimisation composite sample were leached at various
grind sizes. All tests were conducted at 40% pulp density, pH 10.5 and an initial cyanide
concentration of 0.05%, with cyanide concentration maintained above 0.025%. Table 2.9
summarises the results for extractions after 24 hours and 48 hours.
Table 2.9 Unoxidised Vein Leach Results at Various Grinds
Target Grind µm 38 53 75 106 106 150

Actual Grind µm - 47 75 94 106 155
24 h Au extraction % 96.0 94.9 91.3 91.1 84.4 82.5

48 h Au extraction % 97.3 96.9 94.4 92.6 89.1 86.7
24 h Ag extraction % 70.2 64.1 66.6 67.1 63.0 61.8
48 h Ag extraction % 76.8 73.0 75.1 79.7 70.8 69.8
As for the oxidised vein sample, there is a trend of increasing extraction with decreasing
grind size. The actual sizing of the material with a target grind of 38 µm was again
suspect and the results from this test were omitted from the grind size assessment.
Results from the remaining tests are plotted in Figure 2.3 with linear trendlines fitted to the
results to establish leach extraction versus grind relationships for use in the grind
assessment.
Figure 2.3 Unoxidised Vein Leach Results at Various Grinds
The criteria in Table 2.7 were used again to compare the value of increased gold and
silver recovery with the cost of grinding finer for unoxidised vein.
Application of the results of the leach tests to these criteria is presented in Table 2.5.5. All
costs and revenues are calculated on an incremental basis for grinding finer than 155 µm.
5 April 2007 18 of 133

Table 2.10 Unoxidised Vein Size Optimisation
Actual Grind µm 47 75 94 106 155

Costs
Incremental power kWh/t 12.91 6.46 4.22 3.11 -
Incremental power cost US$/t 1.94 0.97 0.63 0.47 -
Incremental media cost US$/t 0.71 0.36 0.23 0.17 -
Incremental liner cost US$/t 0.51 0.26 0.17 0.12 -
Incremental mill size kW 1178 589 385 284 -
Incremental mill capital cost $/t 0.81 0.40 0.26 0.19 -
Overall incremental cost $/t 3.97 1.99 1.30 0.96 -
The incremental revenue less cost figures are plotted in Figure 2.4.
Figure 2.4 Unoxidised Vein Size Optimisation
5 April 2007 19 of 133

Grind Size Selection

A preliminary assessment of the value of increased gold and silver recovery with the cost
of grinding finer was made as the results from the above tests became available, to form
the basis for the following leach optimisation tests. At this stage, a grind of 80% passing
90 µm was selected for both oxidised and unoxidised vein samples.
The preliminary assessment was reviewed prior to commencing variability leach testing,
in light of significant increases in the spot prices of gold and silver and fresh Bond ball mill
work index results. The criteria shown in Table 2.7 were used at this time. These criteria,
when applied to the results from the leach optimisation tests provided the incremental
revenue less incremental cost data shown in Figure 2.2 and Figure 2.4. The graphs
indicate that a grind of 80% passing 75 µm offers the optimal balance between increased
revenue and increased cost from grinding finer for the oxidised and unoxidised vein
samples, when leaching for 24 hours or 48 hours. (Note that 75 µm is the standard sieve
size to which the peak of these curves are closest. Under normal circumstances,
standard sieve sizes are preferred selections, due to ready availability of testing
equipment.)
Based on the results from leaching the oxidised and unoxidised vein samples and the
above analysis, the grind size selection was modified to 80% passing 75 µm.
2.5.2 CIL
CIL tests at a nominal grind of 80% passing 75 µm were conducted in parallel with the
grind optimisation tests to assess whether the material has any preg-robbing
characteristics. The tests were conducted at 40% pulp density, pH 10.5 and an initial
cyanide concentration of 0.05%, with cyanide concentration maintained above 0.025%.
Table 2.11 summarises the results of the carbon-in-leach tests and provides a
comparison with the direct leach tests under the otherwise same conditions.
Table 2.11 Carbon-in-Leach Test Results Summary
Leach Extraction, %
Sample Test
24 h Au 24 h Ag 48 h Au 48 h Ag
Oxidised Vein CIL 89.5 91.2 92.4 90.4
Leach 89.1 73.4 92.4 78.5
Unoxidised Vein CIL 89.3 81.4 92.0 86.1
Leach 91.3 66.6 94.4 75.1
The results do not indicate significant preg-robbing and there is no clear improvement in
gold recovery in the presence of carbon. Silver extraction rates appear to improve in the
presence of carbon.
Ausenco’s experience of projects with silver:gold ratios in the order of 10:1 has been that
a Merrill Crowe circuit provides a more cost effective flowsheet than CIL. As there
appeared to be no advantage, in terms of gold recovery, to leaching in the presence of
carbon, it was decided to proceed with testwork, using leach tests without carbon
addition, which are applicable to the Merrill Crowe process. Such leach tests are also
applicable to the CIL process, but could be expected to provide a conservative result in
terms of silver extraction, in this case. Proceeding with testwork, using CIL tests, would
5 April 2007 20 of 133

have otherwise added significantly to the complexity and cost of the testwork programme
and the results would not have been applicable to the Merrill Crowe process.
2.5.3 General Leach Conditions

The effect of 4 hours of pre-aeration, dosing with 100 g/t lead nitrate, sparging with
oxygen and combining gravity recovery with leaching were assessed. All tests were
conducted at a grind of 80% passing 90 µm, 40% pulp density, pH 10.5 and an initial
cyanide concentration of 0.05%, with cyanide concentration maintained above 0.025%.
The material for gravity tests was ground to 80% passing 150 µm for gravity separation
using a laboratory scale, Knelson 3” separator. The concentrate was amalgamated and
amalgam tails combined with gravity tails before grinding to 80% passing 90 µm and
subsequently leaching. The gold recovery to amalgam was 7.7% from the oxidised vein
sample and 10.4% for the unoxidised vein.
The test results are summarised in Table 2.12 and compared with the results from the test
at the same grind size from the grind optimisation, the “control” test. Note that the
reported leach extractions include recovery of gold and silver to amalgam, in the case of
the gravity tests.
Table 2.12 General Leach Conditions Test Results Summary
Leach Extraction, %
Sample Test (recovery to amalgam included for gravity tests)
24 h Au 24 h Ag 48 h Au 48 h Ag
Oxidised Vein Control 89.0 74.6 91.4 80.3
Gravity Lead 87.4 74.2 91.5 82.5
Nitrate 90.6 79.8 91.8 83.8
Preaeration 87.1 75.3 91.3 79.1
Oxygen 92.8 77.1 92.3 82.1
Unoxidised Vein Control 91.1 67.1 92.6 79.7

Gravity Lead 91.2 65.2 92.4 75.9
Nitrate 90.3 66.9 92.5 75.7
Preaeration 87.2 62.3 91.9 71.7
Oxygen 93.6 68.3 93.4 79.8
The results summarised in Table 2.12 indicate no benefit from combining gravity with
leaching or from pre-aerating. Lead nitrate is shown to offer an improvement, compared
to the control test, for oxidised vein, but not for unoxidised vein. The results indicate that
oxygen sparging offers the best gold extraction in all cases and the best silver extraction,
with the exception of lead nitrate of oxidised vein.
On the basis of the results summarised in Table 2.12, the value of increased extraction
with oxygen sparging justifies the capital and operating costs associated with its inclusion.
Consequently, oxygen sparging has been used in subsequent testwork.
2.5.4 Pulp Density Evaluation

In the event that Merrill Crowe was to be the selected process, it is considered likely that
a pre-leach thickener would be justified and an evaluation was conducted of the effect of
pulp density on leach performance. Tests were conducted at pulp densities of 45% and
5 April 2007 21 of 133

50% solids and compared with results from the previous test at 40% solids. All tests were
conducted at a grind of 80% passing 90 µm, pH 10.5, a dissolved oxygen level of 20 – 25
ppm with oxygen sparging and an initial cyanide concentration of 0.05%, with cyanide
concentration maintained above 0.025%. Table 2.13 summarises the results of tests to
evaluate effect of pulp density.
Table 2.13 Pulp Density Evaluation Result Summary
Leach Extraction, %
Sample Pulp Density
24 h Au 24 h Ag 48 h Au 48 h Ag
Oxidised Vein 40% solids 89.0 74.6 91.4 80.3
45% solids 90.5 76.3 90.5 84.5
50% solids 89.7 70.5 91.1 82.9
Unoxidised Vein 40% solids 91.1 67.1 92.6 79.7
45% solids 92.4 64.0 92.4 74.9
50% solids 93.5 64.6 92.9 79.3
Table 2.13 indicates that use of higher pulp densities, up to 50% solids, has no
discernable affect upon leach performance. Consequently, a pulp density of 50% solids
was used in subsequent testwork.
2.5.5 Cyanide Concentration Evaluation

The sensitivity of leach performance to cyanide concentration was examined to provide
an indication of optimum cyanide consumption and to provide design criteria for cyanide
detoxification. All tests were conducted at a grind of 80% passing 90 µm, pH 10.5, a
dissolved oxygen level of 20 – 25 ppm and 50% solids. The following cyanide
concentrations were compared:
• Initial concentration of 0.025% and maintained above 0.015%.
• Initial concentration of 0.05% and maintained above 0.025% (as used in all prior
tests).
5 April 2007 22 of 133

Table 2.14 summarises the results of these tests.
Table 2.14 Cyanide Concentration Evaluation Result Summary
Cyanide Leach Extraction, %

Sample Concentration,
% Initial/maintain 24 h Au 24 h Ag 48 h Au 48 h Ag
Oxidised Vein 0.025/0.015 84.2 69.0 86.9 79.8

0.035/0.2 87.0 73.1 93.1 84.8
0.05/0.025 89.7 70.5 91.1 82.9
0.075/.004 92.0 79.7 91.6 87.9
Unoxidised Vein 0.025/0.015 87.5 60.7 92.1 75.5
0.035/0.2 89.9 67.0 93.1 79.5
0.05/0.025 93.5 64.6 92.9 79.3
0.075/0.04 88.7 71.2 93.0 85.7
The results in Table 2.14 suggest a trend of increasing extraction with increasing cyanide
concentration. Evaluation of the value of increased recovery with cost of increased
cyanide dosage led to selection of an initial cyanide concentration of 0.05%, maintained
above 0.025%, for ongoing work.
2.6 Variability Leach Testing

A total 38 variability samples were subjected to vat leaching using oxygen injection, an
initial cyanide concentration of 0.05%, maintained above 0.025% and a grind size of 80%
passing 75 µm. The results are summarised in Table 2.15.
5 April 2007 23 of 133

Table 2.15 Variability Leach Test Results
Gold Silver
Sample
Ore Type Calc’d 24 h 48 h Calc’d 24 h 48 h
No. Residue Residue
Head Extr’n Extr’n Head Extr’n Extr’n
g/t g/t
g/t % % g/t % %
Cal-3 Oxidised 1.21 99.9 96.8 0.04 5.2 90.1 86.6 0.7
Cal-4 vein 1.65 86.1 85.7 0.24 23.4 80.4 81.2 4.4
Cal-5 2.03 87.1 89.8 0.21 7.3 78.1 83.6 1.2
Cal-6 2.67 90.0 88.8 0.30 11.6 97.4 89.6 1.2
Cal-7 2.03 83.0 87.1 0.26 34.1 89.8 95.0 1.7
Cal-8 4.42 99.0 95.5 0.20 50.2 81.5 79.7 10.2
Cal-9 6.52 95.3 93.9 0.40 47.2 80.9 78.2 10.3
Cal-10 5.62 92.7 87.8 0.69 96.8 51.5 54.5 44.0
Cal-11 Unoxidised 1.15 93.9 92.0 0.09 12.4 83.0 84.6 1.9
Cal-12 vein 1.12 90.2 96.2 0.04 9.2 72.4 78.3 2.0
Cal-13 2.49 92.1 92.6 0.18 44.1 75.3 83.4 7.3
Cal-14 2.15 95.1 96.0 0.09 48.3 62.2 78.1 10.6
Cal-15 6.05 69.7 92.7 0.45 72.0 41.9 62.5 27.0
Cal-16 5.18 85.5 85.2 0.77 18.4 81.6 84.8 2.8
Cal-17 5.30 88.6 86.2 0.32 16.7 88.6 86.3 2.3
Cal-18 4.88 95.9 92.7 0.35 50.0 78.5 87.4 6.3
Cal-19 Oxidised 0.98 85.1 86.2 0.14 2.1 94.2 95.2 0.1
Cal-20 mineralised 1.16 96.2 91.9 0.09 8.7 78.3 81.7 1.6
Cal-21 andesite 2.81 98.1 93.9 0.17 174.5 49.7 76.5 41.0
Cal-22 0.95 87.1 88.6 0.11 26.0 91.5 95.0 1.3
Cal-23 Unoxidised 0.97 95.1 91.0 0.09 4.7 63.2 62.9 1.7
Cal-24 mineralised 1.16 95.2 93.1 0.06 9.0 66.1 71.0 2.6
Cal-25 andesite 0.21 95.1 89.3 0.02 3.6 60.1 58.5 1.5
Cal-26 3.62 94.8 91.9 0.30 31.7 59.7 61.9 12.1
Cal-27 Oxidised 2.80 97.9 94.6 0.15 29.2 80.8 82.6 5.1
Cal-28 vein 4.04 88.5 89.3 0.43 9.9 73.4 75.8 2.4
Cal-29 4.67 90.0 91.5 0.40 43.5 78.4 83.9 7.0
Cal-30 3.98 89.4 92.3 0.31 25.6 68.0 83.6 4.2
Cal-31 Unoxidised 4.46 81.5 91.5 0.38 10.7 65.4 78.5 2.3
Cal-32 vein 5.59 91.3 92.6 0.41 49.7 78.2 88.5 5.7
Cal-33 5.40 89.0 90.3 0.52 26.5 67.1 79.6 5.4
Cal-34 7.02 78.9 86.2 0.97 40.3 54.6 60.3 16.0
Cal-35 Oxidised 0.37 85.2 85.7 0.05 11.9 90.9 92.5 0.9
Cal-36 mineralised 0.65 91.3 93.2 0.04 10.2 71.8 74.4 2.6
Cal-37 andesite 0.97 91.6 94.4 0.05 16.3 76.6 82.8 2.8
Cal-38 Unoxidised 0.12 82.2 82.2 0.02 2.6 68.1 69.4 0.8
Cal-39 mineralised 0.41 92.4 88.5 0.05 7.1 79.1 77.5 1.6
Cal-40 andesite 1.42 91.5 92.6 0.11 16.4 75.9 79.9 3.3
5 April 2007 24 of 133

The laboratory noted high slurry viscosity when testing the following samples:
• Oxidised vein: Cal-27, Cal-29 and Cal-30.
• Unoxidised vein: Cal-31 and Cal-34.
• Oxidised mineralised andesite: Cal-19, Cal-22, Cal-35, Cal-36 and Cal-37.
• Unoxidised mineralised andesite: Cal-38, Cal-39 and Cal-40.
It was necessary to reduce the pulp density used in the leaching tests for Cal-22, Cal-37
and Cal-38 to 40% solids, because the viscosity of the pulp at 50% solids was too high for
effective agitation.
The silver extraction kinetics were found to range from comparatively fast to quite slow
throughout the variability testwork programme. This may be the result of the presence of
silver in different forms, which perform quite differently with cyanidation.
2.7 Diagnostic Leaching

Diagnostic analysis was performed on the leach residues obtained from some of the tests
performed to evaluate the effect of cyanide concentration. Diagnostic analysis involves
leaching the residue for 48 hours using a relatively high concentration of cyanide to
indicate “free gold” content, followed by aqua regia analysis of the residue to determine
“sulphidic gold” and finally fire assay of the aqua regia residue to measure “silicate gold.”
Details of the test results are contained in AMMTEC’s report. They indicate significant
proportions of the leach residue gold present in the sulphidic and silicate components. As
the concentration of cyanide used in the leaching tests decreased, the residual “free gold”
tended to increase, perhaps indicating incomplete gold dissolution during the leaching
process.
2.8 Flotation Testwork

The two main composite samples (Cal-1 and Cal-2) were tested for their response to
flotation. The tests were simple sighter tests to evaluate the potential for using flotation.
While the recovery of gold and silver could be improved with optimisation, the recoveries
were poor and not considered encouraging.
Summaries of the results of the flotation tests on Cal-1 and Cal-2 are shown in Table 2.16
and Table 2.17, respectively.
5 April 2007 25 of 133

Table 2.16 Flotation Results for Cal-1
Mass Gold Silver Sulphur

Product
Distribution Grade Dist’n Grade Dist’n Grade Dist’n
% g/t % g/t % % %
Con-1 4.9 26.9 43.9 359 51.9 8.49 43.1
Con-2 1.6 9.8 5.1 129 6.0 7.14 11.6
Con-3 2.5 4.0 3.4 59 4.4 3.48 9.2
Tails 91.0 1.6 47.6 14 37.8 0.38 36.0
Calc’d Head 100.0 3.0 100.0 34 100.0 0.96 100.0
Table 2.17 Flotation Results for Cal-2
Mass Gold Silver Sulphur

Product
Distribution Grade Dist’n Grade Dist’n Grade Dist’n
% g/t % g/t % % %
Con-1 2.7 48.7 43.4 671 49.7 13.90 61.0
Con-2 1.5 12.9 6.6 178 7.6 4.42 11.1
Con-3 1.2 7.2 2.8 106 3.4 2.40 4.5
Tails 94.6 1.5 47.3 15 39.3 0.15 23.3
Calc’d Head 100.0 3.0 100.0 36 100.0 0.61 100.0
Diagnostic leach tests were performed on the flotation tails fractions from both samples to
assess the distribution of the remaining gold. Most of the gold was indicated to be “free,”
73% in the case of Cal-1 and 69% with Cal-2.
2.9 Comminution Testing

2.9.1 Unconfined Compressive Strength
A number of pieces of core were selected for Unconfined Compressive Strength (UCS)
Tests. Samples Cal-28, Cal-29 (both oxidised vein) and Cal-38 (unoxidised mineralised
andesite) were too friable to test. Table 2.18 shows the results, with a descriptive
classification.
5 April 2007 26 of 133

Table 2.18 UCS Test Results
Sample No. Material UCS MPa Classification
Cal-27 Oxidised vein 22.7 Medium strong
Cal-30 Oxidised vein >170 Too hard to measure
Cal-31 Unoxidised vein 33.5 Medium strong
Cal-34 Unoxidised vein 75.0 Strong
Cal-35 Oxidised mineralised andesite 38.0 Medium strong
Cal-36 Oxidised mineralised andesite 19.7 Weak
Cal-37 Oxidised mineralised andesite 17.5 Weak
Cal-39 Unoxidised mineralised andesite 12.8 Weak
Cal-40 Unoxidised mineralised andesite 25.2 Medium strong
Cal-46-a Unoxidised vein 59.1 Medium strong
Cal-46-b Unoxidised vein 64.1 Strong
Cal-46-c Unoxidised vein 84.2 Strong
Cal-46-d Unoxidised vein 79.2 Strong
Cal-46-e Unoxidised vein 44.0 Medium strong
2.9.2 Bond Rod and Ball Mill Work Indices and Abrasion Indices
A number of samples were tested to provide Bond rod mill work indices, Bond ball mill
work indices and abrasion indices, as shown in Table 2.19.
5 April 2007 27 of 133

Table 2.19 Bond Rod and Ball Mill Indices and Abrasion Indices
Sample No. Ore Type Rod Mill WI Ball Mill WI Abrasion Index
kWh/t kWh/t
Cal-27 Oxidised vein 18.9 17.1 0.574
Cal-31 Unoxidised vein 13.4 13.5 0.275
Cal-35 Oxidised mineralised andesite 16.8 15.7 0.161
Cal-38 Unoxidised mineralised andesite 12.3 9.2 0.111
The rod and ball mill indices suggest that vein material is hard and competent, while the
mineralised andesite has medium hardness and competency.
The abrasion indices indicate the following:
• Oxidised vein: abrasive.
• Unoxidised vein: generally abrasive with one very abrasive and one slightly
abrasive result.
• Oxidised mineralised andesite: slightly abrasive.
• Unoxidised mineralised andesite : slightly abrasive.
2.9.3 Autogenous Media Competency Test

A sample of unoxidised vein (Cal-46) was subjected to an Autogenous Media
Competency (AMC) Test. A summary of the test results is shown in Table 2.20.
5 April 2007 28 of 133

Table 2.20 AMC Test Results Summary
Energy CWi CWi CWi CWi CWi

Consumption -101+76 mm -76+51 mm -51+38 mm -38+25 mm -25+19 mm
kWh/t kWh/t kWh/t kWh/t kWh/t kWh/t
Av. Max. Av. Max. Av. Max. Av. Max. Av. Max.
3.62 19.7 24.8 13.8 23.7 11.6 20.9 9.2 20.5 8.5 14.8
The AMC test is used to assess the suitability of a SAG mill to grind the material. None of
the results in Table 2.20 raise any concern with the application of SAG milling.
2.9.4 SMC Tests

Samples of each of the main ore types were subjected to the SAG Mill Comminution
(SMC) test to assist with evaluating the comminution characteristics for the different
materials. A summary of the results is given in Table 2.21.
Table 2.21 SMC Test Results Summary
Sample DWi Ax6 t10 @ 1 kWh/t

Oxidised vein 4.8 51.5 37.1
Unoxidised vein 6.4 40.0 32.2
Oxidised mineralised andesite 2.6 89.2 45.1
Unoxidised mineralised andesite 4.9 51.5 36.4
The Drop Weight Index (DWi) measurements typically range from 2 to 12, with softer ores
being at the low end of the scale. The unoxidised vein is seen to be in the middle of the
range and the other samples are in the lower half of the range.
The Ax6 value is a measure of resistance to breakage, with higher values indicating softer
material. The results indicate the following:
• Oxidised vein sample: medium hardness.
• Unoxidised vein sample: moderately hard.
• Oxidised mineralised andesite sample: soft.
• Uunoxidised mineralised andesite sample: medium hardness.
The t10 at 1 kWh/t values indicate the following:
• Oxidised vein sample: moderately soft.
• Unoxidised vein sample: medium hardness.
• Oxidised mineralised andesite sample: soft.
• Unoxidised mineralised andesite sample: moderately soft.
5 April 2007 29 of 133

2.10 Testing for Engineering Data

2.10.1 Oxygen Uptake
Splits of the main composite samples (Cal-1 and Cal-2) were milled to a P80 of 75 µm
and tested for oxygen uptake. The results are summarised in Table 2.22 and indicate low
oxygen consumption for both samples.
Table 2.22 Oxygen Uptake Results
Oxygen Consumption mg/L

Sample
0h 1h 2h 3h 4h 5h 6h
Cal-1 -0.045 0.007 -0.009 -0.003 0.006 -0.004 0.008
Cal-2 -0.030 0.023 0.015 0.014 -0.008 -0.001 -0.009
2.10.2 Carbon Sequential Loading Test

Splits of the main composite samples were milled to a P80 of 75 µm, leached for 48 hours
and subjected to carbon sequential loading tests. The results are summarised in Table
2.23 and are considered typical for gold-silver ores.
Table 2.23 Carbon Loading Kinetics
Gold Silver
Sample Fleming k h-
Fleming k h-1 Fleming n Fleming n
1
Cal-1 151.5 0.714 96.9 0.703

Cal-2 183.8 0.630 84.1 0.656
2.10.3 Viscosity Testing

Splits of the main composite samples were leached for 48 hours at a P80 of 75 µm and
slurry viscosity was measured over a range of pulp densities, using a Bohlin Visco 88
viscometer. A summary is shown in Table 2.24.
Table 2.24 Viscosity Measurements
Shear 4.2 s-1 7.3 s-1 12.7 s- 22.4 39.1 68.3 119.5 209 s-1
rate 1 s-1 s-1 s-1 s-1
Sample
% Viscosity (cP)
solids
60 10 680 6065 3650 2380 1465 949 598 371
Cal-1 50 1938 1162 713 456 284 177 128 116
40 458 320 183 119 73 59 53 63
60 3047 1803 1106 728 454 286 182 175
Cal-2 50 479 294 194 125 80 68 64 78
40 n/a n/a n/a n/a n/a 31 38 48
It was noted by the laboratory that some of the variability samples, when undergoing
leach tests, demonstrated excessively high viscosity (refer to Section 2.6).
5 April 2007 30 of 133

2.10.4 Settling Tests

A number of samples were subjected to settling tests in a measuring cylinder to ascertain
the settling rates. A dose of 40 g/t Magnafloc 5250 flocculant was used in each test.
Composites of each ore type were tested at grinds of both 80% passing 75 µm and 90
µm, in an attempt to correlate the results with those from the thickening testwork, which
was performed at a grind of 80% passing 90 µm. The settling test results are shown in
Table 2.25.
Table 2.25 Settling Test Results
Grind
Initial % Free Settling
Sample Ore Type size, P80 Final % Solids
Solids Rate m/h
µm
90 10.3 44.1 7.3

Cal-1 Oxidised vein
75 10.1 43.1 7.1
90 10.4 50.8 8.2
Cal-2 Unoxidised vein
75 10.5 46.7 4.1
90 10.1 41.1 6.5
Oxidised mineralised andesite
75 10.6 43.5 6.6
90 10.0 38.9 4.5
Unoxidised mineralised andesite
75 11.0 41.9 2.2
Cal-27 9.9 45.6 8.3
Cal-28 9.7 48.0 7.8
Oxidised vein
Cal-29 75 9.9 39.7 7.2
Cal-30 9.4 43.0 7.1
Cal-31 9.9 44.8 7.4
Cal-32 75 9.9 46.9 7.4
Unoxidised vein
Cal-33 10.0 47.1 6.6
Cal-34 10.2 49.9 7.6
Cal-35 Oxidised 9.7 38.2 3.1
Cal-36 mineralised 75 9.9 47.4 6.7
Cal-37 andesite 9.2 34.4 1.7
Cal-38 Unoxidised 10.4 41.1 1.9
Cal-39 mineralised 75 9.8 40.0 2.6
Cal-40 andesite 10.6 45.3 4.3
2.11 Cyanide Detoxification

Splits of the main composite samples were milled to a P80 of 75 µm, leached for 48 hours
in preparation for air-SO2 cyanide detoxification tests. Laboratory scale continuous
cyanide detoxification tests were conducted on the slurries at a pulp density of 50%
solids.
5 April 2007 31 of 133

At the time that the testwork was undertaken, precious metal recovery was thought more
likely to involve Merrill Crowe in the final design rather than CIP processing. 40 ppm zinc
was added to portions of the leach residue slurries to simulate the recirculation of barren
solution from a zinc precipitation circuit into the leach circuit.
The results from testing the Cal-1 and Cal-2 composite samples are summarised in Table
2.26 and Table 2.27, respectively.
Table 2.26 Cyanide Detoxification Tests on Cal-1
Test Conditions Solution Assays

SO2 Lime Feed Treated
Retention g/g CuSO4.5H2O g/g CNWAD CNP
Slurry Type pH Time min CNWAD mg/L SO2 mg/L mg/L
Merrill 9.13 57 4.04 0 0.71 153 0.10

Crowe 9.33 58 3.34 0 0.37 153 1.93
9.59 59 2.67 0 0.00 153 9.38
CIP 9.19 58 3.64 0 0.19 153 0.65
Note that CNP is equivalent to weak acid dissociable cyanide(CNWAD).
Table 2.27 Cyanide Detoxification Tests on Cal-2
Test Conditions Solution Assays

Feed Treated
Slurry Retention SO2 g/g CuSO4.5H2O Lime CNWAD CNP
Type pH Time min CNWAD mg/L g/g SO2 mg/L mg/L
9.12 3.99 0.82 144 24.7
Merrill 57 58 0 27
9.00 4.28 n/a 144 0.10
Crowe
9.21 56 3.15 26 0.97 144 71.1
CIP 9.07 56 4.18 25 0.95 139 0.81
For Cal-1, a dose of 4.04 g SO2 per g CNWAD reduced the CNWAD to <0.5 ppm in all cases,
while a lower dose of 3.34 g SO2 per g CNWAD resulted in an effluent containing generally
<2 ppm CNWAD with one measurement at 8.2 ppm CNWAD. Further reduction of the SO2
dosage, resulted in the system becoming unstable with a progressive worsening of
detoxification performance.
For Cal-2, a dose of 4.28 g SO2 per g CNWAD reduced the CNWAD to <0.5 ppm in all cases,
while a lower dose of 3.15 g SO2 per g CNWAD resulted in the system becoming unstable
and a progressive worsening of detoxification performance.
The target retention time of 60 minutes was adequate to produce treated effluents
containing relatively low levels of CNWAD.
The Cal-2 samples contained insufficient copper in the leach solution to catalyse the
detoxification reaction and addition of copper in the form of copper sulphate was found to
be necessary.
The effect of zinc in the leach solutions on cyanide detoxification performance was found
to be minimal.
5 April 2007 32 of 133

2.12 Heap Leach Testing

Samples of oxidised mineralised andesite and unoxidised mineralised andesite were
leached for five days at coarse crush sizes to assess amenability for treating by heap
leach. The results are summarised in Table 2.28. The head grades of the samples were
much lower than intended. A trend of increasing gold extraction with finer crush size is
evident; although poor leach extraction was found in all tests.
Table 2.28 Coarse Bottle Roll Leaches
Crush Size Calculated Head 120 h Gold Leach Residue

Sample mm g/t Extraction % g/t
Oxidised 25 0.35 27.6 0.26
mineralised 12.5 0.33 35.2 0.22
andesite 6.3 0.29 55.1 0.13
Unoxidised 25 0.17 27.8 0.13
mineralised 12.5 0.19 5.4 0.18
andesite 6.3 0.12 48.4 0.06
The testwork programme had allowed for a column leach test on each sample at a
selected crush size. However, it was decided not to proceed with this work, as the
sample grades were below that of a likely feed to a heap leach operation.
The testwork programme had also provided for heap leaching on oxidised and unoxidised
vein material, but samples were not available for this work.
2.13 Material Handling Characterisation

A sample of oxidised mineralised andesite was selected, as this was expected to have the
worst physical handling characteristics. The sample was sent to TUNRA at the University
of Newcastle in NSW for testing to obtain information to assist with design of stockpiles,
bins and chutes.
The sample was classified by TUNRA as a difficult handling material.
2.14 Vendor Testwork

Samples were prepared and sent by AMMTEC to the following equipment vendors:
• Outokumpu for high rate thickening testwork.
• Delkor for belt filtration testwork.
• Gekko for gravity and flotation testwork.
Testwork reports by each of these vendors are contained in Appendix 2.
2.14.1 Outokumpu
Four samples of leach residue were prepared for testwork at Outokumpu to assess their
likely performance in a high rate thickener:
• Oxidised vein: a portion of Cal-1.
5 April 2007 33 of 133

• Unoxidised vein: a portion of Cal-2.

