Cañariaco Norte Copper Project Pre-Feasibility Study Progress Report

Caariaco Norte Copper Project
Pre-Feasibility Study Progress Report
Submitted to: Candente Copper Corp.

Date: 11 March 2011
Project No.: 165270
IMPORTANT NOTICE
This report was prepared exclusively for Candente Copper Corp.
(Candente). The quality of information, conclusions and estimates
contained herein is consistent with the level of effort involved in
AMECs services and based on: i) information available at the time of
preparation, ii) data supplied by outside sources and iii) the
assumptions, conditions, and qualifications set forth in this report. This
report is intended to be used by Candente only, subject to the terms
and conditions of its contract with AMEC. Any other use of this report
by any third party is at that partys sole risk.
CANDENTE COPPER CORP.

CAARIACO NORTE PROJECT
PREFEASIBILITY PROGRESS REPORT
CONTENTS
Section 1
Executive Summary
Section 2
Introduction
Section 3
Geology
Section 4
Mine Plan and Production
Section 5
Metallurgy
Section 6
Process
Section 7
Tailings and Waste Rock Management
Section 8
Infrastructure and Ancillary Facilities
Section 9
Surface Water Management
Section 10
Environmental Considerations
Section 11
Conceptual Closure Plan
Section 12
Project Execution Plan
Section 13
Capital Cost Estimate
Section 14
Operating Cost Estimate
Section 15
Marketing
Section 16
Financial Evaluation
Section 17
Risks and Opportunities
Section 18
Conclusions
Section 19
Recommendations
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TOC i

APPENDICES
Appendix A
Trade-Off Studies
Appendix B
Resource and Geology
Appendix C
Mining Data
Appendix D
Design Criteria
Appendix E
Metallurgical Testwork and Material Balance
Appendix F
Drawings, Flowsheets, and Lists
Appendix G
Tailings Management
Appendix H
EPCM Schedule
Appendix I
Port Facilities
Appendix J
Estimating
Appendix K
Marketing
Appendix L
Financial Analysis
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TOC ii

CONTENTS
EXECUTIVE SUMMARY ....................................................................................................... 1
1.0
Introduction ................................................................................................................ 1
1.1
Purpose and Objectives of Report .................................................................. 1
1.2
Terms of Reference ....................................................................................... 2
1.3
Project Background and History ..................................................................... 2
1.4
Property Location, Description, and Access ................................................... 3
1.5
Legal Status ................................................................................................... 5
1.5.1 Land Tenure ....................................................................................... 5
1.5.2 Surface Rights .................................................................................... 5
1.5.3 Permits ............................................................................................... 5
1.6
Report Conventions ....................................................................................... 7
2.0
Geology and Mineral Resources ................................................................................ 8
3.0
Mine Plan and Production ........................................................................................ 11

3.1
Summary...................................................................................................... 11
3.2
Pit Optimization ............................................................................................ 11
3.3
Mine Production Schedule ........................................................................... 12
3.4
Waste Dump and Access Roads .................................................................. 14
4.0
Metallurgy ................................................................................................................ 16
4.1
Testwork ...................................................................................................... 16
4.1.1 Phase I (2005 2007) ...................................................................... 16
4.1.2 Phase IIA (2008)............................................................................... 16
4.1.3 Phase IIB (2010)............................................................................... 17
4.2
Recovery ...................................................................................................... 17
5.0
Process ................................................................................................................... 18
5.1
Process Description ..................................................................................... 18
5.2
Process Water System ................................................................................. 21
5.3
Concentrate Receiving and Loadout at Port Site .......................................... 21
6.0
Tailings Management Facility .................................................................................. 22
7.0
Infrastructure and Ancillary Facilities........................................................................ 23

7.1
Mine Site Facilities ....................................................................................... 23
7.2
Port Site Infrastructure ................................................................................. 24
8.0
Surface Water Management .................................................................................... 26
9.0
Environmental Considerations ................................................................................. 27
10.0
Conceptual Closure Plan ......................................................................................... 28
11.0
Project Execution ..................................................................................................... 29
12.0
Capital Cost Estimate .............................................................................................. 30
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Executive Summary
TOC i

13.0
Operating Cost Estimate .......................................................................................... 31
14.0
Concentrate Marketing ............................................................................................ 32
15.0
Financial Evaluation................................................................................................. 33
16.0
Risk and Opportunities ............................................................................................ 36
17.0
Conclusions ............................................................................................................. 37
18.0
Recommendations ................................................................................................... 38
TABLES
Table 2-1:
Table 2-2:
Table 3-1:
Table 3-2:
Table 3-3:
Table 3-4:
Table 12-1:
Table 13-1:
Table 15-1:
Table 15-2:
Table 15-3:
Mineral Resource Statement for Caariaco Norte at a 0.2% Cu Cutoff Grade (David
Thomas P. Geo., Effective Date 8 November 2010) ......................................................... 9
Mineral Resource Statement for Caariaco Norte at Various Cutoffs (David Thomas
P. Geo., Effective Date 8 November 2010). .................................................................... 10
Reference Mine Operating Costs by Unit Operation ....................................................... 11
Process Costs ................................................................................................................. 12
Base Case Pit Optimization Volumetric Results ............................................................. 13
LOM Production Schedule .............................................................................................. 14
Summary of Capital Costs ............................................................................................... 30
Average On-Site Operating Costs ................................................................................... 31
Caariaco Norte Project Financial Summary .................................................................. 33
Results of Sensitivity Analysis ......................................................................................... 34
Summary of Capital Costs by Major Discipline ............................................................... 35
FIGURES
Figure 1-1:
Figure 1-2:
Figure 1-3:
Figure 3-1:
Figure 5-1:
Figure 5-2:
Figure 5-3:
Figure 7-1:
Figure 15-1:
General Location Map ....................................................................................................... 1

Property Access Routes and Infrastructure....................................................................... 4
Caariaco Concessions held by Candente Copper Corp. (as of 29 October 2010) ......... 6
Waste Rock Storage Facility and Initial Road Alignments .............................................. 15
Process Overview General Diagram ............................................................................ 18
Process Overview Block Diagram ................................................................................ 19
Concentrator General Arrangement ................................................................................ 20
General Arrangement of Project Facilities....................................................................... 23
Graph of Sensitivity Analysis Results for Base Case ...................................................... 34
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Executive Summary
TOC ii

EXECUTIVE SUMMARY
1.0
Introduction
1.1
Purpose and Objectives of Report

Candente Copper Corp. (Candente) is 100% owner of the Caariaco Norte project, a
copper property in the Caaris District of Province of Ferenafe, Per, approximately
110 km northeast of the city of Chiclayo (Figure 1-1).
AMEC was retained in early 2010 to develop the Caariaco Norte Prefeasibility Study.
The purpose of this Prefeasibility Progress Report is to describe the status of the project
as of December 2010; to provide an economic evaluation of the projects potential to
justify future expenditures; to identify areas requiring further study; and to plan future work
programs. To assist in meeting these objectives, this progress report includes a capital
cost estimate with an accuracy of 20%.
Figure 1-1:
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General Location Map
Executive Summary
Page 1

1.2
Terms of Reference
Candente is evaluating the development of the Caariaco Norte project in Per.
Candente commissioned AMEC to prepare this report with input from its subconsultant
Ausenco Sandwell.
Before commencing with the design basis, a number of trade-off studies were completed
to evaluate recommendations identified during the scoping study as well as to optimize
the design basis. The studies included conveyance of waste to the tailings management
facility for dam construction, a plant site location study, tailings and waste rock
management facility alternatives, process plant throughput optimization, location of the
waste rock management facility, evaluation of options for copper concentrate treatment,
evaluation of in-pit crushing and conveying, and evaluation of pit electrification,
The progress report addresses the status of work for mineral resources, the mine plan,
processing and support facilities, site access, transportation of materials and equipment,
port requirements, environmental permitting, reclamation, closure, construction, project
implementation, capital and operating costs, and financial evaluation.
1.3
Project Background and History

Copper was first discovered at Caariaco Norte in the 1970s. Phases of exploration and
drilling in the 1970s and 1990s were sporadic until Candente initiated its exploration
efforts in 2004.
INGEMMET identified four centres of alteration and mineralization during exploration in
1971. In 1973 INGEMMET carried out a total of 1,500 m of drilling in the Caariaco Norte
zone, consisting of five separate 300 m deep vertical holes.
In 1994, Placer Dome Exploration Inc. (Placer Dome) optioned the Caariaco property
from the Peruvian Government and carried out a more detailed geological mapping and
rock-chip sampling program with some 2,200 m of trenching and 80 test pits. In the
Caariaco Norte zone, three inclined diamond drill holes, totalling 854 m, were completed
in 1995. Placer Dome dropped its option in 1997.
Billiton Exploration and Mining Per B.V. (Billiton) optioned the Caariaco property from
the Peruvian Government in 1999. An eight-hole diamond drilling program that included
three holes (555.7 m) in the Caariaco Norte zone, three holes (472.5 m) in the
Caariaco Sur zone, and two (+100 m) in the Quebrada Verde zone were completed.
Billiton dropped its option in 2000.
The prevailing copper price (less than 80 cents per pound from 1997 to 2001) and difficult
option deals with the Peruvian Government were the catalysts to both Placer Dome and
Billiton dropping their options on the property.
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Executive Summary
Page 2

In February 2002, Candente Copper Corp. (Candente), through the Peruvian subsidiary
Caariaco Copper Per S.A. (CCPSA) (formerly Exploraciones Milenio S.A., EMSA),
acquired 100% ownership of the Caariaco property. CCPSA commenced exploration in
January 2004 and drilled a total of 218 holes across the Caariaco Norte zone to
delineate the current resource.
Other work included geological mapping from 2004 to 2008 and diamond drilling in 2008
for metallurgical samples and geotechnical investigation. In addition, SRK Consulting
(Canada) Inc. (SRK) completed a Preliminary Economic Assessment (PEA) in 2008.
INGEMMET, Placer Dome, and Billiton compiled resource estimates for the Caariaco
Norte zone:
INGEMMET estimated resources of 8.84 Mt of probable resource at an average
grade of 0.78% Cu and 0.001% Mo, and 380.6 Mt of possible resource at a variable
grade of between 0.45% and 0.80% Cu and 0.001% to 0.003% Mo.
Placer Dome believed the Caariaco property had the potential to host in excess of
800 Mt grading better than 0.5%, of which 365 Mt was estimated in Caariaco Norte.
Billiton concluded that the Caariaco Norte zone contained a minimum of 320 Mt at
an average grade of 0.45% Cu.
The resource estimates outlined above are included solely for completeness. They do
not comply with NI 43-101 standards, and the validity of the results is not confirmed.
1.4
Property Location, Description, and Access

The Caariaco property is located at latitude 0605' south and longitude 7917' west, in
the Western Cordillera of the Peruvian Andes, in the Caaris District of the Province of
Ferreafe, Department of Lambayeque of Northwestern Per.
The property is
approximately 700 km northwest of Lima and approximately 110 km northeast of the city
of Chiclayo in Per (Figure 1-1).
The Caariaco Norte project area and mineral resource lie along the eastern side of the
continental divide at elevations ranging between 2,700 and 3,600 masl. The topography
varies from steep incised valleys at lower elevations to open grassy highlands. Within the
mineral resource area, the topography is challenging, with fingers of sub-tropical forests
extending up the small valleys.
Annual summer and winter temperatures range between 3C and 20C. The region
receives between 830 mm and 1,700 mm of rain each year, with the wet season
extending from November to March. Climatic conditions are not expected to affect
ground-based operations. Therefore, mine operations have been scheduled year-round,
24 h/d.
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Executive Summary
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The Caariaco property is accessible by road from Lima via the city of Chiclayo
(Figure 1-2). Either the Pan-American Highway (700 km, 11-hour trip) or one of three
daily commercial airline flights can be taken from Lima to Chiclayo. The route from
Chiclayo to the Caariaco property is currently a 149 km, 6-hour trip along mostly
unimproved roads via Incahuasi. The road is not currently suitable for heavy trucks, and
there is no landing strip on the property.
At present the Caariaco property has a fully established camp and catering facility for
100 persons. Core-handling facilities and weather stations are also in place on site.
Before project operations begin, a 220 kV overhead transmission line will be installed
from the local utility substation at Carhuaquero, a distance of 57 km from the mine site.
Peruvian freight forwarders have recommended three ports that could be used to import
materials for construction purposes: Callao, Paita, and Salaverry.
Figure 1-2:
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Property Access Routes and Infrastructure
Executive Summary
Page 4

1.5
Legal Status
1.5.1
Land Tenure
The Caariaco property comprises a total area of 20,590 ha in 26 concessions. Three
porphyry copper zones, Caariaco Norte, Caariaco Sur, and Quebrada Verde, have
been identified on the Caariaco property. Candente, through its Peruvian subsidiary
CCPSA, holds a 100% interest in the Caariaco property. Figure 1-3 is a plan of the
concessions in UTM coordinates (PSAD 56, Zone 17).
1.5.2
Surface Rights
The owner of the surface rights is the Comunidad Campesina San Juan Bautista de
Caaris (the Campesina). Under Peruvian Law 24656, Candente is required to have a
valid agreement with the Campesina to undertake exploration. The previous agreement
expired in December 2009, and Candente is in the process of negotiating a new
three-year access agreement.
1.5.3
Permits
The Caariaco property does not have any known environmental liabilities. A Class B EA
was conducted by GEMA Consultants (GEMA) for Candente, as required in law when
trenching, drilling, or other major work is performed. GEMA also conducted a Class C EA
and obtained a Class C Permit from the Peruvian government for advanced drilling and
exploration work at Caariaco.
Candente is carrying out environmental baseline studies and monitoring. A social and
EIA study framework has been prepared and the work is in progress.
Once these studies are completed to levels in accordance with the requirements of the
Peruvian Government and meet the guidelines set out in the Equator Principles, then a
process of obtaining all the required environmental, construction, and mining permits will
be undertaken. The main permit requirements identified to date for the start of
construction and mining operations are summarized below.
Environmental Impact Assessment (EIA), Studies and Permits
Water Authorization
Archaeological Evaluation
Mining Plan and Closure Plan
Mining Operation Certificate (COM)
Easement by Agreement
Procedure of Real Servitude
Construction Permit
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Executive Summary
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Figure 1-3:
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11 March 2011
Caariaco Concessions held by Candente Copper Corp. (as of 29 October 2010)
Executive Summary
Page 6

Municipality Permits to Construct

Labour Permits
Surface Water Use Licence
Ground Water Use Licence
Sanitary Authorization for Waste Water Treatment
Permits to Build Roads
Transportation deed for controlled substances and products
Beneficiation Concession (necessary to process the mineral)
Authorization to start Operation.
1.6
Report Conventions
All monetary values are expressed in third quarter 2010 U.S. dollars.
Unless otherwise noted, metric units of measurement are used throughout, usually in
abbreviated form.
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Executive Summary
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2.0
Geology and Mineral Resources

The Caariaco project contains a major porphyry-copper-gold deposit, Caariaco Norte,
and two porphyry copper-gold-mineralized centres that are at a prospect stage of
evaluation, Caariaco Sur and Quebrada Verde.
The deposit and prospects were identified by exploration programs conducted by the
Peruvian Servicio Nacional de Geologa y Minera (Ingemmet), Placer Dome Exploration
Inc. (Placer Dome), Billiton Exploration and Mining Per B.V. (Surcusal Peruana), and
Candente Copper Corporation (Candente) between 1994 and 2010.
Caariaco Norte is an example of a primary porphyry-copper-gold system. The
Caariaco Norte Early to Late Tertiary polyphase intrusive-breccia complex is
approximately 1.7 km in strike extent, 1.1 km wide, and has been drilled to a depth of
about 770 m.
Copper mineralization was introduced as a series of events closely following the
emplacement of each of the three major intrusive units and the polymictic breccia unit. In
general, the highest copper grades (>0.5% Cu) occur in the biotitefeldspar porphyry and
polymictic breccia units. Intermediate copper grades (0.35% to 0.5% Cu) are most
common in the hydrothermal breccia and the coarse quartz porphyry, and the lowest
grades (0.2% to 0.35% Cu) dominate in the crowded quartz feldspar porphyry, tourmaline
breccia, and volcanic host rocks.
Mineralization occurs primarily as disseminations and in fractures, sulphide and quartz
veins, faults, and breccias. Fracture density is the single most important factor
influencing copper grades, although breccias and faults can locally be important.
Three main zones have been recognized in the deposit: a variable-thickness leached
cap, minor supergene copper mineralization under the leached cap, and hypogene
copper mineralization, the main component of the deposit.
Drilling on the project consists of 263 core holes (75,672.31 m), including geotechnical,
metallurgical, and hydrogeological drilling. Fifteen of the drill holes (3,483 m) were
completed prior to Candentes involvement; the remaining 248 core holes (72,189.7 m)
were drilled by Candente.
The majority of the drilling has been accompanied by a quality assurance/quality control
(QA/QC) program, which has included submission of blanks, standard reference materials
(SRMs), and check assays and was generally performed in accordance with exploration
best practices and industry standards.
A number of data verification programs and audits have been performed over the project
history, primarily in support of technical reports. No errors or omissions were noted
during these reviews.
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Executive Summary
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Mineral resource estimates are based on 225 core holes (67,485.06 m) from the
INGEMMET, Placer Dome, Surcusal Peruana, and Candente drill programs. The cutoff
date for the estimation is 18 July 2010. Candente provided geological interpretations for
modelling purposes, from which AMEC created bench polygons and models. Seven
estimation domains for copper, gold, and silver were defined following evaluation of
statistical distributions of lithological and alteration units. Drill hole data were composited
into 6 m lengths using no geological or domain boundaries. Outlier copper, gold, and
silver grades were capped; outlier arsenic grades were not capped.
AMEC estimated copper, gold, silver, and arsenic grades by estimation domains using
primarily ordinary kriging (OK) interpolation. Inverse distance weighting to the second
power (ID2) was used to interpolate gold and silver in domains where variography was
not considered sufficiently robust. Density values were assigned to blocks based upon
the lithological codes. Blocks were classified as Measured, Indicated, or Inferred based
on a combination of composite numbers and distance from the nearest composite.
Reasonable prospects of economic extraction were assessed by applying preliminary
economic constraints within an open pit shell. Mining and process costs, as well as
process recoveries, were defined from ongoing AMEC studies for the project. AMEC
defined a cutoff value of 0.2% Cu for reporting mineral resources from these parameters.
Mineral resources are tabulated in Table 2-1. The Qualified Person for the Mineral
Resource estimate is David Thomas, P.Geo. Mineral resources are reported using a
long-term copper price of US$2.50/lb, a gold price of $1,035/oz, and a silver price of
US$17.25/oz, and have an effective date of 8 November 2010.
Table 2-1:
Mineral Resource Statement for Caariaco Norte at a 0.2% Cu Cutoff Grade

(David Thomas P. Geo., Effective Date 8 November 2010)
Grade
Contained Metal
Category
Tonnage
Mt
Cu
%
Au
g/t
Ag
g/t
Copper
(Blb)
Gold
(Moz)
Silver
(Moz)
Measured
Indicated
Measured + Indicated
Inferred
406.6
596.5
1,003.0
293.3
0.44
0.38
0.40
0.33
0.07
0.06
0.06
0.05
1.9
1.6
1.7
1.5
3.977
4.964
8.941
2.165
0.958
1.081
2.039
0.448
24.656
30.403
55.059
13.547
Note:
1
2
3
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11 March 2011
Mineral Resources base case is reported at a 0.2% Cu cutoff grade

Mineral Resources are reported as undiluted.
A LerchsGrossmann pit shell was used to constrain the Mineral Resources to assess reasonable prospects
of eventual economic extraction
Mineral Resources are reported using a long-term copper price of US$2.50/lb, a gold price of US$1,035/oz,
and a silver price of US$17.25/oz
Rounding as required by reporting guidelines may result in apparent summation differences between tonnes,
grade, and contained metal content
Tonnage and grade measurements are in metric units. Gold and silver contained ounces are reported as
troy ounces, copper contained pounds as Imperial pounds
Executive Summary
Page 9

The sensitivity of the Mineral Resource to a reduction or increase in copper cutoff grades
is shown in Table 2-2, with the base case highlighted.
Table 2-2:
Mineral Resource Statement for Caariaco Norte at Various Cutoffs

(David Thomas P. Geo., Effective Date 8 November 2010).
Grade
Cutoff
Cu (%)
Tonnage
Mt
Contained Metal
Cu
%
Au
g/t
Ag
g/t
Copper
(Blb)
Gold
(Moz)
Silver
(Moz)
Measured
0.14
0.2*
425.6
406.6
0.43
0.44
0.07
0.07
1.9
1.9
4.049
3.977
0.986
0.958
25.467
24.656
0.3
338.1
0.48
0.08
2.0
3.588
0.853
21.399
0.14
0.2*
680.7
596.5
0.35
0.38
0.05
0.06
1.5
1.6
5.283
4.964
1.166
1.081
33.124
30.403
0.3
414.3
0.43
0.06
1.7
3.945
0.843
23.135
1,106.2
1,003.0
0.38
0.40
0.06
0.06
1.6
1.7
9.332
8.941
2.152
2.039
58.592
55.059
752.4
0.45
0.07
1.8
7.533
1.696
44.534
0.14
0.2*
419.4
293.3
0.28
0.33
0.04
0.05
1.3
1.5
2.634
2.165
0.561
0.448
17.002
13.547
0.3
157.7
0.41
0.06
1.7
1.433
0.281
8.539
Indicated
0.14
0.2*
0.3
Inferred
* Base case
Note: 1 Mineral Resources base case is reported at a 0.2% Cu cutoff grade
2
3
4
Mineral Resources are reported using a long-term copper price of US$2.50/lb, a gold price of $1,035/oz ,and
a silver price of US$17.25/oz
5
6
Tonnage and grade measurements are in metric units. Gold and silver contained ounces are reported as troy
ounces, copper contained pounds as Imperial pounds
Caariaco Norte is part of an extensive porphyry intrusive complex that also includes the
Caariaco Sur and Quebrada Verde zones. The exploration programs completed to date
are appropriate to the style of the deposits and prospects within the project. Exploration
potential remains within the Caariaco Sur and Quebrada Verde prospects, and
Caariaco Norte is still open at depth and at the central-west part of the deposit.
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Executive Summary
Page 10

3.0
Mine Plan and Production
3.1
Summary
The mining schedule provides for a nominal process plant throughput of 34.7 Mt/a, or
95,000 t/d. The mine plan is based on diluted Measured and Indicated mineral resources
contained in a Lerchs-Grossmann (LG) optimized pit shell generated at metal prices of
$2.25/lb Cu, $930/oz Au, and $15/oz Ag.
The estimated geologic resource is the basis for the mine design and production
schedule.
The mine plan generates a total of 728.2 Mt of process plant feed and 713.5 Mt of waste
at a strip ratio of 0.98:1 over a mine operating life of 22 years. Conventional, large-scale,
bulk mining methods will be used to develop a single pit, with the peak mine production
rate of 200 kt/d being achieved with a mine fleet that includes 311 mm diameter blasthole
drills, two 43 m3 rope shovels, one 43 m3 front-end loader, and twenty-one 290 tonne haul
trucks working on 15 m benches. Pit dewatering will be undertaken by a combination of
vertical dewatering wells and horizontal drains in areas where the hydraulic conductivities
are low.
At the time of this report, the prefeasibility geotechnical input necessary for mine design
was still pending. The mine plan presented herein is therefore limited to a preliminary
assessment level of accuracy and will be updated to prefeasibility level upon receipt of
the necessary geotechnical information.
3.2
Pit Optimization
The reference mining cost developed for the pit shell generation is US$1.27/t of waste ore
material mined. The breakdown by unit operation is shown Table 3-1.
Table 3-1:
Reference Mine Operating Costs by Unit Operation

Ore/Waste
(US$/t)
Item
Drilling
Blasting
Loading
Hauling
Support
General Mine Expense
Mining Sustaining Capex
0.06
0.23
0.09
0.42
0.19
0.11
0.16
Total
1.27
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A combined ore-based cost of US$3.57/t milled was used for pit optimization.
breakdown of the individual ore-based costs is shown in Table 3-2.
Table 3-2:
The
Process Costs
Value
(US$/t milled)
Item
Processing
Mill Sustaining Capex Allowance
G&A
Closure Cost Allocation
Total
2.67
0.28
0.54
0.08
3.57
Table 3-3 shows the results for a base-case pit optimization considering only Measured
and Indicated mineral resources. The revenue factor (RF) 1.00 LG shell contains
946.3 Mt at 0.38% Cu, 0.06 g/t Au, and 1.65 g/t Ag above the marginal cutoff of
US$ 3.57/t milled, at a strip ratio of 1.29:1. All volumetrics presented are as reported by
Whittle.
3.3
Mine Production Schedule

For the purposes of this progress study, a mine plan was generated using LG pit shells
adjusted by minimum mining width.
The input parameters utilized for the mine plan development included a mine life between
18 and 22 years, a life-of-mine (LOM) head grade of no less than 0.40% Cu, and a strip
ratio of less than 1:1.
The mine plan results in a total of 728.2 million tonnes (Mt) of mill feed and 713.5 Mt of
waste (0.98:1 strip ratio) over a 22-year mine operating life. The LOM plan focuses on
achieving the required mill feed production rate, mining higher-grade material early in the
schedule, and balancing strip ratios.
The LOM mine production schedule is shown in Table 3-4.
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Table 3-3:
Pit
Shell #
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37 *
38
39
40
41
Base Case Pit Optimization Volumetric Results
Revenue
Factor
Total
Tonnes
(Mt)
Ore
Tonnes
(Mt)
Strip
Ratio
Cu
(%)
Au
(g/t)
Ag
(g/t)
As
(g/t)
NSR
($)
0.28
0.30
0.32
0.34
0.36
0.38
0.40
0.42
0.44
0.46
0.48
0.50
0.52
0.54
0.56
0.58
0.60
0.62
0.64
0.66
0.68
0.70
0.72
0.74
0.76
0.78
0.80
0.82
0.84
0.86
0.88
0.90
0.92
0.94
0.96
0.98
1.00
1.02
1.04
1.06
1.08
56
107
148
166
219
265
300
368
520
562
654
710
799
874
1006
1,099
1,228
1,327
1,442
1,519
1,589
1,627
1,642
1,751
1,763
1,813
1,855
1,875
1,928
1,977
1,989
1,996
2,027
2,029
2,069
2,093
2,163
2,166
2,179
2,205
2,215
34
71
100
114
151
183
206
251
337
365
416
448
497
534
594
633
683
718
759
783
805
818
823
853
856
869
879
883
897
909
912
913
919
920
928
932
946
947
949
954
956
0.7
0.5
0.5
0.4
0.4
0.4
0.5
0.5
0.5
0.5
0.6
0.6
0.6
0.6
0.7
0.7
0.8
0.8
0.9
0.9
1.0
1.0
1.0
1.1
1.1
1.1
1.1
1.1
1.1
1.2
1.2
1.2
1.2
1.2
1.2
1.2
1.3
1.3
1.3
1.3
1.3
0.6
0.5
0.5
0.5
0.5
0.5
0.5
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.11
0.10
0.10
0.09
0.09
0.09
0.09
0.08
0.08
0.08
0.08
0.07
0.07
0.07
0.07
0.07
0.07
0.07
0.07
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
2.33
2.23
2.18
2.12
2.08
2.03
2.00
1.94
1.90
1.88
1.84
1.82
1.79
1.77
1.74
1.73
1.71
1.70
1.68
1.68
1.67
1.67
1.67
1.66
1.66
1.66
1.66
1.66
1.66
1.66
1.66
1.65
1.65
1.65
1.65
1.65
1.65
1.65
1.65
1.65
1.65
253.3
309.5
311.2
294.4
286.7
280.2
280.8
258.1
250.0
245.4
245.0
245.2
241.6
243.4
241.9
242.0
239.8
241.8
239.8
240.4
240.9
239.9
239.9
240.1
240.2
240.8
240.6
241.0
241.2
241.1
241.0
241.1
241.4
241.4
241.7
241.5
241.6
241.6
241.6
241.6
241.6
22.0
20.4
19.7
19.3
18.6
18.0
17.7
17.1
16.5
16.3
16.0
15.8
15.5
15.3
15.1
15.0
14.9
14.8
14.7
14.7
14.7
14.6
14.6
14.6
14.6
14.6
14.6
14.6
14.5
14.5
14.5
14.5
14.5
14.5
14.5
14.5
14.4
14.4
14.4
14.4
14.4
* Pit shell at RF 1.00
Project No.: 165270

11 March 2011
Executive Summary
Page 13
Cu
(Mlb)
419
815
1,115
1,252
1,595
1,882
2,085
2,455
3,198
3,416
3,831
4,075
4,459
4,745
5,213
5,524
5,918
6,206
6,526
6,736
6,904
6,994
7,036
7,277
7,305
7,416
7,478
7,515
7,632
7,712
7,737
7,752
7,803
7,807
7,873
7,893
8,011
8,019
8,035
8,055
8,073
Metal Content
Au
Ag
(koz)
(koz)
123
228
307
347
440
516
567
671
860
910
1,010
1,065
1,155
1,214
1,316
1,384
1,468
1,527
1,596
1,635
1,671
1,692
1,699
1,747
1,752
1,772
1,788
1,795
1,815
1,832
1,836
1,838
1,848
1,849
1,860
1,866
1,886
1,888
1,891
1,898
1,900
2,539
5,070
6,982
7,812
10,104
11,928
13,261
15,674
20,594
22,028
24,595
26,172
28,569
30,441
33,257
35,130
37,529
39,203
41,095
42,266
43,329
43,925
44,139
45,603
45,781
46,446
46,924
47,133
47,810
48,345
48,504
48,569
48,888
48,911
49,298
49,519
50,231
50,282
50,377
50,604
50,686

Table 3-4:
Year
-1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Total
3.4
LOM Production Schedule
Ore Mined
(Mt)
Plant Feed
Mt)
Waste
Mined
(Mt)
1.3
26.4
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
7.0
27.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
7.0
46.2
45.3
40.3
40.3
38.7
38.3
38.3
38.3
38.3
38.3
38.3
38.3
38.3
38.3
38.3
37.5
29.3
25.9
13.5
6.8
4.3
1.7
0.4
728.2
728.2
713.5
Total Mat
(Mt)
Strip
Ratio
NSR
($/t)
Copper
(%)
Gold
(g/t)
Silver
(g/t)
Arsenic
(g/t)
47.5
71.7
75.0
75.0
73.4
73.0
73.0
73.0
73.0
73.0
73.0
73.0
73.0
73.0
73.0
72.2
64.0
60.6
48.1
41.4
38.9
36.4
7.4
35.65
1.71
1.16
1.16
1.12
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.08
0.85
0.75
0.39
0.20
0.12
0.05
0.06
17.6
19.3
17.2
14.9
17.3
16.4
16.4
15.9
14.2
11.6
11.2
13.4
14.9
15.8
16.1
15.5
12.0
11.0
13.2
16.5
17.5
18.7
0.46
0.50
0.45
0.39
0.45
0.43
0.43
0.41
0.37
0.32
0.31
0.36
0.39
0.42
0.42
0.41
0.33
0.30
0.36
0.43
0.46
0.49
0.08
0.09
0.08
0.06
0.08
0.08
0.08
0.08
0.07
0.05
0.04
0.05
0.06
0.07
0.07
0.07
0.05
0.04
0.05
0.07
0.07
0.07
2.46
2.14
1.83
1.95
2.03
1.96
1.82
1.67
1.52
1.32
1.38
1.60
1.70
1.72
1.76
1.63
1.27
1.30
1.50
1.76
1.76
1.99
468
305
261
354
278
231
184
156
163
208
307
302
263
194
200
153
168
264
241
279
174
236
1,441.7
0.98
15.1
0.40
0.07
1.71
243
Waste Dump and Access Roads

A single elongated waste rock management facility (WRMF) will be developed adjacent to
the pit, extending along the valley as illustrated in Figure 3-1. Bottom-up methods will
be used for construction. Preliminary waste rock characterization suggests that
potentially acid generating (PAG) rock will be present, and so encapsulation storage
methods may be required.
The primary ore crusher will be installed on the rim of the ultimate pit, northeast of the pit
centroid.
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Executive Summary
Page 14

Figure 3-1:
Waste Rock Storage Facility and Initial Road Alignments
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Executive Summary
Page 15

4.0
Metallurgy
4.1
Testwork
Two major phases of testwork have been conducted for the Candente project. The first
consisted of process development to define the type of processing most applicable to the
deposit mineralization. This was followed by more detailed work in the second phase to
optimize process conditions and develop economic parameters to progress the project.
This second phase was affected by the financial crisis of 2008, however, when the work
was interrupted. Definition work resumed in 2010 with further development of process
parameters to allow primary equipment selection. The goal of the 2010 work was to
support the prefeasibility study in progress during 2010.
The testwork established the key design parameters, as follows:
For a feed grade of 0.40% Cu, a recovery of 89.7% is forecast at the target grind.
Recovery will vary with feed grade.
The concentrate grade was 30.6% Cu after partial roasting, with arsenic being
lowered to non-penalty limits.
The grind was established at 200 m with a JKSimMet Axb value of 52.1 and a Bond
Ball mill work index of 11.0.
4.1.1
Phase I (2005 2007)

Initial resource development identified potentially leachable copper mineralization. From
2005 to 2006, Kappes, Cassidy & Associates (KCA) assessed the potential of leaching
samples containing high levels of cyanide-soluble copper. Initial recoveries were variable
and lower than anticipated. In response, further new samples were obtained from
twinned drill holes and sent to SGS Lakefield Research Chile (SGS) for bottle-roll and
column leaching testwork. The results at SGS Chile were similar to those from KCA.
Drilling in 2007 indicated the presence of a significantly larger copper resource with
predominantly sulphide copper mineralization. Therefore, the testwork program was
revised to assess the metallurgical response of the sulphide copper mineralization to
flotation. The 2007 work confirmed that additional testwork focusing on the flotation of the
sulphide mineralization was warranted.
4.1.2
Phase IIA (2008)

Based on the positive initial sulphide flotation testwork, comminution, and flotation
testwork was initiated at SGS in early 2008. Although this work was halted prematurely of
its goal because of the world economic situation in late 2008, it had by this time provided
adequate information on the grinding and flotation responses to confirm that a smeltable
Project No.: 165270

11 March 2011
Executive Summary
Page 16

concentrate could be produced. Sufficient detail was available to define metallurgical

challenges, particularly impurities (As, Sb) in the concentrate and the potential mitigation
strategy.
4.1.3
Phase IIB (2010)

Another phase of work for Caariaco Norte began in 2010 with the initial goal of
continuing the definition of ore characteristics to support a prefeasibility study. During the
preliminary design evaluations, it became apparent that there was an opportunity to
enhance the value of the deposit by utilizing a new approach to reduce arsenic and
antimony in the bulk copper concentrate.
The early work in this program consisted of testing for the optimum rougher flotation feed
size, regrind feed size, and rougher and cleaner reagent additions. Products from this
testwork were further analyzed for mineralogy, chemistry, and settling quality. The results
indicated that it was possible to use a coarser grind and still maintain recovery through
the employment of a dual collector system. Later work on the test material focused on
establishing that the improvements were robust and the solution proposed for the penalty
elements would work. This latter testworkthe application of partial roastinghas been
demonstrated to proof-of-concept level.
4.2
Recovery
The principal elements of the flowsheet have been established with indicative recoveries
of 89% Cu, 55% Au, and 50% Ag in a >26% Cu concentrate delivered to the roaster; a
>30% Cu concentrate delivered to the smelter; and arsenic as a penalty element
controlled to a level where no impact on concentrate marketability is anticipated over the
life of mine.
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11 March 2011
Executive Summary
Page 17

5.0
Process
5.1
Process Description
The process design is for a concentrator with a nominal processing capacity of 95,000 t/d
of ore from the open pit. The mineral processing and the roasting/acid plants are based
on conventional technology and industry proven equipment. Figure 5-1 is a general
overview diagram of the process and Figure 5-2 is a block diagram showing the major
processing steps.
Figure 5-1:
Process Overview General Diagram

ROM
Ore from Open
Pit
Crushing
Grinding
Flotation
Tails
Concentrate
Filtration
Sulphuric acid
plant
Sulphuric
acid
Project No.: 165270

11 March 2011
Concentrate
Roast /
Impurity
Stabilization
Treated
Concentrate
Executive Summary
Page 18
Pyrite
Flotation
Tailings
Management
Facility

Figure 5-2:
Process Overview Block Diagram
Coarse Ore
Stockpile
Gyratory
Crusher
Ball Mill
SAG Mill
Vibrating
Screen
Pebble
Recirculation
Roughers
Tailings Thickener
1st Cleaners
1st Cleaners
Scavengers
Process
Water
Storage
Regrind Mill
De-Pyritization
Flotation
System
2nd Cleaners
Concentrate
Thickener
Concentrate
Filter
Press
SULPHURIC
ACID PLANT
GAS
TREATMENT
Tailings
Pond
SOLIDS
CAPTURE
Concentrate
Storage
Roaster
Acid
STABILIZATION
CIRCUIT
Calcine
Storage
Run-of-mine (ROM) ore from the open pit will be crushed and conveyed to the
concentrator where the ore will be ground to liberate the mineral values from the host rock
and then separated by flotation. The bulk copper-silver-gold sulphide concentrate
produced will be filtered and introduced into the roasting plant. There the concentrate will
undergo a partial oxidative roast, which will remove the arsenic and part of the sulphur
into the gaseous phase. The gas will be scrubbed to capture particulate matter and the
arsenic into solution. This solution will report to a stabilization circuit that will remove any
valuable copper and convert the arsenic to scorodite, which will be filtered and transferred
to the tailings management facility (TMF).
After removal of the arsenic, the gas containing sulphur dioxide will be processed through
a modular plant to produce saleable sulphuric acid.
The copper precipitate and solid calcine produced from the roaster will be agglomerated
and stockpiled. Trucks will transport the combined concentrate to the port facilities,
where it will be placed on ocean-going vessels for transport to overseas smelters.
Figure 5-3 is a general arrangement diagram of the concentrator.
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Executive Summary
Page 19

Figure 5-3:
Concentrator General Arrangement
Project No.: 165270

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Executive Summary
Page 20

5.2
Process Water System

Water used for processing purposes will be derived from several sources:
water reclaimed from the TMF
water from pit dewatering
internal plant water recycled from the tailings thickener and the copper concentrate
thickener
water from the waste rock seepage recovery system
fresh water from Rio Caariaco for specific plant requirements.
5.3
Concentrate Receiving and Loadout at Port Site

Copper concentrate from the process plant will be transported by truck to the Marine
Terminal Muchik (MTM) in northern Per, a planned port development by Lumina Copper
(Lumina). Candente will construct and operate its own concentrate receiving, storage,
and reclaim facilities at the terminal and will share marine handling facilities with Lumina.
Annual throughput from Caariaco Norte is projected to average approximately
400,000 tonnes.
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Executive Summary
Page 21

6.0
Tailings Management Facility

The proposed location for the tailings management facility (TMF) is a tributary in the
upper reaches of the Quebrada Yerma valley. The starter dam will be constructed with
locally borrowed earthfill and rockfill sourced from within the impoundment area. An
embankment height of 105 m is required to store one year of tailings production from the
process plant. The main embankment will be raised in stages above the starter dam
using cycloned sand and the centreline construction method. At present the ultimate
height of the TMF is predicted to be 270 m.
A seepage collection (SC) impoundment will be provided downstream of the main TMF
embankment. The SC impoundment is designed to retain cyclone sand drainage,
embankment seepage, and runoff from the embankment and contributing catchment.
The SC embankment will be constructed of compacted earthfill / rockfill with appropriate
filter / transition zones and will have a low-permeability bituminous geomembrane liner on
the upstream face. This design is based on similar embankment designs previously
permitted and constructed in Per.
During the initial construction period, it will be necessary to divert surface water around
the areas of construction, primarily at the TMF and SC embankments. The start-up
design includes cofferdams and diversion systems in both areas for this purpose. The
cofferdams are designed as earthfill / rockfill structures with filter/transition zones and with
a bituminous geomembrane liner on the upstream face. Both embankments have been
designed with emergency spillways to pass waters resulting from larger storm events.
One of the design objectives for the TMF is to keep the PAG tailings saturated at all times
once placed within the TMF impoundment. To achieve this, the PAG tailings will be
deposited subaqueously and be flooded with a minimum 2 m of water cover.
Mineral processing over the operating life of the mine will result in the production of
approximately 30,000 m3 of scoroditethe stable ferric arsenate byproduct from the
partial roast process incorporated in the process flowsheet to manage arsenic levels in
the concentrate. Scorodite represents approximately 0.011% of the total waste material
to be stored in the TMF. It is currently planned to provide a separate lined containment
facility for this byproduct and the facility will be capped at closure.
Water from the TMF will be reclaimed to the process plant during operations. The TMF
reclaim barge will be designed to provide a flow rate 3,380 m3/h.
Project No.: 165270

11 March 2011
Executive Summary
Page 22

7.0
Infrastructure and Ancillary Facilities
7.1
Mine Site Facilities

The mine site facilities are divided into three general areas: the mine, the plant site, which
includes buildings and structures for repair and maintenance of mine and plant
equipment, and the camp area, which includes facilities for personnel accommodations,
administration, and security. Other support facilities and services include site access,
power supply and distribution, water supply, explosive storage and handling,
communications systems and waste disposal facilities at the site. An overall general
arrangement of the development sites is shown in Figure 7-1.
Project infrastructure will also include facilities at the Marine Terminal Muchik (MTM), a
planned development by Lumina Copper Corp (Lumina) in northern Per. Here,
Candente will have its own dedicated concentrate receiving, storage, and reclaim facilities
but will share general site services and loadout / ship berthing equipment with Lumina.
Figure 7-1:
General Arrangement of Project Facilities
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11 March 2011
Executive Summary
Page 23

Access to the plant site will be via a new 42 km single-lane gravel road, branching off the
existing Corral Quemado Road running along the Huacabamba Valley. The alignment
follows a new bridge crossing over Ro Huacabamba and then passes through
challenging terrain, rising at a constant grade of 8% until it reaches the ridge top between
the Yerma and Caariaco valleys near the TMF.
On-site roads will be provided for vehicle access to facilities and remote structures.
General access roads will be two-way, service roads will be one-way with pullouts, and
mine haul roads will be one-or two-way as required and wide enough to accommodate
the Komatsu 930E or similar haul trucks.
To meet regulatory requirements, blasting agents for mining operations will be stored on
the opposite side of the ridgeline to the north of the site, just off the main access road, a
safe distance away from occupied or significant structures. Separate sites will be
provided for a bulk emulsion plant, an ammonium nitrate storage area, and a detonator
magazine.
Fresh water for site services will be obtained from a fresh water reservoir constructed as
part of the Ro Caariaco diversion around the WRMF. Fresh water will be used for
process make-up water, fire water, and to supply the potable water treatment plant
(PWTP). The reservoir will also provide start-up water for the process plant until sufficient
reclaim water is available in the TMF to furnish continual supply, estimated to be two
months after start-up. Normally, most process water is derived from thickener overflow,
reclaim water pumped from the TMF, and other reclaim sources.
Electrical power will be supplied to the Caariaco Norte site by a 220 kV overhead
transmission line from the local utility substation at Carhuaquero, a distance of 57 km
from the mine site. The incoming transmission line will terminate at a new main site
substation for the transformation of power from the transmission voltage level of 220 kV to
the site distribution/utilization level of 25 kV. The anticipated connected load for operation
is 148 MW with an average load of 95 MW and power factor of 95%. Emergency power
will be produced by standby diesel generating units rated for a nominal 4.5 MW to provide
power to mine and process equipment and the permanent camp in the event of a utility
power failure.
Diesel fuel will be stored in four 500 m3 tanks, providing more than two weeks of supply
the event of fuel delivery disruption or power failure.
7.2
Port Site Infrastructure

The port site infrastructure for the project will be at the MTM, a planned development by
Lumina Copper southeast of the town of Eten and the existing Consorcio Terminales Eten
liquid bulk terminal in Northern Per. Copper concentrate from the mine will be
transported by truck to MTM at a rate of approximately 400,000 t/a. The loading berth at
the port will be designed to accommodate up to 50,000 DWT loaded Handymax vessels.
Project No.: 165270

11 March 2011
Executive Summary
Page 24

This study assumes that the berthing facility, the trestle conveyor leading out to the berth,
and the shiploader will be shared with Lumina Copper. Some service buildings and
utilities throughout the port site, such as fire, process, and potable water supply and
sanitary waste disposal, would also be shared, whereas concentrate receiving, storage,
and reclaim facilities for the Caariaco Norte product would be independently developed
and operated by Candente.
Concentrate reclaimed from storage will be conveyed to the pipe conveyor, shared with
Lumina, then to the berth conveyor that feeds the travelling shiploader.
Power supply for the Candente facilities will be delivered to a substation at the
concentrate storage and handling facility at 4.16 kV from the power auxiliary distribution
system planned by Lumina Copper.
The marine berth will be constructed 3.2 km from shore at a water depth of -15.0 m, as
required for the design 50,000 DWT Handymax vessel.
Vessel operations for export of Candente product will be scheduled in conjunction with
Lumina to avoid berthing conflicts.
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Executive Summary
Page 25

8.0

The climate data for the site was updated with the information available from the existing
camp and data from the El Limon and Incahuasi weather stations. The hydrologic data
for the site were determined for various return periods using frequency analysis.
The surface water management plan for the Caariaco Norte project will preserve to the
maximum extent possible the non contact status of surface waters. Waters that come
into contact with project facilities will be contained and treated, if necessary, so that any
water released to the environment meets the applicable water quality regulatory
guidelines. A system of impoundments, embankments, diversions and spillways will be
developed during construction to handle runoff from construction-related activities. This
system will continue to be developed through operations to ensure sustainable water
management.
Water will be impounded upstream of the WRMF to supply the freshwater makeup
requirements of the process plant. A diversion channel will be constructed to direct the
Ro Caariaco around the WRMF. Contact water from the facilities in the areas of the pit,
process plant, and WRMF will be collected and, depending on quality requirements,
utilized as mill process water.
Precipitation on the TMF and runoff draining into the TMF will be impounded to ensure a
minimum water cover is maintained over the tailings and to provide reclaim water for
process plant requirements. At closure, the TMF spillway will be designed to handle flows
generated from probable maximum flood (PMF). The site water balance estimates that
water release from the TMF will not be required until the end of the mine life.
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9.0
Candente initiated the Environmental Impact Assessment (EIA) for the Caariaco project
in 2007 and baseline environmental assessments are ongoing.
The site of the Caariaco Norte project, in Northern Per, is an area environmentally
similar to the surrounding region that extends into Ecuador and Columbia and is subject
to distinct wet and dry seasons. Hydrological investigations show that naturally acidic
waters are present in mineralized areas within the project footprint. Dissolved metals have
been found to be above Probable Effect Levels (PEL) within the project footprint, but this
is not unusual for mineralized areas, where PELs are routinely exceeded. Due to steep
slopes and the high clay and fines contents, soils within the region are typically unstable.
Current air quality is characteristic of rural, non-industrialized areas, with no contaminants
at concentrations of concern to human health.
The project ecosystem consists of moors and cloud forests at higher elevations and
cultivated land at lower elevations. No native fish species were found within the rivers
and creeks at the project site, but introduced trout were identified downstream in the main
stem of Ro Caariaco. Native species were found within the lower basin of both Ro
Caariaco and Quebrada Yerma and in Ro Huancabamba, approximately 40 km from
the project site.
The community of San Juan de Caaris (CSJC) holds the surface rights in the proposed
Caariaco project development area. This community comprises approximately 25
villages and 1,500 primary social groups. The main village of Caaris is adjacent to a
northeast tributary of Ro Caariaco, approximately 2.5 km downstream of the project.
Vehicle access to the villages is limited, and most residents are involved in subsistence
agriculture.
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10.0
Conceptual Closure Plan

Reclamation of the Caariaco Norte project in Per will meet Peruvian environmental
regulations and International Finance Corporation (IFC) Environmental, Health and Safety
Guidelines for Mining (IFC, 2007).
The primary objectives for reclamation and closure are to safeguard future public health
and safety, to minimize impacts on the local environment by ensuring physical, chemical,
and ecological integrity of the site features, and, where practical, to return the disturbed
areas to their pre-mining land use.
The Caariaco Norte project consists of six general areas:
open pit mine area
plant site, camp site, and other ancillary infrastructure
TMF, including the tailings and reclaim pipelines
WRMF and diversion channel
access roads and power transmission lines
port facilities.
The first four areas comprise the reclamation areas for the project. Responsibility and
control of reclamation and closure for the last two areas will be transferred to the
government or other corporations at closure.
In general, at closure of the mine, the open pit mine will be allowed to flood, and overflow
water will be managed at the WRMF water treatment plant. A permanent water cover will
be maintained on the TMF, and any exposed tailings beaches will be capped with leached
cap material to promote revegetation. The WRMF will be covered with a non-acidgenerating cover to reduce infiltration of precipitation. All seepage and runoff from the
TMF and WRMF will be collected in seepage collection impoundments and treated for
discharge if required.
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11.0
Project Execution
The project execution schedule duration is currently 30 months from Notice to Proceed
through to final completion of the second ball mill line within the process plant.
The key milestones for the project include the following:
Notice to Proceed ..............................................................................1 January 2013
Start Site Establishment Work ..........................................................4 January 2013
Start Access Road to Site ...................................................................... 1 April 2013
Start Concrete Works ............................................................................. 1 April 2013
Start Tailings Dam ................................................................................... 1 July 2013
Start Pre-stripping (mine) ..................................................................1 October 2013
Permanent Power Complete ................................................................ 30 June 2014
Diversion Dam Complete ........................................................... 30 September 2014
Start Mining .......................................................................................1 October 2014
Process Plant Mechanical Complete .......................................... 30 December 2014
Ready to Deliver Ore .........................................................................1 January 2015
1st Ball Mill Line Commissioned ......................................................25 January 2015
Diversion Channel Complete ..........................................................30 January 2015
2nd Ball Mill Line Commissioned .......................................................... 30 June 2015
A peak workforce of approximately 1,500 people is anticipated at the site during the
construction phase.
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12.0
Capital Cost Estimate

The total estimated Owner-operated capital cost to design and build the Caariaco Norte
Copper Project in Per at 95,000 t/d, is $1.599 billion. This cost assumes an Owneroperated mining fleet and process plant, and self-performed preproduction development.
The estimate covers the direct field costs of executing the project, plus the Owners
indirect costs associated with design, construction, and commissioning. The estimate is
summarized in Table 12-1.
The capital cost estimate for the financial model base case assumes open pit mining by
the owner with leased supply of mobile mining equipment including scheduled additions
and replacements. The estimated capital cost for the financial base case is $1.437 billion.
A summary of the financial base case capital costs is provided in Table 15-3.
All costs are expressed in Q3 2010 U.S. dollars with no allowance for escalation, interest
or financing fees, taxes or duties, or working capital during construction. The level of
accuracy for the estimate is 20% of estimated final costs, as per AACE Class 4
definition.
Table 12-1: Summary of Capital Costs
Cost
($000)
Area
Mining
Process Plant
On Site Infrastructures
Tailings Management
Project Access Road
Water Diversion
Port Site Facilities
326,615
381,277
133,444
101,527
38,795
50,753
26,887
Total Direct
1,059,298
Owners Cost
Indirects
52,899
243,076
Total Indirects
295,975
Contingency
Total Capital Cost
Escalation (excluded)
Working Capital (included in Financial Analysis)
243,903
1,599,176
-
Total
1,599,176
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13.0
Operating Cost Estimate

The operating costs for the Caariaco Norte project are based on an Owner-operated
mining fleet and process facility and have been prepared in Q3 2010 U.S. dollars. The
operating cost estimate excludes:
contingency
allowance for escalation
sales tax
concentrate shipping
copper smelter treatment and refining charges
import duties.
The operating cost estimates have been assembled by area and component, based on
estimated staffing levels, consumables, and expenditures, according to the mine plan and
process design. Average operating costs are shown in Table 13-1.
Table 13-1: Average On-Site Operating Costs
Area
Unit
US$
Unit
US$/lb Cu
Mining
Processing
General & Administration
$/t processed
$/t processed
$/t processed
2.74
3.11
0.43
$/lb Cu
$/lb Cu
$/lb Cu
0.360
0.408
0.056
Total On-Site Operating Costs
$/t processed
6.28
$/lb Cu
0.824
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14.0
Concentrate Marketing
The marketing assessment for the Caariaco Norte project is based on metallurgical data
to date and reports commissioned from Neil S. Seldon & Associates Ltd. (NSA)1 to
examine the copper concentrate and acid markets.
NSA provides a commentary and outlook on concentrate marketability, and related
smelter charges, including treatment, refining, penalty details, payment timing, metal
accountability, and other contract terms. NSA has not contacted any smelters to
specifically discuss the marketability of the Caariaco Norte concentrates.
An evaluation of the marketability of sulphuric acid by-product from the proposed roasting
facility was completed by Caliper Metals Corp (CMC) on behalf of NSA2. Future supply
demand for both local Peruvian and Chilean acid markets suggests a net deficit for the
near term. CMC has indicated that, from a project perspective, this is a positive project
inclusion as domestic options are likely to increase, although Chile remains a viable
export alternative.
From a chemical quality standpoint, the Caariaco Norte concentrate production is
anticipated to be readily acceptable to smelters. At 32% Cu and with sulphur content
around 20%, the higher copper and lower sulphur content of the partially roasted
concentrate is seen as important to smelters today. The copper content of concentrates
for mines such as Escondida are falling and as a result, smelter input blends have fallen
to plus/ minus 28%.
The anticipated quality of the copper concentrate to be produced is based on
metallurgical testing carried out by SGS Lakefield in Santiago and Outotec (Sweden) AB.
Other than arsenic, which has been managed by the partial roasting process, no other
significant deleterious constituents are anticipated, although it should be noted that
antimony is near the normal penalty levels before concentrate roasting and significantly
below penalty limits afterwards. Overall, the concentrates are considered to be of good
quality.
1
2
For internal use only and not for publication.

For internal use only and not for publication.
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15.0
Four cases were assessed through the financial evaluation:
Case 1 Client Owner Operated
Case 2 Contract Mining
Case 3 Leased Mining Equipment (Base Case)
Case 4 Leased Mining, Mill, and Electrical Equipment.
The case identified below as the base case is Case 3, Leased Mining Equipment. Unless
otherwise specified, discussions and numbers within this section are related to the base
case.
Table 15-1 summarizes the key physical, technical, and after-tax financial parameters for
the progress report. Work was based on a long-term copper price reverting to $2.25/lb
and an oil price of $80/bbl. The total mine site cash operating cost based on leased
mining equipment is US$6.28/t processed, or $0.82/lb Cu produced. The all-in C13 cash
cost, including concentrate transportation, off-site smelting and refining, applicable taxes,
and by-product credits for gold, silver and sulphuric acid, is US$0.99/lb Cu.
Sensitivity analysis was performed on the base case taking into account variations in the
metal price, operating cost, foreign exchange, and mining cost. Analysis shows that the
Caariaco project is most sensitive to changes in metal prices, which directly affects the
revenue stream. The project is less sensitive to capital expenditure and operating cost,
although those sensitivities are very similar. The results are illustrated in Table 15-2 and
Figure 15-1. Because the project is priced in U.S. dollars, the effects of exchange rate
variation do not apply in the current model, although in reality some equipment, supplies,
and services will be priced in Euros and the local Peruvian currency.
Table 15-1: Caariaco Norte Project Financial Summary
Unit
LOM
Copper Price
$/lb
2.25
Total Mined
Mt
1,442
Ore Milled
Mt
728
Strip Ratio
t:t
0.98:1
Grade Copper
Contained Copper
0.4
Mlb
6,431
$/t milled
$/lb Cu
Copper Recovery
89.7
Payable Copper
Mlb
5,556
On-Site Operating Costs
$M
4,572
6.28
0.82
Net Smelter Return
$M
12,582
17.28
2.27
Acid Revenue
$M
269
0.37
0.05
Production Costs
$M
4,951
6.80
0.89
Brook Hunt cost category C1 = net direct cash cost. See Appendix L.
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Unit
LOM
$/t milled
$/lb Cu
Royalties
$M
338
0.46
0.06
Closure and Salvage Costs
$M
58
0.08
0.01
Earnings Before Income Tax (EBIT)
$M
7,505
Total Taxes
$M
2,142
Total Capital
$M
1,508
Net Cash, pre-tax
$M
5,998
Net Cash, after-tax
$M
3,855
NPV Undiscounted, after-tax
$M
$M
3,855
18.8
Mine Life
years
21.2
Payback Year
years
4.1
Total Start-Up Capital
$M
1,437
Total LOM Capital
$M
1,508
NPV @ 8%, after-tax

IRR, after-tax
1,063
Table 15-2: Results of Sensitivity Analysis

Change in Factor
Factor
-30%
Exchange rate
-20%
-10%
0%
10%
20%
30%
932
932
932
932
932
932
932
Capital expenditure
1,323
1,193
1,062
932
802
671
541
Operating expenditure
1,312
1,185
1,059
932
806
679
552
Metal price
(195)
182
557
932
1,307
1,681
2,056
Figure 15-1: Graph of Sensitivity Analysis Results for Base Case

Candente - Sensitivity of NPV @ 8%
NPV @ 8% (US$ million)
2,500
2,000
1,500
Capex
Opex
1,000
Price
500
Xrate
0
(500)
-40%
-30%
-20%
-10%
0%
10%
Change in Factor
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20%
30%
40%

Table 15-3 summarizes the initial capital cost of the project for the base case of leased
mining equipment. The preliminary capital cost reflects prefeasibility level estimates for
all areas with the exception of the mine and where geotechnical assessment for the mine
bench and overall pit slope remains outstanding.
The total capital cost is
US$1,437 million, including contingency and other indirect costs. Another $71 million is
required in sustaining capital.
Table 15-3: Summary of Capital Costs by Major Discipline
Area
2010 ($000)
Prestripping
Mining Infrastructure & Equipment
Processing Plant & Acid Plant
Tailings Management
Project Access Road
Water Diversion and Reservoir
Total Direct
Owners Cost
Indirects
Total Indirects
Contingency
Total Capital Cost
70,008
101,942
381,277
133,444
101,527
38,795
50,753
26,887
904,633
52,899
243,076
295,975
236,522
1,437,160
-
Total
1,437,160
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16.0
Risk and Opportunities

A number of risks and opportunities were identified during the course of the study, many
of which will be pursued as the project develops. Key risks to the project include
sensitivity to metal price and geotechnical design of the 900m+ pit highwall. Other, more
minor risks include escalation in commodity pricing, geotechnical design of the tailings
management facility embankment, and design considerations for the waste rock
management facility diversion channel.
The project financials are most sensitive to metal prices and capital cost. In the current
economic climate, metal pricing for copper and gold is strong and is expected to remain
so into the initial years of production at Caariaco Norte. A significant decrease in copper
price would affect the projected cash flow for the project.
A geotechnical site investigation program has been proposed and planned to support
geotechnical pit design at a prefeasibility level. The data from the site investigations are
considered to be key in understanding the joint patterns and geotechnical complexities
associated with the highwall (approximately 925 m high) and the sensitivity of the highwall
slope to pit depressurization and rock mass strength. These investigations may result in
a design change in the pit slope angles which will have a consequent effect on the
stripping ratio and project mining costs.
Key opportunities include optimization of the mine plan for the initial 18-month production
period, additional drilling to increase Measured and Indicted (MI) resources, and
delineating additional resources in the area of Caariaco Norte.
Optimizing the mine plan for the first 18 months of operations to maximize the IRR and
reduce project payback period is recommended as the mine plan develops.
Additional drilling is recommended to be continued in the vicinity of Caariaco Norte with
the objective of reclassifying Inferred resources to Indicated and/or Measured resources
There is good potential to discover and delineate additional resources at the Caariaco
Sur and Quebrada Verde targets near the Caariaco Norte deposit and expanding the
overall resource base.
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17.0
Conclusions
AMEC has applied industry-standard mining, process design, construction methods, and
economic evaluation practices in this assessment of the Caariaco Norte project.
Sufficient and representative samples and information were available to estimate a
mineral resource, conduct metallurgical testing, and complete this prefeasibility progress
report.
Sufficient work has been undertaken on the permitting and environmental aspects of the
project to gain an understanding of the regulatory requirements that will need to be met to
construct, operate, and close the mine.
After the currently proposed pit is mined, the Caariaco Norte deposit will still contain
resources, particularly at depth. In this study, the Whittle optimization analysis and
subsequent mine design were based on a copper price of $2.25/lb. If a higher copper
price were used, then the optimal Whittle shell could be expected to expand, and the
total mill feed and mine life would increase.
The Caariaco Sur deposit has been interpreted previously to contain a potential
resource, but limited exploration drilling has been carried out to date. Considering
preliminary indications that Caariaco Sur material contains minimal arsenic, it represents
an exploration target that could make ore blending an option and potentially eliminate
some of the arsenic mitigation requirements currently included in this study.
The process plant, as designed, will handle 95,000 t/d through a typical crushing and twostage grinding circuit. The primary flotation circuit will produce a bulk concentrate that will
be reground and upgraded in a three-stage cleaner circuit. The results of ongoing
metallurgical testwork indicate that the ore responds positively to the typical grinding and
conventional flotation methodologies for such deposits. In this study, AMEC has begun
optimizing a concentrator flowsheet that appears to be viable with respect to the known
mineralization of the deposit. The Outotec partial roast process has been confirmed to
reduce the levels of impurities in the concentrate to below smelter penalty limits and will
produce a saleable concentrate throughout the mine life.
Based on the additional data, updated knowledge, and refined assumptions at this stage
of study, the results show that the project achieves a 18.8% post-tax IRR at a long term
copper price of $2.25/lb. The copper price required to produce a breakeven cash flow
(discounted at 8% and post-tax) is $1.75/lb based on a flat copper price and flat prices of
$1,015/oz gold and $15.85/oz silver. The sensitivity analyses show that the project is
most sensitive to copper price, followed by grade, capital cost, and operating cost, in that
order.
AMEC recommends that, should Candente management deem the economic possibilities
to be worth pursuing, they proceed with information-gathering to advance the project to a
feasibility study level. Upon performing the necessary sampling and testwork, a feasibility
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study could improve the construction and operational design, scheduling, costing, and
economic analysis.
18.0
Recommendations
The following are the main recommendations for the completion of a feasibility study:
Site investigations, including drilling, test pitting, packer tests, and seismic lines, to
provide additional samples and information for:
geotechnical and structural characterization
hydrological mapping
increased definition of the mineral resource
waste rock characterization and metallurgical variability testwork
Six-month program estimated to cost $4 million.
Metallurgical and mineral processing tests should include, but not be limited to:
characterization of mineralization in various parts of the deposit
optimization of flotation recovery and reagent use
confirmation of current processing assumptions such as concentrate thickening
and filtration rates
confirmation testing of acid production quantities
further testing of the behaviour of arsenic mineralization in flotation
further characterization of mill feed variability
confirmation testing of arsenic reduction in concentrate to reflect deposit variability
Eight-month program estimated to cost $1.0 million.
ML/ARD testing and development of a PAG/non-PAG rock model
Six-month program estimated to cost $0.25 million.
Pursuit of environment assessment and permitting. Estimated cost $2 million.
Conduct a feasibility study. Estimated cost $6.1million.
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CONTENTS
2.0
INTRODUCTION ....................................................................................................2-1
2.1
Purpose and Objectives of Report ...............................................................2-1
2.2
Terms of Reference ....................................................................................2-2
2.3
Project Background and History ..................................................................2-3
2.3.1 INGEMMET .....................................................................................2-3
2.3.2 Placer Dome ....................................................................................2-3
2.3.3 Billiton ..............................................................................................2-4
2.3.4 Candente Copper Corp. ...................................................................2-4
2.3.5 Historical Resource Estimates .........................................................2-5
2.4
Property Location, Description, and Access ................................................2-5
2.4.1 Property Location ............................................................................2-5
2.4.2 Description ......................................................................................2-6
2.4.3 Access .............................................................................................2-7
2.4.4 Infrastructure ...................................................................................2-8
2.4.5 Local Resources ..............................................................................2-8
2.5
Legal Status ................................................................................................2-9
2.5.1 Land Tenure ....................................................................................2-9
2.5.2 Surface Rights .................................................................................2-9
2.5.3 Mining Law ......................................................................................2-9
2.5.4 Mineral Concession Law ................................................................2-12
2.5.5 Exploitation ....................................................................................2-12
2.5.6 Environmental Regulations ............................................................2-12
2.5.7 Environmental Impact Assessment (EIA) .......................................2-13
2.5.8 Environmental Management Plan (EMP) .......................................2-13
2.5.9 Permits ..........................................................................................2-13
2.6
Caariaco Trade-off Studies......................................................................2-14
2.6.1 Conveying Waste Rock to Tailings Area for Embankment
Construction ..................................................................................2-15
2.6.2 Plant Site Relocation .....................................................................2-15
2.6.3 Tailings and Waste Dump Alternatives ..........................................2-15
2.6.4 Plant Throughput ...........................................................................2-16
2.6.5 Location of Waste Rock Management Facility ...............................2-17
2.6.6 Options for Reduction of Arsenic in Caariaco Norte Concentrate .2-17
2.6.7 In-Pit Crushing and Conveying ......................................................2-17
2.6.8 Pit Electrification ............................................................................2-17
2.7
Report Organization and Conventions.......................................................2-18
TABLES
Table 2-1:
Table 2-2:
Existing Routes from Chiclayo to Caariaco ................................................................... 2-8

Caariaco Concessions held by Candente Copper Corp. (as of 29 October 2010) ..... 2-10
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FIGURES
Figure 2-1:
Figure 2-2:
Figure 2-3:
Figure 2-4:
General Location Map ..................................................................................................... 2-1

View of Caariaco Project Mineral Resource Area ......................................................... 2-6
Existing Caariaco Property Access Routes and Infrastructure ..................................... 2-7
Caariaco Concessions held by Candente Copper Corp. (as of 29 October 2010) ..... 2-11
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TOC ii

2.0
INTRODUCTION
2.1
Purpose and Objectives of Report

Candente Copper Corp. (Candente) is 100% owner of the Caariaco Norte project, a
copper property in the Caaris District of Province of Ferenafe, Per, approximately
110 km northeast of the city of Chiclayo (Figure 2-1).
AMEC was retained in early 2010 to develop the Caariaco Norte Prefeasibility Study.
The purpose of this Prefeasibility Progress Report is to describe the status of the project
as of December 2010; to provide an economic evaluation of the projects potential to
justify future expenditures; to identify areas requiring further study; and to plan future work
programs. To assist in meeting these objectives, this progress report includes a capital
cost estimate with an accuracy of 20%.
Figure 2-1:
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General Location Map
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2.2
Terms of Reference
Candente is evaluating the development of the Caariaco Norte project in Per.
Candente commissioned AMEC to prepare this report with input from its subconsultants
as listed below. The progress report addresses the status of work for mineral resources,
the mine plan, processing and support facilities, site access, transportation of materials
and equipment, port requirements, environmental permitting, reclamation, closure,
construction, project implementation, capital and operating costs, and financial evaluation.
AMEC Americas Limited and Affiliate AMEC Earth & Environmental (AMEC)
overall study compilation
geologic modelling
mine planning
flowsheet development
design of process facilities
design of site support facilities
development of logistics program
equipment pricing, excluding equipment associated with the port facility
quantity estimation for major civil and structural components
capital cost estimates for mine, process facilities, and on-site facilities
operating cost estimates for mining, process, transport, and administration, excluding
the port
concentrate and acid marketing study (subconsultant Neil S. Seldon & Associates
Ltd.)
financial evaluation
development of project plan and schedule
specification and management of environmental and socioeconomic baseline studies,
including impact analysis
permitting requirements
reclamation planning
baseline environmental data
geotechnical engineering to support the mine pit and tailings management facility
(TMF)
site water management
mine waste rock management
design of the TMF
closure cost estimate.
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Candente and Affiliates

specification and management of metallurgical testwork program
proof of concept testing for roasting facility.
Ausenco Sandwell
design of port facilities.
2.3
Project Background and History

Copper was first discovered at Caariaco Norte in the 1970s during a regional exploration
program carried out by the Peruvian Servicio Nacional de Geologa y Minera
(INGEMMET), in cooperation with a British Geological Survey team (Wilson, 1999)1.
Phases of exploration and drilling in the 1970s and 1990s were sporadic until Candente
initiated its exploration efforts in 2004.
2.3.1
INGEMMET
INGEMMET identified four centres of alteration and mineralization during exploration in
1971. This included stream sediment sampling and a detailed geochemical study of the
Ro Caariaco valley. Geological mapping at 1:25,000 defined 9 km2 of alteration and
mineralization. This area was then investigated more closely by means of soil and rock
chip sampling, detailed surficial mapping, and diamond drilling.
In 1973 INGEMMET carried out a total of 1,500 m of drilling in the Caariaco Norte zone,
consisting of five separate 300 m deep vertical holes. Induced Polarization (IP)
geophysical surveys were completed across parts of the Caariaco Norte zone the
following year.
2.3.2
Placer Dome
In 1994, Placer Dome Exploration Inc. (Placer Dome) optioned the Caariaco property
from the Peruvian Government and carried out a more detailed geological mapping and
rock-chip sampling program. Some 2,200 m of trenching and 80 test pits were dug
across the Caariaco Norte and Caariaco Sur zones; this led to petrographic studies
and a re-interpretation of INGEMMETs geophysical surveys. In the Caariaco Norte
zone, three inclined diamond drill holes, totalling 854 m, were completed in 1995. Placer
Dome dropped its option in 1997.
Wilson, A.J., 1999: Caariaco Project, Lambayeque, Northern Per: Unpublished internal geological report
prepared for Billiton Exploration and Mining Per B.V.
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2.3.3
Billiton
Billiton Exploration and Mining Per B.V. (Billiton) optioned the Caariaco property from
the Peruvian Government in 1999 and completed an access road to Billitons exploration
camp at Caariaco Sur. The exploration program included geological mapping,
systematic soil and chip sampling, and both IP and ground magnetic geophysical surveys.
This was followed by an eight-hole diamond drilling program that included three holes
(555.7 m) in the Caariaco Norte zone, three holes (472.5 m) in the Caariaco Sur zone,
and two (+100 m) in the Quebrada Verde zone. Petrographic samples were collected
and studied, and sequential leach testing was carried out on drill core samples from
Caariaco Norte. IP and ground magnetic surveys were also undertaken over the
Caariaco Sur and Quebrada Verde zones. Billiton dropped its option in 2000.
The prevailing copper price (less than 80 cents per pound from 1997 to 2001) and difficult
option deals with the Peruvian Government were the catalysts to both Placer Dome and
Billiton dropping their options on the property.
2.3.4
Candente Copper Corp.

