TSX-V

: ADM

High Pressure Grinding Rolls A brief non-technical explana8on

H.P.G.R.

Andinas Volcan Gold Project PFS

February 2011

of the reasons HPGR is included in

What is the HPGR?

HPGR or high pressure grinding rolls are a way of crushing rock, generally for the ner crushing aIer coarse conven8onal crushing Typically rock crushing in gold mines is done by jaw and cone type crushers, but HPGR crushers, which have been used for many years in diamond, base metal and industrial mineral opera8ons, are now in use in the gold mining sector An HPGR crusher crushes the rock between two rota8ng rollers which are forced together by very high hydraulic pressure. The rock is compressed and shaNers and the only wear on the machine is on the wear resistant and armoured rolls. The rock itself coats the rolls providing an autogenous wear surface to protect the rolls.

What are the Advantages of HPGR?

HPGR produces more ne material at a given crush size than in conven8onal crushers At higher pressures HPGR creates micro-fractures in the crushed rock par8cles Greater nes in a crushed product and micro fractures allow process solu8ons to come into contact with more surface area of the mineral being processed and thus help metal recovery HPGR crushers, compared to conven8onal cone crushers, generate less noise and dust HPGR crushing typically consumes approximately 20% less power per tonne than conven8onal crushing plants producing the same product. For the Volcan Project, the HPGR oers opera8onal exibility more dicult to achieve with conven8onal crushing circuits

The Numbers for Volcan Project

Testwork in 2009 conducted at McLelland Laboratories on conven8onal and HPGR crushed material showed gold recovery improvements of 5% to 7% on Volcan ore Testwork for the current Volcan PFS in 2010 conducted at lower roll pressures showed only modest improvements in gold recovery so further tes8ng will be conducted at higher pressures. (Recovery benets of HPGR are not included in the current {February 2011} Prefeasibility Study) The es8mated capital cost of the third stage system of crushing, the HPGR stage, is $19.5 million. The comparable number for conven8onal crushing is $17.1 million The opera8ng cost es8mate for the third stage of crushing at Volcan, based on power and wear data, suggest that the incremental cost for HPGR will be $0.10/t lower than conven8onal crushing, implying a reduc8on in cost of $2.0 million a year If recovery improvements are conrmed using HPGR by rever8ng to the higher roll pressure the benet to the project can amount to $16.5 million per year

Flexibility Using HPGR at Volcan

The mine plan at Volcan contemplates campaigning selec8vely mined higher grades from the pit through the same system as lower grades but storing crushed product in separate stockpiles. Run-of-mine higher grade ore will be stored at the primary crusher apron in rela8vely small stockpiles for campaigning through the system During planned periods when more higher grade ore is encountered, ideally more of the beNer grade is sent to the mill to op8mize recovery rather than to the heap leach. The mill is intended for higher grade direct feed and swept nes from the lower grade leach feed The roll pressure for low grade can be reduced resul8ng in less low grade nes to the mill and more capacity for beNer grade ore, as it becomes available Fines content in the pad can thus be controlled to assure heap stability and percola8on rates without expensive agglomera8on with cement Remote ore control based on pit blasthole assay samples and mine planning will determine the best economic use of the mill capacity
5

HPGR Technology In Use

HPGR technology has two principle providers Polysius and KhD who have approximately 60 and 40 units in opera8on around the world, respec8vely HPGR technology was pioneered on a large scale in the gold sector at the Boddington mine in WA (Newmont, 4 large HPGRs, 2009) In the gold sector a number of companies have, or are now looking to incorporate HPGR into new development including Barrick, Kinross, Goldcorp (Peasquito), Goldelds (Tarkwa), and Freeport Indonesia. Newcrest Mining (Australia) has ordered an HPGR for the Cadia East Expansion Large HPGRs have also been installed at Cerro Verde (4 ea, Cu, Peru), Spinifer Ridge (3 ea, moly, WA) and Ruby Creek (2 ea, moly, BC) to name a few other hard rock applica8ons During engineering, Andina visited two HPGR plants, one in California (cement) and another at an iron ore mine some 200-km from Volcan at the Los Colorados Mine near Vallanar, Chile Los Colorados has been using HPGR equipment since the early 1990s and enjoys availability in the high 90% range on units producing over 2000 tons/hr of crushed product with equipment similar in size to that contemplated for Volcan
6

Diagram of a HPGR Unit

HPGR plant at Los Colorados