• Oxidised mineralised andesite: a composite made from portions of Cal-35, Cal-36
and Cal-37.
• Unoxidised mineralised andesite: a composite made from portions of Cal-38, Cal-
39 and Cal-40.
The samples were intended to have been ground to 80% passing 90 µm, the preliminary
grind size selection. However, laser sizing by the CSIRO Malvern® laser indicated the
P80 sizes shown in Table 2.29.
Table 2.29 Outokumpu Samples Laser Sizing Results
Material 80% passing, µm

Oxidised vein 100
Unoxidised vein 140
Oxidised mineralised andesite 49
Unoxidised mineralised andesite 35
Flocculant screening indicated that, of the flocculants tested, Magnafloc 5250 was suited
to the samples. A feed density of 10% solids was selected with the Magnafloc 5250.
Bench scale dynamic thickening testwork was conducted on the four samples using
Outokumpu’s 94 mm diameter unit. The results are shown in Table 2.30.
5 April 2007 34 of 133

Table 2.30 Outokumpu Dynamic Thickening Test Results
Solids Underflow
Rise Rate Flocculant Overflow
Material Loading Density %
m/h Dose g/t Clarity ppm
t/m2h solids
0.81 7.5 21 56 60
Oxidised vein 0.81 7.5 32 57 40
1.08 9.4 30 55 50
1.01 9.3 43 56 50
0.85 7.5 31 65 100
Unoxidised 0.81 7.5 43 64 120
vein 1.00 9.0 33 62 130
1.01 8.8 43 63 170
0.81 7.6 32 52 100
Oxidised 0.77 7.4 44 53 60
mineralised 0.61 5.7 32 53 90
andesite 0.61 5.7 43 53 120
0.40 3.8 44 54 90
0.80 7.5 33 51 130
Unoxidised 0.82 7.6 42 51 100
mineralised 0.60 5.8 32 51 100
andesite 0.58 5.7 44 52 60
0.40 3.6 32 51 60
Except for the unoxidised vein sample, the underflow densities achieved in these tests
were relatively poor. It should be noted that both oxidised and unoxidised mineralised
andesite samples were ground finer than intended which was likely to have had an
adverse effect on the thickening characteristics of the samples. Conversely, the oxidised
and unoxidised vein samples were both coarser than the optimum grind, now considered
to be 75 µm, and this could be expected to result in overly optimistic test results.
In the Merrill Crowe process, solid liquid separation is performed in the counter current
decantation circuit, commonly in thickeners. Relatively low underflow densities result in
low stage washing efficiencies in such a circuit, leading to high soluble gold and silver
losses.
2.14.2 Delkor
Two samples of leach residue from portions of Cal-1 and Cal-2 were prepared for
testwork at Delkor to assess their likely performance in a horizontal belt filter. Belt filters
may be used for solid liquid separation in a Merrill Crowe circuit, as an alternative to
thickeners. The target particle size for these samples was 90 µm.
Cal-1 was found to filter poorly under vacuum and Cal-2 to filter reasonably well.
It is unlikely that mineralised andesite samples would filter satisfactorily and in light of the
performance of the Cal-1 sample, filtration testwork was not pursued.
5 April 2007 35 of 133

2.14.3 Gekko
A composite sample, containing similar proportions of oxidised vein (Cal-1) and
unoxidised vein (Cal-2) was prepared by AMMTEC and sent to Gekko in Victoria. Gekko
undertook a programme of testing to evaluate the potential for gold and silver recovery by
means of gravity and flotation.
Gekko conducted a number of tests using a shaking table:
• In the first test, the sample was crushed to 1.0 mm and tabled. Table tails were
reduced to 500 µm and tabled. The resulting tails were ground to 106 µm and
then tabled again. The concentrates (1.0 mm, 500 µm, 106 µm) were combined
and passed over the table five times, the results of which are shown in Table 2.31.
In the second test, the sample was crushed to 1.0 mm and passed over the table
four times. The results are shown in Table 2.32.
• The third test was the same as the second test, but the sample was finer (0.5
mm). The fourth test was a repeat of the third test. The results are shown in Table
2.33and Table 2.34.
Table 2.31 Gekko Progressive Grind Table Test
Cum. Cum.
Mass Grade Distribution Cum. Distr
Mass Grade
Fraction % % g Au/t g Au/t % %
Con 1 0.5 0.5 32.9 32.9 4.7 4.7
Con 2 0.9 1.4 4.5 14.1 1.3 6.0
Con 3 2.2 3.6 5.3 8.8 3.4 9.4
Con 4 3.0 6.6 5.1 7.1 4.6 14.0
Con 5 16.1 22.8 3.2 4.4 15.4 29.4
Table Tails 77.2 100.0 3.08 3.4 70.6 100.0
Feed Assay 3.28
Table 2.32 Gekko Single Pass Table Test at 1.0 mm
Cum. Cum. Cum.

Mass Grade Distribution
Mass Grade Distr.
Con 1 1.9 1.9 5.37 5.4 3.6 3.6
Con 2 1.5 3.5 3.31 4.5 1.8 5.4
Con 3 3.3 6.8 2.84 3.7 3.2 8.6
Con 4 11.5 18.3 3.46 3.5 13.8 22.3
Table Tails 81.7 100.0 2.75 2.9 77.7 100.0
Feed Assay 3.28
5 April 2007 36 of 133

Table 2.33 Gekko Single Pass Table Test at 0.5 mm
Cum. Cum. Cum.

Mass Grade Distr.
Con 1 0.9 0.9 13.70 13.7 3.7 3.7
Con 2 2.1 3.0 3.81 6.7 2.5 6.2
Con 3 3.6 6.6 3.98 5.2 4.5 10.7
Con 4 10.5 17.1 3.96 4.4 13.0 23.7
Table Tails 82.9 100.0 2.94 3.2 76.3 100
Feed Assay 3.28
Table 2.34 Gekko Repeat Single Pass Table Test at 0.5 mm
Cum. Cum. Cum.

Mass Grade Distr.
Con 1 1.6 1.6 21.90 21.9 10.1 10.1
Con 2 5.0 6.5 6.08 9.9 8.7 18.8
Con 3 6.0 12.5 3.46 6.8 6.0 24.8
Con 4 5.9 18.4 3.07 5.6 5.2 30.0
Table Tails 81.6 100.0 2.96 3.5 70.0 100.0
Feed Assay 3.28
In the four tests, only 22 to 30% of the gold reported to 17 to 22% of the mass. Only 3.6
to 10.1% of the gold reported to lower mass yields of 0.5 to 1.9%. This suggests that little
upgrading of the gold into low mass fractions can be achieved at these particle sizes.
The concentrate 2, 3, 4 and table tails fractions from the repeat single pass table test at
0.5 mm were combined and ground to 75 µm. The material was then passed through a 3”
Falcon concentrator. Results are shown in Table 2.35.
Table 2.35 Gekko Falcon Test at 75 µm
Cum. Cum.
Mass Grade Cum. Grade Distribution
Mass Distr.
Concentrate 0.6 0.6 104.0 104.0 24.3 24.3
Falcon Tails 99.4 100.0 2.08 2.7 75.7 100.0
Feed Assay 3.15
Only 24% of the remaining gold reported to concentrate, providing an overall gold
recovery of 34.4% by gravity to a concentrate comprising 2.2% of sample mass.
A flotation test was performed on the Falcon tails. Results are shown in Table 2.36.
5 April 2007 37 of 133

Table 2.36 Gekko Flotation Test at 75 µm
Cum. Cum.
Mass Distr.
Con 1 22.6 22.6 3.66 3.66 40.4 40.4
Con 2 8.9 31.6 4.94 4.02 21.5 61.9
Con 3 0.4 32.0 23.6 4.29 5.03 66.9
Flot’n Tails 68.0 100.0 1.00 2.05 33.1 100.0
Feed Assay 2.08
Gekko combined the results from Table 2.34, Table 2.35 and Table 2.36 to provide the
results shown in Table 2.37.
Table 2.37 Gekko Combined Results
Cum. Cum.
Mass Distr.
Table Con 1 1.7 1.7 21.90 21.9 12.2 12.2
Falcon Con 0.6 2.3 104.0 44.2 21.5 33.7
Flot’n Con 31.3 33.6 4.29 7.0 44.4 78.0
Flot’n Tails 66.4 100.0 1.00 3.0 22.0 100.0
Feed Assay 3.28
The combined results show a gold recovery of 78% into 33.6% of the original sample
mass at a grade of 7.0 g/t. While flotation increased the recovery of gold compared with
that obtained by gravity alone, it was at the expense of a high mass pull. The grade of the
combined concentrate, at 7.0 g/t, is only 2.3 times the calculated head grade.
2.15 Testwork at Universidad Nacional de San Juan

Two 30 kg samples were collected by AQI personnel to represent typical oxidised vein
and unoxidised vein deposits and dispatched to UNSJ for evaluation of gold and silver
recovery by gravity means and flotation. UNSJ’s report is contained in Appendix 2.
According to Table 1 in the annexure of UNSJ’s report:
• The unoxidised vein sample was obtained from two bore holes and had a total
mass of 26.6 kg.
• The oxidised vein sample weighed 36.6 kg, but its origin is unclear.
Both samples were processed through a Falcon concentrator at grind sizes of
approximately 90% passing 400 µm and 150 µm. In all cases the primary Falcon
concentrate was upgraded by panning. The concentrator and pan tails from the 150 µm
tests were combined to produce oxidised and unoxidised vein gravity tails samples for
processing by flotation.
5 April 2007 38 of 133

The gravity concentration results at 400 µm obtained from the two samples are shown in
Table 2.38 and Table 2.39, while those at 150 µm are shown in Table 2.40 and Table
2.41.
Table 2.38 UNSJ Gravity Concentration of Oxidised Vein at 400 µm
Cum. Cum.
Mass Distr.
Fraction % % g Au/t g Au/t % Au % Au
Pan con 0.5 0.5 499.09 499.09 36.2 36.2
Pan tail 0.5 0.9 63.8 290.28 4.3 40.4
Falcon tail 99.1 100.0 4.08 6.78 59.6 100.0
Feed Assay 6.48
Table 2.39 UNSJ Gravity Concentration of Unoxidised Vein at 400 µm
Cum. Cum.
Mass Distr.
Pan con 0.3 0.3 971.12 971.12 62.7 62.7
Pan tail 0.9 1.2 12.41 260.70 2.3 65.0
Falcon tail 98.8 100.0 1.73 4.88 35.0 100.0
Feed Assay 4.06
Table 2.40 UNSJ Gravity Concentration of Oxidised Vein at 150 µm
Cum. Cum.
Mass Distr.
Pan con 0.6 0.6 248.3 248.30 27.0 27.0
Pan tail 0.4 1.0 229.6 241.10 15.6 42.6
Falcon tail 99.0 100.0 3.43 5.91 57.4 100.0
Feed Assay 6.11
Table 2.41 UNSJ Gravity Concentration of Unoxidised Vein at 150 µm
Cum. Cum.
Mass Distr.

Pan con 0.7 0.7 530.75 530.75 61.7 61.7
Pan tail 0.4 1.0 50.4 364.72 3.1 64.8
Falcon tail 99.0 100.0 2.06 5.79 35.2 100.0
Feed Assay 4.57
5 April 2007 39 of 133

High recoveries of gold to gravity concentrate, much higher than those obtained in testing
by AMMTEC and Gekko, were achieved. It should be noted that AMMTEC and Gekko
work was conducted on portions of the same sample composites, whereas different
samples were sent to UNSJ. It is recommended, therefore, that the source of the
samples sent to UNSJ is established.
The flotation results from gravity tails originating from the two samples are shown in Table
2.42 and Table 2.43 at natural pH and in Table 2.44 and Table 2.45 at pH 10.5.
Table 2.42 UNSJ Flotation of Oxidised Vein at Natural pH
Cum.
Mass Grade Cum. Grade Distribution Cum. Distr.
Mass
Con 1 2.7 2.7 29.86 29.86 18.3 18.3
Con 2 1.8 4.4 22.54 26.91 9.3 27.6
Con 3 3.9 8.3 9.35 18.74 8.3 35.9
Tail 91.7 100.0 3.04 4.35 64.1 100.0
Feed Assay 4.21
Table 2.43 UNSJ Flotation of Unoxidised Vein at Natural pH
Cum. Cum.
Mass Distr.
Con 1 0.5 0.5 18.22 18.22 4.0 4.0
Con 2 3.3 3.8 13.78 14.38 19.6 23.6
Con 3 2.5 6.3 24.34 18.33 26.3 49.9
Tail 93.7 100.0 1.24 2.32 50.1 100.0
Feed Assay 2.40
Table 2.44 UNSJ Flotation of Oxidised Vein at pH 10.5
Cum. Cum.
Mass Distr.
Con 1 6.6 6.6 11.99 11.99 23.0 23.0
Con 2 4.1 10.6 10.62 11.47 12.6 35.6
Con 3 3.7 14.3 8.01 10.57 8.7 44.3
Tail 85.7 100.0 2.22 3.42 55.7 100.0
Feed Assay 3.87
5 April 2007 40 of 133

Table 2.45 UNSJ Flotation of Unoxidised Vein at pH 10.5
Cum. Cum.
Mass Distr.
Con 1 3.1 3.1 7.27 7.27 12.6 12.6
Con 2 8.0 11.1 5.48 5.98 24.4 37.0
Con 3 10.5 21.6 2.93 4.50 17.1 54.1
Tail 78.4 100.0 1.05 1.79 45.9 100.0
Feed Assay 2.10
The flotation and gravity concentration results may be combined to demonstrate the
overall effect of gravity followed by flotation, as shown in Table 2.46. The “Recovery to
Overall Concentrate” figures are obtained from Table 4 in the UNSJ report.
Table 2.46 UNSJ Combined Results
Recovery to
Overall
Overall Flotation Tails
Sample Flotation pH Concentrate
Concentrate % Grade g Au/t
Mass %
Au
Oxidised Natural 8.8 53.2 3.04
Unoxidised Natural 6.6 80.8 1.24
Oxidised 10.5 14.9 59.4 2.22
Unoxidised 10.5 22.3 82.4 1.05
As would be expected, the unoxidised material performed better in flotation than the
oxidised, with approximately 40% of the gold from oxidised vein flotation feed reporting to
concentrate compared to approximately 50% from the unoxidised vein material.
The flotation tests at pH 10.5 had much higher mass pulls than those conducted at natural
pH. Despite the considerably lower concentrate mass produced at natural pH, (6.6% and
8.8%), these are still too high for direct smelting and would require additional upgrading.
The gold grade of the flotation tails ranges from 1.05 to 3.04 g/t, demonstrating the losses
that could be expected from a gravity and flotation circuit.
2.16 Cyanide and Lime Consumption Estimates

Cyanide and lime consumed in the variability tests are listed in Table 2.47, with mean
consumptions presented for each ore type. These tests are all at the conditions selected
as optimum, whereas the leach optimisation tests performed on the Cal-1 and Cal-2
samples used various leach conditions.
5 April 2007 41 of 133

Table 2.47 Cyanide and Lime Consumptions in Variability Tests
Consumption
Sample No. Ore Type Test
Cyanide kg/t Lime kg/t
Cal-3 Variability 0.53 1.81
Oxidised vein
Unoxidised vein
Oxidised
mineralised
andesite
Unoxidised
mineralised
andesite
Oxidised vein
Unoxidised vein
Cal-35 Oxidised Variability 0.83 1.56
Cal-36 mineralised Variability 0.63 1.87
Cal-37 andesite Variability 0.62 2.14
Cal-38 Unoxidised Variability 0.56 0.86
Cal-39 mineralised Variability 0.58 1.49
Cal-40 andesite Variability 0.63 1.13
Oxidised vein average 0.59 1.04
Unoxidised vein average 0.50 0.82
Oxidised mineralised andesite average 0.85 1.66
Unoxidised mineralised andesite average 0.63 1.36
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Cyanide consumption in the CIL tests, at 1.80 kg/t and 1.69 kg/t for the Cal-1 and Cal-2
samples respectively, is significantly higher than in all the other tests. This may result
from a combination of the high activated carbon concentration and the adopted test
procedure. The high carbon concentration was used to capture the anticipated high silver
solution values and to provide sufficient carbon mass for the intermediate silver assays. It
is also possible that excess air was sparged into the vat during the test, thereby
increasing cyanide consumption.
At the time the testwork was conducted, the Merrill Crowe process was expected to be
the adopted flowsheet and it was not considered necessary to investigate the cyanide
consumption in the CIL tests. Should the CIL process continue to be attractive, it is
recommended that further testing be conducted to gain a better understanding of cyanide
consumption in the presence of activated carbon.
For the purpose of this IFS Ausenco has assumed that cyanide consumption in the CIL
plant is equivalent to the averages shown in Table 2.47, plus 20% for scale up and the
presence of activated carbon. In addition to the cyanide consumed, a residual cyanide
concentration of 150 ppm has been assumed in the tailings thickener underflow solution.
The predicted cyanide consumption for the main types of material is shown in Table 2.48.
Throughout the leach variability tests, AMMTEC used metallurgical grade lime having
60% CaO. The predicted lime consumption (60% CaO) is equal to the average
consumptions also shown in Table 2.48.
Table 2.48 Predicted Cyanide and Lime Consumptions
Predicted Cyanide Predicted Lime

Consumption Consumption (60% CaO)
kg/t kg/t
Oxidised vein 0.8 1.04

Unoxidised vein 0.7 0.82
Oxidised mineralised andesite 1.1 1.66
Unoxidised mineralised andesite 0.9 1.36
2.17 Gold and Silver Recoveries

The leach extractions obtained in the variability tests, which were all conducted under the
selected leach conditions, were used to predict gold and silver recoveries. The leach
optimisation phase of the testwork programme, conducted on samples Cal-1 and Cal-2,
assessed differing leach conditions, rather than optimised conditions, and results from this
phase were not used in the development of the grade recovery relationships.
The following relationships were examined:
• Grade and 48 hour leach extraction for gold by ore type.
• Grade and 48 hour leach extraction for silver by ore type.
• Grade and 48 hour leach extraction for gold for all variability samples.
• Grade and 48 hour leach extraction for silver for all variability samples.
• Grade and 48 hour leach residue for gold by ore type.
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• Grade and 48 hour leach residue for silver by ore type.

• Grade and 48 hour leach residue for gold for all variability samples.
• Grade and 48 hour leach residue for silver for all variability samples.
All grade versus leach extraction relationships showed relatively poor correlation. The
grade versus leach residue for gold for all variability samples showed better correlation
than grade versus leach residue for gold by ore type, perhaps because of a larger data
population. The grade versus leach residue for silver by ore type and grade versus leach
residue for silver for all variability samples show similar correlations. It was decided to use
the grade versus leach residue for all variability samples for both gold and silver for the
purpose of predicting gold and silver recoveries. Figure 2.5 and Figure 2.6 illustrate the
grade versus leach residue relationships for gold and silver, respectively.
Figure 2.5 Grade vs Leach Residue Relationship for Gold
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Figure 2.6 Grade vs Leach Residue Relationship for Silver
The following relationships have been developed from the variability tests results using
linear regression:
Au leach residue = (0.0935 x Au head grade) – 0.0162
Ag leach residue = (0.2794 x Ag head grade) – 1.406
Recoveries predicted using the above grade versus leach residue relationships should be
discounted by 1% for gold and 2% for silver to cater for scale-up and solution losses to
tailings. Based on the test results from leaching the variability samples, the 48 hour leach
residues for the plant may therefore be predicted by the following relationships:
Au leach residue = (0.1035 x Au head grade) – 0.0162
Ag leach residue = (0.2994 x Ag head grade) – 1.406
2.18 Recommendations for Further Work

If the CIL process remains attractive for the project, then further testwork is required to
investigate the reasons for the high cyanide consumption in the AMMTEC CIL tests. An
examination of the silver kinetics, in the presence of activated carbon, may indicate an
opportunity for leach residence time reduction. Predictions of gold and silver recovery will
require review following this work.
Settling characteristics of many of the samples tested were poor and additional thickening
testwork is required at the selected grind.
The source of the samples sent to San Juan needs to be identified and the reason for
higher gravity recoveries than those obtained at AMMTEC and Gekko needs to be
investigated.
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3 PROCESS PLANT
3.1 General
The Calcatreu process plant and associated service facilities will receive run-of-mine
(ROM) ore and, through a series of processing steps, produce gold and silver bullion
doré. The proposed process encompasses crushing and grinding of the ROM ore,
followed by leaching of precious metals into a dilute cyanide solution, adsorbing the
precious metals onto activated carbon and then stripping and recovery of precious metals
from the carbon to produce doré. The barren tails will be further treated in a SO2/air
process to destroy the weak acid dissociable cyanide (CNWAD) before placement in the
tailings storage facility (TSF).
3.2 Flowsheet Design Basis

The proposed process plant design is based on a metallurgical flowsheet with unit
operations that are well proven in the gold industry.
The key criteria for equipment selection have been the suitability for duty, reliability and
ease of maintenance. The plant layout provides ease of access to all equipment for
operating and maintenance requirements whilst maintaining a compact footprint. The key
project and ore specific criteria for the plant design are:
• Treatment of 750,000 dry tonnes per year of the unoxidised vein ore type.
• Operation of the plant on a 24 hours per day, 7 days per week basis.
• Design availability of 91.3%, (8,000 operating hours per year).
• Inclusion of standby equipment in critical areas within the circuit.
• Sufficiently automated plant control to minimise the need for operator interface on
a continuous basis but allow manual override and control if required.
• Enclosure of the grinding mills, elution circuit, reagent mixing and associated
equipment in a building to facilitate operation and maintenance during the
prolonged periods of high winds that characterise the local climate.
Sections 3.3, 3.4 and 3.5 outline the flowsheet development and describe the plant
processes and plant layout. These sections should be read in conjunction with the
following documents:
• Simplified Block Flow Diagram 1497-F-100 (Appendix 3).
• Process Flow Diagrams (Flowsheets) and General Arrangement Drawings
provided in Appendix 9.
• Process Design Criteria (Appendix 3).
• Mechanical Equipment List (Appendix 3).
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3.3 Flowsheet Development

The process plant design incorporates the following unit process operations:
• Single stage crushing using a jaw crusher to produce a crushed product of a size
80% passing (P80) 120 mm.
• Semi-autogenous grinding (SAG) mill/ball mill circuit (SAB circuit). configured as
an open circuit SAG mill and closed circuit ball mill in series to produce a milled
product of a size 80% passing (P80) of 75 µm.
• Carbon-in-leach (CIL) circuit consisting of two leach tanks followed by six
adsorption tanks in series.
• Anglo American Research Laboratories (AARL) type elution circuit (excluding
electrowinning).
• Precipitation of gold and silver from pregnant elution solution using zinc, followed
with gold and silver recovery to doré.
• Thickening of leach residue and cyanide destruction of the thickened slurry using
the INCO SO2/air process.
3.3.1 Comminution Circuit

The key A x b parameters, obtained from SMC tests and shown in Table 3.1 indicate the
oxidised vein ore as being “moderately competent” and the unoxidised vein ore as
“competent”. Both ores are suited to SAG milling, with the unoxidised vein ore more likely
to result in a build-up of critical size material in the SAG mill. The possible build-up of this
critical size material may warrant the inclusion of recycle crushing. The suitability of the
milling circuit with recycle pebble crushing (SABC) and without recycle pebble crushing
(SAB) was reviewed, with the report included in Appendix 3. The report concluded that
an SAB circuit, with provision to recycle up to 25% of cyclone underflow to SAG mill to
balance power, was the preferred circuit. The need for the recycle crusher is negated by
a marginal increase in diameter and length of the SAG mill and allows commonality of
motor and gearbox capital spares. If ores harder than those tested are encountered in
significant quantity, a recycle crusher could be retrofitted to maintain throughput.
The crushing and milling circuits will be designed to operate continuously at a throughput
of 94 t/h of unoxidised vein ore, giving an annual capacity of 750,000 tonnes at the design
availability of 91.3%.
Grind optimisation testwork was carried out on the oxidised vein and unoxidised vein
composites. The samples were ground to five different sizes, P80 of 38, 58, 75, 106, and
150 µm, and leached for 48 hours. Solution samples were taken at 24 hours and 48
hours to obtain a leach curve for each grind size. The tailings from each test were sized
to obtain a true sizing. The testwork indicated that gold and silver recoveries are related
to grind size, with recoveries increasing with fineness of grind size. An economic analysis
indicated that the optimum grind sizes for the oxidised vein and unoxidised vein ore
samples were the same at a P80 of 75 µm. This grind size was selected for design.
5 April 2007 47 of 133

ROM Ore Stockpile

The ROM bin has been designed to be fed by both front end loader and by direct tipping
from haul truck. However, the operating cost estimate has been based on 100 %
rehandle of ROM ore by front end loader. The ROM stockpile will enable a considerable
degree of blending using multiple fingers.
Crusher Sizing
A 950 x 1,250 mm single toggle jaw crusher has been selected based on the maximum
lump size passing the 550 mm aperture parallel bar grizzly. It is proposed that the
crusher will operate with a closed side setting (CSS) of 100 mm to produce a crushed
product with a P100 of 150 mm and a P80 of approximately 120 mm.
Crushed Ore Stockpile
The prevailing wind conditions encountered at site will cause considerable dust problems
around a crushed ore stockpile. A study of seventeen single stage crushing/milling plants
showed no significant difference in plant availability between circuits with or without a
primary crushed ore stockpile, and thus no primary crushed ore stockpile has been
included.
Mill Sizing
The key comminution parameters determined by testwork and used for mill sizing are
summarised in Table 3.1.
Table 3.1 Mill Design Criteria
Design Criteria Units Oxidised Unoxidised Design Source

Vein Vein Value
Mill Capacity t/h 93.8 Aquiline
Feed Size – 80% passing (F80) mm 117 Ausenco
Product Size – 80% passing (P80) µm 75 Testwork

Max. Crushing Work Index (CWI) kWh/t n/a 24.8 24.8 Testwork
Bond Rod Work Index (RWI) kWh/t 18.9-23.6 13.4-25.8 22.9 Testwork
Bond Ball Work Index (BWI) kWh/t 17.1-21.4 13.5-22.3 20.8 Testwork
JK – A 73.6 88.8 88.8 Testwork
JK – b 0.70 0.45 0.45 Testwork
JK – A x b 51.5 40 40 Testwork
Abrasion Index - Ai 0.56-0.67 0.28-0.83 0.64 Testwork
Ore SG 2.64 2.65 2.65 Testwork
The design values selected for the Bond rod mill, ball mill and abrasion indices, represent
the 80th percentile of the values recorded during the testwork for the combined oxidised
vein and unoxidised vein samples. The unoxidised vein A and b parameters were
selected for design.
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The grinding power demand using the criteria shown in Table 3.1 was determined using
Ausenco’s in house grinding circuit design program. The results are summarised in Table
3.2.
Table 3.2 SAB Mill Grinding Power Demand
Criteria Units Design Value
Pinion Power SAG Mill kW 1,381
Ball Mill kW 1,542
Specific Energy SAG Mill kWh/t 10.2
Ball Mill kWh/t 20.0
Total Corrected Circuit Power kWh/t 30.2
The dimensions and specifications of the selected SAG and ball mills are summarised in
Table 3.3.
Table 3.3 SAG and Ball Mill Sizing
Criteria Units SAG Mill Ball Mill
Diameter -Inside Shell m 5.94 4.11
Length -Effective Grinding Length m 3.67 6.17
L:D Ratio m 0.65 1.5
Discharge Arrangement Grate Overflow
Design Mill Speed % Nc 60 to 80 75

Liner Thickness -New mm 105 75
-Design NominalBall Charge % vol 8 35
-Maximum % vol 15 40
Total Load -Design % vol 26 N/A
Pinion Power -Design kW 1,381 1,582

Installed Power kW 1,750 1,750
The SAG mill sizing has been based on a normal ball charge of 8% and a total charge of
26% of mill volume.
Classification
A mill mounted trommel screen will provide coarse classification around the SAG mill. In
line with conventional practice, hydrocyclones have been selected for the fine
classification duty. The pulps displayed normal viscosity characteristics, thus the
hydrocyclones have been sized to operate at an overflow density of 40% w/w solids for
direct feed to the leach circuit.
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3.3.2 Metal Extraction Circuit

A technical and financial evaluation of three circuit types for the recovery of precious
metal from ore was performed by Ausenco. The case study is included in Appendix 1.
The circuits considered were:
• CIL followed by zinc precipitation for recovery of precious metals from the
pregnant eluate.
• Merrill Crowe.
• A hybrid CIL – Merrill Crowe Circuit.
The conclusions drawn from the case study review are summarised below.
Option 1 – CIL with Zinc Precipitation
The CIL circuit considered in the evaluation consisted of two leach and six adsorption
tanks, an AARL elution circuit, and zinc precipitation of precious metals from pregnant
eluate.
The CIL circuit has the lowest capital cost of the options considered, is not sensitive to
feed rate fluctuations (up to the maximum inter-stage screen flow rate) and offers
potentially higher silver extractions. However, the CIL circuit has the highest operating
cost of the options considered and it has the largest inventory of precious metals held in
circuit due to the large carbon inventories required to ensure adequate adsorption
kinetics.
Key process risks for the CIL circuit are the ability of the circuit to achieve the design
carbon loadings, and insufficient carbon inventory to recover gold/silver if higher leach
extractions and/or lower than design adsorption rates are encountered.
Option 2 – Merrill Crowe
The Merrill Crowe circuit considered in the evaluation consisted of a pre-leach thickener,
six leach tanks, a four stage counter current decantation (CCD) circuit, clarification, de-
aeration and recovery of gold and silver from pregnant leach solution by precipitation with
zinc dust.
The Merrill Crowe circuit is best suited to treating ores with spikes of high silver and has
the lowest inventory of precious metals in circuit. It has the highest capital cost and
lowest operating cost of the three circuit options considered.
The main risk identified with this circuit is the sensitivity of CCD performance to
fluctuations in plant feed rate and to the processing of ores with poor settling
characteristics. Surging feed or reduced settling rates may result in poor CCD circuit
performance and a “dirty” overflow, which may overload the clarifier filters. The risk of this
occurring is real because of the direct mill feed from crusher and the observation in
variability testwork of ores with poor settling characteristics.
Option 3 – Hybrid CIL-Merrill Crowe
The hybrid circuit consists of two leach tanks, a leach discharge thickener, six adsorption
tanks, an AARL elution circuit and a clarification, de-aeration and zinc precipitation circuit
for the combined leach discharge thickener overflow and pregnant eluate solutions.
The hybrid circuit is complex with more unit operations than the other two options and
combines the advantages, disadvantages, and process risks of both circuits.
5 April 2007 50 of 133