In February 2002, Candente Copper Corp. (Candente), through the Peruvian subsidiary
Caariaco Copper Per S.A. (CCPSA) (formerly Exploraciones Milenio S.A., EMSA),
acquired 100% ownership of the Caariaco property at auction. Following the auction,
and prior to completing financing for the property, Candente engaged Knight Pisold to
conduct a fatal flaw analysis of the property, to identify potential locations for leach pads
and waste stockpiles, and to prepare an overview of the permit requirements for the
project.
CCPSA commenced exploration on the property in January 2004 and drilled a total of 218
holes across the Caariaco Norte zone to delineate the current resource, as follows:
12 holes for 2,647 m in 2004
24 holes for 7,388 m in 2005
46 holes for 15,984 m in 2006
123 holes for 31,337 m in 2007
13 holes for 3,570m in 2008.
Other work was also undertaken:
During 2004, programs for geological mapping, prospecting, ground magnetic
geophysics, rock-chip sampling, petrographic studies, bulk sampling for leach column
testing, and re-logging of existing drill core were carried out.
In 2005, additional detailed geological mapping programs were undertaken and
drill core was sampled and re-assayed. Eight holes were analyzed by ICP and 36
holes were fire-assayed for gold.
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Through 2006, the geological mapping programs continued, survey beacons were
established, and bulk samples were taken for leach column testing.
Diamond drilling continued from March until mid-September 2008 for metallurgical
sample procurement, geotechnical drilling, and deep resource delineation.
Candente commissioned NI 43-101-compliant technical reports authored by
James A. Currie in 2004, James McCrea in 2005 and May 2006 (modified in June
2006), Merit International Consultants Ltd. in June 2006, and Minefill Services in
January 2007. Candente also commissioned a Preliminary Economic Assessment
(PEA) by SRK Consulting (Canada) Inc. (SRK) in November 2008.
2.3.5
Historical Resource Estimates

INGEMMET, Placer Dome, and Billiton compiled resource estimates for the Caariaco
Norte zone:
INGEMMET, based on two drill hole intersections, estimated resources of 8.84 Mt of
probable resource at an average grade of 0.78% Cu and 0.001% Mo, and 380.6 Mt of
possible resource at a variable grade of between 0.45% and 0.80% Cu and 0.001% to
0.003% Mo.
Placer Dome believed the Caariaco property had the potential to host in excess of
800 Mt grading better than 0.5%, of which 365 Mt was estimated in Caariaco Norte.
Billiton concluded that the Caariaco Norte zone contained a minimum of 320 Mt at
an average grade of 0.45% Cu (based on analysis of a 1,000 m x 600 m x 200 m
block) and an average specific gravity of 2.7. It was noted, however, that poorly
constrained zones of >0.6% Cu existed within the block and totalled approximately
19% of the overall block (60 Mt).
The resource estimates outlined above are included solely for completeness. They do
not comply with NI 43-101 standards, and the validity of the results is not confirmed.
2.4
Property Location, Description, and Access
2.4.1
Property Location
The Caariaco property is located at latitude 0605' south and longitude 7917' west, in
the Western Cordillera of the Peruvian Andes, in the Caaris District of the Province of
Ferreafe, Department of Lambayeque of Northwestern Per (map sheet 13-E
Incahuasi). The property is approximately 700 km northwest of Lima and approximately
110 km northeast of the city of Chiclayo in Per (Figure 2-1).
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2.4.2
Description
2.4.2.1
Physiography
The Caariaco Norte project area and mineral resource lie along the eastern side of the
continental divide at elevations ranging between 2,700 and 3,600 masl. The topography
varies from steep incised valleys at lower elevations to open grassy highlands
(Figure 2-2). Within the mineral resource area, the topography is challenging, with fingers
of sub tropical forests extending up the small valleys. These forests transition into open
grasslands and broad valleys as the elevation increases (>3,000 masl) to the north of the
main mineralized zone.
Figure 2-2:
View of Caariaco Project Mineral Resource Area
Vegetation at higher elevations consists mainly of ichu and other types of natural grasses
used for livestock grazing. Localized agriculture plots for subsistence farming are
maintained in the forested valleys.
The community of Caaris, within temperate highlands north of the mineral resource area,
is agriculturally based. The main crops are potatoes, maize, and a variety of vegetables
and herbs.
2.4.2.2
Climate
The property crosses several climatic zones and temperatures may vary by up to 10C
with altitude from the lower forested valleys to the upper grassy ridges. Annual summer
and winter temperatures range between 3C and 20C. The region receives between
830 mm and 1,700 mm of rain each year, with the wet season extending from November
to March. Periods of precipitation are generally of short duration, from 1 to 2 hours.
The prevailing winds at the mine site are from the southeast and are generally light to
moderate, with maximum gusts up to 90 km/h. Climatic conditions are not expected to
affect ground-based operations, although helicopter-supported activities and four-wheel
drive roads could be less functional during the rainy seasons. Therefore, mine operations
have been scheduled year-round, 24 h/d, with no allowance for shutdowns due to
weather-related events.
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2.4.3
Access
The Caariaco property is accessible by road from Lima via the city of Chiclayo
(Figure 2-3). Either the Pan-American Highway (700 km, 11-hour trip) or one of the thrice
daily commercial airline flights can be taken from Lima to Chiclayo. The route from
Chiclayo to the Caariaco property is currently a 149 km, 6-hour trip along mostly
unimproved roads via Incahuasi. The road is not currently suitable for heavy trucks, and
there is no landing strip on the property. Road travel time from Chiclayo to the Caariaco
site is summarized in Table 2-1.
Figure 2-3:
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Existing Caariaco Property Access Routes and Infrastructure
Page 2-7

Table 2-1:
Existing Routes from Chiclayo to Caariaco

Distance
(km)
Road/Trail/Type
Chiclayo Motupe Pucara

Pucara Caaris
Caaris Caariaco
260
24
6
Paved Road
Unimproved Road
Horse Trail
Total
290
Route
Chiclayo H. da. Batan Grande

H. da. Batan Grande Incahuasi Huyllurpampa
Huyllurpampa Road Terminus
Road Terminus Caariaco
Total
50
67
30
2
Paved Road
Secondary Gravel Road
Drivable Track
4x4 Access Road to camp
149
Chiclayo Motupe
Motupe Road Terminus
Road Terminus Caariaco
81
97
2
Total
Paved Road
Unimproved Road
4x4 Access Road to Camp
180
Note: After Currie (2004) and van Egmond (2006).
2.4.4
Infrastructure
At present the Caariaco property has a fully established camp and catering facility for
100 persons. Core-handling facilities and weather stations are also in place on site. Core
storage and detailed logging are done at Candentes secure facility in Chiclayo.
The camp is situated near Ro Caariaco and has ample water supply. Electricity is
generated on site. Before project operations begin, a 220 kV overhead transmission line
will be installed from the local utility substation at Carhuaquero, 57 km south of the mine
site.
Peruvian freight forwarders have recommended three ports that could be used for
construction purposes: Callao, Paita, and Salaverry. These are discussed in more detail
in Section 12, Project Execution Plan, of this report.
2.4.5
Local Resources
Per has a long history of mining. Consequently, mining professionals and machine
operators are generally available in most population centres. Candente is expected to be
able to source Peruvian personal for virtually all mine administration and operation
requirements.
Supplies and other normal services are available at Chiclayo. Specialist exploration
services, such as drilling and geophysical and geochemical analyses, are usually
contracted out of Lima.
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2.5
Legal Status
2.5.1
Land Tenure
The Caariaco property comprises a total area of 20,590 ha in 26 concessions as listed in
Table 2-2. Three porphyry copper zones, Caariaco Norte, Caariaco Sur, and
Quebrada Verde, have been identified on the Caariaco property. Candente, through its
Peruvian subsidiary CCPSA, holds a 100% interest in the Caariaco property. Figure 2-4
is a plan of the concessions in UTM co-ordinates (PSAD 56, Zone 17).
2.5.2
Surface Rights
It is a requirement of the Peruvian Government that any property developer either
purchase the surface rights, or make an appropriate agreement with the surface rights
owner, for access to a property. The holders of mining concessions are protected under
the Peruvian Constitution and Civil Code, but their concession rights do not confer
ownership of the land. Thus, the owner of a mining concession must deal with the
registered land owner to obtain the right of access to fulfill the production obligations
inherent in the concession grant. All transactions and contracts pertaining to a mining
concession must be registered with the Public Mining Registry in the event of subsequent
disputes in law. The issue of land tenure continues to be of significance in Per, not least
because the national cadastral system for agricultural land ownership is not always
accurate.
The owner of the surface rights is the Comunidad Campesina San Juan Bautista de
Caaris (the Campesina). Under Peruvian Law 24656, Candente is required to have a
valid agreement with the Campesina to undertake exploration. The previous agreement
expired in December 2009, and Candente is in the process of negotiating a new
three-year access agreement.
2.5.3
Mining Law
The General Mining Law of Per is administered by the Ministry of Energy and Mines
(Ministerio de Energa y Minas, MEM or Ministry). The law was changed in the
mid-1990s to encourage development of the countrys considerable mineral resources.
The law defines and regulates different categories of mining activity according to the
stage of a projects development. Details of the law were consolidated in the Single
Revised Text of the General Mining Law of 1992 (Government document D.S. No. 01492-EM, 19926).
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Table 2-2:
Caariaco Concessions held by Candente Copper Corp.

(as of 29 October 2010)
*Note: Area granted may be less than the area applied for due to overlapping with pre-existing concessions.
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Figure 2-4:
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Caariaco Concessions held by Candente Copper Corp. (as of 29 October 2010)
Page 2-11

2.5.4
Mineral Concession Law

Ownership of mineral claims is controlled by mining concessions that are established
using UTM coordinates to define areas of interest measured in hectares. Individual
concessions must have a minimum size of 100 ha and a maximum size of 1,000 ha. New
concessions must be orientated north-south; pre-existing concessions are based on the
punto de partido system and can be of any orientation. Mining titles are irrevocable and
perpetual, as long as the required annual maintenance fees (derecho vigencia) are up to
date and fully paid to MEM by 30 June each year following the granting of a concession.
The fees are paid in advance. The annual fee for metallic mineral concessions is $3/ha
for each concession that is either actually acquired or pending (petitorio). The concession
holder must reach a minimum level of commercial production of $100/ha in mineral sales
within eight years of the concession being granted. If there is no production income after
eight years, then the annual fee increases to $4/ha until the 14th year and to $10/ha
thereafter.
2.5.5
Exploitation
The concession holder must sustain a minimum level of annual commercial production
greater than $100/ha in gross sales before the end of the 6th year following the granting of
the concession. If the concession has been put into production within the six-year period,
then the annual rental fee remains the same up to the beginning of Year 9, when it
increases to $4/ha for Years 9 to 14. The annual fee rises to $10/ha for each year
thereafter. If the concession has not been put into production within a six-year period,
then the annual rental increases from the first semester of the 7th year to $9 ($3 for
derecho vigencia, plus a $6 penalty) until the minimum production level is met. If, by the
start of the 12th year from granting a concession the minimum production level is not been
achieved, then the annual fee increases to $23/ha ($3 for derecho vigencia, plus a $20
penalty).
A concession holder can, however, be exonerated from paying penalties if he/she can
demonstrate that at least ten times the penalty for the total concession was invested
during the previous year. The investment must be documented, and it must be
accompanied by a copy of the relevant annual tax statement (declaracin jurada de
impuesto a la renta) and payment of the annual fees. A concession will terminate if the
annual rental is not paid either for three years in total over the period that the concession
is held, or for two consecutive years over the period the concession is held.
2.5.6
Environmental Regulations
The environment and environmental compliance are reported to be key issues for the
Peruvian Government, especially with regard to mining and processing operations. The
current legislation (Regulation on Protection of Environment DSN No. 016-93) was
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updated in 2003. According to the available information (source: www.minem.gob.pe),

The General Mining Law of Per can require concession holders to prepare:
an Environmental Evaluation (Evaluacin Ambiental, or EA) for mining exploration
programs
an Environmental Impact Assessment (Estudio de Impacto Ambiental, or EIA) if either
renewed mining or milling activity is to take place or existing operations are to be
expanded by more than 50%
an Environmental Management Plan that establishes a companys environmental
compliance plan for mining and milling operations
a Mine Closure Plan (Plan de Cierre) prior to mining construction and operation.
2.5.7
Environmental Impact Assessment (EIA)

When applying to receive a new mining or processing concession, to increase the size of
existing processing operations by more than 50%, or to execute any other mining project,
an EIA must be submitted to MEM:
The purpose of an EIA is to identify environmental problems that could arise as a
result of mining or metallurgical activity. (An EIA is prepared instead of a Programa
de Adecuacin y Manejo Ambiental, or PAMA.)
An EIA must indicate the applying companys intention to spend at least 1% of annual
sales on environmental expenditures.
The Ministry is required to approve/disapprove an EIA within 180 days of its
submission.
If a response is not received within 45 days, then the EIA may be assumed to be
(automatically) disapproved.
2.5.8
Environmental Management Plan (EMP)

An EMP establishes a companys environmental compliance plan. The scope of
environmental compliance includes considerations of the impact on the environment of
mining disturbance, capital investments in environmental control, monitoring systems,
waste management control, and site restoration. This is part of the EIA and needs to be
revised annually and submitted to the DGAAM if any change is required.
2.5.9
Permits
The Caariaco property does not have any known environmental liabilities. A Class B EA
was conducted by GEMA Consultants (GEMA) for Candente, as required in law when
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trenching, drilling, or other major work is performed. GEMA also conducted a Class C EA
and obtained a Class C Permit from the Peruvian government for advanced drilling and
exploration work at Caariaco.
Candente is carrying out environmental baseline studies and monitoring. A social and
EIA study framework has been prepared and the work is in progress. Studies include
determining the geochemical characteristics of the waste and ore grade rock, assessing
the localized mine area for a potential water supply, and reviewing social and community
conditions.
Once these studies are completed to levels in accordance with the requirements of the
Peruvian Government and meet the guidelines set out in the Equator Principles, then a
process of obtaining all the required environmental, construction, and mining permits will
be undertaken. The main permit requirements identified to date for the start of
construction and mining operations are summarized below. These will be investigated
more fully for the feasibility study along with plans and procedures to obtain the permits.
Environmental Studies and Permits (EIA)
Water Authorization
Mining Plan and Closure Plan
Procedure of Real Servitude
Construction Permit
Labour Permits
Ground Water Use Licence
Transportation deed for controlled substances and products
Authorization to Start Operation.
2.6
Caariaco Trade-off Studies

A number of trade-off studies were carried out during the study. A brief summary of each
is provided below; the full reports are included in Appendix A.
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2.6.1
Conveying Waste Rock to Tailings Area for Embankment Construction

This report (Trade-off #1) investigated the opportunity to transport waste rock from the
mine to the TSF area for use in the tailings embankment construction. Three scenarios
were considered: trucking the waste to the WRMF, conveying waste to the TMF through
the ridge to the northeast of the pit, with the tailings pipelines following the conveyor
route; and conveying waste to the TMF with the tailings pipelines following the road.
A plan and high-level cost estimate was developed for each scenario. The cost
comparison showed that conveying waste to the tailings area and using the material for
embankment dam construction had an economic advantage. This option was
recommended, but the decision was dependent on the final agreed construction
technique for the embankment over the life of the mine. A further trade-off study (see
Trade-off #3 below) found that using cyclone sand to construct the embankment was the
preferred option, and so the base case, trucking waste to the waste rock management
facility, has been adopted has been used in this study.
2.6.2
Plant Site Relocation

This report investigated the possibility of relocating the plant site to the west, over the
ridge line, assuming that waste rock would be conveyed through a tunnel to the tailings
area and used for the tailings embankment construction. Only two sites were considered:
one just to the northeast of the pit (base case), and another the opposite end of the
tunnel, with both ore and waste being conveyed through a slightly larger tunnel.
The main benefits for relocating west of the ridge were flatter terrain and a more
centralized facility arrangement with larger laydown areas for ease of construction. The
costs developed for the preceding waste rock study and combined with these benefits it
was recommended that the relocation option be pursued. Upon further assessment, once
Trade-off Study #3 (below) was completed and there was no need to convey the waste
rock to the tailings dam, it was agreed the base case site northeast of the pit was
preferred.
2.6.3
Tailings and Waste Dump Alternatives

This report (Trade-off #3) compared potential storage of tailings at two sites: Site 8A, a
tributary in the upper reaches of the Quebrada Yerma, and Site 8B, within the Ro
Caariaco valley, near the camp site. The study also considered alternative embankment
construction materials, such as waste rock, borrowed material, or cyclone sands;
downstream or centreline construction techniques; thickening the tailings for disposal; the
location of the WRMF; and diversion of Ro Caariaco.
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The evaluation found no significant reduction in capital cost associated with constructing
at Site 8B, given its proximity to the process facilities. Considering the potential
socioeconomic risks associated with this location, Site 8A was favoured.
The assessment also concluded that, pending cyclone sand ABA testing, the relatively
low cost of the cyclone sand approach using centreline construction for the tailings
embankment, was preferred.
2.6.4
Plant Throughput
Trade-off #4 involved a comparative scoping level assessment to identify logical plant
throughput levels based on known information, then performing an NPV analysis of the
various options considering Capex, Opex, and mine life for each case.
Design criteria and a cost and performance model of the concentrator and concentrate
treatment facility were developed to analyze throughput. Grind size was an important
parameter. A grind size of 150 to 200 m was identified as the most appropriate for
economical copper recovery.
A preliminary, qualitative analysis of suitable mining equipment sizes and numbers was
conducted, and a very high level mine plan was then developed for the various
throughput options. Five different production scenarios were assessed (66, 75, 83, 105,
and 120 kt/d), and the Whittle model used to prepare the mine schedule was applied to
perform a financial analysis.
From the point of view of cost analysis, the options were similar. The 83 kt/d rate at
150 m grind was adopted for several reasons: it provided process flexibility for future
upgrade to higher tonnages; the grind size could potentially require less up-front capital
and is more inline with industry operational benchmarks; it allows the use of a partial
roasting facility of a similar size (and consequently cost) as those currently being
constructed elsewhere; and the waste volume increased incrementally on raising the
throughput to 105 kt/d.
As the prefeasibility study progressed, the updated geological model was completed.
Prior to the new resource being issued, the grind recovery testwork results were received
indicating that 200 m would be economical. AMEC modelled the tonnage increase this
would provide, i.e., 95,000 t/d, which prompted dual reagent suite testwork to maintain
recovery and AMEC mining to confirm that the new resource would support this tonnage
with the same mine design criteria and mine life.
Consequently, the design throughput was changed to 95,000 t/d.
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2.6.5
Location of Waste Rock Management Facility

This report (Trade-off #5) evaluated options for the location of the WRMF and subsequent
diversion of the Ro Caariaco. This involved a high-level estimate of capital and
operating costs. Three scenarios were considered: Option 1, a WRMF in the Rio
Caariaco valley with a diversion channel and 80 m high diversion dam; Option 2, also a
WRMF in the Ro Caariaco valley but with a smaller footprint, a diversion tunnel, and a
15 m high diversion dam; and Option 3, no WRMF in the Ro Caariaco valley, where the
waste rock would be conveyed through in the ridge to the northwest.
Although Option 2 had significant advantages for construction and closure, the capital
cost and NPV of Option 1 was lower. It was therefore recommended that the WRMF be
constructed in the Ro Caariaco valley with a diversion channel with an 80 m high
diversion dam. This concept was adopted for the study and has been incorporated into
the overall designs and cost estimates.
2.6.6
Options for Reduction of Arsenic in Caariaco Norte Concentrate

Trade-off #6 assessed various technologies for reducing arsenic in the concentrates to
marketable, ideally non-penalty, levels. The options were partial roasting, alkaline
sulphide leaching, and the CESL process. Partial roasting was found to be the most
economical approach.
2.6.7
In-Pit Crushing and Conveying

This report (Trade-off #7) was prepared by Candente to assess the option of in-pit
crushing and conveying of both ore and waste rock, versus hauling ROM material to the
edge of the pit, where a crusher would be stationed permanently. Crushed material
would then be conveyed to the mill.
In-pit crushing increases the up-front capital cost in equipment and infrastructure
compared to the additional ongoing cost of diesel for pit-rim crushing. Based on a review
of the pit design and on experience, it was decided that the manner of pit development
does not warrant the installation of an in-pit crushing and conveying system, and a
permanent crusher station on the pit rim was selected.
2.6.8
Pit Electrification
This report (Trade-off #8) was prepared by Candente to assess the use of electrical
versus diesel-powered equipment for production drilling and loading in both ore and
waste areas.
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An NPV and sensitivity analysis found that electrification had higher up-front capital costs
for equipment and power distribution, but savings in ongoing operating costs. The size of
pit favoured electrification.
2.6.9
Concentrate Pipeline Option Evaluation

AMEC prepared this report (TDM-007) to compare the truck and pipeline options for
transporting concentrate from the mine to a new port at Eten. Costs for each option were
prepared, and an economic analysis was carried out for each case. Other considerations
such as safety, health, and environmental requirements were assessed at a preliminary
high level. At this stage, increases in traffic flow and potential disruptions due to heavy
rain and washouts are considered to have only minor impact.
Based upon the marginal pre-tax cash flows, without allowances for escalation or
inflation, the trucking option had the better net present value and was adopted for this
study.
2.7
Report Organization and Conventions

This report is presented in 19 numbered text sections and Appendices A through L.
Depending on length and practicality, some of the appendices are provided in electronic
format only.
Where relevant, bibliographic and report references are listed at the end of each section.
All monetary values are expressed in third quarter 2010 U.S. dollars.
Unless otherwise noted, metric units of measurement are used throughout, usually in
abbreviated form. For reference, the following list includes both metric and Imperial units
of measurement.
Standard Abbreviations for Units of Measure
Above mean sea level .................................................................................................
Ampere .......................................................................................................................
Annum (year) ..............................................................................................................
Billion ..........................................................................................................................
Billion years ago..........................................................................................................
British thermal unit ......................................................................................................
Candela.......................................................................................................................
Centimetre ..................................................................................................................
Cubic centimetre .........................................................................................................
Cubic feet per second .................................................................................................
Cubic foot ....................................................................................................................
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amsl
A
a
G
Ga
Btu
cd
cm
3
cm
3
ft /s or cfs
3
ft

Cubic inch ...................................................................................................................

Cubic metre.................................................................................................................
Cubic yard ...................................................................................................................
Day .............................................................................................................................
Days per week ............................................................................................................
Days per year (annum) ...............................................................................................
Dead weight tonnes ....................................................................................................
Decibel adjusted .........................................................................................................
Decibel ........................................................................................................................
Degree ........................................................................................................................
Degrees Celsius..........................................................................................................
Degrees Fahrenheit ....................................................................................................
Diameter .....................................................................................................................
Dry metric ton..............................................................................................................
Foot .............................................................................................................................
Gallon (US) .................................................................................................................
Gallons per minute (US) .............................................................................................
Gigajoule .....................................................................................................................
Gram ...........................................................................................................................
Grams per litre ............................................................................................................
Grams per tonne .........................................................................................................
Greater than ................................................................................................................
2
Hectare (10,000 m ) ....................................................................................................
Hertz ...........................................................................................................................
Horsepower.................................................................................................................
Hour ............................................................................................................................
Hours per day .............................................................................................................
Hours per week ...........................................................................................................
Hours per year ............................................................................................................
Inch .............................................................................................................................
Joule ...........................................................................................................................
Joules per kilowatt-hour ..............................................................................................
Kelvin ..........................................................................................................................
Kilo (thousand) ............................................................................................................
Kilocalorie ...................................................................................................................
Kilogram ......................................................................................................................
Kilograms per cubic metre ..........................................................................................
Kilograms per hour......................................................................................................
Kilograms per square metre ........................................................................................
Kilojoule ......................................................................................................................
Kilometre .....................................................................................................................
Kilometres per hour.....................................................................................................
Kilonewton ..................................................................................................................
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in
3
m
3
yd
d
d/wk
d/a
dwt
dBa
dB
C
F
dmt
ft
USgal
USgpm
GJ
g
g/L
g/t
>
ha
Hz
hp
h
h/d
h/wk
h/a
"
J
J/kWh
K
k
kcal
kg
3
kg/m
kg/h
2
kg/m
kJ
km
km/h
kN

Kilopascal....................................................................................................................
Kilovolt ........................................................................................................................
Kilovolt-ampere ...........................................................................................................
Kilovolts.......................................................................................................................
Kilowatt .......................................................................................................................
Kilowatt hour ...............................................................................................................
Kilowatt hours per short ton (US) ................................................................................
Kilowatt hours per tonne (metric ton) ..........................................................................
Kilowatt hours per year ...............................................................................................
Kilowatts adjusted for motor efficiency ........................................................................
Less than ....................................................................................................................
Litre .............................................................................................................................
Litres per minute .........................................................................................................
Megabytes per second ................................................................................................
Megapascal.................................................................................................................
Megavolt-ampere ........................................................................................................
Megawatt ....................................................................................................................
Metre ...........................................................................................................................
Metres above sea level ..............................................................................................
Metres per minute .......................................................................................................
Metres per second ......................................................................................................
Metric ton (tonne) ........................................................................................................
Micrometre (micron) ....................................................................................................
Microsiemens (electrical) ............................................................................................
Miles per hour .............................................................................................................
Milliamperes ................................................................................................................
Milligram......................................................................................................................
Milligrams per litre .......................................................................................................
Millilitre ........................................................................................................................
Millimetre.....................................................................................................................
Million ..........................................................................................................................
Million cubic yards .......................................................................................................
Million gallons .............................................................................................................
Million gallons per minute............................................................................................
Million tonnes ..............................................................................................................
Minute (time) ...............................................................................................................
Month ..........................................................................................................................
More than ....................................................................................................................
Newton ........................................................................................................................
Newtons per metre......................................................................................................
Ohm (electrical)...........................................................................................................
Ounce .........................................................................................................................
Parts per billion ...........................................................................................................
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kPa
kV
kVA
kV
kW
kWh
kWh/st
kWh/t
kWh/a
kWe
<
L
L/min
Mb/s
MPa
MVA
MW
m
masl
m/min
m/s
t
m
s
mph
mA
mg
mg/L
mL
mm
M
3
Myd
USMgal
USMgpm
Mt
min
mo
>
N
N/m
oz
ppb

Parts per million ..........................................................................................................

Pascal (newtons per square metre) ............................................................................
Pascals per second.....................................................................................................
Percent........................................................................................................................
Percent moisture (relative humidity) ............................................................................
Phase (electrical) ........................................................................................................
Pound(s) .....................................................................................................................
Pounds per square inch ..............................................................................................
Power factor ................................................................................................................
Quart ...........................................................................................................................
Revolutions per minute ...............................................................................................
Second (plane angle) ..................................................................................................
Second (time)..............................................................................................................
Short ton (2,000 lb) .....................................................................................................
Specific gravity ............................................................................................................
Square centimetre.......................................................................................................
Square foot .................................................................................................................
Square inch .................................................................................................................
Square kilometre .........................................................................................................
Square metre ..............................................................................................................
Thousand tonnes ........................................................................................................
Tonne (1,000 kg).........................................................................................................
Tonnes per day ...........................................................................................................
Tonnes per hour..........................................................................................................
Tonnes per year ..........................................................................................................
Total dissolved solids ..................................................................................................
Total suspended solids ...............................................................................................
Volt ..............................................................................................................................
Week ...........................................................................................................................
Weight/weight .............................................................................................................
Wet metric ton .............................................................................................................
Yard ............................................................................................................................
Year (annum) ..............................................................................................................
Year (US) ....................................................................................................................
Project No.: 165270

11 March 2011
Page 2-21
ppm
Pa
Pa/s
%
% RH
Ph
lb
psi
pF
qt
rpm
"
s
st
SG
2
cm
2
ft
2
in
2
km
2
m
kt
t
t/d
t/h
t/a
TDS
TSS
V
wk
w/w
wmt
yd
a
yr

CONTENTS
3.0
GEOLOGY .............................................................................................................3-1
3.1
Summary.....................................................................................................3-1
3.2
Project History .............................................................................................3-4
3.2.1
Comment on Project History ..........................................................3-6
3.3
Exploration ..................................................................................................3-6
3.3.1
Grids and Surveys .........................................................................3-7
3.3.2
Geological Mapping.......................................................................3-8
3.3.3
Geochemistry ................................................................................3-8
3.3.4
Pits and Trenches .......................................................................3-10
3.3.5
Geophysical Surveys ...................................................................3-10
3.3.6
Geotechnical and Hydrogeology..................................................3-10
3.3.7
Other Studies ..............................................................................3-10
3.3.8
Exploration Potential ...................................................................3-11
3.3.9
Comment on Exploration .............................................................3-11
3.4
Geological Setting .....................................................................................3-11
3.4.1
Regional Geology ........................................................................3-11
3.4.2
Deposit Model .............................................................................3-14
3.4.2.1
Comment on Deposit Model ........................................3-16
3.4.3
Caariaco Norte Deposit Geology ...............................................3-16
3.4.3.1
Lithologies ...................................................................3-17
3.4.3.2
Alteration .....................................................................3-19
3.4.3.3
Structures....................................................................3-23
3.4.4
Prospects ....................................................................................3-23
3.4.4.1
Caariaco Sur .............................................................3-24
3.4.4.2
Quebrada Verde..........................................................3-25
3.4.5
Comment on Geological Setting ..................................................3-25
3.5
Mineralization ............................................................................................3-25
3.5.1
Comment on Mineralization .........................................................3-27
3.6
Drilling .......................................................................................................3-27
3.6.1
Drill Contractors ..........................................................................3-32
3.6.2
Drill Methods ...............................................................................3-33
3.6.3
Geological Logging......................................................................3-33
3.6.4
Collar Surveys .............................................................................3-34
3.6.5
Down-hole Surveys .....................................................................3-34
3.6.6
Recovery .....................................................................................3-34
3.6.7
Caariaco Norte Drilling ..............................................................3-34
3.6.8
Comment on Drill Programs ........................................................3-35
3.7
Sample Preparation ..................................................................................3-36
3.7.1
Geochemical Sampling ...............................................................3-36
3.7.2
Pit and Trench Sampling .............................................................3-36
3.7.3
Core Sampling ............................................................................3-36
3.7.4
Quality Assurance and Quality Control ........................................3-36
3.7.5
Density/Specific Gravity...............................................................3-37
Project No.: 165270

11 March 2011
TOC i

3.8
3.9
3.10
3.11
3.12
3.13
3.14
3.7.6
Comment on Sample Preparation ...............................................3-37
Sample Preparation, Analyses, and Security.............................................3-38
3.8.1
Analytical Laboratories ................................................................3-38
3.8.2
Sample Preparation and Analysis ................................................3-39
3.8.2.1
Candente ....................................................................3-39
3.8.3
Quality Assurance/Quality Control Programs...............................3-40
3.8.3.1
Candente ....................................................................3-41
3.8.4
Databases ...................................................................................3-42
3.8.5
Sample Security ..........................................................................3-43
3.8.6
Sample Storage ..........................................................................3-43
Comment on Sample Preparation, Analyses, and Security .......................3-43
Data Verification ........................................................................................3-44
3.10.1 Currie, 2004 ................................................................................3-44
3.10.2 MineFill, 2007 ..............................................................................3-45
3.10.3 SRK, 2008 ...................................................................................3-45
3.10.4 AMEC, 2010 ................................................................................3-46
3.10.5 Comment on Data Verification .....................................................3-46
Mineral Resource Estimation.....................................................................3-47
3.11.1 Database .....................................................................................3-47
3.11.2 Topography .................................................................................3-47
3.11.3 Models ........................................................................................3-48
3.11.4 Composites .................................................................................3-49
3.11.5 Exploratory Data Analysis ...........................................................3-50
3.11.6 Variography .................................................................................3-52
3.11.7 Grade Capping ............................................................................3-52
3.11.8 Estimation Methodology ..............................................................3-53
3.11.9 Density ........................................................................................3-54
3.11.10 Model Validation ..........................................................................3-55
3.11.11 Mineral Resource Classification ..................................................3-56
Assessment of Reasonable Prospects of Economic Extraction .................3-56
Mineral Resource Statement .....................................................................3-58
3.13.1 Comment on Mineral Resource Estimation .................................3-60
References................................................................................................3-60
TABLES
Table 3-1:
Table 3-2:
Table 3-3:
Table 3-4:
Table 3-5:
Table 3-6:
Table 3-7:
Table 3-8:
Thomas P. Geo., Effective Date 8 November 2010) ..................................................... 3-3
Mineral Resource Statement for Caariaco Norte at Various Cutoffs (David
Thomas P. Geo., Effective Date 8 November 2010) ..................................................... 3-4
Exploration Summary Table........................................................................................... 3-6
Project Stratigraphic Column ....................................................................................... 3-17
Drill Summary............................................................................................................... 3-30
Drill Hole Intercept Summary Table ............................................................................. 3-35
Specific Gravity Values Used in 2010 Mineral Resource Estimate ............................. 3-37
Summary of Drill Data used for Caariaco Norte Resource Estimate ......................... 3-47
Project No.: 165270

11 March 2011
TOC ii

Table 3-9:
Table 3-10:
Table 3-11:
Table 3-12:
Table 3-13:
Table 3-14:
Table 3-15:
Table 3-16:
Table 3-17:
Table 3-18:
Table 3-19:
Description of Lithological Units ................................................................................... 3-48

Domain Definition ......................................................................................................... 3-49
Contact Matrix Defined for Copper Domains ............................................................... 3-52
Contact Matrix Defined for Gold Domains ................................................................... 3-52
Outlier Thresholds for Copper, Gold, and Silver .......................................................... 3-53
Estimation Parameters for All Elements ...................................................................... 3-54
Summary of Statistics Comparing OK and NN Estimates ........................................... 3-56
Optimization Parameters for Resource Pit Shell ......................................................... 3-57
Copper Process Recoveries ........................................................................................ 3-57
Marginal Cutoff Calculation .......................................................................................... 3-58
Thomas P. Geo., Effective Date 8 November 2010) ................................................... 3-58
Table 3-20: Mineral Resource Statement for Caariaco Norte at Various Cutoffs (David
Thomas P. Geo., Effective Date 8 November 2010) ................................................... 3-59
FIGURES
Figure 3-1:
Figure 3-2:
Figure 3-3:
Figure 3-4:
Figure 3-5:
Figure 3-6:
Figure 3-7:
Figure 3-8:
Figure 3-9:
Figure 3-10:
Figure 3-11:
Figure 3-12:
Figure 3-13:
Figure 3-14:
Figure 3-15:
Geochemical and Ground Geophysical Anomalies, Caariaco Sur, and Quebrada

Verde .............................................................................................................................. 3-9
Regional Geology Map ................................................................................................ 3-12
Regional Stratigraphic Column .................................................................................... 3-13
Geological Map, Caariaco Norte ................................................................................ 3-20
Geological Drill Section 9,326,300N ............................................................................ 3-21
Geological Drill Section 690,800E ............................................................................... 3-22
Prospect Location Plan and Geological Map ............................................................... 3-24
Example Vertical Section (9,326,300N) with 15 m Composite Coloured by Cu (%)
Ranges Overlapping Lithological Interpretation ........................................................... 3-28
Example Vertical Section (9,326,300N) with 15 m Composite Coloured by Au (ppb)
Ranges ......................................................................................................................... 3-29
Example Vertical Section (9,326,300N) with 15 m Composite Coloured by Ag (g/t)
Ranges ......................................................................................................................... 3-30
Drill Hole Location Plan, Caariaco Norte ................................................................... 3-31
Drill Hole Location Plan, Caariaco Sur and Quebrada Verde .................................... 3-32
Box Plot for Copper (%) by Domain ............................................................................. 3-51
Box Plots for Silver (%) by Domains ............................................................................ 3-51
Vertical Section (9,326,500) with Blocks and 15 m Composites Grades for Copper
(Corridor of 100 m). Block Color Ranges are for Cu in % .......................................... 3-55
Project No.: 165270

11 March 2011
TOC iii

3.0
GEOLOGY
3.1
Summary
The Caariaco project contains a major porphyry-copper-gold deposit, Caariaco Norte,
and two porphyry copper-gold-mineralized centres that are at a prospect stage of
evaluation, Caariaco Sur and Quebrada Verde.
The deposit and prospects were identified by exploration programs conducted by the
Peruvian Servicio Nacional de Geologa y Minera (Ingemmet), Placer Dome Exploration
Inc. (Placer Dome), Billiton Exploration and Mining Per B.V. (Surcusal Peruana), and
Candente Copper Corporation (Candente) between 1994 and 2010. These programs
included regional and detailed mapping, stream sediment, grab, rock, and soil sampling,
trenching and pitting, core drilling, ground geophysical surveys, mineralization
characterization studies, and metallurgical testing of samples. Petrographic studies and
density measurements on the different lithologies have also been carried out.
Caariaco Norte is an example of a primary porphyry-copper-gold system. The
Caariaco Norte Early to Late Tertiary polyphase intrusive-breccia complex is
approximately 1.7 km in strike extent, 1.1 km wide, and has been drilled to a depth of
about 770 m. The complex has intruded Early Tertiary volcanic units of the Llama and
Porculla Formations of the Calipuy Group. Three major intrusive generations have been
identified, a crowded quartz-feldspar porphyry, a biotite-feldspar porphyry, and a coarse
quartz porphyry. These intrusive units are cross-cut by feldspar porphyry dykes. Three
breccia bodies that post-date the intrusive rocks are also recognized: hydrothermal
breccias, tourmaline breccias, and polymictic breccias.
emplacement of each of the three major intrusive units and the polymictic breccia unit. In
general, the highest copper grades (>0.5% Cu) occur in the biotitefeldspar porphyry and
polymictic breccia units. Intermediate copper grades (0.35% to 0.5% Cu) are most
common in the hydrothermal breccia and the coarse quartz porphyry, and the lowest
grades (0.2% to 0.35% Cu) dominate in the crowded quartz feldspar porphyry, tourmaline
breccia, and volcanic host rocks.
Alteration forms distinct concentric zones with a central potassic alteration; central to
intermediate, overlapping, and partly overprinting phyllic, argillic, and advanced argillic
alteration; and fringing propylitic and minor silicic alteration. Alteration intensity is directly
related to the intensity of fracturing in the hosting lithologies and brecciation in the
polymictic breccia unit. Locally, alteration distribution and intensity are controlled by
northeast- and northwest-trending faults.
influencing copper grades, although breccias and faults can locally be important.
Project No.: 165270

11 March 2011
Page 3-1

Three main zones have been recognized in the deposit: a variable-thickness leached
cap, minor supergene copper mineralization under the leached cap, and hypogene
copper mineralization, the main component of the deposit.
Hypogene copper
mineralization consists mainly of chalcopyrite, chalcocite, and covellite, with lesser
enargite and minor bornite, tennantite, and digenite. Supergene copper consists of
chalcocite and covellite. Drilling on the project consists of 263 core holes (75,672.31 m),
including geotechnical, metallurgical, and hydrogeological drilling. Fifteen of the drill
holes (3,483 m) were completed prior to Candentes involvement; the remaining 248 core
holes (72,189.7 m) were drilled by Candente. Core was logged for geological and
geotechnical parameters. Drill collar locations were picked up by a surveyor using a total
station instrument. Down-hole surveys were performed using Pajari, Sperry Sun, or
Reflex EZ-Shot instruments.
Several primary, independent assay laboratories have been used for routine analyses
over the project history. Copper analyses were typically performed by three-acid digest
and atomic absorption (AA) finish, although four-acid digest and colorimetry methods
have also been used. Gold assays were typically by fire assay with atomic absorption
finish. Other elements were analyzed using inductively-coupled plasma (ICP).
The majority of the drilling has been accompanied by a quality assurance/quality control
(QA/QC) program, which has included submission of blanks, standard reference materials
(SRMs), and check assays.
history, primarily in support of technical reports. No errors or omissions were noted
during these reviews. Legacy drill core, drilled prior to Candentes ownership, was
relogged. Candente drilled three pairs of twinned holes to verify grade uniformity at short
distances. In general, similar average grades were noted over the same depth intervals.
Mineral resource estimates are based on 225 core holes (67,485.06 m) from the
Ingemmet, Placer Dome, Surcusal Peruana, and Candente drill programs. The cutoff
date for the estimation is 18 July 2010. Candente provided geological interpretations for
modelling purposes, from which AMEC created bench polygons and models. Seven
estimation domains for copper, gold, and silver were defined following evaluation of
statistical distributions of lithological and alteration units. Drill hole data were composited
into 6 m lengths using no geological or domain boundaries. Outlier copper, gold, and
silver grades were capped; outlier arsenic grades were not capped.
AMEC estimated copper, gold, silver and arsenic grades by estimation domains using
primarily ordinary kriging (OK) interpolation. Inverse distance weighting to the second
power (ID2) was used to interpolate Au and Ag in domains where variography was not
considered sufficiently robust. Density values were assigned to blocks based upon the
lithological codes. Blocks were classified as Measured, Indicated, or Inferred based on a
combination of composite numbers and distance from the nearest composite.
Project No.: 165270

11 March 2011
Page 3-2

Reasonable prospects of economic extraction were assessed by applying preliminary

economic constraints within an open pit shell. Mining and process costs, as well as
process recoveries, were defined from ongoing AMEC studies for the project. AMEC
defined a cutoff value of 0.2% Cu for reporting mineral resources from these parameters.
Additional data has been included in Appendix B.
Mineral resources are tabulated in Table 3-1. The Qualified Person for the Mineral
Resource estimate is David Thomas, P.Geo. Mineral resources are reported at a longterm copper price of US$2.50/lb, a gold price of $1,035/oz, and a silver price of
Table 3-1:

Grade
Contained Metal
Category
Tonnage
Mt
Cu
%
Au
g/t
Ag
g/t
Copper
(Blb)
Gold
(Moz)
Silver
(Moz)
Measured
Indicated
Inferred
406.6
596.5
1,003.0
293.3
0.44
0.38
0.40
0.33
0.07
0.06
0.06
0.05
1.9
1.6
1.7
1.5
3.977
4.964
8.941
2.165
0.958
1.081
2.039
0.448
24.656
30.403
55.059
13.547
Note:
1
2
3
Project No.: 165270

11 March 2011

Page 3-3

Table 3-2:
Mineral Resource Statement for Caariaco Norte at Various Cutoffs

Grade
Cutoff
Cu (%)
Tonnage
Mt
Contained Metal
Cu
%
Au
g/t
Ag
g/t
Copper
(Blb)
Gold
(Moz)
Silver
(Moz)
Measured
0.14
0.2*
425.6
406.6
0.43
0.44
0.07
0.07
1.9
1.9
4.049
3.977
0.986
0.958
25.467
24.656
0.3
338.1
0.48
0.08
2.0
3.588
0.853
21.399
0.14
0.2*
680.7
596.5
0.35
0.38
0.05
0.06
1.5
1.6
5.283
4.964
1.166
1.081
33.124
30.403
0.3
414.3
0.43
0.06
1.7
3.945
0.843
23.135
1,106.2
1,003.0
0.38
0.40
0.06
0.06
1.6
1.7
9.332
8.941
2.152
2.039
58.592
55.059
752.4
0.45
0.07
1.8
7.533
1.696
44.534
0.14
0.2*
419.4
293.3
0.28
0.33
0.04
0.05
1.3
1.5
2.634
2.165
0.561
0.448
17.002
13.547
0.3
157.7
0.41
0.06
1.7
1.433
0.281
8.539
Indicated
0.14
0.2*
0.3
Inferred
* Base case
2
3
4
5
6
Tonnage and grade measurements are in metric units. Gold and silver contained ounces are reported as troy
ounces, copper contained pounds as Imperial pounds
3.2
Project History
Copper was first discovered at Caariaco Norte in the period 1967 to 1970, during a
regional stream sediment sampling program carried out by the Peruvian Servicio Nacional
de Geologa y Minera (Ingemmet), in cooperation with a British Geological Survey team.
This work identified a copper anomaly, A-2. Subsequently, from 1971 to 1974, Ingemmet
undertook a detailed geochemical study of the Ro Caariaco valley, which delineated
three centres of alteration and copper mineralization, designated Canariaco Norte,
Canariaco Sur, and Quebrada Verde. The geochemistry was supported by geological
mapping, rock chip and soil sampling, induced polarization/resistivity (IP) and ground
magnetic geophysical surveys, and core drilling of five drill holes (1,500 m). Thin section
and petrographic studies were also performed. A mineral resource estimate was
undertaken at the conclusion of this work.
Project No.: 165270

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Page 3-4

Placer Dome Exploration Inc. (Placer Dome) optioned the area from the Peruvian
Government in 1994. Work completed included geological mapping, rock chip sampling,
trenching (2,200 m) and pitting (80 test pits), petrographic studies, re-interpretation of the
available Ingemmet IP/resistivity data, three core holes (853.91 m), and a very preliminary
estimate of tonnage and grade. This work identified a porphyry copper system related to
a Late Tertiary intrusive-breccia complex emplaced into Early Tertiary, Calipuy Group
volcanic basement of andesite to rhyolite pyroclastics and flows. However, in 1997, the
option was not exercised and reverted to the Peruvian Government.
During 1999, Billiton Exploration and Mining Per B.V. (Surcusal Peruana) took up an
option from the Peruvian Government. The work program comprised geological mapping,
soil and rock chip sampling, IP/resistivity and ground magnetic geophysical surveys, and
seven core holes (1,128.7 m). Petrographic samples were collected and studied, and
sequential leach copper analysis was carried out on some of the drill core. A resource
estimate was completed in 1999. The option was dropped in 2000, with the property
returning to the Peruvian Government.
The property was subsequently put up for auction. Candente Copper Corp., through its
wholly-owned Peruvian subsidiary Canariaco Copper Per SA (CCPSA), acquired 100%
ownership of the project in February 2002. Since that date, Candente has completed
geological mapping, prospecting, IP/resistivity and ground magnetic geophysicical
surveys, rock chip sampling, petrographic studies, bulk sampling for metallurgical testing,
and re-logging of existing drill core. A total of 248 core holes (72189.7 m) were drilled to
the end of 2008. Mineral resources were first estimated on behalf of Candente in 2004
and were updated in 2006 and 2008.
A preliminary economic assessment (PEA) was undertaken in 2006. The study
envisaged conventional open pit mining of the Caariaco Norte deposit, with
mineralization crushed, then placed on a heap leach pad. Copper recovery was planned
through a solvent extraction-electrowinning (SXEW) plant to produce copper cathode.
Mining would commence at 30,000 t/d and expand to 60,000 t/d. The financial analysis,
using the costs and assumptions at the time, indicated a positive financial outcome.
In 2008, a revised PEA was undertaken, because additional leach testing had indicated
that heap leaching recoveries were erratic, and a more robust metallurgical process was
required. The production rate from the proposed open pit was 75,000 t/d, feeding a
conventional process plant consisting of semi-autogenous grinding (SAG), ball mills, and
a flotation circuit to produce copper concentrate. The financial analysis, using the costs
and assumptions at the time, indicated a positive financial outcome. The mineral
resource update performed by AMEC in 2010 supersedes the resource estimate used in
the PEA, and the PEA results should be considered historical.
Project No.: 165270

11 March 2011
Page 3-5

3.2.1
Comment on Project History

The exploration programs completed in the period 1994 to 2010 have identified three
porphyry copper-gold-mineralized centres, at Caariaco Norte, Caariaco Sur, and
Quebrada Verde. Caariaco Norte was the subject of two preliminary economic
assessments, in 2006 and 2008, which indicated that additional detailed studies were
warranted.
3.3
Exploration
Exploration activities such as geological mapping and geochemical sampling have been
performed by Candente and predecessor companies Ingemmet, Placer Dome, and
Surcusal Peruana. Contractors were used for activities such as geophysical surveys and
core drilling.
Exploration activities on the project have included regional and detailed mapping, stream
sediment, grab, rock, and soil sampling, trenching and pitting, core drilling, ground
geophysical surveys, mineralization characterization studies, and metallurgical testing of
samples. Petrographic studies and density measurements on the different lithologies
have also been carried out.
A summary of the work programs completed to the report effective date are summarized
in Table 3-3.
Table 3-3:
Exploration Summary Table
Year
19671970
19711974
Operator
Ingemmet
Ingemmet
19941997
Placer
Dome
Project No.: 165270

11 March 2011
Work Undertaken
Regional stream sediment sampling. Identified anomalous copper in drainages surrounding the Caariaco Norte deposit
Geological mapping at 1:25,000 scale defined 9 km2 of alteration and mineralization, with three distinct centres identified.
Limited soil and rock chip sampling; numbers of samples unknown
Nine trenches; locations unknown. A total of 23 rock chip samples taken from the trenches and analysed for Cu and Mo.
Infill geological mapping at 1:5,000 scale; this detailed mapping was hampered by dense vegetation and steep
topography
IP/resistivity ground geophysics over Caariaco Norte
Five vertical core drill holes completed at Caariaco Norte to depths of 300 m for 1,500 m total drilling. A total of 579 core
samples were collected along 3 m or 1.5 m lengths and analysed for Cu and Mo. A total of 66 composite geological
samples were analysed for total copper (TCu), Mo, Ag, and Au.
Thin section and petrographic studies on selected drill core samples
Mineral resource estimate
Geological mapping at 1:1,000 scale at Caariaco Norte; preliminary geological mapping, scale not known, at Caariaco
Sur
Soil and rock chip sampling over an area of about 1.3 km x 1.5 km at Caariaco Norte. A total of 715 rock chip samples
assayed for Au, Cu, Mo, (and some for Ag and As). Reconnaissance rock chip and grab sampling at Caariaco Sur
Trenching (2,200 m) and pitting (80 test pits) at Caariaco Norte and Caariaco Sur
Re-interpretation of Ingemmet IP/resistivity data; the re-interpretation noted some correlation between copper grades and
chargeability and/or resistivity. It was also noted that some of the strongest IP targets had not been drilled by Ingemmet
Three core holes (853.91 m) at Caariaco Norte
Petrographic studies on selected drill core samples
Page 3-6

Year
19992000
Operator
Surcusal
Peruana
2002 to
present
Candente
3.3.1
Work Undertaken
Geological mapping; scale unknown
Soil and rock chip sampling. Sampled outcrops in the streams south of the drilled area at Caariaco Norte. Low-level Cu
anomalies (<500 ppm) were collected from phyllically-altered quartz porphyry at Caariaco Norte. The northern side of
the quartz porphyry generated additional surface copper anomalies (500 to 2000 ppm Cu) in outcrops of basaltic
andesite. In the outcrops around the drill holes in the northern part of the quartz porphyry, gold graded in the 100 to 200
ppb Au range. In the southern half of the system, the grades were generally in the 40 to 100 ppb Au range. Soil samples
were only taken at Caariaco Sur and Quebrada Verde, and outlined co-incident Cu, Au and Mo anomalies over a 750 m
diameter area with smaller anomalies of copper and gold adjacent to this target. Soil sample line spacing was typically
200 m with 100 m infill where initial results were favourable. Sample spacing was 50 m along the lines.
IP/resistivity and ground magnetic geophysical surveys on four lines at Caariaco Norte. For the IP survey, a dipole
dipole array, with electrode spacing of 100 m, was used. The results were not useful because only a very weak current
was received at the potential electrode. The ground magnetic data used the same lines and spacings; no domains of
magnetite destruction could be defined.
Seven core holes (1,128.7 m) drilled at Caariaco Norte, Caariaco Sur, and Quebrada Verde
Petrographic studies on selected drill core samples
Seqential leach copper analysis on 12 samples from two intervals of core; results indicated that the mineralization was
potentially bio-heap leachable.
Geological mapping, including 1:2,000 scale at Caariaco Norte and Caariaco Sur. Preliminary mapping of the
Caariaco Sur and Quebrada Verde zones was also carried out to assess soil geochemistry anomalies outside of the
main mineralized zones. Zones of silicification and quartz vein stockwork exist peripheral to the main circular feature at
Caariaco Sur.
Structural measurements. A total of 311 structural measurements including faults, veins, fractures etc. were collected
Prospecting, rock chip and grab sampling. A total of 148 rock samples were collected in 2002 to 2004 from surface for
gold, total copper and 35-element inductively-coupled plasma (ICP) analyses. In addition, a number of PIMA and
petrology samples were collected to define favourable alteration including alunite and sericite and to define the various
igneous phases. A total of 392 soil geochemistry samples and 355 rock samples were collected over the geophysical
grid at Caariaco Sur and Quebrada Verde in 2008. Soils with elevated levels of copper of up to 5,720 ppm (0.57%) and
gold up to 330 ppb covering over an area of 0.9 km x 1.4 km and potassic alteration mapped over a length of 2.3 km at
Caariaco Sur. Anomalous levels of copper of up to 2,200 ppm (0.22%) and up to 497 ppb gold in soils cover an area of
approximately 0.7 km x 0.9 km at Quebrada Verde.
Re-logging of existing drill core
20 line km of IP/resistivity and ground magnetic geophysics. Outlined areas of magnetite destruction and delineated the
various alteration zones and helped confirm and/or identify old/new fault structures at Caariaco Norte. A coincident
magnetic high; IP/resistivity low and chargeability high identified at Caariaco Sur. A large IP chargeability high centered
on a resistivity anomaly and covering an area of 0.8 km x 2.0 km identified at Quebrada Verde.
Petrographic studies on selected drill core samples.
Four bulk samples for leach testing collected in 2004.
248 core holes (72,189,7 m) at Caariaco Norte, Caariaco Sur, and Quebrada Verde
Grids and Surveys

Servicios Geogrficos y Medio Ambiente S.A.C. (GEMA) was contracted in 2004 to
establish the coordinates of four survey control points for site survey work. All survey
data were based from these control points. The points were established by differential
GPS set on the point for one hour and using the 1 order base station in Lima. Accuracy
of these initial control points is not known. UTM coordinates were reported in PSAD 56.
In June 2006, GEMA was contracted to re-establish five high-precision survey control
points to be used at the project as the base points for all surveying. Monuments were re-
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built using rebar and concrete to permanently secure their position. GEMA re-established
the points with a differential GPS set on the point for three hours and using the 0 order
station Piura as base. Accuracy was established at 1 mm.
Reference point UTM data were reported in WGS-84, which is the main datum used for
surveying in Per. The calculated PSAD-56 UTM data were also reported.
In June 2006 the entire project was changed over from PSAD-56 (zone 17) to WGS-84
UTM (zone 17). All survey work on the project prior to the re-establishment of the control
points and the datum switch was re-done. The project grid corresponds to the WGS-84
(zone 17) UTM grid.
Topographic data were based on aerial photograph coverage provided by Horizons South
America S.A.C. Aerial Mapping Services.
3.3.2
Geological Mapping
Regional and detailed geological mapping was completed by Ingemmet, Placer Dome,
and Candente in a number of phases. Map scales varied from regional (1:25,000) to
prospect scale (1:1,000). Map results were used to identify lithologies, areas of quartz
veining, alteration, and silicification, and sulphide outcrops that warranted additional work.
Air photos were interpreted to identify areas that required additional geological mapping
and sampling. During the mapping program, structural measurements were collected
from faults, veins, and fractures to provide additional structural detail for geological
interpretations.
3.3.3
Geochemistry
Stream sediment, soil, and rock chip sampling was done to evaluate the mineralization
potential and generate targets for core drilling at Caariaco Norte, Caariaco Sur, and
Quebrada Verde. Sampling was performed by Ingemmet, Placer Dome, Surcusal
Peruana, and Candente.
Stream sediment sampling completed by Ingemmet at 100 m spacing along the drainages
of Ro Caariaco during early exploration phases identified elevated copper and gold
values.
Rock chip sampling outlined coppergoldsilvermolybdenum mineralization associated
with quartz porphyry outcrops at Caariaco Norte, Caariaco Sur, and Quebrada Verde.
Soil sampling provided the initial drill target areas for Caariaco Norte. Soils with
elevated levels of copper of up to 5,720 ppm (0.57%) and gold up to 330 ppb, covering an
area of over 0.9 km x 1.4 km, were defined at Caariaco Sur. Anomalous levels of
copper of up to 2,200 ppm (0.22%) and up to 497 ppb gold in soils cover an area of
approximately 0.7 km x 0.9 km at Quebrada Verde (Figure 3-1).
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Figure 3-1:
Geochemical and Ground Geophysical Anomalies, Caariaco Sur,

and Quebrada Verde
Note: Figure courtesy Candente Copper Corp.
PIMA alteration studies undertaken by Candente were used to define favourable

alteration styles for mineralization, including alunite and sericite, and to define the various
igneous phases.
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3.3.4
Pits and Trenches

Ingemmet excavated nine trenches and took a total of 23 rock chip samples. Placer
Dome completed trenching (2,200 m) and pitting (80 test pits) at Caariaco Norte and
Caariaco Sur.
3.3.5
Geophysical Surveys
Geophysical surveys, comprising IP/resistivity and ground magnetics, were completed at
Caariaco Norte, Caariaco Sur, and Quebrada Verde by Ingemmet, Surcusal Peruana,
and Candente.
Results of the surveys prior to the Candente work were considered inconclusive due to
wide line spacings. Candente completed 20 line km of combined IP/resistivity and ground
magnetic surveys. The ground magnetic surveys at Caariaco Norte outlined areas
about 0.7 km x 0.9 km of magnetite destruction and addition, thus delineating the various
alteration zones and helping to confirm and/or identify old/new fault structures. A
coincident magnetic high, IP/resistivity low and chargeability high was identified at
Caariaco Sur. A large IP chargeability high centred on a resistivity anomaly and
covering an area of 0.8 km x 2.0 km was identified at Quebrada Verde (refer to
Figure 3-1).
3.3.6
Geotechnical and Hydrogeology

Geotechnical drilling has been undertaken to test the orientations of the feldspar porphyry
dykes and to test the orientation of the polymictic breccia. All drill holes after drill hole
C06-045 have been logged for standard geotechnical parameters. Following a visit by
SRK personnel in late 2008, geotechnical logging parameters were revised. All drill holes
after C07-189 were logged using the revised protocols.
Candente has also carried out geotechnical mapping of trench exposures (veins, joints,
and faults) and strength testing using a point load tester.
As part of a hydrogeological data acquisition program overseen by Ground Water
International, piezometer pipe was installed in some of the core drill holes, and packer
tests were completed in 12 of those holes. Two holes were drilled specifically for
hydrogeological testing on the ridge to the west of the area that contains the estimated
mineral resources.
3.3.7
Other Studies
Petrography and mineralogical studies in support of mineralogical and geological
interpretations have been completed by Ingemmet, Placer Dome, Surcusal Peruana, and
Candente.
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3.3.8
Exploration Potential
Caariaco Norte is part of an extensive porphyry intrusive complex that also includes the
Caariaco Sur and Quebrada Verde zones. The three deposits cover an area with a
minimum length of 5 km and average width of 2 km. The porphyry complex is covered
entirely by the Caariaco property. Geological mapping and geophysics and geochemical
sampling by Candente and Surcusal Peruana in 1999 (including limited drilling) indicate a
strong potential for additional porphyry copper-gold mineralization within the Caariaco
Sur and Quebrada Verde zones.
Locally, mineralization at Caariaco Norte is still open at depth and at the central-west
part of the deposit.
3.3.9
Comment on Exploration
The exploration programs completed to date are appropriate to the style of the deposits
and prospects within the Project. The petrographic research work supports the genetic
and affinity interpretations. Exploration potential remains within the Caariaco Sur and
Quebrada Verde prospects, and Caariaco Norte is still open at depth and at the
central-west part of the deposit.
3.4
Geological Setting
3.4.1
Regional Geology
A regional geological plan for the project area is shown in Figure 3-2.
Basement rocks comprise pelitic schists of the Precambrian to Early Paleozoic Olmos
Complex that are unconformably overlain by Late TriassicEarly Jurassic La Leche
Formation marine sediments that have minor intercalated volcanic units. An Early to Late
Jurassic volcano-sedimentary sequence, the Oyotn Formation, overlies the earlier units.
Following regional uplift, erosion, and subsequent subsidence, the lower portion of the
Goyllarisquizga Group, a regionally extensive quartz arenite, was unconformably
deposited on the earlier lithologies. In turn, the arenite was overlain by Early Cretaceous
to mid-Late Cretaceous marls, shales, and limestone.
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Figure 3-2:
Regional Geology Map
Note: Figure courtesy Candente Copper Corp. Grid squares on the plan are 4 km x 4 km.
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In the Early Tertiary, volcanic units of the Llama and Porculla Formations of the Calipuy
Group were erupted, followed by uplift and erosion. Renewed volcanic activity
commenced with the eruption of volcanic rocks of the Huambos Formation during the
Late Tertiary. Porphyry stocks, breccias, and dykes that are also Late Tertiary in age
intrude the Cretaceous and Early Tertiary units (Figure 3-3). Age dating using K/Ar and
ReOs on intrusive rocks, breccias, and alteration minerals in the Caariaco Norte
deposit returned dates ranging from 15.8 Ma to 17.9 Ma (Mathur, 2008; Casselman et al.,
2008).
Figure 3-3:
Regional Stratigraphic Column
A number of circular features/intrusions have been identified district-wide (refer to Figure

3-3). A single circular feature that measures 8 km x 10 km encompasses all three
mineralized centres in the project area. This feature is centred on, or close to, major fault
intersections, suggesting that the emplacement of the intrusive complex has been
localized by fault intersections (Murphy, 2004).
Faults that have been identified at a regional scale consist of two, parallel, long-range,
northwestsoutheast-trending district-scale faults. One bisects the project area, and the
second fault is approximately 7 km to the northeast. The northwestsoutheast faults have
a probable conjugate northeastsouthwest fault set that tends to be of medium range.
These faults appear to control the location and development of the intrusivebreccia
complexes and related mineralization and alteration in the project area.
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3.4.2
Deposit Model
The Caariaco Norte deposit is considered to be an example of a primary porphyrycopper system. The following discussion of the typical nature of porphyry-copper
deposits is sourced from Sillitoe (2010), Berger et al. (2008), and Sinclair (2006).
Porphyry-copper systems commonly define linear belts, some many hundreds of
kilometres long, as well as occurring less commonly in apparent isolation. The systems
are closely related to underlying composite plutons, at paleo-depths of 5 km to 15 km,
which represent the supply chambers for the magmas and fluids that formed the vertically
elongate (>3 km) stocks or dyke swarms and associated mineralization.
Commonly, several discrete stocks are emplaced, resulting in either clusters or
structurally controlled alignments of porphyry-copper systems. The rheology and
composition of the host rocks may strongly influence the size, grade, and type of
mineralization generated in porphyry-copper systems. Individual systems have life spans
of circa 100,000 years to several million years, whereas deposit clusters or alignments, as
well as entire belts, may remain active for 10 million years or longer.
Deposits are typically semi-circular to elliptical in plan view. In cross-section, ore-grade
material in a deposit typically has the shape of an inverted cone with the altered, but lowgrade, interior of the cone referred to as the barren core. In some systems, the barren
core may be a late-stage intrusion.
The alteration and mineralization in porphyry-copper systems are zoned outward from the
stocks or dyke swarms, which typically comprise several generations of intermediate to
felsic porphyry intrusions. Porphyry copper-gold-molybdenum deposits are centred on
the intrusions, whereas carbonate wall rocks commonly host proximal copper-gold skarns
and less commonly, distal base metal and gold skarn deposits. Beyond the skarn front,
carbonate-replacement copper and/or base metal-gold deposits, and/or sediment-hosted
(distal-disseminated) gold deposits can form.
Peripheral mineralization is less
conspicuous in non-carbonate wall rocks but may include base metal- or gold-bearing
veins and mantos. Data compiled by Singer et al. (2008) indicate that the median size of
the longest axis of alteration surrounding a porphyry copper deposit is 4 to 5 km, while the
median size area of alteration is 7 to 8 km2.
High-sulphidation epithermal deposits may occur in lithocaps above porphyry-copper
deposits, where massive sulphide lodes tend to develop in deeper feeder structures and
precious metal-rich, disseminated deposits form within the uppermost 500 m.
Porphyry-copper mineralization occurs in a distinctive sequence of quartz-bearing veinlets
as well as in disseminated forms in the altered rock between them. Magmatichydrothermal breccias may form during porphyry intrusion, with some breccias containing
high-grade mineralization because of their intrinsic permeability. In contrast, most
phreatomagmatic breccias, constituting maardiatreme systems, are poorly mineralized
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at both the porphyry copper and lithocap levels, mainly because many such
phreatomagmatic breccias formed late in the evolution of systems.
Copper mineral assemblages are a function of the chemical composition of the fluid
phase and the pressure and temperature conditions affecting the fluid. In primary,
unoxidized or non-supergene-enriched ores, the most common oresulphide assemblage
is chalcopyrite bornite, with pyrite and minor amounts of molybdenite. Some porphyry
copper deposits also contain significant concentrations of hypogene chalcocite and
covellite as in the Butte (Montana, USA) and Resolution (Nevada, USA) porphryry
deposits. In supergene-enriched ores, a typical assemblage can comprise chalcocite +
covellite bornite, whereas, in oxide ores, a typical assemblage could include malachite +
azurite + cuprite + chrysocolla, with minor amounts of minerals such as carbonates,
sulphates, phosphates, and silicates. Typically, the principal copper sulphides consist of
millimetre-scale grains, but may be as large as 1 to 2 cm in diameter and, rarely,
pegmatitic (larger than 2 cm).
Alteration zones in porphyry-copper deposits are typically zoned and classified on the
basis of mineral assemblages and consist of potassic, propylitic, phyllic and argillic zones.
In silicate-rich rocks, the most common alteration minerals are K-feldspar, biotite,
muscovite (sericite), albite, anhydrite, chlorite, calcite, epidote, and kaolinite. In silicaterich rocks that have been altered to advanced argillic assemblages, the most common
minerals are quartz, alunite, pyrophyllite, dickite, diaspore, and zunyite. In carbonate
rocks, the most common minerals are garnet, pyroxene, epidote, quartz, actinolite,
chlorite, biotite, calcite, dolomite, K-feldspar, and wollastonite. Other alteration minerals
commonly found in porphyry-copper deposits are tourmaline, andalusite, and actinolite.
Porphyry-copper systems are initiated by injection of oxidized magma saturated with
sulphur- and metal-rich, aqueous fluids from cupolas on the tops of the subjacent parental
plutons. The sequence of alterationmineralization events is principally a consequence of
progressive rock and fluid cooling, from >700 to <250C, caused by solidification of the
underlying parental plutons and downward propagation of the lithostatichydrostatic
transition. Once the plutonic magmas stagnate, the high-temperature, generally twophase hyper-saline liquid and vapour responsible for the potassic alteration and contained
mineralization at depth and early overlying propylitic and advanced argillic alteration,
respectively, gives way, at <350C, to a single-phase, low- to moderate-salinity liquid that
causes the sericitechlorite and sericitic alteration (phyllic)and associated mineralization.
This same liquid also causes mineralization of the peripheral parts of systems, including
the overlying lithocaps.
The progressive thermal decline of the systems combined with syn-mineral paleo-surface
degradation results in the characteristic overprinting (telescoping) and partial to total
reconstitution of older by younger alterationmineralization types (argillic). Meteoric water
is not required for formation of this alterationmineralization sequence, although its late
ingress is common.
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3.4.2.1
Comment on Deposit Model

Caariaco Norte is considered to be an example of a porphyry system based on the
following:
Multiple emplacements of successive intrusive phases and a variety of breccias are
present.
Copper-bearing igneous rocks are intrusive into host volcanic and sedimentary rocks.
Mineralization is spatially, temporally, and genetically associated with the intrusive
breccia activity and hydrothermal alteration of the intrusive and breccia bodies.
Large zones of veining and stockwork mineralization, together with minor
disseminated and replacement mineralization, occur throughout large areas of
intrusivebreccia and hydrothermally altered rock.
Hydrothermal alteration is extensive and zoned, which is common to porphyry-copper
deposits. The alteration assemblages are consistent with the physico-chemical
conditions of a porphyry environment.
Mineralization is focused in well-developed quartzsulphide stockworks; veins,
crackle, and breccia zones are also present.
The tenor of the copper and gold grades is typical of a porphyry deposit.
The large tonnage is also typical.
3.4.3
Caariaco Norte Deposit Geology

The Caariaco Norte deposit is hosted within a multiphase intrusivebreccia complex
approximately 1.7 km in strike extent and 1.1 km wide. The deposit has been drill-tested
to a depth of approximately 770 m and remains open at depth. The majority of the
copper-gold mineralization is hosted within the intrusive and breccia units, but locally
extends for variable distances into the enclosing volcanic units. Intrusive units comprise
approximately 55% to 60% of the deposit, breccias approximately 30% to 35%, and premineral volcanic rocks approximately 5% to 10%.
The intrusive units are nested and collectively roughly oval in shape, with older intrusive
rocks being cut by successively younger intrusive bodies. In general, the intrusive units
are northsouth-trending, steeply dipping bodies. The breccia units cut the intrusive
units, are oval to circular in shape, and are steeply plunging. The dykes generally strike
northwestsoutheast with a steep southwesterly dip. The shape and positioning of the
intrusive, breccias, and dyke units was largely controlled by northwestsoutheast- and
northeastsouthwest-trending faults (Casselman et al., 2008).
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3.4.3.1
Lithologies
Table 3-4 presents a stratigraphic column for the project area. The following sections on
lithologies have been taken from Casselman et al. (2008).
Table 3-4:
Project Stratigraphic Column
Unit
Rock Code
Rock Type
Description
Breccias
IBxP
TBx
IBxH
Breccia (youngest)
Breccia (middle)
Breccia (oldest)
Polymictic breccia
Tourmaline breccia
Hydrothermal breccia
Intrusives
FP
CQP
BFP
CQFP
VC
Dykes
Intrusive (youngest)
Intrusive (middle)
Intrusive (oldest)
Calipuy Volcanic
Feldspar porphyry dykes

Coarse quartz porphyry
Biotite feldspar porphyry
Crowded quartz feldspar porphyry
Pre-mineral andesitic, dacitic and rhyolitic volcanics
The oldest rocks, ascribed to the Early Tertiay Calipuy Group, are a series of dacite tuffs
with lesser, bedded, rhyolite tuffs overlain by andesite porphyry flows and pyroclastic
rocks. Andesite pyroclastic rocks and flows dominate on the western, northern and
southern sides of the intrusive complex where elevations are higher. The eastern side of
the intrusive complex is lower in elevation, and thus the dacite and rhyolite volcanic rocks
that underlie the andesite volcanic rocks are exposed adjacent to the intrusive complex.
Three major intrusive generations have been identified. The oldest intrusive unit is a
crowded quartzfeldspar porphyry (CQFP), which consists of 1% to 3% quartz eyes, 35%
feldspar phenocrysts, and 3% to 5% hornblendebiotite. Grain sizes of the constituents
range from 1 to 2 mm. The unit is interpreted as dioritic in composition.
The middle intrusive unit is a biotitefeldspar porphyry (BFP) interpreted to be
granodioritic in composition, with 3% to 5% quartz eyes, 15% to 20% feldspar
phenocrysts, 2% to 5% euhederal biotite, and traces of hornblende. Grain sizes typically
range from 3 to 5 mm.
The youngest intrusive unit, a coarse quartz porphyry (CQP), consists of 5% to 10%
quartz eyes (grain size range from 3 to 5 mm), 15% to 20% euhedral feldspar crystals
(<3 mm) and traces of biotite (1 to 2 mm). The CQP is interpreted to be of quartz
monzonitic composition.
The youngest intrusive stage is a set of feldspar porphyry dykes/breccias (FP) that range
in thickness from 2 m to 30 m and have a northwestsoutheast strike, with a steep,
southwesterly dip. The dykes have a fine-grained ground mass with 10% to 20% feldspar
phenocrysts (3 to 10 mm) and 5% to 10% hornblende phenocrysts (2 to 8 mm). The
dykes commonly display cooling contacts. Where the dykes intersect the breccias, dyke
fragments occur as large (>10 m), rotated, and weakly fractured blocks within the
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breccias. The dykes have been only weakly altered and contain minor copper
mineralization where they have been fractured, brecciated, and crackle-brecciated near
the south margin of the hydrothermal breccia unit.
Three breccia bodies that post-date the intrusive rocks are recognized. The oldest unit,
hydrothermal breccia (IBxH), consists of matrix-supported angular to sub-angular biotite
feldspar porphyry and crowded quartzfeldspar porphyry fragments that display little or no
evidence of transport. Fragment sizes within the central part of the breccia are generally
1 to 5 cm in a fine-grained matrix. Near the southern margin of the breccia, there is a
high component of feldspar porphyry dyke fragments up to tens of metres in size. The
unit is not well mineralized, with copper grades related to the inclusion of mineralized
porphyry fragments. The margins of the hydrothermal breccia can show crackle
brecciation.
The middle tourmaline breccia (TBx) has a fine-grained matrix consisting of quartz and
tourmaline. The unit is extensive and was emplaced along the northeastern margin of the
intrusive bodies. Breccia fragments are angular to sub-angular, 1 to 10 cm in size, and
include clasts of the biotitefeldspar porphyry, crowded quartzfeldspar porphyry, and the
hydrothermal breccia. The margin of the breccia shows crackle brecciation. The breccia
is not mineralized, apart from copper grades related to the inclusion of mineralized
porphyry fragments.
The youngest breccia unit, polymictic breccia (IBxP), is a late-stage breccia with an erratic
shape, cross-cutting all earlier units. Sub-rounded to rounded clast fragments include
vein quartz, all three intrusive units, and the two earlier breccia phases. Fragments range
from 0.5 to 10 cm with the breccia margins often grading into a crackle breccia. The unit
shows multiple breccia pulses, the last of which is a fluidized micro-breccia with rounded
fragments that are typically <3 mm in size, cross-cutting all other pulses. Copper
mineralization occurs in both the matrix and the fragments.
influencing copper grades and alteration intensity, although breccias and faults can locally
be important.
emplacement of each of the intrusive units and the polymictic breccia unit. Initially,
copper mineralization comprised chalcopyrite and minor bornite, introduced following
emplacement of each of the crowded quartzfeldspar porphyry and biotitefeldspar
porphyry units, with the greatest amount introduced following emplacement of the biotite
feldspar porphyry unit. This event was followed by introduction of chalcocite, covellite,
minor tennantitedigenite, following emplacement of the coarse quartz porphyry unit. The
mineralizing process terminated with enargite, chalcocite and covellite, minor tennantite
digenite, introduced concurrently with emplacement of the polymictic breccia unit
(Casselman et al., 2008).
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Near surface, the deposit has been intensely weathered, resulting in the formation of a
leached cap that contains less than 0.05% Cu, trace pyrite and tenorite, and variable
concentrations of limonite, goethite, jarosite, and hematite. The leached cap varies
significantly in thickness, ranging from less than a metre to as much as 120 m, averaging
approximately 40 to 50 m in thickness. The water table is at, or near, surface.
A geological plan for the deposit is presented in Figure 3-4 (Van Egmond et al., 2008).
Figures 3-5 and 3-6 are drill sections through the deposit.
3.4.3.2
Alteration
The alteration forms distinct concentric zones with a central potassic alteration; central to
intermediate, overlapping, and partly overprinting phyllic, argillic, and advanced argillic
alteration; and fringing propylitic and minor silicic alteration. Alteration intensity is directly
related to the intensity of fracturing in the hosting lithologies and brecciation in the
polymictic breccia unit. Locally, alteration distribution and intensity are controlled by
northeast- and northwest-trending faults. The following sections on alteration have been
taken from Casselman et al.(2008).
Phyllic and argillic alteration dominate in the upper 50 to 300 m in the southern half of the
deposit and the upper 100 m to locally 150 m in the northern half of the deposit (excluding
overburden and the leached cap). At depth, most of the northern and southern halves of
the deposit under the layer of phyllic and argillic alteration is dominated by potassic
alteration.
Alteration type descriptions are as follows:
Potassic alteration consists of variable proportions of secondary potassic feldspar and
biotite, chlorite and magnetite. Associated with deposition of chalcopyrite and minor
bornite.
Propylitic alteration comprises illite, chlorite, epidote, and smectite. Associated with
deposition of chalcopyrite and minor bornite. Found mainly outside the deposit
margin, but can locally occur within the deposit. Propylitic alteration can extend for
significant distances outside of the intrusivebreccia complex into the bordering
volcanic rocks. It is often associated with silicic alteration near the margins of the
deposit.
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Figure 3-4:
Geological Map, Caariaco Norte
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Figure 3-5:
Geological Drill Section 9,326,300N
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Figure 3-6:
Geological Drill Section 690,800E
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Phyllic alteration includes sericite and quartz with variable concentrations of quartz
veinlets and stockworks (0.5 cm to 1.5 cm thick). Associated with deposition of
chalcocite, covellite, and minor tennantite and digenite. Commonly intermixed with
argillic alteration. Affected parts of the crowded quartzfeldspar porphyry and biotite
feldspar porphyry units and all of the coarse quartz porphyry and polymictic breccia
units. Late-stage phyllic alteration has extended along northeast- and northwesttrending faults outwards from the polymictic breccia unit, and affected units distal from
the polymictic breccia unit
Argillic alteration consists of kaolinite and illite. Associated with deposition of
chalcocite, covellite, and minor tennantite and digenite. It is commonly assocated
with phyllic alteration. Affected parts of the crowded quartzfeldspar porphyry and
biotitefeldspar porphyry units and all of the coarse quartz porphyry and polymictic
breccia units.
Advanced argillic alteration comprises alunite, kaolinite, pyrophyllite, and dickite.
Associated with deposition of enargite, chalcocite, and covellite, and minor tennantite
and digenite. It is commonly associated with late-stage phyllic alteration. Primarily
associated with the polymictic breccia unit, but also has variably affected the
bordering coarse quartz porphyry and biotitefeldspar porphyry units. Has extended
along northeast- and northwest-trending faults outwards from the polymictic breccia
unit, and affected units distal from the polymictic breccia unit.
Silicic alteration comprises very fine grained pervasive silica. Associated with
chalcopyrite and minor bornite. It is found mainly at the deposit margin, but can locally
occur within the deposit. Silicic alteration can extend outside of the intrusivebreccia
complex into the bordering volcanic rocks.
3.4.3.3
Structures
The northwestsoutheast- and the northeastsouthwest-trending fault sets appear to
control the emplacement of the intrusive phases at Caariaco Norte, as well as the
distribution of copper mineralization and alteration. In addition, the faults form structural
corridors for late-stage polymictic breccias and associated alteration and mineralization.
The smaller set of northwestsoutheast-oriented faults control dyke emplacement
(Casselman et al., 2008).
3.4.4
Prospects
Prospect locations are shown in Figure 3-7.
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Figure 3-7:
Prospect Location Plan and Geological Map
3.4.4.1
Caariaco Sur
The Caariaco Sur deposit is 1.3 km southwest of Caariaco Norte on a large area of
potassic alteration with a coincident copper-gold-molybdenum soil geochemical anomaly
having approximate dimensions of 1,400 m x 900 m. A large, coincident magnetic high,
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IP/resistivity low, and chargeability high was identified coincident with the soil
geochemical anomaly and area of potassic alteration. Candente has interpreted the
prospect as a porphyry-copper-gold centre dominated by potassic alteration with
chalcopyrite-bornite-molybdenite mineralization and anomalous CuAuMo grades (refer
to Figure 3-1).
The host rocks to the mineralized intrusions are Calipuy Group andesite volcanic rocks.
Two main intrusions were noted from geological mapping, an early 750 m x 500 m quartz
monzonite stock, and a later diorite stock with an area of approximately 100 m x 50 m. A
third intrusive phase may also exist (Sillitoe, 1999).
3.4.4.2
Quebrada Verde
The Quebrada Verde prospect is 3.2 km south of Caariaco Norte and 1.5 km south of
Caariaco Sur. Strongly anomalous levels of copper and gold in soil samples cover an
area of 0.7 km x 0.9 km. A large IP chargeability high centred on resistivity anomaly and
magnetic high and covering an area of 0.8 km x 2.0 km occurs coincident with the soil
geochemical anomalies (refer to Figure 3-1). Candente staff have interpreted the
prospect as a porphyry copper-gold centre. The one historic drill hole did not test the
geochemical/geophysical target.
Quebrada Verde host rocks consist of a 1 km x 750 m diorite porphyry stock that intruded
Calipuy Group andesite volcanic rocks (Wilson, 1999). A satellite stock of the same
diorite porphyry measuring 400 m x 400 m is located 200 m to the northeast. An
east-west striking, post-mineralization granodiorite dyke, with dimensions of
approximately 1 km x 100 m, intruded the volcanic rocks and the larger diorite porphyry
stock.
3.4.5
Comment on Geological Setting