Circuit Type and Size

A CIL circuit was selected on the basis that it has a lower risk when processing ores with
poor settling characteristics, has potential for higher silver extractions, is less susceptible
to variations in feed rate, and has the lowest capital cost. The net present cost (NPC), a
measure of cash flow over the project life (less than 5 years) is not significantly different to
that of the Merrill Crowe circuit which had the lowest total cost. Any change to the mine
plan may alter the economics of the various circuit options necessitating a re¬validation of
the optimum processing route.
The CIL circuit will have two leach tanks and six adsorption tanks, with the leach tanks
included to provide additional leach residence time and higher solution tenors during initial
contact with the activated carbon in the adsorption circuit.
The six adsorption tanks are considered the optimum number given the carbon adsorption
kinetics determined from the testwork and the need to maintain acceptable performance
in the event of an adsorption tank being bypassed. Average carbon concentrations of
between 20 g/L and 25 g/L are required in all tanks, particularly the first and last, to
ensure high gold and silver adsorption efficiencies and a low solution tail.
All tanks will be identical in size, with their individual volumes of 1,100 m3 giving a total
circuit plug flow residence time of 48 hrs at 40% w/w solids pulp density.
Leach Oxygenation and Agitation
The ores displayed a low oxygen uptake rate. Testwork showed that oxygen injection
enhanced both leach kinetics and total extraction over those achieved by straightforward
aeration.
High shear oxygenation devices utilising gaseous oxygen, such as the Filblast or Multi
Mix Systems, have proven to be an economically attractive means of achieving efficient
oxygen injection, but are only available on a lease basis. A device of this type has been
included, with slurry recycle from the base of the leach tank, and an oxygen supply from a
1 t/d pressure swing adsorption (PSA) oxygen plant.
The normal viscosity characteristics of the pulps allow use of conventional dual impeller
agitators of moderate power to achieve even suspension of solids and sufficient shear
action to achieve satisfactory carbon adsorption kinetics.
Elution and Precipitation
A split AARL elution circuit has been selected on the basis that: (a) the raw water
available has too high total dissolved solids content necessitating the use of potable
water; and (b) there may be a requirement to increase the number of elution cycles to 14
per week for “catch-up”.
An 8 tonne batch size has been nominated and, based on the calculated carbon
movements, a total of 10 to 11 elution cycles are required each week. To enable
continued processing at peak head grades, the circuit will be designed for up to 14 strips
per week.
The goldroom will be operated 7 days a week.
Pregnant eluate will be pumped to the barren eluate tank via one of two precipitation plate
filters (one filter in use while the other is cleaned). Lead nitrate and zinc dust will be
added to the pregnant solution prior to the filters. The zinc dust precipitates gold and
silver from solution which is then retained by the filter. Diatomaceous earth is added to
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enhance the filter rate of the precipitate. The precipitate filters will be designed to hold 36
hours of precipitate at peak gold and silver production.
When a filter is full of precipitate it will be taken offline, and the precipitate recovered. The
filter cake is then oven dried prior to smelting.
Cyanide Destruction and Tails Disposal
A 16 m diameter high rate thickener has been included in the process flowsheet ahead of
the cyanide destruction circuit to reduce the volume of slurry requiring detoxification and
to recycle cyanide water back to the mill. This reduces both the mass of cyanide requiring
detoxification and the overall cyanide consumption. The tails thickener has been sized on
the design settling rate of 0.60 t/m2h and solids feed rate of 94 t/h. A further 28% is
added to the settling area to allow for surges in solids flow, to ensure high underflow
slurry density and minimum flocculant use.
The design of the cyanide destruction circuit has been based on the INCO process
(oxidation of cyanide to cyanate by SO2) a relatively simple and inexpensive process with
a proven track record at over 80 mining sites worldwide. A free cyanide concentration of
150 mg/L in the CIL residue slurry discharging from the final adsorption tank has been
assumed, with a target average CNWAD concentration of 50 mg/L in the slurry discharging
from the circuit. This final cyanide concentration complies with the International Cyanide
Management Code recommendations (CNWAD <50 mg/L).
The circuit design comprises two tanks in series, each with a nominal 45 minutes
residence time. This provides sufficient redundancy such that the plant can operate at
near design capacity with one tank offline for maintenance and still achieve the target
cyanide concentration in the final tailings slurry.
The tank residence time, aeration rates and reagent consumptions have been calculated
using industry standard values and ratios, which have been confirmed by testwork.
3.4 Process Design Criteria Summary

The Process Design Criteria report is included in Appendix 3. The report should be read
in conjunction with the Process Flow Diagrams and the Mass Balance data. A summary
of the design criteria underlying the equipment sizing and operating costs is provided in
Table 3.4.
5 April 2007 52 of 133

Table 3.4 Summary of the Process Plant Design Criteria
Criteria Units Value

Ore Throughput t/y 750,000
t/h 93.8
Plant Availability Design % 91.3
Gold Grade Design g Au/t 3.86
Silver grade Design g Ag/t 33.2
Physical Characteristics BWI – vein kWh/t 20.8
RWI – vein kWh/t 22.9
AI 0.64
Grind Size P80 µm 75
Plant Recovery Gold % 90
Silver % 74
Leach/CIL Residence Time h 48
Residual Free Cyanide Level Concentration mg/L 150
CN Destruction Residence Time minutes 60
Aeration Rate Nm3/t 1
Residual CNWAD Level Concentration mg/L < 50
Oxygen Requirement (100% O2) Total kg/t 0.11

Flocculant Consumption kg/t 0.040
Cyanide Consumption (100% NaCN) kg/t 1.1
CIL Lime Consumption (90% avail. CaO) kg/t 1.66
CN Destruction Lime Consumption (90% avail. CaO) kg/t 0.69
Sodium Metabisulphite Consumption (100% SMBS) kg/t 0.78
Copper Sulphate (as pentahydrate) kg/t 0.03
The selected design reagent consumptions reflect the testwork data for the highest
consuming ore types. These values were chosen for design of reagent handling systems.
The plant actual consumptions will be dependent of ratio of the various ores being fed to
the plant.
3.5 Process Description

3.5.1 Crushing and Mill Feed
Refer to Flowsheet 1497-F-101
Stockpiled ROM ore will all be reclaimed from the ROM pad by a Cat 980 or equivalent
front-end loader (FEL) and fed to the 80 tonne capacity ROM bin, which will be fitted with
substantial “hungry boards”. A standby FEL, Cat 980 or equivalent, will ensure constant
feed availability. The ROM bin will be equipped with a 550 mm aperture parallel bar static
grizzly sloped to bring oversize back to the loading side for immediate removal by the
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same FEL. Oversize may be broken on the ROM pad area by a rock breaker. The design
of the ROM bin will permit direct dumping of ROM ore by the mine haul trucks.
A 300 mm static grizzly will be located on the ROM pad, for the purpose of generating an
emergency feed stockpile. ROM ore containing a higher fines fraction will be selectively
fed to the static grizzly by FEL. The grizzly oversize will be returned to the ROM
stockpile, while the grizzly undersize will be trammed to a stockpile adjacent to the SAG
mill emergency feed hopper.
Ore will be drawn from the ROM bin via a 1,524 mm x 9,000 mm variable speed apron
feeder into a 950 mm x 1,250 mm single toggle jaw crusher operating with a closed side
setting (CSS) of 100 mm.
The ROM bin and apron feeder will be mounted on an elevated, hollow concrete
foundation also serving as a retaining wall. An elevated, composite steel/concrete bridge,
supported at one end on a deadman anchored concrete foundation set at the edge of the
ROM pad and at the other end on the ROM bin itself, will provide access for the FEL. The
concrete primary crusher foundations will be an integral extension of the bin and feeder
support structure with columns along the outer edge to provide generous access to the
area beneath the crusher.
The primary crusher product will discharge onto the 900 mm wide primary crusher
sacrificial conveyor, which will discharge to a 900 mm wide mill feed conveyor belt, fitted
with a weightometer, which in turn will discharge into the SAG mill. In common with all
other conveyors on the project, the conveyor will include:
• Proprietary idlers, including rubber impact at 300 mm centres at load points, carry
and return idlers and at least two sets of steering idlers on carry and return
strands.
• Crowned and rubber lagged drive, tail, take-up and idler pulleys.
• Fabric reinforced belts.
• Shaft mounted drive gearboxes, run-backs, fluid couplings, vee belt drives and
gearbox mounted motors, all with appropriate guards.
• Hooded load areas with proprietary adjustable skirt systems insertable filters
where specified.
• Shedder plates at load points.
• Head pulley scrapers (belle banne or equivalent).
• Return belt scrapers at take-ups and tail pulleys.
• Head, tail end and pinch point guards as per regulations.
• Maintenance access as per regulations.
• Under speed, belt drift, chute blockage and pull wire switches.
• Feed and discharge chutes and skirts with plug welded wear plates of QT360 or
equivalent.
Dust suppression sprays will be installed at the ROM bin, and on the SAG mill feed
conveyor.
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No surge capacity between the crusher and SAG mill has been provided. An emergency
feed hopper located on the SAG mill feed conveyor will allow for continuity of feed to the
SAG mill during periods of crusher downtime. The hopper will be fed by a FEL using ore
from the emergency feed stockpile.
3.5.2 Grinding Circuit

The grinding circuit comprises a single open circuit SAG mill and a ball mill in closed
circuit with cyclones to produce a final product. The SAG mill will be a 5.94 m diameter x
3.67 m effective grinding length, grate discharge, steel lined mill driven through a gearbox
by a 1750 kW wound rotor induction motor and will operate with a nominal ball charge of
8% of mill volume and a total charge of 26% of mill volume. The mill speed will be
variable over a range of 60% to 80% critical speed (Nc) by varying the rotor resistance
with the liquid resistance starter.
The SAG mill will discharge over a 12 mm aperture trommel screen, and the trommel
oversize (pebbles and steel scats) will be discharged onto a series of two conveyors that
will recycle the pebbles back to the SAG mill feed conveyor belt. The pebble recycle
conveyors will be equipped with a weightometer to indicate the mass of pebbles being
recycled. The pebbles will discharge back onto the SAG mill feed conveyor belt.
The SAG mill trommel undersize slurry will gravitate to the mill discharge hopper where it
is diluted with process water and pumped (1 duty/1 standby) to a cluster of hydrocyclones
for classification. The cluster will consist of 5 x 380 mm hydrocyclones inclusive of one
spare hydrocyclone. The overflow from the hydrocyclones (ground product) will gravitate
to a trash removal screen prior to the CIL circuit while the hydrocyclone underflow will be
split with the majority gravitating to the ball mill and the remainder recycled back to the
SAG mill for further grinding.
The ball mill, will be a 4.11 m diameter x 6.17 m effective grinding length, overflow
discharge, rubber lined mill driven through a gearbox by a 1,750 kW fixed speed wound
rotor induction motor and will operate with a nominal ball charge of 35% of mill volume.
The ball mill will discharge over a 10 mm aperture trommel screen with the oversize
discharging into a bunker for regular collection by a FEL or skid steer loader. The
undersize slurry will gravitate to the combined mill discharge hopper.
The mills will be supported on a common foundation consisting of a large concrete plinth
with integral pedestals to support the mill bearings and drive trains. The mills will be
mounted to give the same longitudinal and mill discharge bearing centre lines allowing a
chute arrangement for the mill discharge slurry to easily flow to the common discharge
hopper. The mill discharge pumps (1 duty/1 standby) are located centrally between the
mills and in towards the centre of the main process building to allow easy access for the
overhead crane to be used for maintenance.
Process water will be added to the mill feed chutes to achieve the required pulp density in
the mills for maximum grinding efficiency. Steel balls will be added to the mills via the ball
loading chutes which are integral to the mill feed chutes and allow balls to be directly
dumped into the mill feed chute to maintain the desired ball loads and mill power draw.
Milk of lime slurry will be added to the SAG mill feed chute through a controlled valve fed
by the milk of lime ring main. Lime is added to increase slurry pH ahead of the CIL circuit.
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The complete area beneath the mills, incorporating the mill discharge pump area, will
have a concrete slab and be bunded to contain spillage. A spillage pump will be provided
in the mill bunded area to reclaim any spillage and return it back to the mill discharge
hopper. The spillage pump will be located in a sump at the low point in the mill bund.
A 3 axis, 500 kg mill liner handler has been included in the plant to facilitate removal and
installation of SAG mill liner plates and lifter bars during planned mill relines. The liner
handler will be stored on the concrete work platform that forms the roof of the MCC and
be relocated into working position when required for a reline by the building overhead
crane. The liners will be positioned on the concrete work platform by the overhead crane
so that the liner handler can lift them from the transport pallet and position them into the
mill.
3.5.3 CIL Circuit

Refer to Flowsheet 1497-F-103.
The cyclone overflow pulp with a nominal pulp density of 40% w/w solids will gravitate to
the vibrating trash removal screen to remove any debris from the slurry ahead of the
hybrid CIL circuit. The cyclone cluster is situated adjacent to the first tank at a height
sufficient to allow gravity flow to the trash screen and subsequently to the leach tank via a
launder. The trash that is removed will gravitate to a trash hopper situated at ground level
near to the first CIL tank.
The hybrid CIL circuit will consist of two 1,100 m³ (live) leach tanks and six (6) 1,100 m³
(live) adsorption tanks in series interconnected with launders to allow the slurry to flow by
gravity through the tank train. Each tank will be fitted with a mechanical agitator to ensure
uniform mixing. The tanks will be located on circular concrete ring beams which will be in
filled with a sand/oil mixture to prevent moisture from contacting the underside of the tank
base. A layer of bitumastic board will be placed between the tank floor and the concrete
ring beam along with a bead of silastic at the floor edge to ensure that ingress of slurry or
water to the underside of the tank floor area is prevented.
Oxygen will be injected into the leach slurry by drawing slurry from the base of the leach
tank, pumping it through a high shear reactor and returning the slurry back to the top of
the leach tank.
Each adsorption tank will be fitted with a mechanically swept, woven wire inter-tank
screen to retain carbon. A traveling gantry hoist will be used to remove the screens for
maintenance and routine cleaning. All tanks will be fitted with bypass launders to allow
any tank to be removed from service for agitator or screen maintenance. The top of tanks
will have grid mesh covering a substantial portion of the tank and intermediate tank areas
to allow a large platform for access to the mechanical items for operations and routine
and breakdown maintenance. Removable sections of the grid mesh will allow access to
the launders for insertion and removal of the blanking plates used to bypass a tank that
may need to be temporarily removed from service. A drop down area between the
structural steelwork at the tank train will allow an inter-tank screen to be lowered for
cleaning and maintenance. A spare inter-tank screen will be provided to allow this screen
cleaning and maintenance to be carried out on a regular basis.
Barren carbon will enter the adsorption circuit at the last tank (CIL tank 6) and will be
advanced counter-current to the slurry flow by moving slurry and carbon from CIL tank 6
to CIL tank 5 using recessed impeller carbon transfer pumps. The inter-tank screen in
CIL tank 5 will retain the carbon and the slurry will flow by gravity back to CIL tank 6. This
counter-current process will be repeated until the carbon reaches CIL tank 1. A recessed
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impeller pump will be used to transfer slurry to a loaded carbon recovery screen mounted
above the acid wash column in the stripping plant. The carbon reporting as screen
oversize will gravitate to the acid wash column and the slurry will return to CIL tank 1.
Barren carbon returning to the adsorption circuit from the carbon regeneration kiln will be
screened over a vibrating screen to remove fine carbon, which is discarded to the CIL
tailings hopper. The sized and regenerated carbon will report directly to CIL tank 6.
Sodium cyanide solution will be metered into the leach tanks and CIL tanks 1 and 2 via a
ring main system.
Provision has been made in the layout and piping runs to allow milk of lime slurry to be
added to the leach tanks for pH control.
The CIL area, including the areas for inter-tank screen maintenance, under the cyclones
and trash screen, and under the carbon safety screen will have a concrete floor and
bunds to retain any overflow or spillage. The included volume of the bunded area will be
sufficient to hold a minimum of one tank volume in case of tank rupture. The area will be
provided with two spillage pumps which will deliver spillage back to the first leach tank. If
the leach tank is off-line, the spillage pump delivery will be diverted to an adjacent tank
using a hose.
Tailings slurry from the last CIL tank will gravitate to the vibrating carbon safety screen to
recover any carbon which may be present following damage, wear or incorrect installation
of the final stage inter-stage screen. Carbon recovered on the screen will be delivered to
a bulk bag for reuse. Tailings discharging from the tailings screen will gravitate to the
tailings thickener.
3.5.4 Elution and Precipitation

Refer to Flowsheets 1497-F-104 to F-105
The following operations will be carried out in the elution and goldroom areas:
• Acid washing of carbon.
• Stripping of gold and silver from loaded carbon using a split AARL elution circuit.
• Precipitation of gold and silver from pregnant solution using zinc.
• Filtering of precious metals precipitate.
• Smelting of precipitation products.
The elution and goldroom areas will operate up to 7 days a week, with the loaded carbon
recovery on night shift and the majority of the elution occurring during day shift. The 8
tonne AARL elution circuit will consist of separate rubber lined acid wash column and
stainless steel elution column and will accommodate a maximum throughput of 112
tonne/week of loaded carbon.
Acid Wash
Loaded carbon will be recovered on the loaded carbon recovery screen and directed to
the acid wash column. Transfer and fill operations will be controlled manually. All other
aspects of the acid wash and the pumping sequence will be automated.
Acid washing of the carbon will commence after carbon transfer is complete.
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Concentrated hydrochloric acid (33% w/v HCl) will be pumped from the storage tank and
injected into the fresh water line at the base of the acid wash column to produce a dilute
acid wash solution approximating, 3% w/w hydrochloric acid (HCl) in water.
During acid washing the dilute HCl solution will be circulated through the column in an up-
flow direction to remove contaminants, predominantly carbonates, from the loaded
carbon. This process improves the elution efficiency and has the beneficial effect of
reducing the risk of calcium-magnesium ’slagging’ within the carbon during the
regeneration process.
Following the acid wash cycle the carbon bed will be rinsed with fresh water. Four bed
volumes of fresh water will be pumped through the column to displace any residual acid
from the carbon. The residual spent acid and rinse water will be disposed of directly to the
tails hopper. The acid-washed carbon will then be hydraulically transferred to the elution
column using high pressure raw water.
The acid wash column will be located between the main process building and the CIL tank
train in a steel structure that will provide access for operations and maintenance. An acid
proofed concrete floor and bund will be provided under the acid wash column area to
ensure all spillage is captured. This area will flow into the CIL bunded area and spillage
will be dealt with by the CIL sump pump which will deliver any spillage back to the first
leach tank.
Elution
Lean solution from the lean eluate tank will be pumped through a recuperative heat
exchanger and indirect heater in series to heat it to 130°C before entering the base of the
elution column. Sodium hydroxide and sodium cyanide solutions will be dosed into the
discharge line of the strip solution pump to achieve a 2% w/v concentration of both
reagents.
A recuperative heat exchanger will recover a proportion of the heat from the return eluate
thereby preheating the incoming eluant. A diesel-fired heater will heat a thermal fluid
which is then circulated through a second heat exchanger to raise the temperature of the
incoming barren solution to a nominal 130°C.
The heated solution will then flow into the base of the column filling the interstitial voids in
the carbon bed. The hot solution will be circulated around the column for a period of 30 to
40 minutes during which time the gold and silver will be eluted from the loaded carbon.
After this period has expired, heated solution from the lean eluate tank will continue to be
pumped into the base of the column, in a plug flow regime, to flush the pregnant solution
from the carbon bed. The pregnant solution exiting the top of the column will be cooled
through the recuperative heat exchanger, used to pre-heat the incoming solution, before
gravitating to the eluate tank. After four bed volumes have been removed from the
column, heated potable water is pumped from the break tank, into the base of the elution
column and continues for a further 4 bed volumes. During this cycle the solution
discharging the column is diverted to the lean eluate tank for use in the next strip.
The elution column is situated adjacent to the acid wash column in the same structure
between the main process building and the CIL tanks. As for the acid wash column, a
separate bunded area will be provided to contain spillage. The pregnant eluate tank will
be situated outside the main building adjacent to the reagents annex. The pregnant
eluate tank will have a solid concrete plinth surrounded by a concrete slab and separate
bund to contain spillage. A sump will be contained within the bunded area so that a
portable sump pump can be used to remove spillage and/or rain water and depending on
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the contents of the bunded area it will be directed to different process areas. The break
tank, lean eluate tank, elution heater, and heat exchangers are located on the ground
floor in the area adjacent to the mills and the gold room. A separate bunded area with
concrete floor is provided to contain spillage and allow easy cleanup. All spillage and
cleanup liquids are pumped by a sump pump back to the leach circuit. Pipe supports for
the required piping are provided by simple attachments to adjacent steelwork.
Precipitation and Goldroom

Precious metals will be recovered from the pregnant solution using zinc cementation.
Zinc dust will be metered into the gold and silver rich solution as it is pumped from the
pregnant eluate tank through a precipitation filter. Gold and silver will precipitate on
contact with the zinc and collect in the precipitation filter. Lead nitrate will be added
during precipitation to act as a catalyst for precipitation. Diatomaceous earth will be added
to pre-coat the filters before every batch and act as a body aid, to maintain filter cake
porosity. Filtrate solution, barren of gold and silver, will discharge into the barren solution
tank, from where it will be used for mixing with zinc dust, lead nitrate and diatomaceous
earth, or pumped back to the CIL circuit for disposal.
Diatomaceous earth will be added as a solid into the pre-coat mixing tank and mixed with
barren solution to obtain a preset slurry density. The slurry will then be circulated through
the filter press, with any displaced solution being returned to the pre-coat mixing tank, in
order to pre-coat the filter before the introduction of pregnant solution.
Zinc dust, lead nitrate and diatomaceous earth will be metered into a zinc cone, and
wetted with barren solution prior to dosing into the pregnant solution close to the filter feed
pump suction. Flow from the zinc cone will be distributed between the operating filters by
means of valves.
The precipitation filter feed pumps will have submerged seals to prevent air ingress into
solution, which adversely affects the precipitation process.
Two recessed plate filter presses will be used for the precipitation filtration duty, one
operating, while the other is off line for harvesting and preparation for the next batch.
Each filter will be designed for 36 hours production at design maximum grades.
Filter cake harvested from the precipitate filters will be collected in trays. The trays will be
provided with castors to assist with their withdrawal from beneath the filters and with lifting
points for a fork-lift. The filter cake will be dried in a drying oven before direct smelting
with fluxes in a diesel-fired furnace. The smelted precious metals will be poured into a
cascade of five 600 oz doré moulds. The drying oven and the furnace will be located in
the ground floor area of the secure gold room and designed for a maximum of two smelts
per day, seven days per week.
Separate fume extraction equipment will be provided to remove gases from the drying
oven and barring furnace and exhaust to atmosphere.
Doré bars will be cleaned, weighed, stamped, sampled and then stored in a safe while
awaiting dispatch.
The gold room will have a concrete floor complete with a sump trap overflowing to a
sump. A sump pump will pump all wash down and spillage liquor back to the leach circuit.
All heavy materials collected in the sump trap will be returned to the drying oven and
furnace if required.
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Carbon Regeneration
After completion of the elution process, the barren carbon will be hydraulically transferred
from the elution column over the carbon dewatering screen to the feed hopper of the
horizontal carbon regeneration kiln. In the kiln feed hopper any residual and interstitial
water will be drained from the carbon before it enters the kiln.
The carbon will be heated to 650 - 750°C and held at this temperature for 15 minutes to
allow regeneration to occur. Regenerated carbon from the kiln will be quenched in water
and then pumped, using a recessed impeller pump, to the carbon sizing screen. The
screen oversize (regenerated, sized carbon) will return to CIL tank 6 while the quench
water and fine carbon will report to the tails hopper via the carbon safety screen. The
regeneration kiln will be located on the upper floor within same area as the elution boiler,
adjacent to the ball mill and the gold room. The quench tank will be located beneath the
kiln in the same area. The concrete floor and bunds for the regeneration equipment will be
the same as those for the elution boiler as will the associated sump pump.
3.5.5 Cyanide Destruction and Tails Disposal

CIL residue slurry discharging from the final adsorption tank (CIL Tank 6) will gravitate to
the vibrating carbon safety screen to recover any carbon leaking from worn or damaged
inter-tank screens. The carbon safety screen undersize slurry will gravitate to a 16 m
diameter high rate thickener. The thickened tailings slurry will be drawn from the thickener
underflow by variable speed pump (1 duty/1 standby) to control thickener bed mass and
pumped to a distribution box ahead of the cyanide destruction tanks.
The supernatant will overflow to the adjacent process water tank for subsequent reuse in
the milling circuit.
The cyanide destruction circuit will consist of two (2) 110 m3 (live) tanks arranged in series
and connected by a launder. The tanks will be agitated and aerated to provide sufficient
dissolved oxygen in the slurry to meet the oxygen demand of the CNWAD destruction
reaction.
Sodium metabisulphite and copper sulphate solutions will be dosed into the feed boil box
providing the source of sulphur dioxide (SO2) and catalyst respectively. The reaction
between the CNWAD and SO2 generates sulphuric acid (H2SO4). Milk of lime, from the ring
main, will therefore be added to the feed distribution box to maintain the pH of the slurry
at between 8 and 9 in the final tank.
The detoxified effluent will gravitate to the tails hopper from where it will be pumped to the
TSF by variable speed tails pumps (2 duty/2 standby) and discharged by spigots from
selected outlet points around the periphery of the facility. Supernatant and run-off from
rainfall collected in the decant pond will be pumped to the decant water tank located on at
the plant.
The tails thickener and cyanide destruction area will have a separate bunded concrete
area for collecting spillage and clean up water. A spillage pump will be installed in the
thickener bunded area to reclaim and return any spillage to the carbon safety screen. The
tails thickening and cyanide destruction equipment will be located at the end of and
adjacent to the CIL tank train.
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3.5.6 Reagents
Refer to Flowsheet 1497-F-107/108
Lime
Quicklime will be delivered to site in bulk 25 t road tankers and pneumatically unloaded
directly to a 40 m3 silo. A dust collector will mitigate dust emissions during pneumatic
transfer. Quicklime will be withdrawn from the silo by a variable speed screw feeder to
provide feed to a slaking mill, where it will be ground in decant water, slurried to 15% w/w
solids and stored in a mechanically agitated tank with 24 hours capacity.
Lime slurry will be pumped to the process through a circulating main with off-takes at the
SAG mill feed, at the CIL circuit (emergency pH control) and at the cyanide destruction
circuit for pH control. Solenoid valves with adjustable timers will control the rate of lime
addition from the circulating main.
Currently only quicklime is confirmed as being available for use on site. Price, packaging
and availability of hydrated lime is unknown. Given the expected mine life, the use of
hydrated lime may provide an avenue for total project cost reduction by the elimination of
the lime slaking mill package. This should be investigated in future studies.
Sodium Cyanide (NaCN)

Sodium cyanide will be received as briquettes in 1 tonne bulk bags. A hoist will be used
for lifting the bags to the enclosed feed chute with a bag breaker above the 5 m³ cyanide
mixing tank. The sodium cyanide will be dissolved with filtered raw water to make up a
20% w/v sodium cyanide solution and then transferred to a 7 m³ storage tank.
Cyanide solution will be distributed through a ring main with off-takes at the leach tanks
and CIL tanks 1 and 2 for cyanide profile control. A variable speed progressive cavity
pump will be used to meter the cyanide solution into the suction line of the elution water
pump during the elution cycle.
Sodium Hydroxide (Caustic Soda, NaOH)

Caustic soda will be delivered to site as a solid in 1.25 t bulk bags. A hoist will be used
for lifting the bags to the enclosed feed chute with a bag breaker above an 18 m³ storage
tank located in a concrete bunded area. Solid sodium hydroxide will be dissolved in
filtered raw water to generate a 20% w/v caustic solution.
A variable speed progressive cavity pump will be used to meter the caustic solution into
the suction line of the elution water pump during the elution cycle.
Hydrochloric Acid (HCl)

Concentrated hydrochloric acid (33% w/v HCl) will be delivered to site in bulk 1 tonne
containers. The concentrated acid will be pumped from the containers to the 14 m³
storage tank located in a remote acid-proofed bunded area. The concentrated
hydrochloric acid will be pumped from the storage tank by a positive displacement,
peristaltic pump and injected into the fresh water line at the base of the acid wash column.
Grinding Media
SAG mill grinding balls of 125 mm diameter will be delivered to site in 200 L drums and
transferred from the drums to a 2 tonne media kibble. The kibble will discharge into the
SAG mill ball loading chute located above the SAG mill feed chute.
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Ball mill grinding balls of 50 mm diameter will be delivered to site in 200 L drums and
similarly, transferred from the drums to a 2 tonne media kibble. The kibble will discharge
into the ball mill ball loading chute located above the ball mill feed chute.
Lime slaking mill grinding balls of 50 mm will be delivered to site in 200 L drums and
transferred from the drums to a 1 tonne media kibble. The kibble will discharge into the
slaking mill ball loading chute located above the slaking mill feed chute.
Copper Sulphate (CuSO4 . 5H2O)

Copper sulphate (as pentahydrate) will be received as a crystalline solid in 25 kg bags.
The bags will be emptied into the copper sulphate mixing tank and dissolved with raw
water to make up a 20% w/v copper sulphate solution, and then transferred to a 9 m³
storage tank.
A variable speed diaphragm pump (1 duty/1 standby) will be used to meter the copper
sulphate solution into the distribution box ahead of the cyanide destruction circuit where
copper sulphate acts as a catalyst for destruction of cyanides.
Flocculant
Anionic flocculant will be mixed in a flocculant mixing package to provide diluted flocculant
to the tails thickener. The flocculant will be received on site in powder form in 25 kg bags,
opened and emptied by hand into the flocculant storage hopper.
A variable speed progressive cavity pump will be used to meter the dilute flocculant
solution into the feed box at the thickener.
Sodium Metabisulphite (SMBS, Na2S2O5)
Sodium metabisulphite (SMBS) will be received as a powder in 1 t bulk bags. A hoist will
be used for lifting the bags to the enclosed feed chute with bag breaker above a 13 m³
sodium metabisulphite mixing tank. The SMBS will then be dissolved with raw water to
make up a 20% w/v SMBS solution and then transferred to the 19 m³ storage tank.
A variable speed progressive cavity pump (1 duty, 1 standby) will be used to meter the
SMBS solution into the distribution box ahead of the cyanide destruction circuit.
Activated Carbon
Activated carbon will be delivered in 500 kg bulk bags and added to the carbon quench
tank using the reagent area hoist. The activated carbon inventory will be replenished on a
demand basis, with fines removal from the fresh carbon being performed on the barren
carbon sizing screen.
Zinc Dust
Zinc dust will be delivered to site in 25 kg bags. Zinc dust is used to precipitate precious
metals from solution ahead of the precipitate filters. Pallets are transferred to the
precipitate area, as required, and bags emptied into a hopper. A screw feeder at the base
of the hopper meters zinc dust into a cone, where the dust is wetted, prior to its
distribution between the suctions of the precipitate filter feed pumps.
Lead Nitrate
Lead nitrate will be delivered to site in 25 kg bags on a pallet.
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Pallets will be transferred to the precipitate area, as required, and the bags manually
emptied into a hopper. A screw feeder at the base of the hopper will meter lead nitrate
into the zinc cone, where it is wetted with barren solution prior to distribution between the
suctions of the precipitate filter feed pumps.
Diatomaceous Earth
Diatomaceous earth will be delivered to site in 35 kg bags of a pallet. Diatomaceous
earth will be used for pre-coating and body feed duties and thus the bags will be manually
emptied into both the pre-coat hopper and body feed hopper. The contents of the pre-
coat hopper will discharge into a 0.5 m3 pre-coat mixing tank, where it will be mixed with
barren solution to generate a 10% w/w slurry and pumped to the duty precipitation filter.
A screw feeder at the base of the body feed hopper, meters diatomaceous earth into the
zinc cone where, it is wetted prior to its distribution between the suctions of the precipitate
filter feed pumps.
3.5.7 Plant Services – Water

Process Water Services

The process water system provides high volume low pressure water for the grinding
circuit. The system consists of a storage tank, duty / standby centrifugal pumps and a
water main. The storage tank is sized to provide two hours of residence time at design
flow rates. Water supply to the tank is primarily from tailings thickener overflow, with
additional makeup from the decant water tank or raw water tank as required.
Process water will be delivered to:
• SAG and ball mill inlets.
• Cyclone feed hopper.
• SAG and ball mill trommels screens.
A separate process water system, decant water, delivers water to the circuit where low
residual cyanide water is required. The decant water system consists of a storage tank
with six hours residence time at design rates, duty / standby centrifugal pumps and a
water main. The main water supply to the tank is decant water reclaimed from the tailings
management facility. Raw water can be added to the tank to maintain water supply in the
event of decant return water pump or line failure.
Decant water will be delivered to:
• The tailings thickener for flocculant dilution.
• Cyanide detoxification for dilution water.
• The CIL circuit as spray water.
• The lime slaking facility.
• The process water tank.
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Raw Water Services

Raw water will be supplied from a local borefield by two pumps to the site raw water
storage tank. The raw water storage tank will supply water to the high pressure raw
water, low pressure raw water, filtered water and fire water circuits.
The high pressure raw water circuit will consist of duty / standby pumps and provides
water to the:
• Crushing area – spray water.
• Desorption area – for eduction water.
• Tailings area – spray water for carbon safety screen.
• Gland water circuit.
The low pressure raw water circuit will consist of duty / standby pumps and provide water
to the:
• Mill area – water services.
• Desorption area – carbon transfer water.
• Reagents area – copper sulphate mixing.
• Raw water filter plant.
The filtered raw water circuit will be a vendor package and supply water to the:
• Potable water plant.
• Desorption area – acid wash water.
• Reagent area – cyanide, flocculant, SMBS and caustic soda mixing.
The fire water circuit will consist of a dedicated pump package and ring main. It will be
fed from the raw water tank from an outlet located below the high and low pressure pump
outlets. The position of this outlet will be calculated to ensure that the volume of water
accessible by the fire water circuit only, is sufficient for statutory fire fighting requirements.
The fire water pump package will consist of an electric jockey pump, electric booster
pump and diesel booster pump.
Potable Water Services

The water treatment circuit will provide potable water for use in the plant safety shower
circuit, workshop/store, crib room, ablution building, site administration, guard house, the
accommodation village and the elution circuit.
The circuit will consist of a reverse osmosis plant, storage tank with twenty four hour
residence time at design flow rates, and duty / standby distribution pumps.
3.5.8 Plant Services – Air

Plant and Instrument Air Services

Two screw type compressors will supply compressed air to the plant air receiver. The
compressors will also supply air to the instrument air receiver via a refrigerant air dryer.
Plant air and instrument air at 700 kPag will be reticulated throughout the process plant.
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Low Pressure Air Services (LP Air)

Two screw compressors (1 duty/1 standby) will supply low pressure air at 120 kPag to the
cyanide destruction and the reagent unloading areas. After-coolers will be installed on
each blower to reduce the discharge air temperature. Low pressure air will be reticulated
to the points of usage.
Oxygen (PSA Plant)

A pressure swing adsorption (PSA) plant will supply oxygen at 700 kPag to an oxygen
receiver for subsequent use in the CIL plant. Oxygen will be injected in to a circulating
stream of leach slurry via a high shear device. The flow of oxygen will be controlled to
maintain a dissolved oxygen concentration according to a set point, as measured by a
dissolved oxygen meter located in leach tank 1.
3.6 Control Philosophy

3.6.1 General
The basic design philosophy is that the plant be appropriately automated to reduce the
need for operator intervention on a continuous basis. Moderate levels of process and
engineering data collection and equipment monitoring will be provided via a
programmable logic controller (PLC) based system and operator interface terminal (OIT).
A fully redundant PLC system will be installed to provide online backup of plant process
control in the event of PLC component failure. Critical safety and equipment protection
interlocks will be hardwired. Control of process variables will be via the OIT or discrete
controllers in the field.
The plant will be provided with a central control room from which the status of major
electrical and mechanical equipment can be monitored and major regulatory control loops
can be monitored and adjusted via the OIT.
The proposed control system will allow the starting/stopping of the following drives from
the OIT in the main control room:
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Table 3.5 Drives to be controlled from Main Control Room
Comminution Circuit Apron feeder

Jaw crusher
Conveyor CV 01
Conveyor CV 02
Conveyor CV 03
Conveyor CV 04
Mill motors
Mill discharge pumps
Trash screen
CIL Circuit Leach and CIL tank agitators

Inter-tank screens
Carbon recovery pump
Carbon transfer pumps
Carbon recovery screen
Carbon safety screen
Cyanide Destruction/Tails Thickener underflow pumps

Cyanide destruction tank agitators
Tails pumps
Reagents Milk of lime circulation pumps

Milk of lime storage tank agitators
Cyanide circulation pumps
Thickener flocculant pumps
Cyanide destruction reagent dosing pumps
Services Cyanide reduction blowers

PSA plant
Plant/instrument air compressors

Raw water pumps
Potable water pumps
Decant water pumps
Process water pumps
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The following drives will be started from control panels in the field:
Table 3.6 Drives to be controlled from field-based panels
Crushing Control Panel Feeder

Primary crusher Conveyor CV-01
Conveyor CV-02
Conveyor CV-03
Conveyor CV-04
Mill Control Panel Mill auxiliary drives and mill motor – SAG and Ball mill
Thickener Control Panel Thickener auxiliary drives and rake motor
Elution Circuit Panel Acid wash pump

Elution water pump
Pregnant eluate pump
Heater auxiliary drives
Kiln auxiliary drives
Carbon de-watering screen
Precipitation Filter Panel Precipitation filters

Precipitation filter feed pumps
Carbon Regeneration Kiln
Calcine Oven
Barring Furnace
All other drives will be started in the field at the local stop/start control station located
adjacent to the drive.
The PLC will be utilised to accept status signals from the electrical switchgear for
monitoring drive status conditions on an OIT.
Two OITs will be installed in the main control room comprising two computer screens,
keyboard, mouse and printer with an uninterruptible power supply (UPS) system.
3.6.2 Drive Controls

Each drive will be supplied from a motor control centre (MCC) switchboard. All drive
control circuits will be hardwired and generally operate at 110V AC. Drive safety
interlocks will be hardwired.
In the field, each drive will be provided with a stop/start push-button control station. The
stop button will be of an Off-Stop style.
The SAG mill speed will be varied by the operation of the liquid resistance starter.
Other variable speed control units will use variable voltage variable frequency (VVVF),
utilising pulse width modulated (PWM) technology. The drives will be mounted in
free-standing cubicles, which will be provided with integral control panels for programming
and operation at the VVVF unit, for commissioning and emergency running.
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3.6.3 Control Loops

The regulatory control loops controlled from the main control room will appear as a
dedicated faceplate on the OIT and will appear and function in a similar manner to
traditional field mounted proportional integral derivative (PID) controllers.
The regulatory control loops not controlled from the OIT will be performed with single loop
PID controllers mounted on the field control panel (i.e. crusher, mill thickener, elution, kiln,
calcine oven, and barring furnace control panels). The controllers will be capable of
standard PID control and ratio control and come with standard operator interface facilities.
3.6.4 Crushing Circuit

Operation of the crushing circuit will have essential hardwired interlocks to protect
equipment. The only control point in the crushing circuit will be the speed of the primary
feeder which will be controlled to achieve the desired feed rate to the SAG mill.
A small crusher control panel will be provided in a cubicle above and adjacent to the
primary crusher. The crusher operator will have the facility to indicate a dump/no dump
ROM bin condition to the FEL driver.
3.6.5 Milling Circuit

Ore feed to the SAG mill will be measured with a belt weightometer on the SAG mill feed
conveyor, located upstream of the crushed recycled pebbles discharge point. The speed
of the apron feeder will be modulated to achieve the desired set point on the SAG mill
feed PID controller on the OIT. SAG mill power and weight will also be measured.
Process water addition to the SAG mill feed chute will be measured and controlled to a m3
per tonne ratio with the ore feed, in order to maintain a desired slurry density in the SAG
mill. A flow meter will be provided on the total process water addition to the milling circuit.
A nuclear density gauge located on the cyclone feed line will indicate the cyclone feed
slurry density. The water addition to the SAG mill discharge hopper will be controlled to
maintain a set point on the cyclone feed density PID controller on the OIT.
An ultrasonic level element will measure the slurry level in the mill discharge hopper. A
PID controller on the OIT will be used to control the speed of the mill discharge pumps to
maintain the required hopper level.
The SAG mill feed tonnage, SAG mill weight, SAG mill power draw, SAG mill speed, ball
mill power draw, cyclone feed density, mill discharge hopper level, mill discharge pump
speeds (output), and hydrocyclone feed flow will be trended and recorded through the
OIT.
3.6.6 Hybrid CIL Circuit

The pH of the slurry in leach tanks ahead of the CIL circuit will be continuously measured
by a submerged pH probe, which will control the set point on the lime addition PID
controller on the OIT.
All process parameters within the CIL circuit, with the exception of the pH control loop, will
be manually controlled or measured. The following is a list of the main metallurgical
monitoring functions that the CIL shift operators will be required to perform:
• pH measurements on pulp in the leach tanks and CIL tank 1 by hand-held pH
meter - used to cross-check the automatic pH probe.
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• Density measurements of the pulp in the leach tanks and CIL tank 1 by Marcy
Scale - used to assess performance of the classification circuit.
• Cyanide concentration measurement in leach solutions - measured on filtrate by
titration.
• Carbon concentration measurement - by volume from dip samples.
• Composite head and tail sample collection for assay.
• Slurry level observation in tanks and observation of inter-tank screen condition.
• Carbon recovery screen performance monitoring.
• Mechanical equipment monitoring - temperature, vibration, etc.
3.6.7 Elution Circuit

All steps in the AARL elution cycle will be controlled automatically with the exception of
the carbon transfer steps. The sequence control of the AARL elution cycle will be
monitored and controlled by a dedicated PLC mounted in the elution circuit control panel.
The following sequence control will be performed by the elution circuit PLC:
• The positive displacement hydrochloric acid metering pump will operate on a timer
to ensure the correct dosage of concentrated acid to the water line during the acid
wash cycle.
• The positive displacement elution water pump will operate on a timer to ensure
sufficient water is used to rinse the acid from the acid wash column.
• The positive displacement elution water pump will operate on a timer to ensure
sufficient water is used during the pre-soak cycle.
• The positive displacement caustic and cyanide metering pumps will operate on
timers to ensure the correct dosage of reagents to the suction of the stripping
water pump during the pre-soak cycle.
• The eluate temperature will be measured by a thermocouple located in the eluate
line to the elution column. A PID temperature controller mounted on the elution
circuit control panel will modulate the input of energy from the heater to maintain
the desired eluate temperature.
The stripping plant will strip up to fourteen batches of carbon per week.
The carbon regeneration kiln temperature will be controlled by modulating the speed of
the screw feeder to maintain the temperature set point on the PID controller mounted in
the local kiln control panel.
The critical process parameters (elution temperature and pressure, and kiln temperature)
will be trended on the OIT to assist the operator with process monitoring.
3.6.8 Precipitation and Gold Room

The start-up and shutdown of precipitation filters will be automated and controlled by a
PLC supplied as part of the filter package. Inlet and outlet valves of the precipitation
filters will be automated and controlled from a local control station with their positions
indicated in the central control room.
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Calcine oven and barring furnace temperatures will each be controlled by their respective
temperature controllers mounted in the local control panels. All other aspects of the gold
room operation will be manually controlled.
3.6.9 Cyanide Destruction and Tails Disposal

The pH of the slurry in the first cyanide destruction tank will be continuously measured by
a submerged pH probe which will control the set point on the lime slurry addition PID
controller on the OIT.
The Eh of the slurry in the first detoxification tank will be continuously measured by a
submerged Eh probe which will control the speed of the positive displacement SMBS
solution metering pump to maintain the set point on the PID controller on the OIT.
A copper sulphate solution will be added to the distribution box above the cyanide
destruction reactors using a variable speed, positive displacement pump with the speed
manually adjusted on the OIT.
Air flow to the detoxification tanks will be controlled manually.
An ultrasonic level element will measure the slurry level in the detoxification tails hopper.
A single PID controller on the OIT will be used to control the speed of the detoxification
tails pumps to maintain the required hopper level.
3.6.10 Reagents
Level indicator transmitters will be installed on all reagent mixing tanks and most reagent
storage tanks with level indication on the OIT. Provision will be made for On/Off control of
water addition to reagent mixing tanks via the OIT.
3.6.11 Services
A level indicator will indicate the water level in the decant water tank, raw water tank,
potable water tank and process water tank. The tank levels and high/low level alarms will
register in the control room on the OIT.
Pressure indicator transmitters will be provided for the plant, instrument and LP air
systems with signals monitored and alarmed via the OIT.
Individual magnetic flow meters will measure the bore field water production, and the raw
and process water flows. Water flow monitoring will be via the OIT.
3.6.12 Control Interfaces
Crusher Control Panel

Start/stop facilities will be provided at the crushing control panel and field stop/start
stations.
A remote/local/maintenance switch will be provided at the crushing control panel to allow
the operator to select one of the following options.
• Remote Selected - crushing circuit will be started from the crushing panel.
• Local Selected - crushing circuit will be started from the field stop/start stations
with the sequence interlocks maintained.
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• Maintenance Selected - allows sequence interlocks to be disabled. Starting will

be possible locally or remotely.
The crusher control panel will also house the following:
• Load current indication for the crusher and conveyor drive motors.
• An audible alarm with a panel mounted accept button.
• Panel lamps will indicate Ready, Run and Fault status.
Main Control Room (MCC)

The MCC will be adjoining the central MCC and substation and will contain two OITs on
an operator desk.
The OIT screen indication will include plant mimic pages with the following:
• Ready, Run and Fault status of all drives monitored directly by the OIT.
• Drive electrical parameters and running hours monitored and displayed for all
critical drives to assist in maintenance planning.
• Indication for each field instrument monitoring a process state with alarm status.
• Access to faceplates for associated single loop PID controllers.
• Drive start and stop controls for associated drives configured to start remotely via
the OIT.
• Remote/Local/Maintenance selector for associated drives configured to start
remotely via the OIT.
Audible alarms will be provided on the OIT and around the plant to advise when abnormal
conditions occur. The alarm will be acknowledged on the OIT and the status indicated on
alarm pages.
Mill Control Panel

The SAG mill will be provided with a local control panel adjacent to the mill. The control
panel will house the following:
• Individual mill alarm faults.
• Local mimic panel to assist fault diagnostic information.
• Mill bearing temperatures.
• Mill load cell readings, power draw and speed.
The SAG mill will be started via a liquid resistance starter, which will also be used to
adjust the mill speed within a limited range. The mill speed will be adjusted via the OIT.
The ball mill will be provided with a local control panel adjacent to the mill. The control
panel will house the following:
• Individual mill alarm faults.
• Local mimic panel to assist fault diagnostic information.
• Mill bearing temperatures.
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Elution Circuit Panel

The AARL elution circuit control panel will house the following:
• A PLC that will control the sequencing, control and alarming functions.
• Ready, Run and Fault status of stages of the elution cycle.
• Remote temperature set point for the elution heater.
The elution heater will be a vendor package controlled locally with standard control
facilities. Remote start and temperature set point signals will be initiated from the elution
control panel.
Precipitation Filter Panel

The precipitation circuit control panel will house the following:
• A PLC that will control the sequencing, control and alarm functions.
• Ready, Run and Fault status of the filter throughout its cycle.
The precipitation filters will be a stand alone vendor package located inside the secure
area, adjacent to the goldroom.
Operator Interface Terminal

Operator interface terminals (OIT) will be provided in the main plant control room. The
OIT will consist of the following:
• Two Pentium® IV central processing units (CPU) complete with CD ROM. The
computers will run in a master/slave operation.
• Two 430 mm (17 inch) colour Video Display Unit (VDU).
• Ethernet Cards.
• Standard industrial keyboard.
• Standard two button, serial mouse and mouse pad.
• Windows® and Disk Operating Software (DOS).
• Windows® based Data Logging Software for recording, trending, and alarming.
• Colour printer.
• A 6 kVA uninterruptible power supply (UPS) unit.
The OIT will be interfaced to the control system which collects all the digital status and
analogue measurement signals from the MCC PLC and other PLC in the plant. The
interface between the data logger and the PLC will be via an Ethernet link.
The OIT will read all digital and analogue information within the PLC and perform the
following functions:
• Display analogue process values on the VDU as a bar graph display. Each bar
will display the process value and alarm set points. A facility for the operator to
change the alarm values will also be provided for each bar.
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• Display faceplates for PID controllers configured in the OIT. Each faceplate will
allow the operator to change the process set point, Manual/Auto/Remote selector
and alarm values.
• Store all major analogue process values on the hard disk. The stored data can be
archived off the disk or will be overridden on a regular basis as required.
• Display analogue process values on the VDU as a trend display. The trend
displays will enable the display of data from the past up to present time. The
operator will be able to change the time scale and magnitude axis for each trend.
• Display digital alarms and analogue alarms on an alarm display. This display will
show the date and time the alarm was generated and the alarm condition.
Acknowledged alarms which are still present will be displayed in a subdued colour
until they are cleared. Alarms will be printed as they occur.
3.7 Metallurgical Accounting

A weightometer mounted on the SAG mill feed conveyor will measure crushed ore feed
and will determine the SAG mill feed tonnage. Each weightometer will provide an
instantaneous tonnage output, as well as an integrated tonnage value for metal
accounting purposes.
The density and flow rate signals from the nuclear density gauges and magnetic flow
meters located on the thickener underflow and CIL tail lines will be used to calculate the
mass flow at these points in the circuit.
Regular sampling by auto-samplers on the hydrocyclone overflow and the CIL residue
streams will provide reliable samples for head grade and final solution and residue
grades. These analyses will be performed in the site laboratory and the results used for
overall recovery estimates.
Regular gold and silver in circuit surveys of the CIL circuit will allow reconciliation of
precious metals in feed compared to doré production.
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4 INFRASTRUCTURE AND SERVICES

4.1.1 General
Both on-site and off-site infrastructure requirements have been addressed in this study.
This section provides a description of the infrastructure. It addresses roads, water, fuel
and power supplies, buildings and control room, communications, security, fire protection
and accommodation camp, which will be provided to support the operation of the process
plant.
4.2 In-country Telecom/In-plant Communications

On site communications will comprise inter-connected mobile and fixed systems. The
mobile system will consist of a base and a repeater radio station with 20 hand-held and
14 vehicle mounted slave sets. The fixed system will include a master “communications
manager” controlling a network of up to 64 fixed handsets and an Ethernet data network.
A microwave station with a capacity of 45 Mb/sec will provide a voice and data link from
the mine site “communications manager” between the existing AQI Exploration Office in
Jacobacci, and thence by ISDN to the Buenos Aires offices.
4.3 Access Roads and On-Site Road Constructions

4.3.1 Project Access and Bypass Roads
The existing access road into the project site will be widened and upgraded to meet the
project requirements. This road is some 23 km long and ties in to Provincial Route No. 76
near Ingeniero Jacobacci and ends at the project camp.
Two new bypass roads will be constructed to divert traffic from the project access road
around the site. The northern bypass road will be 3.6 km long. The eastern bypass road
will be 3.3 km long.
A total of 6 km of new roads will be constructed from the end of the project access road
providing access to the mine haul roads, plant site, infrastructure and the main camp. This
includes a spur road to the explosives magazine. These roads will not be normally open
for public access.
The project access and bypass roads will have the following design features:
• Design speed 60 km/h, but restricted to 50 km/h at some corners.
• Two lane road, total carriageway width 6 m.
• 1 m shoulders both sides of road.
• Provision of top side table drain.
• Corrugated pipe culverts.
• In general; fill batter slopes 1:1.5 (vertical:horizontal), Cut batter slopes 1:0.5
(vertical:horizontal).
• A granular sub-base and pavement comprising compacted crushed rock (i.e.
limestone gravels).
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• Appropriate road markings, guide posts and signs.
4.3.2 Mine Haul Roads

• Approximately 3.9 km of haul roads will be constructed initially prior to
development of the open pit. These will connect the Run-of-Mine (ROM) ore
storage pad with an exit of the first two deposits that will be exploited, the northern
pit and the pit just to the west of the plant site. A spur haul road allowing trucks to
access the refuelling area is included.
• Cut to fill construction will be used to the maximum possible extent. The main
section of this road will comprise a 20 m wide running surface, 1 m shoulders and
a 3 m upside drain.
• Maximum allowable grade will be 10%, which will reduce on sharp curves.
Embankment slopes will be 1:1.5 in fill and 1:0.5 in cut. The road foundation will
be substantial, as is required for the passage of mine trucks. It will be sheeted
with gravel maintained by frequent grading and water sprinkling.
• The upper end of this road will adopt a progressively changing alignment to match
it with the variations in open pit exit point elevation.
4.4 Water Supply and Distribution

4.4.1 Source of Supply
The water supply source has not yet been identified by AQI. A nominal lump sum cost
has been allocated in the estimate to allow for the necessary pumps, piping and
associated equipment to deliver water to the plant site.
It is anticipated that the bulk of the plant water demand will be drawn as a recirculating
flow from the decant pond in the TSF and from two monitoring ponds that will be built
down gradient from the TSF. Water will be supplied to the decant pond from the following
sources:
• Water released from the tailings slurry as it settles and consolidates.
• Rain water on the TSF.
• Run-off from rainfall on the undiverted portion of the unlined catchment area
surrounding the TSF liner, from rainfall on the exposed liner area, from rainfall on
the tailings beaches surrounding the decant pond and rainfall in the monitoring
ponds.
• Recirculated drainage water flowing from the tailings underdrainage system laid
on top of the HDPE liner.
• Discharge from the package sewage treatment plant.
• Seepage water from the groundwater interceptor drain, beneath the HDPE liner at
those times when the quality of this water prevents its being discharged to the
receiving waters.
These inputs will be partially offset by evaporation losses from the decant pond surface
and from those areas of the surrounding tailings “beaches” which are not entirely
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desiccated. The water balance model takes all these contributing factors (apart from
occasions of groundwater interceptor drain recirculation or addition of pit dewatering
flows) into account through a 30 year series of actual weather conditions incorporating
extended wet and dry weather cycles.
4.4.2 Raw Water System

Raw water will be delivered from the water supply source to the open topped raw water
tank with a capacity of 800 m3 located at the plant. High pressure and low pressure
pumps each with standby units will supply the raw water needs for the plant. Low
pressure (LP) raw water will be filtered through a sand media filtration system and used in
the elution circuit and for flocculant and reagent make-up. A bleed stream of the filtered
LP raw water will be diverted to the potable water system that is described in Section
4.4.4.
The raw water tank will incorporate a volume dedicated only to the firewater system
described in Section 4.11.
4.4.3 Process Water System

Water will be recovered from the tailings pond using a pontoon equipped with duty and
standby vertical multistage pumps, and with floating access for power, pipeline and
personnel. Normal demand will be met by operation of the duty pump only. The
maximum plant process water demand under adverse conditions, e.g. failing to achieve a
high tailings thickener underflow pulp density will be met by simultaneous operation of
duty and standby pumps. Power will be provided by an overhead line routed from the
process plant to the head of the decant pond causeway, and thence by armoured cable
laid on the surface. The immediate area will be strongly illuminated and the pontoon will
incorporate fencing for security and safety. Pump control will be remote.
Process water will be delivered via an HDPE pipeline, laid on the ground and routed along
the decant pond causeway and access road, to the open topped process water tank
located at the plant. The tank capacity will be approximately 400 m3. A manual drainage
arrangement will allow this pipeline, including the whole process water tank if necessary,
to be drained into the decant pond.
Process water will also be used to supply a standpipe for filling water trucks.
4.4.4 Potable Water System

Potable water will be drawn from the filtered raw water supply to the process plant.
Ultraviolet sterilisation and chlorination will be used to produce potable quality water.
Potable water will be stored at the process plant in a closed tank and pumped, in a
system incorporating a central accumulator, to all safety showers and eyewash stations,
changing/washing facilities, toilets, kitchens and drinking fountains. The tank capacity will
be approximately 60 m3. Potable water piping in the plant area will either be buried below
the frost line, routed through heated buildings or heat traced and insulated. Manual drain
points will be included to allow emptying of pipelines should weather conditions dictate.
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4.5 Effluent
4.5.1 Sources and Disposal
Sewage from the plant site buildings will gravity flow via a pipe network buried below the
frost line into the epoxy coated mild steel tank connected with a package activated sludge
sewage treatment plant. The outflow will either be pumped to the plant tailings hopper or
gravity fed via surface drains to the TSF. Surplus sludge will be periodically transferred to
the tailings hopper.
Hydrocarbon waste will arise from equipment maintenance, sumps in the bunded fuel
storage area, and operation of the oil/water separator in the vehicle wash down facility.
This material will be pump and gravity transferred to a waste oil tank from which it will be
pumped to a contractor’s bulk tanker for off-site disposal in accordance with the
applicable regulations. Chemical waste from the laboratory will be collected and stored for
off-site disposal in the same manner.
Office waste and waste from the meals areas will be collected by a cleaning contractor
who will dispose of the waste materials off-site in accordance with the applicable
regulations.
4.6 Fuel Supply, Storage and Distribution

4.6.1 Usage
During construction, the diesel fuel consumption by all participants is anticipated to be
approximately 400 m3. This is a significant volume and justifies the early scheduling of the
installation of the permanent fuel facility.
During operation, the diesel consumption for the mining fleet is anticipated to range
between 1000 and 2000 m3/year, with an average of about 1600 m3/year. Fuel use for
process plant equipment (strip solution heater, carbon regeneration kiln and barring
furnace) will be relatively steady at about 260 m3/year.
The power station will consume approximately 15,000 m3/year of diesel.
Supplementary uses will be for some light vehicles and plant mobile equipment. These
will average about 87 m3/year for a grand total averaging 16,947 m3/year or approximately
326 m3/week.
Petrol use will be minor, as required for a few light vehicles used on the public roads, and
will be satisfied by purchase from local retail suppliers.
4.6.2 Fuel Source and Quality

Diesel fuel will be sourced from major suppliers able to provide certification as to its
quality to ensure minimisation of environmental impact. It will be delivered in bulk tankers
every week.
4.6.3 Storage and Distribution

The facility will comprise two 170 m3 capacity tanks. A skid mounted fuel supply
mechanical/piping package with controls and interlocks will contain tanker unloading
pump, fuel transfer pumps, strainers and filters. A light and a heavy vehicle bowser, on
opposing sides to separate traffic, will complete the installation. The complete facility will
be located within an impermeable bunded area able to contain the full volume of the tanks
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with a sump draining to the adjacent vehicle wash down facility hydrocarbon sump. It will
be located 25 m clear from the nearest building. Fire suppression sprays will be
permanently piped into the firewater distribution system.
Fuel for use in the process plant will be intermittently pumped to a 1000 L day tank within
the process plant building, from whence it will gravity feed to all the demand points.
4.6.4 Security
A security fence will prevent access to all but the loading point and bowsers. An electronic
card system, preventing fuel withdrawal by unauthorized personnel and recording use
against each card, will be installed.
4.7 Vehicle Wash down Facilities

4.7.1 General Description
A vehicle wash down facility will be provided adjacent to the diesel fuel refuelling area. It
will comprise a bunded slab sloped to a sump, into which rainwater and fuel spillage from
the adjacent fuel storage and distribution area will also drain. A sump pump will transfer
dirty water to an oil/water separator. Collected oil will be pumped to a waste oil tank.
Separated water and solids will be pumped to the tailings thickener.
High pressure water cleaners will be provided to spray down the vehicles with process
water for:
• Regular cleaning.
• Cleaning prior to maintenance.
• Cleaning of wheels and tyres prior to the vehicle or machine leaving the site.
4.8 Power Supply and Reticulation

4.8.1 Power Station
A power station consisting of ten 1.0 MW high speed diesel generators will be installed.
No more than eight units will be required to operate at one time. Power will be generated
at 11 kV.
The power requirement has been calculated as follows:
• Process plant installed power = 6.7 MW.
• Estimated plant consumed power = 5.8 MW (This is when the plant is
operating and is the power used to size the power station).
• Estimated plant average power = 4.5 MW (This is the value used for
estimating operating cost).
• Eight 1MW generator sets (operating at a typical 80% load) will produce 8 x 1 x
0.8 = 6.4 MW, sufficient for 5.8 MW of plant power plus an allowance for mine
workshop, camp, etc. Ausenco recommends that two stand-by units are provided,
giving a total of ten 1 MW generators.
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4.8.2 Power Distribution

An aerial distribution arrangement in the plant switchyard, will distribute the 11 kV supply
to the following:
• The SAG and ball mill drives.
• An 11/0.4 kV, 2 MVA transformer serving the main plant motor control centre
(MCC).
• A 150 m long underground 11 kV line to the crushing plant 11/0.4 kV, 500 kVA
transformer.
• A 1.5 km long 11 kV overhead line routed along the TSF access haul road to the
11/0.4 kV, 100 kVA transformers at the TSF embankment and TSF decant pond.
4.9 Buildings
4.9.1 Administration Buildings
These buildings will be brick or block-work construction with on-ground concrete floor
slabs finished to suit vinyl flooring and skirted below the frost line. Upper floors will be on
similarly finished elevated concrete slabs. They will use local materials and building
techniques to the maximum possible extent. The external finish will be painted. Roofing
will be timber framing clad with corrugated steel.
Ceilings under roofs will be painted plaster board. Internal partitions will be either timber
framed and clad with plaster board or bricks/blocks, all with a painted finish. Skirting and
scotia boards will be provided only if the construction technique demands it. Electrical and
communication wiring may be surface mounted in conduits inside and out. Internal lights
against concrete or block-work will be bulkhead units. Internal doors will be painted
hollow core, external doors painted solid core.
Door hardware will be local domestic standard. Floor finishes will be vinyl sheeting with
local ceramic tiling to wet areas.
The arrangement of windows in the buildings will allow natural ventilation and be local
standard. Heating will be provided by electrical heaters.
Administration Office
This building will house managers, administration and finance personnel and a proportion
of the operating and mining staff, and will be approximately 570 m2 in area.
The building will include 12 private offices, 22 open plan offices, meeting and training
rooms, guardhouse/security area, kitchen, toilets, first aid facilities and ambulance parking
bay. It will be equipped with furniture, emergency first aid facilities and office and fixed
communications equipment.
Plant Offices and Ablution Block

This lean-to structure will be located at one end of the main process plant building.
Approximately 100 m2 will be dedicated to male and female ablutions, change rooms and
lunch room for plant operating and maintenance personnel. The facilities will include
showers, basins, toilets, benches and lockers.
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Approximately 160 m2 will be dedicated to offices for the mill and maintenance managers,
maintenance foremen, metallurgists, maintenance planners and warehouse personnel.
Furnishings will be provided.
4.9.2 Control Rooms
Crusher Control Room

A basic air conditioned and furnished control room will be provided at the primary crusher.
It will be approximately 6 m2 and of a transportable style constructed of insulated
sandwich panel or similar.
The crusher operator will use the plant ablution block toilets about 150 m away.
Continuous operator presence within the crushing area will not be required for
uninterrupted plant feed.
Process Plant Control Room and Titration Area