Knowledge of the deposit settings, lithologies, and structural and alteration controls on
mineralization within the Caariaco Norte deposit is sufficient to support Mineral
Resource estimation. The nearby Caariaco Sur and Quebrada Verde prospects are at
an earlier stage of exploration, and the lithologies, structural, and alteration controls on
mineralization are currently insufficiently understood to support estimation of Mineral
Resources.
3.5
Mineralization
Although all of the lithologic units listed in Table 3-3 host mineralization, the average
grades vary.
In general, the highest copper grades (>0.5% Cu) occur in the
biotite-feldspar porphyry and polymictic breccia units. Intermediate copper grades (0.35%
to 0.5% Cu) are most common in the hydrothermal breccia and the coarse quartz
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porphyry, and the lowest grades (0.2% to 0.35% Cu) are found in the crowded quartz
feldspar porphyry, tourmaline breccias, and volcanic host rocks. The feldspar porphyry
dykes typically do not contain copper grades unless the dykes have been fractured,
brecciated, or crackle-brecciated near the south margin of the hydrothermal breccia,
where they have been weakly mineralized (average copper grade range of 0.1% to 0.2%
Cu).
A Qemscan examination of core samples selected for metallurgical testwork in 2008,
performed by SGS Metallurgical Laboratories in Santiago, Chile, indicated the
predominant minerals and mineral associations present in the Caariaco Norte samples
are:
Copper mineral species dominantly chalcopyrite, covellite, chalcocite, and enargite,
with minor bornite, tennantite, and digenite, and trace tetrahedrite. Copper sulphide
minerals are mainly associated with pyrite and other sulphide gangue minerals.
Non-metallic gangue minerals quartz and micas/biotite/chlorite/clay group
Sulphide gangue mineral pyrite, which is present as liberated pyrite or in association
with other sulphide minerals.
Copper mineralization paragenesis (Casselman et al., 2008) comprised the following
stages:
initially, chalcopyrite (bornite) + pyrite
intermediate, chalcocite and covellite (tennantite, digenite) pyrite
last, enargite, chalcocite, and covellite (tennantite, digenite) + pyrite
Copper minerals and pyrite are disseminated, veined, and fracture-hosted, with copper
grades directly related to the intensity of fracturing and alteration type and intensity.
Higher grades are associated with potassic, phyllic, and argillic alteration and less
commonly with propylitic and silicic alteration.
Casselman et al. (2008) interpret that chalcopyrite (bornite) was deposited initially with
the coarse quartz-feldspar porphyry and biotite-feldspar porphyry units, and with potassic
and propylitic alteration. As the system evolved, chalcocite and covellite (tennanite,
digenite) developed in association with the coarse quartz porphyry and with phyllic and
argillic alteration, and overprinted and replaced chalcopyrite (bornite) and potassic and
propylitic alteration in the central and upper parts of the deposit. Enargite, chalcocite, and
covellite (tennantite, digenite) associated with advanced argillic and phyllic alteration was
the last to form. These minerals are typically restricted in distribution to the polymictic
breccia unit and the adjacent coarse quartz porphyry and biotitefeldspar porphyry units,
where they occur as disseminations, clots, veins, and fracture coatings cutting earlierformed chalcopyrite, chalcocite, covellite, potassic, propylitic, phyllic, and argillic
alteration.
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Chalcopyrite (bornite), chalcocite, covellite, and enargite (tennantite, digenite) are

primarily hypogene in origin, with only limited development of supergene chalcocite and
covellite (Mathur, 2008). In the opinion of Candente staff, between the water table being
at or near the present topographic surface and the active erosive environment, any
supergene chalcocite and covellite that formed is being rapidly removed. Locally thin
(<30 m) discontinuous layers of supergene chalcocite and covellite occur immediately
under the leach cap.
Pyrite is common in all alteration types, averaging approximately 5% throughout the
deposit as disseminations, veins, and fracture coatings. Magnetite is less common and
primarily associated with chalcopyrite (bornite) in potassic alteration. Tourmaline is
restricted to the matrix of the tourmaline breccia unit.
Gold and silver values are anomalous throughout the deposit; however, higher gold
grades only occur with higher copper grades. Gold grades range, on average, between
0.04 g/t Au and 0.11 g/t Au and silver grades average 1.3 g/t Ag to 2.5 g/t Ag throughout
the different rock types in the deposit (Bonson et al., 2008).
Molybdenum (Mo) grades are low, averaging <40 ppm, and are slightly higher on the
margins and at depth in the deposit (Bonson et al., 2008). Molybdenum grades are
unlikely to be economically recoverable based on current information.
Figures 3-8, 3-9, and 3-10 are cross-sections through the Caariaco Norte deposit
showing copper, gold, and silver grades, respectively.
3.5.1
Comment on Mineralization
The mineralization style and setting of the Caariaco Norte deposit are sufficiently well
understood to support Mineral Resource estimation.
3.6
Drilling
Drilling on the project consists of 263 core holes (75,672.31 m), including geotechnical,
metallurgical, and hydrogeological drilling for all three targets, Caariaco Norte,
Caariaco Sur, and Quebrada Verde. Table 3-5 is a drill summary by operator. Drill hole
locations for the Caariaco Norte deposit are shown in Figure 3-11. Figure 3-12 shows
the locations of the drill holes completed at Caariaco Sur and Quebrada Verde. In this
section, all drilling completed prior to Candentes involvement in the project is termed
legacy data.
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Figure 3-8:
Example Vertical Section (9,326,300N) with 15 m Composite

Coloured by Cu (%) Ranges Overlapping Lithological Interpretation
Note: Grid squares are 200 m x 200 m
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Figure 3-9:
Example Vertical Section (9,326,300N) with 15 m Composite

Coloured by Au (ppb) Ranges
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Figure 3-10: Example Vertical Section (9,326,300N) with 15 m Composite

Coloured by Ag (g/t) Ranges
Table 3-5:
Drill Summary
Year
Project Operator
Deposit or Prospect
19711974
19941997
19992000
Ingemmet
Placer Dome
Surcusal Peruana
2004
2005
2006
2007
2008
Candente
Caariaco Norte
Caariaco Norte
Caariaco Norte
Caariaco Sur
Quebrada Verde
Caariaco Norte
Caariaco Norte
Caariaco Norte
Caariaco Norte
Caariaco Norte
Caariaco Sur
Total
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Core
Number Holes
5
3
3
3
1
12
24
46
123
41
2
263
Metres
1,500.0
853.91
555.7
473.0
100.0
2,647.38
7,388.87
15,983.55
31,357.2
13,772.1
1,040.6
75,672.31

Figure 3-11: Drill Hole Location Plan, Caariaco Norte
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Figure 3-12: Drill Hole Location Plan, Caariaco Sur and Quebrada Verde
Note: Figure from Huanqui et al. (2002). Billiton = Surcusal Peruana
3.6.1
Drill Contractors
The Ingemmet program drill contractor was Craelius Tarratest Peruana S.A., which
utilized three Long Year machines (two model 34s and one model 38). No information is
available for the contractors for the Placer Dome and Surcusal Peruana drill programs.
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The Candente drill programs used Pac Rim Drilling SA, a Peruvian subsidiary of Kluane
Drilling Corp, which provided standard man-portable Hydrocore rigs.
3.6.2
Drill Methods
The Ingemmet program used NCD core size to 50 m, NXWL (60.7 mm core diameter) to
170 m, and BXWL (48.4 mm core diameter) thereafter. Both 10 ft (3 m) and 5 ft (1.5 m)
core barrels were used.
No information is available on the core size for the Placer Dome drilling; however, the
Surcusal Peruana drill program used BQ diameter (36.5 mm).
The Candente programs initially used NTW (56 mm) diameter core. During the 2005 drill
program, ground conditions and depth required a reduction to a BTW core diameter
(42 mm) in drill holes 05-014 at 302.35 m and 05-019 at 268 m). In 2006 and 2007, all
drill holes less than 325 m in depth were drilled with NTW diameter core; holes deeper
than 325 m needed to be reduced to BTW at around 250 m to 300 m depth, to allow the
machine to drill to the planned depth. The 2008 drill program employed HQ (63.5 mm
diameter) or NQ (47.6 mm diameter) core sizes.
For the Candente programs, core was transferred to wooden core boxes. Rock quality
descriptions (RQD) measurements were performed at the drill site. The boxes were then
closed and transported by porters hired by Candente to the project core processing
facility, where the core was photographed and logged for geologic and geotechnical
information.
No information is available on the method of core transportation used during the earlier
drill programs by Ingemmet, Placer Dome, or Surcusal Peruana.
3.6.3
Geological Logging
During detailed core mark-up at the logging facility, Candente geologists perform firstpass geological logging of the core. This initial log identifies lithological boundaries, major
structures, leaching depth, and broad mineralization intervals. In tandem with the logging,
the geologist notes where major sample breaks should be placed at lithological
boundaries.
A second phase of detailed core logging is carried out immediately after cutting on the
preserved split core at Candentes core storage facility in Chiclayo, where each core is
logged for lithology, structure, veining, alteration, and mineralization. All logged
descriptions are indexed to 2 m sample intervals, so that the mineralization, veining,
structure, lithology, and alteration affecting any sample are known.
Core from all other legacy drill campaigns has been re-logged by Candente.
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3.6.4
Collar Surveys
Candente drill collar locations were picked up by a surveyor using a total station
instrument. All legacy drill collars were picked up by survey in 2006 and tied into the
project grid.
3.6.5
Down-hole Surveys
For the 2004 drill program, down-hole surveys were undertaken using a Pajari analog
survey tool with a timed locking compass and inclinometer. Readings were taken at the
drill machine to confirm true vertical holes. Any spurious readings were discarded and a
second survey was done at the same depth. The 2005 program used the same
instrumentation and procedures as in 2004. However, a number of the 2005 program drill
holes do not have down-hole survey data due to a malfunction in the instrument.
All the drill holes from the 2006 and 2007 drill programs were down-hole surveyed with a
Sperry Sun single-shot down-hole survey tool supplied by the drilling company.
The 2008 program drill holes were down-hole surveyed for dip and azimuth at 50 m
intervals with a Reflex EZ-Shot digital down-hole survey tool.
Selected drill cores from the 2006 and 2008 drill programs were oriented for geotechnical
purposes using an A.C.E. tool.
3.6.6
Recovery
Drill core recovery data from the legacy drill campaigns are not available. Candente staff
have recorded core lengths and calculated core recoveries and RQD at the sites of the
drill holes.
AMEC reviewed the core recovery data from drill holes C07-164 through to C08-244 and
found a trend of decreasing copper grade with decreasing core recovery. The copper
grades decrease from 0.3% to 0.2% at a core recovery of 80%; however, only 2% of the
data are affected. There is a low risk of a very low number of assays having a negatively
biased copper grade because of low core recoveries.
3.6.7
Caariaco Norte Drilling

The central part of the deposit has been delineated at a nominal, but not regular, spacing
due to relief restrictions. In this area, the drill grid spacing is 75 m x 75 m with most of the
core holes drilled vertically. On the deposit margins, drill spacing widens to as much as
100 m x 100 m.
Drill hole depths range from 14 m to 766 m, averaging 290 m. Drill hole orientations are
typically vertical, but have also been drilled at angles ranging from 45 to 75.
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The relationship between true widths, drill intercepts, lithologies, and copper grades for
drill hole intervals in selected drill holes are shown on the cross-sections included in
Section 3.5.
Example drill intercepts for the deposits, summarized in Table 3-6, are illustrative of
nature of the mineralization. The example drill holes contain sulphide intersections and
areas of higher grade in lower-grade intervals.
Table 3-6:
Drill Hole Intercept Summary Table

To
(m)
Drill Intercept
Interval
(m)
Copper
Grade
(Cu%)
Gold
Grade
(g/t Au)
Silver
Grade
(g/t Ag)
Deposit
Hole ID
From
(m)
Caariaco Norte
C07-200
76
300.25
224.25
0.79
0.140
2.58
Caariaco Norte
C05-020
12
357.95
345.95
0.49
0.045
2.46
Caariaco Norte
C08-213
27.25
46.95
19.7
0.96
0.142
2.19
Caariaco Norte
C08-213
52.4
98.0
45.6
1.01
0.145
3.01
Caariaco Norte
C06-074
52.4
98.0
237.0
0.605
0.111
1.99
Caariaco Norte
C07-144
70.6
271.0
200.4
0.812
0.129
2.48
Caariaco Norte
C06-076
34.9
363.0
328.1
0.911
0.169
2.20
Note: Depending on the dip of the drill hole and the dip of the mineralization, drill intercept widths are typically greater than true
widths.
3.6.8
Comment on Drill Programs

The quantity and quality of the lithological, geotechnical, collar, and down-hole survey
data collected in the exploration and infill drill programs are sufficient to support Mineral
Resource estimation, as follows:
Core logging meets industry standards for copper, gold, and silver exploration.
Collar surveys have been performed using industry-standard instrumentation.
Down-hole surveys were performed using industry-standard instrumentation.
Recovery data from core drill programs are acceptable.
Geotechnical logging of drill core meets industry standards for planned open pit
operations.
Depending on the dip of the drill hole and the dip of the mineralization, drill intercept
widths are typically greater than true widths.
Drill orientations are generally appropriate for the mineralization style and have been
drilled at orientations that are optimal for the orientation of mineralization for the bulk
of the deposit area.
Drill orientations are shown in the example cross-sections in Section 3.5 and can be
seen to appropriately test the mineralization. The sections display typical drill hole
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orientations for the deposits, show summary assay values using colour ranges for
assay intervals that include areas of non-mineralized and very low grade
mineralization, and outline areas where higher-grade intercepts can be identified
within lower-grade sections. The sections confirm that sampling is representative of
the copper, gold, and silver grades in the deposits, reflecting areas of higher and
lower grades.
The drill hole intercepts summarized in Table 3-5 appropriately reflect the nature of
the copper, gold, and silver mineralization.
No factors were identified with the data collection from the drill programs that could
affect Mineral Resource estimation.
3.7
Sample Preparation
3.7.1
Geochemical Sampling
No information is available on the sampling methods for the Ingemmet, Placer Dome, or
Surcusal Peruana geochemical sampling programs. Soil and other geochemical samples
taken by Candente were typically 2 to 5 kg in weight.
3.7.2
Pit and Trench Sampling

No information is available on the sampling methods for the Ingemmet and Placer Dome
geochemical sampling programs.
3.7.3
Core Sampling
Drill core generated by Ingemmet and Placer Dome was halved; no information is
available as to the typical sample intervals. The Surcusal Peruana drill core was halved
and sampled on 2 m intervals.
Candente drill core is halved using a circular rock saw. Samples are 2 m in length unless
a geological contact is present within the sample interval. In those instances, the sample
interval is terminated at the contact. The subsequent sample interval terminates at the
next metre depth mark that allows a minimum sample length of 1.5 m.
3.7.4
Quality Assurance and Quality Control

The quality assurance and quality control (QA/QC) programs for the project are discussed
in Section 3.8.3.
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3.7.5
Density/Specific Gravity
A total of 9,424 bulk density readings were taken by Candente personnel during core
logging using a weight-in-air and weight-in-water method. Samples were taken every
10 m to 20 m to include all rock and alteration types. Data were recorded for drill hole ID,
depth, rock type, alteration, weight in air, and weight submerged in water.
As a part of the update to the 2008 mineral resource estimate, 550 bulk density
determinations were collected by Candente personnel from drill core intervals and
submitted to ALS Chemex (Lima) for density determinations. The determinations were
performed using a wax-coated immersion technique (specialty assay procedure
OA-GRA08a). AMEC assigned constant specific gravity values to each lithological rock
type (Table 3-7).
Table 3-7:
Specific Gravity Values Used in 2010 Mineral Resource Estimate

Specific Gravity
Oxide
3
(g/cm )
Sulphide
3
(g/cm )
2.13
2.33
2.19
2.17
2.03
2.17
2.17
2.17
2.51
2.50
2.48
2.50
2.56
2.50
2.45
2.50
VC
CQFP
BFP
CQP
FP
IBXH
TBX
IBXP
3.7.6
Comment on Sample Preparation

All collection, splitting, and bagging of core samples were carried out by company
personnel, who varied depending on the date of the drill program. No factors were
identified with the drilling programs that could affect Mineral Resource estimation.
The sizes of the sampled areas are representative of the distribution and orientation of
the mineralization.
The figures in Section 3.5 show approximate drill hole collar traces in relation to the
orientation of the mineralization. The figures also show drill hole assay intervals,
including areas of non-mineralized and very low grade mineralization, and confirm that
sampling is representative of the gold, silver, and copper grades in the deposit, reflecting
areas of higher and lower grades.
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The sampling methods are acceptable, meet industry-standard practice, and are
adequate for Mineral Resource estimation purposes, based on the following:
Data are collected following industry-standard sampling protocols.
Sample collection and handling of core were undertaken in accordance with
industry-standard practices, with procedures in place to limit potential sample losses
and sampling biases.
Sample intervals in core, comprising average 2 m intervals, are considered to be
adequately representative of the true thicknesses of mineralization. Not all drill
material may be sampled depending on location and alteration.
Gravity determination procedures are consistent with industry-standard procedures.
There are sufficient acceptable specific gravity determinations to support the specific
gravity values utilized in tonnage interpolations.
3.8
Sample Preparation, Analyses, and Security

From project inception to date, project staff employed by Candente and predecessor
companies were responsible for the following:
sample collection
core splitting
preparation of samples for submission to the analytical laboratory
sample storage
sample security.
3.8.1
Analytical Laboratories
Several primary assay laboratories have been used for routine analyses over the project
history.
Ingemmet used the Plenge Laboratory in Lima and the Ingemmet internal laboratory, also
located in Lima. No information is available as to accreditation of the laboratories at the
time sampling was performed.
Placer Dome utilized the SGS-XRAL (SGS) laboratory in Lima, which was independent of
Placer Dome. No information is available as to accreditation of the laboratory at the time
sampling was performed.
For the Surcusal Peruana sampling, sample preparation was undertaken by ALS Chemex
in Trujillo and primary analysis by ALS Chemex in Lima. The umpire laboratory was
SGS. Both laboratories were independent of Surcusal Peruana. No information is
available as to accreditation of the laboratories at the time sampling was performed.
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Activation-Skyline Laboratories (Actlabs) in Lima, Per, performed all of the sample

preparation and the majority of the analyses for the Candente programs. Actlabs is
independent of Candente and holds ISO:9000 accreditation for the Peruvian laboratory.
Inductively-coupled plasma (ICP) analyses were performed by the Ancaster, Canada,
Actlabs laboratory, which has Standards Council of Canada (SCC) accreditation for
International Standards Organization (ISO) 17025.
Some analyses for the re-analysis of pre-2008 core samples for gold and ICP were
undertaken by ALS Chemex in Lima. ALS Chemex is independent of Candente and
holds ISO:9000 accreditation for the Peruvian laboratory.
ACME Laboratories (ACME), Lima, was used as a check laboratory for pulp analyses.
ACME is independent of Candente and holds ISO:9000 accreditation for the Peruvian
laboratory.
3.8.2
Sample Preparation and Analysis

Limited information is available on the sample preparation and analysis methods for
Ingemmet or Placer Dome. Ingemmet samples were analyzed for Cu and Mo, and more
rarely Au and Ag, using a colorimetric analytical method.
Surcusal Peruana samples were 200 g splits of a 1 kg, 200 mesh homogenized sample.
A split from each sample pulp was assayed for Au (fire assay with atomic absorption
finish, 10 ppb detection limit) and Cu, Pb, Zn, Mo, and As (multi-acid, total digest), with an
atomic absorption (AA) finish for each element. SGS completed check assays on a split
of 1 in 20 pulps using the same analytical procedures as the initial analysis performed by
ALS Chemex.
3.8.2.1
Candente
Sample Preparation
Sample preparation for the Candente samples included drying, then crushing with a jaw
crusher to >70% less than 10 mesh. The sample is thoroughly blended using a riffle
splitter. A sub-split is taken, which is pulverized to >95% less than 150 mesh, and this
pulp is submitted for analysis.
Copper
Each sample was subject to total copper and sequential copper leaching analysis, which
returns results for acid-soluble, cyanide-soluble and residual copper grades. Total copper
analysis was performed using a three-acid digest and AA finish (laboratory method ME-3
or three-acid digestion).
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The sequential leach analysis consisted of:

an initial leach step, where samples were dissolved in sulphuric acid and the copper
grade was determined by AA to give the acid-soluble copper value
a secondary leach step, where samples were dissolved in sodium cyanide and the
copper grade determined by AA to give the cyanide-soluble copper value
a third leach step, where the samples were dissolved using a three-acid digest and
the copper grade determined by AA finish to give the residual copper value.
For any given sample, copper grades were obtained by adding the three parts of the
sequential copper analysis. Results are compared to the copper grade reported in the
total copper analysis; if the sum of the sequential leach grades differs by >0.03% from the
total copper grade, then the analysis is repeated for both parts of the process.
Gold
The sample for gold analysis is taken from the remaining pulps after copper analysis. The
250 g pulps are homogenized and a 30 g split is weighed out for fire assay fusion,
cupelled to obtain a bead, and digested with aqua regia, followed by an AA finish, with a
detection limit of 5 ppb Au (Actlabs code EF1).
Gold assays were done for only some of the original pre-2008 drilling. These were
analyzed by fire assay (FA) with an atomic absorption finish (FA-AA) on a 30 g sample.
The rest of the samples were not systematically analyzed for gold until a large analysis infill campaign was conducted in March 2008. Owing to the large volume of samples,
analyses were split between Actlabs and ALS Chemex. The FA-AA method on a 30 g
sample was used by both laboratories.
The FA-AA method on a 30 g sample was used for the 2008 drill campaign, with all
analyses performed by Actlabs.
Inductively-coupled Plasma Multi-element
Actlabs used a 36-element inductively-coupled plasma optical emission spectrometry
(ICP-OES) method following aqua regia digestion (laboratory code 1E3). ALS Chemex
performed a 33-element ICP atomic emission spectroscopy (AES) method after four-acid
digestion (laboratory code ME-ICP61).
3.8.3
Quality Assurance/Quality Control Programs

There is no information on any quality assurance/quality control (QA/QC) programs for
Ingemmet and Placer Dome.
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Surcusal Peruana used blanks (crushed quartz every 20 samples), standard reference
materials (SRM: one in every 20 samples), and check assays (one in every 20 samples).
In Surcusal Peruanas protocol, a blank sample was not to be submitted adjacent to an
SRM sample, but could not be any more than 10 samples away from an SRM. Chain-ofcustody and sample preparation protocols were also part of Surcusal Peruanas QA/QC
program at Caariaco.
3.8.3.1
Candente
Duplicates
No field duplicates were used in the 2004 drilling program but were included from drill
hole C05-013 of the 2005 drill program. Field duplicates typically comprised quarter drill
core. Coarse reject duplicates were run on drill holes C04-007 and C05-023. Pulp
duplicates were taken at Actlabs every 10th sample.
Candente has consistently sent 5% of pulps prepared and analyzed by Actlabs to
independent laboratories for check assays on total copper analyses. Five percent of the
samples from drill holes C04-001 to C06-082 were sent to ACME Laboratories, Lima, for
analysis by four-acid digestion of a 0.25 g pulp split. For drill holes C07-083 to C07-202,
5% of the samples were sent to SGS Laboratories, Lima, for analysis using the same
analytical procedures as the original assay work (three-acid digestion on a 0.25 g split).
All independent checks included standards, blanks, and duplicates. Pulp duplicates were
also made during all independent laboratory checks at ACME and SGS.
During 2010, Candente sent a suite of 530 pulp reject samples to the SGS laboratory in
Lima for check analyses on silver ICP analyses. The samples were analyzed by four-acid
digest on a 0.3 g pulp split (method ICP40B). The samples were randomly selected from
drill holes throughout the area drilled by Candente. All independent checks included
standards, blanks, and duplicates. Peruaa
Blanks
Field blank material is obtained from a barren outcrop of volcanic host rock situated
beyond the alteration halo at Caariaco. Blanks are submitted at a frequency of one in 30
samples, so that each laboratory batch of 80 will always have at least two blanks. Field
blank fail limits are set at 0.05% Cu or five times the detection limit of 0.01%.
Standard Reference Materials
Candente has used six commercially available SRMs, purchased from CDN Laboratories
in Vancouver, Canada. SRMs are submitted at a frequency of one in 30 samples, so that
each laboratory batch of 80 will always have at least two SRMs. An additional two SRMs
were purchased from Geostats Pty. in Australia specifically for use in the ICP check
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assays conducted during 2010. The selected SRMs have low-grade silver contents that
are close to the average silver grade of the Caariaco Norte deposit.
During 2006, SGS was retained to prepare two SRMs from unweathered outcrops from
the Caariaco property for sequential leach analysis.
Where the copper value of the SRM was outside the acceptable value specified for the
standard by CDN Laboratories (two standard deviations from the mean), they were failed.
Re-analysis of failed copper standards was not carried out at time of drilling. This was
mainly due to the fact that most batches contained two, or sometimes three, standards. If
one standard failed but the other did not, the batch was considered to be acceptable,
particularly if the other QA/QC samples (blanks and duplicates) did not fail.
Re-sampling
Candente conducted an extensive re-sampling program of historical pre-2004 drill hole
data. Nine out of eleven historical holes were re-sampled. Only holes C73-001 and
C73-005 were not re-sampled. C73-001 was twinned by C04-001, and C73-005 did not
have significant copper grades.
Sections of the old core were quartered and sent to Actlabs, Lima, for processing. Given
the state of the legacy drill core after several moves, composite samples of up to 20 m
were made within mineralization types and between fixed blocks to ensure proper
metreage measurements.
A comparison between the original and the Candente assays shows an acceptable
correlation between the datasets. Based on this, all of the historical data were added to
the final database, and the Candente assays from the re-sampling program were
excluded because of the composite lengths.
Twin Holes
Candente drilled three pairs of twinned holes to verify grade uniformity at short distances.
Two of the twin sets (holes C04-007 with C07-104 and C04-023 with C07-106) show
similar average grades over the same depth intervals. The third twin set (C04-005 with
C07-146) shows significantly higher average grades in the original hole from 2004 than in
its twin drilled in 2007. This may indicate that a vertically oriented mineralized vein set
was intercepted in one drill hole and not the other.
3.8.4
Databases
All date in the field are recorded in written form in field books, log books, sample sheets,
logging forms or shipping forms. Various phases of record keeping are repeated in the
subsequent step to confirm recorded values or numbers.
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All field data are entered into Excel tables either in the Caariaco camp or at the
Candente Lima office. Errors in data entry picked up during the verification stage can be
confirmed and corrected from filed data.
Data from third parties such as laboratories or survey contractors are generally supplied
in digital and printed form. These records are printed out and kept in binders for
reference during data verification.
3.8.5
Sample Security
Sample security at the Caariaco project during the Candente drilling programs relied
upon the remote nature of the site and the fact that the samples were always attended or
locked at the sample dispatch facility. Sample collection and transportation have always
been undertaken by company or laboratory personnel using company vehicles.
Drill samples were picked up at site by a freight firm using a dedicated vehicle, and
transported to the sample preparation facility. Pulps were transported by laboratory
personnel to the appropriate analytical facility.
Chain-of-custody procedures consisted of filling out sample submittal forms that were
sent to the laboratory with sample shipments to ensure that all samples were received by
the laboratory.
3.8.6
Sample Storage
Prior to the construction of an access road into camp, all core was stored on racks within
secure storage facilities. In October 2007, all existing core was moved to a secure core
storage facility in Chiclayo, close to Candentes regional offices, and thereafter core
boxes were transported directly to the new core storage facility for detailed logging and
permanent storage.
3.9
Comment on Sample Preparation, Analyses, and Security

The quality of the copper, gold, and silver analytical data is sufficiently reliable to support
Mineral Resource estimation. Sample preparation, analysis, and security are performed
in accordance with exploration best practices and industry standards, as follows:
Geochemical sampling covered sufficient area, was adequately spaced to generate
first-order geochemical anomalies, and thus was representative of first-pass
exploration sampling.
Drill sampling has been adequately spaced to first define, then infill, copper and gold
anomalies to produce prospect-scale and deposit-scale drill data. Drill hole spacing
varies with depth. Drill hole spacing in the central core of the deposit can be about
50 m and is 75 m x 75 m on average, due to drill pad location restrictions as a result of
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the topography. Drill hole spacing increases with depth as the number of holes
decreases and holes deviate, and is wider on the edges of the deposit.
Sample preparation for samples that support Mineral Resource estimation has followed
a similar procedure since 2004. The preparation procedure is in line with industrystandard methods for coppergoldsilver deposits.
Core from drill programs was analyzed by independent laboratories using
industry-standard methods for copper, gold, and silver analysis.
Limited information is available on the QA/QC employed for the earlier drill programs;
however, twin drill holes confirm the grades and lithologies, and the core from the drill
programs has been re-assayed, so that the data can be accepted for use in estimation.
Typically, Candente drill programs included insertion of blank, duplicate, and SRM
samples. The QA/QC program results do not indicate any problems with the analytical
programs. Therefore, the copper, gold, and silver analyses from the core drilling are
suitable for inclusion in Mineral Resource estimation.
The collected data were subject to validation by built-in program triggers that
automatically checked data on upload to the database.
Verification is performed on all digitally collected data on upload to the main database,
and includes checks on surveys, collar coordinates, lithology data, and assay data.
The checks are appropriate and consistent with industry standards
Sample security has relied upon the fact that the samples were always attended or
locked in the on-site sample preparation facility.
Chain-of-custody procedures consist of filling out sample submittal forms that are sent
to the laboratory with sample shipments ensure that all samples are received by the
laboratory.
Current sample storage procedures and storage areas are consistent with industry
standards.
3.10
Data Verification
history, primarily in support of technical reports.
3.10.1
Currie, 2004
During a site visit to support the completion of a technical report, Currie (2004) traversed
the entire Caariaco Norte zone, examining numerous outcrops. Four samples were
taken from outcrop material and trenches. Analyses indicated that the assays from the
outcrops were consistent with the grades seen in drill holes.
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3.10.2
MineFill, 2007
MineFill performed detailed data verification for all available data from 1973 to 2006; only
verified assay information was used in the estimation of mineral resources. Assay values
were deemed verified when the original signed assay certificate or photocopy was
present and the database reflected the assay certificate values accordingly. The sample
numbers and assay values on the certificates were called out by an individual, as another
individual located the corresponding sample numbers within the database and verified the
assay values. The data were marked as verified, corrected, or unverified, accordingly. Of
the five holes drilled by Ingemmet in 1973, only three were verified. The remaining 88
core holes in the 2007 database were completely verified and corrected for use in mineral
resource estimates.
3.10.3
SRK, 2008
SRK undertook the following checks:
detailed verification of assays using signed assay certificates
assay verification from electronic laboratory files
verification of down-hole survey data
verification of drill hole positions in field
comparison of Cu grades from re-sampling of historical drill holes to original data
verification of Cu assay data from twinned drill holes
comparison of Cu assays from different analytical procedures
comparison of Cu assays from vertical versus inclined holes
collection and independent analysis of check assay samples.
SRK noted no errors or omissions in the data that were reviewed that could affect mineral
resource estimation.
SRK also selected a suite of 21 core samples for independent analysis at ALS Chemex,
Vancouver, by four-acid digest and ICP-AES. Samples were chosen on the basis of their
Cu grade (determined by Candente), lithology, mineralization type (presence of leachable
Cu), and age of drill hole, in an effort to reflect the variability in the deposit and the
consistency of analytical results over time. Samples comprised bags of pieces of
quartered core samples taken over a 2 m interval in an attempt to ensure that the
sampled interval coincided with a Candente sample interval. However, the very fractured,
rubbly nature of the recovery of several intervals meant that the samples reflected a
sample of gravel-sized core fragments, rather than split core.
On the whole, SRKs comparisons of results with the original Candente assays yielded
relatively good agreement. Graphic evaluation of the data indicated that approximately
65% and 90% of paired data fell below the 10% and 20% absolute relative difference
lines. Significantly, there was no strong bias within the data, with points falling above and
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below the parity line. The data did not, in SRKs opinion, show an obvious correlation
between the relative difference in lithology, mineralization, grade, or time of assay.
SRK also concluded that the reasonable correlation between the results from its checks
using a four-acid digestion technique with ICP finish and those obtained by Candente
using a three-acid leach and AA finish further confirmed that the three-acid leach
technique was suitable for the Caariaco mineralization.
3.10.4
AMEC, 2010
AMEC reviewed 1,930 copper, gold, silver, and molybdenum assays, or 5.6% of the
analytical data in the database, as a verification of the data quality. No errors were noted
and the analytical data were considered suitable to support Mineral Resource estimation.
3.10.5
Comment on Data Verification

Data verification for the project has been performed by external consultancies, primarily in
support of technical reports. The data verification programs undertaken on the data
collected from the project adequately support the geological interpretations and the
analytical and database quality, and therefore support the use of the data in Mineral
Resource estimation:
No major sample biases were identified from the QA/QC programs that were
completed.
Historic drill core from predecessor companies was re-analyzed. The historical
values were found to be sufficiently in accordance with the re-assay values that they
were deemed acceptable for use.
The collected sample data adequately reflect deposit dimensions, true widths of
mineralization, and the style of the deposit.
External reviews of the database have been undertaken in support technical reports,
producing independent assessments of the database quality. No significant problems
with the database, sampling protocols, flowsheets, check analysis program, or data
storage were noted.
Two generations of independent sampling supports the mineralization grades
reported by Candente.
Drill data are typically verified prior to Mineral Resource estimation by running a
software program check.
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3.11
Mineral Resource Estimation

Mineral Resource estimates were prepared by AMEC employees David G. Thomas,
P.Geo., Senior Resource Geologist, and Rodrigo Alves Marinho, Principal Geologist.
3.11.1
Database
The 2010 AMEC mineral resource estimate uses 15 additional core drill holes that were
not considered in the November 2008 estimate because analytical results were not
available to SRK at the previous estimate cutoff date. The estimation database consists
of 225 core holes (67,485.06 m of core, of which 66,584.29 m have assay intervals) from
the Ingemmet, Placer, Surcusal Peruana, and Candente drill programs (Table 3-8).
Table 3-8:
Summary of Drill Data used for Caariaco Norte Resource Estimate
Campaign
Ingemmet
No. Holes*
Min. Length
(m)
Max. Length
(m)
Avg. Length
(m)
Total
(m)
300.00
300.00
300.00
900.00
Placer Dome
Billiton
Candente 2004
Candente 2005
Candente 2006
Candente 2007
Candente 2008
3
3
12
24
46
109
25
181.36
166.50
152.40
135.60
160.70
14.25
240.00
350.00
197.20
300.12
501.40
594.25
766.60
704.10
284.64
185.23
220.62
307.83
347.47
263.26
400.11
853.91
555.70
2,647.38
7,387.87
15,983.55
28,935.60
10,221.05
Total*
225
14.25
766.60
298.65
67,485.06
*Metallurgical drill holes not included in this table
The drill database was provided by Candente as MS Excel spreadsheets with a cutoff
date of 18 July 2010.
AMEC imported the collar, survey, lithology, alteration, and assay data into GEMS
(version 6.2.4), a commercial mining software program. GEMS validation routines were
used to check for overlapping intervals, missing intervals, and consistent drill hole lengths
between tables. No errors were reported.
3.11.2
Topography
Topographic contour limits were based on a photogrammetric interpretation undertaken
on aerial photograph coverage provided by Horizons South America S.A.C. Aerial
Mapping Services, which was accurate to 1 m (x, y, z). Errors noted in the digital terrain
model (DTM) by SRK (2009) were surveyed using a Sokkia total station instrument.
These points were used in conjunction with the original topographic data to minimize the
differences found. Although AMEC did not find a constant elevation difference between
the surveyed collars and the DTM, AMEC is of the opinion that further investigation is
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required for the next level of study to provide the precision necessary for earth-movement
estimates.
3.11.3
Models
Candente provided interpretations of the lithological units summarized in Table 3-9 on
north-south and east-west vertical sections spaced 100 m apart.
Table 3-9:
Description of Lithological Units
Lithological Unit
Description
VC
CQFP
BFP
CQP
FP
IBXH
TBX
IBXP
Volcanic
Crowded Feldspar Quartz Porphyry
Biotite Feldspar Porphyry
Coarse Quartz Porphyry
Feldspar Porphyry
Igneous Hydrothermal Breccia
Tourmaline Breccia
Igneous Polymictic Breccia
As the lateral extent of the lithological interpretations are not fully defined by drill data in
some areas of the deposit, AMEC expanded the interpretation beyond the limits of the
available drill hole information to cover the block model extents. Although AMEC
considers such extrapolation to be reasonable, AMEC recommends that additional drilling
be performed to increase the level of confidence of the lithological interpretation in these
areas.
The drilling completed post-2008 was added to the interpretations. AMEC created bench
polygons and extruded the bench plan polygons to the mid-point distance to the adjacent
polygons to create lithological solids.
Eastwest oriented, 100 m spaced vertical sections for alteration types and intensities
were prepared by Candente. These were simplified by AMEC, and the resulting bench
plan polygons were extended beyond the limits of the available drill hole information to
cover the block model extents. AMEC recommends that a full review of the alteration
interpretation be completed on vertical sections reconciled to bench plans for the next
level of study.
Estimation domains were defined following evaluation of statistical distributions of
lithological and alteration units. AMEC created a total of seven domains for copper and
four domains for gold and silver (Table 3-10).
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Table 3-10: Domain Definition

Element
Domain Code
Copper
Gold and
Silver
Lithological Units
Alteration Units
10
VC, CQFP
Weak argillic
20
VC, CQFP
All but weak argillic
30
BFP, IBXP
Weak argillic
40
BFP, IBXP
50
CQP, IBXH, TBX
Weak argillic
60
CQP, IBXH, TBX
70
FP
Weak argillic, propylitic, intermediate argillic, phyllic
10
20
VC, CQFP, CQP, FP

VC, CQFP, CQP, FP
All but advanced argillic

Advanced argillic
30
40
BFP, IBXH, TBX, IBXP

BFP, IBXH, TBX, IBXP
All but advanced argillic

Advanced argillic
These domains were flagged to blocks, back-tagged to composites, and used as the
basis for matching samples and blocks during the estimation process. For the definition
of arsenic domains, AMEC used a probabilistic approach considering an arsenic cutoff
grade of 250 ppm as the threshold for low- and high-grade populations.
AMEC defined a supergene-enriched domain that was considered only for the estimate of
copper grades. The supergene layer in the Caariaco Norte deposit is thin and laterally
discontinuous.
Copper mineralization at Caariaco Norte is related to porphyry intrusions, breccias, and
potassic, propylitic, phyllic, argillic, and advanced argillic alteration; however, the limits of
mineralization in the deposit are not well known. AMEC recommends building a mineral
zonation model for the next phase of study. A combination of lithology, alteration, and
mineral zones should provide more robust support for the mineralized envelope and the
definition of grade estimation domains.
3.11.4
Composites
Although the nominal sample length for assays is 2 m, sample lengths in the Caariaco
Norte assay database range from 0.45 m to 100.3 m; such long intervals correspond to
non-mineralized zones or to intervals of non-sampling. In order to normalize the weight of
influence of each sample, AMEC regularized the assay intervals by compositing the drill
hole data into 6 m lengths using no geological or domain boundaries. AMEC then backtagged the 6 m composites using the lithological and alteration solid shapes and assigned
estimation domain codes.
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3.11.5
Exploratory Data Analysis

Exploratory data analysis comprised basic statistical evaluation of the 6 m composites for
copper, gold, silver, and arsenic.
Box plots indicated that copper displayed similar grade distributions in those domains that
had no weak argillic alteration. The biotite-feldspar porphyry and polylithic breccia units
(BFP and IBXp) are preferentially mineralized and have higher average grades for all
metals. Figure 3-13 shows the copper box plots for each domain.
Coefficient of variation (CV) values for copper are low, around and below 1, in all domains
but domain 10, which consists of volcanic rocks (VC) and the crowded quartz-feldspar
porphyry (CQFP), where the CV is 1.5 for uncapped copper composite values.
Average gold grades are very low (below 0.1) in all domains, but box plots indicate that
the combination of biotite feldspar porphyry (BFP) and the different types of breccia
(IBxP, TBx, and IBxH) host most of the higher-grade gold mineralization where such
mineralization is associated with any alteration type other than advanced argillic. All
domains have low CV values for gold (less than 2), which confirms the low variability of
the gold grades.
AMEC used for the same domains for silver as defined for gold because of their good
correlation (Figure 3-14).
Silver displays similar average grades and grade ranges to gold. A higher spread of
silver grade ranges was observed in domain 10.
From the analysis of cumulative distribution plots, AMEC defined a threshold of 250 ppm
As for low- and high-grade arsenic populations relative to this deposit. By splitting the
data, AMEC reduced the global CV from 1.7 to 0.7 and 1.1 for low- and high-grade
samples, respectively. Arsenic values (>400 ppm) are concentrated in the northwest and
south-centre parts of the deposit, and AMEC could not clearly define domains based on
lithology, alteration, or a combination of both. AMEC recommends that once the
mineralogical model has been constructed, the arsenic distribution should be evaluated
along the interpreted units.
Contact analyses were completed for copper (Table 3-11) and gold (Table 3-12)
composite values, and AMEC defined soft, firm, and hard boundaries from this analysis.
To represent the firm contacts, AMEC shared samples only during the first estimation
pass.
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Figure 3-13: Box Plot for Copper (%) by Domain
Figure 3-14: Box Plots for Silver (%) by Domains
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Table 3-11: Contact Matrix Defined for Copper Domains

Domains
10
20
30
40
50
60
70
10
20
21
30
21
21
21
40
50
21
21
60
70
21
21
Note: 0 = soft; 1 = hard; 21 = firm
Table 3-12: Contact Matrix Defined for Gold Domains

Domains
10
20
30
40
10
21
20
21
21
30
40
21
Note: 0 = soft; 1 = hard; 21 = firm
3.11.6
Variography
AMEC used Sage2001 software to construct down-hole and directional correlograms for
the estimation domains for copper, gold, silver, and arsenic. For arsenic, AMEC also
created correlograms for the 250 ppm As indicator threshold and subsequent grade
correlograms for low- and high-grade domains. Domains that displayed soft boundaries
were grouped.
For copper and gold, AMEC used spherical models to fit the experimental correlograms.
A combination of exponential and spherical models was used for silver, depending on
domain.
3.11.7
Grade Capping
AMEC evaluated probability plots to define grade outliers for copper, gold, and silver by
estimation domains. Outlier values typically occur in the upper 1% of the distribution.
Copper and gold values were capped at the thresholds defined. For silver, outlier values
were controlled by using a restricted search ellipse with a radius of 25 m x 25 m x 15 m
during grade estimation. AMEC did not restrict extremely high arsenic values. The grade
thresholds for the different element outliers are shown in Table 3-13.
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Table 3-13: Outlier Thresholds for Copper, Gold, and Silver

Element
3.11.8
Domain Code
Threshold
Copper (%)
10
20
30
40
50
60
70
1.10
2.00
2.50
2.50
1.10
1.20
1.10
Gold (ppb)
10
20
30
40
130
530
-
Silver (ppm)
10
20
30
40
12
12
17
17
Estimation Methodology
The block model consists of regular blocks (15 m x 15 m x 15 m) with no rotation. The
block size was chosen such that geological contacts are reasonably well reflected and to
support an open pit mining scenario.
AMEC estimated copper, gold, silver, and arsenic grades by estimation domains using
ordinary kriging (OK) interpolation for the majority of domains. Inverse distance weighting
to the second power (ID2) was used to interpolate Au and Ag in domains 20 and 40
where variography was not considered sufficiently robust. Estimation domains are shown
in Table 3-14.
The process included the following:
Grade estimation was completed in three passes.
Sample sharing was based upon the matrix determined from contact profiles.
Search orientations for all domains were based upon variogram orientations.
A minimum of 3 to 11 and a maximum of 9 to 15 drill hole composites were required
for estimation; this varied by element and estimation pass.
The estimate of arsenic grades was divided into low- and high-grade populations and the
final grade calculated by weighting grades by the respective probability, as shown in the
following formula:
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As_final grade = As_hg * Prob_hg + As_lg * Prob_lg

where
As_hg = estimated arsenic grade from high-grade samples
As_lg = estimated arsenic grade from low-grade samples
Prob_hg = probability of block being high grade
Prob_lg = probability of block being low grade
Table 3-14: Estimation Parameters for All Elements

Search Ellipse
Rotation ()
Element
Ag
Domain
10 & 20
30 & 40
Au
10 & 20
30 & 40
Cu
10 & 30
20, 40, 50 &

60
70
As
3.11.9
High and
Low
Ranges (m)
Pass
Min. No.
Comp
Max. No.
Comp
Max.
Comp. /Hole
1
2
-57
-57
25
25
6
6
100
200
50
100
75
150
5
5
15
15
3
3
-57
25
400
200
300
12
50
25
-128
120
65
35
15
50
25
-128
240
130
70
15
50
25
-128
420
350
280
12
-17
-10
-16
65
65
90
15
2
3
-17
-17
-10
-10
-16
-16
130
195
130
195
180
270
5
3
15
12
3
3
15
90
-6
130
125
60
15
15
90
-6
260
250
120
15
15
90
-6
450
450
250
12
-93
-30
92
100
120
80
11
15
-93
-30
92
200
240
160
15
-93
-30
92
300
360
240
1
2
-87
-87
-11
-11
63
63
65
190
45
135
90
270
11
6
15
15
5
5
-87
-11
63
310
225
450
12
-25
50
75
100
11
15
-25
100
150
200
15
-25
200
300
400
12
44
-20
65
50
20
100
15
2
3
44
44
-20
-20
65
65
100
240
40
80
200
400
5
3
15
12
3
3
Density
AMEC assigned density values to blocks based upon the lithological codes. In AMECs
opinion, these density values are reasonable for use in mineral resource estimation at this
preliminary level of study, but recommends executing a continuous program of specific
gravity determinations from core samples using preferably the same laboratory and
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determination procedures.
Section 3.7.5.
3.11.10
Density values used in the estimate are discussed in
Model Validation
AMEC validated the Caariaco Norte block model to ensure appropriate honouring of the
input data. A nearest-neighbour (NN) model was created to validate the OK model.
Detailed visual inspection of block grade versus composited data was completed in
section and plan view. The visual inspection of block grade versus composited data
showed a good reproduction of the data by the model. Figure 3-15 illustrates a vertical
section from the modelling. There is good agreement between the estimated grades and
composite grades. Only blocks classified as Measured or Indicated are plotted in this
figure.
A comparison between the OK and NN estimates was completed to check for global bias
in the copper, gold, silver, and arsenic grade estimates. Differences were within
acceptable levels and no global biases were noted in the estimates (Table 3-15).
Figure 3-15: Vertical Section (9,326,500) with Blocks and 15 m Composites Grades for
Copper (Corridor of 100 m). Block Color Ranges are for Cu in %
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Table 3-15: Summary of Statistics Comparing OK and NN Estimates

Model
Element
Domain
Min.
Max.
Mean
CV
Diff. OK/NN
OK
NN
OK
NN
OK
NN
OK
Cu (%)
Cu (%)
Au (ppb)
Au (ppb)
Ag (ppm)
Ag (ppm)
As (ppm)
All
All
0.00
0.01
1.81
1.89
0.37
0.36
0.43
0.58
1.6%
All
All
All
All
All
0.3
1.5
0.2
0.1
2.6
274.5
456.0
39.6
236.7
2,946.7
59.5
59.7
1.6
1.6
236.2
0.53
0.70
0.50
1.30
0.90
-0.3%
NN
As (ppm)
All
1.0
2,963.9
234.9
1.20
0.0%
0.6%
Note: CV = coefficient of variation
Swath plot validation compared average grades from OK and NN models along different
directions. Except in areas where drilling is currently limited, the swath plots indicated
good agreement for all variables.
The degree of smoothing due to kriging was assessed by considering change-of-support
correction using Hermetian polynomials. AMEC considered blocks from all copper
domains; the results show a smoothing of 4% in copper grades but 7% more tonnes
above the 0.2% Cu cutoff, resulting in a difference of only 1% in contained metal. The
kriging smoothing is within acceptable ranges.
3.11.11
Mineral Resource Classification

AMEC used the following criteria to pre-classify blocks into categories as:
Measured mineral resources: Composites from a minimum of three drill holes within
75 m radius from a block centroid, or samples from two drill holes with the closest
sample within 25 m of the block centroid.
Indicated mineral resources: Samples from a minimum of two drill holes within 110 m
distance of the block centroid.
Blocks that were not classified as Measured or Indicated but had a composite within
135 m from the block centroid were classified as Inferred. Remaining blocks were not
classified. AMEC used a semi-automated process to smooth the initial classification and
avoid islands or isolated blocks of different categories.
3.12
Assessment of Reasonable Prospects of Economic Extraction

AMEC assessed the classified blocks for reasonable prospects of economic extraction by
applying preliminary economics for potential open pit mining methods. The assessment
does not represent an economic analysis of the deposit, but was used to determine
reasonable assumptions for the purpose of determining the mineral resource. Mining and
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process costs, as well as process recoveries, were defined from ongoing AMEC studies
for the project.
A large bulk mining open pit operation is envisioned for Caariaco Norte, featuring large
rope shovels working on 15 m benches. A single pit with internal phases is projected to
provide mill feed at a rate of 95,000 t/d. AMEC defined a pit shell, optimized using
Whittle (version 4.3) software, based on the parameters listed in Table 3-16.
The metal prices represent long-term estimates for mineral resources. The metallurgical
recovery for copper is variable depending on the grade range and is shown in Table 3-17.
Table 3-16: Optimization Parameters for Resource Pit Shell
Mining Costs
Unit
Value
Waste Mining Reference Cost

Mining Sustaining Capex Allowance
US$/t mined
US$/t mined
1.11
0.16
Total Reference Mining Costs
US$/t mined
1.27
Process +Tailings + G&A Cost

Closure Costs Allocation
US$/t milled
US$/t milled
US$/t milled
3.32
0.28
0.10
Total Ore Based Costs
US$/t milled
3.70
US$/lb
US$/oz
US$/oz
US$/lb
%
%
%
Degree
2.50
1,035.00
17.25
0.40
variable by grade, refer to Table 3-17
55
50
38
Cu Price
Au Price
Ag Price
Selling Cost
Cu Recovery
Au Recovery
Ag Recovery
Overall Pit Slope(s)
Note: The mining cost increases incrementally with height and depth ($0.015 per 15 m bench above 2,800 m, $0.03
per 15 m bench below 2,800 m). No dilution or mining loss adjustments were applied. The overall pit slope
assumption is based on limited geotechnical data and will likely change when results from the planned
geotechnical drilling become available.
Table 3-17: Copper Process Recoveries

Recovery
(%)
% Cu Head Grade
0.60
0.50
0.40
0.30
0.20
0.15
0.10
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93.1
91.8
89.7
86.3
79.4
72.5
58.8
Page 3-57

AMEC defined a marginal cutoff of 0.14% Cu (see details in Table 3-18) and selected a
base case 0.2% Cu cutoff for mineral resource reporting based on the operating cutoffs of
other comparable copper mines in South America.
Table 3-18: Marginal Cutoff Calculation
Parameters
3.13
Value
Processing Cost (US$/t)

Recovery (%)
Price (US$/lb)
Selling Cost (US$/lb)
3.70
58.8
2.5
0.40
Cutoff Cu (%)
0.14
Mineral Resource Statement

Mineral Resources for the project were classified under the 2005 CIM Definition
Standards for Mineral Resources and Mineral Reserves by applying a cutoff grade that
incorporated mining and recovery parameters, and were constrained to a pit shell based
on commodity prices.
Mineral Resources are tabulated in Table 3-19. The Qualified Person for the Mineral
Resource estimate is David Thomas, P.Geo. Mineral resources are reported at a longterm copper price of US$2.50/lb, a gold price of US$1,035/oz, and a silver price of
Table 3-19:

Grade
Category
Tonnage
Mt
Measured
Indicated
Inferred
406.6
596.5
1,003.0
293.3
Note:
1
2
3
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11 March 2011
Contained Metal
Cu
%
Au
g/t
Ag
g/t
Copper
(Blb)
Gold
(Moz)
Silver
(Moz)
0.44
0.38
0.40
0.33
0.07
0.06
0.06
0.05
1.9
1.6
1.7
1.5
3.977
4.964
8.941
2.165
0.958
1.081
2.039
0.448
24.656
30.403
55.059
13.547

Page 3-58

The numbers reported in Table 3-19 differ from those in the Candente press release of
1 November 2010. The table incorporates additional Ag and As assay results from ICP
tests for some holes drilled during the 2008 campaign for which final assay results were
not available for the full suite of elements at the time of the press release. The
differences relate to the contained metal tonnages in this table and the press release, and
are not material. The tonnes and grades are the same.
Table 3-20: Mineral Resource Statement for Caariaco Norte at Various Cutoffs
Grade
Cutoff
Cu (%)
Tonnage
Mt
Contained Metal
Cu
%
Au
g/t
Ag
g/t
Copper
(Blb)
Gold
(Moz)
Silver
(Moz)
Measured
0.14
0.2*
425.6
406.6
0.43
0.44
0.07
0.07
1.9
1.9
4.049
3.977
0.986
0.958
25.467
24.656
0.3
338.1
0.48
0.08
2.0
3.588
0.853
21.399
0.14
0.2*
680.7
596.5
0.35
0.38
0.05
0.06
1.5
1.6
5.283
4.964
1.166
1.081
33.124
30.403
0.3
414.3
0.43
0.06
1.7
3.945
0.843
23.135
1,106.2
1,003.0
0.38
0.40
0.06
0.06
1.6
1.7
9.332
8.941
2.152
2.039
58.592
55.059
752.4
0.45
0.07
1.8
7.533
1.696
44.534
0.14
0.2*
419.4
293.3
0.28
0.33
0.04
0.05
1.3
1.5
2.634
2.165
0.561
0.448
17.002
13.547
0.3
157.7
0.41
0.06
1.7
1.433
0.281
8.539
Indicated
0.14
0.2*
0.3
Inferred
* Base case
2
3
4
5
6
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3.13.1
Comment on Mineral Resource Estimation

Mineral Resources for the project were estimated on the basis of core drill data to industry
best practices and conform to the requirements of CIM (2005).
Areas of uncertainty that could materially affect the Mineral Resource estimates include:
long-term commodity price assumptions
long-term exchange rate assumptions
operating and capital assumptions used
metal recovery assumptions used.
Any changes to the slope angle of the pit wall resulting from the availability of
more-detailed geotechnical information would affect the pit shell used to constrain the
mineral resources. Geotechnical designs for the open pit may change when results from
the planned geotechnical drill holes are available. Geotechnical data are required to
allow the estimation of Mineral Reserves.
3.14
References
Berger, R.B., Ayuso, R.A., Wynn, J.C., and Seal, R.R., 2008: Preliminary Model of
Porphyry Copper Deposits: U.S. Geological Survey Open-File Report 20081321,
55 p.
Bonson, C., Nowak, M., Doerksen, G., Johnston, A., and van Egmond, R., 2008:
Technical Report Caariaco Norte Project, Department of Lambayeque, Per:
technical report prepared by SRK Consulting Ltd for Candente Resource Corp.,
effective date 11 July 2008
Bonson, C., Campbell, R., Bender, M., Doerksen, G., Johnston, A., Meyer, T., Nowak, M.,
Pilotto, D., Van Egmond, R., Critikos, P., Ostolaza, R., and Huanani, A., 2009:
Revised Preliminary Economic Assessment Technical Report, Caariaco Norte
Project, Per: technical report prepared by SRK Consulting Ltd for Candente
Resource Corp., effective date 30 November 2008
Canadian Institute of Mining, Metallurgy and Petroleum (CIM), 2000: CIM Standards for
Mineral Resources and Mineral Reserves, Definitions and Guidelines: Canadian
Institute of Mining, Metallurgy and Petroleum, August, 2000
http://www.jogmec.go.jp/mric_web/tani/cimstandard.pdf
Canadian Institute of Mining, Metallurgy and Petroleum (CIM), 2003: Estimation of
Mineral Resources and Mineral Reserves, Best Practice Guidelines: Canadian
Institute of Mining, Metallurgy and Petroleum, 23 November 2003,
http://www.cim.org/committees/estimation2003.pdf.
Canadian Institute of Mining, Metallurgy and Petroleum (CIM), 2005: CIM Standards for
Mineral Resources and Mineral Reserves, Definitions and Guidelines: Canadian
Project No.: 165270

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Institute of Mining, Metallurgy and Petroleum, December 2005,

http://www.cim.org/committees/CIMDefStds_Dec11_05.pdf.
Collins, J., McCrea, J., and Rokosh, J., 2006: Caariaco Copper Project, Per,
Preliminary Assessment and Economic Evaluation Report: technical report prepared
by Merit Consultants for Candente Resource Corp., effective date 28 June 2006
Casselman, M.J., Lutynski, P., Van Egmont, R., Cayo, E. and Bernuy, E., 2008: Drill
Holes For Metallurgical Characterization of the Canariaco Norte Deposit, 2008
Currie, J.A., 2004: Technical Report On The Caariaco Copper Porphyry Prospect
Department Of Lambayeque Northern Per Latitude 6 05 S Longitude 70 17 E,
technical report prepared for Candente Resource Corp., August 2004
Huangui, F., Freeze, J.C., and Coder, J.M., 2002: Geological Report On The Caariaco
Copper-Gold Porphyry Prospect Department Of Lambayeque Northwest Per NTS
13-E 70 17 E 6 05 S: technical report prepared for Candente Resource Corp.,
effective date 9 August 2002
Journel, A., G., and Huijbregts, Ch., J., 1978: Chapter 5: Selection and Estimation of
Reserves: in Mining Geostatistics p. 472-490, Blackburn Press, 600 p.
Mathur,R: Cu Isotope Measurements Used to Identify Primary and Secondary Cu
Minerals from the Porphyry Copper Deposit, Canariaco Norte
McCrea, J.A., 2005: Technical Report on the Caariaco Copper Porphyry Prospect
Department of Lambayeque Northwest Per: technical report prepared for Candente
Resource Corp., effective date 22 April 2005
McCrea, J.A., 2006: Technical Report on the Caariaco Copper Porphyry Prospect
Department of Lambayeque Northwest Per: technical report prepared for Candente
Resource Corp., effective date 27 April 2006
Murphy, F., 2004: Structural Analysis Canariaco Property, Per
Sillitoe, R.H., 2000: Role of Gold-Rich Porphyry Models in Exploration: in S.G.
Hagerman and P.H. Brown, eds., Gold in 2000, Reviews, Economic Geology, v. 13,
pp. 311346
Sillitoe, R.H., 1999: Comments on Geology and Potential of the Caariaco Porphyry
Copper Prospect, Northern Per: Unpublished internal geological report for prepared
for Billiton Exploration and Mining Per B.V., 10 p.
Sillitoe, R.H., 2010: Porphyry Copper Systems: Economic Geology, v. 105, pp. 3-41
Sinclair, W.D., 2006: Consolidation and Synthesis of Mineral Deposits Knowledge
Porphyry Deposits: report posted to Natural Resources Canada website 30 January
2006, 14 p. <http://gsc.nrcan.gc.ca/mindep/synth_dep/porph/index_e.php>, accessed
28 August, 2010
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Stone, D.M.R., Godden, S., Van Egmond, R., and Tosney, J.R., 2007: Updated
Technical Report and Preliminary Economic Assessment on the Caariaco Nort
Porphyry Copper Project Starter Pit Option: technical report prepared by Minefill
Services Inc. for Candente Resource Corp., effective date 18 April 2007
Wilson, A.J., 1999: Caariaco Project, Lambayeque, Northern Per: Unpublished
internal geologic report prepared for Billiton Exploration and Mining Per B.V
Van Egmond, R., Bernuy, E., Cayo, E., Casselman, M.J., 2008: Updated Surface
Geology Map for Canariaco Norte
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CONTENTS
4.0
MINE PLAN AND PRODUCTION ...........................................................................4-1

4.1
Summary.....................................................................................................4-1
4.2
Mining Method ............................................................................................4-1
4.3
Design Criteria ............................................................................................4-1
4.4
Block Model NSR and Dilution Calculations ................................................4-2
4.5
Pit Geotechnical Design Recommendations................................................4-3
4.6
Pit Hydrogeology .........................................................................................4-5
4.7
Pit Optimization ...........................................................................................4-8
4.7.1 Whittle Block Model......................................................................4-8
4.7.2 Mining Costs ....................................................................................4-8
4.7.3 Processing Costs.............................................................................4-9
4.7.4 Metal Price and Recovery ..............................................................4-10
4.7.5 Results ..........................................................................................4-10
4.7.6 Sensitivity Analysis ........................................................................4-10
4.8
Mine Production Schedule ........................................................................4-13
4.8.1 LG Shells and Cutoff Selection ......................................................4-13
4.8.2 Schedule Results...........................................................................4-14
4.9
Waste Dump and Access Roads ...............................................................4-23
4.10 Mine Equipment Fleet ...............................................................................4-24
TABLES
Table 4-1: Calculation Parameters .................................................................................................. 4-2
Table 4-2: Copper Recoveries ........................................................................................................ 4-3
Table 4-3: Design Sector Slope Recommendations ....................................................................... 4-5
Table 4-4: Packer Test Data from GWI, 2008 ................................................................................. 4-6
Table 4-5: Rock Type Attributes ...................................................................................................... 4-8
Table 4-6: Reference Mine Operating Costs by Unit Operation ..................................................... 4-9
Table 4-7: Process Costs ................................................................................................................ 4-9
Table 4-8: Base Case Pit Optimization Volumetric Results .......................................................... 4-11
Table 4-9: LG Sensitivity Optimization Results ............................................................................. 4-13
Table 4-10: Mineral Resources within Pit Phases .......................................................................... 4-16
Table 4-11: LOM Production Schedule ........................................................................................... 4-16
Table 4-12: Total Material Mined (kt) by Phase ................................................................................ 4-19
Table 4-13: Mine Equipment Requirements ................................................................................... 4-25
Table 4-14: Primary Equipment Productivities ................................................................................ 4-26
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TOC i

FIGURES
Figure 4-1:
Figure 4-2:
Figure 4-3:
Figure 4-4:
Figure 4-5:
Figure 4-6:
Figure 4-7:
Figure 4-8:
Figure 4-9:
Figure 4-10:
Figure 4-11:
Figure 4-12:
Figure 4-13:
Figure 4-14:
Figure 4-15:
Geotechnical Design Sectors......................................................................................... 4-4

Horizontal Drain Design ................................................................................................. 4-7
Estimated Pit Inflows through Time ............................................................................... 4-7
Pit-by-Pit Graph Size vs. Value Analysis .................................................................. 4-12
Selected LG Shells identified in Pit-by-Pit Graph ........................................................ 4-15
3D View of Pit Shapes, looking Northeast ................................................................... 4-15
Material Movement by Period ...................................................................................... 4-18
Mill Feed Characteristics by Year ................................................................................ 4-18
Pit Development at End of Year -1 (pre-strip) .............................................................. 4-20
Pit Development at End of Year 1 ............................................................................... 4-20
Pit Development at End of Year 14 ............................................................................. 4-22
Pit Development at End of Year 18 ............................................................................. 4-22
Waste Rock Management Facility and Initial Road Alignments .................................. 4-24
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TOC ii

4.0
MINE PLAN AND PRODUCTION
4.1
Summary
This section outlines the parameters and procedures used to design the open pit mine,
estimate the in-pit mineral resource, and establish a practical mining schedule for a
nominal process plant throughput of 34.7 Mt/a, or 95,000 t/d. The mine plan is based on
diluted Measured and Indicated mineral resources contained in a Lerchs-Grossmann (LG)
optimized pit shell generated at metal prices of $2.25/lb Cu, $930/oz Au, and $15/oz Ag.
This section also reviews the open pit equipment requirements, key consumables, and
labour requirements.
The estimated geologic resource, as described in Section 3 of this document, is the basis
for the mine design and production schedule.
The mine plan generates a total of 728.2 Mt of process plant feed and 713.5 Mt of waste
at a strip ratio of 0.98:1 over a mine operating life of 22 years. Conventional, large-scale,
bulk mining methods will be used to develop a single pit, with the peak mine production
rate of 200 kt/d being achieved with a mine fleet that includes two rope shovels, one large
front-end loader, and 21 haul trucks.
At the time of this report, geotechnical information from the planned site investigations for
prefeasibility level slope design recommendations for the mine design was still pending.
The mine plan presented herein is therefore limited to a preliminary assessment level of
accuracy and will be updated to prefeasibility level upon receipt of the necessary
geotechnical information.
4.2
Mining Method
Large-scale conventional bulk open pit mining has been selected for Caariaco, featuring
311 mm diameter blasthole drills, 43 m3 rope shovels, and 290 tonne haul trucks working
on 15 m benches. A single pit with internal phases will provide process feed at a rate of
95,000 t/d.
Selection of the throughput rate was based on an initial trade-off study performed in June
2010; this study is included in Appendix A. A follow-up analysis in September 2010,
incorporating the latest available metallurgical test results and the updated AMEC
resource model, resulted in the selection of a feed rate of 95,000 t/d.
4.3
Design Criteria
The design criteria for the study were developed by AMEC with input from Candente.
These include metal prices, recoveries, smelter terms, shipping costs, royalties, and other
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Page 4-1

physical parameters. Key items are presented as appropriate in the following sections.
The complete design criteria checklist is included in Appendix C.
4.4
Block Model NSR and Dilution Calculations

Revenue is generated from the sale of copper concentrates, which contain payable coproducts of gold and silver. Copper metal recoveries are variable with head grade. To
capture the multi-element and variable recovery complexity, Net Smelter Return (NSR)
values were calculated for cutoff application and block valuation during pit optimization.
The NSR parameters are shown in Table 4-1.
Table 4-1:
Calculation Parameters
Parameter
Unit
Value
Metal Prices
Cu
Au
US$/lb
US$/oz
2.25
930.00
Ag
US$/oz
15.00
Process Recoveries
Cu
Variable see Table 4-2
Au
Ag
%
%
55.00
50.00
Cu
Au
Ag
%
g/t
g/t
1.0
1.00
30.00
Percentage Payable in Metals

Cu Payable
Au Payable
Ag Payable
%
%
%
96.50
90.00
90.00
Refining Charges in Metals

Cu Refining Charge
Au Refining Charge
US$/payable lb
US$/payable oz
0.075
5.00
Ag Refining Charge
US$/payable oz
0.40
Concentrate Costs and Penalties

Concentrate Transport to Port
US$/wmt
21.00
Port Costs
Insurance
Ocean Freight
Concentrate Treatment Charges
US$/wmt
US$/wmt
US$/wmt
US$/wmt
11.21
2.50
37.00
75.00
2.50
6.50
Metal Deductions
Royalty
Royalties
Other Parameters
Moisture
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Page 4-2

Copper recovery was modeled as variable based on copper head grades. The recoveries
applied to copper are shown in Table 4-2.
Table 4-2:
Copper Recoveries
Copper Head Grades
(%)
Recovery
(%)
0.100 to 0.125
0.125 to 0.175
0.175 to 0.250
0.250 to 0.350
0.350 to 0.450
0.450 to 0.550
0.550 to 100.0
58.8
72.5
79.4
86.3
89.7
91.8
93.1
Visual inspection of the block model shows good continuity of the ore zones with general
gradational changes across economic cutoff boundaries.
Ore loss and dilution
adjustments were performed by applying a mixing zone across economic boundaries.
No additional ore loss was applied. The NSR calculations and dilution/mining loss
adjustments were performed using custom scripts in MineSight. This procedure used
three scripts to:
calculate the NSR from the pre-diluted grades
adjust the dilution/mining losses across economic boundaries defined by the marginal
NSR cutoff, with Inferred material being treated as waste. A second set of block
model grade items (CuDil, AuDil, AgDil, AsDil) was populated.
calculate the diluted NSR (NSRD) from the above diluted grades.
The NSRD was then used for pit optimization and cutoff application for mine planning. A
memo providing a detailed description of the process and the calculation scripts is
included in Appendix C. The resulting NSR values are different from those presented in
the financial model due to simplifications required for block-by-block calculations.
4.5
Pit Geotechnical Design Recommendations

A site investigation program has been proposed and planned to support geotechnical pit
slope design recommendations at a prefeasibility level. The data from the site
investigations are considered to be key in understanding the joint patterns and
geotechnical complexities associated with the highwall (approximately 925 m high) and
the sensitivity of the highwall slope to pit depressurization and rock mass strength.
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Page 4-3

Candente therefore requested that AMEC provide credible slope angles to be used to
develop preliminary LG pit shapes. A geotechnical analysis was performed, based on the
following:
site visits by AMEC geotechnical engineers to inspect the core
additional testing of selected core samples
review of the existing geotechnical and hydrogeological database, which includes a
preliminary economic assessment (PEA) issued by SRK Consulting in November
2008 and a preliminary geotechnical report completed by Minefill Services in May
2007. A memo documenting this analysis is provided in Appendix C.
The geotechnical analysis considered three design sectors, as shown in Figure 4-1. The
recommended slope parameters for each sector are shown in Table 4-3. For the
purposes of pit optimization, sectors 1 and 2 were combined and flattened to account for
ramp and geotechnical berm locations, resulting in overall slopes of 35 and 44 for
Sectors 1+2 and 3, respectively.
Figure 4-1:
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Geotechnical Design Sectors
Page 4-4

Table 4-3:
Design Sector Slope Recommendations

Geotechnical Berm
Overall Slope
Design
Sector
Inter-ramp Angle
(degrees)
Width
(m)
Vertical Interval
(m)
Max Slope Angle

(degrees)
Max Slope Height

(m)
1
2
3
38
38
48
50
50
50
250
250
250
35
35
45
925
925
500
4.6
Pit Hydrogeology
Hydrogeologic information from numerous packer tests completed in the pit area was
assessed; the data are shown in Table 4-4. Several of the packer test results indicate
hydraulic conductivities greater than 1 x 10-6 m/s, some from relatively deep test intervals.
While the test locations and subsequent test results do not originate in the pit walls, the
testing does indicate that permeable features such as faults or fracture zones are present
at depth. Pit dewatering will therefore be undertaken by a combination of vertical
dewatering wells, specifically constructed in these permeable features, and horizontal
drains in areas where the hydraulic conductivities are lower than about 1 x 10-7 m/s.
To determine potential dewatering requirements, the bedrock has been divided into three
regimes. The upper regime, generally less than 100 m deep, could be dewatered with
vertical wells if the hydraulic conductivities were high enough; this should be confirmed
moving into the next phase of the study. The intermediate regime, at 100 m to 300 m
depth, is generally of low permeability and will be depressurized with horizontal drains. In
this case there is evidence that higher-permeability structures are present down to 300 m,
indicating that vertical wells may be required in these areas at depth within the pit. The
deeper regime, below 300 m, will be depressurized by horizontal drains. Typical drain
designs are shown in Figure 4-2.
Modelled estimates of pit inflows through time are shown in Figure 4-3. These estimates
are based on a simplistic 2D model using an arbitrary excavation staging taken to
15 years and include no specific perimeter dewatering system. The modelling method is
described in a memo dated 25 October 2010 in Appendix C. The analysis assumes
uniform hydraulic conductivity, no structures with higher-permeability units, and that all
water reports to the pit walls and from there to the sump(s). No dewatering wells are
included in this preliminary design; if they were, then the model rate of inflow would
reduce, at least partially. Given the degree of uncertainty at this stage, however, both
horizontal and vertical wells have been allowed for in the capital cost estimate.
The model and water balance will be refined on receipt of additional hydrogeologic
information from the planned drilling program, and the inflow predictions will be extended
to the 22-year mine life during further investigations during the next phase of study.
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Page 4-5

Table 4-4:
Packer Test Data from GWI, 2008

Test Interval Depth
(mbgs)
Boring ID
Test
Top
Bottom
Average
Vertical Depth
(mbgs)
K (m/s)
Lithology
DDH-C07_145
DDH~C07~162
1
2
3
4
1
2
1
2
1
2
3
1
2
1
2
1
2
1
2
3
1
2
3
4
5
1
2
3
4
1
2
3
4
5
6
1
2
1
2
3
4
1
57.00
82.38
117.85
180.00
59.52
90.03
30.52
61.05
33.35
76.70
120.85
87.35
169.65
82.43
214.95
123.25
214.79
58.40
126.15
185.60
30.30
81.10
135.60
202.79
262.23
32.04
96.04
172.24
225.58
30.56
70.21
126.58
170.79
210.43
250.05
202.81
251.58
24.47
59.50
99.56
249.75
61.08
60
106.70
149.35
225.00
88.40
121.95
51.82
91.45
53.35
106.70
150.85
117.35
199.65
121.95
245.35
143.25
234.70
88.40
166.15
225.60
50.30
101.10
160.00
237.75
301.75
51.80
115.80
192.00
265.20
64.00
103.65
166.10
205.75
249.95
280.45
243.85
291.10
53.35
89.90
140.60
287.75
100.60
58.50
94.54
133.60
202.50
73.96
105.99
41.17
76.25
43.35
91.70
135.85
102.35
184.65
102.19
230.15
133.25
224.75
73.40
146.15
205.60
40.30
91.10
147.80
220.27
281.99
41.92
105.92
182.12
245.39
47.28
86.93
146.34
188.27
230.19
265.25
223.33
271.34
38.91
74.70
120.08
268.75
80.84
3.00
24.32
31.50
45.00
28.88
31.92
21.30
30.40
20.00
30.00
30.00
30.00
30.00
39.52
30.40
20.00
19.91
30.00
40.00
40.00
20.00
20.00
24.40
34.96
39.52
19.76
19.76
19.76
39.62
33.44
33.44
39.52
34.96
39.52
30.40
41.04
39.52
28.88
30.40
41.04
38.00
39.52
3.5E-06
8.1E-07
3.4E-07
1.5E-07
7.0E-07
4.0E-07
4.2E-07
3.0E-06
1.6E-07
3.3E-06
1.1E-07
1.2E-06
2.4E-07
3.4E-08
4.1E-08
6.1E-08
4.1E-10
5.9E-08
1.1E-06
3.9E-08
9.7E-07
1.3E-06
2.8E-07
9.8E-08
4.9E-08
1.1E-06
9.2E-07
5.1E-06
1.0E-08
9.4E-07
5.7E-06
1.0E-05
1.4E-05
1.6E-07
6.2E-07
1.6E-07
2.6E-06
7.6E-07
3.0E-07
2.9E-07
2.0E-07
3.9E-07
Volcanic Rock
Volcanic Rock
Volcanic Rock
Volcanic Rock
Volcanic Rock
Intrusive Rock
Hydrothermal Breccia
Intrusive Rock
Intrusive Rock
Intrusive Rock
Intrusive Rock
Intrusive Rock
Volcanic Rock
Intrusive Rock
Intrusive Rock
Intrusive Rock
Intrusive Rock
Intrusive Rock
Intrusive Rock
Intrusive Rock
Intrusive Rock
Intrusive Rock
Volcanic Rock
Volcanic Rock
Intrusive Rock
Volcanic Rock
Volcanic Rock
DDH~C07~164
20.35
50.10
35.23
29.75
1.2E-06
Volcanic Rock
DDH~C07~147
DDH~C07~148
DDH~C07~149
DDH~C07~150
DDH~C07~152
DDH~C07~154
DDH~C07~155
DDH~C07~156
DDH~C07~157
DDH~C07~158
DDH~C07~159
DDH~C07~160
Note: mbgs = metres below ground surface
Project No.: 165270

11 March 2011
Page 4-6
Test Section
Length
(m)

Figure 4-2:
Horizontal Drain Design
Figure 4-3:
Estimated Pit Inflows through Time
Note: Graph illustrates inflows based on a 2D model and does not incorporate dewatering systems.
Project No.: 165270

11 March 2011
Page 4-7

4.7
Pit Optimization
4.7.1
Whittle Block Model

The mining block model described in Section 4.4 was imported into Whittle for LG pit
shell optimization. The resources captured in Whittle were verified by comparing an
inventory of the global tonnages and grades above zero copper undiluted cutoffs.
Prior to import to Whittle, model attributes were created to represent the different rock
type attributes required for the LG shell generation, shown Table 4-5.
Table 4-5:
Rock Type Attributes
Rock Type
Attribute
inf
ind
meas
nogo
undef
Inferred
Indicated
Measured
Crusher Limit
Undefined material
Given the project execution schedule requirements, the ore crusher and conveyor corridor
were finalized in advance of the mine planning activities, based on preliminary LG
analysis performed on the PEA resource model. To protect against mining out the ore
crusher and conveyor corridor, a special rock type labelled nogo was created using a
60 m offset. In Whittle, a very high mining cost adjustment factor (MCAF) was applied
to this rock type.
The grades imported into Whittle consist of the diluted NSR and each of the diluted
metal grades. The block valuation was performed on the NSRD grade only. The diluted
metal grades were carried in Whittle for reporting purposes only. All discussion of
grades in the rest of this mining section refer to diluted grades.
The original 15 x 15 x 15 m blocks were re-blocked on a 2 x 2 x 2 basis to a final size of
30 x 30 x 30 m to improve calculation speed.
4.7.2
Mining Costs
The reference mining cost developed for the pit shell generation is US$1.27/t total for
waste and ore material mined. The breakdown by unit operation is shown Table 4-6.
Costs are based on a first-principles cost estimate from a previous preliminary mine plan.
Incremental haulage costs were based on the increased distance from the pit rim
(estimated at level 2,800 m) and are as follows:
for every bench 15 m above the pit rim, an increase in haulage costs of US$0.015/t
Project No.: 165270

11 March 2011
Page 4-8

for every bench 15 m below the pit rim, an increase in haulage costs of US$0.030/t.
Applying this reference mining cost and the elevation-based cost adjustment factors to
the preliminary mine plan results in an average mining cost of $1.42/t mined.
Table 4-6:
Reference Mine Operating Costs by Unit Operation

Ore/Waste
(US$/t)
Item
4.7.3
Drilling
Blasting
Loading
Hauling
Support
General Mine Expense
Mining Sustaining Capex
0.06
0.23
0.09
0.42
0.19
0.11
0.16
Total
1.27
Processing Costs
A combined ore-based cost of US$3.57/t milled was used for pit optimization. The
breakdown of the individual ore-based costs is shown in Table 4-7. The processing cost
component represents a first-principles build-up of costs for crushing, grinding, flotation,
tailings management, concentrate treatment, and acid plant operation. The G&A estimate
is also from a first-principles cost build-up. The closure cost allocation is based on
applying the PEA closure cost of $53 million over an assumed 20-year mine life.
Because the ore-waste delineation was performed using an NSR block value, the
combined ore-based cost of US$3.57/t milled represents the marginal breakeven cutoff
grade.
Table 4-7:
Process Costs
Value
(US$/t milled)
Item
Processing
G&A
Closure Cost Allocation
Total
Project No.: 165270

11 March 2011
2.67
0.28
0.54
0.08
3.57
Page 4-9

4.7.4
Metal Price and Recovery

To account for the NSRD grade, which includes the contribution of metal prices, smelting
and refining terms, downstream costs, and recoveries, the Whittle NSR metal price and
recovery were set to 1.0 and the sell cost to zero.
4.7.5
Results
Table 4-8 shows the results for a base-case pit optimization considering only Measured
and Indicated mineral resources. The revenue factor (RF) 1.00 LG shell contains
946.3 Mt at 0.38% Cu, 0.06 g/t Au, and 1.65 g/t Ag above the marginal cutoff of
US$ 3.57/t milled, at a strip ratio of 1.29:1. All volumetrics presented in this section are
as reported by Whittle.
The best-case NPV @ 8%, shown as a continuous blue line in Figure 4-4, is the NPV (pre
Capex) for a schedule that mines each shell in sequence. Although this is not a practical
mining sequence because the shells are too narrow for the equipment, it is of interest
because it demonstrates the theoretical maximum NPV. The worst-case NPV, shown as
a continuous red line, assumes that the entire shell is mined bench by bench. This would
eliminate any internal phases, removing the ability to delay the mining of some of the
waste material, thereby decreasing the NPV of the schedule. The best-case and
worst-case scenarios provide an upper and lower boundary that a mineable schedule
would fall within it. Selection and scheduling of a collection of shells that have
approximate minimum mining width spacing and reasonable access will result in NPV
values below the theoretical best case and above the worst case.
4.7.6
Sensitivity Analysis
Sensitivity optimization runs were performed to determine the impact of changes to pit
slopes and operating costs, as shown in Table 4-9. The runs were performed at a single
RF of 0.64, matching the shell selected for the ultimate pit shape. The results show that
the LG pit shells are more sensitive to a pit slope reduction of 2 than an increase of 2.
As well, the LG pit shells are more sensitive to a 10% increase in Opex than a 10%
decrease.
Project No.: 165270

11 March 2011
Page 4-10

Table 4-8:
Pit
Shell #
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37 *
38
39
40
41
Base Case Pit Optimization Volumetric Results
Revenue
Factor
Total
Tonnes
(Mt)
Ore
Tonnes
(Mt)
Strip
Ratio
Cu
(%)
Au
(g/t)
Ag
(g/t)
NSR
($)
Cu
(Mlb)
0.28
0.30
0.32
0.34
0.36
0.38
0.40
0.42
0.44
0.46
0.48
0.50
0.52
0.54
0.56
0.58
0.60
0.62
0.64
0.66
0.68
0.70
0.72
0.74
0.76
0.78
0.80
0.82
0.84
0.86
0.88
0.90
0.92
0.94
0.96
0.98
1.00
1.02
1.04
1.06
1.08
56
107
148
166
219
265
300
368
520
562
654
710
799
874
1006
1,099
1,228
1,327
1,442
1,519
1,589
1,627
1,642
1,751
1,763
1,813
1,855
1,875
1,928
1,977
1,989
1,996
2,027
2,029
2,069
2,093
2,163
2,166
2,179
2,205
2,215
34
71
100
114
151
183
206
251
337
365
416
448
497
534
594
633
683
718
759
783
805
818
823
853
856
869
879
883
897
909
912
913
919
920
928
932
946
947
949
954
956
0.7
0.5
0.5
0.4
0.4
0.4
0.5
0.5
0.5
0.5
0.6
0.6
0.6
0.6
0.7
0.7
0.8
0.8
0.9
0.9
1.0
1.0
1.0
1.1
1.1
1.1
1.1
1.1
1.1
1.2
1.2
1.2
1.2
1.2
1.2
1.2
1.3
1.3
1.3
1.3
1.3
0.6
0.5
0.5
0.5
0.5
0.5
0.5
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.11
0.10
0.10
0.09
0.09
0.09
0.09
0.08
0.08
0.08
0.08
0.07
0.07
0.07
0.07
0.07
0.07
0.07
0.07
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
2.33
2.23
2.18
2.12
2.08
2.03
2.00
1.94
1.90
1.88
1.84
1.82
1.79
1.77
1.74
1.73
1.71
1.70
1.68
1.68
1.67
1.67
1.67
1.66
1.66
1.66
1.66
1.66
1.66
1.66
1.66
1.65
1.65
1.65
1.65
1.65
1.65
1.65
1.65
1.65
1.65
22.0
20.4
19.7
19.3
18.6
18.0
17.7
17.1
16.5
16.3
16.0
15.8
15.5
15.3
15.1
15.0
14.9
14.8
14.7
14.7
14.7
14.6
14.6
14.6
14.6
14.6
14.6
14.6
14.5
14.5
14.5
14.5
14.5
14.5
14.5
14.5
14.4
14.4
14.4
14.4
14.4
419
815
1,115
1,252
1,595
1,882
2,085
2,455
3,198
3,416
3,831
4,075
4,459
4,745
5,213
5,524
5,918
6,206
6,526
6,736
6,904
6,994
7,036
7,277
7,305
7,416
7,478
7,515
7,632
7,712
7,737
7,752
7,803
7,807
7,873
7,893
8,011
8,019
8,035
8,055
8,073
* Pit shell at RF 1.00
Project No.: 165270

11 March 2011
Page 4-11
Metal Content
Au
(koz)
123
228
307
347
440
516
567
671
860
910
1,010
1,065
1,155
1,214
1,316
1,384
1,468
1,527
1,596
1,635
1,671
1,692
1,699
1,747
1,752
1,772
1,788
1,795
1,815
1,832
1,836
1,838
1,848
1,849
1,860
1,866
1,886
1,888
1,891
1,898
1,900
Ag
(koz)
2,539
5,070
6,982
7,812
10,104
11,928
13,261
15,674
20,594
22,028
24,595
26,172
28,569
30,441
33,257
35,130
37,529
39,203
41,095
42,266
43,329
43,925
44,139
45,603
45,781
46,446
46,924
47,133
47,810
48,345
48,504
48,569
48,888
48,911
49,298
49,519
50,231
50,282
50,377
50,604
50,686

Figure 4-4:
Pit-by-Pit Graph Size vs. Value Analysis
Project No.: 165270

11 March 2011
Page 4-12

Table 4-9:
LG Sensitivity Optimization Results

Slopes
Parameters
Opex
Unit
Base Case
-2
+2
+4
+6
+10%
-10%
degrees
35 and 44
33 and 42
37 and 46
39 and 48
41 and 50
same
same
Reference Mining Cost

Ore Based Costs
$/t
$/t
1.270
3.570
same
same
same
same
same
same
same
same
1.397
3.927
1.143
3.213
Millfeed
kt
717,241
655,396
762,810
791,726
818,695
641,650
745,026
Waste
kt
724,592
710,131
672,149
637,739
597,894
586,074
773,806
Total Material
kt
1,441,833
1,365,527
1,434,959
1,429,465
1,416,589
1,227,724
1,518,832
Slopes
Strip Ratio
W:O
1.01
1.08
0.88
0.81
0.73
0.91
1.04
NSR grade
$/t milled
15.31
15.30
15.36
15.37
15.40
15.51
15.21
%
g/t
0.40
0.067
0.404
0.068
0.406
0.067
0.406
0.067
0.407
0.067
0.409
0.069
0.402
0.067
Cu grade
Au grade
Ag grade
g/t
1.72
1.74
1.72
1.72
1.72
1.75
1.72
Cu Contained
klb
6,388,167
5,837,340
6,827,665
7,086,483
7,345,923
5,785,639
6,602,787
Au Contained
koz
1,553
1,430
1,644
1,700
1,753
1,422
1,597
Ag Contained
koz
39,756
36,560
42,233
43,833
45,327
36,143
41,080
Delta Cu content
klb
-550,828
439,498
698,316
957,755
-602,529
214,620
-9
11
15
-9
kt
%
-61,845
-9
45,569
6
74,485
10
101,454
14
-75,591
-11
27,785
4
kt
-76,306
-6,874
-12,368
-25,244
-214,109
76,999
-5
-1
-2
-15
Delta Millfeed
Delta Total Material Mined
4.8
Mine Production Schedule
4.8.1
LG Shells and Cutoff Selection

For the purposes of this progress study, a mine plan was generated using LG pit shells
adjusted by minimum mining width. The next iteration of mine planning will require pit
phase designs, considering pioneering access to upper benches, internal ramp access,
minimum mining widths, and depressurizing and dewatering requirements.
The input parameters utilized for the mine plan development included a mine life between
18 and 22 years, a life-of-mine (LOM) head grade of no less than 0.40% Cu, and a strip
ratio of less than 1:1. To meet these criteria, a series of constant LOM elevated cutoffs
were tested on the collection of nested pit shells. The capacity of the waste rock
management facility may potentially impose a restriction on the size of the ultimate pit.
Shell 19 (RF=0.64) combined with a NSR cutoff of $5.2/t milled met the desired targets.
Internal to the selected ultimate LG pit shell, three intermediate phase mining shapes
were established. Shells 3, 9, and 15 were selected for phase development based on
their ability to maximize grade and reduce pre-stripping requirements early in the LOM,
while keeping the process plant at full production capacity in high-level Whittle
Project No.: 165270

11 March 2011
Page 4-13

schedules. These shells were adjusted for a minimum mining width of 60 m (2 x the 30 m
re-blocked block dimension). Because the starter pit had a relatively low east-side wall,
which was predominantly in relatively competent rock, it was re-generated using a 40
overall slope in the upper wall of sectors 1 and 2. The selected unadjusted LG shells are
identified in the pit-by-pit graph in Figure 4-5. The continuous green line in the graph
represents the NPV of the specified case, that being a schedule created using shells 3,
9, 15, and 19. A 3D view of the pit shapes is shown in Figure 4-6.
During the next iteration of mine planning, AMEC recommends that cutoff optimization be
performed in conjunction with the use of a more-detailed shell selection methodology.
Although the proposed site layout and topography do not lend themselves to the space
required for a substantial low-grade stockpile, a cutoff profile featuring elevated cutoffs in
the early years could still improve project value without stockpiling. Cutoff optimization
can provide economic benefits with or without stockpiling low-grade material. Both
approaches should be evaluated to establish the value of a low-grade stockpile to the
project. If the value of the low-grade stockpile sufficiently exceeds the cost of displacing
waste rock storage to make the space for the stockpile, then it should be incorporated into
the plan.
The minimum mining width pit shapes were exported to MineSight for volumetrics
determination. The combined diluted Measured and Indicated materials by phase, using
an internal cutoff grade of $5.20/t NSR (as reported from MineSight), are shown in
Table 4-10.
4.8.2
Schedule Results
The mine plan results in a total of 728.2 million tonnes (Mt) of mill feed and 713.5 Mt of
waste (0.98:1 strip ratio) over a 22-year mine operating life. The LOM plan focuses on
achieving the required mill feed production rate, mining higher-grade material early in the
schedule, and balancing strip ratios.
As described above, the mine was divided into four phases with the intent of maximizing
grade in the early years, reducing pre-stripping requirements in the early years, and
maintaining process plant production at 95,000 t/d (except in Year 1, when the plant is
expected to achieve 80% of its capacity based on AMEC experience with similar
projects). The LOM mine production schedule is shown in Table 4-11.
Project No.: 165270

11 March 2011
Page 4-14

Figure 4-5:
Selected LG Shells identified in Pit-by-Pit Graph
Figure 4-6:
3D View of Pit Shapes, looking Northeast
Project No.: 165270

11 March 2011
Page 4-15

Table 4-10: Mineral Resources within Pit Phases

Ore
(Mt)
Phase
Waste
(Mt)
Total Mat
(Mt)
Strip
Ratio
NSR
($/t)
Copper
(%)
Gold
(g/t)
Silver
(g/t)
1
2
3
4
84.7
244.6
244.2
154.7
36.6
154.2
241.9
280.8
121.4
398.8
486.1
435.5
0.43
0.63
0.99
1.82
20.5
15.5
13.7
14.0
0.53
0.41
0.37
0.38
0.10
0.07
0.06
0.05
2.20
1.81
1.57
1.53
Total
728.2
713.5
1,441.7
0.98
15.1
0.40
0.07
1.71
Note: MineSight volumetrics do not exactly match those generated in Whittle
Table 4-11: LOM Production Schedule
Year
-1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Total
Ore Mined
(Mt)
Plant Feed
Mt)
Waste
Mined
(Mt)
1.3
26.4
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
7.0
27.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
34.7
7.0
46.2
45.3
40.3
40.3
38.7
38.3
38.3
38.3
38.3
38.3
38.3
38.3
38.3
38.3
38.3
37.5
29.3
25.9
13.5
6.8
4.3
1.7
0.4
728.2
728.2
713.5
Project No.: 165270

11 March 2011
Total Mat
(Mt)
Strip
Ratio
NSR
($/t)
Copper
(%)
Gold
(g/t)
Silver
(g/t)
Arsenic
(g/t)
47.5
71.7
75.0
75.0
73.4
73.0
73.0
73.0
73.0
73.0
73.0
73.0
73.0
73.0
73.0
72.2
64.0
60.6
48.1
41.4
38.9
36.4
7.4
35.65
1.71
1.16
1.16
1.12
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.08
0.85
0.75
0.39
0.20
0.12
0.05
0.06
17.6
19.3
17.2
14.9
17.3
16.4
16.4
15.9
14.2
11.6
11.2
13.4
14.9
15.8
16.1
15.5
12.0
11.0
13.2
16.5
17.5
18.7
0.46
0.50
0.45
0.39
0.45
0.43
0.43
0.41
0.37
0.32
0.31
0.36
0.39
0.42
0.42
0.41
0.33
0.30
0.36
0.43
0.46
0.49
0.08
0.09
0.08
0.06
0.08
0.08
0.08
0.08
0.07
0.05
0.04
0.05
0.06
0.07
0.07
0.07
0.05
0.04
0.05
0.07
0.07
0.07
2.46
2.14
1.83
1.95
2.03
1.96
1.82
1.67
1.52
1.32
1.38
1.60
1.70
1.72
1.76
1.63
1.27
1.30
1.50
1.76
1.76
1.99
468
305
261
354
278
231
184
156
163
208
307
302
263
194
200
153
168
264
241
279
174
236
1,441.7
0.98
15.1
0.40
0.07
1.71
243
Page 4-16

The production schedule for Caariaco was developed by generating by phase, by

bench volumetrics with Minesight software and by scheduling the volumetrics with a
spreadsheet-based scheduling tool. Preproduction stripping was scheduled within
Year -1, with Year 1 representing the commencement of processing at a throughput
projection at 80% of maximum, allowing for plant ramp-up after commissioning.
Approximately 8 km of pit access construction will be required during Year -2 and another
4 km in Year -1. The mining schedule attempts to reflect the challenges of developing
multiple phases in steep terrain. The average mining rate is approximately 185 kt/d with a
peak of 205.4 kt/d in Years 2 and 3. Material movement is shown in Figure 4-7 and
process plant feed characteristics by year in Figure 4-8. Material movement by phase is
shown in Table 4-12. Material rehandle required during access and mining of the upper
benches was not included in the estimate for this level of study.
The mine plan and equipment productivities assume that a small, short-term stockpile will
be provided near the primary ore crusher to act as a buffer between the mine and mill;
howeve, no blending of stockpiled material has been included in this schedule.
To illustrate the progression of mining, 3D images of end-of-period pit surfaces are shown
for Years -1, 1, 4, 8, 14, and 18 in Figures 4-9 to 4-14. Pit development during these
years is summarized below.
Year -1 Pit development begins with pre-stripping on both the northwestern and
southwestern tops to open up Phases 1 and 2. A total of 46.2 Mt of waste and 1.3 Mt of
ore will be released and stockpiled; the ore will be used for processing in Year 1. The
northwestern pre-stripping drops Phase 1 down to 2,980 masl and the northern part of
Phase 2 to 3,055 masl, while the southwestern pre-stripping brings the southern part of
Phase 2 down to 3,205 masl. The top part of Phase 2 is divided into northern and
southern sections to expose ore in the northern section earlier and reduce preproduction
stripping requirements. Small quantities of Phases 3 and 4 are mined as pioneering work
to establish a workable mining width.
Year 1 Processing begins with 26.4 Mt of direct feed ore delivered from Phases 1 and
2, plus 1.3 Mt of stockpile rehandle. In the northern section of the pit, Phase 1 is mined to
2,845 masl and Phase 2 is mined to 2,980 masl. On the southern part, Phase 2 is mined
to 3,115 masl. Total mill feed consists of 27.7 Mt at 0.46 %Cu. A total of 45.3 Mt of
waste is mined, resulting in a strip ratio of 1.71:1. Phases 3 and 4 are dormant until
Years 4 and 8, respectively.
Years 2 to 4 Mining in Phase 1 advances to 2,710 masl. Phase 2 reaches 2,830 masl
and is no longer divided, with the northern and southern parts merging at 2,920 masl.
Phase 3 starts in Year 4, mining only waste to 3,130 masl. Plant feed head grade
decreases from 0.5% Cu to 0.39% Cu over these years because ore from the relatively
higher grade Phase 1 is decreasing, and more lower-grade ore is produced from Phase 2.
A total of 34.7 Mt of mill feed and 40 Mt of waste are produced per year, for an average
strip ratio of 1.16.
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Figure 4-7:
Material Movement by Period
Figure 4-8:
Mill Feed Characteristics by Year
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Table 4-12: Total Material Mined (kt) by Phase
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Figure 4-9:
Pit Development at End of Year -1 (pre-strip)
Figure 4-10: Pit Development at End of Year 1
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Years 5 to 8 Phase 1 mining is completed to a bottom elevation of 2,620 masl in Year 5,

and mining continues in both Phase 2 (2,665 masl) and Phase 3 (2,935 masl) with the
addition of the final Phase 4 in Year 8 (3,205 masl). Average plant feed head grade
averages at 0.43% Cu. Annual waste production is 38.3 Mt, resulting in a strip ratio of
1.11.
Years 9 to 14 Mining in Phase 2 is completed to the 2,470 masl pit bottom in Year 14,
Phase 3 reaches 2,635 masl, and Phase 4 continues down to 2,920 masl. Mill feed is
produced from Phase 2 and Phase 3 while only waste is produced from Phase 4. Annual
waste production is 38.3 Mt, resulting in a strip ratio of 1.11.
Years 15 to 18 Mining in Phase 3 is completed to the 2,350 m pit bottom in Year 18,
and Phase 4 reaches 2,695 masl. Each year, 34.7 Mt of plant feed is delivered at an
average head grade of 0.36% Cu. Waste mining begins to tail off and average annual
waste production is 26.6 Mt, resulting in a strip ratio of 0.77:1.
Years 19 to 22 All mining is from Phase 4, which is completed to its ultimate depth at
2,320 masl. Each year, 34.7 Mt of mill feed is delivered, with the exception of Year 22,
which produces 7.0 Mt. The average head grade during these years is 0.44 % Cu. Total
waste production is only 13.2 Mt, resulting in an average strip ratio of 0.11:1.
Detailed pit phase and access design will be required during the next phase of mine
planning. Mine scheduling will need to consider the time required to develop access to
the upper parts of the phases and the requirements to bridge drainages.
4.9
Waste Dump and Access Roads

A single elongated waste rock management facility (WRMF) will be developed adjacent to
the pit, extending along the valley as illustrated in Figure 4-15. Bottom-up methods will
be used for construction. Preliminary waste rock characterization suggests that
potentially acid generating (PAG) rock will be present, and so encapsulation storage
methods may be required. More rock geochemistry information is required to develop a
waste rock characterization block model and plan for handling these materials. This work
is recommended for the next phase of study. A more detailed discussion of the
preliminary waste rock qualities is provided in Section 10, Environmental Considerations.
The primary ore crusher will be installed on the rim of the ultimate pit, northeast of the pit
centroid. Haul road access to the crusher will be via roads internal to the pit for earlier
phases, with the final phase utilizing an external road incorporated into the waste
management facility from its lowest daylight point. Preliminary road alignments were
generated to estimate quantities for road construction for inclusion in the capital cost
estimate. These road alignments are shown in magenta in Figure 4-15.
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Figure 4-15: Waste Rock Management Facility and Initial Road Alignments
4.10
Mine Equipment Fleet

Large-scale mining equipment was selected for the conventional bulk open pit mining
approach and to meet the required ore and waste mining rates. Mining will be performed
on 15 m benches, with production drilling performed by electric 311 mm diameter
blasthole drills. Rope shovels of 43 m3 bucket size were selected for loading activities, as
they were a good match to the material movement requirements and the 15 m mining
bench. A 40 m3 front-end loader (FEL) will assist with production and rehandle from the
short-term stockpile and will act as a backup to the rope shovels. Haul trucks of
290 tonne capacity were selected in an effort to minimize the fleet size and match the
loading unit and material movement requirements.
A fleet of suitably sized support and ancillary equipment has been specified. Mine
support activities include access road construction, pit cleanup, in-pit ramp maintenance,
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haul road maintenance, dozing, road grading, haul road dust control, and water diversion
and management.
Primary equipment requirements were calculated from engineering estimates of
productivities, activities, and quantities of material moved. Haul profiles from a previous
preliminary plan were used to estimate truck requirements. Support and ancillary
equipment unit requirements were determined by estimates of activities. The peak mine
equipment requirements are shown in Table 4-13 and primary equipment productivities
are shown in Table 4-14.
Mine staffing and labour requirements are presented in Section 14, Operating Cost
Estimate. A detailed LOM breakdown of the labour and staffing requirements is provided
in Appendix C.
Table 4-13: Mine Equipment Requirements
Equipment Type
No. of Units
Primary Equipment
P&H 4100C Shovel
L2350 Front-end Loader
930E Haul Truck
2
1
21
Sandvik 1190E Drill

Sandvik DP1500 Drill
3
2
Subtotal Primary Equipment
29
Support Equipment
Cat D11R Track Dozer
Cat D10T Track Dozer
2
3
Cat 24M Motor Grader

Cat RTD834 Rubber-tired Dozer
Cat 785C Water Truck
1
2
2
2
Cat 365DL Track Excavator

HM400 Articulated Truck
1
1
3
Subtotal Support Equipment
17
Ancillary Equipment
General Service Truck
Hiab 105 Crane Truck (10 t)

Mine Rescue Ambulance
Komatsu WA320 Wheel Loader w/ Tire Handler
Adanac Fuel Lube Truck
1
1
2
3
Cat P36000 Forklift

Personnel Bus
Pickup Truck
Lighting Plant 20 kW
1
2
16
8
Lowbed Tractor Trailer
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Equipment Type
No. of Units
Cat 988 MCS Cable Reeler

Liebherr LTM 55 Mobile Crane
Flygt Pump 104 kW
1
1
1
Flygt Pump 65 kW
McElroy Pipe Fuser
Mobile Jaw Crusher
2
2
1
Subtotal Ancillary Equipment
45
Total
91
Table 4-14: Primary Equipment Productivities

Equipment Type
Unit of Measure
Value
kt / day / unit
kt / day / unit
kt / day / unit
m / day / unit
m / day / unit
84.9
35.6
9.8
379.7
361.1
t / op hr / unit
t / op hr / unit
t / op hr / unit
m / op hr
m / op hr
5251.6
3209.3
605.0
23.2
27.2
Daily Productivity
P&H 4100C Shovel
930E Haul Truck
Sandvik 1190E Drill
Hourly Productivity
P&H 4100C Shovel
930E Haul Truck
Sandvik 1190E Drill
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CONTENTS
5.0
METALLURGY .......................................................................................................5-1
5.1
Summary.....................................................................................................5-1
5.1.1 Testwork ..........................................................................................5-1
5.1.1.1 Phase I (2005 2007) ..................................................... 5-1
5.1.1.2 Phase IIA (2008).............................................................. 5-2
5.1.1.3 Phase IIB (2010).............................................................. 5-2
5.1.2 Recovery .........................................................................................5-3
5.2
Phase I Program Results (2005 2007) .....................................................5-3
5.2.1 Leachability Testwork ......................................................................5-3
5.2.2 Concentration Testwork ...................................................................5-5
5.2.3 Comminution Testwork ....................................................................5-7
5.2.4 Flotation Testwork ...........................................................................5-7
5.2.4.1 Effect of Grind Size .......................................................... 5-7
5.2.4.2 Effect of Collectors and pH .............................................. 5-8
5.2.4.3 Effect of Sulphidization .................................................... 5-9
5.2.4.4 Cleaner Flotation (2005-2007) ......................................... 5-9
5.2.4.5 Locked-Cycle Tests (2005-2007) ................................... 5-11
5.3
Phase IIA Program Results (2008) ............................................................5-14
5.3.1 Introduction....................................................................................5-14
5.3.2 Mineralization ................................................................................5-15
5.3.3 Sampling and Sample Preparation (2008) .....................................5-16
5.3.4 Comminution Testwork Development .........................................5-20
5.3.5 Flotation Primary Flotation Test (2008) .......................................5-20
5.3.5.1 Effect of Primary Grind Size(2008) ................................ 5-21
5.3.5.2 Effect of Collectors and Frothers (2008) ........................ 5-22
5.3.5.3 Effect of Pulp pH............................................................ 5-28
5.3.5.4 Sulphidization Tests (2008) ........................................... 5-28
5.3.6 Flotation Cleaner Flotation Tests ................................................5-31
5.3.6.1 Regrind Tests (2008) ..................................................... 5-31
5.3.6.2 Effect of Pulp pH on Cleaner Flotation(2008) ................. 5-33
5.3.6.3 Cleaner Kinetics (2008) ................................................. 5-36
5.3.7 Comminution Testwork Variability ...............................................5-36
5.3.7.1 Crushing Testwork (2008) ............................................. 5-36
5.3.7.2 SAG Mill Testwork ......................................................... 5-37
5.3.7.3 Bond Mill Work Index Testwork ..................................... 5-39
5.3.7.4 Abrasion Testwork ......................................................... 5-41
5.4
Phase II Program Results (2010) ..............................................................5-41
5.4.1 Introduction....................................................................................5-41
5.4.2 Flotation Primary Flotation Test ..................................................5-44
5.4.2.1 Effect of Primary Grind Size (2010) ............................... 5-44
5.4.2.2 Effect of Collectors (2010) ............................................. 5-47
5.4.2.3 Effect of Cleaning .......................................................... 5-51
5.4.2.4 Locked-Cycle Tests ....................................................... 5-54
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5.4.2.5
5.4.2.6
5.5
5.6
Tailings Generation ....................................................... 5-54

Concentrate Generation for SolidLiquid Separation and
Roasting Tests............................................................... 5-54
5.4.3 Solid-Liquid Separation Tests (Tailings and Concentrate) .............5-55
5.4.4 Roasting Testwork .........................................................................5-57
5.4.4.1 Chemical Reactions ....................................................... 5-57
5.4.4.2 Testwork ........................................................................ 5-60
Mineralogy (2010) .....................................................................................5-62
Recovery ...................................................................................................5-69
TABLES
Table 5-1:
Table 5-2:
Table 5-3:
Table 5-4:
Table 5-5:
Table 5-6:
Table 5-7:
Table 5-8:
Table 5-9:
Table 5-10:
Table 5-11:
Table 5-12:
Table 5-13:
Table 5-14:
Table 5-15:
Table 5-16:
Table 5-17:
Table 5-18:
Table 5-19:
Table 5-20:
Table 5-21:
Table 5-22:
Table 5-23:
Table 5-24:
Table 5-25:
Table 5-26:
Table 5-27:
Table 5-28:
Table 5-29:
ICP Analysis of Scoping Composites ............................................................................ 5-6

Comminution Tests Results ........................................................................................... 5-7
Effect of Grind Size on Rougher Recovery .................................................................... 5-8
Collector vs. Recovery for CN Composite ..................................................................... 5-9
Collector vs. Recovery for BS Composite ...................................................................... 5-9
Collector vs. Recovery for CPY Composite ................................................................... 5-9
Final Concentrate Grade vs. Regrind Size for CN Composite .................................... 5-10
Final Concentrate Grade vs. Regrind Size for BS Composite ..................................... 5-10
Final Concentrate Grade vs. Regrind Size for CPYComposite ................................... 5-11
Locked-Cycle Test Results for CN (2005-2007) .......................................................... 5-13
Locked-Cycle Test Results for BS (2005-2007) .......................................................... 5-13
Locked-Cycle Test Results for CPY (2005-2007) ........................................................ 5-13
Elemental Analysis of Locked-Cycle Concentrates (2005-2007) ................................ 5-14
Principal Assays for Phase IIA Composites ................................................................. 5-19
Full Assays for Phase IIA Composites ......................................................................... 5-19
Comminution Test Results (2008) ............................................................................... 5-20
Particle Sizes at Various Regrind Levels ..................................................................... 5-31
Summary of JKDWT Data............................................................................................ 5-37
Comparison of Deposit JKDWT Values Against SGS Database ................................. 5-37
Summary of SMC and JKDWT Data ........................................................................... 5-38
Comparison of SMC Deposit Values Against SGS Database (2008).......................... 5-39
Composite Characteristic ............................................................................................. 5-42
Composition of 2010 Program Samples ...................................................................... 5-43
Samples for Solid-Liquid Separation and Roasting Tests ........................................... 5-54
Test Results on Bulk Concentrate Settling .................................................................. 5-57
Elemental Analysis of Composite Feeds ..................................................................... 5-61
Elemental Analysis of Composite Products ................................................................. 5-61
Mineral Composition of Feed Samples (MCP1 14) .................................................. 5-63
Mineral Composition of Feed Samples (MCP15 28) ................................................ 5-63
FIGURES
Figure 5-1:
Recovery vs. Rougher Grind Size ................................................................................. 5-8
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TOC ii

Figure 5-2:
Figure 5-3:
Figure 5-4:
Figure 5-5:
Figure 5-6:
Figure 5-7:
Figure 5-8:
Figure 5-9:
Figure 5-10:
Figure 5-11:
Figure 5-12:
Figure 5-13:
Figure 5-14:
Figure 5-15:
Figure 5-16:
Figure 5-17:
Figure 5-18:
Figure 5-19:
Figure 5-20:
Figure 5-21:
Figure 5-22:
Figure 5-23:
Figure 5-24:
Figure 5-25:
Figure 5-26:
Figure 5-27:
Figure 5-28:
Figure 5-29:
Figure 5-30:
Figure 5-31:
Figure 5-32:
Figure 5-33:
Figure 5-34:
Figure 5-35:
Figure 5-36:
Figure 5-37:
Figure 5-38:
Figure 5-39:
Figure 5-40:
Figure 5-41:
Figure 5-42:
Figure 5-43:
Figure 5-44:
Figure 5-45:
Figure 5-46:
Figure 5-47:
Copper Grade vs. Regrind Size at pH 12 (2005-2007) .............................................. 5-11

Lock-Cycle Test Flowsheet .......................................................................................... 5-12
Locations of Metallurgical Samples for Development Composites in Late 2008 ......... 5-17
Locations of Metallurgical Samples for Variability Testing in Late 2008 ..................... 5-18
Rougher Flotation Procedure ....................................................................................... 5-21
Effect of Primary Grind on Cu Recovery ...................................................................... 5-22
Collector Type vs. Rougher Recovery for Composite CPY ......................................... 5-23
Collector Type vs. Rougher Recovery for Composite ENT ......................................... 5-23
Collector Type vs. Rougher Recovery for Composite MIX .......................................... 5-24
Collector Type vs. Rougher Recovery for Composite SEC ......................................... 5-24
Rougher Recovery vs. Collector Type for all Composites ........................................... 5-25
Rougher Recovery vs. Frother Type for all Composites (collector AP-3330) .............. 5-25
Rougher Recovery vs. Frother Type for all Composites (collector AP-3477) .............. 5-26
Recovery vs. Grade for Different Frother Types for CPY (collector AP-3330) ............ 5-26
Recovery vs. Grade for Different Frother Types for ENT (collector AP-3330) ............ 5-27
Recovery vs. Grade for Different Frother Types for MIX (collector AP-3330) ............. 5-27
Recovery vs. Grade for Different Frother Types for SEC (collector AP-3330) ............ 5-28
Recovery vs. Grade at Different pH for CPY (collector AP-3330) ............................... 5-29
Recovery vs. Grade at Different pH for ENT (collector AP-3330) ............................... 5-29
Recovery vs. Grade at Different pH for MIX (collector AP-3330) ................................ 5-30
Recovery vs. Grade at Different pH for SEC (collector AP-3330) ............................... 5-30
Schematic of Open Cleaner Tests ............................................................................... 5-31
Concentrate Grade vs. Level of Regrinding for CPY ................................................... 5-32
Concentrate Grade vs. Level of Regrinding for ENT ................................................... 5-32
Concentrate Grade vs. Level of Regrinding for MIX .................................................... 5-33
Concentrate Grade vs. Level of Regrinding for SEC ................................................... 5-33
Concentrate Grade vs. pH for CPY ............................................................................. 5-34
Concentrate Grade vs. pH for ENT .............................................................................. 5-34
Concentrate Grade vs. pH for MIX............................................................................... 5-35
Concentrate Grade vs. pH for SEC ............................................................................. 5-35
Distribution of Bond Rod Mill Work Indices .................................................................. 5-40
Distribution of Bond Ball Mill Work Indices .................................................................. 5-40
Distribution of Bond Abrasion Indices .......................................................................... 5-41
Rougher Flotation Procedure ....................................................................................... 5-44
GrindCu Recovery Curves for Composites ACP, ACS, and ACL .............................. 5-45
Primary Grind vs. Rougher Recovery for ACP Test Summary .................................... 5-46
Primary Grind vs. Rougher Recovery for ACS Test Summary .................................... 5-46
Primary Grind vs. Rougher Recovery for ACL Test Summary .................................... 5-47
Copper Recovery vs. Collector for ACP Test Summary .............................................. 5-48
Copper Recovery vs. Collector for ACS Test Summary .............................................. 5-49
Copper Recovery vs. Collector for ACL Test Summary .............................................. 5-49
Gold Recovery vs. Collector for ACP Test Summary .................................................. 5-50
Gold Recovery vs. Collector for ACS Test Summary .................................................. 5-50
Gold Recovery vs. Collector for ACL Test Summary................................................... 5-51
GradeRecovery Curve for Different Collectors ACP Test Summary ..................... 5-52
GradeRecovery Curve for Different Collectors ACS Test Summary ..................... 5-53
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Figure 5-48:
Figure 5-49:
Figure 5-50:
Figure 5-51:
Figure 5-52:
Figure 5-53:
Figure 5-54:
Figure 5-55:
Figure 5-56:
Figure 5-57:
Figure 5-58:
Figure 5-59:
Figure 5-60:
Figure 5-61:
Figure 5-62:
GradeRecovery Curve for Different Collectors ACL Test Summary ..................... 5-53
Underflow Slurry Density vs. Flocculant Addition for ACS .......................................... 5-55
Underflow Slurry Density vs.Flocculant Addition for ACL ............................................ 5-56
Overflow Clarity vs. Flocculant Addition for ACS ......................................................... 5-56
Overflow Clarity vs. Flocculant Addition for ACL ......................................................... 5-57
Partial Roasting Flowsheet .......................................................................................... 5-58
Impurity Stabilization Flowsheet .................................................................................. 5-59
Mineral Composition of Feed Samples (MCP1 14) .................................................. 5-64
Mineral Composition of Feed Samples (MCP15 28) ................................................ 5-64
Cu Species Composition in Feed Samples (MCP1 14) ............................................ 5-65
Cu Species Composition in Feed Samples (MCP15 28) .......................................... 5-66
Mineralogical Composition of ACP, ACS & ACL Composites ..................................... 5-67
Cu Species Composition in Rougher Concentrates (Composite ACP) ....................... 5-67
Cu Species Composition in Rougher Concentrates (Composite ACS) ....................... 5-68
Cu Species Composition in Rougher Concentrates (Composite ACL) ....................... 5-68
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5.0
METALLURGY
5.1
Summary
5.1.1
Testwork
Two major phases of testwork have been conducted for the Candente project. The first
consisted of process development to define the type of processing most applicable to the
deposit mineralization. This was followed by more detailed work in the second phase to
optimize process conditions and develop economic parameters to progress the project.
This second phase was affected by the financial crisis of 2008, however, when the work
was interrupted. Definition work resumed in 2010 with further development of process
parameters to allow primary equipment selection. The goal of the 2010 work was to
support the prefeasibility study in progress during 2010. Ultimately, further work will be
required to define the variability of the ore characteristics sufficiently to support a
feasibility study. All relevant reports have been included in Appendix E.
The testwork established the key design parameters, as follows:
For a feed grade of 0.40% Cu, a recovery of 89.7% is forecast at the target grind.
Recovery will vary with feed grade.
The concentrate grade was 30.6% Cu after partial roasting, with arsenic being
lowered to non-penalty limits.
The grind was established at 200 m with a JKSimMet Axb value of 52.1 and a Bond
Ball mill work index of 11.0.
5.1.1.1
Phase I (2005 2007)

Initial resource development identified potentially leachable copper mineralization. From
2005 to 2006, Kappes, Cassidy & Associates (KCA) assessed the potential of leaching
samples containing high levels of cyanide-soluble copper. The leaching testwork
consisted of bottle-roll leach tests and column leach tests. Initial recoveries were variable
and lower than anticipated. In response, further new samples were obtained from
twinned drillholes and sent to SGS Lakefield Research Chile (SGS) for bottle-roll and
column leaching testwork. The results at SGS Chile were similar to those from KCA.
predominantly sulphide copper mineralization. Therefore, the testwork program was
revised to assess the metallurgical response of the sulphide copper mineralization to
flotation. In late 2007, SGS re-composited untreated samples remaining from the leaching
testwork program into three master composites for scoping-level comminution and
flotation testwork. These samples were not considered to be representative of the entire
primary sulphide deposit but were used for a process development program. The 2007
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work was encouraging and confirmed that additional testwork focusing on the flotation of
the sulphide mineralization was warranted.
Principal development composites were:
CPY .............................. primary sulphides composite
CN ................................ secondary sulphides composite
BS................................. composite from breccia lithology.
5.1.1.2
Phase IIA (2008)

Based on the positive initial sulphide flotation testwork, comprehensive comminution and
flotation testwork was initiated at SGS in early 2008. Fresh samples were collected and
composited, then subjected to comminution and flotation tests with the objective of
defining metallurgical parameters for a feasibility study. Although this work was halted
prematurely of its goal because of the world economic situation in late 2008, it had by this
time provided adequate information on the grinding and flotation responses to confirm
that a smeltable concentrate could be produced. Sufficient detail was available to define
metallurgical challenges, particularly impurities (As, Sb) in the concentrate and the
potential mitigation strategy.
CPY .............................. a predominantly hypogene mineralization type that is primarily
chalcopyrite
ENT............................... a mixed mineralization type that has elevated arsenic values
from the multi-element analysis
MIX ............................... a mixed mineralization type that contains several copper
sulphide minerals
SEC .............................. a mineralization type that contains predominantly enriched
minerals such as chalcocite, covellite, bornite, enargite, and
tennantite.
5.1.1.3
Phase IIB (2010)

Another phase of work for Caariaco Norte began in 2010 with the initial goal of
continuing the definition of ore characteristics to support a prefeasibility study. During the
preliminary design evaluations, it became apparent that there was an opportunity to
enhance the value of the deposit by utilizing a new approach to reduce arsenic and
antimony in the bulk copper concentrate.
The early work in this program consisted of testing for the optimum rougher flotation feed
size, regrind feed size, and rougher and cleaner reagent additions. Products from this
testwork were further analyzed for mineralogy, chemistry, and settling quality. The results
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indicated that it was possible to use a coarser grind and still maintain recovery through
the employment of a dual collector system. Later work on the test material focused on
establishing that the improvements were robust and the solution proposed for the penalty
elements would work. This latter testworkthe application of partial roastinghas been
demonstrated to proof-of-concept level, and therefore key development work is
recommended to advance this approach.
ACP .............................. selection of samples containing chalcopyrite and arsenic
minerals
ACS .............................. selection of samples containing secondary copper sulphide
(covellite, chalcocite, bornite) and arsenic minerals
ACL ............................... selection of samples with low content of As (<0.03%As).
In 2011, work is planned to progress to the level of locked-cycle testwork. This work has
been designed to define the variability of metallurgy in terms of grindability, recovery and
the response of concentrates to roasting.
5.1.2
Recovery
The principal elements of the flowsheet have been established with indicative recoveries
of 89% Cu, 55% Au, and 50% Ag in a >26% Cu concentrate delivered to the roaster;
a>30% Cu concentrate delivered to the smelter; and arsenic as a penalty element
controlled to a level where no impact on concentrate marketability is anticipated over the
life-of-mine.
5.2
Phase I Program Results (2005 2007)
5.2.1
Leachability Testwork
The Caariaco deposit contains significant levels of leachable copper minerals including
chalcocite, covellite, digenite, and enargite. As a result, initial metallurgical testwork at
KCA focused on the assessment of the leaching characteristics of the ore. From 2005 to
2006 KCA analyzed samples containing high levels of cyanide-soluble copper. The
leaching testwork comprised bottle-roll leach tests and column leach tests. Initial
recovery results were variable and lower than anticipated.
In response, new samples were obtained in 2007 from twinned drill holes and sent to
SGS for bottle-roll and column leaching testwork. A major bottle-roll testwork program
was conducted on 55 composites drawn from 12 metallurgical drill holes in various parts
of the Caariaco Norte deposit. Hydrometal, Inc. (then Hydrometal LLC), engaged by
Candente to assess the leaching results, released a draft report in December 2007, and a
final draft was issued in February 2008.
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The SGS results confirmed previous testwork by KCA that not all the soluble-copper
minerals in the ore were completely leachable. Results were variable and indicated
potential recoveries of 60% to 70% of the contained leachable copper. These SGS results
were similar to those from KCA. Material containing less than 40% chalcopyrite and less
than 0.1% arsenic generally leached well. These values are recommended as break
points for predicting leachability, especially when combined with QLT (Quick Leach Test)
results, as reported earlier. Materials containing more than 40% chalcopyrite or 0.1%
arsenic are likely to be refractory when leached directly.
The behaviour of both the chalcopyrite and chalcocite followed the expected leach
patterns. However, the behaviour of the enargite, covellite, and bornite did not. The
leachability of the various copper minerals in the Caariaco ore was found to be as
follows:
Chalcocite >> Enargite > Bornite > Covellite >> Chalcopyrite
Earlier work had suggested that the presence of enargite might be detrimental to leach
recovery. However, QemScan mineralogical studies by SGS on the heads and
residues from the bottle-roll tests clearly failed to support this conclusion. In all, head
samples from 54 of the 55 composites were evaluated, along with nine of the residues.
This work indicated that on a gross basis, there was very little difference in the general
sample makeup. Virtually all samples were dominated by quartz and mica/chlorite. Forty
of the composites contained at least 80% quartz plus mica/chlorite, and four contained
more than 90%. Quartz dominated in 40 of the samples, while mica, chlorite, and clays
dominated in 14. Four samples also contained a significant amount of plagioclase/albite
(more than 20% of the total mineralization). These four samples contained less than 30%
quartz.
Pyrite was the dominant sulphide, ranging from 1% to 11% in the head samples, while
most of the composites (60%) contained between 4% and 8% pyrite. With the climatic
conditions at Caariaco, this much pyrite in a typical heap or dump leach operation would
be potentially acid generating (PAG) in situ, likely reducing the amount of acid that would
need to be purchased and added externally.
The conclusions of the leachability work were as follows:
Chalcocite leaches to a high degree in all material, and extraction is not inhibited by
the presence of other copper minerals. These other minerals also have to leach to
some extent to account for the observed recovery levels.
Chalcopyrite is the most refractory copper-bearing mineral in the Caariaco ore. It
undergoes little if any dissolution, and its content obviously increases in the leach
residues due to dissolution of the other copper minerals.
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Enargite proved to be less refractory than expected. In most of the samples it

leached well and contributed to the observed recovery. The only case where the
enargite did not appear to leach was when the arsenic content exceeded 0.1%,
leading to very high enargite content relative to the other copper minerals.
Bornite was found to leach reasonably well, decreasing in six of the nine samples.
Covellites behaviour was unexpected, as it did not appear to leach as well as either
enargite or bornite. This may be somewhat misleading because covellite is also
being formed as an intermediate reaction product when chalcocite is leached.
Overall, material containing less than 40% chalcopyrite and less than 0.1% As
appears likely to leach well. Material containing more than 40% chalcopyrite and/or
more than 0.1% As is likely to be refractory.
The gangue in Caariaco ore is dominated by quartz and micas/chlorites. Quartz is
the most common mineral in most of the samples. Only a few samples contained
appreciable plagioclase (20% to 30%).
Pyrite is the dominant sulphide, ranging from 1% to 11%. Most samples contained
4% to 8% pyrite and are likely to generate acid in situ during a typical heap or dump
leach operation.
Mineral grain size is fine, and the mineral associations tend to be complex.
Chalcopyrite:pyrite and chalcopyrite:bornite are the most common binary
associations.
5.2.2
Concentration Testwork
predominantly sulphide copper mineralization. The fact that the potentially leachable
copper mineralogy was now a smaller part of the total copper resource, combined with
the variable copper leachability, led Candente management to conclude that development
of the project based solely on a leaching process was not the best approach. Therefore
the testwork program was revised to assess the metallurgical response of the sulphide
copper mineralization to flotation. In late 2007, SGS re-composited untreated samples
remaining from the leaching testwork program into three master composites for scopinglevel comminution and flotation testwork. These samples were not considered to be
representative of the entire primary sulphide deposit but were used for a process
development program. The 2007 work was encouraging and confirmed that additional
testwork focusing on the flotation of the sulphide mineralization was warranted.
Fifty-five samples for compositing had originally been sent to SGS for leachability
testwork. The classification of these composites was based on sequential copper analysis
of twinned holes. The samples were half HQ size core in all cases except holes 104
(CO4-007) and 106 (CO5-023), which were quarter core. From these 55 composites, five
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domains were identified for preliminary flotation testwork composites based on lithology,
alteration, and type of copper minerals present, as follows:
CPY .............................. mainly chalcopyrite (to CPY composite)
Cu CN (Cc, Cv) ............ mainly chalcocite and/or covellite (to CN composite)
Bs. IBxP ........................ mainly igneous breccia polylithic lithology (to BS composite)
Bs. IBxH........................ mainly intrusive breccia hydrothermal lithology (to BS
composite)
En ................................. high enargite content (not tested during this initial phase).
Table 5-1 provides a chemical analysis of the composites.
Table 5-1:
Constituent
Al
As
Ba
Be
Bi
Ca
Cd
Co
Cr
Cu
Fe
Ga
Hg
In
K
La
Li
Mg
Mn
Mo
Na
Nb
Ni,
P
Pb
S
Sb
Sc
Se
Sn
Sr
Te
Ti
V
Zn
Zr
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ICP Analysis of Scoping Composites

Unit
CPY
BS
CN
%
%
g/t
g/t
g/t
%
g/t
g/t
g/t
%
%
g/t
g/t
g/t
%
g/t
g/t
%
g/t
g/t
%
g/t
g/t
%
g/t
%
%
g/t
g/t
g/t
g/t
g/t
%
g/t
g/t
g/t
5.88
0.0076
343
<0.50
<1
0.39
1
8
94
0.46
2.69
21
<5
<5
>2
10
12
0.80
159
59
1.80
<1
8
0.04
<2
1.89
<5
6
<5
<10
60
<1
0.13
41
84
45
7.07
0.0426
374
1.70
<1
0.27
5
7
92
0.69
3.34
25
<5
<5
>2
10
<10
0.64
77
27
1.07
1
4
0.04
4
2.74
35
7
<5
<10
78
<1
0.08
45
98
42
6.37
0.0458
284
<0.5
<1
0.16
6
9
121
0.71
2.89
21
<5
<5
>2
8
<10
0.37
42
25
0.73
<1
8.8
0.04
4
2.41
45
8
<5
<10
139
<1
0.11
43
86
44
Page 5-6

To prepare these samples for column leaching testwork to determine the viability of heap
leaching, they were crushed to 100% -25 mm and classified into screen fractions. The
material was then re-sampled and re-composited to make flotation composites. To
conserve costs and reduce turn-around time, the two breccia composites were combined
into a single breccia composite (BS), and the enargite composite was not tested.
5.2.3
Comminution Testwork
The objective of the grinding testwork was to establish the hardness of the material and to
produce sized feed material for the flotation work. The results of the preliminary
comminution work are presented in Table 5-2.
Table 5-2:
Comminution Tests Results
Composite
CPY
BS
CN
5.2.4
BWI, kW-h/t
Ai
13.3
13.3
12.2
0.12
0.11
0.16
Flotation Testwork
The objective of flotation testwork was to identify an industry-standard, cost-effective
approach to maximize copper recovery and concentrate copper grade. A standardized
approach was sought for all sample types. The testwork assessed the effect of primary
grind size, regrind size, bulk and cleaning pH, and the amount and types of collector and
frother on the flotation response. The potential of using sulphidization to enhance
recovery was also explored.
5.2.4.1
Effect of Grind Size

Several rougher flotation tests were performed at different particle sizes (P80 of 75, 106,
150, 212, and 250 m) and at pH 10 for each of the three composite types (Table 5-3 and
Figure 5-1). There was little performance difference for the P80between 106 m and
150 m. The 2% recovery improvement from grinding down to P80 75 m would, based
on the results of a subsequent throughput analysis, probably be offset by the higher
OPEX and CAPEX of the primary grind and cleaner circuits, as the mass pull was higher.
Therefore, a P80 of 150 m was recommended for later testwork.
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5.2.4.2
Table 5-3:
Effect of Grind Size on Rougher Recovery
Figure 5-1:
Recovery vs. Rougher Grind Size
Effect of Collectors and pH

Several rougher flotation tests were carried out to determine the best reagents to obtain a
high copper recovery. Various flotation reagents were evaluated using a constant primary
grind P80 of 106 m at pH 10. The best flotation results of the three composites
(Tables 5-4, 5-5, and 5-6) were obtained with the collector AP-3894 and methyl isobutyl
carbinol (MIBC) frother. Several tests were carried out to evaluate the effect of primary
grinding on the rougher performance (grade and recovery) using this reagent pair.
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Table 5-4:
Collector vs. Recovery for CN Composite
Table 5-5:
Collector vs. Recovery for BS Composite
Table 5-6:
Collector vs. Recovery for CPY Composite
Further separate tests were carried out at a P80 of 150 m with the addition of collector
AP-3498 (25 g/t) and frother MIBC (10 g/t). The flotation tests conducted at pH values of
7.2, 11, and 12 indicated that 10 is the optimum pH for the rougher flotation stage. This
pH gave acceptable results for all the composites tested.
5.2.4.3
Effect of Sulphidization
Sulphidization agents are often used to improve the floatability of semi-oxide minerals and
can improve bornite flotation kinetics significantly. Tests were carried out at a P80 of
150 m and pH 10 with the addition of collector AP-3498 (25 g/t) and frother MIBC
(10 g/t). Results indicate that flotation performance (recovery and grade) was not
improved by the addition of a sulphidizing reagent.
5.2.4.4
Cleaner Flotation (2005-2007)

For the open cleaner tests, the rougher concentrate was produced at a P80 of 150 m with
the addition of collector AP-3894 and frother MIBC. This rougher concentrate was then
reground and floated in two cleaning stages and one cleaner-scavenger stage. The
effects of pulp pH and regrind size were also evaluated. Results indicate that the
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concentrate grade is sensitive to cleaning flotation pH and regrind size. Good

performance is indicated for a P80 of 37 m (80% passing 400 mesh) for composite CN
(Table 5-7) and BS (Table 5-8); however, a finer regrind is required for composite CPY
(Table 5-9) to obtain commercial concentrate grades. The regrind P80 used for the design
criteria in this study was 30 m, which is the average of the regrind P80s that give the
best performance.
Figure 5-2 shows the response of final concentrate grade to regrind size.
The effect of pH is important to obtain good concentrate grades with composite CPY,
where a pH of 12 was found to be necessary. For the other two composites, it is possible
to produce acceptable final concentrate grades with much lower flotation pH in the
cleaning stage. Modification or optimization of the pH in the cleaners is planned for future
testwork phases.
Table 5-7:
Final Concentrate Grade vs. Regrind Size for CN Composite
Table 5-8:
Final Concentrate Grade vs. Regrind Size for BS Composite
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Table 5-9:
Final Concentrate Grade vs. Regrind Size for CPY Composite
Figure 5-2:
Copper Grade vs. Regrind Size at pH 12 (2005-2007)

Cu grade vs Re-grind Size
45
40
35
Cu grade, %
30
25
20
15
10
CPY
BS
CN
0
10
20
30
40
50
60
70
80
P80, m
5.2.4.5
Locked-Cycle Tests (2005-2007)

A locked-cycle test (or closed-cycle test) is a repetitive series of batch tests used to
simulate a continuous circuit, where the final cycles of the test are expected to mimic a
continuous circuit. For Caariaco, the batch tests were continued in an iterative manner
for six cycles. The final products from each cycle (final concentrate and tailings) were
filtered and removed from further processing. At the end of the test, all of the products,
final and intermediate, were dried, weighed, and subjected to chemical analysis. Results
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were then balanced and a metallurgical projection was calculated.

procedure is shown in Figure 5-3.
The locked-cycle
In this phase of testwork, one locked-cycle test (LCT) was done per composite type. The
LCT objectives were to:
produce a closed metallurgical projection for the sample tested
assess whether the flowsheet and reagent scheme are stable in a closed circuit.
The locked-cycle tests for each composite were carried out under the following
conditions:
Primary grind ................ P80 150 m
Primary pH ................... 10
Collector ....................... 25 g/t AP-3894
Frother .......................... 10 g/t MIBC
Regrind ......................... P80 of 20 m for CPY and a P80 of 37 m for CN and for BS
Cleaner pH ................... 12 for CPY and 11.5 for CN and for BS
For all composites, stability was reached over the last three cycles.
Figure 5-3:
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Lock-Cycle Test Flowsheet
Page 5-12

Recovery for the CN composite (Table 5-10) was 84.5% Cu with a final concentrate grade
of 26.5% Cu. This is a relatively low grade for a mineral of secondary type. To obtain
better concentrate grade it would be necessary to use a regrind finer than the P80 of
37 m that was selected and to use a pH in the cleaner stage higher than the level of 11.5
that was used for the locked-cycle test. Subsequent mineralogy showed that fine
associations with pyrite limit the final concentrate grade possible for the CN domain but
that the concentrate grade is suitable for smelting. The final concentrate grade for the BS
composite was 26.6% Cu with 81% recovery (Table 5-11). A recovery of 89% Cu with a
concentrate grade of 25.5% Cu was achieved for the CPY composite (Table 5-12). The
copper concentrate grade could possibly improve with a third cleaning stage.
Table 5-13 provides a detailed analysis of the three locked-cycle test concentrates.
Table 5-10: Locked-Cycle Test Results for CN (2005-2007)
Grade
Product
Cl. Conc.
Ro. tail + scv. tail
Ro. Conc
Calc. Head
Recovery
Weight %
Cu %
Fe %
Mo %
Cu%
Fe %
Mo %
2.23
97.8
11.05
100
26.5
0.11
5.581
0.7
21.9
2.6
18
3.1
0.1
0.01
0.02
0.01
84.5
15.5
88.2
100
15.9
84.1
63.9
100
14.3
85.7
21.1
100
Table 5-11: Locked-Cycle Test Results for BS (2005-2007)

Grade
Product
Cl. Conc.
Ro. Conc
Calc. Head
Recovery
Weight %
Cu %
Fe %
Mo %
Cu %
Fe %
Mo %
1.8
98.2
9.68
100
26.6
0.114
5.176
0.59
23.531
2.88
16.59
3.135
0.1
0.01
0.02
-
81
19
84.8
100
13
87
51.2
100
14.5
85.5
37.2
-
Table 5-12: Locked-Cycle Test Results for CPY (2005-2007)

Grade
Product
Cl. Conc.
Ro. Conc
Calc. Head
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Recovery
Weight %
Cu %
Fe %
Mo %
Cu %
Fe %
Mo %
1.42
98.6
12.38
100
25.5
0.045
3.021
0.41
27.8
2.4
15.36
2.8
0.2
0
0.03
0.01
89
11
91.7
100
14.5
85.5
67.8
100
43
57
52.4
100
Page 5-13

Table 5-13: Elemental Analysis of Locked-Cycle

Concentrates (2005-2007)
Note: The (-) sign indicates values below the

detection limit of the method.
5.3
Phase IIA Program Results (2008)
5.3.1
Introduction
Based on the positive initial sulphide flotation testwork, a comprehensive level of
comminution and flotation testwork was initiated at SGS in early 2008. Fresh samples
were collected and composited, then subjected to comminution and flotation tests with the
objective of defining metallurgical parameters for a feasibility study. This work was halted
prematurely because of the world economic situation in late 2008. However, by this point
the work had provided adequate information on the grinding and flotation responses
required to generate a smeltable concentrate. Sufficient detail was available to define
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metallurgical challenges, particularly impurities (As, Sb) in the concentrate and the
potential mitigation requirement.
While flotation testwork was sufficient for a preliminary flowsheet, the grinding work had
advanced further, and a large amount of information had been developed about the
grinding characteristics of the material.
Candente commissioned Transmin to supervise the scoping, prefeasibility, and variability
level comminution and flotation testwork programs. The testwork was performed by SGS
in Santiago with the objective of developing a suitable process flowsheet and reagent
suite for treatment of the Caariaco ores. The results and findings presented herein are
based upon metallurgical results from a series of comminution and flotation tests
performed by SGS between April and October 2008.
This testwork was performed on Caariaco ore composites identified as CPY, MIX, ENT,
and SEC. Variability results to date were received for the grinding testwork, but the
variability flotation testwork was delayed until Phase IIB or later. Tests results indicated
that traditional flotation technology could be used to concentrate copper into commercial
grade concentrate with good recoveries. Based on preliminary arsenic recovery
assumptions at this time, the LOM average grade of As in the Cu concentrate was
estimated to be 1.3%.
5.3.2
Mineralization
A QEMSCAN examination of the samples indicated that the following minerals and
mineral associations are predominant in the Caariaco Norte samples:
Predominant copper mineral species are chalcopyrite, covellite, chalcocite, bornite,
enargite, tennantite, and tetrahedrite
Predominant non-metallic gangue minerals are quartz and a mica/biotite/chlorite/clay
group
Copper sulphide minerals are mainly associated with pyrite and other sulphide
gangue minerals
Predominant sulphide gangue mineral is pyrite, which is present as liberated pyrite or
in association with other sulphide minerals.
The copper minerals have the following compositions:
Chalcopyrite ................. CuFeS2
Bornite ......................... Cu5- Error! Hyperlink reference not valid.FeS4
Covellite........................ CuS
Chalcocite .................... Cu2S
Enargite ........................ Cu3AsS4
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Tennantite .................... Cu12As4S13

Tetrahedrite .................. Cu12Sb4S13
5.3.3
Sampling and Sample Preparation (2008)

The composites for this testwork were sourced from two drilling campaigns:
material composited in late 2007 from existing drill core
material composited in late 2008 from existing drill core.
A total of 14 holes were drilled strictly to obtain samples for the testwork. The locations of
these metallurgical drill holes are shown in Figures 5-4 and 5-5.
The following parameters were used to generate metallurgical domains for sampling the
Caariaco Norte mineral resource:
geographical areas
depth
lithology
alteration
copper grade
copper mineralization (as determined by sequential leach results)
minor element grades.
The impact of each domain factor on metallurgical performance was again evaluated, and
it was determined that copper mineralization was more important than lithology or
alteration; therefore, the samples were grouped into four master composites:
CPY .............................. a predominantly hypogene mineralization type that is primarily
chalcopyrite
ENT............................... a mixed mineralization type that has elevated arsenic values
from the multi-element analysis
MIX ............................... a mixed mineralization type that contains several copper
sulphide minerals
SEC .............................. a mineralization type that contains predominantly enriched
minerals such as chalcocite, covellite, bornite, enargite, and
tennantite.
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Figure 5-4:
Locations of Metallurgical Samples for Development Composites in Late 2008
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Figure 5-5:
Locations of Metallurgical Samples for Variability Testing in Late 2008
11
1
4
10
2
6
8
7
12
17
14
9
13
15
16
Samples delivered to SGS were divided into 28 subsamples and then composited for
metallurgical testing by applying several criteria, including copper residual assays, iron
content, mineralogy, sample location, and the ratio of cyanide-soluble copper to total
copper. The five main alteration types and the seven main rock types seen in Caariaco
Norte are all present in proportional amounts in the four master composites selected.
The principal assays are shown in Table 5-14 and a full elemental set of assays in
Table 5-15.
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Table 5-14: Principal Assays for Phase IIA Composites

Composite
CPY
MIX
ENT
SEC
Au g/t
Ag g/t
As g/t
Cu %
Cu (H ) %
Cu (CN) %
Cu (R) %
Fe %
0.08
0.08
0.1
0.1
<1
2
2
2
<0.005
0.022
0.047
0.025
0.356
0.551
0.678
0.485
0.017
0.056
0.097
0.091
0.027
0.201
0.436
0.323
0.298
0.287
0.139
0.062
2.72
3.33
2.86
2.21
Note: Cu (H+) = acid soluble, Cu (CN) = cyanide soluble, Cu(R) = remainder.
Table 5-15: Full Assays for Phase IIA Composites

Element
Unit
CPY
MIX
ENT
SEC
Element
Unit
CPY
MIX
ENT
SEC
Au
g/t
ppm
%
%
%
%
%
%
%
%
%
%
%
%
ppm
%
ppm
ppm
ppm
ppm
%
ppm
ppm
ppm
%
%
ppm
ppm
ppm
0,08
-1
0,15
0,48
1,29
0,45
-0,005
0,356
2,72
0,017
0,027
0,298
1,49
1,57
-1
7,02
10
337
-0,5
-1
0,23
-1
12
119
0,35
2,92
19
-5
-5
0,08
2
0,17
0,47
2,04
0,45
0,022
0,551
3,33
0,056
0,201
0,287
2,51
2,51
-1
6,62
185
228
0,5
-1
0,2
4
11
119
0,55
3,9
20
-5
-5
0,1
2
0,05
0,3
1,71
0,45
0,047
0,678
2,86
0,097
0,436
0,139
2,68
3
-1
6,11
404
223
-0,5
-1
0,05
7
7
122
0,68
2,96
20
-5
-5
0,1
2
0,03
0,21
2,05
0,34
0,025
0,485
2,21
0,091
0,323
0,062
1,93
2,04
-1
6,63
213
2163
2,4
-1
0,04
3
6
135
0,46
2,27
20
-5
-5
%
ppm
ppm
%
ppm
ppm
%
ppm
ppm
%
ppm
%
ppm
ppm
ppm
ppm
ppm
ppm
%
ppm
ppm
ppm
ppm
%
%
%
%
%
>2
19
12
0,52
353
57
0,79
-1
18,2
0,04
10
1,51
-5
11
-5
-10
46
-1
0,35
45
199
59
-0,1
6,73
3,08
0,32
0,04
32,33
>2
15
-10
0,53
251
30
0,7
-1
8,5
0,03
7
2,71
11
12
-5
-10
58
-1
0,38
71
167
45
0,2
6,36
3,78
0,36
0,02
33,56
>2
12
-10
0,33
93
22
0,73
-1
4,2
0,02
15
3,02
49
8
-5
-10
86
-1
0,24
31
182
45
-0,1
5,05
3,08
0,22
0,01
34,8
>2
11
-10
0,28
79
33
1,07
-1
5,4
0,02
14
1,95
15
8
-5
-10
104
-1
0,28
30
93
21
-0,1
6,48
2,32
0,24
-0,01
34,29
Ag
Ca
Mg
K
Na
As
Cu
Fe
Cu(H+)
Cu(CN)
Cu(Res)
Sulphur
S
Ag
Al
As
Ba
Be
Bi
Ca
Cd
Co
Cr
Cu
Fe
Ga
Hg
In
La
Li
Mg
Mn
Mo
Na
Nb
Ni
P
Pb
S
Sb
Sc
Se
Sn
Sr
Te
Ti
V
Zn
Zr
Hg
Al
Fe
Ti
Mn
Si
Note: The (-) sign indicates values below the detection limit of the method.
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5.3.4
Comminution Testwork Development

The 2008 comminution testwork consisted of two sets of tests. The first was conducted to
support process development and an interim report, and included:
Crushing work index (CWI)
SAG Power Index (SPI)
Bond Rod mill work index (RWI)
Bond Ball mill work index (BWI)
Abrasion Index (AI).
While the second set of tests were variability comminution tests, completed after the SRK
PEA report was issued.
Testwork results are summarized in Table 5-16.
Table 5-16: Comminution Test Results (2008)
Composite
CPY
MIX
ENT
SEC
MinnovEx
Crushing Index
BWI kW-h/t
SPI min
Ai
26
98
98
96
9.8
10.9
11.3
9.2
72.4
48.3
49.8
56.5
0.1114
0.1301
0.1949
0.0945
Compared to the scoping study composites, the ball mill work index results (BWI) were
significantly lower for this phase of work and also for the subsequent variability
composites. However, because no composite material from the scoping study remains
that could be retested, this anomaly will remain. Both results are from the same
laboratory, equipment, and procedures. Because the program summarized in Table 5-16
was far more comprehensive, it was recommended that these values rather than the
scoping study values be used moving forward.
5.3.5
Flotation Primary Flotation Test (2008)

Primary flotation was conducted with six stages of roughing. Collector, frother type,
dosage and pulp pH were varied to evaluate their effect on mineral flotation performance.
The duration of each flotation test was 18 minutes. A schematic of the sequence is
shown in Figure 5-6.
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Figure 5-6:
Rougher Flotation Procedure

Mineral
Grinding
Final Tailing
Rougher Cu
0-1 min, Conc Rougher 1

5.3.5.1
Effect of Primary Grind Size(2008)

The effect of grind size (P80 at 75, 100, 150, 200, and 250 m) on the flotation
performance of the Phase II composites was evaluated. Several tests were carried out at
25 g/t of collector A3894, 10 g/t of frother MIBC, pH 10 (maintained through addition of
lime), and 33% slurry density. Although finer grinding improved the copper recovery, a
primary grind of P80 125 m was deemed to be optimum. The CPY composite particularly
showed a marked improvement between 106 m and 150 m.
The tests showed (Figure 5-7) a substantial variance in recovery between the
composites, in the following order: MIX > ENT > SEC > CPY. The last two composites,
SEC and CPY, yielded 86% and 85%, respectively, after six-stage rougher flotation at
150 m. The CPY composite was more sensitive to primary grind size than the other two
types. Figure 5-7shows a noticeable increase in copper recovery when the grind size is
reduced from 150 m to 100 m.
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Figure 5-7:
Effect of Primary Grind on Cu Recovery

Effect of K80 on Cu recovery
100
90
80
Recovery Cu %
70
60
50
PYC
40
MIX
30
ENT
20
SEC
10
0
0
50
100
150
200
250
300
K80
5.3.5.2
Effect of Collectors and Frothers (2008)

Collector screening tests were performed on the Phase IIA composites to investigate the
selectivity for copper recovery. Tests were completed at a grind size of 125 m, pH 10,
collector types AP-3894, AP-3330, PAX, AP-3477, AP-404, AP-3926, AP-3302 and with
frother (MIBC) addition. Higher copper selectivity was observed for all composites using
collectors AP-3330, AP-3477, and AP-3894. The addition of AP-3894 appears to
increase the concentrate copper grade of the ENT composite significantly.
The results for the composites CPY, ENT, MIX, and SEC are shown in Figures 5-8 to
5-11. Although the AP-3302 showed fairly good selectively in all composite types, it also
yielded a lower overall recovery at the typical rougher concentrate grade range required
to ensure good overall recovery. This is demonstrated in Figure 5-12.
Frother screening tests were carried out on the process development composites at a
grind size of 125 m, pH 10, frother types MIBC, D-250, H-76 and TEB and with the
addition of collectors AP-3330 (25 g/t) and AP-3477 (25 g/t). The results indicate that
copper recovery and grade benefit most from the use of AP-3330 / MIBC (Figures 5-13 to
5-18).
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Figure 5-8:
Collector Type vs. Rougher Recovery for Composite CPY
EFFECT COLLECTOR
COMPOSITE CPY
100
90
80
Recovery Cu %
70
60
50
3330
40
PAX
30
AP-3477
404
20
AP-3926
10
AP-3302
0
0
10
12
Grade Cu %
Figure 5-9:
Collector Type vs. Rougher Recovery for Composite ENT

EFFECT COLLECTOR
COMPOSITE ENT
100
AP-3330
90
PAX
Recovery Cu %
80
AP-3477
70
AP-404
60
AP-3926
AP-3302
50
40
30
20
10
0
0
10
15
20
Grade Cu %
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25
30

Figure 5-10: Collector Type vs. Rougher Recovery for Composite MIX
EFFECT COLLECTOR
COMPOSITE MIX
100
3330
Recovery Cu %
90
PAX
80
AP-3477
70
AP-404
AP-3926
60
A-3302
50
40
30
20
10
0
0
10
15
20
25
Grade Cu %
Figure 5-11: Collector Type vs. Rougher Recovery for Composite SEC
EFFECT COLLECTOR
COMPOSITE SEC
100
90
80
Recovery Cu %
70
60
50
AP-3330
40
PAX
30
AP-3477
A-404
20
AP-3926
10
AP-3302
0
0
10
12
Grade Cu %
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14
16
18

Figure 5-12: Rougher Recovery vs. Collector Type for all Composites
10
90
80
70
60
50
40
30
20
10
Cu grade, %
Cu recovery, %
Collector Screening Test

100
0
AP-3330
PAX
AP-3477
AP-404
AP-3926
AP-3302
Collector
CPY
MIX
ENT
SEC
CPY Cu, %
MIX Cu, %
ENT Cu, %
SEC Cu, %
Figure 5-13: Rougher Recovery vs. Frother Type for all Composites
(collector AP-3330)
Frother Screening Test (collector AP-3330)
100
95
90
85
80
60
55
50
45
40
35
30
25
20
15
10
5
0
0
MIBC
D250
H76
TEB
Frother
CPY
MIX
ENT
SEC
CPY Cu, %
MIX Cu, %
Note: Frother screening test (collector AP-3330)
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ENT Cu, %
SEC Cu, %
Cu grade, %
Cu recovery, %
75
70
65

Figure 5-14: Rougher Recovery vs. Frother Type for all Composites
(collector AP-3477)
Frother Screening Test (collector AP-3477)
100
95
90
85
80
60
55
50
45
40
35
30
25
20
15
10
5
0
0
MIBC
CPY
D250
MIX
ENT
H76
Frother
SEC
CPY Cu, %
TEB
MIX Cu, %
ENT Cu, %
SEC Cu, %
Figure 5-15: Recovery vs. Grade for Different Frother Types for CPY
(collector AP-3330)
COLLECTOR AP-3330/EFFECT FROTHER
COMPOSITE CPY
100
90
80
Recovery Cu %
70
60
50
40
250
76-A
30
TEB
20
MIBC
10
0
0
Grade Cu %
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Cu grade, %
Cu recovery, %
75
70
65