This room will be located above the gold room within the process plant building
overlooking the grinding and regeneration area and close to the access way between the
process building to the CIL area. It will be about 20 m2, have block-work walls and a
timber frame and plaster board ceiling. It will be fitted out with appropriate furniture and
fixings but have no provisions for heating or cooling.
An area outside the enclosed control room will be fitted with benches, sinks, shelves and
equipment and serve as the titration area for process control by operations personnel.
4.9.3 Industrial Buildings

These buildings will have steel frame construction with galvanised cold-rolled sections for
purlins and girts, zincalume or colorbond steel cladding and roofing, with concrete and
bitumen flooring.
Process Plant Building

The process plant building will be 60 m long (6 x 10 m bays) by 26 m wide and with an
eaves height of 13.5 m. One 15 tonne overhead electric travelling crane along its full
length will provide complete coverage for operations (ball loading), plant and mine
equipment maintenance and warehouse access.
The two 10 m bays at its north east end will house the grinding, desorption, goldroom and
regeneration sections of the process plant. A 20 m long by 6 m wide lean-to annex along
the north west wall at this point will contain the covered sections of the reagent mixing
equipment and be fitted with its own 1.5 tonne monorail crane for reagent addition.
The remaining four 10 m bays of the building will be dedicated to the plant maintenance
and light vehicle workshop and warehouse facility. The workshop area will be fitted out
with a small lathe and milling machine, benches, tools and welding machines and will
include a lay down space accessed by a roller door on each side of the building.
The warehouse section will cover a 30 m by 10 m fenced off floor space along the north
west wall with a 20 m by 10 m mezzanine floor at about 3.5 m height. The storage
volume below the mezzanine floor will be fitted with a proprietary multi-row, full height
shelving system providing the support for the mezzanine floor itself. An elevated walkway
at mezzanine floor level will provide access direct from the process plant office area to the
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grinding area eliminating unnecessary traffic through the workshop. A fence around the
mezzanine floor will provide security to that storage space.
Tools and materials will be dispensed from a bench in an interior wall of the warehouse at
floor level. Ground and mezzanine floor areas accessible to the overhead crane hook will
be used to store bulky/heavy items. 600 m2 of fenced outdoor storage will also be
provided.
A full length closable ridge vent and peripheral wall louvres on the building will provide
summer ventilation and temperature control but allow warmth to be contained in winter.
No heating will be provided in the building other than in enclosed office spaces and the
control room.
Mine Workshop Building

The mine workshop building will be 40 m long (4 x 10 m bays) by 15 m wide and with an
eaves height of 7.5 m.
Two full bays will be dedicated to full size mine equipment stalls and one bay to light
equipment and tyre fitting. Each stall will be accessed through a roller door, and 8 m by
9 m concrete slabs in each of the mine equipment stalls will allow jack operation without
floor damage. Appropriate fixed benches, tools and lubrication equipment will be
provided.
One full bay (180 m2) will be dedicated to mine personnel offices, lunchroom and ablution
facilities.
Reagent Storage
The reagent storage building will be situated adjacent to the process plant building
opposite the reagent mixing area. 300 m2 of floor area will be provided.
Drains and a sump pump will be provided for spill management.
The area and the building will be lit and access will be strictly controlled. The internal
areas will be divided to allow separate access to and control of the cyanide storage area
in compliance with relevant regulations.
Core Storage and Laboratory

The core storage and laboratory will be situated adjacent to the process plant and will be
750 m2 in area. It will be a bare industrial building shell only, with a section of concrete
floor for the sample preparation area and with basic lighting and a power board. The
laboratory contractor will provide and install a fully fitted out transportable analytical
laboratory building and office space in the allocated area within the building shell.
Laboratory staff will use the plant ablution block toilets. The sample preparation facility
will be built up from individual items of equipment installed on the concrete slab with dust
collection and suppression equipment as required for safe operation.
4.9.4 Motor Control Centre Rooms
Main Plant Motor Control Centre

The maim MCC room will be 11 m by 7 m with 4 m ceiling height and it will be located on
the north side of the process building, constructed with block-work walls. Double doors
opening to the east will provide access for installation of equipment. The project
switchyard will be on the northern end of the room. Additional single doors will provide
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personnel and safety ingress/egress. A ventilation fan will provide cooling when
necessary.
Crusher Area Motor Control Centre

This will comprise a transportable building pre-fitted with all equipment and provided with
doors, lighting and ventilation.
4.10 Man camp

A fully equipped man camp capable of housing up to 200 people will be constructed 1 km
from the plant site to the south west of Nelson deposit. The camp will comprise buildings
with 4 bedrooms and 2 bathrooms, with each bathroom shared by 2 rooms. Junior
personnel will share bedrooms (2 to a room) and senior personnel will not share rooms.
The heating in the rooms will be by electrical heaters and there is no provision for
airconditioning or fans for cooling.
The camp will have a single lounge area and there will be a single mess supplying all the
personnel the same meals using a contract catering service.
4.11 Fire Protection

Fire protection will be a “wet” system. Jockey, duty and diesel-powered standby pumps
will pump from a dedicated firewater volume in the raw water tank. The jockey pump will
maintain the minimum pressure of 5 bar in the system at all times.
A buried ring main around the plant area will circle the main process plant building and
allow “dry” type hydrants suitable for cold weather installation to be located outside the
main building, the reagent annexe, the offices, the reagent store, the core shed/lab
building, the fuel area and the tankage area. Fire hose reel cabinets, fed from buried ring
main branch pipes, will be located within all buildings. Supplementary hand held fire
extinguishers, each suitable for its specific area, will be mounted throughout all buildings,
with special emphasis on MCCs, control rooms, transformer areas, diesel fired equipment
and fuel storage locations. No sprinkler systems will be installed in buildings.
A fire indicator panel will be provided in the main control room, cabled to very early smoke
detection alarms in the following areas:
• Process Plant MCC Room.
• Crushing Area MCC.
• Gold Room.
• Administration building and crib room.
• Workshops and stores.
• Power station.
These, and other enclosed areas will be provided with emergency exits and appropriate
illuminated exit signs. Other enclosed areas will all be fitted with standard smoke
detection alarms and break glass alarm panels will be mounted externally to all buildings
adjacent to access ways.
No fire suppression systems will be provided.
5 April 2007 82 of 133

4.12 Security
4.12.1 Fencing and Gates
The plant area, incorporating the crushing plant, main process building, leach area,
administration building, core shed and laboratory and reagent store will be surrounded by
a 2.4 m high chain mesh fence topped with four strands of barbed wire.
The plant access gate with a guard/security house will be on the plant access road
immediately adjacent to the security centre in the administration building. The gate will
consist of a sliding gate and a boom gate and will be overlooked by a security camera.
Vehicle access through the gate will require identification and search/clearance of the
vehicle at the security centre immediately prior to entry and exit.
The guard house will be a prefabricated building with separate entrance and exits doors,
small washroom with toilet and sink. Exterior and interior finishings will include all
plumbing and electrical wiring.
People entering and leaving the plant on foot will report to the security staff and be
subject to identification and search as is necessary.
Visitor car parking bays are provided next to the administration building. There is also car
parking and truck bays outside the guard house.
Additional fencing within the plant area compound will separate the outdoor storage
section of the warehouse, the reagent store building, the switchyard and the transformer
compounds. Access to all these areas will be restricted to very few personnel with a
single key to each area held by a senior staff member.
Areas external to the process plant compound also will be fenced with 2.4 m high chain
mesh topped with four strand barbed wire. These will include the diesel fuel and vehicle
wash down facility, the mine maintenance workshop, the TSF seepage pond pump station
and the water supply pump station. All will be fitted with single swinging gates with a
single key held by a senior staff member.
The magazine area will be fenced with a double security fence with a single sliding gate.
A solar powered proximity alarm system with radio link will bring up an alert in the security
centre in the event of penetration of the peripheral barrier. The single key to this gate will
be held by a senior staff member.
4.12.2 Secure Buildings

Higher security areas within the process plant will comprise the cyanide storage section of
the reagent store and the process plant gold room.
The cyanide storage area will be a secure area within the fenced and secured reagent
store. It will be separated off by locked door or gate with controlled access.
The goldroom will be reinforced concrete and block work construction with lockable
access doors and secure airlock compound for armoured vehicle loading. Access will be
by key, fingerprint access and radio contact with the security centre. Continuous
surveillance cameras will monitor and record all activity within the gold room.
High security buildings external to the process plant compound will comprise the two
modified containers in the magazine area. These intrinsically secure types of construction
will be fitted with lockable doors with keys held by individual senior members of staff. It
5 April 2007 83 of 133

will require two staff members to access these areas – one holding the key for the
security fence gate and one having the key for a magazine container.
4.12.3 Fuel
Fuel bowsers will be locked and all fuel dispensed by a single individual per shift under
surveillance by camera and recorder.
4.13 Plant Light Vehicles and Mobile Equipment

The following light vehicles will be supplied:
Table 4.1 Light vehicles to be supplied
Administration Vehicle Type No. of vehicles

Resident Manager 4x4 Wagon 1
Administration Manager 4x4 Wagon 1
Security Supervisor 4x4 Wagon 1
Roaming Security 4 Wheel Motorbike 1
Pool Cars 4x4 Dual Cab 3
OHSE Group 4x4 Dual Cab 1
Communications Manager 4 x 4 Dual Cab 1
First Aid (ambulance) 4 x 4 Troop Carrier 1
Transport Bus 1
Process Plant Vehicle Type No. of vehicles
Processing Manager 4 x 4 Wagon 1
Shift Supervisor 4 x 4 Utility 1
TSF Engineer 4 x 4 Utility 1
Maintenance Manager 4 x 4 Wagon 1
Senior Met/Maintenance Supervisor 4 x 4 Dual Cab 1
Total Administration and Process 16
The following mobile equipment will be supplied:
Table 4.2 Light vehicles to be supplied
Administration Vehicle Type No. of vehicles

Warehouse All terrain 3 tonne forklift 1
Process Plant Vehicle Type No. of vehicles
Maintenance 5 t Yard Crane 1
Maintenance 5 t flat bed truck with Hiab 1
Operations CAT 966G FEL 1
Operations CAT 980 FEL 1
Operations Skid steer loader 1
Total Administration and Process 6
5 April 2007 84 of 133

5 PROCESS PLANT OPERATIONS AND ADMINISTRATION

5.1.1 General
Personnel will be recruited locally to fill the majority of the available positions. Given the
requisite skills, or the ability to quickly acquire such skills, Argentinean nationals living in
the Río Negro province would be ideally placed to fill the available positions.
Those positions requiring experience in gold plant and related operations will be filled by
nationals with the suitable experience, in preference to expatriate labour. Expatriate
positions will account for a very small, but essential, proportion of the total personnel
employed.
The Calcatreu operations and manning organisation charts are shown in Appendix 5.
Labour costs (summary) are provided in Section 6.4.2 for Process Plant and Section 6.5.1
for Administration.
5.2 Administration
The administration development will provide support services to the mining, operations
and maintenance departments. Key functions and services will include: human resources
management, accounting, payroll, purchasing, warehouse and inventory control,
communications support, security environmental support, and accommodation
management. Administration staffing has been discussed with AQI and agreed.
The department will be under the supervision of an Administration Manager who will
report to the Resident Manager, Reporting to the Administration Manager will be the
Information Technology (IT) Manager, Environmental Officer, Human Resources (HR
Manager and Finance Manager.
The HR Manager’s duties and functions include community relations, security,
Occupational Health Safety and Environment (OHS&E), HR (medicals, inductions,
training, accommodation) and travel. The HR Manager will have 35 permanent staff to
carry out this administration duties shown in Table 5.1.
The Financial Manager’s duties and functions include all payroll and accounting functions,
capital maintenance, and purchasing and stores inventory. Seven permanent staff will
assist to carry out these duties.
All community development and accounting facilities will be based at an office in
Jacobacci, with the remaining administration functions being directed from site.
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Table 5.1 Administration Employment Numbers Operations Manning
Administration Position Location Employees

Administration Manager Jacobacci 1
Subtotal 1
Secretary/Receptionist Jacobacci 1
Secretary/Receptionist Site 1
Subtotal 2
IT Manager Both 1
Subtotal 1
Environmental Officer Site 1
Environmental Technicians Site 2
Subtotal 3
HR Manager Jacobacci 1
Community Development Officer Jacobacci 1
OHS&E Manager Site 1
Drivers Both 3
Company Nurse Site 1
Safety and Training Officers Site 2
Security Supervisor Site 2
Security Guards Both 18
Accommodation Supervisor Site 1
Housekeepers/Cleaners Site 6
Subtotal 36
Finance Manager Jacobacci 1
Chief Accountant Jacobacci 1
Cost Accountant Jacobacci 1
Payroll & Accounts Payable Jacobacci 2
Supply Manager Site 1
Purchasing Officer Site 1
Storeperson Site 1
Subtotal 8
Total 51
The process plant shift crew labour of 20 employees, shown in Table 5.2, provides a
continuous operational coverage for 24 hours per day, 7 days per week, over 52 weeks
per annum. Operations manning has been discussed with AQI and agreed.
The 4-panel roster is structured on a three shift, 24 hours/day basis. A typical shift
contains 5 employees. Each shift consists of 1 Shift Supervisor and 4 Process Operators.
Each shift covers operations of all continuously operated areas of the process plant
(crushing, grinding, leaching and adsorption, and tailings management).
In addition to the operating shifts, 9 operators have been included to handle
reagents/water requirements, carry out elution and goldroom duties, provide leave
coverage for shift crew, and additional tailings management on a one shift per day basis.
The Assistant Process Manager, Mill Superintendent and Senior Metallurgist will report to
the Process Facility Manager who in turn reports to the Resident Manager. The Mill
5 April 2007 86 of 133

Superintendent for the Process Plant has 4 Shift Supervisors reporting directly to him/her.
The manning numbers for the Process Plant are shown in Table 5.2. Key personnel will
be employed sufficiently early in the implementation schedule to achieve an effective
involvement in the development of operating and training programmes/procedures.
Contract laboratory labour is included in the overall process plant manning levels. The
costs for these personnel are included in the monthly assaying services fee.
Table 5.2 Process Plant Employment Numbers
Process Plant Position Employees

Supervision Process Facility Manager 1
Senior Metallurgist 1
Assistant Process Manager 1
Mill Superintendent 1
Metallurgical Clerk 1
Shift Crew Shift Supervisors 4
FEL Operator 4
Crusher Operator 4
Mill Operator 4
CIL/CN Detox Operator 4
Day Crew Goldroom Operator 2
TSF Labourer 2
Reagents/Water Operator 1
Shift Relief 3
General Labourer 1
Metallurgist 1
Junior Metallurgist 1
Chemist and Supervisor (Contract) 2
Sample Preparers (Contract) 6
Laboratory Technicians (Contract) 4
Total Process Plant 48
5.3 Maintenance
The Maintenance Manager will oversee the plant maintenance activities and will report
directly to the Resident Manager. The Maintenance Superintendent reports to the
Maintenance Manager and supervises the Maintenance Planner, shift maintenance crew
and the Day Foreman. Breakdown maintenance will be performed by the shift crew
comprising of one fitter and one electrician. The Day Foreman has a total of 3 Trades
people and 2 Trades assistants under his supervision. The maintenance manning
numbers are shown in Table 5.3.
Maintenance, during start-up, can be high due to a higher than normal number of
equipment failures. Modifications of various kinds (chutes, pipes, instruments, etc) are
5 April 2007 87 of 133

required at this time and it is necessary to maintain certain construction crews to assist
with commissioning activities.
Table 5.3 Process Plant Maintenance Employment Numbers
Maintenance Position Employees

Supervision Maintenance Manager 1
Maintenance Superintendent 1
Maintenance Planner 1
Shift Crew Electrician 4
Fitter 4
Day Crew Day Foreman 1
Fitter 2
Instrument Technician 1
Trades Assistant 2
Total Maintenance 17
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6 OPERATING COST ESTIMATE

6.1.1 Summary
The Operating Cost Estimate is presented in United States dollars (USD) and uses prices
obtained in 2Q06. All references to dollars or $ are to USD. The overall accuracy of the
project initial capital cost estimate is ±25%.
The estimate excludes doré shipping, mining, insurance and refining costs, escalation,
accuracy provisions, corporate overhead charges, financing costs, royalties, income taxes
or similar imposts as well as expenditures classified as capital, sustaining capital, or
rehabilitation and closure costs.
Operating cost estimates were prepared by a number of consultants for the various
components of the Project. Major contributions to the estimate were made by:
• AQI participated in advice about and enquiries to local suppliers and advised on
labour rates, labour loadings and manning schedules, and security needs.
• Ausenco provided the operating cost components associated with the Process
Plant.
Ausenco has combined these separate inputs to create an operating cost estimate for the
processing plant and administration combined.
Table 6.1 summarises the average annual costs for processing Calcatreu ore at a rate of
750,000 tonnes per year over the life of the mine.
A detailed operating cost estimate is appended in Appendix 6.
Table 6.1 Operating Cost Summary
Cost Centre Average Annual Costs Unit Cost
USD M USD/t ore treated
Processing 11.16 14.89

General & Administration 2.19 2.92
Total 14.65 19.55
6.2 General Estimating Parameters

6.2.1 Exchange Rates
The estimate is expressed in USD. Conversions of all quoted foreign currencies have
been based upon the foreign exchange rates shown in Table 6.2.
5 April 2007 89 of 133

Table 6.2 Currency Exchange Rates
Country Unit of Currency Exchange Rate (USD)
USA Dollar ($) 1.00
Australia Dollar (Aus$) 0.75

Argentina Dollar (Arg$) 3.00
6.2.2 Escalation
Operating costs have a base case of 2Q06, with no allowance for escalation.
6.2.3 Accuracy Provision

There is no accuracy provision included in the costs.
6.2.4 Inclusions
The operating cost estimate includes the following:
• Rehandle of ore from run of mine stockpile to primary crusher.
• Labour cost calculations include regular bonuses, holiday and sick provisions (by
way of additional “standby” staffing), social security contributions, and personal tax
offsets.
• Labour costs for supervision, management and reporting of on-site organisational,
commercial, technical, environmental, training and occupational health and safety
activities.
• Labour costs for operating and maintaining the mobile equipment and light
vehicles, process plant and supporting infrastructure as well as for monitoring of
the environment.
• All power, fuels, reagents, consumables and maintenance materials utilised in
operating the mobile equipment and light vehicles, process plant and supporting
infrastructure as well as for monitoring of the environment.
• Operating costs of an on-site contract assay laboratory.
• Operating payments to miscellaneous minor contractors such as waste collection,
specialised maintenance groups and similar.
• On-site general and administration (G&A) costs. These are detailed in Section 6.5
below. They include:
− additional personnel costs such as safety clothing and first aid costs,
− office costs such as communications, postage, stationery and computer
supplies, and
− operation and maintenance of the administration light vehicles and mobile
equipment.
5 April 2007 90 of 133

6.2.5 Exclusions
The operating cost estimate excludes the following:
• Costs for exploration and assessment of the viability of other potential ore
resources.
• Costs for all mining activities.
• In-country or overseas corporate head office, financing, legal, banking, insurance,
accounting costs and charges.
• Insurance, shipping costs and refining charges for the doré bars.
• Royalties, Value Added Tax (VAT), income taxes or similar imposts.
• Enterprise fees, licenses, land use, water use or other charges to State or Local
Body Authorities other than those specifically provided for.
• Pre-production mining costs, which are included in the capital costs.
• Activities covered by the sustaining capital and closure/rehabilitation provisions.
6.3 Development of Estimated Rates and Costs

6.3.1 Labour
Development of the labour cost estimate is built around the site administration and
processing plant manning list as shown in Section 5, excluding the contract laboratory
labour.
AQI then provided a base monthly remuneration rate in USD for all local and expatriate
personnel on that manning list according to skill level and responsibility. AQI also
provided the loadings applicable to those base rates to enable determination of the total
amounts directly and indirectly payable for each individual. These included a standard
bonus equivalent to an additional base monthly rate. Indirect payments comprised a
single loading, understood to cover elements such as social security benefits and payroll
taxes.
The spreadsheet showing the development of these costs for the administration and
process plant operation and maintenance, with detail of the loadings and their application,
is attached as Appendix 6.
6.3.2 Power
Due the location and projected life of the project, power will provided onsite by ten 1.0
MW high speed diesel fired generators.
The cost of power generation has been calculated from a diesel consumption of 0.25 L
per kWh generated plus running costs (including operating labour and maintenance costs)
of USD 0.13/kWh.
6.3.3 Diesel Fuel

The cost of diesel used in this cost estimate was provided by AQI.
5 April 2007 91 of 133

6.3.4 Grinding Media

Costs based on quote received from regional supplier, Molycop Chile.
6.3.5 Reagents
AQI provided pricing information for various reagents including quicklime, cyanide,
carbon, caustic soda, flocculant, diatomaceous earth, and zinc dust. International prices
were used for all other reagents.
6.3.6 Estimate Basis

Estimated costs have been developed as a matrix of cost type and expenditure area.
Rates and costs were generally determined in the manner described in Section 6.3.1 to
Section 6.3.5. The following sources were used to arrive at the operating cost estimate:
• AQI.
• Plant design criteria.
• Vendor data.
• Operating practice, industry standards.
• Engineering Handbooks.
Processing plant operating costs are presented at two levels of detail. Section 6.4
presents a summary of the cost centres, whereas Sections 6.4.2 to 6.4.7 provide detailed
cost breakdowns for the individual cost categories.
6.4 Process Plant

6.4.1 Operating Cost Estimate Summary
A summary of the total annual process operating costs, broken down by cost category, is
presented as Table 6.3. A split between variable and fixed costs for process plant cost
categories is also given in this table.
An alternative summary, with the same costs broken down by process plant area, is
shown in Table 6.4.
5 April 2007 92 of 133

Table 6.3 Summary of Processing Operating Costs by Cost Type
Annualised Operating Cost for 0.75 Mt/a

Cost Centre
Total Fixed Variable
USD/year USD/t USD/year USD/t USD/year
Production Labour 919,620 1.23 919,620
Power 5,151,095 6.87 1,790,273 4.48 3,360,822
Operating Consumables 4,440,510 5.92 438,602 5.34 4,001,908

Laboratory & Assays 653,490 0.87 653,490
Subtotal - Process 11,164,715 14.89 3,801,985 9.82 7,362,730
Plant Maintenance Labour 440,505 0.59 440,505
Maintenance Consumables 862,010 1.15 862,010

Subtotal - Maintenance 1,302,515 1.74 1,302,515
Total 12,467,230 16.62 5,104,500 9.82 7,362,730
Note: Operating costs have been calculated on an annualised basis assuming full
production. Initial ramp up periods will result in higher unit costs until throughput is
stabilised
5 April 2007 93 of 133

Table 6.4 Summary of Operating Costs by Plant Area
Elution/ Reagents
Tailings/CN General & Annual
Crushing Grinding CIL Regeneration/ and Plant Laboratory
Cost Centre Destruction Administration Total
USD/yr USD/yr USD/yr Goldroom Services 2 USD/yr
USD/yr USD/yr USD/yr
USD/yr USD/yr
Production Labour 140,400 70,200 35,100 35,100 35,100 94,770 508,950 0 919,620
Plant Maintenance Labour 0 0 0 0 0 212,355 228,150 0 440,505
Power 180,810 3,556,737 578,404 73,950 215,813 499,829 45,552 0 5,151,095
Operating Consumables 204,185 1,838,880 958,041 1,057,131 356,789 0 25,486 4,440,510
Maintenance Consumables 196,820 289,863 75,932 36,777 41,503 221,114 0 0 862,010
Laboratory & Assays 0 0 0 0 0 0 0 653,490 653,490
Total 722,215 5,755,680 1,647,477 1,202,958 649,205 1,028,068 808,138 653,490 12,467,230
Notes:
1. Operating costs have been calculated on an annualised basis assuming full production. Initial ramp up periods will results in higher unit costs
until throughput is stabilised.
2. Maintenance labour costs are not distributed by area.
5 April 2007 94 of 133

6.4.2 Labour
The labour rates for plant operation and maintenance were developed as described in
Section 6.3.1. These were applied to the labour numbers as detailed on the Organisation
Chart shown in Appendix 5. A labour cost break-down is provided in Appendix 6.
A summary of labour cost by department is presented in Table 6.5.
Table 6.5 Labour Cost Summary
Labour Distribution Annualised Cost USD/y
Plant Operation 919,620
Plant Maintenance 440,505
Total 1,360,125
6.4.3 Light Vehicles and Mobile Equipment

A schedule of light vehicles for staff and plant mobile equipment, excluding mining
requirements, has been developed for the administration and process plant groups. It is
detailed in Section 4 and its substance is repeated in the operating cost tables below.
Whilst mobile equipment and vehicle operating costs are inclusive of fuel and ongoing
maintenance, the cost of the mobile equipment operators and maintenance staff has been
included under plant labour costs.
The costs shown in these tables are distributed into several summary costing tables.
Light Vehicles
Table 6.6 shows the estimated hourly consumption of diesel and estimated hourly cost for
spares and consumables for each vehicle type.
Table 6.7 includes a fleet listing and an annual estimate of running times to allow
derivation of annual operating costs for each vehicle and the total fleet.
Table 6.6 Light Vehicle Fuel Use, Spares and Consumable Costs
Light Vehicle Category Fuel Use (L/h) Spares & Consumables USD/h
4 x 4 Wagon 7 4
4 x 4 Dual Cab 6 3
4 x 4 Utility 7 4
4 Wheel Motorbike 2 2
4 x 4 Troop Carrier 10 5
5 April 2007 95 of 133

Table 6.7 Light Vehicle Running Cost
Spares &
Operating Fuel Use Fuel Cost
Light Vehicles Vehicle Type No. Cons
Time h/a L/a USD/y
USD/y
Administration
Resident Manager 4x4 Wagon 1 500 3,500 1,470 2,000
Admin. Manager 4x4 Wagon 1 368 2,576 1,082 1,472
Security Supervisor 4x4 Wagon 1 1,095 7,665 3,219 4,380
Security 4 W M/Bike 1 2,190 4,380 1,840 4,380
OHS&E Group 4x4 Dual Cab 1 730 4,380 1,840 2,190
IT Manager 4x4 Dual Cab 1 368 2,208 927 1,104
Pool Cars 4x4 Dual Cab 3 730 13,140 5,519 6,570
First Aid 4x4 Troop

1 365 3,650 1,533 1,825
(ambulance) Carrier
Admin Bus 1 1,095 16,425 6,899 10,950
Total
11 57,924 24,328 34,871
Administration
Process Plant
Processing Manager 4 x 4 Wagon 1 500 3,500 1,470 2,000
Senior Metallurgist 4 x 4 Dual Cab 0.5 365 2,190 920 1,095
Shift Supervisor 4 x 4 Utility 1 1,300 9,100 3,822 5,200
TSF crew 4 x 4 Utility 1 1,300 9,100 3,822 5,200
Maintenance
4 x 4 Wagon 1 500 3,500 1,470 2,000
Manager
Maintenance
4 x 4 Dual Cab 0.5 365 2,190 920 1,095
Superintendent
Total Process
5 29,580 12,424 16,590
Plant
Total 16 87,504 36,752 51,461
Mobile Equipment
Table 6.8 shows the hourly consumption of diesel and the estimated hourly spares and
consumables costs for each piece of equipment. These have been taken from Australian
standard costs, and from mines operating similarly sized equipment. A full breakdown of
vehicle allocation and cost build-up is included in Appendix 6.
Table 6.9includes a fleet listing and an annual estimate of running times to allow
derivation of annual operating costs for each unit and the total fleet.
5 April 2007 96 of 133

Table 6.8 Mobile Equipment Fuel Use, Spares and Consumable Costs
Light Vehicle Category Fuel Use (L/h) Spares & Consumables USD/h
All terrain 3 t fork lift 5 10
5 t Yard crane 15 15
5 t flat bed truck with Hiab 15 10
CAT 966G FEL 35 15
CAT 980 FEL 42.5 15
Skid steer loader 20 15
Table 6.9 Mobile Equipment Fuel, Spares and Consumable Costs
Op Fuel Fuel
Mobile Spares &
Vehicle Type No. Time Usage Cost
Equipment Cons USD/y
h/a L/a USD/y
Administration
Stores 3t forklift 1 1,095 5,475 2,300 10,950
Admin Subtotal 1 5,475 2,300 10,950
Process Reclaim
Operations Cat 966 FEL 1 1,095 38,325 16,097 16,425
Operations Cat 980 FEL 1 8,200 348,500 146,370 123,000
Reclaim Subtotal 2 386,825 162,467 139,425
Process Plant
Maintenance 5 t Yard crane 1 550 8,250 3,465 8,250
Maintenance 5 t flat bed truck with 1 550 8,250 3,465 5,500

Hiab
Operations Skid steer loader 1 730 14,600 6,132 10,950
Process Subtotal 3 31,100 13,062 24,700
Total 6 423,400 177,828 175,075
6.4.4 Power
The unit cost for power supply is as shown in Section 6.3.2.
The process plant power costs are based on an anticipated average continuous power
demand. The average continuous power demand for each duty drive has been calculated
from the installed power applying various process utilisation and mechanical efficiency
5 April 2007 97 of 133

factors, depending on drive type and duty. The equipment listing with connected and
drawn power demand is attached as Appendix 6.
A summary of the installed power, anticipated average continuous power draw and
annual power costs by area has been provided in Table 6.10.
Table 6.10 Power Cost Summary
Average Annual Annual Cost

Power Usage kWh/t USD/t
kW kWh USD
Buildings 40 350,400 45,552
Subtotal Buildings 40 350,400 0.47 45,552 0.06
Process Plant
Crushing 159 1,390,847 180,810
Grinding 3,123 27,359,518 3,556,737
Leach and Adsorption 508 4,449,263 578,404
Desorption and Regeneration 25 222,812 28,966
Precipitation and Goldroom 40 346,034 44,984
CN Detox /Tailings 190 1,660,099 215,813
Reagents 13 113,979 14,817
Plant Services 426 3,730,857 485,011
Subtotal Process Plant 4,483 39,273,408 52.36 5,105,543 6.81
Total 4,523 39,623,808 52.83 5,151,095 6.87
Fixed Cost 1,572 13,771,329 18.4 1,790,273 2.39
Variable Cost 2,951 25,852,480 34.5 3,360,822 4.48
6.4.5 Operating Consumables and Reagents