Figure 5-16: Recovery vs. Grade for Different Frother Types for ENT
(collector AP-3330)
COMPOSITE ENT
100
90
80
Recovery Cu %
70
60
50
40
30
250
20
76-A
TEB
10
MIBC
0
0
10
Grade Cu %
Figure 5-17: Recovery vs. Grade for Different Frother Types for MIX
(collector AP-3330)
COMPOSITE MIX
100
90
80
Recovery Cu %
70
60
50
40
250
30
76-A
20
TEB
10
MIBC
0
0
Grade Cu %
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Figure 5-18: Recovery vs. Grade for Different Frother Types for SEC
(collector AP-3330)
COMPOSITE SEC
100
90
80
Recovery Cu %
70
60
50
40
250
30
76-A
20
TEB
MIBC
10
0
0
Grade Cu %
5.3.5.3
Effect of Pulp pH
Several tests on the prefeasibility composites were conducted at natural pH and at pH 9,
10, 11, and 12. Tests were performed at a grind size of 125 m with the addition of
collector AP-3330 (25 g/t) and frother MIBC (20 g/t). Natural pH values corresponding to
composites CPY, MIX, SEC, and ENT are 6.2, 6.57, 6.65, and 5.37, respectively. A
noticeable decrease in copper recovery occurs at natural pH for ENT and SEC mineral
samples. At pH 9 and 10, good performance was obtained (recovery and grade), with
particularly higher concentrate copper grades at pH 10 for all composites. Performance is
shown in Figures 5-19 to 5-22.
5.3.5.4
Sulphidization Tests (2008)

Tests were completed at a grind size of 125 m, pH 10, and the addition of collector
AP-3330 (25 g/t) and frother MIBC (10 g/t). The effect of adding the reagent NaHS (50 g/t
and 100 g/t) on the mineral response to flotation was evaluated. The composites CPY,
MIX, and SEC showed better copper recoveries without the addition of NaHS. However,
the addition of 50 g/t of NaHS did slightly improve copper recovery for the ENT
composite.
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Figure 5-19: Recovery vs. Grade at Different pH for CPY (collector AP-3330)
CPY Effect of pH
100
90
Cu recovery, %
80
70
60
50
pH9
40
pH11
30
pH12
20
pH10
pH Natural
10
0
1
Cu grade, %
Figure 5-20: Recovery vs. Grade at Different pH for ENT (collector AP-3330)
ENT Effect of pH
100
90
Cu recovery, %
80
pH10
70
60
pH natural
50
pH 11
40
30
pH12
pH9
20
10
0
3
Cu grade, %
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10

Figure 5-21: Recovery vs. Grade at Different pH for MIX (collector AP-3330)
MIX Effect of pH
100
90
Cu recovery, %
80
70
60
50
40
pH9
30
pH11
20
pH12
10
pH10
pH natural
0
3
Cu grade, %
Figure 5-22: Recovery vs. Grade at Different pH for SEC (collector AP-3330)
Cu recovery, %
SEC Recovery/Grade
100
90
80
70
60
50
40
30
20
10
0
pH 10
pH natural
pH 9
pH11
pH12
3
6
Cu grade, %
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5.3.6
Flotation Cleaner Flotation Tests
5.3.6.1
Regrind Tests (2008)

Tests were performed on the prefeasibility composites with a primary grind size of
125 m, pH 10, cleaner pH 11.5 and AP-3330 (25 g/t) and MIBC (10 g/t). Regrinds were
evaluated at times of 4, 8, and 12 minutes rather than specific P80 sizes to facilitate lab
work with the small sample mass available. Figure 5-23 is a schematic of the workflow
employed. The CPY composite required 4 minutes of regrinding to achieve optimal
grade-recovery relationship in batch tests; the other three composites required between 8
and 12 minutes (Table 5-17 and Figures 5-24 to 5-27). Locked-cycle tests and detailed
mineralogy were conducted as necessary to further define the regrind requirements for
each composite.
Figure 5-23: Schematic of Open Cleaner Tests
Mineral
Grinding
Ro. Tail
Rougher
Re grinding
Cleaner 1a
Cl. Scav. Tail
Cl. Scav.
Cl. 2 Tail
Cleaner 2a
Cl. 3 Tail
Cleaner 3a
Co. Cleaner
Table 5-17: Particle Sizes at Various Regrind Levels

CPY
Regrind Time
Minutes
0
4
8
12
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MIX
ENT
SEC
P80m
-400 #
%
P80m
-400 #
%
P80m
-400 #
%
P80m
-400 #
%
102
68
35
29
58,5
71.0
83.1
88.5
100
68
36
28
57.6
69.5
81.5
87.5
83
67
51
37
55.5
63.5
71.7
81.0
99
67
35
30
59.4
71.0
82.5
88.2
Page 5-31

Figure 5-24: Concentrate Grade vs. Level of Regrinding for CPY

(Open Cycle Cleaner Tests)
Composite CPY Effect of Regrind
100
90
Recovery Cu %
0
80
70
8
12
60
50
40
30
20
10
0
0
10
15
20
25
Grade Cu %
Figure 5-25: Concentrate Grade vs. Level of Regrinding for ENT
Composite ENT. Effect of Regrind
Recovery Cu %
100
90
80
70
8
12
60
50
40
30
20
10
0
0
10
15
20
Grade Cu %
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25
30
35

Figure 5-26: Concentrate Grade vs. Level of Regrinding for MIX

Composite MIX. Effect of Regrind
100
0
Recovery Cu %
90
80
70
12
60
50
40
30
20
10
0
0
10
15
20
25
Grade Cu %
Figure 5-27: Concentrate Grade vs. Level of Regrinding for SEC
Composite SEC. Effect of Regrind

100
90
Recovery Cu %
80
70
60
0
50
40
30
12
20
10
0
0
10
15
20
25
30
35
40
Grade Cu %
5.3.6.2
Effect of Pulp pH on Cleaner Flotation (2008)

Several cleaner flotation tests were conducted at pH 11, 11.5 and 12 at a grind size of
125 m with the addition of AP-3330 (25 g/t) and frother MIBC (20 g/t). A pH of 11.5
achieved satisfactory although not optimal results for all composites tested at this stage
(Figures 5-28 to 5-31).
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Figure 5-28: Concentrate Grade vs. pH for CPY

(Open Cycle Cleaner Tests)
Composite CPY. Effect of pH

100
90
80
Recovery Cu %
70
60
50
11,0
40
11,5
30
12,0
20
10
0
0
10
Grade Cu %
Figure 5-29: Concentrate Grade vs. pH for ENT

Composite ENT. Effect of pH
100
90
80
Recovery Cu %
70
60
50
11,0
11,5
40
12,0
30
20
10
0
0
10
15
Grade Cu %
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20
25

Figure 5-30: Concentrate Grade vs. pH for MIX

Composite MIX. Effect of pH
100
90
80
Recovery Cu %
70
60
11,0
50
11,5
40
12,0
30
20
10
0
0
10
15
20
25
30
Grade Cu %
Figure 5-31: Concentrate Grade vs. pH for SEC

Composite SEC. Effect of pH
100
11,0
90
11,5
80
12,0
Recovery Cu %
70
60
50
40
30
20
10
0
0
10
15
20
25
Grade Cu %
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30
35
40
45

5.3.6.3
Cleaner Kinetics (2008)

Tests were carried out to determine the optimum flotation time for cleaner and
cleaner-scavenger flotation. Tests were run at a primary grind size P80 of 125 m, pH 10
and the addition of AP-3330 (25 g/t) and frother MIBC (10 g/t). Flotation times were as
follows:
First-stage cleaner ................................ 0.5, 1, 2, and 4 minutes
Cleaner-scavenger ................................ 1, 2, 4, 7, and 11 minutes
Cleaner flotation time must achieve a balance between satisfactory copper recovery and
good selectivity against slow-floating gangue minerals. At least 3 minutes per stage is
required for good copper recovery, but more time will increase gangue pull to the
concentrate, reducing the concentrate grade and possibly increasing the recirculating
load. It has been indicated from previous testwork that longer flotation times would lead
to increased recovery of precious metals in this material.
5.3.7
Comminution Testwork Variability

The second set of testwork concentrated on defining the level of comminution variability
across the orebody to provide information suitable for a later prefeasibility or feasibility
study.
This 2008 comminution testwork consisted of the followed tests:
Crushing work index (CWi)
SAG mill comminution (JKSMC)
Drop weight test (JKDWT)
Specific gravity (SG)
Bond rod mill work index (RWi)
Bond ball mill work index (BWi)
Abrasion Index (Ai).
The samples used in this testwork were 48 composite samples formed from material
sourced from the 2008 metallurgical drilling campaign. These 48 samples were subjected
to all tests except drop-weight tests, which were limited to 10 samples and were used to
provide a calibration between the JKDWT and JKSMC tests.
5.3.7.1
Crushing Testwork (2008)

The Bond crushing work index test (CWi) is used to calculate the net power requirements
for sizing crushers, the required closed-sized settings for cone crushers, or the open-size
settings for gyratory and jaw crushers for a given product size. Caariaco variability
crushing work indices in the range of 4 to 12 kWh/t, are typical of porphyry copper
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deposits but are significantly lower than those reported in the PEA. The 80th percentile of
the CWi was found to be 13 kWh/t.
5.3.7.2
SAG Mill Testwork

The JKTech drop-weight test (JKDWT) and the SMC (abbreviated version of the dropweight test) aim to estimate crushing energy requirements and specific parameters
(energy and sizing data) that can be used in grinding circuit modelling and simulation
using the JKSimMet software.
The JKDWT data are presented in Table 5-18 and are developed further and compared
against the SGS database of test results (2008) in Table 5-19. The SMC data are
provided in Tables 5-20 and 5-21.
Table 5-18: Summary of
JKDWT Data
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Table 5-19: Comparison of Deposit JKDWT Values

Against SGS Database
Page 5-37

Table 5-20: Summary of SMC and JKDWT Data
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Table 5-21: Comparison of SMC Deposit Values Against SGS Database (2008)
5.3.7.3
Bond Mill Work Index Testwork

The variability testwork indicates an average bond rod mill work index (RWi) of just over
10 kWh/t. This, in conjunction with the BWi of just under 10 kWh/t, indicates that the ore
is a soft to moderately soft type.
Figure 5-32 summarizes the grindability data from the 48 variability composites. The
80th percentile of hardness was found to be 11.9 kWh/t for RWi.
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Ball mill work indices in the range of 9 to 12 kWh/t confirm the results of the process
development composites by showing a soft to moderately soft ore type.
Figure 5-33 summarizes the grindability data from the 48 variability composites. The
80thpercentile for hardness was 12.7 kWh/t.
Figure 5-32: Distribution of Bond Rod Mill Work Indices
Bond Rod Mill Index
100
90
80
70
Percentile, %
60
50
40
30
20
10
0
6
10
12
14
16
RWI, kW-h/t
Figure 5-33: Distribution of Bond Ball Mill Work Indices

Bond Ball Mill Index
100
90
80
Percentile, %
70
60
50
40
30
20
10
0
7.20
8.20
9.20
10.20
11.20
12.20
BWI, kW-h/t
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13.20
14.20
15.20
16.20

5.3.7.4
Abrasion Testwork
The abrasion index can be used to determine steel media and liner wear in crushers, rod
mill, and ball mills. The range of abrasion index numbers is shown in Figure 5-34.
The average abrasion index was less than 0.1, which may indicate that the selected
variability composites correspond to a non-abrasive ore. Figure 5-34 summarizes the
abrasion data from the 48 variability composites. At the 80th percentile, the abrasion
index is around 0.12, which is the basis of the steel values used for the operating cost.
Figure 5-34: Distribution of Bond Abrasion Indices
Abrasion Index
100
90
80
Percentile, %
70
60
50
40
30
20
10
0
0.011
0.061
0.111
0.161
0.211
Ai
Note: Abrasion index (variability testing)
5.4
Phase II Program Results (2010)
5.4.1
Introduction
Work resumed in 2010 under the supervision of Transmin based on the results obtained
in 2008. It was essentially a continuation of the process development and employed the
same drill inventory of samples to provide components of the composites. This work had
the following metallurgical objectives:
defining three composites from the samples remaining from inventory set aside for
flotation variability work to complete the grinding and flotation process development
work
confirming the reagent selection and parameters of final process development
generating sufficient sample of tailings for geochemical characterization, establishing
the particle size distribution for the design of tailings systems, chemical
characterization of effluents and environmental studies
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generating sufficient concentrate production to allow proof-of-concept testwork in

roasting.
New composites were created from the samples used for the variability composites
according to the following criteria:
ACP .............................. selection of samples containing chalcopyrite and arsenic
minerals
ACS .............................. selection of samples containing secondary copper sulphide
(covellite, chalcocite, bornite) and arsenic minerals
ACL ............................... selection of samples with low As content (<0.03%As).
The emphasis of this work was to assess the impact of arsenic and other penalty
elements relative to the principal types of mineralogy. Table 5-22 summarizes the
distribution of weight for each composite.
Table 5-23 lists the samples selected for the formation of composites ACP, ACS, and
ACL. These same materials were used to provide samples for the variability comminution
work performed in 2008.
Table 5-22: Composite Characteristic
Composite
ACP
ACS
ACL
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Composition
No. of
Samples
Weight
(kg)
Cu %
As %
As, Cpy
As, Cv, Cc, Bo
low As
27
20
8
135
100
80
0.46
0.55
0.43
0.02
0.03
0.01
Page 5-42
Comment
Arsenic comp primary
Arsenic comp secondary
Arsenic comp low As

Table 5-23: Composition of 2010 Program Samples

Weight
Composite
Name
Mineralogy
Core
Sample
Other
Assays
Weight
Total
CuT
%
As
(ppm)
As
(%)
kg
Remain
Ratio
Weight (kg)
ACP
ACS
ACL
ACP
ACS
ACL
CP-01
py, cpy, bo, tnn, (cv)
484
484
0.64
20
464
0.25
CP-02
py, bo, cpy, (en)
262
262
0.94
20
242
0.25
0.25
CP-03
py, bo, en
780
780
0.53
20
760
0.25
CP-05
py, en, cpy, tnn, (cv)
68
37
105
0.66
20
85
0.25
CP-06
CP-07
py, en, tnn, (cv)

py, en, tnn (cpy, cv)
22
303
37
37
59
340
0.53
0.62
1,025
0.10
20
20
39
320
0.25
0.25
CP-08
py, en, tnn, (cv)
332
37
369
0.35
277
0.03
20
349
0.25
0.50
10
CP-09
py, en, bo
278
278
0.88
1,761
0.18
20
258
0.25
CP-10
py, cpy, (bo), mg
154
20.2
174
0.29
20
154
0.25
0.25
CP-11
CP-12
py, cpy, mg
py, cpy, mg
30
118
30
118
0.36
0.34
5
20
25
98
1.00
0.25
5
5
CP-13
py, cpy
73
73
0.40
20
53
0.25
CP-14
py, cpy
249
257
0.41
20
237
0.25
CP-15
py, cc, cpy, (hem)
243
243
0.34
20
223
0.25
CP-16
py, cpy, (hem)
149
149
0.29
20
129
0.25
CP-17
CP-19
py, cv, bo, en

py, cpy, bo
93
237
93
237
0.25
0.32
20
20
73
217
0.25
-
0.25
0.25
5
-
5
5
CP-20
py, cpy, (en)
223
223
0.28
20
203
0.25
0.25
CP-21
py, bo, en, cpy
90
90
0.40
20
70
0.25
CP-22
py, bo, en, (cpy)
326
326
0.72
217
0.022
20
306
0.25
0.50
10
CP-23
CP-24
py, cc, cpy, en

py, (bo, cpy)
152
101
152
101
0.67
1.18
724
764
0.072
0.076
20
20
132
81
0.25
0.25
0.25
0.25
5
5
5
5
CP-25
py, cv, cpy, (en)
465
465
0.71
342
0.034
20
445
0.25
0.25
CP-26
py, bo, en, cpy
439
439
20
419
0.25
CP-27
py, cc, bo, en
332
332
0.49
739
0.07
20
312
0.25
CP-28
py,(cpy)
219
219
0.59
669
0.07
20
199
CP-30
CP-31
py, cpy, cv
py, cpy
404
177
404
177
0.53
0.41
110
82.6
0.01
0.01
20
20
384
157
0.25
0.25
0.50
0.50
5
5
10
10
CP-32
py, cc, en
145
145
0.44
82.6
0.01
20
125
0.25
0.50
10
CP-33
py, cpy
148
148
0.51
951
0.10
20
128
0.25
CP-34
py, cpy, bo
180
180
0.49
45.3
0.00
20
160
0.25
0.50
10
CP-39
CP-40
py, bo, cpy, (en)

py, cpy, (bo, en)
138
51.77
26.8
52
165
0.26
0.27
135
202
0.01
0.02
20
20
32
145
0.25
0.25
0.50
0.50
5
5
10
10
CP-41
py, en
25.55
26
0.21
21
1.00
CP-42
py, en
48
26.3
75
0.15
20
55
CP-43
py, cpy, cv, cc
157
20.7
178
0.60
20
158
0.25
CP-44
CP-45
py, cpy, (bo)

py, cpy, (bo, en)
160
-
38.4
22.35
198
22
0.62
0.50
20
5
178
17
0.25
1.00
5
5
CP-46
py, cpy, bo, en
16.8
17
0.43
12
1.00
CP-47
py, cpy, (bo, en)
26.2
26
0.17
21
1.00
CP-48
py, cpy, bo, (en)
22.25
22
0.51
10
12
0.50
0.50
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5.4.2
Flotation Primary Flotation Test

Primary flotation was conducted with six stages of roughing. Collector, frother type,
dosage and pulp pH were varied to evaluate their effect on mineral flotation performance.
The duration of each flotation test was 18 minutes. A schematic of the sequence is
shown in Figure 5-35.
Figure 5-35: Rougher Flotation Procedure
Mineral
Grinding
Final Tailing
Rougher Cu

5.4.2.1
Effect of Primary Grind Size (2010)

The effect of grind size (P80 at 120, 150, 175, 200, and 250 m) on the flotation
performance of the three composites (at the conditions developed in 2008) was
evaluated. All tests were performed as rougher kinetic tests with six stages using 25 g/t of
collector A3894 and 10 g/t of frother MIBC. Tests were conducted at pH of 10 (maintained
through addition of lime) and 33% slurry density. The results are summarized in
Figure 5-36.
As expected, there was a decrease in recovery when using a coarser grind for all three
composites. However, the impact of increasing from 150 m to 200 m was considered
minor for all composite types. Indeed, recoveries for the ACS composite increased
slightly with the coarser grind. The results were sufficiently encouraging to develop a
comparison model based on preliminary capital and operating costs at the various sizes
versus revenue. In this model, the cost of power was assumed to be $0.05/kWh and
reagent loading was kept constant as per the test. The capital equipment was maintained
at the same level.
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Figure 5-36: GrindCu Recovery Curves for Composites ACP, ACS, and ACL
100.0
Rougher Recovery, % Cu
95.0
90.0
85.0
80.0
75.0
ACP
70.0
ACS
65.0
ACL
60.0
55.0
50.0
100
150
200
250
Primary Grind P80, m
The modelling was done by comparing recoveries at a constant rougher grade of 4%.
The mass pull was examined to determine the impact on regrinding and whether energy
requirements here would outweigh the benefits produced elsewhere. For all ore types,
the increase in throughput and decrease in overall cost outweighed recovery loss and the
required cost increases in regrinding. In all three cases, the comparison model showed
that it was economically beneficial to move from a primary grind of 150 m to 200 m, as
it allowed a greater amount of metal to be recovered per unit of expenditure.
The results for the individual composites are presented in Figures 5-37 to 5-39.
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Figure 5-37: Primary Grind vs. Rougher Recovery for ACP Test Summary
Figure 5-38: Primary Grind vs. Rougher Recovery for ACS Test Summary
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Figure 5-39: Primary Grind vs. Rougher Recovery for ACL Test Summary
5.4.2.2
Effect of Collectors (2010)

Grind size was held constant at a P80 of 150 m, and all tests were performed as rougher
kinetic tests with six stages. The base case was the flotation recipe developed in 2008,
which used 25 g/t of collector A3894 and 10 g/t of frother MIBC, pH 10, and a slurry
density of 33%. The goals of the collector tests were to increase the recovery of both
copper and gold into the concentrate. At the end of the 2008 test campaign, further
testwork had indicated that the A3894 gave more favourable results than A3330 and
A3894 was used afterwards.
Other reagents that were tested included a potassium xanthate collector (PAX), MX945
(also called GoldMax) produced by Cytec Industries Inc. at 30, 40, and 50 g/t, and
mixed reagent suites at 25 g/t in the following combinations:
75% A-3894 and 25% PAX
75% A-3477 and 25% PAX
75% A-3894 and 25% SIBX
40% A-3894, 40% A-3477, and 20% PAX.
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A-3894 is an alkyl-alkyl thionocarbamate collector that is selective against pyrite;

is a dithiophosphate collector reagent that is fairly selective against pyrite; and
potassium amyl xanthate that is a very strong collector and not all that selective
pyrite. SIBX is sodium isobutyl xanthate, which is weaker and more selective
pyrite than PAX.
A-3477
PAX is
against
against
In these rougher tests, the best overall recovery performance was achieved by the 75%
A-3894 and 25% PAX combination. Not only was copper performance better, but gold
performance was also substantially upgraded from previous work.
The combination of 75% A-3894 and 25% PAX provided the best overall recoveries for
both Cu and Au. Although no cleaning tests were available, it was projected that it would
be possible to make a saleable concentrate similar to that achieved in 2008. The kinetic
curves indicated that the performance of the 75% A-3894 and 25% PAX curve at the
rougher stage was generally as good as the 100% A-3894 curve and, in the case of the
ACS material, actually better.
Cu recoveries for each composite are detailed in Figures 5-40 to 5-42 and gold recoveries
in Figures 5-43 to 5-45.
Figure 5-40: Copper Rougher Recovery vs. Collector for ACP Test Summary
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Figure 5-41: Copper Rougher Recovery vs. Collector for ACS Test Summary
Figure 5-42: Copper Rougher Recovery vs. Collector for ACL Test Summary
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Figure 5-43: Gold Recovery vs. Collector for ACP Test Summary
Figure 5-44: Gold Recovery vs. Collector for ACS Test Summary
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Figure 5-45: Gold Recovery vs. Collector for ACL Test Summary
5.4.2.3
Effect of Cleaning
Following the change in both primary grind and reagent suite for the rougher flotation, the
resulting course of action was to conduct a testing campaign that examined the combined
impact of the coarser primary grind and the different reagent suite.
Grind size was held constant at a P80 of 200m and all tests were performed as rougher
kinetic tests with six stages. The base case was the flotation recipe developed in 2008
with the use of 25 g/t of collector A3894 and 10 g/t of frother MIBC, pH 10, and a slurry
density of 33% in rougher flotation. The second case used the mixed reagent approach
of 25 g/t (75% A-3894 and 25% PAX), pH 10 and a slurry density of 33% in rougher
flotation.
The concentrates produced by this rougher approach were then cleaned in three stages
utilizing different levels of pH to remove the pyrite at a regrind P80 of approximately 35 m.
The unoptimized results (Figures 5-46 to 5-48) indicate that the cleaning requires a high
pH level of approximately 12 to produce reasonable copper concentrate grades. In
addition, the mixed reagent did not perform as well as the sole use of A3894. The
mixture was a particular disadvantage for the ACP material and also slightly worse for
ACS, but fairly similar for ACL. Subsequent analysis of the testwork indicated that
collector was not added properly in cleaning. At the time of reporting, mineralogical and
size analysis was underway to further investigate the cause of the cleaning seen with the
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mixed reagent suite. Although there will be a compensating effect in the impurity roasting
step, which will see an uplift in final copper concentrate grade suitable for sale, it is
recommended that more material be obtained for a series of locked-cycle tests to
examine this aspect in more detail.
No results from this testwork were available for gold values in either the concentrate or
the tails streams, so it was not possible to evaluate the impact of mixed reagents on gold
cleaning.
Figure 5-46: GradeRecovery Curve for Different Collectors
ACP Test Summary
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ACS Test Summary

ACL Test Summary
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5.4.2.4
Locked-Cycle Tests
Although locked-cycle testwork is planned to assess the new target grind, combined with
the solo A3894 reagent addition or the mixed reagent addition suite, no locked-cycle
testwork has been performed at the time of writing.
5.4.2.5
Tailings Generation
Flotation testwork was performed to develop the tailings flotation flowsheet and provide
sample suitable for ABA testing. This testwork took place using the flowsheet developed
in 2008, at a primary grind of 150 m, a regrind of approximately 35 m and the addition
of 25 g/t of A3894 collector.
5.4.2.6
Concentrate Generation for SolidLiquid Separation and Roasting Tests

Additional testwork was performed on all three composites (ACP, ACS, ACL) to produce
feed for proof-of-concept roasting testwork by Outotec Oyj (Outotec). The flowsheet
developed in 2008 was used for this testwork, applying a primary grind of 150 m, a
regrind of approximately 35 m, and the addition of 25 g/t of A3894 collector. (At the
time, the 200 um grind and dual reagent suite had not yet been identified as beneficial.)
The sample composition for this work is summarized in Table 5-24.
Table 5-24: Samples for Solid-Liquid Separation and Roasting Tests
Composite
Composition
% Cu
Weight
kg
Remained
kg
Concentrate
kg
Tailings
g
ACP
ACS
ACL
As, Cpy
As, Cv, Cc, Bo
low As
0.46
0.55
0.43
135
100
80
105
70
50
2.4
1.6
1.1
103
68
49
Sample preparation consisted of cutting charges for the bulk flotation tests to be carried
out in a D5 Denver cell 1 ft3 in size. Approximately 107 kg of ACP, 72 kg of ACS, and
50 kg of ACL material were ground to the required P80 and then floated in batches of
10 kg. The rougher concentrates were reground to the required P80 before proceeding
with the cleaner-scavenger tests. The rougher and cleaner scavenger tailings were then
combined into a single final tailing for each composite. The pulp tailings from the ACS
and ACL composites were sent to the OutotecChile (Antofagasta) laboratory for dynamic
thickening and filtration tests.
The concentrates were sent to Outotec in Sweden for testing after taking a small amount
for assay purposes. The analysis of these concentrates and the roasting results are
included in Section 5.4.4.
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5.4.3
Solid-Liquid Separation Tests (Tailings and Concentrate)

The objective of the tailings thickening tests for the ACS and ACL composites was to
determine the sedimentation rate, the solids contents in the underflow, the clarity of the
liquid (overflow), the required dosage of flocculant, and the unitary area of the thickener.
Several flocculants were tested including SNF-2040, Rheomax-1010, Magnafloc-1011,
Rheomax-1050 and SNF-603-SH at flocculant dosing of 6, 10, and 14 g/t. Magnaflo-1011
was slightly superior to the SNF-2040 and was the one selected.
The thickening tests showed that the required underflow slurry densities could be
achieved for all the flocculant addition rates at the three loading levels of 0.30, 0.50, and
0.70 t/m2h (Figures 5-49 and 5-50). The thickening tests also showed that the required
overflow slurry clarities could be achieved for most of the Magnafloc 1011 flocculant
addition rates at the three loading levels (Figures 5-51 and 5-52).
Figure 5-49: Underflow Slurry Density vs. Flocculant Addition for ACS
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Figure 5-50:Underflow Slurry Density vs. Flocculant Addition for ACL
Figure 5-51: Overflow Clarity vs. Flocculant Addition for ACS
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Figure 5-52: Overflow Clarity vs. Flocculant Addition for ACL
Bulk concentrate settling was also tested, this time by SGS; the results are reported in
Table 5-25. All concentrates showed good settling performance. The final percent solids
results are best for the ACL material, followed by the ACS, and finally the ACP, but all are
at 60% or above.
Table 5-25: Test Results on Bulk Concentrate Settling
Test
1
2
3
Sample
Flocculant
Floc
Conc
ACP
ACS
ACL
A-110
A-110
A-110
g/t
g/t
g/t
5.4.4
Roasting Testwork
5.4.4.1
Chemical Reactions
Settling
Velocity
(mm/s)
Final %Solids in
UF
Unit Area
2
m /h/t
4.17
4.50
4.47
60.1
63.2
65.2
0.33
0.31
0.32
Partial roasting removes sulphur and arsenic from copper concentrate as volatile oxides
and, in the case of arsenic, volatile sulphides. This technology is known as magnetitegiving roasting and has been used at the Boliden smelter for over 80 years. Heat from
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partial oxidation decomposes concentrate minerals.

represented below:
The reactions are simplistically
Chalcopyrite: 2CuFeS2 (T>550C) Cu2S + S(g) + 2FeS .........................................(1)

Enargite: 2Cu3AsS4 (T>550C) 3Cu2S + As2S3(g) +2S(g) ......................................(2)
Pyrite: FeS2 (T>550C) FeS + S(g) .........................................................................(3)
Subsequent oxidation reactions convert most of the sulphur and arsenic gases to oxides:
S + O2 SO2 + heat ...................................................................................................(4)
As2S3 + 9/2O2 As2O3(g) + 3SO2 + heat ...................................................................(5)
Iron sulphide is partially oxidized:
3FeS + 5O2 Fe3O4 + 3SO2 + heat ...........................................................................(6)
To the extent that the thermal decomposition reactions take place above the bed where
the oxygen partial pressure is negligible, arsenic sulphide and sulphur vapour may be
exhausted with the roaster gas, and so a secondary reaction zone with extra air addition
may be required after removal of solids by cyclones. Heat generated in this zone is not
useful for decomposition, so the overall heat balance requires low moisture in the feed.
Sketch flowsheets of the selected partial roast arsenic reduction processes are presented
in Figures 5-53 and 5-54.
Figure 5-53: Partial Roasting Flowsheet
Air
Secondary
oxidation
Gas &
dust
Clean Gas to
Acid Plant
Water
Concentrate
(low moisture )
Fluid Bed
Roaster
Cyclone (s )
Quench
Heat
Exchanger
(Cooler )
Calcine cooler
Wet
Gas
Air
Copper Concentrate
<0 .2 % As
< 0 . 1 % Sb
to Storage
& Loadout
Figur 3.1-1: Arsenic Removal by Partial Roasting

e
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As 2 O 3 & Dust to
Stabilization
Gas
Scrubber

Figure 5-54: Impurity Stabilization Flowsheet
Quenching and wet scrubbing of the gas (approximately 12% to 15% SO2, 1% to 2%O2,
balance nitrogen) removes water-soluble As2O3 along with fine partially oxidized copper
and iron minerals and insolubles not captured by the cyclones.
It is expected, based on industrial experience with the Outotec process that the arsenic
captured in the scrubber solution will be fully oxidized arsenic (i.e., no residual As2S3 in
the scrubber slurry). It is also assumed that iron, copper, and insolubles captured in wet
scrubbing are approximately in proportion to their abundance in the concentrate.
In this system, it is expected that the arsenic will dissolve in the quench/scrub liquor as
As2O3 (solubility in hot (90C) water >100 g/L). Ferric arsenate will also dissolve due to
the presence of SO2:
2FeAsO4 + 3SO2 +H2O 2FeSO4 + As2O3 + H2SO4 .................................................(7)
Proportions of other iron minerals will also dissolve as ferrous sulphate and thiosulphate.
The copper will be selectively precipitated as sulphide in the presence of sulphur dioxide
and iron sulphide.
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With reference to Figure 5-54, arsenic stabilization is achieved by:

conditioning the scrubber slurry in closed atmospheric tanks with sparged SO2 to
complete the dissolution of arsenic and precipitation of copper
thickening and filtration to separate insoluble residue (copper sulphides, gold, and
silicates) from the arsenic-iron-sulphate solution
oxidation of the solution to generate scorodite (ferric arsenate):
2FeSO4 + As2O3 +3/2O2 + 2H2O FeAsO4.2H2O ...............................................(8)
additional neutralization to precipitate iron as a residue stabilizer
filtration of the stabilized ferric-arsenate, followed by disposal of the cake into a
dedicated area of the tailings management facility.
Cleaned gas for the concentrated acid manufacture proceeds to a conventional sulphuric
acid manufacturing plant.
5.4.4.2
Testwork
Concentrates produced from the ACP, ACS, and ACL composites were sent to Outotec in
Sweden for testing. The objective was to reduce the As and Sb in the concentrate to
levels that would have low or no penalty elements and thus enhance the marketability of
the product.
The roasting tests were performed in a rotating kiln at fixed temperature. Each
concentrate was tested at four different temperatures: 600C, 650C, 700C, and 725C
with a residence time of 30 minutes for each test. A stable reducing environment was
achieved by adding a flow of SO2 gas. The resulting calcines were analyzed for both
sintering tendencies and elemental composition. Elemental analyses of the composites
feed material and composite products are shown in Table 5-26 and Table 5-27.
At 700C. the roasting tests show that the expected arsenic content will normally result in
a calcine with a residual arsenic content of 0.05% to 0.2% unless calcium is present
either in the gangue or from the reagent systems. The ACL calcine achieved the best
result at 700C, producing a concentrate that would not incur a smelter penalty. The ACS
calcine also achieved good performance at 700C and typically would not incur a smelter
penaltyor, if so, it would be minor. The ACP calcine, did not perform as expected at the
700C test temperature and contained a level of arsenic that would incur a penalty. This
may be due to the presence of excess lime used for pH control in the cleaning circuit. It
may be necessary to examine this issue in additional work by determining ways to either
reduce lime levels in the plant (e.g., pre-roast concentrate washing), blend with other
concentrates, or treat the concentrate further.
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It is highly recommended that further composite preparation for testing of the partial
roasting process be correlated to the mine plan so that the results would be more
representative of what will be processed through the LOM.
Table 5-26: Elemental Analysis of Composite Feeds
Table 5-27: Elemental Analysis of Composite Products
Levels of antimony were found to reduce by 50% to 60%, well below penalty levels.
The silver and gold content in the concentrate and calcine was not analyzed at this level
of testing, but these elements are expected to behave in the same way as copper. The
average increase in copper level in the concentrate was 6%; both silver and gold are
likely to follow the same trend. Since the concentrate is very fine, however, about 5% of
the gold and silver are likely to pass to the gas stream where they should be recovered by
the downstream processes.
The roasting tests did not show any problems related to sintering.
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All concentrates had a P80 of 50 m or less, with approximately 20% of the material
smaller than 10 m. This suggests that 5% of the calcine will report to the scrubbing
circuit for capture at that point.
5.5
Mineralogy (2010)
Samples were divided into four size fractions (100, 200, 400, and -400 mesh), and one
grain mount was prepared per size fraction. This mount was polished and analyzed using
the Particle Mineralogical Analysis (PMA) method, which allows for the complete
mineralogical analysis of the sample, identifying mineral types and properties, and
measuring average grain size.
The mineralogical analysis of the three rougher concentrates indicates the following
characteristics:
Chalcopyrite is the main ore mineral with values between 6.06 wt% and 9.30 wt%.
The main gangue in the samples is quartz, pyrite, and sericite/muscovite. Other
gangue includes plagioclase/albite, chlorite, clays, Ti oxides, and biotite. The fine
fraction (-400 mesh) has low amounts of pyrites and is primarily phyllosilicates.
In the ACP and ACL rougher concentrates, the copper occurs mainly as chalcopyrite
(70.7% and 71.7%, respectively). The remaining copper is from bornite, enargite,
covellite, chalcocite/digenite, and trace tetrahedrite.
In the ACS rougher concentrate, the copper occurs as chalcopyrite (49.1%), bornite
(19.4%), enargite (12.3%), covellite (12.9%), chalcocite/digenite, and trace
tetrahedrite.
Copper sulphide liberation increases with decreased particle fraction size.
Copper sulphides are predominantly associated with pyrites and
silicates/phyllosilicates.
Mineral and copper species compositions are shown in Tables 5-28 and 5-29 and
Figures 5-55 through 5-62.
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Table 5-28: Mineral Composition of Feed Samples (MCP1 14)
Table 5-29: Mineral Composition of Feed Samples (MCP15 28)
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Figure 5-55: Mineral Composition of Feed Samples (MCP1 14)
Figure 5-56: Mineral Composition of Feed Samples (MCP15 28)
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Figure 5-57: Cu Species Composition in Feed Samples (MCP1 14)
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Figure 5-58: Cu Species Composition in Feed Samples (MCP15 28)
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Figure 5-59: Mineralogical Composition of ACP, ACS & ACL Composites
Figure 5-60: Cu Species Composition in Rougher Concentrates (Composite ACP)
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Figure 5-61: Cu Species Composition in Rougher Concentrates (Composite ACS)
Figure 5-62: Cu Species Composition in Rougher Concentrates (Composite ACL)
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5.6
Recovery
The metallurgical recovery estimates were derived from the 2010 testwork detailed in
Sections 5.4.2.1 and 5.4.2.2 and based on the following criteria:
flotation test results using the optimum reagent mixture of 75% A-3894 and 25% PAX
for each of the three composites (ACP, ACS, ACL), the rougher recoveries achieved
at concentrate mass pulls resulting in 4% Cu grade
an adjustment of the recovery numbers, using a constant tails approach, because the
grades used in testwork are higher than the average deposit grades
further modification of the recovery model taking into account the coarser grind being
used for the process flowsheet design, whereas the testwork was done at a fine
particle grind size
a reduction of 1% in copper recovery to reflect the lower recovery expected following
flotation cleaner stages.
Copper recoveries are expected to vary with feed grade ranging from 93.1% at 0.6% Cu
and 58.8% at 0.1% Cu. The metallurgical response of gold and silver has not been
assessed to the same degree as copper; however, based on the testwork completed to
date, gold and silver recoveries are projected to be 55% and 50% respectively.
Given that the results for the three composites were weighted equally, further definition of
the distribution of these sample types and their representation in the LOM plan is
recommended. This can be achieved through a variability flotation testwork program,
which is currently planned for the next phase of work.
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CONTENTS
6.0
PROCESS ..............................................................................................................6-3
6.1
Process Design Criteria...............................................................................6-3
6.1.1 Design Basis ...................................................................................6-3
6.1.2 Design Parameters ..........................................................................6-3
6.2
Process Description ....................................................................................6-3
6.2.1 Overview .........................................................................................6-3
6.2.2 Open Pit Primary Crushing and Conveying ......................................6-9
6.2.2.1 General............................................................................ 6-9
6.2.2.2 Primary Crushing Station ............................................... 6-10
6.2.3 Coarse Ore Storage and Reclaim ..................................................6-10
6.2.4 Grinding .........................................................................................6-12
6.2.4.1 General.......................................................................... 6-12
6.2.4.2 SAG Mill and Pebble Recycle ........................................ 6-12
6.2.4.3 Ball Mills and Cyclone Classification .............................. 6-13
6.2.4.4 Design Considerations Grinding ................................. 6-14
6.2.5 Flotation.........................................................................................6-15
6.2.5.1 Rougher Flotation .......................................................... 6-15
6.2.5.2 Bulk Cleaner Flotation ................................................... 6-18
6.2.5.3 Design Considerations Flotation Area ......................... 6-20
6.2.6 Concentrate Dewatering ................................................................6-21
6.2.7 Tailings Thickening and Disposal ..................................................6-21
6.2.8 Roasting and Stabilization .............................................................6-23
6.2.8.1 Summary ....................................................................... 6-23
6.2.8.2 Partial Roasting ............................................................. 6-23
6.2.8.3 Impurity Stabilization...................................................... 6-24
6.2.8.4 Agglomeration ............................................................... 6-26
6.2.8.5 Acid Plant ...................................................................... 6-27
6.3
Reagents and Grinding Media ...................................................................6-28
6.3.1 Flotation Reagents ........................................................................6-28
6.3.2 Grinding Media ..............................................................................6-29
6.3.3 Product Stabilization Reagents ......................................................6-29
6.4
Process Water System ..............................................................................6-29
6.5
Process Control, Sampling, and Assay .....................................................6-30
6.5.1 Process Control System ................................................................6-30
6.5.2 Field Instrumentation .....................................................................6-31
6.5.3 Sampling .......................................................................................6-31
6.5.4 Assay Laboratory...........................................................................6-32
6.6
Concentrate Receiving and Loadout at Port Site .......................................6-32
TABLES
Table 6-1:
Key Process Design Criteria .......................................................................................... 6-4
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FIGURES
Figure 6-1:
Figure 6-2:
Figure 6-3:
Figure 6-4:
Figure 6-5:
Figure 6-6:
Figure 6-7:
Figure 6-8:
Figure 6-9:
Figure 6-10:
Figure 6-11:
Figure 6-12:
Figure 6-13:
Figure 6-14:
Figure 6-15:
Figure 6-16:
Figure 6-17:
Figure 6-18:
Process Overview General Diagram .......................................................................... 6-6

Process Overview Block Diagram .............................................................................. 6-7
Concentrator General Arrangement .............................................................................. 6-8
Primary Crushing, Conveying, and Coarse Ore Stockpile ............................................. 6-9
Coarse Ore Reclaim System ....................................................................................... 6-11
General Arrangement of Coarse Ore Stockpile ........................................................... 6-11
SAG Mill Pebble Recirculation ..................................................................................... 6-12
Ball Mill Circuit.............................................................................................................. 6-14
Flotation Circuits .......................................................................................................... 6-16
General Arrangement of Flotation Circuits .................................................................. 6-17
Rougher Flotation Circuit ............................................................................................. 6-18
Regrind Mill and 1st Cleaner Flotation ......................................................................... 6-19
2nd Cleaner Flotation and Copper Concentrate Thickener ......................................... 6-20
Copper Concentrate Thickener .................................................................................... 6-21
Arsenic Removal Circuit ............................................................................................... 6-24
Partial Roasting General Arrangement ........................................................................ 6-25
Partial Roasting Circuit Flowsheet ............................................................................... 6-26
Stabilization Circuit ...................................................................................................... 6-27
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6.0
PROCESS
6.1
Process Design Criteria
6.1.1
Design Basis
The process design is for a concentrator with a nominal processing capacity of 95,000 t/d
of ore from the open pit. Process design criteria for the facilities are based on the
following:
testwork, supervised by Transmin, performed at SGS-Santiago in 2008, 2009, and
2010, using samples obtained during a 2008 drilling campaign
roasting testwork, supervised by Candente and performed at Outotecs facilities in
2010.
Where data were not available at the time of flowsheet development, AMEC developed
criteria for the sizing and selection of equipment based on comparable industry
applications, benchmarking, and the use of modern modelling and simulation techniques.
Further testwork is required to develop the information needed to support process design
criteria and variability responses for use in the feasibility study.
6.1.2
Design Parameters
Key design criteria for the Caariaco process plant are listed in Table 6-1. Full details
may be found in Appendix D.
6.2
Process Description
6.2.1
Overview
The mineral processing and the roasting/acid plants are based on conventional
technology and industry proven equipment. Figure 6-1 is a general overview diagram of
the process and Figure 6-2 is a block diagram showing the major processing steps.
Run-of-mine (ROM) ore from the open pit will be crushed and conveyed to the
concentrator where the ore will be ground to liberate the mineral values from the host rock
and then separated by flotation. The bulk copper-silver-gold sulphide concentrate
produced will be filtered and introduced into the roasting plant. There the concentrate will
undergo a partial oxidative roast, which will remove the arsenic and part of the sulphur
into the gaseous phase. The gas will be scrubbed to capture particulate matter and the
arsenic into solution. This solution will report to a stabilization circuit that will remove any
valuable copper and convert the arsenic into scorodite, which will be filtered and
transferred to the tailings management facility (TMF).
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Table 6-1:
Key Process Design Criteria
Project
Unit
Value
Throughput
Project life
Annual
Daily
years
t/a
t/d
22
34,675,000
95,000
Operating Time
Days per year
Plant availability
days
%
365
94
Run of Mine Ore

Moisture content
Run-of-mine top size
%wt
mm
3.0
1,000
sg
2.67
%
g/t
0.40
0.05
g/t
1.80
Specific gravity
Nominal feed grade
Cu
Au
Ag
Design feed grade
Cu
0.50
Overall plant recovery (nominal)

Cu LOM average
Au LOM average
Ag LOM average
%
%
%
89.7
55.0
50.0
Copper grade in flotation bulk copper concentrate

Copper grade in roaster calcine
%
%
26.0
30.6
Haul truck capacity

Dump pocket capacity
Crusher type
Crusher OSS
t
No. of haul trucks
mm
290
1.5
Gyratory
168
Discharge P80
Primary Crushing
mm
125
Coarse Ore Storage and Reclaim

Live storage
85,000
Grinding
Circuit configuration
SAB
kWh/t
kWh/t
kWh/t
9.4
10.2
11.0
52.1
1.0
0.64
Grinding Parameters
Crusher work index (average)
Bond rod mill work index (average)
Bond ball mill work index (average)
JKTech ore breakage test results
A
b
ta
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Project
Unit
Value
mm
SAG
3.4
Primary grinding
Mill type
P80
Secondary grinding
Mill type
Ball
%
m
250
200
% of mill feed
%
94
4.00
min
18
kWh/t
m
15.00
30
% of mill feed
%
92.5
20
min
10
% of mill feed
%
89.7
26.00
min
20
% of mill feed
0.59
2.00
Copper Concentrate Thickening and Filtration

Thickener underflow density
wt% solids
65
Tailings Thickening
Thickener underflow density
wt% solids
55
Collector 1
Collector 2
Frother
Flocculant
AP 3894
PAX
MIBC
-
Lime
Ball Mill circulating load

Cyclones P80
Flotation
Rougher
Concentrate
Recovery, Cu
Grade, Cu
Flotation cells
Residence time
Regrind
Work index
Circuit product size, P80
Cleaner Stage 1
Concentrate
Recovery, Cu
Grade, Cu
Flotation cells
Residence time
Cleaner Stage 2
Concentrate
Recovery, Cu
Grade, Cu
Flotation cells
Residence time
Cleaner Scavengers
Concentrate
Recovery, Mass
Grade, Cu
Reagents
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Figure 6-1:
Process Overview General Diagram

ROM
Ore from Open
Pit
Crushing
Grinding
Flotation
Tails
Pyrite
Flotation
Tailings
Management
Facility
Concentrate
Filtration
Sulphuric acid
plant
Sulphuric
acid
Concentrate
Roast /
Impurity
Stabilization
Treated
Concentrate
After removal of the arsenic, the gas containing sulphur dioxide will be processed through
a modular plant to produce saleable sulphuric acid.
The copper precipitate and solid calcine produced from the roaster and its cyclones will
be agglomerated and stockpiled. Trucks will transport the combined concentrate to the
port facilities, where it will be placed on ocean-going vessels for transport to overseas
smelters. Figure 6-3 shows the general arrangement of the concentrator.
The following sections describe each part of the process in more detail. Appendix F
provides complete process flow diagrams, general arrangement drawings of the process
facilities, and full design criteria.
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Figure 6-2:
Process Overview Block Diagram
Coarse Ore
Stockpile
Gyratory
Crusher
Ball Mill
SAG Mill
Vibrating
Screen
Pebble
Recirculation
Roughers
Tailings Thickener
1st Cleaners
1st Cleaners
Scavengers
Process
Water
Storage
Regrind Mill
De-Pyritization
Flotation
System
2nd Cleaners
Concentrate
Thickener
Concentrate
Filter
Press
SULPHURIC
ACID PLANT
GAS
TREATMENT
Tailings
Pond
SOLIDS
CAPTURE
Concentrate
Storage
Roaster
Acid
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STABILIZATION
CIRCUIT
Calcine
Storage
Page 6-7

Figure 6-3:
Concentrator General Arrangement
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6.2.2
Open Pit Primary Crushing and Conveying
6.2.2.1
General
The primary crushing and conveying area includes the crusher station at the pit rim, the
overland conveyor, and the coarse ore stockpile (COS); Figure 6-4 is a simplified flow
diagram of the systems. The area includes the following major equipment:
one fixed crushing station complete with a truck dump hopper, gyratory crusher,
support structure, rock breaker, maintenance crane, surge bin, apron feeder, and
intermediate conveyor
one overland conveyor to transport crushed material to the stockpile.
Figure 6-4:
Primary Crushing, Conveying, and Coarse Ore Stockpile
Crusher
Feed Hopper
Gyratory
Crusher
Apron
Feeder
Dust
Collection
Self Cleaning
Magnet
Coarse Ore
Stockpile
At Plant Site
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6.2.2.2
Primary Crushing Station

The primary crushing station will be a fixed 60 x 89 inch gyratory crusher housed in a
concrete structure and served by a mobile maintenance crane. Laydown areas within
crane access will be provided at the foot of the station. Mine haul trucks with a capacity
of up to 290 tonnes each will dump ROM ore directly into the dump pocket of the crusher.
The ramp will be constructed of waste rock and provide truck access to two sides of the
dump hopper.
Crushed ore will fall into a pocket below the crushe, which in turn discharges to an apron
belt feeder. The feeder will draw ore from the surge pocket at a controlled rate using a
variable-speed drive and will discharge to sacrificial coarse ore conveyor No. 1. The
conveyor will incorporate a magnet to remove tramp metal and a metal detector to detect
remaining tramp metal in the bulk material and thus prevent damage to downstream
equipment. Coarse ore conveyor No.1 will be 39 m long, inclined at 5, and will feed
coarse ore conveyor No. 2 for delivery from the crushing station to the coarse ore
stockpile (COS). Conveyor No. 2 will be loaded at a 5 angle, which transitions to a 16
conveying angle after a 500 m radius vertical curve. The overall length of this conveyor is
approximately 970 m with a lift of 244 m. The head end of conveyor No. 2 is cantilevered
to accommodate the conical coarse ore stockpile.
The overland conveyor system from the crusher discharge belt feeder to the COS is sized
for a design capacity of 6,900 t/h. The conveyors will not be covered. Elevated sections
will be housed in open galleries, but transfer points will be housed in chutes and equipped
with dust suppression spray nozzles to reduce dust generation.
6.2.3
Coarse Ore Storage and Reclaim

The COS will be conical and have a live capacity of 85,000 tonnes and additional dead
capacity of 280,000 tonnes. The COS will not be covered. The purpose of the stockpile
is to create a buffer between the mining and crushing operations and the process plant so
that the plant can continue to receive ore from the stockpile when there are intermittent
stoppages of feed from the crusher or the mine. A track dozer will be used to push ore
into the feeders when ore needs to be reclaimed from the dead section of the stockpile
during upstream maintenance activities.
Ore will be reclaimed from the stockpile with four in-line belt feeders installed in a
concrete tunnel below the stockpile. The belt feeders are sized such that three will
normally operate at the required capacity with one on standby. In the event that one
operating conveyor is down for maintenance or repair, two can still supply the design
tonnage to the SAG mill without using the standby unit. The belt feeders will discharge
ore at a controlled rate onto the SAG mill feed conveyor. The feeders will be inclined at
5 to accommodate the geometry of the SAG mill feed conveyor.
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Figure 6-5 is a flowsheet of the coarse ore reclaim system, and Figure 6-6 shows the
position of the COS relative to the other mill site processing facilities.
Figure 6-5:
Coarse Ore Reclaim System

Coarse Ore
Stockpile
At Plant Site
Track Dozer
Head
chute
Dust
Collection
Apron
Feeder
SAG Mill Feed Conveyor
Figure 6-6:
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General Arrangement of Coarse Ore Stockpile
Page 6-11

The SAG mill feed conveyor will deliver the reclaimed ore from the stockpile to the SAG
mill and also receive oversize material from the pebble circuit and SAG mill balls, which
will be discharged back into the SAG mill. The SAG mill feed conveyor will be
approximately 165 m long with a 15 m lift and a design capacity of 6,300 t/h.
6.2.4
Grinding
6.2.4.1
General
The grinding circuit configuration will consist of an open-circuit SAG mill followed by two
ball mills in closed circuit with cyclones. Pebblesmaterial greater than 15 mm leaving
the SAG millwill first be screened out by a trommel screen and then passed over the
SAG mill discharge screen to remove the fines and wash the material before recycle back
to the SAG mill feed conveyor. The undersize from the two screens will be combined and
transferred to the cyclone feed pumpbox. The average final product size from the
grinding circuit will be 80% passing 200 m. Total line throughput will average 95,000 t/d.
6.2.4.2
SAG Mill and Pebble Recycle

The purpose of this circuit is to prepare the feed material for the ball mill circuit, which
liberates the minerals for maximum recovery in the concentrator. In particular, the SAG
mill coarsely classifies the widely varying feed size, resulting in homogenized feed size
distribution to the ball milling circuit. Pebbles produced by the SAG mill will be directed to
the pebble recirculation system. This consists of three conveyors that transport the
oversized material back onto the SAG mill feed conveyor for return to the SAG mill. The
pebble recirculation conveyors are sized for a design capacity of 1,300 t/h. The need for
a pebble crusher is not foreseen at this time.
Figure 6-7 is a simplified flowsheet of the SAG and pebble recycle circuit.
Figure 6-7: SAG Mill Pebble Recirculation
Process
Water
Lime
SAG Mill
Coarse Ore
Stockpile
Trommel
Screen
Pebble
Recirculation
Vibrating
Screen
SAG
Discharge
Pumps
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Ball Mill
Circuit

The SAG mill will be a 38 ft diameter x 20 ft effective grinding length (EGL) mill, powered
by a 24 MW gearless motor drive. The mill will be operated at a ball load of between 15%
and 18% by volume, a total mill loading of 26%, and a rotation at 78% of critical speed.
The grates will initially be installed with a 75 mm gap, wearing to approximately 90 mm.
The pulp lifters will be radial; grate flux will be achieved by adequate discharge cavity
depth and proper throat design.
The SAG mill discharge, with a top size of 90 mm, will pass through a trommel screen
from where most of the finely ground material will report directly to the SAG discharge mill
pumpbox. The remainder will pass onto a 3.6 m wide x 7.3 m long vibrating screen
equipped with a 15 mm screen deck. Undersize from the vibrating screen will collect in
the SAG discharge pumpbox and be pumped to the ball mill discharge pumpbox. Given
the coarse nature of the feed, two installed pumps are considered necessary in this
position. The washed pebbles in the vibrating screen oversize will be conveyed back to
the SAG mill feed belt.
Solid lime will be added to the SAG mill feed to suppress the flotation of pyrite while
recovering the copper, gold, and silver minerals in the rougher flotation circuit.
6.2.4.3
Ball Mills and Cyclone Classification

The purpose of this circuit is to prepare the rougher flotation feed to allow for the most
efficient liberation point for the material, minimizing the use of overall concentrator
grinding power while maintaining target recovery.
The grinding circuit will have two 26 ft x 40 ft overflow ball mills, each driven by two
7,500 kW single-pinion, fixed-speed drives on either side of the mill, operating in parallel.
Figure 6-8 is a simplified flowsheet of the ball mill circuit.
The SAG mill transfer pump will feed a distribution box that splits the feed between two
cyclone feed pumpboxes, one coupled with each ball mill. Each pumpbox will have a
single variable-speed pump feeding a cluster of ten 30" cyclones. The average 80%
passing particle size will be 200 m. Cyclone overflows will contain approximately 35%
solids. Each cyclone cluster overflow stream will be sampled and the sample analyzed by
a particle size analyzer before the stream feeds into the flotation circuit. Cyclone cluster
underflow will report to the ball mill. The ball mills will operate at a ball load of between
30% and 33% by volume, a total mill loading of 35%, and a rotation at 76% of critical
speed. A grizzly will protect each cyclone feed pump from large rocks or balls that may
be discharged from the mills during upset conditions. Ball mill discharge will join the SAG
mill discharge in the mill discharge pumpbox.
Collectors will be added to the mill discharge pumpbox to prepare the material for
subsequent flotation.
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Figure 6-8:
Ball Mill Circuit
Collector
Process
Water
SAG Mill
Discharge
Ball Feed
Hopper
Flotation
Circuit
Cyclone
Cluster
Sampler
For Particle
Size Analysis
Grizzly
Ball Mill No. 1
Ball Feed
Hopper
Flotation
Circuit
Cyclone
Cluster
Grizzly
Sampler
For Particle
Size Analysis
Ball Mill No. 2
6.2.4.4
Ball Mill
Rejects Tote
Ball Mill
Rejects Tote
Design Considerations Grinding

Spills from the SAG and ball mills will be collected in a common sump. Large sump
pumps at the low point will handle spilled water and fine solids. The trench is designed
such that coarse spilled material can be removed by a large wheel loader.
A re-lining aisle will be provided at both the SAG and ball mill feed trunnions. The feed
chutes for all mills will be handled by a self-propelled cart. There will be one lining
machine for the SAG mills and another for the ball mills. Jib cranes by the feed-end
trunnions will facilitate liner handling, and sufficient area will be provided for stacking new
and used liners and for handling by large fork-lift trucks. Liners will be lifted onto the reline floor by a mobile crane prior to start of re-line activities. Hydraulic bolt-removal tools
will be provided.
The mill lubrication sets will be in enclosed rooms above the maximum slurry level of the
sump containment, within easy gravity reach of the lubrication return lines.
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Grinding balls will be delivered in bulk by truck and tipped into storage bins. The grinding
balls will be introduced batch-wise to the ball mill feed chutes by means of automatic
feeders and conveyors.
6.2.5
Flotation
The objective of this circuit is to recover the minerals containing copper, gold, and silver
into a bulk concentrate. The concentrate will subsequently be treated by partial roasting
to prepare it for commercial sale. The design of the flotation circuit maximizes the
recovery of these valuable minerals at the lowest overall capital and operating cost.
A simplified flowsheet of the flotation circuit is shown in Figure 6-9, and a general
arrangement of the flotation area is shown in Figure 6-10.
Depending on the mine source location, the mill feed material may at times contain higher
amounts of clay minerals and pyrite. Copper minerals and some pyrite, along with
significant entrained and locked non-sulphide gangue, will be recovered in rougher
flotation and then be reground to further liberate the minerals from each other. The
rougher tailings will still have significant levels of pyrite, which will be removed in a
flotation circuit positioned near the TMF to produce material that can be used as cyclone
sand for construction of the tailings dam (see Section 6.3.6).
The rougher concentrate will be upgraded in two stages of cleaning and sent to the bulk
concentrate thickener.
6.2.5.1
Rougher Flotation
The objective of this circuit is to maximize gangue rejection while simultaneously
maximizing valuable mineral recovery to the cleaner upgrade circuits. The feed will have
been ground to a point of sufficient liberation for material recovery to the upgrading circuit.
The simplified rougher circuit flowsheet is shown in Figure 6-11.
The average 80% passing particle size will be 200 m. Cyclone overflow will be at
approximately 35% solids. The cyclone overflow stream will be sampled and the sample
analyzed by a particle size analyzer before the stream reports to a distributor and is
divided between two rows of six 300 m3 tank-type flotation cells (12 cells total).
At 95,000 t/d, the total rougher residence time will be 18 minutes to obtain an average
copper recovery of 91% before cleaning. A mixture of A3894 and potassium amyl
xanthate (PAX) will be used as a collector.
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Figure 6-9:
Flotation Circuits
Ball Mill
Cyclone Clusters
Roughers
Tailings Thickener
Roughers
Densification
Cyclones
1st Cleaners
1st Cleaners
1st Cleaner
Scavengers
1st Cleaner
Scavengers
Regrind Mills
2nd Cleaners
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Copper
Concentrate
Thickener

Figure 6-10: General Arrangement of Flotation Circuits
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Figure 6-11: Rougher Flotation Circuit

MIBC
Lime
Collector
Ball Mill
Cyclone Clusters
Roughers
Tailings
Thickening
Roughers
1st Cleaners
Scavenger
Concentrate
Regrind
Mills
Densification
Cyclones
The rougher concentrate will collect in a series of launders and be directed to a single
pumpbox. Two rougher concentrate pumps, one operating and one standby, will feed the
regrind circuit.
Frother (MIBC) is added in the flotation circuit, and additional lime is added to the
roughers to achieve a pH of approximately 9.8.
6.2.5.2
Bulk Cleaner Flotation

The objective of this circuit is to maximize copper concentrate grade without unduly
sacrificing recovery. This is achieved by:
adjusting reagent combinations to perform selective recovery and rejection of
valuable and gangue minerals, respectively
regrinding the feeds and certain of the process streams to achieve a higher level of
liberation
recycling the process streams through unit operations to allow multiple attempts at
recovery of high-value minerals.
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The copper cleaner circuit will have one regrind and two cleaner upgrading steps. The
flowsheets are shown in Figures 6-12 and 6-13.
The rougher concentrate will be sent directly to densifying cyclones before entering the
regrind mill circuit, consisting of two M10,000 IsaMill units. These regrind mills will reduce
the concentrate particle size to 30 m for discharge to the 1st cleaner circuit of four
100 m3 mechanical tank cells. The 1st cleaner concentrate reports to the 2nd cleaner feed.
The tails from the 1st cleaners enter the 1st cleaner scavengers, consisting of four 100 m3
mechanical tank cells. The 1st cleaner scavenger concentrate is recirculated back to the
feed of the regrind mill system, while the 1st cleaner scavenger tails join the bulk flotation
tails.
The 2nd cleaners will consist of four column cells and use recirculating pumps to feed a
sparger assembly. The 2nd cleaner concentrate is the final concentrate and is sent to the
concentrate thickener. The 2nd cleaner tails are recycled back to the feed of the 1st
cleaners.
All the cleaner columns employ specialized sparger technology, which requires a
circulating pump to pass material through a cavitation air mixer or similar equipment. This
type of technology has been selected to ensure effective cleaning performance.
Lime and frother are the principal reagents in the cleaning circuit. Lime is used as the
primary pH modifier throughout and is added at the regrind mills as required to depress
pyrite.
Figure 6-12: Regrind Mill and 1st Cleaner Flotation
Densification
Cyclones
Lime
Frother
Rougher
Concentrate
1st Cleaners
2nd Cleaner
Tails
1st Cleaners
1st Cleaner
Scavengers
1st Cleaner
Scavengers
Regrind Mills
2nd
Cleaners
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Tailings
Thickener

Figure 6-13: 2nd Cleaner Flotation and Copper Concentrate Thickener

1st Cleaner
Concentrate
Frother
Copper
Concentrate
Thickener
2nd Cleaners
Process
Water
Storage
1st Cleaners
Feed Distributor
Concentrate
Filter
Press
6.2.5.3
Design Considerations Flotation Area

The plant is oriented to take maximum advantage of gravity. The floor of the flotation
area slopes downward toward the tail of each bank at approximately 11%. This allows
the tank cells to be arranged with a level control valve between each tank, providing good
level control and hence control of the froth-pulling rate. The concentrate is gathered in
launders and directed into the appropriate pumpbox.
The process plant will not be enclosed within a building, and overhead cranes have not
been incorporated into the design. Therefore, provision has been made in the general
arrangement for mobile crane access and process plant lifting requirements.
Standby process pumps will be available for each duty in the flotation plant; these pumps
will be equipped with redundant discharge lines rather than valving arrangements.
The use of columns for copper concentrate has been assumed from typical industry
practice cleaning, rather than being based on testwork results. Columns are commonly
used for this purpose at numerous large-scale copper operations worldwide.
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6.2.6
Concentrate Dewatering
The final concentrate will be fed into the copper concentrate thickener where flocculant
will be added to assist material settling. While the thickener overflow is recycled to the
process water system, the thickened underflow is stored in a concentrate storage tank.
Material from the concentrate storage tank is fed in batches to the pressure filters for the
reduction of overall concentrate moisture content to 8%.
Figure 6-14 shows the thickener and filtration circuits.
After filtration, the concentrate will be transferred by a reversible loadout conveyor to a
storage silo with sufficient capacity for 8 hours of concentrate delivery. The reversible
conveyor design allows the material to be discharged directly to a final product storage
silo awaiting shipment to the port or to the roaster feed stockpile for further treatment.
Concentrate from the roaster feed stockpile is fed to the roaster circuit for partial roasting
to remove impurities (Section 6.3.7).
Figure 6-14: Copper Concentrate Thickener
2nd Cleaner
Concentrate
Flocculant
Process
Water
Storage
Copper
Concentrate
Thickener
Copper
Concentrate
Stock Tank
Concentrate
Filters
Concentrate
Discharge
Conveyor
6.2.7
Tailings Thickening and Disposal

The role of the tailings thickener is primarily to recycle solution at the process plant that
would otherwise report to the TMF with the flotation tailings, thereby significantly reducing
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the volume of decant solution to be pumped back to the plant from the TMF. The tailings
thickener underflow will be pumped to the final tailings pumpbox at a density of 55%. Any
discharges from the process plant are also added to the tailings pumpbox at this point.
From the pumpbox at elevation 2,930 m, the tailings will be pumped by means of a twostage pumping system (with installed spare) through a 1,050 mm diameter HDPE
pipeline to a high point at elevation 2,990 m approximately 650 m north of the plant site,
along the main access road. From there the tailings will flow by gravity a distance of
11,600 m through 1,050 mm (42") diameter pipe to the pyrite flotation circuit at elevation
2,985 m. Decreasing the pyrite content of the tailings will permit them to be used as
construction material for the tailings dam.
The tailings line will enter the pyrite flotation plant at the TMF and discharge to a mixing,
dampening tank where potassium amyl xanthate (PAX) and frother will be added before
the material passes to two 300 m3 self-aerated flotation cells. The pyrite-rich froth is
removed and diverted directly to the TMF for subaqueous encapsulation. The pyrite
flotation underflow material is pumped through a 1,050 mm (42") pipeline to a cyclone
plant on the northern abutment of the tailings storage embankment, 6,800 m away. The
cyclone plant will be installed at 2,750 m elevation for use during the initial years of
operation and will be moved to 2,980 m elevation for final deposition as the dam height
increases.
The cyclone plant will separate the tailings flow into a sands component and a slimes
component. The sand, which comprises approximately 24% of the total tailings stream,
will be used for construction of the tailings embankment, while the slimes, the remaining
76%, will be used to form a beach on the upstream side of the embankment. The sand
production plant will consist of 22 Recyclone units, plus four on standby, to produce
sand material with a nominal fines content (passing No. 200 sieve by weight) of 13%;
details of the plant design are provided in Appendix G.
The tailings sands will exit the cyclones at a pulp density of approximately 74%, requiring
the use of positive displacement pumps. Because of the high pressures needed for
pumping this material, the slurry will be pumped through a HDPE-lined 350 mm (14")
carbon steel pipe to 150 mm (6") diameter spigot pipes. The spigots will be spaced at
50 m intervals to evenly distribute the sand slurry along the downstream side of the
embankment, where it will be spread and compacted by dozers.
The slimes component will be pumped to the upstream side of the embankment through a
900 mm (36") diameter HDPE pipeline to 300 mm (12") diameter spigots spaced 50 m
apart along the embankment crest. The slimes will form a beach to help raise the
embankment by the centreline construction method.
All tailings piping will be surface-run in a right-of-way alongside the main access road.
The pipes will be weighed down by evenly spaced soil anchors to prevent snaking in
response to changes in process pressures or air temperature.
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6.2.8
Roasting and Stabilization
6.2.8.1
Summary
The filtered flotation concentrate from the process plant will contain arsenic at levels that
would impair its marketability. Arsenic will therefore be removed from the concentrate by
the industrially proven Partial Roasting process, which converts the arsenic to its (air
oxidation) trioxide (As2O3) form. Figure 6-15 shows the major processing steps.
The arsenic trioxide, recovered scrubbing the roaster off-gas with water, will need to be
stabilized before disposal in a separate lined impoundment within the TMF, separated
from the flotation tailings. The arsenic is oxidized and reacts with dissolved iron to
produce stable, highly insoluble scorodite (ferric arsenate).
During the partial roast, some of the sulphur in the concentrate is oxidized to sulphur
dioxide (SO2) and must be removed from the scrubbed (arsenic-free) off-gas. The
technology selected for removal is conversion to concentrated sulphuric acid in a
conventional package plant. The sulphuric acid will be an upgraded, marketable byproduct. The partially roasted concentrate will be agglomerated as required for shipment
and smelting.
The partial roasting, impurity stabilization, and agglomerating processes are described
further below.
6.2.8.2
Partial Roasting
The concentrate is introduced into a fluid bed roaster operating at a temperature and
controlled air flow rate conducive to partial oxidation to release the arsenic and a portion
of the sulphur into the gas stream, while maintaining a suitable level of sulphur in the
concentrate for smelting requirements.
The gas stream is cleaned of fine particles in dust cyclones and then further oxidized with
more air before being quenched and scrubbed. The resulting scrubbed slurry containing
arsenic and particulate matter reports to a stabilization circuit.
The concentrate from the roaster and the dust cyclone underflow will be agglomerated in
a calcine cooler and then transported by screw conveyor to a storage bin. This is the final
concentrate product that will be trucked to the port facilities.
Figure 6-16 and 6-17 show the general arrangement and flowsheet for the roasting
facilities.
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Figure 6-15: Arsenic Removal Circuit

CFB
Roaster
Cyclones
Scrubber
Acid Plant Pkg
Dry Calcine
Bin
Conditioning
Leach
Acid to Market
Agglomeration
S/L
(Thickening,
Filtration)
Filtration
Concentrate
To Market
6.2.8.3
Arsenic
Stabilization
(Settling &
Oxidation)
Arsenical
Waste
Impoundment
Impurity Stabilization
The slurry from gas scrubbing reports to a stabilization circuit for the recovery of any
valuable copper and conversion of the arsenic into ferric arsenate, which will be filtered
and disposed of within the TMF. The remaining gas, containing sulphur dioxide, passes
though a modular acid gas plant to produce an upgraded, saleable sulphuric acid.
The scrubber slurry passes to conditioning leach tanks where sulphur dioxide (SO2), a
concentrated bleed stream from the acid manufacturing plant, is added. The role of the
SO2 is to create an acidic reducing environment where arsenic and iron are leached out
while copper is precipitated with the SO2 to form a copper sulphide. After this controlled
reaction, the discharge from the tanks is sent to a fine copper thickener where the
precipitated copper sulphide and insolubles (silica, etc.) are thickened to a level that
permits filtration. The filtered material will be stored in a surge bin that discharges to
agglomeration.
The overflow from the fine copper thickener, containing dissolved arsenic and iron, is sent
to the impurity stabilization circuit. Air is introduced together with limestone to create a
stable ferric arsenate material also known as scorodite, a naturally occurring mineral, in
the presence of excess iron.
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Figure 6-16: Partial Roasting General Arrangement
FANS
ROASTER
ELECTROSTATIC
PRECIPITATOR
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Figure 6-17: Partial Roasting Circuit Flowsheet
Concentrate
Storage
Stockpile
Roaster
Feed
Bin
Dust
Cyclones
Solids
Capture
Roaster Feed
Screw Conveyor
Gas
Oxidation,
Quenching,
Scrubbing
Sulphuric
Acid Plant
Stabilization
Circuit
Roaster
Cyclone Calcine
Discharge Screw Conveyor
Dry Calcine
Storage Bin
This material is precipitated out of solution in these tanks and is transported to a

stabilized product thickener. There the material is thickened and then pumped to a surge
tank feeding a filtration circuit that filters out the stable arsenic-containing sludge. The
filtered cake is stored in a stockpile before being trucked to a dedicated, lined
impoundment within the TMF.
The overall stabilization circuit is shown in Figure 6-18.
6.2.8.4
Agglomeration
As shown in Figure 6-18, calcine from the roaster and dust cyclones (dry) and copper
sulphide (wet) from the stabilization circuit are withdrawn from their respective storage
bins and fed to an agglomerator where the moisture content is adjusted accordingly.
Intense mixing in this unit results in uniform wetting, blending, and formation of granular
agglomerates. The agglomerated material is non-dusting and has favourable material
handling properties.
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Figure 6-18: Stabilization Circuit

Roaster Wet
Scrub
Gas
discharge
SULPHURIC
ACID PLANT
SO2
Acid
Storage
Solids
discharge
Conditioning
Leach Tanks
Lime
Fine
Copper
Thickener
Fine Copper
Filter
Stabilized
Product Thickener
Air
Stabilized
Product
Receiving
Tank
Fine
Copper
Product Bin
Stabilized
Product
Filter
Process Water
Dry Calcine
Storage Bin
Moisture Control
Disc Agglomerator
Stabilized
Product
Stockpile
Final Product Storage
Stockpile
Tailings
Management
Facility
6.2.8.5
Acid Plant
The acid plant will be a modular package plant that will utilize current industry technology
and meet environmental guidelines.
In a typical acid plant flowsheet, the roaster off-gas first passes through a scrubber to be
cleaned of all fine dust and particulate matter. The SO2-containing gas is then sent to a
droplet eliminator and on to a cooling tower where the gas is cooled by means of
circulating weak acid. The gas passes through wet electrostatic precipitators for removal
of the finest particles and acid aerosols and is then diluted with atmospheric air and
conveyed to a drying tower irrigated with sulphuric acid (96%) flowing countercurrent to
the gas. Through this contact, the acid absorbs the moisture in the SO2 gas and heat is
released. The sulphuric acid is collected and cooled.
The gas from the tower is transported to a converter section where the cold SO2 gas is
reheated before entering the first in a series of catalyst beds. SO3 is formed as the gas
passes through successive catalyst beds. The gas then enters an adsorption tower
where the SO3 is adsorbed by circulating acid, which is collected and transferred to an
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acid handling system. The gas stream passes through a final adsorption tower, where
the remaining SO3 is recovered, and then through a high-efficiency mist eliminator and
into the final discharge stack. The emissions from the acid plant will meet all
environmental regulations for air and water quality.
6.3
Reagents and Grinding Media

Solid and liquid reagents will be stored in a fenced area, the solid reagents either under
cover or in containers and the liquids in either tote containers or bulk tanks. As required,
the reagents will be delivered to the concentrator mixing area and prepared for
distribution into the system. Each reagent mixing tank will be ventilated to control
emissions. The storage and mixing facilities in this area will also have a separate sump
system.
6.3.1
Flotation Reagents
The principal flotation reagents for the process are listed below:
A3894 liquid flotation collector, promoter
PAX potassium amyl xanthate, a strong collector
MIBC the frother used in flotation
Lime used to control circuit pH
Flocculant reagent used to help settle solids in the thickeners.
Reagents will generally be delivered in tote bags or tote containers. Storage capacity will
be provided for a six-week supply of unmixed reagents. Where reagents are to be
diluted, storage will also be provided for a one-day supply of mixed reagent. The mix
tanks will be located on the floor above the day tanks. Mixed reagents will be pumped to
destination points around the flotation plant. In the case of the tailings de-sulphurization
flotation plant, xanthate and neat MIBC will be mixed at the concentrator and shipped by
truck to a day-storage tank at the facility.
Lime required for pH control will be shipped in trucks as pebble quicklime from Chiclayo
on the Peruvian coast. The quicklime will be pneumatically transferred into a silo,
reclaimed when needed, slaked in a vertical stirred mill, and stored in holding tanks sized
for a two-day supply. Lime slurry will be metered to the plant from a continuous,
pressurized loop line with provision to add lime for pH control to the following addition
points: SAG mill feed chute, rougher distribution box, regrind cyclone feed pumpbox, 1st
cleaner flotation cells, tailings box and tailings thickener feed tank.
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6.3.2
Grinding Media
Steel grinding media will be trucked in bulk from Lima and be loaded into storage bins at
site. The SAG mill balls will be added directly to the SAG mill feed conveyor from a bin
above it, while the ball mills will be fed by conveyors from the bins that hold their media.
The media for the IsaMill regrind mills will be shipped from Europe in 1 tonne tote bags
and will be loaded into the mills by vendor-supplied equipment.
6.3.3
Product Stabilization Reagents