Unit costs of these items were determined in the manner described in Section 6.3.3,
Section 6.3.4, and Section 6.3.5. The consumption rates used in this estimate is a
weighted average of the individual ore type consumptions, based on their distribution in
mill feed over the life of project.
Unit costs, consumption rates, annual consumptions and annual costs have been
developed and are presented in Table 6.11.
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Table 6.11 Consumable and Reagent Costs Summary
Price
Annual
Area Consumption Rate USD/y USD/t
USD Unit Consumption
Crushing
Jaw Liners 6,953 USD/set 6 sets/a 6 sets/a 41,718 0.056
FEL Fuel 420 /kL 386.8 kL 162,467 0.217
Subtotal 204,185 0.272
Grinding
SAG Media 955 USD/t 0.66 kg/t 495 t 472,725 0.630
SAG Liners 102,825 USD/set 1 sets/a 1 sets 102,825 0.137
SAG Lifters 176,271 USD/set 1.33 sets/a 1.33 sets 234,969 0.313
SAG Grates 136,610 USD/set 1 sets/a 1 sets 136,610 0.182
Ball Mill Media 800 USD/t 1.33 kg/t 998 t 798,000 1.064
Ball Mill Lifters 28,432 USD/set 1 sets/a 1 sets 28,432 0.038
Ball Mill Liners 65,318 USD/set 1 sets/a 1 sets 65,318 0.087
Subtotal 1,838,880 2.452
CIL
Lime 50 /t 1.03 kg/t 775 t 38,726 0.052
Lime Mill Media 800 /t 0.30 kg/t lime 0.35 t 278 0.000
Sodium Cyanide 1,210 /t 0.78 kg/t 586 t 708,887 0.945
Carbon 2,700 /t 0.086 kg/t 65 t 174,150 0.232
Aerator Rental 3,000 /month 12 month/ann 36,000 0.048
Subtotal 958,041 1.277
Tailings + CN Destruction
Lime 50 /t 0.51 kg/t 384 t 19,178 0.026
SMBS 442 /t 0.71 kg/t 534 t 235,895 0.315
Copper Sulphate 1,190 /t 0.02 kg/t 15 t 17,707 0.024
Flocculant 3,300 /t 0.03 kg/t 25 t 84,009 0.112
Subtotal 356,789 0.476
Elution, Precip. + Goldroom
Hydrochloric Acid 194 USD/t 1240 kg/strip 593 t 115,084 0.153
Caustic Soda 410 USD/t 340 kg/strip 163 t 66,089 0.089
Cyanide 1210 USD/t 340 kg/strip 163 t 196,814 0.262
Diesel-Goldroom/regen 0.420 USD/L 19,496 L/week 1014 kL 425,784 0.568
Diamtomaceous earth 85.7 USD/t 150 kg/cycle 54.6 t 4,679 0.006
Zinc 2360 USD/t 2 g/g Au+Ag 42.2 t 99,622 0.133
Lead Nitrate 600 USD/t 2 g/g Au+Ag 42.2 t 25,328 0.034
Crucibles 3375 USD/ea 12 each 12 each 40,500 0.054
Borax 1380 USD/t 130 kg/smelt 47.3 t 65,302 0.087
Sodium Nitrate 1130 USD/t 22 kg/smelt 8.0 t 9,049 0.012
Soda Ash 350 USD/t 65 kg/smelt 23.7 t 8,281 0.011
Subtotal 1,057,131 1.410
Other
Plant LV Fuel 420 /kL 30 kL 12,424 0.017
Plant Mob. Fleet Fuel 420 /kL 31 kL 13,062 0.017
Subtotal 25,486 0.034
Total 4,440,510 5.92
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6.4.6 Maintenance Consumables

Maintenance consumable costs comprise maintenance materials as well as specialist
contract labour costs. Maintenance consumable costs have been estimated as a
percentage of the direct installed capital cost (percent factor) on an area by area basis.
The magnitude of the factors applied is related to the energy input or severity of duty in
each area of the plant and is based on typical industry values. Table 6.12 shows the
factors that have been applied to each area.
Table 6.12 Maintenance Consumables Annual Cost Factors
Process Area % of Installed Capital

Crushing 3.0
Reclaiming has no fixed plant N/A
Grinding 3.0
CIL 2.0
Regeneration 2.0
Goldroom 3.0
Tailings/Cyanide Destruction 3.0
Reagents 3.0
Utilities and Services 3.0
Application of these factors results in the estimated annual costs summarised in Table
6.13. The ‘reclaiming’ cost is the cost of running the plant feed front-end loader (FEL)
throughout the year. These costs exclude:
• Crusher components, mill liners and lifters, and other components listed in Table
6.11, operating consumable costs.
• Maintenance labour costs.
Details of maintenance costs are included in Appendix 6.
Table 6.13 Maintenance Consumable Costs
Capital Factored Additional

Total Cost, Cost
Area Value, Cost Allowance
(USD’000/y) (USD/t)
USDM (USD’000/y) (USD’000/y)
Crushing 1.91 57.4 0 57.4 0.077
Reclaim 0.00 0 139.4 139.4 0.186
Grinding 9.66 289.9 0 289.9 0.386
CIL 3.80 75.9 0 75.9 0.101
Regeneration 0.95 18.9 0 18.9 0.025
Goldroom 0.89 17.9 0 17.9 0.024
Tailings/CN Detox 1.38 41.5 0 41.5 0.055
Reagents 1.46 43.9 0 43.9 0.059
Utilities and Services 4.53 135.9 41.3 117.2 0.236
Total 681.3 180.7 862.0 1.15
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6.4.7 Laboratory and Assaying

The annual laboratory operating cost is estimated at USD 653,490, and is based on a
fixed analytical service of USD 40,275 per month and a monthly laboratory equipment
supply fee of USD 14,183. The costs include provision of the contract laboratory labour,
identified in the process plant manning lists.
6.5 General and Administration

6.5.1 Operating Cost Estimate Summary
A summary of the total annual administration operating costs, broken down by cost
category, is presented as Table 6.14. A split between variable and fixed costs for process
plant cost categories is also given in this table.
Table 6.14 Summary of Administration Operating Costs by Cost Type
Annualised Operating Cost

Cost Centre Total Fixed Variable
USD/y USD/t USD/y USD/t USD/y
G & A Expenses 818,599 1.09 818,599
Administrative Labour 1,370,655 1.83 1,370,655
Total 2,189,254 2.92 2,189,254
6.5.2 General and Administration Expenses

General and administration expense estimates have been based on a combination of
experience from similar projects and site specific requirements. The total estimated cost
is $0.787 M per year or $1.05 per tonne of ore processed. The estimate provisions are
summarised in Table 6.15 followed by a brief discussion of the major items.
Note that no allowance has been made for costs specifically associated with mining.
Table 6.15 General and Administration Costs
Item Annual Costs, USD

Telecommunications 33,600
Stationery 6,000
Postage, Courier and Light Freight 6,000
Computer Supplies 12,000
First Aid Costs 2,675
Metallurgical Testing 24,000
Consultants and Vendors 48,000
Safety, Clothing 16,050
Rubbish Removal 12,000
Administration Fleet Maintenance Cost 45,821
Administration Fuel Cost 26,628
Accommodation and Messing 585,825
Total 818,599
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Telecommunications
An allowance of $33,600/year for telephone and facsimile transmissions is included to
cover all communication costs. This allows for expected monthly landline and mobile
telephone costs plus an allowance for international calls by expatriate workers.
Stationery
An allowance of $6,000/year has been included to cover all stationery requirements for
the project.
Postage, Courier and General Freight

An allowance of $6,000/annum, has been included for general postage, courier and light
freight not included under operating consumables and maintenance materials costs.
Computer Supplies
An allowance of $12,000/year has been included for computer supplies. This allows for
computer servicing and minor software upgrades.
First Aid Costs

An allowance of US$25/person on site, or $2,675/year, has been included for first aid
supplies and medical requirements. Note this excludes all mining personnel.
Metallurgical Testing
An allowance of $24,000/year has been provided for off site metallurgical testing in
support of operations. This is in additional to the routine test-work undertaken by the on-
site service provider.
Consultants and Vendors

An allowance of $48,000/year has been provided for consulting services relating to the
operations. This includes an estimate for a safety consultant required to set-up a
monitoring program in the first year or more of operation.
Safety Clothing
An allowance of $150/person for safety clothing is used for a total of $16,050. Clothing
and personnel protective equipment includes overalls, jacket, hard hat, safety boots,
safety glasses, earplugs, dust masks and gloves.
Rubbish Removal
An allowance of $1,000/month has been made for rubbish removal by a local contractor.
Administration Vehicle Fleet Maintenance Cost
An allowance of $45,821 for maintenance costs for the administration light vehicle fleet is
included. Refer to Table 6.7 for details of the fleet and cost breakdown.
Administration Vehicle Fleet Fuel Cost
An allowance of $26,628 for maintenance costs for the administration light vehicle fleet is
included. Refer to Table 6.7 for details of the fleet and cost breakdown.
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Accommodation and Messing Cost

An allowance of $15/person per day, or $585,825/year, has been made for
accommodation and messing arrangements for personnel onsite. The figure is based on
Ausenco experience.
6.5.3 Administrative Labour

The labour rates for administration were developed as described in Section 6.3.1. These
were applied to the labour numbers as detailed on the Organisation Chart shown in
Appendix 5. A labour cost break-down is provided in Appendix 6.
Labour costs for environmental monitoring and management are included in the
administration labour costs.
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7 CAPITAL COST ESTIMATE

7.1.1 Summary
The project initial capital cost estimate is presented in United States dollars (USD) and
has a base date of 2Q06. All references to dollars or $ are to US dollars. The overall
accuracy of the project initial capital cost estimate is ± 25%.
In broad terms the estimate includes design and construction of the plant access road,
power supply, mining infrastructure, process plant, TSF, water supply, on-and off-site
infrastructure costs.
The capital cost estimate, as summarised in Table 7.1, is USD 66.2M. The detailed
estimate and supporting data is provided in Appendix 7.
The estimate excludes escalation, duties, taxes, mining costs, working capital, Owner’s
costs, sustaining capital, financing costs, rehabilitation and closure costs and allowance
for project growth.
Table 7.1 Capital Cost Summary
Cost Element Estimated Cost

(USD M)
Process Plant 26.6
On Site Infrastructure and Utilities 10.4
Off Site Infrastructure and Utilities 8.1
Mining Infrastructure, Haul Roads and ROM Pad Construction 2.8
Mobile Equipment, First Fill Consumables and Capital Spares 3.9
Indirects Temporary Construction Facilities, EPCM, Start-Up and Commissioning 14.4
Total Capital Cost 66.2
Major contributions to the estimate were also made by:

• Vendor quotes.
• Indec S.A. - undertook collection of local contractor rates.
• Vector - provided the tailings management facility design and associated MTO.
Ausenco has combined these separate inputs and applied appropriate accuracy
provisions to create an overall capital cost estimate for the project.
7.2 General Estimate Parameters

7.2.1 Exchange Rates
The estimate is expressed in USD. Conversion of all quoted foreign currencies has been
based upon the foreign exchange rates shown in Table 7.2.
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Table 7.2 Exchange Rates
Country Unit of Currency Exchange Rate (USD)

USA Dollar 1.00
Australia Dollar 0.75
Argentina Peso 3.00
7.2.2 Escalation
Capital costs have a base date of 2Q06 with no allowance for escalation.
7.2.3 Working Capital

The estimate does not include an allowance for working capital.
7.2.4 Taxes and Duties

VAT and Import Duties are excluded from the estimate.
7.2.5 Sustaining Capital, Rehabilitation and Closure Costs

Sustaining capital, rehabilitation and closure costs have not been included in the project
initial capital cost estimate.
7.2.6 Project Growth Contingency

Contingency is excluded from the estimate. Contingency is normally provided by the
Owner to allow for potential costs beyond the Engineer’s control or for items that are
specifically excluded from estimates, such as changes in scope, escalation of the project,
currency variations and inflation; or due to delays caused by weather, demands of
contractors, industrial actions, escalation of field construction labour costs above the base
line escalation of 2Q06, market conditions, non-availability of ore during commissioning,
etc.
Some of these items may be estimated by the Owner and included in the Owner’s Costs,
but in any event should be included somewhere within the overall project cost estimate.
7.2.7 Accuracy Provisions

The component estimates have been developed at bare cost (excluding accuracy
provision). An accuracy provision allowance has then been allocated to each area and
element of the direct and indirect costs to reflect the level of definition available in the
scope of work.
The purpose of the accuracy provisions is to make allowance for uncertain elements of
costs to cover such factors as:
• Restricted information on site conditions, most especially concerning sub-surface
conditions and the engineering properties of excavated materials.
• Imprecision of sizing and quantities information arising from lack of detailed
engineering.
• Arithmetical and procedural errors in quantity take-offs and estimate assembly and
consolidation.
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• Accuracy of materials and labour rates.

• Accuracy of productivity expectations.
• Accuracy of equipment budget pricing.
• Lack of direct knowledge of local contractor capabilities.
• Lack of direct knowledge of local permitting methods, procedures and outcomes.
The sum of the estimated bare costs and accuracy provisions is the total estimated cost
for the project with an overall accuracy of ± 25%.
It is Ausenco’s standard practice to include accuracy provision in all estimates and it does
not duplicate level of accuracy.
7.2.8 Assumptions
The following assumptions underlie this estimate:
• The design is based upon available testwork information.
• The design is as detailed in the relevant sections of this report.
• The design will meet local environmental requirements.
• All materials from clearing, grubbing and demolition will be disposed of at the
project site.
• Sand, aggregate and construction water is available within a radius of 2km from
the plant site.
• Fill materials are generally available from mine waste or from quarries located
within the lease boundary of the project site.
• Transportation access is available to port/road systems from point of manufacture
to project site including border crossings.
• The assessment and understanding of current local costs obtained by the
methodologies described below is correct within the accuracy limits adopted.
7.2.9 Exclusions
The project initial capital cost estimate excludes the following:
• Mining, other than mine workshop building.
• Owner’s costs.
• Sunk costs for the completion of this report.
• Ongoing exploration or acquisition costs.
• Ongoing test work.
• Ongoing studies.
• Taxes and duties other than those specifically allowed for.
• Project growth occurrences such as foreign currency fluctuations, escalation and
others as described above.
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• Sustaining capital.
• Corporate costs.
• Rehabilitation and closure costs.
7.3 Direct Cost Development and Detail

Direct costs include:
• Supply of permanent materials and fixed and mobile equipment.
• Labour to undertake and manage the construction activities. This includes wages
and salaries with loadings for site labour, supervision and management, including
associated expenses such as accommodation and travel, and home and/or
satellite office management expenses.
• Contractors and suppliers mark-up and profit.
• Freight and shipping expenses for permanent and temporary equipment and
materials.
7.3.1 Development of Supply Costs, Freight Costs and Construction Rates
Local Supply and Contracting Rates and Capabilities

It is intended to use local capabilities to the maximum extent feasible. This may include:
• Construction equipment hire, including that for earthworks, civil works, cranes, and
transportation.
• Labour hire.
• Supply and fabrication of building materials, structural steelwork, mechanical
platework, mechanical/piping and electrical components.
• Contracting for earthworks, civil, building, structural steel, tankage, mechanical
installation, piping and electrical installation.
Supply of Mechanical Equipment

Estimated costs were derived from two main sources:
• Responses to inquiries for budget prices.
• Ausenco historical costs for the same or similar equipment.
Freight Costs
The freight costs for mechanical equipment have been factored using a percentage based
on previous project experience.
Freight for rates items is included in the overall rate as quoted by local contractors.
7.3.2 Direct Cost Estimate

Cost estimates for the disciplines represented in the above components have been
developed as follows:
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Earthworks
Bulk earthworks cost allowance for the plant site was based on preliminary earthwork
drawings in sufficient detail to provide approximate quantities for estimation.
Costs for the ROM pad construction and the haul roads were estimated from the rates
provided by the mining contractor and the respective take-offs.
Concrete
Quantity take-offs were made from GA drawings combined with knowledge of quantities
on similar Ausenco projects. Local construction rates, covering supply and execution of
detailed excavation, blinding concrete, formwork, rebar and embedment, concrete,
finishing, stripping, curing and detailed backfill and compaction, from local budget prices
as described above, were applied to the estimated quantities.
Structural Steelwork
Quantity take-offs were made from GA drawings combined with knowledge of quantities
on similar Ausenco projects. Local supply, transport and erection rates, covering shop
detailing, supply, fabrication, surface treatment, transport and erection for steelwork,
grating and handrails, from local budget prices as described above, were applied to the
estimated quantities.
Mechanical Platework and Site Erected Tankage

Mechanical platework and site erected tankage costs have been factored as a percentage
of the mechanical equipment drawn on experience from similar plants.
Mechanical Equipment Supply

Equipment lists were developed from the process flowsheets. These provided equipment
numbers, type, sizing and power. Prices for equipment were sourced from international
suppliers using budget quotations or from Ausenco’s data base of recent projects and
estimates.
Mechanical Installation
Installation of mechanical equipment and platework is based on Ausenco’s historical man
hour data from similar gold process plants appropriately adjusted to represent local man
hours by applying a productivity factor. The adjusted manhours, together with the labour
rate, have been used to obtain total labour costs.
An additional allowance for heavy lift cranes has been included in some instances.
Piping Supply and Installation

Process plant piping costs have been factored as a percentage of the mechanical
equipment drawn on experience from similar plants.
Pipe runs external to the process plant compound have been quantified from GA
drawings and have been estimated separately based on local budget costs as described
above.
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Electrical and Instrumentation

Electrical and instrumentation costs have been factored as a percentage of the
mechanical equipment drawn on experience from similar plants.
Buildings
Building areas for the process plant, comprising the crusher control room, main process
building, main control room and plant building offices and ablutions, were taken from GA
drawings. Construction unit rate estimates were obtained and applied to the measured
areas. These unit rates include the building shells, internal fit-out, electrics, lighting,
HVAC, furniture and office equipment.
The main process building also contains the plant and warehouse and plant workshop.
Supplementary provision is made for warehouse shelving and fixed workshop machines,
hand tools and specialized electrical/instrumentation maintenance equipment and
lubrication gear.
Freight
Freight allowance to transport all equipment and materials to site has been calculated by
percentage based on previous project experience. The majority of fabricated items such
as structural steelwork, platework and piping will be sourced in-country, and local freight
costs are included in the quoted rates or included in the factored cost as applicable.
First Fill Reagents and Consumables

Costs for supply and delivery of reagents and consumables have been factored based
upon Ausenco’s experience with similar installations.
Capital Spares
A capital spares provision is included in the estimate and has been factored from previous
experience with similar installations
7.3.3 Tailings Storage Facility

Cost estimates for the TSF have been developed by Vector, who provided quantity
take-offs for ground preparation, earthworks, HDPE liner, pipe work and access tracks
from preliminary drawings of the TSF, and applied local rates to arrive at the cost
estimate.
7.3.4 Infrastructure
Plant Site Buildings

These comprise the administration building, core storage and laboratory building.
The administration building area was determined from the GA drawings. A construction
unit rate estimate was obtained and applied to this measured area. This unit rate includes
the building shell, internal fit-out, electrics, lighting, HVAC, furniture and office equipment.
The estimate for the core storage building was obtained in the same manner as for the
main plant building, that is, a package budget price for design, supply and packing ex
works for a complete steel framed and clad building, from a specialist supplier. Some
additional provisions have been included to allow the installation of a laboratory building
and sample preparation area within the shell of the core shed.
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Mine Buildings
The mine buildings comprise a workshop for heavy mining equipment maintenance and
the explosive magazine.
The building area for the workshop was taken from GA drawings. Construction unit rate
estimates were obtained and applied to the measured areas. These unit rates include the
building shells, internal fit-out, electrics, lighting, HVAC, furniture and office equipment.
Supplementary provision is made for warehouse shelving and fixed workshop machines,
hand tools, and mining equipment lubrication gear.
The magazine estimate was developed from first principles. It encompasses the
earthworks and high grade security fence for the magazine compound, a small ANFO
shed and the magazine proper, comprising two modified shipping containers.
Communications System
This includes supply and installation of a local radio base station and repeater station with
associated hand held and vehicle mounted units, a microwave mini-link for voice and data
communication, a phone system throughout the plant area and a data wiring system
throughout the plant offices. Budget prices for these systems were obtained from
previous projects.
Access Roads
The cost of the off-site roads was estimated from rates provided by Micon International
Ltd., as requested by AQI, for road construction.
Quantities were obtained from the preliminary design of the road and applied rates to
arrive at the estimated cost.
Accommodation Camp
The cost of the accommodation village is based upon a previous design including
sleeping quarters, recreation facilities, kitchen, mess, first aid post complete with services
and utilities. The accommodation village has been sized to accommodate a labour force
of 200 people. The camp will be used during construction and, if required, it will be
supplemented with temporary trailer type accommodation.
The cost of constructing the village has been estimated based upon the building costs per
square meter provided by local contractors. An allowance has been included for fit-out.
7.4 Indirect Cost Development and Detail

Indirect costs have been factored from the direct costs based upon experience with
similar previous projects. The indirect costs include:
• EPCM services, together with supervision and commissioning of the plant.
• Temporary construction facilities and services such as site access and laydown,
site offices, ablutions, security and storage buildings, fences, security/cleaning/
maintenance services, water, power and fuel supply, sewage treatment/disposal,
communications, first aid and safety equipment, contractors’ mobilisation and
demobilisation and site establishment costs, survey crew and vendor
representative attendance.
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• Start-up and commissioning.
7.4.1 Indirect Costs Breakdown

Cost estimates for the indirect components have been developed as follows:
Temporary Construction Facilities and Services
Temporary construction facilities and services have been factored from the direct costs
based on previous similar projects. The derived cost includes:
• Offices for EPCM staff, including allowances for fit-out, cleaning, maintenance and
consumables.
• Construction personnel ablution building, including allowances for fit-out, cleaning,
maintenance and consumables were included.
• Hire and operation of a package temporary sewage treatment plant.
• Security hut, (it was assumed that the permanent fence would provide site
security).
• Temporary water supply system comprising pumps, piping, tanks and water
treatment plant for site ablutions.
• Temporary power supply system (allows for the hire and operating costs for an on-
site generator for site ablutions and EPCM contractor’s site office).
• Temporary communications (allows for short term hire of a satellite dish
communications link prior to installation of the permanent link and long term
provision of radios for construction personnel).
• Fuel storage (allows for the supply of a small storage facility until permanent
installation is completed in time for start of mine pre-operations phase).
• Safety barriers, safety signs, safety training materials and first aid supplies.
• Security personnel.
• Site clean-up personnel.
• Contractor mobilisation/demobilisation and site establishment.
• Vendor representation costs for on site construction supervision and pre-
commissioning activities where applicable.
EPCM Costs
The EPCM cost has been factored from the direct costs based on Ausenco’s experience
with similar current projects, which varies between 18% and 26%.
The EPCM cost includes:
• EPCM Labour
Home office and site based time-based costs for project management, project
controls, procurement/contracting, site construction management and secretarial.
• EPCM Expenses
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EPCM expenses include costs for consultants, inspection/expediting services, home

and site office expenses, airfares, phone, postage, copying, stationary and
computer systems.
• Sub Consultants
Costs for sub consultants are also included under the EPCM costs.
• Commissioning
This covers the estimated costs of construction contractors providing plant start-up
assistance during commissioning and associated miscellaneous materials and
equipment.
The costs for the EPCM Contractor’s commissioning group are included.
Costs associated with vendor commissioning assistance are also included.
• Start-up and Commissioning
This covers the estimated cost of providing plant start-up experts from the EPCM
group based on previous projects. This cost will allow for commissioning manager,
a senior mechanical engineer and plant metallurgists to provide round the clock
supervision and guidance during the pre-commissioning and commissioning phase.
7.5 Owner’s Costs

Owner’s costs are excluded from the estimate.
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8 ALTERNATIVE PROCESS ROUTES

8.1.1 Summary
In parallel with the IFS based on a CIL/zinc precipitation process, AQI requested Ausenco
conduct two concept studies covering two alternative process routes. These alternative
process flowsheet options are:
• Gravity concentration followed by flotation.
• Heap leach.
The objective of the option studies was to evaluate the technical and economic viability of
the two alternate processes compared to that presented in the IFS. The deliverables for
these studies are:
• Conceptual flowsheets.
• Plant capital and operating cost estimates.
The operating and capital cost estimates have an accuracy of ±40%.
Table 8.1 lists the key project indicators applicable to each of the alternative process
options.
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Table 8.1 Summary of Key Project Indicators
Criteria Units Gravity/Flotation Heap Leach
Mining rate t/y 750 000 750 000
Cut off grade Au g/t 1.25 1.25

Average LOM grade, Au Au g/t 3.86 3.86
Average LOM grade, Ag Ag g/t 33.20 33.20
Overall metal recovery
Au % 78 65
Ag % 78 65
Product produced Filter cake Doré
t/y 252 000 18.07
Metal produced
Au t/y 2.26 1.88

Ag t/y 19.42 16.19
Operating cost USD/t 14.89 11.56
USDM/y 11.32 8.67
Project capital cost (direct & indirect USDM 60.5 56.1

cost)
Deferred capital USDM n/a 17.0
Further details on the operating cost estimate for the gravity/flotation option and operating
cost estimate for the heap leach option are included in Section 8.2.3 and Section 8.3.3,
respectively.
The details on capital cost estimates for the gravity/flotation option and the heap leach
option are presented in Sections 8.2.4 and Section 8.3.4, respectively.
The preliminary design criteria, conceptual process flowsheets and preliminary equipment
lists for the respective flowsheet options are included in Appendix 8.
8.2 Gravity and Flotation Process Option

8.2.1 Design Basis
Gravity and Flotation

The basis for the gravity/flotation process flowsheet development is the testwork results
obtained by Gekko in Australia. Gekko performed a number of scouting tests to determine
the suitability of gravity separation followed by flotation for the recovery of gold. The test
work was conducted on a composite sample prepared by AMMTEC. The composite
sample consisted of similar amounts of oxidised vein (Cal-1) and unoxidised vein (Cal-2)
material.
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This testwork consisted of gravity concentration of a milled sample by shaking table

followed by the upgrading of the table tailings by a batch centrifugal bowl style of gravity
concentrator. Subsequently, a flotation test was carried out on the tailings stream from
the batch centrifugal bowl concentrator.
The gravity separation testwork demonstrated that a gold concentrate of 44.2 g/t can be
produced at a 33.7% mass recovery.
The results obtained from shaking table tests are indicative of the expected recovery of
coarse high specific gravity (SG) particles and simulate the performance of an in-line
pressure jig (IPJ). The flowsheet for this conceptual study is based on the use of an IPJ
followed by the scavenging of the IPJ tail (float) fraction by means of a batch centrifugal
gravity bowl unit i.e. Falcon or Knelson concentrator. The IPJ model size is based on
treating as much as possible of the equivalent of the new feed within a single unit. For
that reason the largest IPJ unit currently available was selected, which accommodates a
feed rate of 88 t/h solids, equivalent to 91% of new feed.
The model size of the batch centrifugal gravity bowl is selected to match the feed tonnage
of the gravity section.
The results of the flotation tests carried out on the table tailings show a 31.3% mass pull
at a concentrate grade of 4.29 g/t Au with a recovery of 44.4%. The Gekko report
contains little information on the test conditions under which the flotation test was carried
out. For this reason the flotation cell residence time and reagent additions are based on
the tests carried out by AMMTEC. However, metal recovery is assumed to be as per the
tests results reported by Gekko. This is done because Gekko performed the flotation
tests on the tailings of the gravity circuit, whereas AMMTEC performed the flotation tests
on the composite sample.
The critical design parameters for the combined gravity and flotation flowsheet are
summarised in Table 8.2.
Table 8.2 Critical Design Parameters
Mass Pull Grade, g Recovery,

Unit Value
% Au/t % Au
Gravity concentrate 2.3 44.2 33.7
Flotation concentrate 33.6 7.0 78.0
Flotation Conditions
Time min 10
Reagent addition
Activator g/t 100
Promotor g/t 100
Collector g/t 100
Frother g/t 5
A detailed description of the testwork performed by Gekko is included in Section 2.14.3

and the original report is included in Appendix 2.
Gekko assayed the samples for gold content only. For this conceptual study however, it
has been assumed that silver follows the gold in both the gravity and flotation processes.
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All further assumptions and input data relevant for the sizing of the flowsheet are included
in the design criteria in Appendix 8.
At the Universidad Nacional de San Juan (UNSJ) similar gravity followed by flotation tests
were performed. However, high recoveries of gold to the gravity concentrate, much
higher than those obtained in the test work carried out by AMMTEC and Gekko, were
achieved. It should be noted that the AMMTEC and Gekko work was conducted on
portions of the same sample composites, whereas different samples were sent to UNSJ.
Further details on the testwork carried out at UNSJ are included in Section 2.15.
Crushing and Grinding

The design in this alternative flowsheet is identical to the crushing and grinding plant
section in the CIL option. The design basis of this circuit is covered Section 3.3.1.
Concentrate Handling
In the absence of applicable testwork data, the sizing of the concentrate thickener and
concentrate filter is based on data from the Ausenco in-house database.
A concentrate storage shed has been sized to store six days of concentrate production
with an additional 1 day’s storage capacity provided in the filter building.
It has been assumed that a low grade gold/silver concentrate can be sold to a third party.
However, this assumption requires confirmation prior to further development of this
option.
Tailings Handling
The tailings thickener has been sized using a higher settling rate than that determined by
Supaflo on the CIL tailings, as the particle size of the tailings from the gravity and flotation
circuit is likely to be coarser (less particle degradation due to leaching).
8.2.2 Process Plant Description

The following narrative provides a brief description of the gravity and flotation flowsheet
option and should be read in conjunction with the conceptual process flow diagram (1497-
F-201) and mechanical equipment list included in Appendix 8.
Ore Receipt and Crushing