Sulphur dioxide provided as a bleed stream from the acid production plant will be used as
a reductant in the conditioning leach circuit.
Limestone will be necessary as a neutralizing reactant for any excess SO2 (sulphuric
acid) produced from the acid plant that cannot be upgraded for sale.
Flocculant will be used as a settling aid in the fine copper and stabilized product
thickeners.
6.4
Process Water System

Water used for processing purposes will be derived from several sources:
water reclaimed from the TMF
water from pit dewatering
internal plant water recycled from the tailings thickener and the copper concentrate
thickener
water from the waste rock seepage recovery system
fresh water from Ro Caariaco for specific plant requirements.
Recycle and dewatering water will be stored in two tanks sized to provide total process
water requirements for three hours. The water will be delivered by gravity flow to the
plant operating floor at a nominal pressure of 50 psi. Most process water will be used in
grinding and flotation, with lesser amounts used for washing, flushing, and general
cleanup. Booster pumps will be added where higher pressures are required.
Fresh water will be used where clean water is required for the following plant systems:
spray water in the flotation columns
cooling water for the mill drives and lubrication systems
cooling water for plant air compressors
reagent mixing
gland seal water.
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Fresh water for process demand will be obtained from the fresh/firewater tank at the mill
site and supplied to the plant operating floor mill by gravity flow at a nominal pressure of
100 psi. Booster pumps will be added where higher pressures are required.
The bottom section of the fresh/firewater tank will be reserved for fire water storage
(800 m3), and the upper section will hold 1,400 m3 of fresh water for process and other
uses. If the fresh water system were interrupted for a significant period, then the needs
listed above would be met from the process water system.
Water supply and distribution are discussed further in Section 8.7.
6.5
Process Control, Sampling, and Assay
6.5.1
Process Control System

Process control will be from a central control room where the operator can perform
remote start-up and shut-down. In addition, operators will carry portable computing pads
(with wireless links) to provide them with control information updates. A plant-wide radio
system will be used for communications.
The process control system for the plant will consist of a network of distributed controllers
and human-machine-interface (HMI) equipment. The control system, HMI stations, and
all associated communications equipment will be of current technology that has proven to
be efficient and reliable in similar installations. The system will be capable of direct
expansion to control all equipment required to meet possible future requirements of the
mine. The system design will include the following features:
The processors, configuration tools, and operator interface(s) will reside on a peer-topeer network. The peer-peer network will be redundant and self-healing.
The remote I/O network will be redundant and self-healing.
All controllers, HMIs, servers, and communication equipment will be backed up by
uninterruptible power supply units (UPS).
Programming software will be IEC 6-1131-3 compliant supporting ladder logic and
function block.
HMIs will be located in the main process plant control room. Field-mounted HMIs will
be located as required.
The control system will include an Instrument Device Management software
application for tracking instrument calibration, configuration, and health.
Motor control will be integrated to the main control system via DeviceNet or
Profibus.
Variable-frequency drive (VFD) control will be integrated to the main control system
using a communications system such as DeviceNet, Profibus, Ethernet, or
Modbus communications.
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Third-party control systems and packaged equipment PLCs will communicate with the
main plant control system via fibre-optic communications link. The vendor will
nominate the preferred bus protocol.
The control system components, processors, power supplies, I/O modules, and data
communications equipment will be housed in floor-standing cabinets in electrical
rooms.
The main plant control system will tie directly to the field instrumentation, which is
based on Conventional 4-20 mA dc signal currents using HART SMART instruments
technology.
Control system analog I/O will include HART communications capabilities.
Fibre-optic technology will be implemented for the network(s).
The control system will be capable of linking directly through a gateway to the plant
office local area network (LAN). The gateway device will include firewall protection for
security.
6.5.2
Field Instrumentation
Instrumentation and control equipment will be used and applied for measurement and
control of process variables such as pressure, level, flow, temperature, density, weight,
and speed. The degree of instrumentation will be sufficient for safe and efficient control
of the process by a minimum number of operators.
All instrumentation will be standard catalogue products from suppliers. Where practical,
identical components will be used to promote component interchangeability, minimize
spare parts, and simplify service and repairs.
The project will implement 4 to 20 mA isolated with HART Protocol as the standard for
measurement instruments and control valves.
6.5.3
Sampling
Grinding and regrinding cyclone overflowsprimary cyclone overflow and cleaner regrind
mill dischargewill be continuously sampled for particle size analysis.
An on-stream x-ray fluorescent analyzer (OSA) will provide continuous analyses of solids
content, copper, iron, arsenic, antimony, and sulphur content to enable operators and
supervisory control systems to optimize flotation and respond to upset conditions. The
OSA system will pull samples from the following points:
flotation feed
rougher concentrate
rougher tailings
1st cleaner feed
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1st cleaner scavenger tailings

2nd cleaner feed
2nd cleaner concentrate.
6.5.4
Assay Laboratory
A laboratory facility will be provided at the mine site for metallurgical, environmental and
analytical services. The facility will be housed in its own building, isolated from the mill,
and will have five main components:
sample preparation
instrument analysis (AA, Leco, x-ray, ICP)
wet chemistry (titrations)
fire assaying
environmental analysis.
The assay group will analyze samples for:
mine grade control
concentrator OSA calibration
metallurgical testwork
metallurgical accounting
plant discharge control samples
environmental compliance.
The lab will be able to conduct instrumental analysis for up 200 samples per day. The
main analytical parameters will be copper, gold, silver, iron, antimony, arsenic, and
sulphur. Metallurgical testwork will concentrate on the optimization of processes within
the plant.
Design of the assay lab is based on two 12-hour shifts per day for preparation and
analysis.
6.6
Concentrate Receiving and Loadout at Port Site

Copper concentrate from the process plant will be transported by truck to the Marine
Terminal Muchik (MTM) in northern Peru, a planned port development by Lumina Copper
(Lumina). Candente will construct and operate its own concentrate receiving, storage,
and reclaim facilities at the terminal and will share marine handling facilities with Lumina.
Annual throughput from Caariaco Norte is projected to average approximately
400,000 tonnes.
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Trucks arriving at the terminal will unload the concentrate product into a truck unloading
station consisting of a hopper feeding a conveyor system into the storage building. All
trucks will be weighed before and after unloading and will be washed on arrival and
before departure. Wash water will be collected and treated at the port facility.
The concentrate storage building will be fully enclosed and have a normal operating
capacity of 46,000 tonnes. The incoming concentrate will be distributed into piles by a
travelling portal stacker at an average rate of 50 t/h (80 t/h maximum). A front-end loader
(FEL) will reclaim the concentrate from a storage pile and dump it into either of two fixedposition hopper feeders. These feeders will in turn deposit the concentrate into the
reclaim conveyor, which will be set in a recessed area below the main floor level of the
building.
The conveyors will be enclosed in galleries to minimize fugitive dust emissions to the
atmosphere and will be fitted with a vacuum system to clean up spilled concentrate or
settled concentrate dust.
The reclaim conveyor will include a process scale to monitor the amount of concentrate
being loaded. Outside the building, the reclaim conveyor will be housed in a gallery that
connects initially to the sampling station and then through to a transfer tower for material
transfer to a shipping pipe conveyor running along a 3.2 km long trestle from the shore to
the shiploading berth. The concentrate is transferred again to the berth conveyor, which
travels along the length of the berth to provide coverage to the tripper that feeds the
shiploader.
More details on these facilities are provided in Section 8.13, Port Site Infrastructure.
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CONTENTS
7.0
TAILINGS MANAGEMENT FACILITY ....................................................................7-1

7.1
Summary.....................................................................................................7-1
7.1.1 Approach and Concept ....................................................................7-1
7.1.2 TMF Location Trade-off ...................................................................7-2
7.1.3 Design Criteria .................................................................................7-2
7.1.4 Environmental Assessment .............................................................7-3
7.2
Description of TMF ......................................................................................7-3
7.2.1 Starter Embankment ........................................................................7-8
7.2.2 Main Embankment ...........................................................................7-8
7.2.3 TMF Seepage Collection Impoundment .........................................7-12
7.2.4 Construction Diversion Structures..................................................7-12
7.2.5 Scorodite Management Facility ......................................................7-13
7.3
Design Criteria ..........................................................................................7-16
7.4
Operational Data .......................................................................................7-17
7.5
Tailings Management ................................................................................7-19
7.5.1 Cycloned Tailings Underflow and Overflow Distribution .................7-19
7.5.2 Tailings Headers and Raising System ...........................................7-19
7.5.3 Placement and Compaction of Sands at TMF Embankment ..........7-19
7.5.4 Closure ..........................................................................................7-20
7.6
Quantity and Cost Estimating ....................................................................7-20
7.7
Information Required for Further Stages of Design ...................................7-20
7.7.1 Tailings and SC Embankment Sites...............................................7-20
7.7.2 Tailings Impoundment ...................................................................7-21
7.7.3 Tailings Deposition Technology .....................................................7-21
TABLES
Table 7-1:
Table 7-2:
Table 7-3:
Table 7-4:
Table 7-5:
Tailings Production and Embankment Raising ............................................................. 7-11

TMF Embankment Design Criteria ................................................................................ 7-16
Seepage Collection Impoundment Design Criteria and Data ....................................... 7-17
Scorodite Management Facility Design Criteria and Data ......................................... 7-17
Caariaco Norte Project Operational Data.................................................................... 7-18
FIGURES
Figure 7-1:
Figure 7-2:
Figure 7-3:
Figure 7-4:
Figure 7-5:
Figure 7-6:
Figure 7-7:
TMF General Arrangement at Start-up ........................................................................ 7-4

TMF General Arrangement at Closure ......................................................................... 7-5
TMF Typical Sections 1 of 2 ......................................................................................... 7-6
TMF Typical Section 2 of 2 .......................................................................................... 7-7
TMF Storage Elevation.................................................................................................. 7-10
Scorodite Management Facility General Arrangement and Typical Sections ........... 7-14
Scorodite Management Facility Details ...................................................................... 7-15
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7.0
TAILINGS MANAGEMENT FACILITY
7.1
Summary
7.1.1
Approach and Concept

This report section presents the proposed design for the Caariaco Norte tailings
management facility (TMF). The design represents a reasonably conservative approach
with appropriate contingencies as required for a prefeasibility level assessment.
During the prefeasibility work, a trade-off study was conducted to determine the preferred
TMF location and method of construction. Minimizing socioeconomic impacts and
physical footprint, the available geochemical characterization and topographical data, and
effective cost management were all contributing factors in the selection of the TMF
location and embankment construction method.
The proposed TMF embankment will utilize the centreline construction method using
compacted non-acid-generating (NAG) cyclone sands. The proposed location is a
tributary valley within the headwaters the Quebrada Yerma watershed. The facility has
been designed to withstand the seismic activity associated with a maximum credible
earthquake (MCE) and to contain the inflow design flood (IDF) and probable maximum
flood (PMF) as appropriate to the stage of construction.
The bulk tailings exiting the process plant will be pumped to a sulphide flotation circuit for
removal of sulphide minerals, primarily pyrite. The sulphide flotation concentrate
(overflow) will be pumped to the TMF where it will be deposited subaqueously. The
sulphide flotation tailings (underflow) will be pumped to the cyclone sand plant (CSP).
The CSP fine sand overflow will be deposited directly into the TMF. The CSP
underflowcoarse, sulphide-free NAG sandwill be pumped along the embankment
crest and used for cell-type construction. Water from the TMF will be reclaimed to the
process plant during operations.
The TMF presented in this report is designed to manage tailings for mine operations at a
processing rate of 95,000 t/d for 19 years as per the preliminary mine plan. Subsequent
to completion of this facility design an updated mine plan was developed that extended
the mine life to 22 years. To accurately reflect this change, the TMF design will be
updated during the next phase of project study. Nevertheless, the current facility
represents a reasonable assessment of the associated costs for the project based on the
known conditions. The TMF design is currently at a preliminary prefeasibility level;
additional information from planned site investigations is required to bring the design to
prefeasibility level.
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7.1.2
TMF Location Trade-off

Candente and AMEC identified two locations that had suitable topography for the
construction of an embankment and sufficient volume for containment of the projected
life-of-mine tailings: the Quebrada Yerma valley (8A) and the Ro Caariaco valley (8B).
A trade-off study was undertaken to assess the availability of construction materials such
as waste rock, local borrow, and cyclone sand; to compare downstream and centreline
embankment construction methods for each option; and to evaluate alternative tailings
depositions technologies such as high-density thickening (see Appendix G). Capital and
LOM operating costs were then compared and weighed against the potential
socioeconomic impacts and physical footprint. The trade-off concluded that the
Quebrada Yerma valley was the preferable location for building either a cyclone sand or
waste rock embankment with centreline construction, or a waste rock embankment with
downstream construction for the deposition of thickened, sloped tailings.
It was decided to opt for cyclone tailings, largely because the cost was somewhat lower,
and because cycloning tailings for dam construction is a technology with a much longer
operational history than high-density thickening. The trade-off should be re-visited early
in the feasibility phase, after more site investigation information is available on
embankment foundations, potential borrow areas and materials, and groundwater levels,
and more advanced, site-specific capital and operating cost information has been
developed.
7.1.3
Design Criteria
The design criteria are commensurate with appropriate governance literature and/or
industry standards as appropriate for this level of study. All applicable regulations and
statutes have been observed during the design process.
The key criteria adopted for design of the TMF are summarized below; further details are
provided in Section 7.4 and Appendix D.
The design incorporates sufficient freeboard to manage the projected tailings volume
and inflow design flood (IDF) at different stages of the mine life. For Years 1 to 5 of
the mine life, the IDF corresponds to the 1-in-1,000 year, 5-day storm event. For
Years 6 to 19, the IDF corresponds to the probable maximum flood (PMF) 30-day
storm event. The criteria for closure are less demanding than for operations because
an embankment spillway has been designed and will be constructed to safety
manage the PMF 24-hour event.
In accordance with the preceding IDF criteria, a minimum of 3 m freeboard will
provided above the tailings and water level at all times. This comprises 2 m for
dynamic settlement, static settlement, and wave run-up due to wind action, and 1 m of
dry freeboard as a contingency.
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The tailings starter embankment will be constructed to provide storage for a minimum
of one year of tailings production as well as the design stormwater and freeboard
requirements.
The impoundment will be operated to ensure that the tailings remain saturated at all
times to inhibit oxidation.
A sulphide flotation circuit will be installed adjacent to the TMF to remove sulphide
minerals (primarily pyrite) from the tailings. The non-sulphide tailings will feed the
cyclone sand plant and will be non-acid generating (NAG). The coarse cyclone
underflow will be used to construct the tailings embankment. The fine sand overflow
stream will be deposited in the TMF.
7.1.4
Environmental Assessment
The site setting, geology, vegetation, hydrology, climate, and tectonic characteristics are
important factors in determining the nature of the water and waste management facilities
that will be most appropriate for the project. To date, the ongoing Environmental Impact
Assessment (EIA) work has not focused on the Quebrada Yerma valley, and so more
information is required to fully assess this location for tailings management. AMEC has
recommended that the EIA and future site investigation plans be expanded into this area
to support the next stage of design.
7.2
Description of TMF
The Caariaco Norte TMF will provide storage for all tailings produced over the projected
life of the mine. The main components of the TMF are as follows:
starter embankment
main embankment
seepage collection (SC) facility
construction diversion structures
scorodite management facility.
General arrangements of the TMF at start-up and at closure are shown in Figures 7-1 and
7-2. Associated typical sections are shown in Figures 7-3 and 7-4.
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Figure 7-1:
TMF General Arrangement at Start-up
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Figure 7-2:
TMF General Arrangement at Closure
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Figure 7-3:
TMF Typical Sections 1 of 2
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Figure 7-4:
TMF Typical Section 2 of 2
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7.2.1
Starter Embankment
The TMF starter embankment will be an earthfill / rockfill structure with appropriate filter
and transition zones constructed of locally borrowed fill materials from within the
impoundment footprint and potentially excess cut from the access road construction.
Beginning at the upstream side, where a filter zone will impede the passage of tailings
solids, the materials in the graded zones become progressively coarsen advancing
downstream.
More detail on the grain size distributions and other engineering
characteristics of the material zones will be provided in future stages of design.
The starter embankment will be constructed with 2H:1V upstream and downstream slopes
and a 10 m wide crest. It has been sized to store one year of tailings production from the
process plant as well as appropriate freeboard allowances for storage of the IDF, dynamic
and static settlements, wave run-up, and contingency.
The starter embankment will have a maximum height of 105 m (measured vertically at the
embankment centreline) and contain a total volume of 12.5 Mm3 of fill material. It is
recommended that the starter embankment position and storage requirements be
reassessed and optimized during the next stage of design.
The slope design required for satisfactory stability will depend primarily on the ground
conditions encountered under the proposed embankment structure. This will be analyzed
during the next stage of study using limit-equilibrium models once data are available from
the planned geotechnical site investigations.
At present there is no plan to store water in the TSF for use during start-up.
The starter embankment design is illustrated in plan and section in Figures 7-1 and 7-3,
respectively.
7.2.2
Main Embankment
The TMF embankment will be raised in stages as a compacted cycloned sand shell above
the starter embankment using cycloned sands and centreline construction methods. The
cyclone sand plant (CSP) will initially be installed on the right abutment of the TMF
embankment at approximately elevation 2,820 masl to produce the cycloned sand
required for the downstream shell. As the embankment is raised, the CSP will be moved
to a platform at elevation 2,960 masl. This relocation concept will be reassessed at the
next stage of study, as there may be an opportunity to move the sands to the
embankment for construction by means of gravity flow.
Feed to the cyclone plant will be the tailings from a sulphide flotation circuit that will
remove the sulphide minerals. The sulphide flotation concentrate will have acidgenerating potential and will therefore be stored subaqueously within the tailings
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impoundment Subaqueous deposition limits oxygen contact with the sulphide minerals,
thereby substantially reducing the potential to produce acid.
The CSP will consist of 22 Cavex Recyclone units with 4 standby units. This system will
produce cyclone underflow with a nominal fines content (passing No. 200 sieve, by
weight) of 13%. This type of material would be considered free-draining, unlikely to
support a significant phreatic surface within the embankment fill, and so will result in an
inherently more stable embankment structure. Information from Weir Minerals on the
cyclone system design is provided in Appendix G.
The coarse sands will be pumped to the embankment and discharged on the downstream
slope of the embankment. The discharge points will be moved periodically to build the
embankment up evenly. A bulldozer will be used to further distribute and compact the
coarse sands over the embankment. Solution released after emplacement will be
collected in the seepage collection system at the base of the embankment and be
pumped back into the TMF. Fine sands will be deposited directly within the TMF
impoundment via spigots placed uniformly across the embankment crest. The final
embankment crest elevation will be 2,950 masl. The increase in storage elevation over
time is shown in Figure 7-5.
The tailings production and embankment raising schedule for operations is provided in
Table 7-1. This schedule was based on the tailings sand production analyses performed
by Weir Minerals for a typical tailings feed.
The TMF embankment has been designed with a final downstream slope of 2H:1V,
similar to the Kemess tailings dam currently under construction. The embankment will
ultimately be 270 m high and require a total volume of 78 Mm3 of cycloned sand. There is
also precedent for cyclone sand embankments of this height both within Peru (currently in
operation) and other countries. At Los Pelambres, both the Quillayes and El Mauro
tailings embankments are currently being constructed as cycloned sand operations with
proposed final heights of over 200 m.
An embankment of this height will entail some specialized considerations for slope
stability, such as the potential for particle crushing during later stages of the construction
period. The design of the embankment will be analyzed in more detail during the next
phase of study after the results of planned site investigations are available to assess
foundation conditions.
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Figure 7-5:
TMF Storage Elevation
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Table 7-1:
Tailings Production and Embankment Raising
Elevation
Available Volume for Tailings3

In TMF
Impoundment
(m3)
In TMF
Impoundment
(m3)
Tonnages
Total
(m3)
In TMF
Impoundment
(tonnes)
In TMF
Embankment3
(tonnes)
Tailings
Suface1
Embankment
Crest2
Total
(Mt)
Production
Year
2,680
2,693
2,690
2,703
141,340
132,008
273,348
161,127
53,709
0.2
0.01
2,700
2,713
548,291
286,228
834,519
625,052
208,351
0.8
0.02
2,710
2,723
1,283,856
542,475
1,826,331
1,463,596
487,865
2.0
0.06
2,720
2,733
2,562,044
924,359
3,486,403
2,920,730
973,577
3.9
0.11
2,730
2,743
4,555,155
1,444,478
5,999,633
5,192,877
1,730,959
6.9
0.20
2,740
2,753
7,319,609
2,121,807
9,441,416
8,344,354
2,781,451
11.1
0.33
2,750
2,763
10,968,380
2,965,890
13,934,270
12,503,953
4,167,984
16.7
0.49
2,760
2,773
15,606,310
3,988,621
19,594,931
17,791,193
5,930,398
23.7
0.69
2,770
2,783
21,174,055
5,235,707
26,409,763
24,138,423
8,046,141
32.2
0.94
2,780
2,793
28,041,060
6,723,074
34,764,135
31,966,809
10,655,603
42.6
1.2
2,790
2,803
36,232,760
8,495,216
44,727,976
41,305,346
13,768,449
55.1
1.6
2,800
2,813
45,999,044
10,599,374
56,598,419
52,438,910
17,479,637
69.9
2.0
2,810
2,823
57,620,783
13,090,030
70,710,813
65,687,693
21,895,898
87.6
2.6
2,820
2,833
71,359,899
15,927,741
87,287,641
81,350,285
27,077,160
108.4
3.2
2,830
2,843
87,663,095
19,105,161
106,768,256
99,935,928
32,478,774
132.4
3.9
2,840
2,853
104,722,246
23,018,633
127,740,878
119,383,360
39,131,675
158.5
4.6
2,850
2,863
126,613,619
27,441,930
154,055,549
144,339,525
46,651,281
191.0
5.6
2,860
2,873
151,521,751
32,355,108
183,876,859
172,734,796
55,003,683
227.7
6.7
2,870
2,883
179,290,088
37,756,367
217,046,456
204,390,701
64,185,824
268.6
7.9
2,880
2,893
209,896,632
43,646,548
253,543,180
239,282,160
74,199,132
313.5
9.2
2,890
2,903
243,357,792
50,024,058
293,381,850
277,427,883
85,040,899
362.5
10.6
2,900
2,913
279,651,578
56,895,122
336,546,700
318,802,799
96,721,707
415.5
12.2
2,910
2,923
318,798,396
64,277,965
383,076,361
363,430,171
109,272,541
472.7
13.8
2,920
2,933
360,871,482
72,204,167
433,075,649
411,393,489
122,747,084
534.1
15.6
2,930
2,943
406,053,861
80,694,711
486,748,572
462,901,401
137,181,008
600.1
17.6
2,940
2,950
454,531,624
86,913,043
541,444,667
518,166,052
147,752,173
665.9
19.5
2,950
2,963
506,278,005
101,000,000
607,278,005
577,156,926
171,700,000
748.9
21.9
Notes: 1. Elevation is at upstream TMF embankment face. From that point, deposited slope is 0.5% downward.
2. Elevation of embankment crest uses an approximate total freeboard of 13 m.
3. Assume a maximum of 25% of tailings reports to TMF embankment.
Another prefeasibility assumption that needs to be confirmed is the availability of enough

cyclone underflow tailings for all embankment raises. The prefeasibility design requires
approximately 80% of the CSP coarse underflow tailings to be available for placement on
the embankment at all times during construction to maintain adequate storage and
freeboard. This will addressed during subsequent stages of design when additional
information becomes available on the variability of tailings particle size distribution. In the
event that the embankment raising schedule cannot be fully met using cyclone underflow
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tailings, then a minor amount of earthfill / rockfill material may be needed to augment the
embankment fill.
Completion of the TMF will involve the construction of four saddle embankments later in
the mine life.
7.2.3
TMF Seepage Collection Impoundment

A seepage collection (SC) impoundment has been designed downstream of the main
TMF embankment, as shown in plan and section in Figures 7-1 and 7-4, respectively.
The SC embankment design is based on similar designs previously permitted and
constructed in Peru and includes a compacted earthfill / rockfill embankment with
filter / transition zones and a low-permeability, bituminous geomembrane liner on the
upstream face. The impoundment has been specifically designed to retain cyclone sand
drainage, embankment seepage, and runoff from the embankment and contributing
catchment.
Other alternatives such as the following should be considered in future stages of design:
low-permeability core soil (clay-core) embankments with rockfill shells
clay liner on the upstream face
alternative geomembrane materials.
Trade-off studies should be undertaken to determine the most appropriate design
considering the availability of local borrow materials and costs for supplying and installing
synthetic and/or imported materials. Slope stability design for the SC embankment will
also depend primarily on foundation conditions, for which data will be available after the
planned site investigation program has been completed.
The SC impoundment is sized to contain the accumulated precipitation from the 1:25-year
wet year. In addition, the SC embankment design includes an emergency spillway sized
to manage the peak flow during a PMF event. The embankment will reach a maximum
height of 50 m (measured vertically at the embankment centreline), creating 1.25 Mm3 of
storage volume.
It is anticipated that the SC impoundment will collect water during the operational life of
the TMF. During post-closure, the SC embankment could serve as a reservoir for
ongoing treatment before release to the downstream environment, depending on the
water quality at that time.
7.2.4
Construction Diversion Structures

Surface water will need to be diverted around the areas of construction during the
preproduction period. This will include primarily the TMF main embankment, the TMF SC
embankment, the WRMF diversion embankment, and the WRMF SC embankment. The
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start-up design includes cofferdams and diversion systems for these areas. The TMF and
its SC embankment diversion structures are illustrated in plan and section in Figures 7-1
and 7-4, respectively.
The cofferdams have been designed as earthfill / rockfill structures with filter and
transition zones and a bituminous geomembrane liner on the upstream face. The TMF
cofferdam will also have a low-level outlet structure to allow passage of base flows, which
will be conveyed and discharged downstream of the construction area, away from the
starter embankment and seepage collection embankment. The embankments have also
been designed with emergency spillways to manage water from larger storm events.
7.2.5
Scorodite Management Facility

Mineral processing over the operating life of the mine will result in the production of
approximately 30,000 m3 of scoroditethe stable ferric arsenate byproduct from the
partial roast process incorporated in the process flowsheet to manage arsenic levels in
the concentrate. Scorodite represents approximately 0.011% of the total waste material
to be stored in the TMF. It is currently planned to provide a separate lined containment
facility for this byproduct. The facility will be capped at closure.
Conceptual designs for the facility are illustrated in Figures 7-6 and 7-7.
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Figure 7-6:
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Scorodite Management Facility General Arrangement and Typical Sections
Page 7-14

Figure 7-7:
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Scorodite Management Facility Details
Page 7-15

7.3
Design Criteria
The criteria adopted for the design of the TMF embankment structures are summarized in
Table 7-2. Design criteria and data for the seepage collection impoundments and for the
scorodite management facility are summarized in Table 7-3 and Table 7-4.
Table 7-2:
TMF Embankment Design Criteria
Data
1:10,000-year return period earthquake
Value
0.7 g
Inflow Design Flood (IDF) Tailings Embankment

Years 1 to 5
1:1,000-year, 5-day
event
Corresponding
freeboard = up to
10 m
Comments / Reference
CDA Dam Design Guidelines, corresponding to Extreme
Hazard Classification
CDA Dam Design Guidelines (modified by AMEC),
corresponding to Extreme Hazard Classification.
This criterion assumes that the IDF will be stored
(i.e., no emergency spillway available).
Precip = 535 mm
Runoff volume = 2.2 Mm3
Operation Years 6 to 19
PMF, 30-day event

Corresponding
freeboard = 10 to
15 m

This criterion assumes that the IDF will be stored (i.e.,
no emergency spillway available).
Precip = 2,547 mm
Runoff volume = 10.2 Mm3
Closure and Post-Closure
PMF, 24-hour event

Corresponding
freeboard = 3 m

This criterion assumes that an operating / emergency
spillway will be present.
Precip = 881 mm
Peak flow depth in spillway = 3 m
Tailings Embankment Dry Freeboard

Dynamic settlement (due to earthquake),
static settlement, and wave run-up (due
to wind)
Dry (contingency) freeboard
Starter embankment slopes
Final embankment downstream slope
Minimum starter embankment tailings
storage capacity
Mill start-up water storage requirement
2m
AMEC assumption experience in similar projects
1m
Upstream and
Downstream = 2H:1V
2H:1V
AMEC assumption experience in similar projects

To be constructed of borrowed fill material earthfill /
rockfill.
Requires free-draining, well-compacted sand and a
competent foundation material.
AMEC / Candente
1 year of production
No start-up water
required from TMF
AMEC / Candente
Slope Stability Factors of Safety

Pseudostatic conditions
1.0
End-of-construction condition
1.3
Static conditions
1.5
Maximum fines (passing No. 200 sieve,

by weight) for tailings embankment
solids
13%
CDA Dam Design Guidelines 2007; MEM, Gua Ambiental

para el Manejo de Relaves Mineros 1995
To maintain a free-draining embankment fill.
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Table 7-3:
Seepage Collection Impoundment Design Criteria and Data

Data
Value
Seepage flow from tailings sand

flow-off
Impoundment must store 1.5 Mm

(1 in 25 wet year)
Environmental design flood
Corresponds to precipitation of
254 mm
Table 7-4:
AMEC
24-hour, 1:100-year runoff event as a
minimum
Scorodite Management Facility Design Criteria and Data

Data
Location
Total volume
Geochemical characteristics
7.4
3
Value
Within TMF
3
30,000 m
Assume lined impoundment because
geochemical characteristics not yet
determined
Fully-lined facility, separate cell.
AMEC / Candente
AMEC experience with similar materials
Operational Data
The preliminary prefeasibility design of the Caariaco Norte TMF is based on the
operational data provided from various engineering disciplines, as summarized in
Table 7-5.
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Table 7-5:
Caariaco Norte Project Operational Data

Data
TMF Site
Embankment raise construction method
Tailings Solids Production Rates
Total tailings
Sulphide flotation product
Sulphide tailings product (feed to tailings
cyclones)
Specific Gravity of Tailings Products
Total tailings
Value
Reference
8A (Quebrada Yerma valley)

Centerline
Candente / AMEC
Candente / AMEC
95,000 t/d
4,600 t/d
89,000 t/d
AMEC
AMEC
AMEC
2.65
3.3
2.63
AMEC
AMEC (reference value based on
typical value for pyrite)
AMEC
637.8 Mt
31.3 Mt
606.5 Mt
AMEC
AMEC
AMEC
1.14 g/cm3
AMEC experience with similar projects.
1.7 g/cm3
AMEC experience with similar projects.
P80 = 200 m
P80 = 150 m
AMEC
AMEC

cyclones)
Tailings Production Tonnage
Total tailings
cyclones)
In situ dry density of tailings solids within tailings
Impoundment (cyclone underflow)
In situ compacted dry density of tailings solids in
tailings embankment (cyclone overflow)
Particle Size Distribution
Total tailings
cyclones)
Pulp Density
Total tailings
cyclones)
pH of tailings products
Tailings material ARD/ML potential
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Particle Size
(mm)
Percent Passing
by Weight
0.841
0.595
0.420
0.297
0.210
0.149
0.105
0.074
0.053
0.037
100.00
99.95
99.28
95.96
88.91
79.81
69.76
59.72
50.59
41.62
40%
30%
40%
9 to 10
Tailings after sulphide removal
should be NAG and non-metal
leaching
Page 7-18
AMEC
AMEC
AMEC
AMEC
AMEC
AMEC

7.5
Tailings Management
7.5.1
Cycloned Tailings Underflow and Overflow Distribution

The underflow and overflow produced by the cyclone plant will be pumped through
separate headers to the crest of the embankment, where discharge spigots will placed at
regular intervals along the embankment crest. Coarse sands discharge from the
underflow spigots will be directed to the downstream side of the embankment and used to
raise the embankment. Discharge from the fine sands overflow spigots will be directed
into the TMF for containment.
As designed by Weir Minerals (see Appendix G), the tailings underflow will exit the
cyclones at a pulp density of approximately 74%. This material will need to be pumped by
positive displacement pumps to overcome the high operational heads in the cyclone and
distribution systems. Details of the tailings pump selection and distribution system and
provided in Appendix G.
The plant and distribution system will be assessed in more detail during the next stage of
design. Specific aspects to be assessed include:
the possibility of using a single CSP location for the life of mine
use of positive displacement pumps or centrifugal pumps for underflow pumping, or
gravity flow
the possible advantages of decreasing or increasing the pulp density to allow gravity
flow of cyclone sands, particularly in the early years of the mine life
embankment drain-off pumpback
cyclone underflow dilution
configuration of tailings distribution headers and spigots for both overflow to the
impoundment area and underflow to the embankment.
7.5.2
Tailings Headers and Raising System

The tailings header pipelines will be placed on a pipe support system for progressive
raising of the embankment crest. This is typical for cyclone sand embankments.
The header pipes will discharge into smaller-diameter spigots located at nominal spacing
to construct the paddocks at the downstream area of the embankment.
7.5.3
Placement and Compaction of Sands at TMF Embankment

To maintain a stable slope for the TMF embankment, the tailings sands will need to be
placed in paddocks or cells at the TMF embankment. These will be near-horizontal areas
within the body of the embankment. The tailings will be spread and compacted by
bulldozers (nominally a Caterpillar D8-size).
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7.5.4
Closure
The design objective for the TMF is to keep the PAG tailings saturated at all times within
the impoundment. To achieve this, the PAG tailings will be deposited subaqueously,
encapsulated with NAG sands, and be flooded with a minimum 2 m of water cover.
Based on the current water balance, the median depth of water cover in the embankment
will be 8 m. It is recommended that the water quality and excess water discharge
schedule be re-evaluated in the next phase of work to reduce the water cover at closure
while determining if there is potential to discharge water and what treatment technology, if
any, may be required.
7.6
Quantity and Cost Estimating

Estimated quantities for the phases of mine developmentinitial construction, operations,
and closureare detailed in Appendix G and were used in developing the cost estimates
for this report. The quantities were calculated primarily using CAD software packages
designed for this type of calculation. The accuracy of the methods used is considered
suitable for prefeasibility-level studies, but additional site data, including geotechnical
assessment, are required for the TMF design as a whole to meet a prefeasibility level of
accuracy.
7.7
Information Required for Further Stages of Design

Additional data are required to complete a full prefeasibility design, specifically:
geological/geotechnical characterizations and data from the TMF area
geotechnical/rheological testing data from tailings products.
Further geotechnical investigations required to advance the TMF design to the feasibility
level are described below.
7.7.1
Tailings and SC Embankment Sites

Geotechnical drilling and test pitting will be required at the embankment sites. Drilling will
include sampling of the soil units for visual classification and geotechnical laboratory
testing. Bedrock coring will be required. Bedrock geology must be defined and any
problematic bedrock (e.g., limestone) or structure (weak sedimentary rock such as
claystones, etc.) identified. Some boreholes extended into bedrock should be angled to
intercept any sub-vertical geologic structure that may control secondary hydraulic
conductivity of the bedrock, including potential faulting in the valley bottom that may
control the valley alignment and seepage control requirements. Packer permeability
testing will be conducted within the bedrock to obtain a profile of hydraulic conductivity
versus depth in the valley bottom and on the abutments. Piezometers and groundwater
monitoring wells will be installed in select boreholes in support of baseline studies.
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Geophysical survey methods such as seismic refraction may be useful along and across
the embankment axes to calibrate and extend borehole information.
7.7.2
Tailings Impoundment
Investigations within the tailings impoundment itself will focus on identifying and
quantifying of potential borrow areas for embankment construction and ongoing raises.
These investigations will also assess the overall hydrogeology of the impoundment area,
with particular emphasis on the continuity and thickness of the overburden material, which
could possibly form a natural impoundment liner along the valley slopes.
For the diversion structures, test pits will be required along the axis of the proposed
cofferdams to confirm ground conditions (overburden versus bedrock excavation).
Upon collection and review of the site investigation information, an analysis of slope
stability for the TMF embankment and other major components can be performed.
The site investigation should also be planned to obtain data to enable feasibility-level
estimates of seepage from the TMF impoundment.
7.7.3
Tailings Deposition Technology

A cyclone sand embankment construction method was selected for the purposes of the
prefeasibility progress report. During future stages of design, the tailings deposition
technology should be re-evaluated once relevant information from site investigations is
available, particularly on embankment foundation conditions and potential borrow material
sources, and using more accurate cost estimating information.
This comparison will also depend on the results of geochemical testing on waste rock,
which will, in part, determine its suitability as a potential embankment construction
material.
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CONTENTS
8.0
INFRASTRUCTURE AND ANCILLARY FACILITIES ..............................................8-1

8.1
Summary.....................................................................................................8-1
8.1.1 Mine Site Infrastructure....................................................................8-2
8.1.2 Port Site Infrastructure .....................................................................8-4
8.2
Site Selection and Facility Arrangement ......................................................8-5
8.3
Site Conditions ............................................................................................8-6
8.3.1 Terrain .............................................................................................8-6
8.3.2 Climate ............................................................................................8-6
8.4
Plant Site Buildings .....................................................................................8-9
8.4.1 Mine Truckshop ...............................................................................8-9
8.4.2 Truck Wash Station .......................................................................8-11
8.4.3 Mill Maintenance Shop ..................................................................8-11
8.4.4 Blasting Agent Facilities .................................................................8-12
8.4.4.1 Location ......................................................................... 8-12
8.4.4.2 Bulk Emulsion Plant ....................................................... 8-12
8.4.4.3 Detonator Magazine ...................................................... 8-13
8.4.4.4 Ammonium Nitrate Storage Structure ............................ 8-13
8.5
Camp and Administration Area..................................................................8-13
8.5.1 Personnel Accommodations ..........................................................8-15
8.5.2 Main Administration Building..........................................................8-16
8.6
Roads .......................................................................................................8-16
8.6.1 Access Road to Site ......................................................................8-16
8.6.2 On-Site Roads ...............................................................................8-17
8.6.3 Existing Roads...............................................................................8-18
8.7
Water Supply and Distribution ...................................................................8-18
8.7.1 Fresh Water ...................................................................................8-18
8.7.2 Process Water ...............................................................................8-19
8.7.2.1 Reclaim Water System .................................................. 8-19
8.7.2.2 Waste Rock Seepage Recovery System ....................... 8-19
8.7.2.3 Pit Dewatering System .................................................. 8-20
8.7.3 Potable Water ................................................................................8-20
8.7.4 Fire Water......................................................................................8-21
8.8
Power Supply and Distribution ..................................................................8-22
8.8.1 Power Supply ................................................................................8-22
8.8.2 Main Substation .............................................................................8-22
8.8.3 Main Power Transformers .............................................................8-23
8.8.4 Site Power Distribution ..................................................................8-23
8.8.4.1 General.......................................................................... 8-23
8.8.4.2 Open Pit Mine Power Supply ......................................... 8-23
8.8.4.3 Process Plant and Ancillary Services Power Supply ...... 8-24
8.8.5 Electrical and Control Rooms ........................................................8-24
8.8.6 Lighting ..........................................................................................8-25
8.8.7 Emergency Standby Power ...........................................................8-25
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8.9
8.10
8.11
8.12
8.13
Fuel Storage and Distribution ....................................................................8-26

8.9.1 Diesel Fuel Tank Farm ..................................................................8-26
8.9.2 Lubricating Oils and Hydraulic Fluids .............................................8-27
Waste Handling and Disposal ...................................................................8-27
8.10.1 Waste Disposal Facilities ...............................................................8-27
8.10.2 Incinerator .....................................................................................8-28
8.10.3 Solid Waste Handing .....................................................................8-30
8.10.4 Waste Recycling ............................................................................8-30
8.10.5 Sewage Management ....................................................................8-31
8.10.5.1 Sewage Treatment Plant ............................................... 8-31
8.10.5.2 Sewage Collection System ............................................ 8-32
Communications .......................................................................................8-32
Site Security ..............................................................................................8-33
Port Site Infrastructure ..............................................................................8-34
8.13.1 Design Considerations...................................................................8-34
8.13.2 On-Shore Port Facilities .................................................................8-34
8.13.2.1 Truck Unloading Station ................................................ 8-34
8.13.2.2 Concentrate Storage Building ........................................ 8-37
8.13.2.3 Concentrate Shiploading ............................................... 8-37
8.13.2.4 Ancillary Facilities and Services ..................................... 8-38
8.13.2.5 Power Supply and Distribution ....................................... 8-38
8.13.2.6 Waste Handling and Disposal ........................................ 8-38
8.13.3 Marine Facilities.............................................................................8-39
8.13.3.1 Off-Shore Berth ............................................................. 8-39
8.13.3.2 Berth Alignment and Mooring ........................................ 8-39
TABLES
Table 8-1:
Table 8-2:
Table 8-3:
Table 8-4:
Table 8-5:
Table 8-6:
Potable Water Requirements at Mine Site .................................................................... 8-21

Plant Equipment Utilization Voltages ............................................................................ 8-24
Selection of Lighting Fixtures ........................................................................................ 8-25
Storage Requirements for Potentially Hazardous Oils and Fluids ................................ 8-27
Waste Quantities for Incineration .................................................................................. 8-29
Sewage Volumes to be Treated .................................................................................... 8-32
FIGURES
Figure 8-1:
Figure 8-2:
Figure 8-3:
Figure 8-4:
Figure 8-5:
Figure 8-6:
General Arrangement of Project Facilities ...................................................................... 8-1

Mine Site General Arrangement...................................................................................... 8-7
Plant Site General Arrangement ..................................................................................... 8-8
Layout of Camp and Administration Area ..................................................................... 8-14
Onshore Facilities General Arrangement ................................................................... 8-35
Marine Terminal Berthing and Mooring General Arrangement .................................. 8-36
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8.0
INFRASTRUCTURE AND ANCILLARY FACILITIES
8.1
Summary
The mine site facilities are divided into three general areas: the mine, the plant site, which
include buildings and structures for repair and maintenance of mine and plant equipment,
and the camp area, which includes facilities for personnel accommodations,
administration, and security. Other support facilities and services include site access,
power supply and distribution, water supply, explosive storage and handling,
communications systems and waste disposal facilities at the site. An overall general
arrangement of the development sites is shown in Figure 8-1.
Project infrastructure will also include facilities at the Marine Terminal Muchik (MTM), a
planned development by Lumina Copper in northern Peru. Here, Candent will have its
own dedicated concentrated receiving, storage, and reclaim facilities but will share
general site services and ship berthing / loadout equipment with Lumina.
All drawings referred to in this section are provided in Appendix F. Site Conditions and
design criteria are included in Appendix D.
Figure 8-1:
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General Arrangement of Project Facilities
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8.1.1
Mine Site Infrastructure

The mine truckshop will be the main services complex on site. The complex will contain
maintenance shops for the mine mobile equipment fleet, warehouse space, first aid, a
change room, dispatch area, lunchroom facilities, and offices for mine operations. It will
also service all light- and medium-duty vehicles used on the site, including personnel
buses and pickup trucks. A truck washdown pad, fuelling station, and ready-line for mine
vehicles will be constructed nearby. A single-lane haul road will connect the truckshop to
the pit area via the primary crusher station.
A mill maintenance shop adjacent to the process plant will service all stationary mill
equipment such as pumps, instruments and motors.
Accommodation facilities will be constructed to house a construction crew of
approximately 1,500 persons in a combination of single, double, and four-person
occupancy rooms. The facilities will be converted to single- and double-occupancy rooms
for the operations staff, expected to be around 600 persons. Facilities will include areas
for a kitchen, dining room, recreation, medical facility, office space for camp
administration, and security for check-in / check-out.
A two-storey main administration building will be constructed adjacent to the camp. The
lower floor will be an open office arrangement and the second floor will have enclosed
offices for senior staff. The building will include areas for reception, training, conferences,
and storage. With adequate planning, it could be built early enough to accommodate the
initial construction management and administration staff.
Access to the plant site will be via a new 42 km single-lane (7 m wide) gravel road
branching off the existing Corral Quemado Road along the Huancabamba Valley. The
alignment follows a new bridge crossing over Ro Huancabamba and then passes
through challenging terrain, rising at a constant grade of 8% until it reaches the ridge top
between the Yerma and Caariaco valleys near the tailings management facility (TMF).
The road then widens to 11 m to accommodate the surface-run tailings and reclaim
pipelines running to and from the plant site. Continuation of the road to the process plant
includes a single high point about 1,200 m away from the plant. This permits any pipeline
drainage required in the event of a power failure, for example, to flow to the existing low
points at each end of the line, eliminating the need for any other emergency dump ponds
along the route
On-site roads will be provided for vehicle access to facilities and remote structures.
General access roads will be two-way and 8 m wide, service roads will be one-way and
5 m wide with pullouts, and mine haul roads will be one-or two-way as required and wide
enough to accommodate the Komatsu 930E or similar haul trucks.
To meet regulatory requirements, blasting agents for mining operations will be stored on
the opposite side of the ridgeline to the north of the site, just off the main access road, a
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safe distance away from occupied or significant structures. Separate sites will be
provided for a bulk emulsion plant, an ammonium nitrate storage area, and a detonator
magazine.
Fresh water for site services will be obtained from a fresh water reservoir constructed as
part of the Ro Caariaco diversion around the waste rock management facility (WRMF).
Fresh water will be used for process make-up water, fire water, and to supply the potable
water treatment plant (PWTP). The reservoir will also provide start-up water for the
process plant until sufficient reclaim water is available in the TMF to furnish continual
supply, estimated to be two months after start-up. Normally, most process water is
derived from thickener overflow, reclaim water pumped from the TMF, and other reclaim
sources. Regular fresh water makeup is required for approximately 5% of total process
flows, where the water has to be of higher quality.
The PWTP will be designed to provide sufficient potable water for the construction
workforce. The water will be pumped to the camp and administration buildings and flow
by gravity to the other site facilities. Both fresh and potable water will be trucked to the
bulk emulsion plant as required.
Fire water will be stored in a combined fire/fresh water tank equipped with a fire pump
module and diesel backup pump to provide fire water to the camp facilities, but the flow to
the plant area will be by gravity flow. A system of fire hydrants and stand pipes will be
installed in strategic locations in and around the buildings. In addition, sprinkler systems
will be installed in the accommodation facilities, administration offices, assay lab, office
areas, and warehouse areas of the shops.
substation for the transformation of power from the transmission voltage level of 220 kV to
the site distribution/utilization level of 25 kV. The anticipated connected load for operation
is 148 MW with an average load of 95 MW and power factor of 95%.
Power will be supplied to the various mine facilities through radial feeders originating at
the main substation and routed on site through cable tray in pipe racks, either installed on
overhead powerlines, direct buried, or in duct banks. Step-down transformers will provide
equipment utilization voltages from the site distribution voltage. All process electrical and
control rooms will be modular units constructed off site with all electrical controls and
instrumentation equipment installed, wired, and completely tested before shipment to site.
Emergency power will be produced by standby diesel generating units sized to provide
power to mine and process equipment and the permanent camp in the event of a utility
power failure. The standby power plant will consist of three gensets and be rated for a
nominal 4.5 MW. In addition, an uninterruptible power supply (UPS) system will provide
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backup power to critical control systems, and emergency battery power packs will supply
backup power to the fire alarm system and emergency egress lighting fixtures.
The site communications system will cover the complete voice, data, fax, Internet/email
and radio communications requirements for the process and camp facilities. The system
will be designed to meet all regulatory requirements needed for operating approvals. The
mine communications system will be independent of the rest of the system.
Diesel fuel will be stored in four 500 m3 tanks, providing more than two weeks of supply
the event of fuel delivery disruption or power failure. The fuel tanks will be installed within
HDPE-lined, bermed enclosures to provide secondary containment for any spillage or
sudden tank failure. The fuel will be used to run the construction / emergency generators
and will be piped to the re-fuelling station near the truckshop.
Solid waste from the plant site will be handled and disposed of in an environmentally
acceptable manner in accordance with legal requirements and best industry practices. As
applicable, waste will either be incinerated, disposed of in a landfill, recycled, or removed
off site to special handling facilities.
A sewage treatment plant (STP), sized for the complete construction workforce, will be
built on site. The plant will be self-contained in an enclosure housing all mechanical and
electrical equipment and will be designed to produce effluent that complies with Peruvian
regulations for effluent quality. Sewage will be collected from the different sources
through a network of pipelines, holding tanks, lift stations, and a pumper truck, where
necessary. Treated effluent will be discharged directly to the environment during
construction and to the TMF during operations.
8.1.2

The port site infrastructure for the project will be at the Marine Terminal Muchik (MTM), a
planned development by Lumina Copper southeast of the town of Eten and the existing
Consorcio Terminales Eten liquid bulk terminal in Northern Peru. Copper concentrate
from the mine will be transported by truck to MTM at a rate of approximately 400,000 t/a.
The loading berth at the port will be designed to accommodate up to 50,000 DWT loaded
Handymax vessels.
This study assumes that the berthing facility, the trestle conveyor leading out to the berth,
and the shiploader will be shared with Lumina Copper. Some service buildings and
utilities throughout the port site, such as fire, process, and potable water supply and
sanitary waste disposal, would also be shared, whereas concentrate receiving, storage,
and reclaim facilities for the Caariaco Norte product would be independently developed
and operated by Candente.
Concentrate from the mine will be delivered to the port by truck, unloaded into a dump
hopper, and sent to a storage building sized to meet expected package sizes for
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concentrate export and the anticipated schedule of vessel arrivals, including an allowance
for vessel delays due poor weather or hurricane conditions en route to the port.
Concentrate reclaimed from the storage pile will be conveyed initially to a sampling
station, then to a transfer tower to the shipping pipe conveyor shared with Lumina, then to
the berth conveyor, which in turn travels along the length of the berth to a towed tripper
that feeds the travelling shiploader.
All conveyor systems will be enclosed in galleries to minimize fugitive emissions of
concentrate dust into the atmosphere.
Power supply for the Candente facilities will be delivered to a substation at the
concentrate storage and handling facility at 4.16 kV from the power auxiliary distribution
system planned by Lumina Copper. The substation will include incoming 4.16 kV
switchgear and a step-down transformer.
As at the mine site, waste handling and disposal will be managed in an environmentally
acceptable manner in accordance with legal requirements.
The marine berth will be constructed 3.2 km from shore at a water depth of -15.0 m, as
required for the design 50,000 DWT Handymax vessel. Dredging to permit berth
construction closer to shore was deemed uneconomical. The design and orientation of
the berth are intended to minimize wave and swell action. A system of spread moorings
will help to prevent ships from colliding with the berth during loading operations and to
reduce loads on the mooring lines.
Vessel operations for export of Candente product will be scheduled in conjunction with
Lumina to avoid berthing conflicts.
8.2
Site Selection and Facility Arrangement

(Drawings 165270-0000-C-1002/3)
At the start of the study, two potential plant sites were reviewed. One site was slightly
north of the mine site, on a relatively level area at a nominal elevation of 2,920 m, and the
other was to the west, on the opposite side of the ridgeline that separates the tailings and
mine site area. The second site required that a tunnel be cut through the ridgeline to
allow ore and waste material to pass via two separate conveyors. Following a trade-off
study that included alternative methods for constructing the tailings dam, it was
determined that the most cost effective option was to keep the site adjacent to the mine
and put the waste rock management facility (WRMF) within the Caariaco valley, as
illustrated in Figure 8-2.
Considering the topographical challenges, the next relatively level area was chosen for
the camp and administration facilities. This area is adjacent to the access road,
approximately 1 km north of the plant site at a nominal elevation of 3,075 m. The
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intervening ridgeline thus serves as a barrier against the noise of the mining and milling
operations (Figure 8-2).
The plant facilities were arranged to maximize use of the available area, as shown in
Figure 8-3. The plant configuration, with the flotation cells positioned from northwest to
southeast, intentionally uses the natural grade for gravity flow from one cell to the next
through the circuit. The truckshop, being downslope of the plant, will be constructed on a
lower bench to minimize cut-and-fill earthworks quantities.
The location of the primary crusher was based on a number of parameters such as its
proximity to the pit to minimize haul distances; its elevation in relation to the COS as
limited by the maximum grade of the COS feed conveyor; and suitable ground adjacent to
the pit.
Site selection for fuel storage and the construction / emergency gensets took into
consideration the available, suitably flat terrain and a position that was amenable for
mining activities and mitigated noise issues for the camp.
The explosives facilities were situated as close as practically possible to the mine in
accordance with industry standards and guidelines for safe distances from significant
structures.
8.3
Site Conditions
8.3.1
Terrain
The project mine site is located in an area of rugged topography with steep hills
separated by narrow, deep valleys containing stream and river channels. No industrial
development exists in this part of Peru, and the region is sparsely populated.
Subsistence farming is the primary occupation of the local residents.
8.3.2
Climate
The property crosses several climatic zones, and at any given time temperatures vary by
up to 10 or more with altitude from the lower forested valleys to the upper grassy ridges.
Annual summer and winter temperatures range between 3C and 20C. The region
receives between 830 mm and 1,700 mm of rain each year, with the wet season
extending from November to March. Periods of precipitation are generally of short
duration, from 1 to 2 hours. The prevailing winds at the mine site are from the
southeast and are generally light to moderate with maximum gusts of 90 km/h. Climatic
conditions are not expected to affect ground-based operations, although
helicopter-supported activities and four-wheel drive roads could be less functional during
the rainy seasons. Therefore, mine operations have been scheduled year-round, 24 h/d,
with no allowance for shutdowns due to weather-related events.
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Figure 8-2:
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Mine Site General Arrangement
Page 8-7

Figure 8-3:
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Plant Site General Arrangement
Page 8-8

Details are provided

(Appendix D).
8.4
Plant Site Buildings
8.4.1
Mine Truckshop
in
the
Site
Conditions
Specification
#165270-C-SP-001
(Drawings 165270-0000-A-1001/1002/1003)
The mine truckshop will be the main services complex on site. It will cover a total ground
area of 6,850 m2, with eave and hook heights of 23 m and 17 m, respectively. The facility
will be organized along a 4 m wide central service aisle with the services spaced on either
side. The complex will contain maintenance facilities for the mine mobile equipment fleet,
warehouse space, first aid, lockers, lunchroom facilities and a machine shop. A change
room and dispatch area for the mine operations crew will be provided on the second floor
and offices on the third floor above one bay of the building. The total office and general
use areas will cover 2,100 m2 over the three floors. Lockers on the ground floor are
intended for the transportation department.
The building will be mostly an open-air structure with a single-skin, metal-clad roof and
some partial single-skin wall cladding extending up high enough to protect the crane from
the elements.
Several bays housing personnel facilities and more-sensitive service equipment will be
fully enclosed. Personnel facilities will be air-conditioned, and all air-conditioned spaces
will be insulated. The warehouse, tire storage, and lube/oil storage areas will be roofed
over and secured with chain link fencing.
The mine truckshop will also be used to service all light- and medium-duty vehicles used
on the site, including personnel buses, pickup trucks, and other vehicles.
The building facilities are described below:
four 15 m x 21 m bays for mine mobile and heavy equipment maintenance, including
three with embedded rails in the floor to allow for tracked vehicles. Two 30/10 tonne
overhead cranes will service these bays.
one 15 m x 21 m bay for servicing light vehicle equipment, serviced by one of the
30/10 tonne overhead cranes
one 15 m x 21 m bay for general welding tasks, serviced by one of the 30/10 tonne
overhead cranes
one 15 m x 21 m bay for tire changes
one 15 m x 21 m bay for vehicle lubrication
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one roofed 15 m x 21 m bay for tire repair, including an adjacent area for air
compressors
one roofed 15 m x 21 m bay adjacent to the lube/oil bay for all bulk lubricant systems,
including storage tanks, pumps, compressors, and high-pressure water pumps
one 15 m x 21 m bay for general fabrication, platework, and other welding tasks,
serviced by one of the 30/10 tonne overhead cranes
one 15 m x 21 m bay equipped with an array of machining and fabrication tools and
modern welding equipment (auto wire feed and spray welding) for machine
component rebuilds, fully enclosed and serviced by its own 10 tonne overhead crane
one 15 m x 21 m bay serving as an electrical shop, suitably equipped to perform
maintenance associated with the mine equipment electrical components such as
wheel motors and dewatering pump motors. This bay will be fully enclosed and
serviced by its own 10 tonne overhead crane.
two 15 m x 21 m bays to provide ancillary spaces such as locker rooms, a lunchroom,
offices, first aid, a tool crib, an electrical room, and a compressor room. A second
floor above will house the mine dry and dispatch facilities. A third floor above will
house offices for mine operations and maintenance personnel. This arrangement will
allow for rapid and easy organization and reporting at the start and end of each shift.
four 15 m x 21 m bays consisting of covered high storage for the main warehouse
one 25 m x 40 m wash pad outside and away from the building (see Section 8.4.2
below for more details).
The superstructure and foundations will be designed for all environmental and operating
loads. The building will be constructed with reinforced concrete foundations and a preengineered and prefabricated steel superstructure delivered to site for installation and
erection. Pre-assembly will include the double-bay overhead cranes and the three-storey
section inside the truckshop. All reinforced concrete works, namely foundations and
suspended concrete on metal deck floors, will be supplied and installed on site.
The foundations will include building columns supported by spread footings and pedestals
with grade beams spanning between pedestals above footings. The footings will typically
be placed at 2 m below grade for strength, stability, and to avoid settlement. Two
longitudinal trenches and sumps will be provided inside the building for surface drainage.
The design incorporates a 5 m wide concrete apron around the perimeter of the building.
The layout of the mine truckshop provides for ease of maintenance operations for a mine
fleet supporting a nominal 95,000 t/d operation. The shop can be expanded by relocating
the lube and tire shop to another pad and adding repair facilities into this space if
necessary.
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Accumulated used oil from the truckshops and associated facilities will be disposed of in
an approved manner, either on or off site. Used air filters, oil filters, hoses, and solvents
that cannot be incinerated will be collected, sorted in the on-site sorting facility, and
disposed of off site according to the Peruvian regulation requirements.
8.4.2
Truck Wash Station

A separate truck wash station will be provided in an open area adjacent to the truckshop
for manual truck washing. The facility will consist of a heavy slab on grade with water
cannons at the sides, and no roof. A water tank and a pump system will be supplied as
part of the package.
The water, oil, and mud mixture resulting from washing will drain into a reclaim
separation/storage system. The reclaim area is divided into two sections, one for the
separated water, which will be recirculated to the wash system. Any oil in the recycled
water will be skimmed off in an oil-water separator prior to re-use. The collected oil will
be disposed of according to Peruvian guidelines. The other section will be fitted with a
sloped slab to allow loader/bobcat access to clean out the settled mud and soil. The
collected muck will be disposed of appropriately, either on site or off site as required. All
concrete slabs, walls, and foundations will be placed on a minimum of 2 m compacted
structural fill to prevent foundation settlement and concrete cracking.
8.4.3
Mill Maintenance Shop

(Drawings 165270-0000-A-1004/1005)
The mill maintenance shop will service all stationary mill equipment such as pumps,
instruments, and motors. Located southwest of the concentrator building, the shop will
cover a total ground area of 2,000 m2 organized around open millwright, welding, and
machine shops with an enclosed electrical/instrumentation shop at one end and an
enclosed warehouse at the other. The building will contain the following facilities:
electrical and instrumentation shops
machine and millwright shops
welding shop
tool crib and warehouse
space allowed for a rubber repair shop.
The building will be a mostly open-air structure with a single-skin, metal-clad roof and
some partial single-skin wall cladding higher up to protect the crane from the rains. A
10 tonne overhead crane will be provided in the welding area and a 7.5 tonne overhead
crane in the electrical shop. The electrical and instrumentation shops and the warehouse,
which will house the more-sensitive service equipment, will be fully enclosed. The
warehouse area will include a modular 3 m x 3 m office, and the open shop area will
include two offices with washrooms in a 12 m x 3 m modular unit. This section of the
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warehouse area will be enclosed and climate-controlled for the storage of sensitive
electronic equipment spares.
The shop structure and foundations will be designed for all environmental and operating
loads. The building will be constructed with reinforced concrete foundations and a preengineered and prefabricated steel structure.
8.4.4
Blasting Agent Facilities

(Drawing 165270-0000-C-1003)
8.4.4.1
Location
The location of the blasting agent facilities is halfway between the TMF and the camp
area, south of the main access road, as shown in Figure 8-2. The three sites with
necessary utilities will be provided to a licensed blasting contractor to establish and
manage a bulk emulsion plant, an ammonium nitrate storage facility, and a detonator
storage magazine. The contractor will also supply packaged explosives, initiation
systems, cast primers, and accessories. Each site will be designed with increased
security and in accordance with industry standards and guidelines for safe distances of
explosives from significant structures. The terrain also provides a natural barrier between
the blasting facilities and the mine and camp infrastructure. The location, just off the main
access road, is convenient for both the delivery of ammonium nitrate and the transport of
explosives to the mine site.
8.4.4.2
Bulk Emulsion Plant

The bulk emulsion manufacturing plant will be a continuous-process facility supplied,
installed, and operated by a manufacturer experienced in the production of blasting
agents. The plant will be installed on a graded gravel pad about 70 m x 110 m in size,
fenced and gated for security. The blasting contractor will produce and transport the bulk
emulsion and ANFO (ammonium-nitrate fuel-oil) mixture to the mine drill holes in bulkblend trucks.
The plant will consist of the following structures:
emulsion manufacturing module
ammonium nitrate storage bins
workshop/office building and electrical room
security shed
truck storage and wash bay complete with wash-down water treatment system
fuel oil storage
fresh water tank and septic holding tank.
Candente will provide the following facilities to the blasting contractor:
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power
Internet and communications connections
fresh water delivered by tanker truck
sewage removal from a septic tank to the STP.
Wash water from the wash-down bay will be collected in a large sump where solids will
settle out before the water is recirculated to the wash system. Any oil in the recycled
water will be skimmed off in an oil/water separator prior to re-use. The settled solids will
be mucked out regularly and disposed of appropriately either on site or off site as
required.
8.4.4.3
Detonator Magazine
A secure fenced detonator magazine will be provided for the storage of packaged
detonators, primers, and priming accessories. These materials will be stored in an
explosives-certified container supported on concrete sleepers laid on a gravel surface.
8.4.4.4
Ammonium Nitrate Storage Structure

Ammonium nitrate (AN) prills will be delivered to site in 1 tonne plastic-lined tote bags
packed in standard shipping containers and stored in a secure, fenced area about 30 m x
35 m, sized to store approximately 800 tonnes in double-stacked bags. This is equivalent
to about 10 days supply for the 95,000 t/d operation.
8.5
Camp and Administration Area

(Drawing 165270-0000-C-1007)
The camp and administration area is shown in Figure 8-4. The main facilities are the
sleeping dormitories, administration offices, and construction/standby power plant.
Supporting infrastructure includes an incinerator, water storage tanks, potable water
treatment plant (PWTP), and sewage treatment plant (STP). The site development plans
will also incorporate a helipad and control centre for operational requirements and
emergency medical evacuations.
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Figure 8-4:
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Layout of Camp and Administration Area
Page 8-14

8.5.1
Personnel Accommodations
The camp will be constructed to initially house the approximately 1,500-person
construction workforce and will then be converted to permanent housing for the
operations staff of 600 persons. To save on space and overall construction costs, the
dormitory units will be two storeys high and will consist of prefabricated modules shipped
to site for assembly, thereby minimizing on-site labour requirements.
The camps will consist of the following:
dormitories with ablution facilities, toilets, and self-serve laundry
food preparation and serving facilities
medical clinic
recreation facilities and small commissary.
The construction camp will also have a check-in and administration office module.
Dormitory rooms during construction will accommodate:
four people per room with a common washcar for trades and labourers. The intention
is to have two of the staff on opposite shifts so that only two people are sleeping in a
room at any one time.
two people per room, each on opposite shifts, with shared en suite for skilled trades
and supervisors
one person per room with private en suite for superintendents and management.
For operations, beds will be removed from each of the rooms to provide the following
sleeping arrangements:
two people per room, each on opposite shifts, with a common washcar for trades and
labourers
one person per room with shared en suite for skilled trades and supervisors
one person per room with private en suite for superintendents and management.
Dining rooms will be sized for breakfast and dinner sittings of up to 750 workers at a time.
Facilities will also be available to prepare brown-bag lunches that can be taken to the
work areas. Kitchens will be sized accordingly and will have sufficient cooler and freezer
storage.
The recreation facilities will include a fitness area with gym equipment, two TV viewing
areas with seating for 50, and computer stations. The superintendent and management
dorms will be wired to allow connection of personal TVs and computers.
All camps will be pre-engineered and prefabricated modular-type structures erected over
reinforced concrete foundations. The structures and foundations will be designed for all
environmental and operating loads, and for the foundation loads provided by the module
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vendor. The structural units will include all interior furnishings.

consist of concrete footings and pedestals.
The foundations will
The camp will have a medical clinic equipped to treat general injuries and sicknesses, to
stabilize serious cases for medivac to off-site health facilities, and to dispense drugs and
medications as necessary. The clinic will have six beds, three of which will be in single
rooms with adjoining washrooms. The facilities will include an emergency operating
room, recovery room, x-ray room, two consulting/examination rooms, pharmacist office,
doctors office, nurses office, nursing station, waiting room, and related support services.
An ambulance garage and helipad for medivac will be stationed adjacent to the clinic.
Separate entrances will be provided for walk-in patients and emergency cases.
The clinic will be constructed of modularized prefabricated units, complete with all
equipment and furniture, and installed near the camp facility. A standby diesel generator
will provide electricity during emergencies.
8.5.2
Main Administration Building

(Drawing 165270-0000-A-1006/1007)
The main administration building will be constructed on a pad adjacent to the camp. The
building will be a two-storey, pre-engineered steel structure. With adequate planning, the
facility will be built early in the construction phase and used for construction
administration. The lower floor will generally be an open office arrangement and the
second floor will have more enclosed offices for senior staff. The building will include a
reception area, training room, conference room, washrooms, photocopy, and storage
rooms. The building will be constructed on reinforced concrete foundations with elevated
concrete slab on a metal deck floor.
8.6
Roads
8.6.1
Access Road to Site

(Drawings 165270-0000-C-2001 to -2004)
Road access to the site will be via Corral Quemado Road, which runs along the
Huancabamba Valley. The main access road to the site will be constructed off the Corral
Quemado Road from a point roughly 2 km east of the Yerma Valley. The road will be
designed to meet Peruvian guidelines, as presented in the Peruvian road design manual
Manual De Diseo Geometrico Para Carreteras, and will be suitable for the transport of
concentrate, freight, and equipment, including all oversized equipment needed for
construction and operation of the mine/plant facilities. The entrance to the road will be
controlled, thereby restricting the road to authorized vehicles only. All users will need
two-way radios, as the road is planned to be radio-controlled to increase safety and
usability.
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The access road will be roughly 42 km long, single-lane, with an overall travel width of
7 m, including shoulders, and road pullouts every 1 km. A bridge will be required to cross
Ro Huancabamba. Once on the south side of the Huancabamba Valley, the road will
follow the terrain at a fairly constant gradient of 8% for about 24 km, then start to level out
as it reaches the top of the ridge line between the Yerma and Caariaco valleys at
elevation 2,900 m. From here it will continue south along the ridge line for another 5 km
toward the tailings management facility (TMF). At the TMF, the road will turn east toward
the mine site for another 13 km. This last stretch of road will be 4 m wider to
accommodate the two tailings and reclaim pipelines. The road will ascend at an average
gradient of about 1.5% to a high point at elevation 2,990 m approximately 800 m from the
plant site, then descend at a fairly constant down-gradient of 8% to the plant site at
elevation 2,930 m.
Due to the regional topography, the route navigates through challenging terrain for much
of its length and is mostly in cut. Fills were kept to a minimum because the terrain is
generally steeper than the natural angle of repose of most fill materials and therefore
cannot be placed economically. It is planned to use the excess cut material to construct
the starter embankment of the TMF.
At present, the only bridge required for the main access road is the one over Ro
Huancabamba; however, some culvert crossings will be needed. Two of the larger
crossings will consist of three parallel culverts, 3 m in diameter. Smaller diameter culverts
will be installed as required. All culverts will be of appropriate diameter to accommodate
design flows.
The culverts will require inlet and outlet structures and armouring to protect the road
structure during storms and floods. If necessary, the culverts will be designed with riprap, gabions, or other erosion/sediment control measures. Check-dams and coarse bar
screens will be installed upstream of the inlets to slow stream velocities and prevent
blockages; routine maintenance will be required to keep the culverts free of debris.
Roadside drainage structures will be incorporated into the road structure.
The road route will be reviewed and optimized once more accurate contour data are
obtained during the feasibility study. Following this phase, a road reconnaissance field
trip will be recommended along the proposed route, with a geotechnical site investigation
to follow to confirm the route.
8.6.2
On-Site Roads
The mine site will need a network of general vehicle access roads around facilities,
service roads to remote structures, and haul roads. These will often be an extension of
yard areas and not always delineated separately. The general access roads will be twoway and 8 m wide, the service roads will be one-way and 5 m wide with pullouts, and the
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haul roads will be one-way or two-way depending on requirements and have a travel
width that will accommodate the Kamatsu 930E or similar haul truck.
The roads will have the following safety features:
rock safety berms for haul roads
mandatory and advisory traffic signs
speed limit signs
radio communications systems between trucks
pullouts every kilometre on one-way roads.
Further details of the site roads are provided in the Civil Design Criteria (Appendix D).
8.6.3
Existing Roads
The site is currently accessible via an existing road from Chiclayo that generally parallels
the Pan-American Highway, 700 km north of Lima. The project site is a 6-hour drive
northeast of Chiclayo. The routing includes a combination of paved and gravel roads for
approximately 150 km, passing through numerous small villages. Conditions worsen to a
rough 4x4 only road as it nears the site. This access can be particularly difficult during
heavy rains because of the poor drainage and low-quality road conditions. There is no
landing strip on the property.
The road is currently unsuitable for heavy trucks and therefore cannot be used for
construction access. Construction traffic will need to wait until the new access road
connecting the site to the Corral Quemado Road is completed.
8.7
Water Supply and Distribution
8.7.1
Fresh Water
Raw water for potable, process make-up and other uses at the mine site will be obtained
from a freshwater reservoir filled by surface water runoff and rainwater. The reservoir will
be established upstream of the mine waste rock management facility (WRMF), behind a
lined earth dam. Minimum elevation of the water level in the reservoir is estimated to be
2,775 m. The water will be pumped from a barge in the reservoir to the fresh/fire gravity
head tank at elevation 3,000 m through a carbon steel pipeline that will transition to HDPE
once the pressure head drops to an acceptable level. The pipe will be surface-laid along
the side of the service road and buried as necessary for protection in higher traffic areas.
The barge in the reservoir will be equipped with four vertical turbine pumps (three
operating, one standby) sized to deliver up to 375 m/3 of flow. The fresh/fire water tank
will be sized for 2 hours of fire reserve (800 m3) and 4 hours of process reserve
(1,400 m3).
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8.7.2
Process Water
Process water for the plant will come from four sources: recycle water from the copper
concentrate and bulk thickeners; pit dewatering water; seepage return water from the
WRMF; and reclaim water pumped from the TMF. Thickener overflow and TMF reclaim
are the primary sources. Water from the pit and seepage from the WRMF will be
unreliable sources of process water because quantities depend on rainfall. Fresh water
makeup is required for about 5% of total process flows, where the water has to be of
higher quality (see section 6, Processing, for details on the recycle water systems).
8.7.2.1
Reclaim Water System

The TMF reclaim barge will be designed to provide a flow rate 3,380 m3/h (allowing for a
15% design factor) against a total dynamic head of 275 m based on a 95,000 t/d
operation. Reclaim water from the tailings pond will be pumped from a pump barge
through a 12,200 m long pipeline back to the process plant. The reclaim water barge will
be supplied with four 20" vertical turbine pumps, including one installed spare, each with
1,750 hp motors. As the elevation the TMF increases over time, the static head will
decrease accordingly, allowing pump stages to be removed and power demand to be
reduced.
The reclaim water pipeline will be laid alongside the tailings pipeline back to the plant site
and terminating at the process water tanks. The first 7,900 m section will be 36" diameter
carbon steel pipe and the rest will be 42" diameter HDPE pipe. The carbon steel pipe is
needed where internal line pressures exceed those recommended for HDPE pipe.
It has been determined that the TMF will not contain enough water for the reclaim system
during the initial two-month commissioning and start-up phase of the process plant.
Therefore, water from the freshwater reservoir will be used to supply the needed start-up
water of roughly 4.2 Mm3 (two months supply). Because the freshwater pumping system
cannot deliver the required flow, it is planned to install the reclaim pump barges into the
freshwater reservoir temporarily and relocate them after the two-month start-up window.
To minimize downtime during the relocation of the barges to the TMF, all reclaim piping
and support infrastructure will be pre-installed with only the barges needing to be
relocated and connected before operations can be restarted.
8.7.2.2
Waste Rock Seepage Recovery System

Runoff and seepage water that come into contact with the waste rock stored in the WRMF
will be collected in a downstream impoundment. The impoundment will be sized to store
roughly 2.5 Mm3 of contact water during the wet season to lower the pumping
requirements to a reasonable flow rate. Runoff rates will fluctuate throughout the year,
but to meet storm runoff criteria, a 1,040 m3/h pump barge will need to be installed to
pump the water to the process tank at elevation 2,965 m. Because of the lower elevation
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of the water level in the impoundment, at 2,445 m, static head plus fictional losses will
equate to a total pressure head of 620 m. To meet this pressure demand, a booster
station will be required about halfway up the 5,000 m long pipeline to pump the water to
the process water tanks.
The barge and booster pump modules will be sized equally with similar components to
simplify operations and maintenance requirements. Each module will be supplied with
four 14" vertical turbine pumps, including one installed spare, each with 500 hp motors.
The pipeline to the process tanks will be approximately 5,000 m of 16" diameter carbon
steel pipe to accommodate the high pressures in the line. The pipeline will run along a
service road that runs between the plant site and the impoundment. With the ultimate
WRMF blocking easy access to the impoundment, it was deemed practical to incorporate
the service road and pipeline into the development of the WRMF. As the WRMF expands
from the preproduction pile, the pipeline and road will be moved and incorporated into the
face of the pile as it advances north.
8.7.2.3
Pit Dewatering System

A pit dewatering system will be maintained and operated throughout the life of the mine to
collect contact water for either reuse in the process during operations or, if deemed
necessary, for treatment before discharge once mining is completed.
The pit
development will incorporate ditches and drainage channels that will direct runoff water to
central collection sumps. It is currently anticipated that one central sump will be
established on the north side of the pit during the initial stages of pit development, with a
second one installed in the southern part of the pit as it develops in later years. The
sumps will be sized to contain the 100-year return period, 24-hour duration rainfall event,
with a barge-mounted pumping system capable of pumping out the water over a 14-day
period. The barge pumping systems and 18" diameter pipelines running out of the pit will
be sized to handle a maximum capacity of 780 m3/h each. From the pit rim to the process
water tank, the pipeline will be increased to 24" diameter to take the combined flow of
1,560 m3/h. Each barge will be supplied with four 14" vertical turbine pumps, including
one installed spare, each with 1,000 hp motors.
8.7.3
Potable Water
Potable water will be produced from the raw water stored in the fresh/fire water tank.
Water will be pumped to a PWTP located on the camp site pad capable of producing
potable water for the construction workforce of 1,500 and later for the smaller operations
workforce of approximately 650.
The plant will be a self-contained system complete with piping, valving, electrical
components, and instrumentation inside a steel container. The container will be mounted
on structural steel skids to minimize on-site installation requirements. The plant will be
provided with ventilation units suitable for summer temperatures on site.
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Physical contamination will be removed by efficient filtering and pre-treatment. The

minimum treatment for surface water will be chemically assisted rapid-sand filtration and
disinfection.
This will include chemical mixing, coagulation, flocculation, solids
separation, and filtration. The chlorinator will have the capacity to dose enough chlorine
to overcome the demand and to maintain the required concentration of free or combined
chlorine.
The treated potable water will be stored in an adjacent steel storage tank with a storage
volume based on the estimated 24-hour demand for the construction workforce of 1,500
people. This will allow for approximately two days of storage for the operations workforce
of 650. Potable water storage requirements at the mine/plant site are summarized in
Table 8-1.
Table 8-1:
Potable Water Requirements at Mine Site
Design Parameter
Unit
Value
people
people
L/person/day
1,500
600
200
during construction
L/day
300,000
during operations
L/day
120,000
Construction and Operations

Maximum construction camp workforce
Operations camp workforce
Water flow rate requirement
Average water flow:
The potable water will be pumped and distributed through a network of underground
pipes to the camp and administration buildings. Given the camp pad elevation of
3,080 m, potable water can be supplied to the rest of the plant site by gravity flow, without
pumping. Distribution piping will branch off the main feed lines to provide potable water to
the various facilities at the plant site. The pipelines will be designed for:
internal pressures
external loads
surge pressures caused by normal valve operations or emergency valve closures.
8.7.4
Fire Water
Fire protection water for the facilities will be stored in the lower section of the freshwater
tank at elevation 3,000 m. This elevation permits fire water to flow to the process plant
area by gravity, but a fire pump module will be provided to supply fire water to the camp
area. The fire pump module will consist of an electric pump, a diesel backup pump, and a
jockey pump to maintain pressure in the fire piping distribution network. The fire water
storage and pipe distribution network are designed to meet a fire demand of 110 L/s for
two hours.
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All firewater piping will have a pressure rating of 1,240 kPa (180 psi) or higher to meet
design guidelines. Fire loops will be provided around all the main facilities to supply
hydrants installed at minimum 100 m spacing. Steel protection ground posts will be
erected around each hydrant. In addition, sprinkler systems will be installed in the
accommodation facilities, administration offices, assay lab, office areas, and warehouse
areas of the shops. A fire line will also be extended to one hydrant in the primary crusher
building area.
8.8
Power Supply and Distribution
8.8.1
Power Supply
substation consisting of incoming circuit breakers, disconnect switches, power
transformers, switchgear, and protective equipment for the transformation of power from
the transmission voltage level of 220 kV to the site distribution/utilization level of 25 kV.
Emergency power will be produced by a standby power generating station sized to
provide power to essential components of the mine and process equipment and the
permanent camp in the event of a utility power failure.
The anticipated electrical load for the Caariaco Norte site is as follows:
Connected load ..................................... 148 MW
Average load ......................................... 95 MW
Power factor .......................................... 95%
8.8.2
Main Substation
The main substation will be adjacent to the mill, where the largest loads are located, to
minimize cabling costs and losses. The substation will include the following equipment:
incoming dead-end structure
structures and bus system
metering transformers
main incoming circuit breaker
high-voltage isolation switches
two power transformers (see below)
substation electrical room to house the metering, protective relaying, and main site
distribution switchgear.
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The transformer secondaries will be connected to a primary distribution centre (PDC) to

distribute power to the site. Feeders from the substation will be run in cable tray or on
powerlines to the area loads.
8.8.3
Main Power Transformers

The main substation will consist of two power transformers rated as follows:
220 kV25 kV
60/80/100 MVA
ONAN/ONAF/ONAF
3 phase, 60 Hz
automatic on-load tap-changer and grounding resistors.
The self-cooled and forced-air-cooled ratings are continuous. Each transformer is
capable of meeting the total load requirements of the mine in the event of a single
transformer outage.
8.8.4
Site Power Distribution
8.8.4.1
General
The mine facilities will be supplied with power through radial feeders originating at the
main substation and routed on site either using cable tray in pipe racks, installed on
overhead powerlines, direct buried or in duct banks. The site distribution voltage will be
25 kV, 3 phase, 60 Hz.
Step-down transformers will provide equipment utilization voltages from the site
distribution voltage.
The electrical distribution equipment will consist of switchgear, transformers, starters, and
feeder breakers for the motor and non-motor loads in common line-ups. Lighting and
small power applications will be fed from transformers and power panel in the electrical
rooms, as required.
Cabling will use armoured, jacketed copper conductors with ground, shielded cables in
heavy duty aluminum ladder tray systems, and overhead pole lines. Transformers will be
located in the process area electrical rooms and will be dry type.
8.8.4.2
Open Pit Mine Power Supply

The primary power supply to the mine will be two 25 kV, feeds from the PDC switchgear
in the main substation. Ultimately, the pit will have a pole line around the pit with taps
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down to portable substations to power the electric shovels and drills. Additional provision
is included for pit dewatering.
8.8.4.3
Process Plant and Ancillary Services Power Supply

The process plant distribution voltage will be 25 kV obtained from the PDC switchgear in
the main substation. The switchgear will feed the following areas:
grinding area, including SAG mill, ball mill and all other grinding loads with cable in
tray
crushing area loads overhead pole line
flotation area cable in tray
regrind and reagents cable in tray
roasting plant cable in tray
tailings, reclaim water, fresh water, and ancillary services overhead pole lines.
Plant equipment utilization voltages will be as summarized in Table 8-2.
Table 8-2:
Plant Equipment Utilization Voltages
Plant Equipment
Voltages
Grinding Mill Motors

All drives over 200 hp
All drives 0.5 hp 200 hp
Motors with VFD up to 500 hp
25 kV 3 phase high-resistance grounded

4.16 kV 3 phase high-resistance grounded
480 V 3 phase high-resistance grounded
480 V 3 phase high-resistance ground (maximum hp rating to be
determined at time of order)
4.16 kV 3 phase high-resistance grounded
120 V 1 phase solidly grounded
220 V 1 phase or 208 V 3 phase solidly grounded
277 V / 480 V 1 or 3 phase solidly grounded
Motors with VFD over 500 hp

Small drives below 0.5 hp
Electrical Heaters over 1.8 kW
Electrical Heaters up to 1.8 kW
Lighting
Small power & instrumentation
Heat tracing: Short lengths
Long lengths
Welding Receptacles
8.8.5
Electrical and Control Rooms

To minimize field labour costs, the pre-assembled electrical rooms will be distributed
around the site and situated as close as possible to the major electrical loads.
All process electrical and control rooms will be modular units assembled off site. The
rooms will be installed outdoors on elevated steel structures adjacent to process areas or
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indoors on elevated structures. The rooms will be self-supporting and designed for road
shipment, lifting, and transport to site. All electrical controls and instrumentation
equipment will be installed, wired, and completely tested before shipment.
The rooms will be built to meet a one-hour fire rating. All openings will be sealed and
made water- and dust-tight by using approved fire-retardant materials.
All electrical rooms will have two means of egress at opposite ends of the room. Doors to
the rooms will be supplied with panic exit type hardware. Each room will also have an
equipment door sized to permit the largest piece of equipment to be installed/removed
without removing the door from its hinges. The floors of the rooms will be elevated a
minimum of 20 cm (8 inches) above the adjacent process concrete floors. No liquid or
fluid piping will be routed through electrical rooms.
The electrical rooms and control rooms will be pressurized, air-conditioned, and designed
in accordance with occupancy regulations.
Non-process buildings will incorporate electrical rooms as required and shown on the
layouts as integral parts of the building.
8.8.6
Lighting
Lighting at the plant site will be task-oriented. Lighting fixtures will be selected for the
various lighting tasks, as shown in Table 8-3.
Emergency lighting will be provided to meet the requirements of the applicable codes and
standards.
Table 8-3:
8.8.7
Selection of Lighting Fixtures
Task
Lighting Fixture
High bay
Low bay
Electrical rooms
Control rooms and offices
Outdoor operations areas
metal halide sodium vapour

metal halide sodium vapour
rapid start-cool white fluorescent
rapid start-warm white fluorescent
High-pressure sodium vapour
Emergency Standby Power

Diesel generators will provide emergency power to selected mine and process loads and
the permanent camp complex. These units will start automatically on power failure and
will be equipped with automatic transfer switches to supply all the essential services at
the plant site, including emergency lighting, rake drives, agitators, and selected pumps for
system protection.
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The standby power plant will consist of three gensets and be rated for a nominal 4.5 MW.
Control of the emergency power loads will be through the process control system. This
system will stagger starts, automatically start and stop loads to keep process tanks
properly agitated, and run equipment such as lubrication pumps on the large mills and
mine requirements.
An uninterruptible power supply (UPS) system will provide backup power to critical control
systems. The UPS equipment will be sized to permit operations to shut down and back
up the computer and control systems to facilitate start-up on restoration of normal (utility)
power.
Emergency battery power packs will supply backup power to the fire alarm system and
emergency egress lighting fixtures.
8.9
Fuel Storage and Distribution
8.9.1
Diesel Fuel Tank Farm

The main diesel fuel storage tanks will be installed by the standby generators, just south
of the accommodation area. Fuel will be stored in single-walled, above-ground tanks
within HDPE-lined, bermed enclosures to provide secondary containment in the event of
the sudden tank failure. Spillage resulting from a broken valve or hose will also be
contained within the secondary containment.
The fuel farm will consist of four diesel fuel tanks, each with a storage capacity 500 m3.
The total 2 ML will provide more than two weeks supply for the mine and mill
requirements based on a daily consumption rate of 125,000 L/d. The number of tanks
required could potentially be reduced in future phases of the project when it is planned to
provide two access routes into the site. Diesel fuel will be delivered regularly by tanker
truck up the main access road. From the storage tank, the diesel fuel will be pumped
through a buried pipeline to a refuelling station nearer the mining operation. The
refuelling station will be used to refuel mine haul trucks that have been repaired/serviced
in the truckshop and to fill the fuel tanker, which will refuel the large haul trucks in the pit.
The dispensing station will also accommodate the smaller vehicles and equipment on
site.
As noted, the secondary containments will be lined with an impermeable membrane and
sized for 110% of the largest tank capacity plus an allowance for rainfall. The volume of
freeboard will be sufficient to contain the rainfall from a 25-year, 24-hour storm event. In
addition, the berm will be far enough from the tank wall that a jet of fuel squirting from a
pinhole leak will be contained within the berm perimeter.
All small fuel storage containers, such as 200 L drums used to store jet fuel, gasoline, or
waste oil, will be installed on a stable storage rack, and again placed within an
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impermeable containment capable of capturing at least 110% of the total capacity of the
largest storage container.
As rainwater collects in containment facilities, it will be drained via a manually controlled
drain valve and line installed through the dike wall. The valve will normally be locked to
prevent unauthorized discharges. The valve will remain closed and locked at all times
until the diked area collects enough rainwater to require draining. If an oil-sheen or any
accumulated oil is observed, it will be removed from the water by an oil-water separator
before draining the water. Collected pollutants will be disposed of in accordance with
environmental regulations.
The fuel dispensing facility will consist of a fuel module and a concrete pad for secondary
containment to avoid leakage of fuel to the environment. Rainwater collected in the
refuelling area will be cleaned by an oil-water separator. No oil or fuel will be allowed to
enter the environment.
8.9.2
Lubricating Oils and Hydraulic Fluids

Lubricating oils, hydraulic fluids, and other potentially hazardous substances will be
stored in large on-site storage tanks. Mobile or portable oil storage tanks, drums, and
other small containers will be stored in secondary containments capable of holding the
contents of the largest container. Empty containers will be returned to suppliers for
re-use. The storage requirements for these substances are shown in Table 8-4.
Table 8-4:
Storage Requirements for Potentially Hazardous Oils and Fluids
Substance
Storage
Hydraulic fluid, motor oil, transmission fluid, and

waste oil
Single-walled, above-ground tank in a secondary

containment
Heavy-duty grease, gear compound, drive-train

fluid, and grease compound
Drums
Paint and solvents
Cans in approved / bunded enclosure
Acetylene/Oxygen
Tanks in approved enclosure, marked / protected
Propane
Tanks in approved enclosure, marked / protected
8.10
Waste Handling and Disposal
8.10.1
Waste Disposal Facilities

Waste from operations at both the mine/plant site and the port site will include:
hazardous waste, including waste chemicals and petroleum products
dry sludge cake from sewage treatment plants
waste from building and equipment maintenance
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domestic waste
inert waste from construction sites
biological (hazardous) waste from medical facilities.
Wastes will be disposed of in an environmentally acceptable manner in accordance with
legal requirements to prevent their direct or indirect discharge to any watercourse or
groundwater. Waste can be classified as:
hazardous waste that must be stored before being shipped off site
waste that can be incinerated
solid waste that will be sorted, some of which will be recycled
non-hazardous solid waste that can be placed in the landfill.
Hazardous waste will be stored temporarily at the mine/plant site in drums protected by
secondary containments before being sent off site for disposal at special handling
facilities.
8.10.2
Incinerator
An incinerator will be utilized on site to burn select material during the construction and
operations phases of the project. The waste burned in the incinerator will consist of:
camp waste and the organic component of garbage
sewage sludge cake
waste oil
construction waste.
The waste will not be homogenous, and its characteristics may vary considerably;
characteristics such as moisture, density, and heat content have been assumed based on
industry standards. Inappropriate materials, including reactive/explosive chemicals and
items containing heavy metals, will not be burned in the incinerator. To avoid the need for
pre-sorting at the incinerator, waste will be sorted at source to keep inappropriate
materials out of the waste feed. Estimated waste quantities are shown in Table 8-5.
The incinerator will have the following main components:
primary and secondary combustion chambers
fuel burners, day tanks, and piping packages
stack and air pollution control system
waste heat boiler system
continuous-emissions monitoring system
wet-ash conveyor
main control panel.
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Table 8-5:
Waste Quantities for Incineration
Design Parameter
Unit
Value
People
1,500
People
600
Project workforce:
Waste generation rates:

food waste and food packaging
kg/person/day
dewatered sewage sludge
kg/person/day
0.75
general waste
kg/person/day
kg/d
3,000
kg/d
1,125
general waste
kg/d
4,500
kg/d
1,200
kg/d
450
general waste
kg/d
1,800
Waste amounts during construction:
Waste amounts during operations:
Non-hazardous combustible solid wastes will be burned regularly in the incinerator at the
mine site. The incinerator will operate on diesel and waste oil. The incinerator will be
designed as a continuous-feeding type unit, sized to accommodate the peak waste flow
from the construction workforce and to operate daily over 24 hours. During operations,
when waste generation will decrease because of the smaller operations workforce, daily
burning time will be reduced. In both cases, the hourly waste burning rate is the same,
and the same scrubber can be used regardless of the daily waste generation rate.
The incinerator will be constructed from steel plate, suitably reinforced with structural
steel members. They will be provided as self-contained systems, complete with piping,
valving, electrical components, and instrumentation. In addition, they will be mounted on
structural steel skids to minimize on-site installation. Units will be factory assembled in
packages but knocked down for transport.
Each incinerator will be based on a concrete slab within a fenced, gravelled area. The
fencing will be 2 m high diamond mesh, partially buried to prevent animal burrowing.
Sheet metal roofing will cover the complete incinerator enclosure, and sheet metal will be
attached to the upper 2 m section of the walls. The roof area has been designed to
provide coverage for personnel and machines during operations and maintenance, and
for two days storage of waste.
The supplementary waste-oil burner, complete with an oil pump and blower, will burn
waste oil at about 3 to 5 USgal/h.
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Each incinerator will be complete with a stack to ensure that emission gases are vented
efficiently to the atmosphere. The stack will be free-standing, made of steel, and
refractory-lined where required.
What remains in the primary combustion chamber after burning is sterile,
non-combustible material, such as metals and glass, and a non-toxic, non-leaching ash
that is safe for disposal on site. During construction, ash from the incinerator at the mine
site will be buried in the waste dumps. During mine operations, ash from the mine site
will be buried in an active mine waste dump.
8.10.3
Solid Waste Handing

Solid non-hazardous waste will be managed in an environmentally responsible manner,
promoting material recycling, coupled with a policy of awareness to reduce waste at the
point of consumption. Non-hazardous material will be recycled if possible, buried if
biodegradable, and burned in the incinerator if not suitable for burial. Hazardous waste
will be segregated and transported according to international (Transport of Dangerous
Goods) conventions to suitable disposal facilities in Peru or other countries.
8.10.4
Waste Recycling
Wastes will be recycled where practicable to reduce landfill requirements. Waste
materials such as tires and conveyor belting will be shipped off site for recycling.
Materials that offer recycling opportunities will be stored in the fenced solid waste sorting
facility at the mine site before being removed off site to a recycling facility. Steel bins and
dumpsters will be provided around each major facility at the mine and port sites for
collecting recyclable waste. These containers will be transported regularly to the
recycling facility, where the contents will be sorted and stored.
Hazardous and toxic waste, including lead-acid batteries, fluorescent lamp ballasts, and
chemicals, will be stored temporarily in sealed steel or plastic drums in a waste transfer
area and then be shipped off site for disposal or recycling.
Waste materials will be stored in suitable containers at points of generation. The
containers will be large enough to hold all waste materials generated between collection
periods. Animal-proof refuse containers, which will be serviced regularly, will be provided
at buildings for domestic waste. Special containers will be constructed for spilled liquids
and to prevent access by insects and wildlife. Storage areas and containers will be kept
tidy and will be covered to prevent wastes from being dispersed by water, wind, or
animals.
Waste from the source points will be sorted into designated containers. Storage
containers will include steel drums, plastic and steel bins, boxes, and dumpsters. Wastes
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from these containers will be transferred to appropriate bags or containers for

transportation off site.
Where non-hazardous wastes cannot be recycled or incinerated, they will be disposed of
in a designated landfill that will be managed in accordance with general industry
standards.
8.10.5
Sewage Management
8.10.5.1
Sewage Treatment Plant

A sewage treatment plant will be provided at the mine site. The plant will be modular and
sized to treat the larger construction workforce. For operations, the plant will be reduced
in size for the smaller workforce by removing surplus tanks and equipment. The sewage
plant equipment will be supplied in self-contained units within building enclosures that
house all mechanical and electrical equipment. The plants will also include ventilation,
lighting, and cooling systems.
Although proprietary methods may differ, sewage treatment generally consists of the
following processes:
screening
grit removal
primary treatment (sedimentation)
secondary treatment (biological)
final settlement
tertiary treatment (filtration)
disinfection
sludge dewatering.
The sewage treatment plants will be designed to produce effluent complying with the
requirements of the Peruvian regulations for effluent quality.
Sources of influent to the sewage treatment plant will include:
black water from toilets and urinals
grey water from hand basins in dormitories and washrooms
grey water from showers
grey water from laundries
grey water and food waste from kitchen sinks.
The estimated volumes of sewage to be treated at the mine site are shown in Table 8-6.
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Table 8-6:
Sewage Volumes to be Treated
Design Parameter
Unit
Value
people
people
L/ person/day
1,500
600
200
L/d
300,000
L/d
h
120,000
10
1.5
Mine/Plant Site
Sewage flow rate
Average sewage flow:
during construction
during operations
Peaking factor (peak flow/average flow)
Peak duration
8.10.5.2
Sewage Collection System

The sewage treatment plant (STP) will be located downhill from the construction and
permanent camps, as shown in Figure 8-4. Sewage from the camp will flow by gravity
through buried PVC pipes to the STP. Sewage from the plant and truckshop will be
collected in holding tanks and pumped by a grinder pump through buried HDPE force
mains to the STP for treatment.
Toilets in outlying sites such as the primary crusher or explosives mixing plant will be
equipped with approved closed holding tanks that will be collected in sewage tank trucks
and delivered to the STP.
During operations, the mine site sewage effluent will be pumped through an HDPE force
main to the tailings pumpbox. During construction, the treated effluent will need to be
discharged directly to the environment because the TMF will not be functional. The
sewage sludge cake will be burned in the incinerator.
8.11
Communications
The Caariaco Norte site communications system will cover the complete voice, data, fax,
Internet/email, mobile and radio communications requirements for the process and camp
facilities.
The system includes built-in redundancy with the provision for continuous service with key
equipment failure and UPS backup power for each communications system cluster.
The proposed system comprises:
External satellite communication system
gigabyte (1000Base) onsite fibre communications system
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key equipment built-in redundancy to enable hot equipment change without loss of
service
network-based upon LAN environments per building forming a single WAN
voice, data, fax, Internet, and video (1000Base T devices) capabilities
satellite/radio equipment electronics installed in a communications modular building.
Equipment includes antennas, dishes, snow shields, cabinets, transceivers, power
supplies, and all other system requirements. Outdoor electrical/electronics are
housed in NEMA 4X enclosures.
fibre-optic based cabling and modules
communications equipment, including servers, routers, switches, controllers, security
firewall, modems, and balance of system requirements
UPS backup supply for a minimum 1 hour supply with system fully loaded
modular design suitable for expansion, maintenance, and trouble-shooting
cabinets, cabinet wiring, and equipment mounting
software and associated licences
VoiP, Data, VoiP/Data receptacles for installation by others using CAT5e or CAT6
twisted-pair cabling
trunked radio system, including all electronics, antennas, base stations, handheld
radios, mobile radios, chargers and holsters, and setup
application to federal authorities for all radio frequency licences
antenna towers including aircraft lights, ladders, work and rest platforms, and UPS
core CATV equipment, including satellite dish, DVD array, and distribution equipment
IP telephony system, including installation and setup, all phone sets including phone
booths, electrical rooms, offices, reception areas, and conference rooms
support services for installation of communications equipment and pre-test the
equipment prior to the shipment of the module to site
support services for commissioning of the complete communications systems.
On consultation with the surrounding residents, communication systems will be installed
in local community centres.
8.12
Site Security
A gatehouse will be provided at the entrance to the main access road off the Corral
Quemado Road. This will restrict access to authorized vehicles only. In addition, a
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guardhouse will be erected farther up the main access road, just ahead of the TMF, to
register and inspect incoming and outgoing traffic to and from the site.
8.13
8.13.1
Design Considerations
Copper concentrate from the Caariaco Norte mine will be transported by truck to the
Marine Terminal Muchik (MTM), a planned development by Lumina Copper Corp
(Lumina) southeast of the town of Eten and the existing Consorcio Terminales Eten liquid
bulk terminal in Northern Peru. Annual throughput is expected to be 400,000 tonnes.
The loading berth will be designed to accommodate up to 50,000 DWT loaded Handymax
vessels.
It is assumed for this study that the berthing facility, the trestle conveyor leading out to the
berth, and the shiploader will be shared with Lumina Copper. Service buildings and
utilities throughout the port site would also be shared, whereas concentrate receiving,
storage, and reclaim facilities for the Caariaco Norte product would be independently
developed and operated by Candente.
Belt conveyors will transport concentrate from the Candente truck unloading facility to the
storage building and from the storage building to the shipping conveyor. As part of the
sustainable aspects in the design, conveyor systems will be enclosed in galleries to
minimize fugitive emissions of concentrate dust into the surrounding environment. In
addition, a vacuum system will be installed throughout all conveyor galleries for cleaning
up spilled concentrate or settled concentrate dust. The conveyor galleries will be
provided with flexible vacuum hoses long enough to cover the connecting areas along the
conveyors.
The marine terminal site plan is shown in Figures 8-5 and 8-6.
8.13.2
On-Shore Port Facilities
8.13.2.1
Truck Unloading Station

The truck unloading system will consist of an integrated truck dump hopper and feeder
conveyor, both installed at ground level. The hopper is sized for a minimum of two full
30 tonne truckloads of concentrate and will be attached to the skirt of the feeder conveyor
to prevent concentrate spillage during unloading. The feeder will have a volumetric
capacity of up to 80 tonnes and a throughput capacity of 50 t/h, with a peak of 80 t/h.
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Figure 8-5:
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Onshore Facilities General Arrangement
Page 8-35

Figure 8-6:
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Marine Terminal Berthing and Mooring General Arrangement
Page 8-36

An adjustable trim gate at the hopper discharge will profile the concentrate being drawn
from the hopper and prevent the feeder conveyor from being overloaded. The feeder
conveyor passes the concentrate to a receiving conveyor, which ascends and enters the
southwest side of the concentrate storage building. The concentrate is then distributed
into stock piles by a travelling portal stacker at an average rate of 50 t/h, designed to
handle a peak rate of up to 80 t/h.
The truck unloading facility will be fitted with a dust collection system to control dust
generated during the unloading process. The unit will be installed outside the concentrate
storage building enclosure and will include an induced draft fan sized for 30,000 cfm. The
intake duct will be positioned near the receiving hopper. The collected dust will be
discharged automatically into a bin that will be emptied manually back into the receiving
hopper when full.
8.13.2.2
Concentrate Storage Building

The proposed concentrate storage building will be constructed with reinforced concrete
foundations, a floor slab, perimeter retaining walls, and a steel-frame roof. The building
will be fully enclosed to contain dust and protect the concentrate from contamination and
the elements. The building will have a vehicle door, personnel doors at both ends of the
building, and access doors to the reclaim conveyor area for maintenance and cleanup.
The design operating capacity of 46,000 tonnes considers the expected package sizes for
concentrate export and the anticipated schedule of vessel arrivals, including an allowance
for vessel delays due poor weather, such as hurricane conditions en route to the port.
Copper concentrate will be reclaimed from the storage pile by a front-end loader, (FEL),
which will supply concentrate into one of two fixed-position hopper feeders on one side of
the building. The hopper feeders will, in turn, feed the concentrate to the reclaim
conveyor, set in a recessed area below the main floor level of the building. The reclaim
conveyor will be equipped with a process scale to monitor the amount of concentrate
being loaded.
On exiting the building, the reclaim conveyor will be housed in a gallery that connects
initially to a sampling station and then to a transfer tower, where the concentrate will be
shifted to the shipping pipe conveyor shared with Lumina.
8.13.2.3
Concentrate Shiploading
The shipping pipe conveyor will be carried over the 3.2 km long trestle from the shore to
the berth. The concentrate will then be transferred to the berth conveyor, which in turn
travels along the length of the berth to provide coverage for a towed tripper that feeds the
travelling shiploader.
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The shipping pipe conveyor, berth conveyor, shiploader with towed tripper, and related
marine equipment will all be shared between Lumina and Candente. Vessel operations
for export of Candente product will be scheduled in conjunction with Lumina to avoid
berthing conflicts.
For safety and operational reasons, control systems will be established to ensure
continuous communication between the Candente reclaiming operations at the
concentrate storage building and shiploading operations at the berth by Lumina.
8.13.2.4
Ancillary Facilities and Services

Other facilities to be provided at the port site to support Caariaco Norte operations
include the following:
maintenance building
warehouse
administration building
cafeteria and change-rooms.
These facilities will be shared with the adjacent Lumina Copper facilities. The following
site services will also be shared with Lumina Copper:
fire water
process water
potable water
sanitary waste
process waste.
8.13.2.5
Power Supply and Distribution

Power supply for the port site will be delivered to an on-shore substation at the Caariaco
concentrate handling facility from the planned Lumina facility power auxiliary distribution
system at 4.16 kV, 3 phase, 3 wire, 60 Hz. The substation will include incoming 4.16 kV
switchgear and a step-down transformer.
8.13.2.6
Waste Handling and Disposal

Sewage Collection System
Sewage from the port site buildings will flow by gravity through a PVC pipe to a pumping
chamber and be pumped through a HDPE pipe to an equalization chamber owned by
Lumina Copper for treatment. The sewage pipes will have intermediate manholes for
inspection.
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Other Wastes
Other wastes from operations at the port site will include:
hazardous waste, including waste chemicals and petroleum products
waste from building and equipment maintenance
domestic waste
inert waste from construction sites.
Wastes will be disposed of in an environmentally acceptable manner in accordance with
legal requirements to prevent their direct or indirect discharge to any watercourse or
groundwater.
Hazardous waste will be stored temporarily at the port site in drums protected by
secondary containments before being sent off site for disposal at special handling
facilities.
8.13.3
Marine Facilities
8.13.3.1
Off-Shore Berth
The berth will be constructed 3.2 km from shore at a water depth of -15.0 m, as required
for the design 50,000 DWT Handymax vessel. Dredging the seabed to provide a channel
for vessels to berth closer to shore is not recommended because sediment transport in
the shallow water is substantial, and the dredged pocket would quickly fill with sediment
materials. Frequent maintenance dredging would be required to maintain the draft in the
channel and berth pocket, which would significantly increase the operational costs of the
terminal.
Vessels approaching from the west and southwest will have an open and clear approach
with no apparent navigational hazards. It is recommended that navigational aids be
provided to guide arriving vessels toward the berth.
The marine terminal port is expected to operate 24 h/ad.
8.13.3.2
Berth Alignment and Mooring

The berth face will be aligned in the direction of the predominant waves at 210 from the
shore line. The approach trestle carrying the loadout conveyor will run perpendicular to
the shoreline at a small angle to the berth face.
The berth will be exposed to wave and swell action, and significant swell-induced vessel
motion is expected. A system of spread moorings will prevent ships from colliding with
the berth during loading operations and will reduce loads on the mooring lines. The
minimum standoff for the design vessel is 7 m.
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The spread moorings will consist of seven mooring buoys and a quick-release hook
installed on the shiploader platform. Four of the buoys will be at the bow, and three, plus
the quick-release hook, at the stern. The spread mooring arrangement will allow the
vessel to align with the dominant swell direction (facing west). The buoys will be
connected to either three-chain mooring legs with a stockless anchor or to a deadman at
the seabed.
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CONTENTS
9.0
SURFACE WATER MANAGEMENT ......................................................................9-1

9.1
Summary.....................................................................................................9-1
9.2
Introduction .................................................................................................9-2
9.3
Site Climate Data ........................................................................................9-2
9.4
Site Hydrology .............................................................................................9-3
9.5
Water Balance ............................................................................................9-4
9.5.1 Water Balance Modelling .................................................................9-4
9.5.2 Water Balance Description and Data ...............................................9-6
9.5.2.1 General Description ......................................................... 9-6
9.5.2.2 TMF Embankment and Seepage Recovery
Impoundment .................................................................. 9-9
9.5.2.3 Process Plant and Cyclone Sand Plant ........................... 9-9
9.5.2.4 Open Pit ........................................................................ 9-10
9.5.2.5 WRMF Runoff Collection and Seepage Recovery ......... 9-10
9.5.2.6 Freshwater Reservoir .................................................... 9-10
9.5.2.7 Closure Water Management .......................................... 9-11
9.5.3 Water Balance ...............................................................................9-11
9.6
Water Management Structures..................................................................9-14
9.6.1 General..........................................................................................9-14
9.6.2 TMF Spillway .................................................................................9-15
9.6.3 Diversion Channel around the WRMF ...........................................9-16
9.6.4 Freshwater Diversion Embankment and Impoundment..................9-20
9.6.5 Seepage Collection Embankments and Impoundments .................9-22
TABLES
Table 9-1:
Table 9-2:
Table 9-3:
Table 9-4:
Table 9-5:
Table 9-6:
Details of Local Meteorological Stations ....................................................................... 9-2

Climate Data for the Water Balance .............................................................................. 9-3
Short-Duration Precipitation Frequency Analysis for Project Site ................................. 9-4
Long-Duration Precipitation Frequency Analysis for Project Site ................................. 9-4
TMF Water Balance over the Mine Life ....................................................................... 9-12
Overall TMF Water Balance for Closure Year ............................................................. 9-12
FIGURES
Figure 9-1:
Figure 9-2:
Figure 9-3:
Figure 9-4:
Figure 9-5:
Figure 9-6:
Water Balance Schematic Operations ....................................................................... 9-5

Water Balance Schematic Closure............................................................................. 9-7
Catchment Areas and Water Management Structures ................................................. 9-8
Water and Solids Elevations in the TMF during Operation ......................................... 9-13
Tailings Management Facility Spillway........................................................................ 9-17
Waste Rock Management Facility Diversion Channel Plan and Profile................... 9-18
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TOC i

Figure 9-7:
Figure 9-8:
Figure 9-9:
Waste Rock Management Facility Diversion Channel Sections .............................. 9-19

Waste Rock Management Facility River Diversion Embankment ............................ 9-21
Waste Rock Management Facility Seepage Recovery Embankment ......................... 9-23
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TOC ii

9.0
SURFACE WATER MANAGEMENT
9.1
Summary
The climate database for the site was updated with the information available from the
existing camp and data from the El Limon and Incahuasi weather stations. Mean annual
precipitation and mean annual evaporation were determined to be 1,025 mm and
393 mm, respectively, and the annual runoff coefficient for vegetated natural areas was
estimated to be 0.52.
The hydrologic data for the site were determined for various return periods using
frequency analysis. The 24-hour, 100-year intensity was determined to be 254 mm and
the 24-hour probable maximum precipitation (PMP) intensity to be 881 mm. These
values have been incorporated into the design of the key water management structures
on site.
The surface water management plan for the Caariaco Norte project will preserve to the
maximum extent possible the non contact status of surface waters. Waters that come
into contact with project facilities will be contained and treated if necessary so that any
water released to the environment always meets the applicable water quality regulatory
guidelines. A system of impoundments, embankments, diversions, and spillways will be
developed immediately when construction commences to handle runoff from
construction-related activities. This system will continue to be developed through
construction and operations to ensure that water discharged to the environment meets
the guidelines
The project will affect two main catchment areas: the Caariaco valley, where most of the
facilities (WRMF, open pit, and process plant) will be constructed, and the Quebrada
Yerma valley, which is the proposed location for the TMF.
Water will be impounded upstream of the WRMF to supply the freshwater makeup
requirements of the process plant. A diversion channel will be constructed to direct
excess water from Ro Caariaco around the WRMF. Contact water from the facilities in
the area of the pit, process plant, and WRMF will be collected immediately downstream of
the WRMF and be used as mill makeup water; the excess will be discharged to Ro
Caariaco via water treatment plants. Because most of this water is consumed by the
mill, the site water balance indicates that such discharges are only expected toward the
end of the mine life.
Precipitation falling on the TMF and runoff draining into the TMF will be impounded to
ensure a minimum water cover is maintained over the tailings. Excess water will be
directed to the process plant as makeup water. At closure, a TMF spillway will be
constructed on the west saddle embankment to route stormwater flows to the Quebrada
Yerma. The TMF spillway will be designed for the probable maximum flood (PMF).
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The site-wide water balance estimates that water release from the TMF would not be
required until the end of the mine life. Nevertheless, if significant storm events made it
necessary to release water during operations to reduce the storage volume in the TMF,
then the water would be treated, if required, prior to release.
9.2
Introduction
The purpose of this section is to summarize information relating to the climate, hydrology,
site water balance, and water management structures for the Caariaco Norte project.
The site water balance model is based on current topography, climate data, facility
layouts, process parameters, and key construction activities. Reasonable assumptions
have been made, based on experience and industry norms, where information is not yet
available. The climate and hydrology data, site water balance, and water management
structure design will be updated as the project advances and more information is
gathered.
9.3
Site Climate Data

Monthly precipitation and evaporation data are available for two weather stations in the
area: El Limon (El. 1,029 masl) and Incahuasi (El. 3,078 masl). Some data are also
available from a third weather station at the project site (El. 3,083 masl), but are
incomplete. Precipitation records are available for only two partial years, and no
evaporation data have been recorded here. Details of the meteorological stations are
provided in Table 9-1. The three sets of data were correlated to estimate precipitation
and evaporation on site.
The El Limon station dataset covers ten years, from 1995 to 2004, and the Incahuasi
dataset four years, from 1995 to 1998. Precipitation estimates for the project site are
based on El Limon data because of the longer period of record, but evaporation estimates
are based on Incahuasi because its elevation is similar to that at the project site. In any
case, this is a short period of record for all stations and will be updated as more
information is collected.
The monthly and annual climatic data used to develop the site water balance for this study
are summarized in Table 9-2 and discussed briefly below.
Table 9-1:
Station
El Limon
Incahuasi
Project Site
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Details of Local Meteorological Stations

Longitude
Latitude
Altitude
(masl)
Period of Record
7919'
7919'
7916'
0555'
0614'
066'
1,029
3,078
3,083
10 years
4 years
8 months
Page 9-2

Table 9-2:
Climate Data for the Water Balance
Parameter
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Annual
Total Precipitation (mm)
67.4
167.9
201.5
156.4
85.4
29.3
14.7
3.4
35.7
90.2
75.0
98.4
1,025
Distribution (%)
6.6
16.4
19.7
15.3
8.3
2.9
1.4
0.3
3.5
8.8
7.3
9.6
100
1:10 Year Dry Total Precipitation (mm)

1:10 Year Wet Total Precipitation (mm)
34.8
100
86.7
249.1
104.1
298.9
80.8
232
44.1
126.8
15.1
43.5
7.6
21.8
1.8
5.0
18.4
53.0
46.6
133.8
38.7
111.3
50.8
146
530
1,521
Distribution (%)
6.6
16.4
19.7
15.3
8.3
2.9
1.4
0.3
3.5
8.8
7.3
9.6
100
Total Evaporation (mm)
32.2
19.5
20.7
21.0
27.0
30.0
42.5
52.3
41.3
37.8
36.6
32.1
393.0
Distribution (%)
8.2
5.0
5.3
5.3
6.9
7.6
10.8
13.3
10.5
9.6
9.3
8.2
100
Mean Runoff Distribution

Total Runoff (mm)
Distribution (%)
17.5
3.3
120.3
22.7
149.4
28.2
105.3
19.9
32.2
6.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
35.4
6.7
24.0
4.5
44.8
8.5
528.9
100
Mean Precipitation Distribution
10-Year Wet and Dry Precipitation
Mean Evaporation Distribution
Mean annual precipitation (rainfall only) is estimated to be 1,025 mm, as derived from
the monthly precipitation data for the El Limon station, adjusted for altitude by a factor
of 2.9 based on the limited project site precipitation data available at this time. The
factor should be reviewed as more information becomes available from the project
site.
A frequency analysis, including the altitude adjustment factor, was performed on the
data from the El Limon station to determine the 1:10-year wet and dry annual and
monthly precipitation at the project site. These values were used to test the sensitivity
of the water balance to extreme events.
Based on monthly evaporation data from the Incahuasi station, mean annual
evaporation at the project site is estimated to be 393 mm.
Potential evapo-transpiration data from the Incahuasi station were used in conjunction
with the project site precipitation data to determine the mean annual and monthly
runoff distribution for the project site. The annual runoff coefficient for vegetated
undisturbed areas was estimated to be 0.52. It is recommended that hydrometric
stations be installed to measure flows at the project site.
9.4
Site Hydrology
A frequency analysis was performed on the altitude-adjusted El Limon station maximum
24-hour and 30-day precipitation data to determine short- and long-term duration
intensities for various return periods; these are shown in Tables 9-3 and 9-4. The PMP
values were calculated according to the Hershfield method and would be used for the
design of diversion ditches, spillways, impoundments, and embankments on the project
site.
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Table 9-3:
Short-Duration Precipitation Frequency Analysis for Project Site
Return
Period
(Years)
0.25
31
37
45
40
49
60
10
47
57
70
20
53
65
50
61
100
Duration (h)
12
24
74
90
109
100
121
148
117
142
173
79
133
162
198
75
91
154
188
230
67
82
101
170
207
254
200
73
90
110
185
227
278
500
81
99
122
206
252
309
1,000
87
107
131
222
272
333
PMP
212
263
327
572
710
881
Table 9-4:
0.5
6
Intensity (mm)
Long-Duration Precipitation Frequency Analysis for Project Site

Duration (d)
Return
Period
(Years)
10
12
15
20
25
109
132
147
159
170
178
186
148
180
202
219
233
245
256
10
20
173
198
211
242
237
272
258
295
275
315
290
332
30
193
199
205
216
230
249
265
278
266
275
284
299
318
345
368
387
303
347
314
361
325
373
335
385
353
406
377
432
409
470
436
501
459
528
Intensity (mm)
50
230
281
316
344
367
387
405
421
435
449
473
505
549
586
618
100
254
311
350
381
406
428
448
466
482
497
524
560
609
650
685
200
278
340
383
417
445
469
491
511
528
545
575
614
668
713
752
500
309
379
427
465
496
524
548
570
590
608
642
685
746
796
840
1,000
PMP
333
881
409
1,094
460
1,241
501
1,358
535
1,456
565
1,541
591
1,617
614
1,686
636
1,749
656
1,807
692
1,913
739
2,051
805
2,244
859
2,406
907
2,547
The 10-year period of record for the El Limon station is a very short time frame for
performing a frequency analysis, and inaccuracies can be expected for longer return
periods. The frequency analysis should therefore be revisited when more information
becomes available for both the EI Limon station and the project site.
9.5
Water Balance
9.5.1
Water Balance Modelling

A water balance model has been developed to estimate the monthly water balance for the
Caariaco project during pre-mining (construction), mining operations, and closure (one
typical year). Figure 9-1 is a schematic of the overall water balance based on the current
water management plan during mining operations.
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Figure 9-1:
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Water Balance Schematic Operations
Page 9-5

The water balance model includes the average annual precipitation and evaporation
values and is tested for wet and dry years by using the 1:10-year dry and wet conditions.
The water levels within the TMF are used in the model to determine release rates, reclaim
rates, and freshwater requirements. The following five areas are key input or output
locations affecting the water balance:
TMF embankment and seepage recovery impoundment
process plant and cyclone sand plant
open pit
WRMF runoff collection and seepage recovery
freshwater collection and diversion embankment.
Figure 9-2 is a schematic of the overall water balance during closure. One typical closure
year was analyzed to show the impacts on the site.
9.5.2
Water Balance Description and Data
9.5.2.1
General Description
The water balance in this report simulates average conditions for mine operations at a
processing rate of 95,000 t/d for 19 years as per the preliminary mine plan. Subsequent
to completion of this water balance an updated mine plan was developed that extended
the mine life to 22 years. To accurately reflect this change, the water balance will be
updated during the next phase of project study. Nevertheless, the current water balance
represents a reasonable assessment of the project based on the known conditions. The
following key mining activities will affect water management during these years:
Year -1 (January) Freshwater diversion embankment constructed upstream of the
WRMF and the TMF embankment is started.
Year 1 (January) Mining operations commence.
Year 19 (August) Mining operations cease and closure commences.
All contact water associated with road runoff will be directed to sediment control
containments. Diversion ditches will route clean non-contact water away from the pit and
around the WRMF to existing natural channels downstream or to the freshwater reservoir.
The available data and assumptions used in the water balance for the five key project
areas are outlined below. The catchment areas delineated for the site are shown in
Figure 9-3.
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Figure 9-2:
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Water Balance Schematic Closure
Page 9-7

Figure 9-3:
Catchment Areas and Water Management Structures
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9.5.2.2
TMF Embankment and Seepage Recovery Impoundment

During construction of the TMF starter embankment, water will be retained upstream by a
coffer dam and diverted around the construction activities until the starter embankment is
complete. Toward the later years of the mine life, north and east saddle embankments
will be required to manage the tailings and water cover in the TMF. Based on the current
water balance, the TMF has sufficient storage capacity to permit treatment and discharge
of contact water to be delayed until the end of the mine life. The requirement for
treatment and release of water will be optimized in later stages of project design.
The TMF seepage recovery impoundment and systems have been designed to capture
seepage from the cyclone sands construction activities at the main embankment and to
pump the captured water into the TMF impoundment. The seepage recovery collection
and monitoring wells will return captured water to the seepage recovery impoundment.
9.5.2.3
Process Plant and Cyclone Sand Plant

Based on the preliminary mine plan, approximately 633 Mt of tailings will be generated
over the mine operating life at a process throughput of 95,000 t/d. Freshwater
requirements for this throughput level are estimated to be 307 m3/h, consisting of
groundwater captured by wells constructed around the perimeter of the pit and water from
the reservoir upstream of the WRMF. The average total plant water requirement is
approximately 2,900 m3/h.
Other sources of water reporting to the process plant will include moisture in the ore feed
at approximately 118 m3/h, pit dewatering, seepage recovered from the WRMF, and
reclaim water from the TMF.
Tailings from the plant will proceed via a pyrite flotation circuit to the cyclone sand plant
(CSP), which will operate year-round once mining has commenced. The water balance
estimates that approximately 24% of the tailings will be diverted by the CSP to generate
coarse sand for use in shell construction of the TMF embankment; the rest will report to
the TMF impoundment for deposition.
The tailings solids have the following characteristics:
tailings deposited dry density ............................. 1.1 t/m3
tailings slurry density .......................................... 55%
tailings specific gravity ....................................... 2.65
cyclone sand dry density.................................... 1.7 t/m3
cyclone sand saturation ..................................... 35%
cyclone sand specific gravity ............................. 2.37
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9.5.2.4
Open Pit
The final pit area is estimated to be approximately 216 ha. For the water balance, the pit
has been projected to expand at a rate of approximately 1 ha per month during mining
operations. Nevertheless, this will be directly correlated to the mine plan in the next phase
of study. The pit groundwater inflow was modelled using SeepW. The initial inflows
during the early years of the mine life are estimated to be approximately 5.3 L/s,
increasing to 100 L/s after full mine development.
Direct precipitation and surface runoff not captured by diversion structures, contingent on
its quality, will be pumped to the process plant during mining operations. If water quality is
unsuitable for use within the process plant, then it will be pumped to the tailings thickener.
Approximately 70% of the flows entering the pit will be captured via pit wall dewatering
wells, and the remaining 30% will be pumped to the process plant via the pit sumps.
To the extent possible, water flows from non-contact areas potentially draining toward the
pit will be diverted to the freshwater reservoir upstream of the diversion embankment.
9.5.2.5
WRMF Runoff Collection and Seepage Recovery

Ro Caariaco will be diverted through a lined channel beginning upstream of the WRMF
and rejoin the existing river channel downstream of the WRMF seepage recovery
embankment. Water associated with the WRMF, including waste rock moisture and direct
precipitation runoff, will be collected in the seepage recovery system and, depending on
its quality, be pumped to the process plant.
The system design also includes downstream seepage collection and monitoring wells.
Any seepage captured by the collection wells will be pumped via the WRMF seepage
recovery impoundment to the process plant.
Surface water flows from non-contact areas that could potentially flow into the WRMF
from the east side of the valley will be collected in the diversion channel and diverted,
along with Ro Caariaco, downstream of the WRMF seepage recovery systems.
9.5.2.6
Freshwater Reservoir
The freshwater reservoir created upstream of the diversion embankment will supply
freshwater makeup requirements for operations. Surface runoff west of the pit will be
directed to the reservoir by diversion structures. Catchment areas for the diversion
structures are shown in Figure 9-3.
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9.5.2.7
Closure Water Management

The current mine closure water management plan includes the construction of two water
treatment plants (WTPs), one downstream of the TMF and the other downstream of the
WRMF. The WTPs will be designed to treat surplus water that cannot be retained within
the surge capacity of the WRMF water management systems or the TMF, and will
discharge to the environment from holding ponds. The discharge water quality will meet
regulatory criteria for receiving waters.
The surface channel that diverts Ro Caariaco around the WRMF during operations will
remain in place upon closure. The design flow, and subsequent size of the surface
channel, during closure will be determined in the next phase of study and will include
failure consequence analysis.
The pit will begin filling upon mine closure. Further field studies and modelling will be
carried out to confirm whether the pit can be allowed to overflow to the WRMF or whether
the water level will need to be maintained at a certain height below the pit rim to maintain
it as a groundwater sink. Any surplus water will be directed to the WTP downstream of the
WRMF, treated to meet regulatory discharge criteria, and released to the environment.
Water associated with the WRMF will be directed from the WRMF seepage collection
impoundment to the WTP downstream of the WRMF.
Based on the current water balance, water will need to be released from the TMF during
closure to maintain the required freeboard and water cover above the tailings. Water
quality modelling during subsequent design stages of this project will predict if water
treatment will be required before release and assist in selecting the appropriate treatment
technology.
9.5.3
Water Balance
Water balance models for average, wet, and dry conditions were developed with monthly
increments, based on the inputs summarized in Section 9.3 above. The water balance
allows the TMF to act as a water storage facility to manage wet season surges and dry
season evaporation. The wet and dry site conditions were also used to check the
availability of water in the TMF for reclaim. It was determined that no reclaim
requirements for the process plant would be affected in any of the models.
All other areas of the site are used as both inputs to the water balance and for other
aspects of the mine design, such as required pumping capacities and pipeline sizing.
Only the average water balance results, summarized in Table 9-5, are presented in this
report.
Over the life of the mine, the largest water flows to and from the TMF are tailings slurry
water (T7) and reclaim water to the process plant (T10), respectively. As discussed
earlier, no water is released from the TMF during mine operations (T9), and
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approximately 40 Mm3 would form the tailings water cover in the TMF at the end of the
mine life. Although the current TMF design impounds this water, the potential for release
from the TMF before the end of the mine life will be assessed in later stages of project
design. Reducing the depth of water cover over the tailings has the potential to reduce
the embankment construction requirements and associated costs. Figure 9-4 illustrates
the tailings and water levels in the TMF over the life of the mine without water release to
the environment.
Table 9-6 illustrates the water balance at mine closure.
During closure, all
process-related inputs and outputs to the TMF cease such that precipitation becomes the
dominant TMF water inflow. Treated water discharged from the WTP (T9) is the largest
water output during closure.
Table 9-5:
TMF Water Balance over the Mine Life

Value
(Mm3)
Item
Inflows to the TMF
(T8) TMF Impoundment Precipitation *
60.32
(T5) TMF Catchment Area Runoff

(T7) Tailings Slurry Water Inflow Volume **
(S3) TMF Seepage Recovery Impoundment Pumpback
Total Inflows to the TMF
49.27
484.58
71.10
665.27
Outflows from the TMF

(T4) TMF Impoundment Evaporation
(S1) + (T2) Potential Seepage Collected
(T10) Reclaim Water to Process Plant from the TMF
(T11) Water Retained in Tailings within the TMF
TMF Impoundment Volume
23.19
9.13
336.42
256.35
40.18
Total Outflows from the TMF
665.27
* Refer to Figure 9-1 of operations water balance schematic.

** Varies with cyclone sand production
Table 9-6:
Overall TMF Water Balance for Closure Year
Item
Value
(Mm3)
Inflows to the TMF

Initial TMF Impoundment Volume
(T8) Precipitation on the TMF Impoundment
(T5) Runoff from TMF Catchment Area
Total Inflows to the TMF
40.18
5.37
1.53
47.08
Outflows from the TMF

(T4) TMF Impoundment Evaporation
(S1) + (T2) Seepage Collected
(T9) Water to WTP for Treatment and Discharge from the TMF
TMF Impoundment Volume
2.04
0.95
3.92
40.18
Total Outflows from the TMF
47.08
Note: Refer to Figure 9-2 for closure water balance schematic.
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Figure 9-4:
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Water and Solids Elevations in the TMF during Operation
Page 9-13

9.6
Water Management Structures
9.6.1
General
A high-level trade-off study was carried out to assess alternative settings for the WRMF
and the method of diverting Ro Caariaco around it (Appendix A). The study examined
three alternatives:
Option 1 Large WRMF in Ro Caariaco valley. Ro Caariaco would be diverted
around the east side of the WRMF through a 6.4 km surface channel that would also
collect runoff from the drainage area to the east of the WRMF. The channel would
remain in place through closure and need to be maintained in perpetuity. A 70 m high
embankment would be required upstream of the WRMF to divert the river.
Option 2 Smaller footprint WRMF in Ro Caariaco valley. Ro Caariaco would be
diverted around the east side of the WRMF through a 2.9 km tunnel through the
mountain. This tunnel would remain in place through closure and need to be
maintained in perpetuity. A surface channel would also be required on the east side
of the WRMF to collect runoff from the drainage area to the east of the WRMF. A
15 m high embankment would be required upstream of the WRMF to divert the river.
Option 3 No WRMF in Ro Caariaco valley. The waste rock would be transported
via conveyor in a tunnel through the ridge to the northwest of the process plant. This
tunnel would only be used during mining operations and would be decommissioned at
closure. This option would not require diversion of Ro Caariaco.
On a capital cost basis, Options 1 and 2 were carried forward for net present value (NPV)
analysis. Option 1 (6.4 km diversion channel) was found to have the lowest capital and
life-of-mine costs. The costs are not absolute, however, and were developed on a
relative basis without benefit of geotechnical information. In addition, they did not
consider design, permitting, or closure costs. Based on these assumptions, the cost for
Option 3 was approximately $20 million to $40 million higher than for Options 1 and 2.
On this basis, AMEC recommended Option 1 for the prefeasibility study. Nevertheless,
site geotechnical and environmental investigations are recommended at the feasibility
stage of the project to determine the slope conditions for diversion channel and access
road construction. These findings could lead to changes in the relative difference
between the options and in the WRMF and Ro Caariaco diversion configurations.
Numerous structures will be required on site for water management (see Figure 9-3) and
are summarized as follows:
The TMF spillway required at closure will be designed to manage the 24-hour PMP
and resulting flows from the TMF impoundment, so that the structural integrity of the
embankment is not compromised in the event of a storm of this magnitude.
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A diversion channel is required to route the Ro Caariaco headwater drainage area

around the proposed WRMF and to collect additional surface runoff to the east of the
WRMF. This channel has been designed for the 24-hour, 100-year precipitation
event. This diversion channel will remain in operation after closure.
A diversion channel will be required to divert the catchment area west of the pit to the
freshwater reservoir upstream of the proposed diversion embankment for the WRMF.
A diversion channel will be required to divert the catchment area northwest of the pit
to the WRMF seepage collection system or to the pit pumping systems.
Various other minor diversion ditches will be required at the process plant and other
project site areas.
A freshwater diversion embankment, channel inlet, and impoundment are required to
manage outflows to the WRMF diversion channel.
Seepage collection embankments and impoundments are required downstream of
both the WRMF and the TMF.
Preliminary designs for the main channels and embankments are discussed below. Plans
for the minor diversion ditches will be developed at a more detailed level of design.
9.6.2
TMF Spillway
The TMF spillway will be constructed around the west saddle embankment during mine
closure to divert excess flows associated with storm events to the Quebrada Yerma. The
spillway is designed so that the flows do not compromise the structural integrity of the
TMF.
A PMP storm event was used as the inflow design flood (IDF) input for design of the TMF
spillway. The peak 24-hour PMF to the TMF is estimated to produce a flow of 731 m3/s.
Routing this flow of water through the TMF reservoir and a V shaped inlet spillway
channel would attenuate the flow to approximately 6.5 m3/s. The reduction results from
temporary storage in the impoundment; this increases the surface elevation of the TMF
reservoir and water is then channelled at a lower rate over a longer period of time.
The spillway will have 2:1 side-slopes, a channel slope of 0.1%, and be approximately
2 m deep. The V-shaped channel (no bed width) will transition to a 5 m wide trapezoidal
channel section with 2:1 side-slopes once the existing ground slope steepens, and will tie
into an existing gully. If the spillway and channel are not constructed in rock, then riprap
may be required for erosion protection, the need for which will be determined in future
work. Figure 9-5 shows a plan, profile, and cross-sections of the proposed TMF closure
spillway.
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9.6.3
Diversion Channel around the WRMF

The diversion channel around the east side of the WRMF is designed to serve two
purposes:
to divert Ro Caariaco around the WRMF
to divert non-contact water from east of the WRMF downstream to Ro Caariaco.
The peak 24-hour, 100-year inflow to the freshwater impoundment at the upper end of the
diversion channel is estimated to be 288 m3/s. Routing the water through the
impoundment would result in an estimated 100-year, 24-hour attenuated outflow at the
channel of 50 m3/s. As previously discussed, the reduction in flow results from the water
being stored temporarily in the impoundment, then released at a lower outflow rate over a
longer period of time.
The diversion ditch will intercept runoff from the catchment east of the WRMF, thus
increasing the flow at the outlet to approximately 100 m3/s. A road along the west side of
this channel will form its embankment to the west. The upper reaches will be constructed
as a 5.5 m wide trapezoidal section with 2:1 side-slopes. The initial channel slope of 2%
will reduce to 1% as it transitions to a spillway chute to direct the flow back into Ro
Caariaco downstream of the WRMF seepage collection system. The spillway chute
section will increase to a 21 m wide trapezoid with 2:1 side-slopes and a slope of 15% at
Station 4+300, as shown in Figure 9-6. The increase in width will assist in energy
dissipation and in minimizing potential erosion issues associated with the chute spillway.
Both the channel and the chute spillway will require riprap protection against erosion. A
liner or a filter layer may also be required, depending on the bed material. Figures 9-6
and 9-7 provide a plan, profile, and cross-sections of this preliminary channel and
spillway.
Based on the hydrobiological assessment conducted at the project site (Section 10,
Evnironmental Considerations), which indicates that no native fish species are present in
Ro Caariaco, the current channel design does not consider fish migration.
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Figure 9-5: Tailings Management Facility Spillway
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Figure 9-6:
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Waste Rock Management Facility Diversion Channel Plan and Profile
Page 9-18

Figure 9-7:
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Waste Rock Management Facility Diversion Channel Sections
Page 9-19

9.6.4
Freshwater Diversion Embankment and Impoundment

An embankment will be constructed upstream of the WRMF at the headwaters of Ro
Caariaco to create a water diversion structure and a freshwater impoundment, as shown
in Figure 9-8. The embankment will incorporate a 5 m deep inlet to the WRMF diversion
channel.
The impoundment is sized to manage surge flows into the reservoir and outflows to the
diversion channel. During the initial two months of start-up operations only, the estimated
freshwater requirement for the process plant is 2,990 m3/h because no water will be
reclaimed from the TMF during this time. After this, the average freshwater requirement
for the process plant is approximately 250 m3/h.
The highest flows in Ro Caariaco occur during the wet season between February and
April. To minimize impact on the Ro Caariaco flows, the current execution plan
commences operations in that period. The freshwater impoundment will be used to
supplement flow to the process plant. During start-up, flows from the diverted area east
of the WRMF will be captured in the diversion channel and conveyed to the confluence of
Ro Caariaco with the unnamed tributary that flows past the village of Caaris. Although
flows in Ro Caariaco will be reduced at that point, the execution plan has been
specifically designed to satisfy both the process plant and the minimum flow requirements
in Ro Caariaco.
Considering this water supply plan for start-up, flows in Ro Caariaco downstream of the
WRMF may be reduced by 50% to provide freshwater to the process plant. Because the
river flows are highest at this time of year, however, a significant amount of water would
still be available in downstream areas. After the first two months of operation, flows in the
Ro Caariaco at the first confluence downstream of the village of Caaris will be more
than 90% of the original levels. Impacts on the downstream flows are expected to be
minimal.
The community of Caaris does not obtain its fresh water from Ro Caariaco, but from
an unnamed tributary northeast of the river. There will be no impact on or reduction of
flow in the tributary and therefore no effect on water supply for the community during
construction, operations, or closure.
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Figure 9-8:
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Waste Rock Management Facility River Diversion Embankment
Page 9-21

9.6.5
Seepage Collection Embankments and Impoundments

Two seepage recovery embankments and respective impoundments will be constructed,
one downstream of the TMF and the other downstream of the WRMF. Figure 9-9 shows
the layout and sections of the WRMF seepage recovery facilities. Collected seepage
water will be pumped back into the TMF during operations and upon closure to the WTP
downstream of the TMF. Seepage water collected from the WRMF during operations will
be pumped to the process plant and to the WTP downstream of the WRMF during
closure.
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Figure 9-9:
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Waste Rock Management Facility Seepage Recovery Embankment
Page 9-23

CONTENTS
10.0
ENVIRONMENTAL CONSIDERATIONS ..............................................................10-1

10.1 Summary...................................................................................................10-1
10.2 Biophysical Project Components ...............................................................10-2
10.2.1 Area of Environmental Influence ....................................................10-2
10.2.2 Physical Environment ....................................................................10-4
10.2.2.1 Climate and Weather ..................................................... 10-4
10.2.2.2 Soils and Land Use ....................................................... 10-4
10.2.2.3 Hydrology ...................................................................... 10-4
10.2.2.4 Water Quality and Sediment Management .................... 10-5
10.2.2.5 Air Quality and Noise ................................................... 10-10
10.2.3 Ecosystems and Biodiversity .......................................................10-11
10.2.4 Environmental Effects of the Project ............................................10-13
10.2.5 Mitigation and Management.........................................................10-13
10.3 Socioeconomic Component ....................................................................10-14
10.3.1 Socioeconomic Area of Influence ................................................10-14
10.3.2 Resettlement Assessment ...........................................................10-16
10.4 Legal Framework ....................................................................................10-17
10.4.1 General Legal Framework ...........................................................10-17
10.4.1.1 Mining Regulation ........................................................ 10-17
10.4.1.2 General Environmental Law......................................... 10-18
10.4.1.3 Environmental Impact Assessment National System
Law.............................................................................. 10-18
10.4.2 Specific Legal Framework ...........................................................10-19
10.4.2.1 Environmental Protection Rule on Mining and
Metallurgical Activities ................................................. 10-19
10.4.2.2 Mining Closure Regulations ......................................... 10-19
10.4.2.3 Water Quality and Effluents ......................................... 10-19
10.4.2.4 Air Quality and Emissions ............................................ 10-19
10.4.2.5 Flora and Fauna .......................................................... 10-20
10.4.2.6 Archaeology ................................................................ 10-20
10.4.2.7 Solid Wastes ............................................................... 10-21
10.4.2.8 Social and Community Relationships ........................... 10-21
10.4.3 Summary of Legal Framework .....................................................10-22
10.5 Permitting Requirements .........................................................................10-24
10.5.1 Summary of Permits and Authorizations ......................................10-24
10.5.2 Pre-Construction Permits .............................................................10-28
10.5.2.1 Surface Land Use ........................................................ 10-28
10.5.2.2 Archaeological Assessment ......................................... 10-29
10.5.2.3 EIA and Closure Plan .................................................. 10-29
10.5.2.4 Other ........................................................................... 10-29
10.5.3 Construction and Operations Permits ..........................................10-31
10.5.3.1 Construction Phase ..................................................... 10-31
10.5.3.2 Operations Phase ........................................................ 10-31
10.5.4 Permitting Process ......................................................................10-32
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TABLES
3
Table 10-1: Ro Caariaco Monthly and Annual Discharges (m /s) (1965-1995) / Caariaco
Station .......................................................................................................................... 10-5
Table 10-2: Summary Results of Project Stream Flow Measurements (September 2007) ............ 10-7
Table 10-3: Summary of Water Quality Results .............................................................................. 10-9
Table 10-4: Air and Noise Measurement Stations......................................................................... 10-10
Table 10-5: Protected and Endemic Bird Species in Project Area ................................................ 10-12
Table 10-6: Access to Village of Caaris ...................................................................................... 10-15
Table 10-7: Applicable Legal Framework ...................................................................................... 10-22
Table 10-8: Major Licences and Permits Required Pre-Construction Phase ............................. 10-26
Table 10-9: Major Licences and Permits Required Construction Phase ................................... 10-27
Table 10-10: Major Licences and Permits Required Operations Phase ...................................... 10-28
FIGURES
Figure 10-1: Project Area of Influence .............................................................................................. 10-3
Figure 10-2: Locations of Hydrology Stations ................................................................................... 10-6
Figure 10-3: Locations of Water Quality Monitoring Stations ........................................................... 10-8
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TOC ii

10.0
ENVIRONMENTAL CONSIDERATIONS
The Environmental Impact Assessment (EIA) for the Caariaco project was initiated in
2007 by Candente. The information in this report is derived from ongoing baseline
studies and is related mainly to the biophysical component, the socioeconomic
component and the permitting process. All biophysical and socioeconomic information
presented here is based on baseline site investigations from 2007 to2010. More baseline
site studies are planned for 2011 to complete the Environmental Impact Assessment
(EIA).
10.1
Summary
The site of the Caariaco Norte project is in Northern Peru, in an area environmentally
similar to the surrounding region that extends into Ecuador and Columbia. Baseline
environmental assessments are ongoing. Findings to date include the following: The
project site is subject to distinct wet and dry seasons. Hydrological investigations show
that naturally acidic waters are present in mineralized areas within the project footprint.
The background levels for copper in water in mineralized areas are approximately 15%
greater than for non-mineralized areas. With regard to sediments, study results were
compared to Canadian guidelines because Peru has no background guidelines.
Dissolved metal levels were found to be significantly above Probable Effect Levels (PEL)
within the project footprint, but this is not unusual for mineralized areas, where PELs are
routinely exceeded. Due to steep slopes and the high clay and fines contents, soils within
the region are typically unstable.
Current air quality is characteristic of rural,
non-industrialized areas, with no contaminants at concentrations of concern to human
health.
The project ecosystem consists of moors and cloud forests at higher elevations and
cultivated land at lower elevations. This ecosystem extends through Ecuador and into
Columbia. The intense study of the project area has provided a greater understanding of
the biodiversity within the ecosystem.
No native fish species were found within the rivers and creeks at the project site, but
introduced trout were identified downstream in the main stem of Ro Caariaco. Native
species were found within the lower basin of both Ro Caariaco and Quebrada Yerma
and in Ro Huancabamba, approximately 40 km from the project site.
Some of the key environmental considerations for the project are as follows:
water flows and quality
possible effects of construction and mining activities on the surrounding natural
habitat
potential latent effects on protected species
potential soil erosion.
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These key issues will be addressed through project environmental management and
engineering controls. Other measures, such as restoration of ground cover, will only be
possible at closure.
The community of San Juan de Caaris (CSJC) holds the surface rights in the proposed
Caariaco project development area. This community comprises approximately 25
villages and 1,500 primary social groups (see Section 10.3 for an explanation of
community, village, and primary social groups in the Peruvian context). The main CSJC
village of Caaris is adjacent to a northeast tributary of Ro Caariaco, approximately
2.5 km from the project site. Vehicle access to the villages is limited, and most residents
are involved in subsistence agriculture. Resettlement of primary social groups who will be
directly affected by mining and processing operations is a key socioeconomic
consideration for the project moving forward.
Section 10.2 describes the biophysical aspects of the project, Section 10.3 outlines
socioeconomic conditions, and 10.4 outlines the laws and regulations applicable to the
project, followed by the permitting requirements for pre-construction, construction, and
operations.
10.2
Biophysical Project Components
10.2.1
Area of Environmental Influence

The Caariaco Norte project site is on the Atlantic side of the Andes, within the Western
Cordillera mountain range. Figure 10-1 shows the project area of influence, including the
access road to the Huancabamba valley, the project facilities, the open pit area, and the
drainages that will be affected by project development.
The area of environmental influence is formed by the upper Ro Caariaco basin and the
mid-basin of Quebrada Yerma, at altitudes ranging from 2,400 and 3,200 masl. The
waste rock management facility (WRMF), diversion embankment, and WRMF seepage
recovery embankment will be in the Caariaco valley. The open pit, process plant, camp,
and other auxiliary facilities will be on the west side of the valley. The tailings
management facility (TMF) will be in the basin of Quebrada Yerma. Both Ro Caariaco
and Quebrada Yerma flow into Ro Huancabamba. Tributaries of Ro Caariaco
upstream of the WRMF diversion embankment include Quebradas Verde and Soron. The
village of Caaris (within the CSJC) is adjacent to an unnamed tributary of Ro Caariaco,
on the east side of the Caariaco valley and approximately 2.5 km from the project site.
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Figure 10-1: Project Area of Influence
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10.2.2
Physical Environment
10.2.2.1
Climate and Weather

Situated on the Atlantic watershed of the Andes, the project site is subject to high
humidity and frequent fogs. The area has a strong seasonality; the wet season extends
from January and April.
The proposed facilities lie within a number of different microclimates. The lower regions,
at 2,400 masl, have a warm climate with an average annual temperature of 15C,
whereas the elevated regions, up to 3,200 masl, are frequently subject to fog and have an
average temperature of 10C.
10.2.2.2
Soils and Land Use

Changes in land use resulting from project implementation will have consequences for the
agricultural or forestry potential of the soils within the project area. Of the total agricultural
area that the project will eventually affect by the end of the mine life, only 20 ha are
actively farmed at present.
Analysis of topography, satellite information, and site surveys shows sloped landforms
over large tracts of the project area. Soil instability due to the less-competent component
materials, mainly clay and fine sand, is a project design consideration for the PFS and will
remain a key consideration moving forward. Project design will also consider appropriate
programs of conservation and revegetation of disturbed soils, as set out in the conceptual
reclamation and closure plan (presented in overview in Section 11). As a guiding
principle, all soils with value for reclamation, i.e., thick enough to warrant salvage, will be
stockpiled to the extent practical. A detailed reclamation plan, based on information on
the volume and quality of soils on the site, will be developed before project construction
and operation. This information will be obtained during the detailed design phase. The
plan will be updated periodically as required and as the project evolves.
10.2.2.3
Hydrology
Most of the project infrastructure will be constructed in the basins of Ro Caariaco and
Quebrada Yerma. Potential changes in the local water cycles, including water flow
volumes and infiltration rates, are key considerations for the project. As discussed in
Section 9, Surface Water Management, the period of greatest change to the local water
cyclethe first two months of operationsis currently planned to coincide with the wet
season, when there would be minimal impact to the downstream environment.
Historical data from the Ro Caariaco hydrometric station are available for a 31-year
period (1965 to 1995) and are summarized in Table 10-1. Four hydrological assessments
have been completed to date, and it is planned to add to the dataset during the next
phase of the study. Figure 10-2 is a location map for the stations.
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Table 10-1: Ro Caariaco Monthly and Annual Discharges (m /s) (1965-1995) / Caariaco Station
Monthly Discharges
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Annual
Average Discharge (m3/s)
2.67
2.98
3.85
3.83
2.79
2.48
1.99
1.68
1.75
2.14
1.95
2.26
2.53
Standard Deviation
1.16
1.19
1.62
1.59
0.94
0.94
0.86
0.49
0.67
0.86
1.00
0.91
0.55
Maximum Discharge (m3/s)
6.10
6.20
9.20
8.90
5.40
4.90
5.50
2.60
3.80
4.40
6.70
4.70
3.87
1.00
0.90
1.90
1.60
1.00
0.70
0.90
0.40
0.50
0.90
0.40
0.70
1.41
Minimum Discharge (m /s)
Staff gauges were installed at 30 stations around Ro Caariaco and tributaries (indicated
on Figure 10-2). At the time of these original hydrological assessments, the proposed
TMF location was in the Quebrada Pilco Yacu valley, but as a result of the trade-off study
discussed in Section 7, Tailings and Waste Rock Management, it has since been
relocated to the Quebrada Yerma valley.
Table 10-2 summarizes results for the 2007 measurements. This was the only year of
data for locations within the project influence area. These measurements will be used as
inputs to populate models for use as design tools and aids to developing management
plans during construction and operation of the project.
Studies to date indicate that most of the streams are permanent and flows predominantly
respond to seasonal precipitation, with maximum rates of discharge between March and
May and minimum rates between August and September.
10.2.2.4
Water Quality and Sediment Management

Water quality is closely related to hydrology, land use, and slope stability. The project
design considers an overall water conservation strategy to minimize potential impact on
water resources resulting from project development, and to control any impacts that do
occur. Under a philosophy of zero discharge, fresh water (non-contact water) will be
diverted around project components (tailings, waste rock, process plant, roads, and
auxiliary facilities) and returned to original streams. Runoff and slopes will be controlled
to prevent soil loss, and potentially contaminated (contact) water will be returned to the
mine process, minimizing releases to the environment.
Facilities to manage non-contact water will include diversion channels and structures, the
freshwater reservoir and redirection of Ro Caariaco to avoid contact with the WRMF,
and diversion structures for Quebrada Yerma to bypass the TMF. Considerations for
contact water include catchment, seepage and runoff, treatment, monitoring, and return of
potentially contaminated water to the process plant or the TMF. A preliminary water
management plan is discussed in Section 9; more comprehensive water management
plans will need to be developed during the detailed engineering phase.
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Figure 10-2: Locations of Hydrology Stations
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Table 10-2: Summary Results of Project Stream Flow Measurements (September 2007)
River/Creek
Station
Quebrada Oso
Quebrada Oso
Quebrada Oso
Quebrada Norte
Quebrada Norte
Quebrada Norte
Quebrada Norte
Quebrada Norte
Quebrada Norte
Quebrada Norte
Quebrada Norte
Quebrada Norte
Quebrada Norte
Quebrada Norte
Quebrada Norte
Quebrada Norte
Quebrada Norte
Quebrada Pilco Yacu
Quebrada Pilco Yaco
Quebrada Pilco Yacu
Quebrada Pilco Yacu
Quebrada Achicamonte
Ro Jatun Yacu
Quebrada Popa
Quebrada Popa
Quebrada Popa
Quebrada Popa
Quebrada Yerma
Ro Huancabamba
Ro Caariaco
OS-01
OS-02
OS-03
NO-01
NO-02
NO-03
NO-04
NO-05
NO-06
NO-07
NO-08
NO-09
NO-10
NO-11
NO-12
NO-13
NO-14
PI-01
PI-02
PI-03
PI-04
AC-01
JA-01
PO-01
PO-02
PO-03
PO-04
YE-01
HU-01
CA-01
UTM Coordinates
East
North
(m)
(m)
690,931
691,134
691,461
689,016
689,086
689,180
689,536
689,537
689,623
690,442
690,655
690,649
690,780
690,740
690,909
691,465
691,900
688,160
687,927
687,899
687,670
690,073
691,838
688,619
688,746
688,984
688,550
686,248
686,367
692,122
9,327,098
9 327,020
9 326,627
9 326,028
9 326,184
9 326,156
9 326,218
9 326,280
9 326,214
9 326,380
9 326,416
9,326,666
9 326,576
9 326,090
9 326,390
9,326,612
9 326,450
9 325,428
9 326,206
9 326,642
9 328,132
9 327,986
9 326,456
9 328,448
9 328,742
9 329,078
9 329,628
9 345,226
9 345,838
9 343,352
Altitude
(masl)
Discharge
(L/s)
2,943
2,856
2,740
3,430
3,390
3,375
3,305
3,329
3,296
2,849
2,871
2,969
2,868
2,960
2,864
2,721
2,680
3,461
3,349
3,271
3,045
3,264
2,675
3,050
3,043
2,996
2,914
1,078
1,081
1,044
8.4
8.6
32
0.13
1.41
0.4
4.2
0.98
4.8
7.6
23.6
0.5
2
1
20
54.7
82.8
1
9.5
4.7
44.7
1.4
601.5
1.5
3.3
17.9
18.7
165.4
12739.1
859.8
In summary, non-contact waters will be diverted around the project to the maximum
extent practical. Contact water will be contained, collected, and treated if necessary
before release. During construction, sediment ponds will be constructed where
necessary to contain and settle out suspended sediments. Once the TMF starter
embankment has been constructed, water from construction activities upstream of the
TMF will be directed there.
During the studies conducted between 2007 and 2010, samples were collected
throughout the area of the Ro Caariaco basin, part of the Quebrada Yerma basin, and
reaches of Ro Huancabamba. Figure 10-3 shows the locations of water quality sampling
sites. Results for stations closest to the pit area are summarized in Table 10-3.
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Figure 10-3:
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Locations of Water Quality Monitoring Stations
Page 10-8

Table 10-3: Summary of Water Quality Results

Monitoring Stations
K-01
K-03
K-04
K-05
S-09
March 2010
K-23
V-03
ECA1
April 2010
Category 3
Unit
S.W.
S.W.
S.W.
S.W.
S.W.
S.W.
S.W.
Irrigation
Animal
Drinking
Water
11.7
12.2
11.9
11.9
10.15
11.4
11.45
7.21
6.70
4.52
6.81
7.18
7.21
7.87
6,5 - 8,5
6,5 - 8,4
mv
-7.00
19.00
139.00
12.00
-7
3.00
-27
mg/L
7.21
6.67
>= 4
>5
S/cm
L/s
16
4810.8
90
306.2
43
72.4
95
432.0
18.9
253.0
16
857.4
17.1
229.9
< 2000
-
<= 5000
-
Total Dissolved Solids
mg/L
30
92
67
97
31.00
19
21.00
Total Suspended Solids
mg/L
12
<1
<1
2.00
Type of Sample
Parameters In-Situ
Temperature
pH
Eh
Dissolved Oxygen
Conductivity
Discharge Flow
Physical Assessment
Total Metals
Arsenic (As)
mg/L
<0.001
<0.001
<0.001
<0.001
<0.001
<0.001
0.002
0.05
0.1
Cadmium (Cd)
Copper (Cu)
mg/L
mg/L
<0.0002
0.04
<0.0002
0.172
<0.0002
0.234
<0.0002
0.178
<0.0002
0.031
<0.0002
0.002
<0.0002
0.003
0.005
0.20
0.01
0.50
Iron (Fe)
mg/L
0.706
0.128
0.322
0.135
<0.001
0.182
0.12
Mercury (Hg)
mg/L
<0.0001
<0.0001
<0.0001
<0.0001
<0.0001
<0.0001
<0.0001
0.0010
0.0010
Lead (Pb)
mg/L
<0.001
<0.001
<0.001
<0.001
<0.001
<0.001
<0.001
0.05
0.05
Zinc (Zn)
mg/L
0.01
0.016
0.015
0.012
<0.009
0.028
0.032
24
Note: S.W. = Surface Water

1. Water Quality Standards (Peru) D.S.N 002-2008-MINAM
The background total copper concentrations in water are higher in mineralized areas than
in non-mineralized areas. Acidic to slightly acidic pH levels have been identified only at
Stations K-03, K-04, and K-05 at the confluence of the Oso and Norte watersheds, which
are the main watersheds intersected by the open pit, and their surrounding area,
presumably due to the nature of parent material of the nearby hill-slopes and the
dominant mineralization in the area. The natural mineralization is also reflected in the
results for conductivity and total dissolved solids.
At present there are no Peruvian background guidelines for sediment levels. Upon
comparison to Canadian guidelines, water samples from the area showed mercury,
arsenic and lead contents above Probable Effect Levels (PEL), with copper and zinc
nearly 50% above Interim Guidelines (ISQGs). This is not unusual for naturally occurring
mineralized areas where PELs are routinely exceeded.
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10.2.2.5
Air Quality and Noise

AMEC assessed the baseline air quality in the project area on four separate occasions.
The station locations are listed in Table 10-4. The results indicate that air quality is typical
of rural, non-industrialized areas, with no contaminants at concentrations of concern to
human health.
Table 10-4: Air and Noise Measurement Stations
Code
UTM_N*
UTM_E*
Altitude
(masl)
Date
May-07
EAC-01
9,326,314
691,795
2,748
5/27/2007
May-07
EAC-02
9,327,536
690,542
3,229
5/28/2007
May-07
EAC-03
9,328,142
685,865
3,160
5/29/2007
May-07
EAC-04
9,327,902
687,893
3,102
5/30/2007
May-07
EAC-05
9,325,907
688,738
3,495
6/1/2007
Sep-07
EAC-01
9,326,314
691,795
2,748
9/26/2007
Sep-07
EAC-03
9,328,142
685,865
3,160
9/30/2007
Sep-07
EAC-04
9,327,902
687,893
3,102
9/29/2007
Sep-07
EAC-06
9,326,338
689,253
3,376
9/27/2007
Sep-07
EAC-07
9,325,756
688,612
3,507
10/2/2007
Sep-07
EAC-08
9,326,138
687,708
3,352
10/1/2007
Sep-07
EAC-09
9,327,528
689,523
3,420
9/28/2007
May-11
EAC-01
9,326,314
691,795
2,748
5/20/2008
May-11
EAC-03
9,328,142
685,865
3,160
5/23/2008
May-11
EAC-04
9,327,902
687,893
3,102
5/24/2008
May-11
EAC-06
9,326,338
689,253
3,376
5/21/2008
May-11
EAC-07
9,325,756
688,612
3,507
5/29/2008
May-11
EAC-08
9,326,138
687,708
3,352
5/25/2008
May-11
EAC-09
9,327,528
689,523
3,420
5/22/2008
May-11
ERC-10
9,323,913
689,704
3,413
5/27/2008
May-11
EAC-11
9,323,573
688,244
3,583
5/28/2008
May-11
EAC-12
9,321,489
686,763
3,768
5/26/2008
May-11
EAC-01
9,326,294
691,730
2,761
5/2/2010
May-11
EAC-02
9,327,163
690,292
2,920
4/30/2010
May-11
EAC-06
9,326,338
689,253
3,376
5/1/2010
Site Visit
Datum: PSAD56 17S
Project construction and operating activities will be controlled to minimize the generation
of emissions and fugitive dust that could alter the air quality. Key sources for dust are
from mining operations: haul truck traffic, blasting, and material handling, both ore and
waste. Stationary source emissions, such as those from generators, will comply with or
be lower than Peruvian emission regulations for these types of equipment. In the case of
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Caariaco, the mine will be supplied with power from the national electric grid, and so
generator emissions will be limited. Stack emissions from the roaster will be controlled
through off-gas scrubbing, using BACT (best available control technology) for emission
control. Exhaust emissions from mobile equipment will comply with Peruvian guidelines.
The mine equipment maintenance program will ensure that vehicles are maintained
properly so that emissions comply with the original manufacturers specifications.
Potential air quality impacts from fugitive and stationary sources will be assessed with the
aid of an air dispersion model to predict areas of potential exceedance of air quality
guidelines. Particular focus will be placed on predicting the impacts of the roaster and
acid plant. Emission control measures will be site specific as much as possible.
To date, four noise level assessments have been conducted at the same locations shown
in Table 10-4 to obtain background data for the site under various conditions. Results
indicate the site is typical of rural, non-industrialized areas with few non-natural noise
sources. Additional noise modelling will be conducted once the equipment fleet has been
decided upon and the locations of major stationary noise sources have been set.
Construction and operations scenarios will be modelled and the results used to focus
control and management measures on mitigating potential effects on health of residents
and workers and minimizing potential impact on local wildlife.
10.2.3
Ecosystems and Biodiversity

Ground surfaces at the highest altitudes in the project area are covered by wet
grasslands, locally known as moors (3,200 to 3,600 masl), and cloud forests1 (2,600 to
3,200 masl). At lower altitudes (below 2,800 masl), the ground is cultivated land,
currently used for grazing, or recently abandoned cultivated land covered by native
vegetation. Very little primary forest or undisturbed land is found below 2,800 masl. The
moorland ecosystem traditionally extends from Colombia in the north to the
Huancabamba Depression in Peru in the south. The moors in the project area had not
had not been recorded before and are now considered to constitute the southern extent of
this ecosystem along the axis of the Western Cordillera. The ecosystem is deeply
fragmented and affected by human activities along most of its length.
Biodiversity is the sum total of different plant and animal species and their support
communities and ecosystems in a particular placefrom a microcosm to the entire earth.
Indicators of biodiversity are measures used to rank biodiversity in a particular frame of
reference (e.g., microcosm). A common index is the number of different species of plants
or animals in the frame of reference. Operationally, for assessment purposes,
biodiversity is taken to mean the number of rare and/or endangered species.
Cloud forests are so called because they occur in an area where clouds rising on mountain slopes routinely impinge on the forest
canopy.
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The project area has been studied more intently than the surrounding region with respect
to biodiversity indicators such as species richness (for orchids in particular, with more
than 150 species recorded), level of endemism (for amphibians, orchids, insects, and
small mammals), and the presence of endangered species (more than 20, including
especially mountain tapir and spectacled bear). These studies have resulted in a greater
understanding of the biodiversity of the overall region. All of the protected and
endangered species recorded or sited within the greater project footprint are also found in
similar habitats within Peru or in neighbouring countries.
Studies conducted by AMEC have shown that an abundant number of orchid species are
present within the larger project footprint, and species previously known in Ecuador and
Colombia have also been identified. This is not surprising, as orchids are the most
diverse family of flowering plants in the world. Candente has initiated an orchid relocation
program, as described below. The ongoing baseline studies have also sighted more than
180 bird species within the project area and Ro Huancabamba, including thirteen
endangered and endemic species, as shown in Table 10-5; all species listed on the table
are resident. Twenty-three protected species of mammals have been recorded in the
greater project footprint, including the spectacled bear and the mountain tapir. AMEC
specialists have observed spectacled bears and have begun documenting footprints and
their locations, hair samples, and feeding locations. Candente plans to commission a
relocation assessment for endangered and protected mammals as part of the next phase
of study.
Table 10-5: Protected and Endemic Bird Species in Project Area
Common Name
Bearded Guan
Ecuadorian Ground Dove
Pacific Parrotlet
Spot-Throated Hummingbird
Purple-throated Sunangel
Rainbow Starfrontlet
Collared Antshrike
Maran Crescentchest
Unicolored Tapaculo
Maran Thrush
Buff-bellied Tanager
Black-capped Sparrow
Drab Seedeater
Species
Penelope barbata
Columbina buckleyi
Forpus coelestis
Leucippus taczanowskii
Heliangelus viola
Coeligena iris
Sakesphorus bernardi
Melanopareia maranonica
Scytalopus unicolor
Turdus maranonicus
Thlypopsis inornata
Arremon abeillei
Sporophila simplex
INRENA
IUCN
EN
VU
Endemic
NT
NT
EBAs
46
45
45
048, 051
46
46
048, 045
48
X
X
48
48
048, 045
45
Candente has conducted studies that provide the necessary information for the future
relocation of protected orchid and amphibian species. The orchid relocation study
includes population assessments and the construction and implementation of two orchid
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nurseries at two different altitude levels to experiment with transplantation techniques.