Run of mine (ROM) ore is delivered by the mine haul trucks onto a ROM pad. A front-end
loader (FEL) is used to feed the ROM ore over a static grizzly located above a ROM bin.
The grizzly is used to remove large oversize particle/rocks, which may choke the primary
jaw crusher. The jaw crusher is sized to accommodate a rock having a maximum single
dimension of 900 mm.
The jaw crusher product gravitates onto a sacrificial conveyor. A sacrificial conveyor is
used to minimize damage to the belt in the event that an occasional piece of tramp iron
bar is trapped in the crusher and thus causing the belt to rip.
Milling Circuit
Primary grinding is carried out in a single milling line consisting of a SAG mill closed
circuit with a trommel screen followed by a ball mill in closed circuit with cyclones.
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The SAG mill discharges onto a trommel screen. Coarse oversize, pebbles and worn
media, is captured on the screen and is re-circulated by means of a conveyor to the SAG
mill feed for another pass through the SAG mill.
The ball mill discharges via another trommel screen. The ball mill trommel screen
undersize gravitates to the cyclone feed hopper and is combined with the SAG mill
trommel undersize slurry. The ball mill trommel screen oversize product is captured in a
bunker. The combined trommel underflow slurry is directed to the cyclones.
The cyclone overflow from the grinding circuit gravitates to the trash screen.
The cyclone underflow stream passes through a distribution box with two outlets, one
outlet directs the slurry to the ball mill feed spout and the second outlet directs the slurry
stream to the gravity separation circuit. The gravity separation feed stream has
throughput capacity for 88 t/h solids.
Gravity Circuit
The gravity circuit feed stream flows through a distribution box onto a scalping screen.
The scalping screen oversize fraction (>6 mm) reports to the ball mill feed chute, and the
undersize gravitates into an IPJ for coarse gold and silver particles recovery. This
concentrate reports to the sink fraction (concentrate) outlet and is pumped to the
concentrate thickener.
The float (tailings) fraction of the IPJ is pressurised and is directed into a surge tank which
feeds a batch centrifugal bowl concentrator. The batch centrifugal bowl concentrator
recovers fine gold and silver that are present in the IPJ tailings stream. Either a Falcon or
Knelson concentrator could be used for this duty. The operation of the batch centrifugal
bowl concentrator is such that the concentrate is periodically recovered. This is a fully
automated process and no manual interaction is required. The bowl concentrate is
combined with the IPJ concentrate in a hopper and pumped to the concentrate thickener.
The tailings stream of the batch centrifugal bowl concentrator gravitates into the cyclone
feed hopper.
As an alternative to feeding the gravity circuit with a portion of the cyclone underflow
stream, a provision is made such that a bleed from the cyclone feed can be directed to
the gravity circuit. This can be achieved by directing one or more of the outlets of the
cyclone distributor to the IPJ. The advantage of having a dedicated port feeding the IPJ is
that the pressure in the cyclone feed distributor is maintained. As the result of the
consistent pressure in the cyclone distributor, the cyclone cut point and the mill circulating
load remain consitent.
Flotation Circuit
The cyclone overflow slurry gravitates onto a trash screen which prevents coarse material
from entering the downstream flotation circuit.
The trash screen undersize gravitates through a pipe launder into a conditioner tank to
which flotation reagents are added. The conditioner tank overflows to a bank of rougher
flotation cells. The tailings stream of the rougher section gravitates to a bank of middlings
flotation cells and similarly the tailings of the middlings bank gravitate to a bank of
scavenger cells.
The gold-silver concentrates from each of the three flotation banks are combined in a
hopper and pumped to the concentrate thickener.
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Concentrate Handling
The concentrate from the gravity circuit and the flotation cells is pumped to a concentrate
thickener for dewatering. The recovered water from the thickener overflows into the
process water tank. The thickened concentrate is pumped by a peristaltic pump into a
mechanically agitated concentrate stock tank.
The contents of the concentrate stock tank are pumped to a recessed plate and frame
filter press. Only when the filter is ready to receive the slurry, an actuated valve opens
and the slurry flow is directed into the filter. Once the filter is full, the slurry is diverted
back to the stock tank and the slurry continues to be recycled.
The filter cake is formed in the filter chambers and is air dried using compressed air. After
the air blow, the filter press is opened and the cake discharged into a concentrate bunker
below. The filtrate gravitates to the process water tank.
A concentrate storage shed is provided to store the filtered concentrate. The storage
shed has a capacity of 6 days of production. The filter building is designed such that a
further one day’s concentrate production may stored in the bunker below the filter press.
Tailings Handling
The scavenger flotation tailings slurry is collected in the flotation tailings hopper and
pumped to the tailings thickener for water recovery. The overflow from the thickener
gravitates into the process water tank. The thickened tailings are transferred by two-
stage pumping to a tailings storage facility.
Reagent Area
Day storage tanks for the various reagents and the mixing facilities for collector and
activator are located in the reagent area of the plant.
Reagent dosing pumps are located next to the day tanks and transfer the reagents to the
conditioner tank and downstream in the flotation circuit.
A storage shed is provided for reagent storage and protection.
Infrastructure and Services

The infrastructure and services for this flowsheet option is identical to the CIL based
flowsheet and is described in detail in Section 4.
Plant Control System

This plant is operated and controlled via a PLC/Scada plant control system. The control
system is centralised in a control room.
8.2.3 Operating Cost Estimate

An operating cost estimate has been prepared for the stand alone Calcatreu
concentrating plant treating 750,000 t/y ROM ore producing 252,000 t/y of a gold and
silver rich concentrate. The costs are expressed in USD and are current during 2Q06.
The cost estimate is accurate to ±40%.
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The operating cost estimate is based on the process design criteria and the information
obtained from the following sources:
• Metallurgical test work.
• Data provided by AQI.
• Quotations from suppliers.
• Ausenco’s in-house database.
A summary of the estimated operating costs for the gravity/flotation option is presented in
Table 8.3.
Table 8.3 Operating Cost Estimates
Cost Centre USDM/y USD/t
Electrical power 4.71 6.28
Labour - General and Administration 1.37 1.83

Labour - Process and Maintenance 1.54 2.05
Consumables 2.43 3.24
Sample assays 0.15 0.00
General and Administration 0.79 1.05
Total 11.32 14.89
Basis of Operating Cost Estimate

The process plant design criteria and conceptual plant mass balance provided the basis
for the operating cost estimate.
Unit rates for process consumables have been estimated from vendor information, current
projects and in-house data bases.
The unit labour and diesel fuel costs for the gravity/flotation process option are identical to
those used in the CIL process option, as supplied by AQI.
The cost of maintenance consumables has been calculated as a percentage of the plant
mechanical equipment, piping and electrical equipment cost. The factors are based on
industry standard estimating experience with similar metallurgical operations.
A mechanical equipment list has been compiled from which an electrical load list, based
on estimated annual operating hours and, service factors, has been developed. This
enabled the determination of the annual electrical energy consumption from which the
power plant has been sized. An allowance for power demand has been included to cover
the site lighting and infrastructure power requirements.
The unit cost of electrical power is US$0.13/kWh.
Qualifications
The operating cost estimate excludes the following costs:
• Mining and ore haulage.
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• Marketing, transportation and sales of the gold/silver concentrate.

• Royalties.
• Levies and taxes.
• Bonds.
• Permits.
• Currency fluctuations.
• Insurances other than workers compensation.
• Support services of the head office.
• TSF maintenance.
• Community and heritage related issues.
• Environmental requirements.
• Working capital.
• Contingency allowance.
8.2.4 Capital Cost Estimate
Summary
The project initial capital cost estimate is presented in US dollars, has a base date of the
2Q06, and is to an accuracy of ±40%. All references to dollars or $ are to US dollars.
In broad terms the estimate includes design and construction of the plant access road,
power supply, process plant, TSF, water supply, on and off site infrastructure costs.
The estimate excludes escalation, duties, taxes, mining costs, working capital, sustaining
capital, financing costs, rehabilitation and closure costs and project contingency. The
estimate is summarized in Table 8.4.
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Table 8.4 Breakdown of Capital Cost Estimate
Cost Centre USDM

Direct Cost
Process Plant
Crushing 2.1
Grinding 11.2
Gravity Concentration 2.7
Flotation 1.8
Concentrate Handling 0.8
Reagents 0.5
Utilities 4.7
On-Site Infrastructure 10.1
Off-Site Infrastructure 6.8
Mining Miscellaneous 2.8 3.7
Sub-total Direct Cost 47.2
Indirect Cost
Temporary Construction Facilities 2.0
EPCM 10.4
Start up and Commissioning 0.8
Sub-total Indirect Cost 13.2
Total Project Cost 60.4
Exchange Rates
The estimate is expressed in USD and the exchange rates used are those given in
Section 7.2.1.
Escalation
Capital costs have a base date of 2Q06 with no allowance for escalation.
Working Capital
The estimate does not include an allowance for working capital.
Tax and Duties

Value added tax (VAT) and Import Duties are excluded from the estimate.
Sustaining Capital, Rehabilitation and Closure Costs
Sustaining capital, rehabilitation and closure costs are excluded from the estimate.
Project Contingency
Project contingency for changes, which arise from outside or unpredictable circumstances
such as exchange rate variations from the estimate basis and escalation of field
construction labour costs above the base line estimate, has been excluded.
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Accuracy Provisions
The component estimates have been developed at bare cost (excluding accuracy
provision). An accuracy provision allowance has then been allocated to each area and
element of the direct and indirect costs to reflect the level of definition available in the
scope of work.
The purpose of the accuracy provisions is to make allowance for uncertain elements of
costs to cover such factors as:
• Restricted information on site conditions, most especially concerning sub-surface
conditions and the engineering properties of excavated materials.
• Imprecision of sizing and quantities information arising from lack of detailed
engineering.
• Arithmetical and procedural errors in quantity take-offs and estimate assembly and
consolidation.
• Accuracy of materials and labour rates.
• Accuracy of productivity expectations.
• Accuracy of equipment budget pricing.
• Lack of direct knowledge of local contractor capabilities.
• Lack of direct knowledge of local permitting methods, procedures and outcomes.
Assumptions
The following assumptions underlie this estimate:
• All costs are based on new equipment.
• The design is based upon available test work information.
• The design is as detailed in the relevant sections of this report.
• The design will meet local environmental requirements.
• All materials from clearing, grubbing and demolition will be disposed of at the
Project site.
• Fill materials are generally available from mine waste or from quarries located
within the lease boundary of the project site.
• Transportation access is available to port/road systems from point of manufacture
to project site including border crossings.
• The assessment and understanding of current local costs obtained by the
methodologies described below is correct within the accuracy limits adopted.
Exclusions
The Project Initial Capital Cost Estimate excludes the following:
• Owner’s costs.
• Sunk costs to the completion of this report.
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• Ongoing exploration or acquisition costs.

• Ongoing test work.
• Ongoing studies.
• Taxes and duties other than those specifically allowed for.
• Project growth occurrences such as foreign currency fluctuations, escalation and
others as described above.
• Sustaining capital.
• Corporate costs.
• Rehabilitation and closure costs.
8.2.5 Direct Cost Development

Direct costs include:
• Supply of permanent materials and fixed and mobile equipment.
• Labour to undertake and manage the construction activities. This includes wages
and salaries with loadings for site labour, supervision and management including
associated expenses such as accommodation and travel, and home and/or
satellite office management expenses.
• Contractors and suppliers mark-up and profit.
Development of Supply and Freight Costs
Supply of Mechanical Equipment

Estimated costs were derived from two main sources:
• Responses to inquiries for budget prices.
• Ausenco historical costs for the same or similar equipment.
Freight Costs
The freight costs for mechanical equipment have been factored using a percentage based
on previous project experience.
Freight for rates items is included in the overall rate as quoted by local contractors.
Direct Cost Estimate

Cost estimates for the disciplines represented in the above components were developed
as follows:
Earthworks
Bulk earthworks cost allowance for the plant site was estimated based on previous similar
projects.
Costs for the ROM pad construction and the haul roads were estimated from the rates
provided by the mining contractor and the respective take-offs.
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Concrete
Concrete costs have been factored as a percentage of the mechanical equipment drawn
on experience from similar plants.
Structural Steelwork
Structural steel costs have been factored as a percentage of the mechanical equipment
drawn on experience from similar plants.
Mechanical Platework and Site Erected Tankage

Mechanical platework and site erected tankage costs have been factored as a percentage
of the mechanical equipment drawn on experience from similar plants.
Mechanical Equipment Supply

Equipment lists were developed from the process flowsheets. These provided equipment
numbers, type, sizing and power. Prices for equipment were sourced from international
suppliers using budget quotations or from Ausenco data base of recent projects and/or
estimates.
Mechanical Installation
Installation of mechanical equipment and platework is based on Ausenco historical man
hour data from similar gold process plants appropriately adjusted to represent local man
hours by applying a productivity factor. The adjusted manhours, together with the labour
rate, have been used to obtain total labour costs.
An additional allowance for heavy lift cranes has been included in some instances.
Piping Supply and Installation

Piping costs have been factored as a percentage of the mechanical equipment drawn on
experience from similar plants.
Electrical and Instrumentation

Electrical and instrumentation costs have been factored as a percentage of the
mechanical equipment drawn on experience from similar plants.
Buildings
Building areas have been estimated. Construction unit rate estimates were obtained and
applied to the estimated building areas.
Freight
Freight allowance to transport all equipment and materials to site has been calculated by
percentage based on previous project experience.
First Fill and Consumables

Costs for supply and delivery of reagents and consumables have been factored based
upon Ausenco experience with similar installations.
Capital Spares
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A capital spares provision is included in the estimate and was factored from previous
experience with similar installations
Tailings Management Facility

Cost estimates for the TSF have been developed for the gravity/flotation option from
estimates provided by Vector Engineering for the CIL process option.
Infrastructure
Communications System
This includes supply and installation of a local radio base station and repeater station with
associated hand held and vehicle mounted units, a microwave mini-link for voice and data
communication, a phone system throughout the plant area and a data wiring system
throughout the plant offices. Budget prices for these systems were obtained from
previous projects.
Access Roads
Quantities were derived from the preliminary road design and rates provided by Micon
International Pty, as requested by AQI, for access road construction.
Accommodation Camp
The cost of the accommodation village is based upon a previous design. The
accommodation village is sized such to accommodate the construction labour force and
will also be used by operations upon completion of construction.
The cost of constructing the village has been estimated based upon the building costs per
square meter provided by local contractors. An allowance has been included for fit-out.
Indirect Costs Breakdown

Indirect have been factored from the direct costs based upon previous experience with
similar past projects. The cost estimates for the indirect components were developed as
follows:
Temporary Construction Facilities and Services

Temporary construction facilities and services have been factored from the direct costs
based on previous similar projects. The derived cost includes the following:
• Offices for EPCM staff.
• Construction personnel ablution building.
• Temporary sewage system (allows for hire and operation of a package treatment
plant).
• Security hut (it was assumed that the permanent fence would provide site
security).
• Temporary water supply system.
• Temporary power supply, (allows for the hire and operating costs for an on-site
generator for site ablutions and EPCM contractors site office).
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• Temporary communications.
• Fuel storage (allows for the supply of a small storage facility unit until permanent
installation is completed in time for start of mine pre-operations phase).
• Safety barriers, safety signs, and safety training materials and first aid supplies.
• Security personnel.
• Site clean-up personnel.
• Contractor mobilisation/demobilisation and site establishment.
• Vendor representation costs for on site supervision and pre-commissioning
activities where applicable.
EPCM Costs
The EPCM cost has been factored from the direct costs based on Ausenco’s experience
with previous similar projects. The EPCM cost includes:
• EPCM labour.
• EPCM expenses.
• Sub consultants.
Start-up and Commissioning

This covers the estimated cost of providing plant start-up experts from the EPCM group
based on previous projects.
Owner’s costs
Owner’s costs are excluded form the estimate.
8.2.6 Recommendations
The following recommendations suggested here are applicable to this conceptual
gravity/flotation option only:
• Due to the limited gravity and flotation test work carried out for this study it is
recommended that a series of tests are conducted to determine the concentrate
grades and associated recoveries with varying head grades and ore types.
• Further development of the flotation flowsheet by carrying out re-grinding, reagent
and pH screening tests as well as locked cycle flotation tests.
• It should be investigated if the concentrate can be sold economically to a third
party.
8.3 Heap Leach Process Option

This section of the report presents the conceptual study findings covering the heap leach
process option.
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8.3.1 Design Basis

Samples of oxidised mineralised andesite and unoxidised mineralised andesite were
leached for five days at coarse crush sizes to assess amenability for treating by heap
leach. Full details of the heap leach testwork can be found in Section 2.12. The head
grades of the samples were much lower than intended. A trend of increasing gold
extraction with finer crush size is evident; although poor leach extraction was found in all
tests.
The testwork programme had allowed for a column leach test on each sample at a
selected crush size. However, it was decided not to proceed with this work, as the
sample grades were below that of a likely feed to a heap leach operation.
The testwork programme had also provided for heap leaching on oxidised and unoxidised
vein material, but samples were not available for this work.
For the above reasons the heap leach conceptual study is based on the assumption that
the ore is amenable for heap leaching. The following key design parameters were
assumed and used:
• Assumed average metal recovery of 65% gold and silver.
• Leach duration 180 days.
• Irrigation rate 0.0015 m3/m2/h.
8.3.2 Process Description

The following narrative provides a brief description of the main heap leach process option
and should be read in conjunction with the conceptual process flow diagram (1497-F-801)
and mechanical equipment list included in Appendix 8.
Ore Receipt
Run of mine (ROM) ore is delivered by the mine haul trucks onto a ROM pad. A FEL is
used to feed the ROM ore over a static grizzly located above a ROM bin. The grizzly is
used to remove large oversize particle/rocks which choke the primary jaw crusher. The
jaw crusher is sized to accommodate a rock having a maximum single dimension of 900
mm.
The jaw crusher product gravitates onto a sacrificial conveyor which is used to bare the
brunt of tramp and oversize material and thus prolong the life of the downstream
equipment.
Crushing and Screening

Further size reduction of the primary crushed ore is achieved by secondary and tertiary
crushing in closed circuit with a screen. The closing size of the screen is 12 mm.
A conveyor transfers the primary crushed ore to a triple deck sizing screen. The top deck
acts as a relief deck to prevent damage of the screen deck by large particles. The
oversize from the top and middle decks combines and is conveyed to a surge feed bin
ahead of the secondary crusher. The oversize from the bottom deck is conveyed to a
surge feed bin ahead of the tertiary crusher. Metal detectors are installed above the
crusher feed conveyors to prevent tramp metal entering the cone crushers.
Both crushers are choke fed to achieve maximum crushing efficiency. The crushed
products from the crushers gravitate onto the sizing screen feed conveyor.
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The undersize from the bottom deck of the sizing screen gravitates onto a product
conveyor which discharges into an agglomerator feed hopper.
A dust collector while a wet dust scrubber captures dust generated at the sizing screen.
Agglomeration and Stacking

The agglomerator is fed from the feed hopper by a variable speed belt feeder. Quicklime
for pH control and cement for binding of the fine particles are added onto the ore on the
belt feeder. Both the lime and cement silos are located above the agglomerator feed belt.
Water is added to the agglomerator to aid in the agglomeration process. The water
addition is ratio controlled with the feed rate such that an agglomerate moisture content of
10% w/w is obtained.
The agglomerator discharges onto a transfer conveyor which in turn, discharges onto the
first of a series of stacking conveyors. The stacking conveyors transport the
agglomerates to a horizontal bandwagon conveyor and radial stacker conveyor with a
“stinger”. The agglomerated ore is then stacked on a heap leach pad, with the spreading
action being controlled by the stacker operator.
The stacker and horizontal bandwagon conveyor are retracted daily using a front end
loader. Once the stacker and bandwagon are fully retracted the stacking system must be
shut down in order to remove a stacking conveyor. As no surge facility exists, between
the crushing plant and the heap, crusher maintenance should be undertaken to coincide
with the movements of the stacking equipment. Consideration of alternate stacking
options (i.e. truck stacking) is recommended if this option is to be progressed.
The agglomerates are stacked in cells, each 60 m wide, 430 m long, and 6 m high, with a
capacity of 248,400 tonnes (equivalent to 90 days production). The agglomerates are
placed on the heap at the down slope end of the cell and the stacking progresses upslope
on the heap, thus allowing irrigation of freshly stacked ore to commence.
Heap Leaching
An initial topographical assessment of the likely plant site reveals that flat open land is
scarce. For this reason, the conceptual layout is based on a two level heap leach
operation to minimise the real estate requirements.
The leach pad is constructed in stages to avoid excessive rainfall catchment and
containment requirements in initial years and also to minimise initial capital expenditure.
The stage 1 leach pad is constructed as part of the initial plant construction and is large
enough to allow one year’s operation. To allow counter-current leaching and assist in
metallurgical balancing, the individual cell has separate, metered solution application
systems. Internal solution containment berms direct the leach solution from each cell to
discrete off-flow solution collection systems. The collected leach solution from each cell
will be directed to either the Pregnant Leach Solution (PLS) or Intermediate Leach
Solution (ILS) return pipes, depending on solution tenor.
A two stage counter-current leach cycle will be utilised to reduce PLS flow rates and
increase gold solution tenors reporting to clarifying filter. In this arrangement, Barren
Leach Solution (BLS) is applied to the oldest, most extensively leached cells (nearly
exhausted) to form a low grade ILS. The ILS is then fortified with cyanide and
anti¬scalant and applied to fresher cells. The high grade leach solution from the cells
under primary leach is directed to the PLS pond while the lower grade leach solution from
the cells under secondary leach are recycled to the ILS pond.
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Caustic and cyanide solutions will be metered to the BLS pond to maintain a pH of >9 and
a free cyanide concentration of 300 - 500 mg/L. The BLS is pumped to the cells under
secondary leach. If necessary raw water will be added to maintain the level in the BLS
pond and to replenish for the water lost to evaporation and hold-up within the heaps.
Solution draining from the heaps under secondary leach is collected in the high density
polyethylene (HDPE) lined ILS pond. The ILS is pumped to the cells under primary and
secondary leach. Raw water make-up and caustic, cyanide and anti-scalant metering are
identical to the BLS circuit.
Solution draining from the heaps under primary leach is collected in the HDPE lined PLS
pond. The PLS is pumped to the clarifying filter feed tank.
Leach solution discharging from the collection system in each individual cell is directed to
either the PLS or the ILS open return launder, depending on the solution tenor/leach
cycle.
During periods of excessive rainfall, the off-flow solution from the heaps will exceed the
capacity of the various ponds. The PLS pond and BLS ponds overflow to the ILS pond,
which in turn overflows to the storm water pond. Solution will be reclaimed from the storm
water pond as processing capacity becomes available in the period following the rainfall
event.
Low annual rainfall, evaporation losses, and water retention in the heap all conspire to
create an overall negative water balance. Supplementary water addition is, therefore,
required.
Solution form the PLS pond is in batches transferred to a clarifying filter surge tank.
Barren solution from the precipitation filter is returned to the BLS pond.
Precipitation and Goldroom

Prior to the recovery of precious metals, the PL solution is fed through a clarifying filter to
ensure that solid particles are removed. The clarified solution is directed to a surge tank.
The stored solution is pumped through a de-aeration vessel ahead of the mixing point
where zinc dust, catalyst and precoat are introduced.
Zinc dust is metered into the gold and silver rich solution as it is pumped from the
precipitate filter feed tank through a precipitation filter. Gold and silver precipitates are
formed on contact with the zinc dust and collected in the precipitation filter. Lead nitrate is
added during precipitation to act as a catalyst for the precipitation reaction, while
diatomaceous earth is added to the filter feed stream to pre-coat the filter surface prior to
each filtration cycle. During filtration, further diatomaceous earth is added to act as a
body aid, which maintains filter cake porosity.
Filtrate solution, barren of gold and silver, discharges from the filter into the barren
solution tank, where the filtrate is either used for mixing with zinc dust, lead nitrate and
diatomaceous earth, or pumped back to the BLS pond.
Two recessed plate filter presses are used for the precipitation filtration duty with one filter
operating, whilst the other filter is off line for harvesting and/or in preparation for the next
batch. Each filter is sized such that 36 hours of production at design maximum grades can
be accommodated.
Filter cake recovered from the precipitate filters is collected in trays. The trays are
provided with castors to assist with their withdrawal from beneath the filters and with lifting
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points for a fork-lift. The filter cake is dried in a drying/calcining oven before direct
smelting with fluxes in a diesel-fired furnace. The smelted precious metals will be poured
into a cascade of five 600 oz doré moulds. The drying oven and the furnace are located
in the ground floor area of the secure gold room and are designed for a maximum of two
smelts per day, seven days per week.
Fume extraction equipment will be provided to remove gases from the drying oven and
barring furnace and exhaust to atmosphere.
Doré bars will be cleaned, weighed, stamped, sampled and then stored in a safe while
awaiting dispatch.
The gold room has a concrete floor complete with sump trap which overflows to a sump.
A sump pump transfers all wash down or spillage to the ILS pond. The heavy metals
collected in the sump trap are returned to the drying oven.
Plant Control System

For a plant of this nature a basic hard wired interlock control system is adequate. The
plant operation relies on manual stop start of conveyors and pumps. Hard wired
interlocks are in place to protect equipment from overloading.
8.3.3 Operating Cost Estimate

An operating cost estimate has been prepared for the stand alone Calcatreu heap leach
plant treating 750,000 t/y ROM ore producing 18.07 t/y of gold and silver in doré. The
costs are expressed in USD and are current during 2Q06. The cost estimate is accurate
to ±40%.
The operating cost estimate is based on the process design criteria and the information
obtained from the following sources:
• Metallurgical performance assumption made by Ausenco.
• Data provided by AQI.
• Quotations from suppliers.
• Ausenco’s in-house database.
A summary of the estimated operating costs for the heap leach option are presented in
Table 8.5.
Table 8.5 Operating Cost Estimates
Cost Centre USDM/y USD/t

Electrical power 1.80 2.40
Labour - General and Administration 0.92 1.23
Labour - Process and Maintenance 1.02 1.36
Consumables 3.64 4.85
Sample assays 0.32 0.43
General and Administration 0.63 0.84
Total 8.67 11.56
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Basis of Operating Cost Estimate

The process plant design criteria and a conceptual mass balance provide the basis for the
operating cost estimate.
Compared with the gravity/flotation process option, the heap leach operation requires less
personnel, vehicles, mobile equipment and accommodation.
The unit labour and diesel fuel costs for the heap leach option are identical to those used
in the CIL process option, as supplied by AQI.
Unit rates for process consumables are estimated from vendor information, current
projects and in-house data bases.
The cost of maintenance consumables is calculated as a percentage of the plant
mechanical equipment, piping and electrical equipment cost. The factors are based on
industry standard estimating experience with similar metallurgical operations.
A mechanical equipment list has been compiled from which an electrical load list, based
on estimated annual operating hours and service factors, has been developed. This
enabled the determination of the annual electrical energy consumption from which the
power plant has been sized. An allowance for power demand has been included to cover
the site lighting and infrastructure power requirements.
The unit cost of electrical power is US$0.13/kWh.
It is assumed that quicklime and cement are available in bulk quantities.
Qualifications
The operating cost estimate excludes the following costs:
• Production loss when the stacking conveyors are relocated.
• Mining and ore haulage.
• Marketing, transportation and sales of the gold/silver concentrate.
• Royalties.
• Levies and taxes.
• Bonds.
• Permits.
• Currency fluctuations.
• Insurances other than workers compensation.
• Support services of the head office.
• TSF maintenance.
• Community and heritage related issues.
• Environmental requirements.
• Working capital.
• Contingency allowance.
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8.3.4 Capital Cost Estimate
Summary
The capital cost estimate for the heap leach estimate has been developed in the same
manner as the gravity flotation option as described in Section 8.2.4. The capital costs
estimate for the heap leach option is summarized in Table 8.3.2.
The heap leach option contains a deferred capital component for the expansion of the
leach pad area and associated items. Details of the deferred capital cost also appear in
Table 8.3.2.
Table 8.6 Breakdown of Capital Cost Estimates
USDM
Cost Centre
Direct Cost
Heap Leach Plant
Crushing 4.7
Agglomeration and Stacking 8.9
Heap Leach Pad and Ponds 8.3
Zinc Precipitation and Goldroom 3.0
Reagents 0.3
Utilities 3.9
On-Site Infrastructure 4.9
Off-Site Infrastructure 4.4
Mining 2.1
Miscellaneous 3.3
Sub-total Direct Cost 43.8
Indirect Cost
Temporary Construction Facilities 1.9
EPCM 9.6
Start up and Commissioning 0.8
Sub-total Indirect Cost 12.3
Initial Project Costs 56.1
Deferred Capital 17
Total Project Cost 73.1
8.3.5 Recommendations
The following recommendations suggested here are applicable to this conceptual heap
leach option only:
5 April 2007 132 of 133

• A heap leach testwork programme should be developed to obtain engineering

design parameters. For that reason it is recommended that the testwork
programme covers the following aspects:
− Testing of all major ore types.
− Leach response variation versus ore depth and ore location in the deposit.
− Leach response variation versus feed size distribution.
− Permeability of the heap.
− Reagent consumption rates.
− Agglomeration tests to determine residence time, moisture content and
cement addition rate.
− Leach response versus temperature.
As the entire heap leach operation requires a surface area several orders larger in size
than an equivalent CIL based process, an investigation should be conducted to determine
a suitable site location.
5 April 2007 133 of 133


Volume 5: Financial Analysis
5 April 2007
Prepared by
Executive Summary
The financial analysis shows that Aquiline Resources Incorporated’s (AQI’s) Calcatreu
Project offers a modest level of profitability using the assumptions and findings of the IFS.
The Project delivers free cashflow of USD16.26 M and an NPV of USD6.07 M with an IRR
of 14%. All costs and revenues have been modelled and reported in $US unless
otherwise stated.
The project as it stands does not have an attractive risk profile. When analysed for the
impact of identifiable significant risks, it is apparent that there is only a 37% probability of
the project delivering better than a break-even financial result (i.e. zero NPV) and a 24%
probability that the project will deliver the IFS NPV or greater.
Analysis using recent 6 month average gold and silver prices produced free cashflow of
USD73.54, NPV of USD54.68 with an IRR of 74%.
Risk mitigation strategies should be considered and incorporated into the project before a
decision is made to proceed with development. In particular, the identification of
additional resources for conversion into mining inventory, through discovery or upgrading
the confidence classification of existing resources, provides an opportunity to significantly
improve the risk profile. It is understood that Aquiline is pursuing this strategy.
Aquiline Resources Inc.: Calcatreu Gold Project
1 Project Scope 1
2 Project Description 2
3 Base Case 3
4 Sensitivity and Risk Analyses 5

4.1 Sensitivity Analysis 5
4.2 Risk Analysis 6
4.2.1 Resource and reserve risk factors ........................................... 6
4.2.2 Market/price risk factors .......................................................... 7
4.2.3 Production schedule ................................................................ 8
4.2.4 Operational cost ...................................................................... 9
4.2.5 Capital cost.............................................................................. 9
4.2.6 Variable ranges ....................................................................... 9
4.2.7 Results................................................................................... 10
5 Risk Reduction 13
6 Conclusions 14
Tables
Table 3.1 Base Case financial modelling results ................................................ 4
Table 4.1 Variable ranges for risk modelling ..................................................... 10
Table 4.2 NPV simulation results with varying gold price range ....................... 12
Table 4.3 NPV simulation results with varying grade range.............................. 12
Table 4.4 NPV simulation results with varying recovery range ......................... 12
Table 4.5 NPV simulation results with varying mining inventory ....................... 12
Table 4.6 NPV simulation results with varying capital expenditure ................... 12
Figures
Figure 4.1 Sensitivity results ................................................................................ 6
Figure 4.2 Gold price 1973 – 2006 (Source: www.thebulliondesk) ...................... 8
Figure 4.3 NPV simulation distribution ............................................................... 11
Appendices
A Financial model detail
5 April 2007
1 Project Scope
A financial model was prepared to evaluate the viability of AQI’s Calcatreu Project
assuming the operational and economic assumptions established during the Initial
Feasibility Study (IFS). The financial model was used to identify the sensitivity of the
project to key input variances and to define the project’s risk profile.
5 April 2007 1 of 19
2 Project Description
The Calcatreu Project is situated near the southern border of Rio Negro Province,
Argentina. The deposit is classified as an epithermal gold and silver vein system which
extends over more than 73,000 hectares. Currently 11 outcropping epithermal gold and
silver bearing veins have been identified. The two most promising veins are the 49 and
Nelson Veins which contain all of the currently drill defined resource ounces at Calcatreu.
The other 9 veins remain partly tested and will soon become the focus of the AQI's
aggressive project wide exploration program.
The project is planned to mine by open pit methods 3.50 Mt of mineralised material for
395 koz of recovered gold and 2,804 koz of recovered silver over a life of mine (LOM) of
4.67 years (56 months).
5 April 2007 2 of 19
3 Base Case
The project financial model assumes the following Base Case parameters:
• mining inventory:
− 3.50 Mt ore
− 3.86 g/t Au head grade
− 33.22 g/t Ag head grade.
• discount rate 8%
• operational costs:
− mining $41.85 M or $11.95/t ore
− processing $68.43 M or $19.55/t ore.
• process recovery:
− gold 90%
− silver 74%.
• gold price $500/oz
• silver price $8/oz
• royalties 5.5% on NSR
• discount rate 8%
• total capital expenditure $79.15 M.
No provision has been made for exploration expenditure attributable to the operation.
No provision has been made for environmental bonds, rehabilitation costs or salvage
revenues.
No provision has been made for project financing arrangements or sales arrangements
other than spot price contracts.
Depreciation of capital expenditure has been provided for on a reducing balance over
mine life basis.
No provision has been made for inflation of costs with time or taxation of profits.
The Base Case financial model results are summarised in Table 3.1 and are shown in
greater detail in Appendix A.
5 April 2007 3 of 19
Table 3.1 Base Case financial modelling results
Item Unit Value

Net cashflow $M 16.26
NPV @ 8% discount $M 6.07
IRR % 14
Payback period Months 40
The Base Case represents the financial outcome considering the cost, revenue and
financial factors derived or assumed by the IFS for the project.
5 April 2007 4 of 19
4 Sensitivity and Risk Analyses

Due to the inherent uncertainty in estimating some of the key factors which influence the
viability of mining projects of this type, a sensitivity and risk analysis has been undertaken
to determine the robustness of the viability of the project and the risk of the project
becoming non-viable in the event of foreseeable and reasonably assumed variability in
the project assumptions.
The sensitivity analysis identifies the impact on project value for simple variances in the
assumed values for the key project factors. An indication of the variance required for
each variable to produce a break-even result can be derived.
The risk analysis uses Monte Carlo Simulation to assess the probability of the project
achieving a certain outcome, such as a positive NPV, after assigning range limits to key
variables. A statistical analysis of the range of likely NPV results provides an insight into
the robustness of the viability of the project.
The range of possible variability for each key factor has been estimated on the basis of
knowledge and experience with similar projects, consideration of physical attributes of the
project and consideration of historical and consensus forecasts for external financial
factors. Each factor offers complementary, though not necessarily balanced, risk of
downside or upside impacts.
4.1 Sensitivity Analysis

The sensitivity of the project NPV has been established for increments of +/- 2.5%, +/- 5%
and +/- 10% of key project variables. The results are shown as a spider diagram in Figure
4.1. Figure 4.1 shows that the project NPV is very sensitive to the key revenue based
variables of gold value (price) and gold grade. The project is similarly sensitive to
processing recovery of gold though any upside potential is limited by physical constraints
to increasing recovery. The project becomes NPV break-even following a 4% negative
movement in value of any of these variables. A 4% positive movement sees a 100%
increase in project NPV to $12.2 M.
The project is sensitive to variation in the mining inventory. A 5% change in mining
inventory sees a 35% or $2.1 M change in NPV. A 12% increase in mining inventory will
see a 100% increase in project NPV.
The project is also sensitive to variations in the pre-production capital requirement. An
8% change in pre-production capital will see the project value reduced to break-even, or
alternatively, doubled.
An additional sensitivity scenario was run using 6 month (to 31 December 2006) average
gold and silver prices of $624 /oz and $12.38 /oz respectively. The projected results of
free cashflow of $73.54 M, NPV of $54.68 M and IRR of 74% further demonstrate the
sensitivity of the project to commodity prices.
5 April 2007 5 of 19
Figure 4.1 Sensitivity results
Diluted Grade Gold Diluted Grade Silver

Tonnes of Mining Resources Mining & Processing Rate
Beneficiation & Conc. Tonnes Production Capital
Mining Cost Processing Cost
Unhedged Value Gold Unhedged Value Silver
Mine # 1
25
20
% Change in NPV
15
10
0
-15% -10% -5% 0% 5% 10% 15%
-5
-10
-15
% Change From Base
4.2 Risk Analysis

The key risks associated with the project have been identified and an estimate made of
the range of potential variability to consider for each variable.
4.2.1 Resource and reserve risk factors

Narrow veins, generally less than 3 m wide, are complex geological phenomena, which
commonly display unpredictable geometry and grade distribution. Variations in structural
continuity, dip, strike, width, mineralogy and specific gravity are common. Veins may be
composite, with ore-grade mineralisation restricted to specific structural domains.
Branches, intersections and braided zones are common features. Potentially high-grade
zones are often localized within ore shoots, which are surrounded by barren or low-grade
regions. Although the overall deposit grade can be predicted with some confidence,
these features make accurate local grade prediction difficult.
The Calcatreu deposit benefits from a low value of the geostatistical parameter “relative
nugget ratio”, which distinguishes it from many other narrow vein deposits where this ratio
is large and reliable grade estimation is consequently difficult. The gold mineralisation is
fine grained and varies in size between 0.2 µm and 6 µm, and this contributes to
confidence in the grade estimation.
The mineral resource reported for Calcatreu (Micon International Limited: A Preliminary
Assessment and Economic Evaluation for the Calcatreu Gold-Silver Project, October
2004) has been classified as Indicated in accordance with the CIM Standards on Mineral
5 April 2007 6 of 19
Resources and Reserves (2000), with no part classified as Measured. This means that
the project estimate of resource tonnes and grade is at a medium level of confidence by
virtue of the relationship between the sampling density and the geostatistical
characteristics of the mineralisation. Accordingly, any assessment of sensitivity or risk
should consider commensurate potential variances in the resource.
Narrow vein mining operations can also be subject to high levels of unplanned dilution
depending upon geological variability and mining engineering issues, such as blasting
impacts and the selectivity of the mining method and equipment. Unplanned high levels
of dilution can have negative consequences for the cash flow and NPV of a project.
The IFS assumes average mining dilution from adjacent material of 5% volume to high
grade mineralisation and 8% volume to low grade mineralisation. Mining losses of 5% of
low grade mineralisation to waste are provided for.
For the risk analysis, a range of variability from the Base Case of - 5% to + 3% in the gold
grade has been considered, biased towards the lower side of the grade distribution, which
is close to the standard error as calculated for Vein 49. For silver grade a - 5% to + 5%
variability has been considered. The mining inventory has a variability of - 4% to + 5%
considered. These variabilities reflect the uncertainty in the resource estimate and in the
unplanned dilution included in the mining inventory estimate.
4.2.2 Market/price risk factors

The annual revenue generated by the project as reported by the Base Case financial
model comprises:
• 85% to 89% revenue from Au
• 11% to 15% revenue from Ag.
The major proportion of the revenue stream is derived from gold sales and so the project
value is leveraged more to variability in the gold market price than that of silver.
Historically, the market price for gold has fluctuated widely and has been affected by
numerous factors, over which the producer has no control, including:
• the demand for gold for industrial uses and jewellery
• actual or expected purchases and sales of gold bullion holdings by central banks
or other large gold bullion holders or dealers
• speculative trading activities in gold
• the overall level of forward sales by other gold producers
• the overall level and cost of production by other gold producers
• international or regional political and economic events or trends
• the strength of the U.S. dollar (the currency in which gold prices generally are
quoted) and of other currencies
• financial market expectations regarding the rate of inflation
• interest rates.
Changes in the market price for gold will affect the cash flows and profit generated by
Calcatreu. A representation of the recent gold price in USD/oz, from 1973 to 2006, is
shown in Figure 4.2.
5 April 2007 7 of 19
Figure 4.2 Gold price 1973 – 2006 (Source: www.thebulliondesk)
In addition, the current demand for, and supply of gold affects the price of gold, but not
necessarily in the same manner as current demand and supply affect the prices of other
commodities. Central banks, financial institutions and individuals historically have held
large amounts of gold as a store of value and, historically, production in any given year
has constituted only a small portion of the total potential supply of gold. Since the
potential global supply of gold is largely unrelated to mine production in any given year,
normal variations in current production will not necessarily have a significant effect on the
supply of gold or the gold price. Historically, gold has tended to retain its value in relative
terms against basic goods in times of inflation and monetary crisis.
In 2004, 15 European central banks entered into a gold sales agreement pursuant to
which they restrict their annual sales of gold to specified limits. This agreement will be
reviewed in 2009. The content and effect of any new agreement on the market in terms
of gold sales and prices is unclear but presents a risk which will crystallise during the
current scheduled life of the Calcatreu Project.
For the risk analysis, a range of variability in the gold price from the Base Case of - 15%
to + 15% has been considered. Due to its small contribution to project value, no variability
in the silver price has been provided for.
4.2.3 Production schedule

The analysis indicates that the project is extremely sensitive to variation in gold grade and
recovery. As most of the mineralised resource is currently classified as Indicated, the
ability to accurately estimate the local distribution of grade in the ore body, and hence
short term variability of feed grade to the process plant, is limited. To this extent, the
project carries some risk of operating below cash break-even for periods during its life.
5 April 2007 8 of 19
An in-depth analysis of this risk would be undertaken during the preparation of a project
definitive feasibility study to identify the magnitude of this risk and establish appropriate
strategies for its management.
No provision has been made for modelling the risk of variability in the short term mined
grades as the resource estimate has not been prepared to the level of confidence
required to enable meaningful interpretation of risk.
Recovery of metal is subject to some uncertainty until the process plant has been
commissioned and is operating at a steady state performance level. To reflect this
uncertainty, variability in recovery from the Base Case has been modelled with a range of
- 2% to + 1.5% for gold and - 5% to + 3% for silver. The upside potential for recovery is
limited by physical constraints within the selected process path.
4.2.4 Operational cost

The estimated operating costs for the project comprise:
• mining cost $11.95/t ore
• processing cost (includes Administration) $19.55/t ore.
The results of the sensitivity analysis shown in Figure 4.1 indicate that the NPV is
relatively insensitive to changes in mining and processing costs. The degree of detail
used to estimate these costs in the IFS is such that a relatively low variability can be
expected.
For the risk analysis, a range of variability from the Base Case of - 3% to + 5% in the
operating costs is considered appropriate.
4.2.5 Capital cost

The total capital cost including costs for the mining equipment, treatment plant and
infrastructure is estimated to be $79.15 M. The major part of the capital expenditure
($78.87 M) is scheduled as a pre-production cost. There is a small provision of $0.28 M
for road construction during Year 3 of the operation. The largest component of the capital
expenditure (84%) is due to processing plant, administration and infrastructure costs.
Recent experience suggests that project capital costs can be volatile and subject to
significant short term movement. Capital costs are impacted by global supply and
demand forces which have produced significant over-run outcomes in recent times. For
the risk analysis, it is assumed that the capital expenditure could vary between -5% and
+25% of the expected $79.15 M.
4.2.6 Variable ranges

The Monte Carlo Simulation risk model has been established using the variable ranges
shown in Table 4.1 and by running the model on a multivariate basis. These variable
ranges are considered to represent a reasonable expectation of the range of variability
the project may encounter during operations.
The range of values used for the variables have been modelled as a uniform distribution
with a selection bias of 70% (approximately 1 standard deviation) towards the mean of the
range for each variable. In this manner, the impact of data outliers is moderated. Ten
thousand iterations were run to ensure an adequate distribution of results was obtained to
enable meaningful interpretation.
5 April 2007 9 of 19
Table 4.1 Variable ranges for risk modelling
Variable Base Case Variable ranges

Qty Units + -
Diluted Grade
Gold 3.86 g/t 3.0% 5.0%
Silver 33.22 g/t 5.0% 5.0%
Mining inventory 3.50 Mt 5.0% 4.0%
Recovery
Gold 90 % 1.5% 2.0%
Silver 74 % 3.0% 5.0%
Metal Price
Gold 500 $ /oz 15% 15%
Silver 8 $ /oz 0% 0%
Capital
Pre-Production 78.87 $M 25% 5%
Production 0.28 $M 0% 0%
Operating Costs
Mining 11.95 $ /t 5% 3%
Processing 19.55 $ /t 5% 3%
Further Monte Carlo analyses were undertaken to determine the sensitivity of the
simulated NPV outcome to the most influential factors identified by the sensitivity analysis,
i.e. the gold price, grade, recovery, mining inventory and capital cost. This analysis was
undertaken by changing the range of variability of each of these key variables in isolation
to determine the effect on the NPV distribution.
4.2.7 Results
The multi-variate Monte Carlo analysis indicates that, based on the selected variable
ranges, the project has a mean (expected) NPV of -$4.59 M, that is, a 50% probability of
achieving an NPV of -$4.59 M or lower, and a 50% probability of achieving an NPV of
-$4.59 M or higher. The project has a 37% probability of achieving a positive NPV, and a
24% probability of achieving or exceeding the Base Case NPV of $6.07 M. There is a
95% probability of the project delivering an NPV between -$36.51 M and $27.32 M.
The probability distribution of NPV outcomes produced by the Monte Carlo analysis is
shown in Figure 4.3.
5 April 2007 10 of 19
Figure 4.3 NPV simulation distribution
Calcatreu Project
0.18 1
Cummulative Probability
0.16
0.14 0.8
Probability
0.12
0.6
0.1
0.08
0.4
0.06
0.04 0.2
0.02
0 0
-48 -41 -34 -27 -21 -14 -7 0 7 14 21 49
NPV $ M
Table 4.2 to Table 4.6 show the results of the additional key variable simulations
undertaken to further investigate the sensitivity of the project to the key parameters of:
• gold price
• grade
• recovery
• mining inventory
• capital cost.
The key parameter variance ranges were adjusted to those shown in Table 4.2 to
Table 4.6 while the remaining variable ranges were maintained at those shown in Table
4.1
Table 4.2, Table 4.3, and Table 4.4 show little difference in NPV distribution for the key
revenue factors (gold price, grade, recovery) apart from a widening of the range of NPVs
reported as the range of variability of each factor widens. The mean NPV stays within a
narrow range close to the base simulation mean NPV of -$4.59 M.
Table 4.5 shows the effect on NPV distribution from varying the mining inventory, with the
upside variance representing the results of potential exploration success. The mean NPV
increases by about $3 M for each 5% increase in mining inventory.
Table 4.6 shows that a significant increase in mean NPV may be achieved by limiting the
capital expenditure variability over-spend, with a positive mean NPV of $2.69 M reported
for a variability range of +/- 5%.
5 April 2007 11 of 19
Table 4.2 NPV simulation results with varying gold price range
Gold price range Mean NPV 95% probability range of NPV
± 5% from base -$4.33 M -$22.2 M to $13.5 M
± 10 % from base -$5.19 M -$30.0 M to $19.6 M

± 15% from base -$4.59 M -$36.5 M to $27.3 M
± 20% from base -$5.89 M -$44.3 M to $32.5 M
Table 4.3 NPV simulation results with varying grade range
Grade range Mean NPV 95% probability range of NPV

-3% to + 1% from base -$4.52 M -$35.9 M to $26.9 M
-6% to + 3% from base -$5.88 M -$37.9 to +$26.1 M
Table 4.4 NPV simulation results with varying recovery range
Varying recovery Mean NPV 95% Probability Range of NPV

-2% to + 1.5% from base -$4.59 M -$36.5 M to $27.3 M
Table 4.5 NPV simulation results with varying mining inventory
Varying mining inventory Mean NPV 95% Probability Range of NPV

-5% to + 25% from base $1.84 M -$33.6 M to $37.3 M
Table 4.6 NPV simulation results with varying capital expenditure
Varying capital expenditure Mean NPV 95% Probability Range of NPV

-5% to + 5% from base $2.69 M -$26.8 M to $32.1 M
5 April 2007 12 of 19
5 Risk Reduction
A number of strategies can be employed to minimise the exposure of the project to the
significant risks and uncertainties identified in this financial analysis. These strategies
include:
• increasing the mining inventory tonnage and grade. The current mining inventory
is operating cash positive though not of a magnitude to produce a very attractive
project outcome. Any increase in the mining inventory, by defining additional
economic resources to contribute to the mining inventory, will add to the project’s
viability and reduce the sensitivity of the project NPV to the capital requirements
for development.
• reducing the capital cost. This can be achieved by conducting value engineering
reviews to identify opportunities to reduce capital cost requirements.
• reducing the project exposure to gold price volatility. This can be achieved by
entering into arrangements which secure the price to be received for future mine
production. There are a number of methodologies available to achieve this
outcome.
• increasing the confidence of the resource estimate. Further resource
development work should aim to increase the resource classification from
Indicated to Measured. This can be achieved with further drilling and resource
estimation and can be aided by the application of conditional simulation
techniques to quantify the uncertainty in the resource estimate.
• reducing the risk of grade dilution through mining. This can be achieved by
conducting geotechnical investigations which quantify the risk of dilution and
provide a basis for establishing the means by which the dilution can be controlled.
• increasing the certainty and currency of capital and operating cost estimates.
Cost estimates need to be updated progressively as decision points for project
development are approached and firm cost commitments secured to reduce
uncertainty. In particular, capital costs are impacted by global supply and demand
forces which have produced significantly negative outcomes in recent times.
5 April 2007 13 of 19
6 Conclusions
• The financial analysis shows that the Calcatreu Project Base Case delivers
$16.26 M in free cashflow with an NPV of $6.07 M and an IRR of 14%. Payback
is achieved in 40 months.
• The sensitivity analysis shows the financial outcome is highly sensitivity to the key
revenue factors of grade, gold price and recovery. A 4% favourable movement in
any of these key factors produces a 100% improvement to the project NPV, to
$12.2 M. A 4% negative movement in any of these factors produces a below
break-even outcome.
• The analysis shows the project viability to be sensitive to the mining inventory. A
12% increase in mining inventory produces a 100% increase in NPV.
• The analysis shows the project to be quite sensitive to capital costs, with an 8%
increase in capital costs resulting in a below-break even outcome.
• Analysis using recent 6 month average gold and silver prices produced free
cashflow of $73.54 andNPV of $54.68 with an IRR of 74%.
• The risk analysis shows the profitability of the project is vulnerable within the
range of variable movements modelled. The simulation modelling shows the
project has only a 37% probability of delivering a break-even result and a 24%
probability of achieving the Base Case NPV. The modelled mean project NPV is
-$4.59 M. There is a 95% probability of the project delivering an NPV between
-$36.51 M and $27.32 M.
• Achieving a reduction in the risk of capital over-expenditure (increasing the
certainty of capital cost estimates) will have a significant impact on reducing the
risk of the project delivering a negative NPV result.
• Risk reduction strategies should be considered and incorporated into the project
before a decision is made to proceed with development.
5 April 2007 14 of 19
A Financial model detail
5 April 2007 15 of 19
Multi Mine - Advanced Financial Analysis 21-Feb-07

Calcatreu
Rio Negro Prov. Argentina Calcatreu YEARLY DATA
Initial Feasibility Study S IRR 14% Year Ore -2.0 -1.00 0.00 1.00 2.00 3.00 4.00 4.67
NPV (Ex Finance) $ 6.070 L/G Years 0.00 0.00 0.00 0.00 0.00 0.00
NPV (All Cashflows) $ 6.070
Cash $ 16.263
Project Type 0
Currency USD 0 1 2 3 4 5
Pre-Prodn Period years 0.00 0.00 0.00 0.00 0.00 0.00 0.00
MINEABLE RESOURCES/RESERVES TOTALS
Grade of Metal Gold g/t 3.86
Grade of Metal Silver g/t 33.22
Tonnes of Mining Resources million t 3.500
Strip Ratio ?:1 7.26 7.26 7.26 7.26 7.85 9.54 6.86 7.62 2.98
Recovery & Reserves of Ore % 100.0% 3.500 3.500 0.750 0.750 0.750 0.750 0.500
Grade of Mineralised Waste Gold g/t 0.00
Grade of Mineralised Waste Silver g/t 0.00 Remaining Tonnes 3.500 2.750 1.999 1.247 0.494
MINING
% Production from this Mine 100% 3.500 0.750 0.752 0.751 0.753 0.494
Mining Rate, Remaining Ore & Min Waste million t/year 6.197 6.197 2.750 1.999 1.247 0.494 -
Tonnes Waste million t 25.424 25.424 5.889 7.173 5.152 5.738 1.472
Total Tonnes Mined million t 28.925 28.925 6.640 7.925 5.904 6.491 1.966
Bulk Density Ore t/m3 2.48 2.48 2.48 2.48 2.48 2.48
BCM Ore BCM 1.414 1.414 0.303 0.304 0.303 0.304 0.200
Bulk Density Waste t/m3 2.49 2.49 2.49 2.49 2.49 2.49
BCM Waste - Pre- Strip BCM 10.193 10.193 2.361 2.876 2.066 2.300 0.590
PROCESSING
Process Plant Availabilty % 91%
Thruput, Mine & Project Life tpa & yrs 0.750 4.67 4.67 4.67 3.500 0.750 0.752 0.751 0.753 0.494
Wt % Concentrate & Ore Retained t % 100.0% Min. Waste 3.500 0.750 0.752 0.751 0.753 0.494
% Distribution to Conc. & Grade Gold % 100.0% 3.86 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
% Distribution to Conc. & Grade Silver % 100.0% 33.22 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
% Recovery Gold M/W Recov 90.0% 90.0% 90.0% 90.0% 90.0%
Recovered Grade & Commissioning Gold % 90.0% 3.47 100.0% 0 100.0% 3.90 3.99 3.81 2.68 2.77
90.0% 2.922 2.995 2.859 2.018 1.370
% Recovery Silver 74.0% 74.0% 74.0% 74.0% 74.0%
Recovered Grade & Commissioning Silver % 74.0% 24.58 100.0% 0 100.0% 19.18 25.92 33.09 19.48 25.59
74.0% 14.388 19.479 24.860 14.666 12.654
Recovered Silver ozs 2.766 0.463 0.626 0.799 0.472 0.407
SPOT MARKET SALES
Price & Rate of Change/Year Gold USD $ 500.00 0.00% $ 500.00 $ 500.00 $ 500.00 $ 500.00 $ 500.00
Payable Concentrate Grade Gold g/t - - - - -
Value of Recovered Metal / Tonne Conc Gold USD/t $ 62.62 $ 64.06 $ 61.17 $ 43.08 $ 44.53
Value Gold million $ $ 195.533 $ 46.979 $ 48.146 $ 45.956 $ 32.437 $ 22.015
Price & Rate of Change/Year Silver USD $ 8.00 0.00% $ 8.00 $ 8.00 $ 8.00 $ 8.00 $ 8.00
Payable Concentrate Grade Silver g/t - - - - -
Value of Recovered Metal / Tonne Conc Silver USD/t $ 4.93 $ 6.67 $ 8.51 $ 5.01 $ 6.58
Value Silver million $ $ 22.131 $ 3.701 $ 5.010 $ 6.394 $ 3.772 $ 3.255
Total Product Value $ 62.18 $ 217.665 $ 50.680 $ 53.156 $ 52.350 $ 36.210 $ 25.270
Currency/USD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
USD Value $ 217.665 $ 50.680 $ 53.156 $ 52.350 $ 36.210 $ 25.270
PRE-PRODUCTION CAPITAL
Year -3 $ - $ - $ - $ - $ - $ - $ -
Year -2 $ - $ - $ - $ - $ - $ - $ -
Year -1 $ 78.872 $ 78.872 $ 78.872 $ - $ - $ - $ -
Total Pre-Production Capital $ 78.872 $ 22.53 $ 78.872 $ 78.872 $ - $ - $ - $ -
PRODUCTION CAPITAL
Inflation Rate (On Capital Costs) 0.00% 1.0000 1.0000 1.0000 1.0000 1.0000
Year 1 $ - $ - $ - $ - $ - $ - $ -
Year 2 $ 0.279 $ 0.279 $ 0.279 $ - $ - $ -
Year 3 $ - $ - $ - $ - $ -
Year 4 $ - $ - $ - $ -
Year 5 $ - $ - $ -
Year 6 $ - FV $ 0.279 $ -
Total Production Capital $ 0.279 $ 0.08 $ 0.279 $ - $ 0.279 $ - $ - $ -
Capital for Depeciation $ 79.151 $ 22.61 $ 79.151 $ 78.872 $ 0.279 $ - $ - $ -
OPERATING COSTS Cost / tonne of ore
Mining Waste $/t $ 1.45 33.4% $ 10.51 $ 10.39 $ 1.32 $ 1.21 $ 1.49 $ 1.40 $ 2.85
$ 36.367 $ 7.756 $ 8.701 $ 7.693 $ 8.028 $ 4.189
Mining Ore $/t $ 1.45 4.6% $ 1.45 $ 1.57 $ 1.32 $ 1.21 $ 1.49 $ 1.40 $ 2.85
$ 5.480 $ 0.987 $ 0.911 $ 1.121 $ 1.053 $ 1.408
Total Mining Cost $ 41.847 $ 8.744 $ 9.612 $ 8.813 $ 9.081 $ 5.597
Mining Cost / tonne $ 11.95 $ 11.65 $ 12.79 $ 11.73 $ 12.06 $ 11.32
Processing $/t ore $ 14.89 47.3% $ 14.89 $ 14.89 $ 52.121 $ 14.89 $ 14.89 $ 14.89 $ 14.89 $ 14.89
$ 11.172 $ 11.190 $ 11.187 $ 11.210 $ 7.362
Maintenance $/t $ 1.74 5.5% $ 1.74 $ 1.74 $ 6.091 $ 1.74 $ 1.74 $ 1.74 $ 1.74 $ 1.74
$ 1.305 $ 1.308 $ 1.307 $ 1.310 $ 0.860
Administration $/t ore $ 2.92 9.3% $ 2.92 $ 2.92 $ 10.221 $ 2.191 $ 2.194 $ 2.194 $ 2.198 $ 1.444
Total Processing Cost $ 68.433 $ 14.668 $ 14.693 $ 14.688 $ 14.719 $ 9.666
Processing Cost / tonne $ 19.55 $ 19.55 $ 19.55 $ 19.55 $ 19.55 $ 19.55
Total Operating Cost $ 110.280 $ 23.411 $ 24.304 $ 23.501 $ 23.800 $ 15.263
Creditors Paid Operating Cost 0.00 $ 110.280 $ 23.411 $ 24.304 $ 23.501 $ 23.800 $ 15.263
Operating Cost / tonne $ 31.50 $ 31.50 $ 31.20 $ 32.34 $ 31.28 $ 31.61 $ 30.87
ROYALTIES
% Metal Value After NSR 5.50% $ 3.42 $ 11.972 $ 2.787 $ 2.924 $ 2.879 $ 1.992 $ 1.390
Total Royalties $ 3.42 $ 11.972 $ 2.787 $ 2.924 $ 2.879 $ 1.992 $ 1.390
GOVERNMENT TAXES
Tax Deductions $ 122.252 $ 26.199 $ 27.228 $ 26.381 $ 25.791 $ 16.653
Cummulative Tax Deductions $ - $ 26.199 $ 27.228 $ 26.381 $ 25.791 $ 16.653
Taxable Gross Income $ 217.665 $ 50.680 $ 53.156 $ 52.350 $ 36.210 $ 25.270
Taxable Income $ 95.413 $ 24.481 $ 25.927 $ 25.970 $ 10.419 $ 8.617
Tax Payable in Current Year & Rate 75% 0.0% $ - $ - $ - $ - $ - $ - $ -
Total Taxes $ - $ - $ - $ - $ - $ - $ -
FINANCIAL ANALYSIS
Cash Inflow $ 62.18 $ 217.665 $ 50.680 $ 53.156 $ 52.350 $ 36.210 $ 25.270
Cash Outflow $ 57.54 $ 201.402 $ 105.071 $ 27.507 $ 26.381 $ 25.791 $ 16.653
Cash Cost / Unit of Metal Gold ozs $ 280.83 $ - $ - $ - $ - $ -
Cash Cost / Unit of Metal Silver ozs $ 4.49 $ - $ - $ - $ - $ -
Total Cost / Unit of Metal Gold ozs $ 462.64 $ - $ - $ - $ - $ -
Total Cost / Unit of Metal Silver ozs $ 7.40 $ - $ - $ - $ - $ -
Total Cost/Tonne Mined $ 140.04 $ 36.60 $ 35.11 $ 34.26 $ 33.68
Net Cashflow $ 4.65 $ 16.263 -$ 54.391 $ 25.649 $ 25.970 $ 10.419 $ 8.617
Cumulative Cashflow -$ 54.391 -$ 28.742 -$ 2.773 $ 7.646 $ 16.263
Maximum Working Capital -$ 54.391 -$ 54.391 -$ 28.742 -$ 2.773 $ - $ -
Operating Cashflow $ 27.26 $ 95.413 $ 24.481 $ 25.927 $ 25.970 $ 10.419 $ 8.617
NPV (Excluding Finance) 8.00% $ 6.070 -$ 52.338 $ 22.852 $ 21.424 $ 7.958 $ 6.173
NPV (Including Finance) 8.00% $ 6.070 -$ 52.338 $ 22.852 $ 21.424 $ 7.958 $ 6.173
IRR 14% 8% 14%
5 April 2007 16 of 19

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CALCATREU GOLD PROJECT

Initial Feasibility Study

1 Project description ............................................................................................... 1

2 Mineral Resources .............................................................................................. 2

3 Mining and Mineral Reserves .............................................................................. 3

4 Processing and site infrastructure ....................................................................... 4

5 Financial analysis ................................................................................................ 5

3 Mining and Mineral Reserves

4 Processing and site infrastructure

Initial Feasibility Study

2 Mineral Resources .............................................................................................. 2

Figure 2.1 Location map – Argentina

Figure 2.2 Location Map – Calcatreu project area

Previous drilling at Calcatreu was completed in four campaigns, by La Source and

Table 2.1 Mineral Resource 0.55 g/t Au cut-off (Micon 2004B)

Nelson Area Oxide

Nelson Area Primary

Initial Feasibility Study

1 Introduction (Item 4) ............................................................................................ 1

2 Reliance on Other Experts (Item 5) ..................................................................... 2

3 Property Description and Location (Item 6) ......................................................... 3

4 Accessibility, Climate, Local Resources, Infrastructure and Physiography

5 History (Item 8) .................................................................................................... 7

6 Geological Setting, Deposit Types, Mineralisation, Exploration, Drilling,

7 Adjacent Properties (Item 17)............................................................................ 12

8 Mineral Processing and Metallurgical Testing (Item 18).................................... 13

9 Mineral Resource and Mineral Reserve Estimates (Item 19) ............................ 15

10 Other Relevant Data and Information (Item 20) ................................................ 29

11 Interpretation and Conclusions (Item 21) .......................................................... 35

12 Recommendations (Item 22) ............................................................................. 37

13 References (Item 23)......................................................................................... 38

14 Date and Signature Page (Item 24)................................................................... 40

15 Additional Requirements for Technical Reports on Development Properties

16 Illustrations (Item 26) ......................................................................................... 48

2 Reliance on Other Experts (Item 5)

Table 2.1 Expert references

Field Expert Reference

*Denotes previously lodged in accordance with NI 43-101.

3 Property Description and Location (Item 6)

Figure 3.1 Calcatreu project location plan

4 Accessibility, Climate, Local Resources, Infrastructure and

Figure 4.1 Topography and vegetation typical of the project area

Table 4.1 Climatic features

Climatic feature Magnitude

6 Geological Setting, Deposit Types, Mineralisation, Exploration,

6.1 Geology, deposit types and mineralisation

6.2 Exploration, drilling, sampling and data verification

detailed mapping has been undertaken to enable an improved understanding of the

Table 6.1 Drilling programs

Drill program Drilled by Date completed No. holes M drilled

6.3 Sampling Method and Approach

6.4 Sample Preparation, Analyses and Security

6.5 Data Verification

7 Adjacent Properties (Item 17)

8 Mineral Processing and Metallurgical Testing (Item 18)

9 Mineral Resource and Mineral Reserve Estimates (Item 19)

Table 9.1 Mineral Resource 0.55 g/t Au cut-off (Micon 2004B)

Nelson Area Oxide