The amphibians study includes population assessments and the evaluation of potential
relocation sites.
The hydrobiological assessment reported no native species of fish in Ro Caariaco or
Quebrada Yerma at stations within the area of environmental influence of the project.
Native species, especially catfish, have been found in the lower basin of both waterbodies
and in Ro Huancabamba, approximately 40 km downstream of the project site.
Introduced trout were found downstream in the main stem of Ro Caariaco.
Candente is planning to support a national conservation initiative for the creation of a
60,000 ha National Park south of the project for the protection of similar habitats and
species.
10.2.4
Environmental Effects of the Project

Key considerations for evaluating the potential environmental effects of the project are as
follows:
Potential alteration of the quality or volume of water from the two watersheds within
the area of influence of the project Effects on water quality and volume will be
minimized to the extent practicable through water management practices and
monitoring programs.
Change in land use and effect on montane cloud forests Effects on the natural
habitat will mainly be limited to the areas of the open pit and the WRMF and will be
mitigated in development of the mine. The remaining project components are
predominantly situated in abandoned agricultural zones or areas that have already
been modified by other human activities.
Effects on protected species Mine development, increased traffic volumes, and the
noise generated during construction and operation of the project are factors that will
be managed to minimize effects on protected species, along with potential relocation
measures.
Potential for soil erosion The methods outlined in the following subsection will be
implemented to minimize the potential for soil erosion resulting from vegetation
removal required for project construction.
10.2.5
Mitigation and Management

A considerable amount of human activity has taken place in the area up to this time,
including primarily agricultural activities and, to a lesser extent, previous mineral
exploration, and much of the area is no longer pristine; however, Candente has been
proactive in measuring background conditions and assessing mitigation strategies.
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A comprehensive water management program will be developed and implemented during

detailed engineering prior to project construction. The key objective of the water
management plan is to minimize negative effects on quality and quantity of water in the
drainage basins in which the project is located, through all project phases from
construction through operation, closure, and post closure.
The project footprint within areas that contain the cloud forests has been minimized to the
greatest extent practical consistent with safe operation of the mine. Where possible,
forest cover will be re-established following mine closure. Revegetation of areas previous
affected by humans will also be assessed as part of a no net loss approach.
Candente has initiated and plans to continue a program of orchid cultivation to provide the
necessary information for the future relocation of protected species. Where possible, rare
plant species will be protected or transplanted; where practical, the habitats of rare fauna
will be maintained as functioning ecological units.
Soil erosion will be mitigated by three principal methods:
minimizing disturbance of vegetated areas
stabilizing disturbed areas to prevent erosion through mechanical (compaction) and
bioengineering (replanting, live cuttings) means
reclaiming and revegetating disturbed areas as soon as practical after disuse.
10.3
Socioeconomic Component
10.3.1
Socioeconomic Area of Influence

The Caariaco project lies within the Region of Lambayeque, in Ferreafe province, in the
Caaris2 district of northern Peru. In addition to this political administrative division, the
community of San Juan de Caaris3 (CJSC) holds the surface rights in the proposed
Caariaco project development area.
In Peru, a peasant community is defined as a group of families with collective rights over
land property. These communities are enrolled in the Public Register Office and are
considered a legal entity, such as an association or company. The community must
renew its registration every two years by presenting a complete list of their active
membersmainly adult men. A village is defined as a group of houses in a rural area. A
social group consists of a number of people interacting and sharing an objective and
Peru is divided politically and administratively into regions, provinces, and districts; the latter are the basic units for the
political-administrative management of the State. Distribution of the budget for public and social programs to support poverty
reduction is channelled through these districts.
Rural communities are one of the oldest types of organization in the Peruvian countryside. Although their origins are ancient, at
present they are modern institutions of territorial character and are recognized by the Peruvian State, which grants them legal
existence and identity. Castillo, Pedro. Las comunidades campesinas en el siglo XXI: Balance jurdico. En Qu sabemos de las
comunidades campesinas? Lima, 2007.
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norms. For example, the peasant community itself is a social group encompassing a
number of primary social groups.
The CJSC was formally recognized by the State on 10 October 1956, and it now
comprises more than 25 villages and about 1,500 primary social groups. The CJSC
village of Caaris is adjacent to an unnamed tributary to Ro Caariaco, on the east side
of the Caariaco valley, about 2.5 km from the project site. According to the National
Institute for Statistics (INEI), Caaris has 323 inhabitants grouped in 81 families. A
program to determine the number of primary social groups within Caaris is being
planned. The origins of the community are pre-Hispanic and despite transformations over
centuries, it retains the main characteristics that have allowed it to organize and govern
the undeveloped territory in which is located. These include:
partial collective management of the natural resources within its territory lands,
water, forest, natural pasture
its own social organization in which authorities and representatives are democratically
chosen. The community board, which is elected every two years, is the body that
represents the Community Assembly composed of all members of the community.
Road infrastructure and access to CJSC and surrounding farmhouses is limited, with the
closest paved road leading to the nearest intermediate cities such as Chiclayo
(Lambayeque Region) and Jan (Cajamarca Region) still more than 40 km away. Table
10-6 lists the existing means of access from Lima to the village of Caaris in the central
part of the territory of CJSC.
Table 10-6: Access to Village of Caaris
Route
Lima Chiclayo
Chiclayo Olmos
Olmos Pucar
Pucar Caaris
Means of Transport
Travel Time
(hours)
Aeroplane
Truck paved road
Truck paved road
Truck secondary gravel road
1.0
1.5
2.0
3.0
Total
7.5
With the exception of the access road and power line, the project components for this
study will be constructed along the basin of Ro Caariaco and Quebrada Yerma,
covering altitudes ranging from 2,400 to 3,600 masl and falling within different
archaeological zones. The territory includes villages, agricultural areas or individual plots,
collective-use grasslands, and the Caaris woods area. In the latter case, the forest is
parcelled among landholders, but it is also recognized that all forest area in the CJSC is a
common community resource, especially for water collection.
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The residents of CJSC are defined according to the United Nations Statistical
Commission as both absolute and relatively poor. In 2007 AMEC (Peru) conducted a
survey of households in the community and found that living standards are well below the
national average. For example, the study showed that 86% of families have monthly
incomes of less than US$100. Another important indicator of vulnerability is the high rate
of illiteracy, which reaches 46%.
Adequate sanitation is scarce; the survey found that more than 50% of homes have no
piped water. Water supply is derived directly from streams that are also used for cattle,
ablution, and defecation and as waste receptacles for plastics, cans, and domestic
residues. Ninety-five percent of families use wood obtained from the cloud forests for
cooking within their abodes, without adequate exhaust, leading to a high rate of
respiratory diseases, especially among women and children who spend most of their time
inside the house.
Most members of the community, 87.6%, are involved in subsistence agricultural
production of various crop types suited to the variety of microclimates and ecological
zones found in the Caariaco basin. Andean tubers a (potatoes, ocas, ollucos) are
cultivated at the highest elevations, above 3,000 masl,, where there is also abundant
natural grass land for cattle grazing. Maize, beans, and peas are grown at mid-altitudes
between 2,000 and 3,000 masl, and fruit crops dominate at elevations below 2,000 masl.
The lack of funding sources for irrigation prevents farmers from taking greater advantage
of the diverse growing conditions; only 15.4% of plots are irrigated by means of rustic
channels. Farmers have few opportunities to sell their products to the regional market
because most crops are consumed locally.
Given the socioeconomic and cultural characteristics of the CJSC, the population within
the direct area of influence of the project, according to IFC standards, falls into the
category of a vulnerable indigenous group, meaning they are excluded from economic
development processes, and whose livelihoods are directly linked to the local natural
resources4. Therefore, the socioenvironmental studies and management plans to be
developed for the project will follow the IFC standards, which are recognized as a
warranty of higher performance level for investment in mining projects.
10.3.2
Resettlement Assessment
The development of the Caariaco Norte project will potentially require the resettlement of
social groups in the immediate project impact area. In assessing the results and costs of
this resettlement, studies and planning will address several key factors:
A socioeconomic baseline and inventory of goods will be developed that recognizes
the current residential condition of those individuals to be resettled and the fair
Development Policy and Standards on Social and Environmental Sustainability IFC, 2006
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agricultural value of their lands. This framework will allow the project to evaluate
stakeholder requirements.
Studies will address the allocation of forested areas in CJSC. The community as a
whole is recognized as a landholder, and projects will be implemented to mitigate the
potential changes in biodiversity, forestry, ethno-biological resources, and potentially
water quality and volume in the basin. As discussed previously, an orchid cultivation
program has already been initiated, and Candente plans to protect, transplant, or
relocate other rare species.
A social risk study will be undertaken at both a regional and local level that recognizes
and acknowledges the perceptions of stakeholders and other interest groups with
regard to the potential impacts of the project, including the amount and quality of
water, the change in land use, and the potential effects on downstream populations.
The local population will be encouraged to participate in varying aspects of project
development through a Health, Safety, Environment, and Community (HSEC)
Management System that incorporates the IFC5 Development Standards. This
management system will be implemented from the initial stages of the project to lay
the appropriate foundations for socially responsible management for the life of the
project.
10.4
Legal Framework
This section outlines the legal framework in Peru that will serve as the basis for permitting
requirements for the project. Spanish abbreviations for English terms are shown in
brackets.
10.4.1
General Legal Framework
10.4.1.1
Mining Regulation
The main regulation for the mining and metallurgical sector is the Consolidated Text
(TUO) of the General Mining Law, Supreme Decree (DS) 014-92-EM and the
Environmental Protection Regulations approved by DS 016-93-EM and its amendment
approved by DS 059-93-EM. The Ministry of Energy and Mines (MINEM) is the overall
governing body for mining-related legislation.
The development standards that will have to be included in the Management System and the Social and Environmental
Assessment are related to the following topics: a) work and labour conditions, b) prevention and reduction of pollution, c) health
and safety of the community, d) land acquisition and involuntary resettlement, e) biodiversity conservation and natural resources
sustainable management, f) indigenous peoples and cultural heritage. For each of these issues, the IFC has developed the
Performance Standards to be included in Environmental Impact Studies and Management Plans of Projects interested in receiving
support of the World Bank.
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10.4.1.2
General Environmental Law

In Peru, environmental regulations are governed by the Political Constitution of Peru
(1993) and the General Environmental Law, Law 28611, as amended by Law 29263, and
Legislative Decree 1055 (D. Leg.).
Law 28611 establishes the legal framework for environmental management, including
principles and basic rules to ensure the effective exercise of the right to a healthy,
balanced, and appropriate environment for the full development of life. Its intent is to
promote effective environmental management and environmental protection, with the aim
of improving the quality of life of the population and sustainable development of the
country.
The provisions of this law and its supplementary rules are binding on any person or entity,
public or private, that affects soils, both surface and underground, maritime areas,
lakeside, hydrology, hydrogeology, and airspace within the national territory.
The Ministry of Environment (MINAM) was created 13 May 2008 by D. Leg. 1013 with the
aim of conserving the environment by fostering and ensuring sustainable, responsible,
rational, and ethical use of natural resources and the environment that sustains them. Its
stated mission is to assist the comprehensive social, economic, and cultural development
of human individuals in harmony with their environment; and to thereby ensure for present
and future generations the right to enjoy a balanced and suitable environment for the
development of life.
10.4.1.3
Environmental Impact Assessment National System Law

Law 27446, Law of the National Environmental Impact Assessment, as amended by
D. Leg. 1078, created the Environmental Impact Assessment National System (SEIA) as
a unique and coordinated system for the identification, prevention, monitoring, control,
and early correction of negative environmental impacts of human actions resulting from
an investment project. It also seeks to establish a uniform process that includes
requirements, stages, and scope of environmental impact assessments for investment
projects and establishes mechanisms to ensure citizen participation in the process of
environmental impact assessment.
This law provides for the categorization of investment projects according to their
environmental risk: Category I Environmental Impact Statements, Category II
Semi-detailed Environmental Impact Study, and Category III Detailed Environmental
Impact Study. It also provides environmental protection criteria to consider in evaluating
investment projects.
The regulation of Law 27446 was approved by DS 019-2009-MINAM.
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10.4.2
Specific Legal Framework
10.4.2.1
Environmental Protection Rule on Mining and Metallurgical Activities

The Environmental Protection Rule on Mining and Metallurgical Activities was approved
by DS 016-93-EM and amended by DS 059-93-EM. The rule states that the holder of a
mining and metallurgy activity/project is responsible for emissions, discharges, and waste
disposal to the environment that result from the processes carried out on the project site.
To this end, it is the duty of the project holder to avoid and prevent those elements and/or
substances that in concentrations and/or over a period of long exposure that could
exceed the maximum permissible levels and have adverse effects on the environment.
This rule defines the environmental duties that mining operators must meet to operate a
mining project and the authorities responsible for approving environmental studies and
auditing mining and metallurgical activities.
10.4.2.2
Mining Closure Regulations

Mine Closure Law 28090 sets out the obligations of a company with regard to
rehabilitation, closure, and post-closure activities for a mining operation. DS 033-2005EM approved the specific rule for the Mining Closure Law. Mining companies are
required to prepare and submit closure plans that define the steps to be taken, including
costs, to protect the environment from solids, liquids, and gases generated by mining
work. The law mandates the establishment of an Environmental Guarantee at the early
stages of a project to avoid the possibility of a lack of funds in future.
10.4.2.3
Water Quality and Effluents

The instruments of current legislation protecting the natural water resource are supported
by the Water Resources Law 29338 and its rule approved by DS 001-2010-AG. Also, in
July 2008 MINAM promulgated DS 002-2008-MINAM approving the National Surface
Water Quality Standards (ECA).
DS 010-2010-MINAM establishes the maximum permissible levels for discharge of
effluents from mining and metallurgical activities. These limits apply to all new operations
and projects. Mining projects currently in operation must comply with the limits
established in Ministerial Resolution (RM) 011-96-EM/VMM; however, DS 010-2010MINAM provides a maximum period of 20 months for current operations to adjust to the
new limits.
10.4.2.4
Air Quality and Emissions

DS 074-2001-PCM and its complement DS 069-2003-PCM established the National Air
Quality Standards. In addition, DS 003-2008-MINAM approved new standards for sulphur
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dioxide, benzene, total hydrocarbons, PM2.5, and hydrogen sulphide. For the mining
sector, RM 315-96-EM/VMM sets the maximum permissible levels of elements and
compounds present in the gaseous emissions resulting from mining and metallurgical
activities.
10.4.2.5
Flora and Fauna

Law 29376 repealed D. Leg. 1090 and reinstates Law 27308, Law of Forestry and
Wildlife, and its regulation approved by DS 014-2001-AG (and amendments), which
regulate and monitor the sustainable use and conservation of forest resources and wildlife
in the country.
Peruvian legislation regulates the protection of endangered species through its
membership in the international CITES, or Convention on International Trade in
Endangered Species. This convention regulates the trade of endangered species of flora
and fauna. The CITES convention was ratified by Law 21080 on 21 January 1975.
In addition, DS 034-2004-AG approved the list of threatened fauna species in Peru, which
includes mammals, birds, reptiles, and amphibians, and prohibits the use, hunting,
transportation, and/or export of wildlife species for commercial purposes not authorized
by the Department of Management and Wildlife (DGFFS).
DS 043-2006-AG approved the official categorization of endangered species of flora and
established prohibitions on the use or acquisition of species on the official list for
commercial purposes.
10.4.2.6
Archaeology
The following instruments of current legislation protect Perus archaeological heritage and
regulate the activities that require archaeological studies:
Political Constitution of Peru (1993) According to Article 21, all deposits and
archaeological remains are considered Cultural Patrimony of the Nation, whether
expressly stated or temporarily presumed as such.
Penal Code This code governs the protection of cultural heritage and is accompanied
by sanctions (Articles 226 to 230). Any intentional destruction of any archaeological
site or any archaeological object is classified as a crime against cultural property that
leads to imprisonment and fines.
Regulation of Archaeological Research (RS 004-2000-ED) This rule governs the
approval procedure for archaeological assessment and the process for obtaining a
Certificate of Nonexistence of Archaeological Remains (CIRA), which is required for
the implementation of mining projects.
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DS 022-2002-ED This covers the National Culture Institutes (INC) Single Text of
Administrative Procedures (TUPA).
The INC is now an integral part of the Ministry of Culture, which was created by Law
29565 (July 2010), and standards are currently being developed to adapt the different
administrative INC procedures to the new structure of the Ministry of Culture.
Applications for archaeological assessments, CIRA, and other procedures are submitted
to the General Directorate of Archaeology.
10.4.2.7
Solid Wastes
Law 27314, General Law of Solid Wastes, amended by D. Leg. 1065, and its regulation
approved by DS 057-2004-PCM state the technical and legal requirements for solid waste
management. They also provide procedures for the gradual implementation of new
management systems for projects, considering technical and economic feasibility,
geographic location, human health, and the environment.
The Solid Waste Law establishes that the Ministry of Transportation and Communications
(MTC) regulates and governs the transportation of hazardous wastes under DS 0212008-MTC, National Regulation for Transport of Hazardous Materials and Wastes, and its
amendment DS 030-2008-MTC.
10.4.2.8
Social and Community Relationships

Article 89 of the Political Constitution of Peru recognizes the legal existence and legal
status of peasant and native communities. These communities are autonomous in their
organization, community work, free use of their territories, and economic and
administrative issues.
Rural Communities Law 24656 defines peasant communities as public interest
organizations with legal status. These constitute families who live and control the land
related to the community for economic and cultural ancestral ties.
The Law of Private Investment for Development of Economic Activities in Peruvian and
Rural Communities and Native Lands 26505, Articles 10 and 11, were reinstated in
accordance with Law 29261, which establishes the conditions to be followed by mining
concession holders to obtain permission for use of surface lands from the peasant
communities where a mining project is located.
Also, in May 2008 MINEM approved DS 028-2008-EM, Rule for Consultation and Citizen
Participation in the Mining Sector, and in June 2008 approved the complementary
regulation RM 304-2008-EM/DM. Both regulate the process of citizen participation in the
mining sector and outline the mechanisms for consultation and public participation during
the development of mining projects.
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Evaluation of the social aspects of the Caariaco project must consider the MINEM
guidelines established in the Guide to Community Relations.
10.4.3
Summary of Legal Framework

Table 10-7 lists the main laws and regulations applicable to the Caariaco Norte project.
Table 10-7: Applicable Legal Framework

Legal Instrument
Date
Description
General Framework
Political Constitution of Peru
30/12/93
Political Constitution of Peru in 1993. Title III, Chapter II "The Environment and
Natural Resources"
D. L. 757 (repealed in part)
13/11/91
Framework Law for Private Investment Growth in Peru
Law 28245
08/06/04
Framework Law of the National Environmental Management System
DS 008-2005-PCM
28/01/05
Rule of the Framework Law of the National Environmental Management System
Law 27446
16/03/01
Law of Environmental Impact Assessment National System
DS 019-2009-MINAM
25/09/09
Rule of Law 27446
Law 26842
20/07/97
Health General Law
Law 28611
13/09/05
Environmental General Law
D. Leg. 1055
27/06/08
Amendment of the Environmental General Law
Law 29263
01/10/08
Amendment of the Environmental General Law
D. Leg. 1013
14/05/08
Approves the Law of Creation, Organization and Functions of the Ministry of

Environment
DS 016-93-EM
28/04/93
Environmental Protection Rule for Mining and Metallurgical Activities
DS 059-93-EM
10/12/93
Amendment of the Environmental Protection Regulation for Mining and Metallurgical

Activities
DS 020-2008-EM
02/04/08
Environmental Regulation for Mining Exploration Activity
RM 167-2008-EM/DM
10/04/08
Established the TOR for environmental studies in exploration projects
Law 28090
14/10/03
Closure Mine Law
DS 033-2005-EM
15/08/05
Regulation for Closure Mine Law
Law 28721
06/07/04
Environmental Liabilities Law
DS 059-2005-EM
07/12/05
Regulation for Environmental Liabilities Law
D. Leg. 1042
26/06/08
Amendment of Environmental Liabilities Law
DS 014-92-EM
02/06/92
Title XI of the TUO of the General Mining Law about Environment
DS 031-2007-EM
26/06/07
Regulation for Organization and Functions of the Ministry of Energy and Mines
RS 052-2004-SUNARP/SN
09/02/04
Regulation for Mining Rights and Claims Registry
DS 042-2003-EM
13/12/03
Establishes Previous Commitments as a Requirement for the Development of

Mining Activities
DS 052-2010-EM
17/08/10
Amendment of DS 042-2003-EM
DS 028-2008-EM
27/05/08
Regulations for Consultation and Citizen Participation in the Mining Sector
RM 304-2008-EM/DM
26/06/08
Complementary Regulation of DS 028-2008-EM detailing the mechanisms for

citizen participation in the mining sector.
DS 074-2001-PCM
22/06/01
Air Quality Standards
DS 069-2003-PCM
14/07/03
Complementary regulation of Appendix 01 of DS 074-2001-PCM
Mining Specific Framework
Air Quality and Emissions
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Legal Instrument
Date
Description
DS 003-2008-MINAM
22/08/08
Air Quality Standards for sulphur dioxide, benzene, total hydrocarbons, hydrogen
sulphide and PM2.5
RM 315-96-EM/VMM
16/07/96
Maximum Permissible Levels of elements and compounds present in gaseous

emissions coming from Mining and Metallurgical Operations
Noise and Non-Ionizing Radiation

DS 085-2003-PCM
24/10/03
Environmental Noise Quality Standards
DS 055-2010-EM
25/07/01
Regulation for Safety and Occupational Health of Mining Activities
Law 28028
18/07/03
Law Regulating the Use of Ionizing Radiation Sources
DS 039-2008-EM
19/07/08
Regulation for Law Regulating the Use of Ionizing Radiation Sources
DS 010-2005-PCM
02/02/05
Non Ionizing Radiation National Standards
Water Quality Water Resources Effluents

Law 29338
31/03/09
Law of Water Resources
DS 001-2010-AG
24/03/10
Regulation of Law of Water Resources
DS 002-2008-MINAM
31/07/08
Surface Water Quality National Standards
RM 011-96-EM/VMM
13/01/96
Maximum Permissible Levels for Liquid Effluents from Mining - Metallurgical

activities (applicable to existing operations)
DS 010-2010-MINAM
21/08/10
Maximum Permissible Levels for Liquid Effluents from Mining - Metallurgical

activities (applicable to new projects)
D. Leg. 997
13/03/08
Law of Organizations and Functions of the Ministry of Agriculture.
Law 26505
17/07/95
Law of Private Investment for Development of Economic Activities in National and

Rural and Native Communities Lands
DS 011-97-AG
13/06/97
Regulation for Law 26505
DS 033-85-AG
12/04/85
Regulation for Soil Survey
DS 017-2009-AG
02/09/09
Regulation for the Land Classification Rules Using Major Capacity
Soils
Natural Resources and Biological Diversity (Vegetation, Flora, Fauna)

Law 26821
26/06/97
Organic Law for the Sustainable Use of Natural Resources
Law 26839
16/07/97
Law of the Conservation of Biological Diversity
DS 068-2001-PCM
21/06/01
Regulation for the Law of Conservation and Sustainable Use of Biological Diversity
Law 29376
10/06/09
Repealed the D. Leg. 1090 and reinstated the Law 27308, its regulation and
amendments
Law 27308
16/07/2000
Law of Forestry and Wildlife
D.S 014-2001-AG
09/04/01
Regulation of the Law 27308
DS 038-2001-AG
26/06/01
Regulation of the Law of Natural Protected Areas
DS 043-2006-AG
13/07/06
Categorization of Threatened Species of Flora
DS 034-2004-AG
18/09/04
Categorization of Endangered Species of Wild Fauna
Law 26221
19/08/93
Law of Hydrocarbons
DS 015-2006-EM
02/03/06
Environmental Protection Regulation for Hydrocarbon Activities
DS 052-93-EM
18/11/93
Regulation for Safe Hydrocarbon Storage
DS 030-98-EM
03/08/98
Regulation for the Sale of Liquid Fuels and Other Derivatives of Hydrocarbons
DS 026-94-EM
10/05/94
Regulation for Safe Hydrocarbon Transportation
Law 27314
21/07/00
Solid Wastes General Law
DS 057-2004-PCM
24/07/04
Regulation for Solid Wastes General Law
Law 28256
19/06/04
Law of Terrestrial Transport of Hazardous Materials and Wastes
Hazardous Materials
Solid and Dangerous Wastes
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Legal Instrument
Date
DS 021-2008-MTC
10/06/08
Regulation for the Law of Terrestrial Transport of Hazardous Materials and Wastes
Description
DS 030-2008-MTC
01/10/08
Amendment of the Regulation for the Law of Terrestrial Transport of Hazardous

Materials and Wastes
Cultural Heritage
Law 29565
22/07/2010
Law 28296
22/07/04
Law that created the Ministry of Culture

General Law of National Cultural Heritage
RS 060-95-ED
02/08/95
Regulation for Exploration and Archaeological Excavations
RS 004-2000-ED
25/01/00
Regulation for Archaeological Research
Social Aspects and Community Participation

Law 24656
14/04/87
Peasant Communities General Law
Law 26505
17/07/95
Law of Private Investment for Development of Economic Activities in National and

Rural and Native Communities Lands
Law 29261
21/09/08
Law which repeals D. Leg. 1015 and 1073, and reinstates the articles 10 and 11 of
Law 26505, Law of Private Investment for Development of Economic Activities in
National and Rural and Native Communities Lands
DS 055-2010-EM
22/08/10
Regulation for Safety and Occupational Health of Mining Activities
RD 087-2000-EM
19/05/00
Record of Incidents
RD 128-2001-EM
19/10/01
Safety Auditing
Safety and Occupational Health
D.L. = Decree Law; D.Leg. = Legislative Decree; DS = Supreme Decree; RS = Supreme Resolution; RM =: Ministerial Resolution;
RD = Directoral Resolution.
10.5
Permitting Requirements
10.5.1
Summary of Permits and Authorizations

In accordance with the requirements of the Peruvian Legal Framework and Ministry of
Energy and Mines, Candente must initiate a process to obtain all environmental,
construction, and mining permits that pertain to the project.
The main permit
requirements identified to date for the start of construction and mining operations are
summarized below.
Environmental Studies and Permits (EIA)
Water Authorization
Closure Plan
Construction Permit
Labour Permits
Groundwater Use Licence
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Transportation Deed for controlled substances and products
Authorization to Start Operation.
Lists of major permits and authorizations required for the project pre-construction,
construction, and operations phases are compiled in Tables 10-8, 10-9, and 10-10. Each
permit is tabulated along with the associated reviewing agency and a priority rating of
high, medium, or low.
The tables set out durations in business days. Twenty-two business days per month is
considered to be the average for those procedures for which the legal deadline has been
set in calendar days.
The estimated time frames shown in the tables represent an optimal approach to time
management in administrative procedures. Candente has committed to staying apprised
of changes in Peruvian environmental and mining regulations, which are currently being
updated. The legislation will need to be reviewed continuously to identify all the social
and environmental studies, permits, and authorizations required, as well as the permitting
process and the timeline itself so that it can match the project schedule with the licensing
schedule.
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Table 10-8: Major Licences and Permits Required Pre-Construction Phase

Priority
High
Licence, Permit, or Authorization
Deadline (approximate business days)
Acquisition of land or permission for surface land use
Legal deadline: Not determined

Estimated Time: It is difficult to determine since it
depends on the location of the project components
that overlap in the individual area of the community
or the holders.
Archaeological Assessment Project:

Archaeological Evaluation with/without excavations
Legal Deadline: 22 business days

Estimated Time: 110 business days
Archaeological rescue
Medium
Low
Certificates of Nonexistence of Archaeological Remains

(CIRA)

Approval of Environmental Impact Assessment (EIA)

Mine Closure Plan Approval

Constitution of Financial Guarantee for the Mine Closure Plan
Legal Deadline: Not determined

Estimated Time: Could be constituted at the most
in 20 days.
Granting of Concession of Benefit

Granting of Mining Transport Concession

Granting of Definite Electrical Concession

Establishment of Electricity Easement

Licence of water use:

For population or domestic use/for mining purposes

Estimated Time 45 business days
Favourable technical report for direct consumers of liquid fuel

Deforesting permit to holders of operation and activities other

than forestry

Authorization for crossing access roads

Estimated Time: It is not possible to be
determined, due to fact that a specific procedure
for the granting of this authorization does not exist
Permissions and Licences in the corresponding municipality

Estimated Time: It is not possible to be determined
due to that the terms could vary depending on
each Municipality.
Service of operation for terrestrial transport of workers by

highway

Authorization for the construction or modification of public or

private airports or airfields

Approval of Investment in Public Service Infrastructure

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Table 10-9: Major Licences and Permits Required Construction Phase

Priority
High
Medium
Low
Registration in the Registry of Hydrocarbon Direct

Consumers, Packaging Plants and Sales Outlets

Authorization to give private telecommunication services

Operation Licence for an explosives deposit

Explosive Handler Licence

Issuance of Transportation of Explosives Guide

Estimated Time: 40 working days
Issuance of special operation permits for the service of self

ground transportation of hazardous materials and / or wastes.

Special Vehicle authorization for the ground transport of

materials and / or hazardous wastes by road.

Drivers Licence of special category for ground transport of

hazardous materials and / or wastes by road

Health Authorization of the Drinking Water Treatment System

Authorization of the Treatment System and disposal of

Domestic Wastewater: a) Release; b) Reuse; c) Infiltration
in the ground (includes septic tanks).

Authorization of the Treatment System and Disposal of

Industrial wastewater for: a) Release; b) Reuse

Permissions and Licences from the corresponding

municipality

Estimated Time: It is not possible to determine
because the terms could vary depending on each
Municipality.
Technical inspection of private or public airfield
Legal Deadline: 30 days capable

Granting of operation or closing authorization of public or

private airports or airfields

Operation and / or renovation authorization of private clinic or

hospital.
Legal Deadline: 15 business days.

Issuance of proof of categorization and registry of medical

offices, medical centres, clinics, private hospitals, dental
clinics

Use of fixed and portable radiation meters

Storage and / or possession of radioactive materials

Establishment of Health Certificate

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Table 10-10: Major Licences and Permits Required Operations Phase

Priority
High
Medium
Low
10.5.2
Authorization to start / restart activities of exploitation in metal

or non-metal mining claims (includes the mining plan)

Mining Operation Certificate

Semi-annual authorization for use of explosives, supplies and

related materials (can be extended once to one year)

Registration or renewal registration only for the control of

chemical materials and controlled products or updated
information

Permissions and Licences before the corresponding

municipality

Estimated Time: It is not possible to be
determined due to that the terms could vary
depending on each Municipality.
Safety Technical Inspection in Multidisciplinary Civil Defense.

Estimated Time: 22 business days or 30 days
calendar
Monthly reports of the special ledgers of chemical supplies

and controlled products kept manually or by electronic means
even when there is no movement
Legal Deadline: 1 business day

Estimated Time: 5 business day
Pre-Construction Permits
This section describes some of the high-priority permits Candente must acquire before
starting the construction phase. The process for obtaining permits for construction and
operations will depend on whether all required pre-construction permits have been
obtained.
10.5.2.1
Surface Land Use

As noted earlier, the area proposed for project development is within the lands of the
Community of San Juan de Caaris (CSJC). CSJC is recognized by the Peruvian
Government as the owner and the beneficiary of the surface lands in their name. To
ensure that it can access all project facility sites, Candente must reach an agreement with
the representatives of CSJC to acquire permission for use of the surface area. Candente
currently has an agreement in place with CSJC to proceed with environmental, social,
and engineering studies. An agreement is pending for the use of surface lands for
construction and mining operations. A second-level negotiation for access will also be
required, mainly for the open pit area, which is parcelled among individual holders.
The time required for Candente to acquire the surface rights needed for the project will
depend on the willingness of the other parties to negotiate and the formalities that must
be met to ensure that all parties recognize the validity of any and all agreements on land
disposition.
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10.5.2.2
Archaeological Assessment
Mining projects in Peru must ensure that the development property is assessed for the
potential presence of historical or archaeological remains (Archaeological Assessment
Project). Depending on the results of the assessment, the area in question could be
subject to an Evaluation of Archaeological Excavations by the Directorate General of the
Archaeological Heritage of the National Institute of Culture (INC)6 or by an archaeologist
registered on the National Register of Archaeologists, which is managed by the INC. This
evaluation, in turn, could lead to the need for an Archaeological Rescue Project, as
recommended by the National Technical Committee of Archaeology. On completion and
approval of the assessment or rescue project, as appropriate, a CIRA, or Certificate of
Nonexistence of Archaeological Remains, will be available for the property.
To date, Candente has carried out the Archaeological Assessment Project for the open pit
area. The results showed that the open pit and surrounding forested areas have no
archaeological sites or remains. It is suspected that other forested areas within the
project footprint will have similar results. All other project components are located in
grasslands or cultivated areas. As a result, INC issued CIRA 2008-403 to Candente for
the open pit and surrounding area: 300 ha plus a perimeter zone of 7 km. To initiate
construction activities, Candente must obtain CIRA(s) for the other project facility areas.
Because the other project facility areas are mainly grasslands or cultivated areas, it is not
possible to predict whether they contain archaeological sites or remains without further
study.
10.5.2.3
EIA and Closure Plan

According to the Environmental Protection Rule on Mining and Metallurgical Activities,
Candente must define all the components of the project as part of an Environmental
Impact Assessment (EIA). Many regulatory procedures and permits depend directly on
approval of the EIA. The EIais currently in progress; the results to date are discussed in
Section 10.2.
According to DS 033-2005-EM, a Closure Plan must be submitted within a maximum
period of one year from approval of the EIS. However, for the project activities to proceed
in a timely manner, it is recommended that the Closure Plan be submitted within three
months of approval of the EIS.
10.5.2.4
Other
Once the EIS is submitted to the MINEM, applications can be prepared and submitted for
other permits as listed below and shown as high-priority items in Table 10-8; however, no
approvals can be granted until the EIA has been approved.
INC now part of the Ministry of Culture
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Granting of Concession of Benefit

Granting of Mining Transport Concession
Granting of Definite Electrical Concession
Establishment of Electrical Easement
Licence of water use for domestic or mining purposes
Favourable technical report for direct consumers of liquid fuel
Deforesting permit to holders of operations and activities other than forestry
Receipt of these authorizations is subject to various conditions and procedures; items of
particular note are discussed below.
Electrical Easement
Candente will need an electrical easement if its electrical supply line crosses an area
owned by local residents or third parties. The easement cannot be granted until the final
concession is approved.
Water Use
The National System of Water Resources was established by Hydrological Resources
Law 29338 and its regulations (DS 001-2010-AG), which stipulate that the National Water
Authority (ANA) is responsible for granting water use rights through decentralized offices,
known as Local Water Administrators (ALA), in each main regional basin. The ALA of the
Jan Basin will be responsible for granting the water use licence for the Caariaco
project. The licence must take into account all requirements and procedures under the
current legislation.
According to the ANA, water licence studies include hydrological information, a site
description, downriver water use estimations, and a water balance study. In addition, a
feasibility-level hydraulic engineering description is required for all facilities related to
water capture. All of these items are currently included in either the EIA or the
engineering studies.
Road Use
Authorization for crossing existing access roads or rail lines falls under the Single Text of
Administrative Procedures (TUPA) of the Ministry of Transport and Communications
(MTC), but the General Directorate of Roads and Railways has not established specific
procedures for obtaining permissions for such crossings. In practice, however, it is
appropriate to request permission to cross existing roads and rail tracks because they are
public property. Supreme Decree No. 034-2007-MTC and its Annex provide details on
road classifications as national, regional, or municipal.
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If any project facilities or access-ways are located in a surface area considered by the
Provincial Municipality of Ferreafe as an Urban Housing Development or Urban
Expansion Area, then Candente must obtain all required permits from the Municipality.
DS 021-2008-MTC approved the National Regulation of Land Transport of Hazardous
Materials and Waste, which seeks to regulate the activities, processes, and operations of
ground transportation of hazardous materials and wastes. These procedures have not
yet been incorporated into the MTCs TUPA, but this is expected to change. The MTC
will be the competent authority for the licensing of vehicles to transport hazardous
materials and wastes, including explosives. This responsibility was previously held by the
Directorate for Control of Security Services, Control of Firearms, Ammunition, and
Explosives for Civilian Use (DICSCAMEC).
Use of Explosives
In accordance with Article 243 of DS 055-2010-EM, Rules of Safety and Occupational
Health in Mining Activities, a Certificate of Mining Operation must be in place for the use
of explosives, accessories, and blasting agents in mining activities. The certificate holder
must be registered with DICSCAMEC.
10.5.3
Construction and Operations Permits

Once all permits required for the pre-construction phase have been obtained, the
following licences and permits are deemed most critical (Tables 10-4 and 10-5).
10.5.3.1
Construction Phase
registration on the hydrocarbons register of direct consumers, packaging plants, and
sales outlets
authorization for the private provision of telecommunications services
licence for the operation of an ammunition depot
authorization for eventual use of explosives and related materials
Explosives Handlers Licence
issuance of the explosives transit guide.
10.5.3.2
Operations Phase
Authorization to start exploitation activities in metallic mining concessions
Technical Security Inspection in Multidisciplinary Civil Defense
permits and licences from municipalities (Ferreafe and Caaris)
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semi-annual authorization for use of explosives, supplies, and related materials

(global authorization)
registration or updated registration or information for the control of chemicals and
controlled products
monthly reports on the special registers of chemicals and controlled products, kept
manually or electronically, even when there have been no changes.
10.5.4
Permitting Process
On 25 September 2009, the Ministry of Environment (MINAM) approved the rule for the
Environmental Impact Assessment System Law (DS 019-2009-MINAM), under the
provision that sector environmental authorities update or develop standards relating to
environmental impact assessment that are appropriate to the intent of the law, within a
period not exceeding 180 calendar days from the day following the publication of the law.
In accordance with legally established criteria, the deadline expired on 25 March 2010.
In the short term, therefore, responsibility for defining and detailing specific terms of
reference (TOR) for mining project EIAs will remain with the Ministry of Energy and Mines
(MINEM). Possible implications for managing mining projects upon the transfer of
regulations from MINEM to MINAM are outlined below.
The time required for baseline and EIA preparation could increase if the TOR and
scope of the EIS need to be more detailed than required in the current mining
environmental regulation (DS 016-93-EM). This assumes that project engineering will
have been completed to the feasibility level and that the public consultation program
has been approved and is underway.
MINEM will need to consult with MINAM, the National Water Authority (ANA), and the
Ministry of Agriculture (MINAG) and address their opinions and observations in a
period of no more than 60 days. This process will be incorporated within the 120-day
(calendar days) period allowed for the General Directorate of Environmental Mining
Affairs (DGAAM) of the MINEM to submit the first project evaluation report.
According to present regulations the DGAAM of MINEM can submit two reports of
observations and a final approval/disapproval report. This could take between 10 and
12 months.
While the EIA is being evaluated by the authorities, the detailed Closure Plan (CP)
must be assembled for presentation within a year after approval of the EIA.
Assuming there are no significant changes to the project design or engineering
closure design presented as part of the EIA, it would be preferable to finish the CP no
more than three months after EIA approval, considering that CP evaluation and
approval is like to take approximately nine months.
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After approval of the EIA and/or the CP, permits for pre-construction will be granted
and applications will be submitted for construction- and operations-phase permits.
Once the construction phase is initiated, the most important permit is the Mining
Operation Certificate (COM), which allows the start of operations.
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CONTENTS
11.0
CONCEPTUAL CLOSURE PLAN .........................................................................11-1

11.1 Summary...................................................................................................11-1
11.2 Introduction ...............................................................................................11-2
11.2.1 General..........................................................................................11-2
11.2.2 Reclamation Objectives .................................................................11-2
11.2.3 Site Facilities .................................................................................11-3
11.3 Final Closure and Reclamation Measures .................................................11-3
11.3.1 Open Pit Mine ................................................................................11-4
11.3.2 Process Plant, Camp Site, and Ancillary Infrastructure ..................11-4
11.3.2.1 Process Plant ................................................................ 11-5
11.3.2.2 Camp Site, Ancillary Buildings, and Infrastructure ......... 11-6
11.3.3 Tailings Management Facility ........................................................11-8
11.3.4 Waste Rock Management Facility and Ro Caariaco Diversion
Channel .........................................................................................11-8
11.3.5 Access Roads and Power Lines ....................................................11-9
11.4 Post-Closure Monitoring ............................................................................11-9
11.5 Reclamation Studies ...............................................................................11-10
11.6 Opinion of Probable Cost for Closure ......................................................11-10
TABLES
Table 11-1: Opinion of Probable Cost for Closure and Reclamation of Caariaco Norte Project 11-11
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11.0
CONCEPTUAL CLOSURE PLAN
11.1
Summary
Reclamation of the Caariaco Norte project in Peru will meet Peruvian environmental
regulations and International Finance Corporation (IFC) Environmental, Health and Safety
Guidelines for Mining (IFC, 2007).
The primary objectives for reclamation and closure are to safeguard future public health
and safety, to minimize impacts on the local environment by ensuring physical, chemical,
and ecological integrity of the site features, and, where practical, to return the disturbed
areas to their pre-mining land use.
open pit mine area
tailings management facility (TMF), including the tailings and reclaim pipelines
waste rock management facility (WRMF) and Ro Caariaco diversion channel
port facilities.
The first four areas comprise the reclamation areas for the project and are the focus of
the following closure concepts. Responsibility and control of reclamation and closure for
the last two areas will be transferred to the government or other corporations at closure.
In general, at closure of the mine, the open pit mine will be allowed to flood, and overflow
water will be managed at the WRMF seepage collection facility. A permanent water cover
will be maintained on the TMF, and any exposed tailings beaches will be capped with
leached cap material to promote revegetation. The WRMF will be covered with a
non-acid-generating cover to reduce infiltration of precipitation. All seepage and runoff
from the TMF and WRMF will be collected in the respective seepage collection
impoundments and, if required, treated before discharge.
Buildings and infrastructure will be salvaged or resold. All non-hazardous materials and
demolition debris will be disposed of appropriately. All hazardous materials will be
removed from the site for proper disposal. Above-grade concrete foundations will be
razed to ground level, and foundations on surface will be broken up. Disturbed areas at
the process plant and camp sites will be graded and revegetated. Post-closure monitoring
would include annual geotechnical inspections and water quality monitoring.
The estimated cost to complete the closure and reclamation activities is $57,652,000.
The accuracy of the cost estimate is limited by the availability of data for this level of mine
planning. The closure plan, reclamation plan, and cost estimate will be revised as the
project develops.
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11.2
Introduction
11.2.1
General
Reclamation of the site will meet Peruvian environmental regulations and International
Finance Corporation (IFC) Environmental, Health and Safety Guidelines for Mining (IFC,
2007), both of which require mine closure plans. The IFC guidelines state that closure
and post-closure activities should be considered as early as possible in the planning and
design stages.
The reclamation and closure plan will evolve hand-in-hand with the design as the project
proceeds through feasibility and permitting. Site-specific knowledge will be gained during
mine development and operations, and the closure plan will be updated to incorporate
this knowledge in addition to the environmental and social conditions and circumstances
at the time of closure.
11.2.2
Reclamation Objectives
The primary reclamation and closure objectives will be to:
minimize adverse socioeconomic impacts and maximize socioeconomic benefits to
the local communities
ensure that future public health and safety are not compromised
ensure that the after-use of the site is beneficial and sustainable to the communities in
the long term
return the areas disturbed by mining operations to their pre-mining land use, where
practical
ensure the physical, chemical, and ecological integrity of site features.
These reclamation objectives will be met by developing a plan that:
where possible, returns the site to a viable self-sustaining ecosystem compatible with
the surrounding environment and post-mining land use
ensures the natural integration of disturbed areas into the surrounding landscape and,
where possible, restores the overall natural conditions of the mine site
ensures the long-term physical stability of engineered structures
ensures the chemical stability of mining products so that water resources are
protected and sustained
returns the land to the pre-mining level of productivity or higher, wherever possible
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develops measures to prevent or minimize discharges of contaminants to surface

water, groundwater, air, and soils
meets or exceeds applicable regulatory requirements and standards for protection of
human health and the environment
presents a durable and cost-effective strategy that minimizes the long-term
expenditure of post-closure maintenance and monitoring.
Notwithstanding these objectives, it will not be possible to fully return some areas to their
pre-development conditions because of the physical changes that will result from mining
operations.
Closure and post-closure plans will include appropriate after-care and continued
monitoring of the site, emissions, and related potential impacts. The minimum
recommended duration of post-closure monitoring is five years after chemical and
physical stability has been achieved. Reductions in monitoring frequency will be a
function of environmental performance and regulatory requirements.
11.2.3
Site Facilities
open pit mine area
tailings management facility (TMF), including the tailings and reclaim pipelines
waste rock management facility (WRMF) and Ro Caariaco diversion channel
port facilities.
The first four areas comprise the reclamation areas for the project and are the focus of
the following closure concepts. Responsibility and control of reclamation and closure for
the last two areas will be transferred to the government or other corporations at closure.
11.3
Final Closure and Reclamation Measures

Final closure and reclamation activities normally proceed after the end of mining activities,
but Candente plans to undertake progressive reclamation where feasible to enhance the
overall remediation of the site. As with the other closure scenarios, procedures at
Caariaco Norte will be site-specific to accomplish the results described below. The plan
will be updated as the project progresses.
In general, all buildings, tanks, and infrastructure not required for post-closure activities
will be cleaned, demolished, and removed from site. Concrete foundations will be razed
to ground level and broken up. Once the site is cleared of all infrastructure, the building
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sites disturbed by mining operations will be re-graded to promote natural drainage and
minimize erosion. Where practical, the surface will be covered with a suitable thickness
of NAG leached cap material (to be determined from reclamation studies through
operations) to encourage natural revegetation.
The access roads, power lines, and port facilities are excluded from this conceptual
closure plan. At this stage of the project it is considered appropriate that Candente could
negotiate with the appropriate groups to transfer control of this infrastructure.
11.3.1
Open Pit Mine

At the cessation of mining, all man-made equipment and materials with salvage value,
such as mining equipment, piping, pumps, and electrical cable, will be removed from the
open pit and then from the site. All equipment and materials with no salvage value will be
cleaned of potentially hazardous materials and disposed of in a permitted on-site landfill.
Non-salvageable, inert materials from other areas of the site will also be placed in the
landfill.
Except those required to maintain the water management system, haul roads into the
open pit will be decommissioned and barricaded to prevent access at closure. A berm
will be built around the perimeter of the open pit and warning signs placed at regular
intervals.
At closure, the open pit will be allowed to flood. At the time this closure plan was
prepared, however, the mine plan was still under development, and the time frame for pit
flooding has not yet been determined; it will be refined in future study phases. Water
inflows will be from direct precipitation, runoff from the catchment area above the open
pit, and regional groundwater flow. Where possible, a diversion ditch will be constructed
north of the pit to direct non-contact surface water toward the reclaimed plant and camp
site. The open pit will be allowed to fill to an elevation that permits it to serve as a
groundwater sink and to contain all open pit contact water. The water level in the open pit
will be maintained by pumping to the water treatment plant downstream of the WRMF
seepage collection system, where it will be treated and released as required.
11.3.2
Process Plant, Camp Site, and Ancillary Infrastructure

The process plant includes the mill building, concentrate storage building, roasting plant,
gas treatment/acid production plant, and primary crusher and conveyors. The camp site
includes the administrative building, the dorm and associated living facilities, and propane
storage. Ancillary infrastructure includes the truckshop buildings, emergency power
generation and distribution systems, potable water treatment plant, sewage treatment
plant, and explosives facilities.
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After being cleaned and hazardous wastes have been removed, all buildings, tanks, and
infrastructure not required for post-closure activities will be demolished. Concrete
foundations will be razed to ground level and broken up to reduce ponding of water.
Once the site is cleared of all infrastructure, the entire camp and process plant areas
disturbed by the mining operations will be re-graded to promote natural drainage and
minimize erosion. The process plant and the camp sites will be covered with NAG
leached cap material to encourage natural revegetation where practical.
Further details for final closure and reclamation of specific site features are described
below.
11.3.2.1
Process Plant
All remaining ore, including material in the coarse ore stockpile, will be processed. The
process plant will then be decommissioned by flushing in-process material through the
circuit, including all flotation cells, tanks, thickeners, and pipelines. The flushed inprocess material will either be recovered as concentrate and shipped off site for smelting,
or report as tailings to the TMF. All in-plant sumps and floors will be cleaned of inprocess material at the same time. All remaining milling agents and chemicals will be
shipped off site for use at a similar facility, recycled through the original supplier, or
disposed of through a government-approved disposal facility.
Once cleaned of in-process materials, the following reclamation measures will be initiated
to decommission and remove the processing facilities:
Process equipment and building systems will be inspected and cleaned of all
potentially hazardous materials such as lubricating oil, hydraulic fluid, and batteries.
Potentially hazardous materials will be packed in appropriate containers and shipped
off site for recycling or disposal at a government-approved facility. Once cleaned,
equipment and material with a salvage value will be removed from the site and sold.
Equipment with no salvage value will be removed and disposed of appropriately.
Once all equipment and wiring have been removed from the plant, the internal and
external structures, tankage, and building shell itself will be demolished. Material with
a salvage value will be shipped off site and sold. Inert material with no salvage value
will be removed and disposed of appropriately.
All above-grade concrete foundations within the mill, such as pump bases and
grinding mill foundations, will be backfilled. The concrete debris will be removed and
disposed of appropriately.
All at-grade concrete floor slabs will be broken up in situ to prevent water from
ponding. The area will be re-graded with local soils as required. Any excess
concrete will be removed and disposed of appropriately.
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Soil and foundation materials around the plant area will be inspected for evidence of
metals and/or hydrocarbon contamination. A soil remediation plan will be developed
and implemented based on this assessment. Metal-contaminated materials will be
excavated and disposed of appropriately. Hydrocarbon-contaminated soils will be
excavated and treated in an on-site landfarm or shipped to an approved off-site facility
for disposal.
11.3.2.2
Camp Site, Ancillary Buildings, and Infrastructure

Warehouse/Maintenance
At closure the warehouse/maintenance buildings and other support buildings will be
removed.
All equipment and building systems will be inspected and cleaned of all potentially
hazardous materials such as lubricating oil, hydraulic fluid, and batteries. Potentially
hazardous materials will be packed in appropriate containers and shipped from site
for recycling or disposal at government-approved facilities. Once cleaned, equipment
and material with a salvage value will be removed from the site and sold. Equipment
and material with no salvage value will be removed and disposed of appropriately.
Once all equipment and wiring have been removed from the buildings, the internal
and external structures and building shells will be demolished. Material with salvage
value will be shipped off site and sold. Material with no salvage value will be removed
and disposed of appropriately.
All above-grade concrete foundations within the buildings will be backfilled or broken
up. Any concrete debris will be removed and disposed of appropriately.
All at-grade concrete floor slabs will be broken up in situ to prevent ponding of water.
The area will be re-graded with local soils as required. Any excess concrete will be
removed and disposed of appropriately.
Soil and foundation materials around infrastructure will be inspected for evidence of
metals and/or hydrocarbon contamination. A soil remediation plan will be developed
and implemented based on this assessment. Metal-contaminated materials will be
excavated and disposed of appropriately. Hydrocarbon-contaminated soils will be
excavated and treated in a landfarm or shipped to an approved off-site facility for
disposal.
Fuel Facilities
At mine closure, the on-site fuel station and tanks and propane tanks will be drained and
cleaned. The drained fuel or propane will be transferred to tank trucks and shipped off
site. Oil and waste water produced during cleaning will be separated, and the reclaimed
oil will be packed into drums for shipment and disposal off site. The cleaned tanks will
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either be shipped off site and sold for their salvage value or be dismantled and disposed
of in an approved off-site facility.
Fuel piping and distribution equipment will similarly be cleaned and then dismantled. The
diked fuel containment area will be cleaned and razed. The liner will be cut up,
decontaminated, and removed with demolition debris to an on-site permitted landfill. The
area will be graded as necessary and allowed to revegetate naturally.
Similar procedures will be followed to decommission the oil storage tank and burner unit
on the domestic waste incinerators. Any remaining inventory of waste oil will be
transferred into drums or a tank truck and be shipped off site for use elsewhere or for
disposal through a government-approved facility.
Potable Water and Sewage Treatment Plants
The potable water and sewage treatment plants will be decommissioned, cleaned, and
removed from site as previously described for other buildings and structures.
The potable water treatment plant will be decommissioned and shipped off site to be
sold for its salvage value. All equipment and building systems will be inspected and
cleaned of all hazardous materials such as lubricating oil, hydraulic fluid, and
batteries. Potentially hazardous materials will be packed in appropriate containers
and shipped off site for recycling or disposal at a government-approved facility.
The sewage treatment plant will be washed out and drained. All equipment and
building systems will be inspected and cleaned of all hazardous materials such as
lubricating oil, hydraulic fluid, and batteries. Potentially hazardous materials will be
packed in appropriate containers and shipped off site for recycling or disposal at a
government-approved facility.
It is assumed at this level of study that local workers retained for long-term maintenance
and post-closure activities will only require small mobile on-site potable water or sewage
treatment facilities, which will be procured if required.
Electrical Substations
The electrical substations and power distribution system will continue to be used to
support the local communities and post-closure water management facilities, and so will
not be decommissioned.
Water Distribution Systems
The water management systems required for the water treatment plants will not be
decommissioned. The remainder of the water management infrastructure will be
dismantled and removed. The freshwater wells will be decommissioned by removing the
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pumps and all above-ground equipment and then backfilling or sealing the wells by other
acceptable means. All above-ground water distribution piping and tankage will be
dismantled; salvageable components will be shipped off site and sold, and nonsalvageable inert materials will be disposed of appropriately. Below-ground piping will be
truncated at ground entry and exit points at a depth of about 1 m below surface. The
buried pipeline sections will be left in place, and the truncation points will be backfilled
with clean fill.
Any residual chemicals from the potable water system will be shipped off site for use
elsewhere. The chemical dosage and handling equipment will be cleaned, dismantled,
and sold.
Site Landfarm
Depending upon the volume of hydrocarbon-contaminated solids present on site at
closure, they may either be shipped off site for disposal at an approved facility or treated
in an on-site landfarm. If a landfarm is constructed, then it will be decommissioned after
closure when all hydrocarbon-contaminated soils have been remediated. Once the
landfarm is no longer required, the remediated soils will be removed from the site and
used as growth media or as cover for reclaimed facilities. The underlying barriers will be
removed and disposed of off site. The landfarm area will then be re-graded to prevent
water ponding, and the oil-water separator will be removed and disposed of appropriately.
The area will be revegetated.
11.3.3

A permanent water cover will be maintained on the TMF post-closure.
Any exposed
tailings beaches will be covered with NAG leached cap material to hasten natural
revegetation and prevent dust emissions. A permanent closure spillway will be
constructed near the saddle embankments. All seepage and runoff from the TMF will be
collected in a seepage collection impoundment and treated for discharge as required.
The TMF water treatment plant is expected to remain in operation until testing indicates
that no further treatment is required to meet emission limit values and receiving water
quality standards. The TMF embankments will be inspected by qualified geotechnical
engineers to ensure long-term physical stability.
11.3.4
Waste Rock Management Facility and Ro Caariaco Diversion Channel

The current mine plans show that the WRMF will cover approximately 250 ha and contain
an estimated 713.5 Mt of waste rock. Estimates of waste rock volumes will be refined as
the project develops.
For the purpose of closure planning, it is assumed that the WRMF will have both nonpotentially acid generating (non-PAG) and potentially acid generating (PAG) components.
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Both types of waste rock will be covered with a layer of fine-grained, non-PAG, leached
cap material to reduce infiltration of precipitation and allowed to naturally revegetate. All
runoff and seepage from the WRMF will be collected and treated at a water treatment
plant as required.
The volume of runoff and seepage will be minimized by retaining the Ro Caariaco
diversion channel in the post-closure period. The channel will divert clean surface water
around the WRMF. Regular inspections by qualified engineers and maintenance of the
channel will be required to ensure its long-term physical stability.
11.3.5
Access Roads and Power Lines

Discussions will be held with the appropriate authorities to transfer control of the access
roads and power lines to the government or community on final closure.
11.4
Post-Closure Monitoring
Monitoring will be undertaken to ensure that the reclamation and closure activities are
successful. Ongoing monitoring and maintenance will be required for the TMF, the
WRMF, the Ro Caariaco diversion channel, and the water treatment plants. This
monitoring has been separated into two phases:
reclamation and closure monitoring
post-closure monitoring and maintenance.
Reclamation and closure monitoring begins at the end of mining and continues until
reclamation and closure activities have ceased. The post-closure monitoring phase will
begin after site reclamation. The level of monitoring required for these phases will be a
function of the environmental performance of the site and national requirements.
Post-closure monitoring requirements will be detailed in the operational monitoring
program, which will be updated regularly during the life of the mine to focus on the key
issues at the time. The following generic discussion of the monitoring program is based
on the current mine design and known monitoring requirements.
During the transition from mine operations to reclamation and closure, water management
operations will continue, including, where necessary, the collection and treatment of
runoff and seepage from site facilities until testing shows that no further treatment is
required to meet emission limit values and/or receiving water quality standards.
The need for environmental monitoring is expected to decline and eventually terminate
once the project facilities have been fully decommissioned and the site has been
reclaimed. Reductions in monitoring frequency will be a function of environmental
performance and regulatory requirements.
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The main elements of the monitoring program during the early reclamation and closure
phase are assumed to be as follows:
continued surveillance of applicable monitoring stations
monitoring of water quality in the open pit and TMF
monitoring of water treatment plant discharges and points downstream of the
discharges
annual inspections of the WRMF, TMF, and open pit by a qualified professional
geotechnical engineer.
The monitoring program is likely to reduce in scope and intensity after the closure period
as reclamation goals and endpoints are achieved. Clear identification of the endpoints,
such as water quality parameters, will be key to the development and implementation of
the monitoring program. Long-term monitoring requirements will be detailed in the
operational monitoring program, which will be updated regularly during mining operations.
11.5
Reclamation Studies
Reclamation studies will be conducted throughout the operation of the mine to develop
the most effective and viable methods to completely reclaim the mine facilities at the end
of operations. Progressive reclamation will also give an indication of final performance
and will lessen the work required at closure. Reclamation studies will include, but not be
limited to:
revegetation test plots, including the evaluation of potential cover materials and
amendments
identification of new reclamation techniques and technologies that reduce costs and
increase efficiencies and environmental protection.
Wherever practical, Candente will continue to work cooperatively with the local
community, research institutions, and/or government agencies to develop and execute
the reclamation studies.
11.6
Opinion of Probable Cost for Closure

AMEC has developed a prefeasibility level cost estimate for the anticipated closure and
reclamation activities discussed in this section. The estimated total cost for all activities is
US$57,650,000, including a 30% contingency (Table 11-1).
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Table 11-1: Opinion of Probable Cost for Closure and Reclamation of

Caariaco Norte Project
Estimated Cost
(US$)
Task
Description
1
2
3
4
5
Open pit mine

Plant site, camp site, and ancillary infrastructure
Waste rock management facility and diversion channel
Tailings management facility
Post-closure monitoring
6,010,000
2,695,000
15,342,000
15,200,000
5,100,000
Subtotal
44,347,100
Contingency 30%
13,305,000
Total
57,652,000
The accuracy of the cost estimate is limited by the availability of data at the prefeasibility
level of mine planning. Unit rates for closure and reclamation activities were based on
comparison with similar South American projects. Estimates of time required to complete
tasks were based on comparison with similar South American projects and previous
AMEC experience. The closure and reclamation plan and the cost estimate will be
revised as the project develops.
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CONTENTS
12.0
PROJECT EXECUTION .......................................................................................12-1

12.1 Summary...................................................................................................12-1
12.2 General Execution Strategy ......................................................................12-4
12.2.1
Project Organization and Staffing ..............................................12-4
12.2.2
Engineering Strategy.................................................................12-5
12.2.3
Basic Engineering and Procurement .........................................12-5
12.2.4
Detailed Engineering .................................................................12-6
12.2.5
Contract Strategy ......................................................................12-8
12.2.5.1
Direct Contracts / Work Packages .........................12-8
12.2.5.2
Service Contracts ................................................12-10
12.2.6
Procurement ...........................................................................12-10
12.3 Site Access .............................................................................................12-12
12.4 Weather ..................................................................................................12-12
12.4.1
General ...................................................................................12-12
12.4.2
Water Management ................................................................12-12
12.5 Construction Execution ...........................................................................12-13
12.5.1
Camp Requirements ...............................................................12-13
12.5.2
Aggregate and Concrete Production .......................................12-13
12.5.3
Mine / Mill Site.........................................................................12-14
12.5.3.1
Open Pit ..............................................................12-14
12.5.3.2
Crushers, Conveyors, and Coarse Ore Stockpile 12-14
12.5.3.3
Process Plant ......................................................12-14
12.5.3.4
Infrastructure .......................................................12-15
12.5.3.5
Tailings Management Facility ..............................12-15
12.6 Traffic/Logistics .......................................................................................12-15
12.6.1
Construction Volumes .............................................................12-15
12.6.2
Project Logistics Organization .................................................12-16
12.6.2.1
Project Logistics Group .......................................12-16
12.6.2.2
Freight-Forwarding ..............................................12-16
12.6.2.3
Customs Clearance .............................................12-16
12.6.2.4
Logistics Management System ............................12-16
12.6.3
Logistics Infrastructure and Services .......................................12-17
12.6.3.1
Off-shore Consolidation Centres .........................12-17
12.6.3.2
Ocean Transport .................................................12-17
12.6.3.3
Ports in Peru .......................................................12-17
12.6.3.4
Marshalling Yards and Warehouses ....................12-21
12.6.3.5
Road Transport ...................................................12-22
12.6.3.6
Airports and Air Freight........................................12-26
12.6.3.7
Hazardous and Dangerous Goods ......................12-27
12.6.4
Project Containers ..................................................................12-27
12.6.5
Personnel Transport ...............................................................12-27
12.7 Project Master Schedule .........................................................................12-27
12.8 Project Controls.......................................................................................12-29
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12.8.1
Scheduling ..............................................................................12-29
12.8.2
Cost Control ............................................................................12-30
12.9 Commissioning and Operational Readiness ............................................12-30
12.9.1
Operator Training ....................................................................12-30
12.9.2
Commissioning Program .........................................................12-31
12.10 Health, Safety, Environment, and Community (HSEC) ............................12-31
12.10.1 Safety .....................................................................................12-32
12.10.2 Security ...................................................................................12-33
TABLES
Table 12-1:
Long-Lead Equipment and Packages ........................................................................ 12-5
FIGURES
Figure 12-1:
Figure 12-2:
Figure 12-3:
Figure 12-4:
Figure 12-5:
Figure 12-6:
Figure 12-7:
Figure 12-8:
Figure 12-9:
Figure 12-10:
Figure 12-11:
High Level Execution Schedule ................................................................................. 12-3

Ports and Transport Infrastructure in Peru ............................................................... 12-18
Port of Callao ........................................................................................................... 12-19
Port of Paita ............................................................................................................. 12-20
Port of Salaverry ...................................................................................................... 12-21
Highway 1B, North of Mopute (view 1 of 2) ............................................................. 12-23
Highway 1B, North of Mopute (view 2 of 2) ............................................................. 12-23
Section of Corral Quemado Road at Lower Elevation along River .......................... 12-24
Limited Clearance Envelope on Road between Chiclayo and Project Site ............. 12-24
Waiting to Pass Washout on Road North of Mopute ............................................... 12-25
Toll Booth near Intersection of Highway 1B and Corral Quemado Road (bypass
required) ................................................................................................................... 12-25
Figure 12-12: High Level Execution Schedule ............................................................................... 12-28
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12.0
PROJECT EXECUTION
12.1
Summary
The execution plan outlines the scope and sequence of events for the permitting,
engineering, procurement, and construction phases of the Caariaco Norte Copper
Project, from current prefeasibility stage, onto feasibility and initiation of preliminary and
basic engineering, through detailed engineering, site construction, and commissioning
and start-up activities. The plan describes the engineering, procurement, project
schedule, site access, logistics, and keys to project success. While Health, Safety,
Environment, and Community (HSEC) issues are considered at every step of the project,
they gain prominence in the field during construction activities.
The major differences between this Execution Plan and that outlined in the PEA study are
summarized below:
Mill throughput has been increased to 95,000 t/d.
Diversion of the river around the waste dump will be via a channel rather than a
tunnel.
The tailings management facility (TMF) has been relocated.
With the exception of the starter dam, the TMF embankments will be constructed of
cycloned tailings.
A pyrite flotation circuit has been included in the tailings processing operation.
The route of the access road has been altered.
Construction now includes a roaster and acid plant.
The execution plan is premised on the following key assumptions:
The mine throughput and process will not change from the prefeasibility study. Any
changes will require review of the plan, estimate, and schedule.
Conditional Approval will be given in June 2012 and Notice to Proceed is given no
later than January 2013.
Upgrading of the pioneer access to site will commence at the beginning of 2013 to
enable early site preparation and camp setup.
Site capture works will commence between these dates, including mobilization,
staging, road upgrades, pioneer road construction, and establishing the construction
camp and services.
Sufficient funds will be made available for the basic and detailed engineering and
procurement phases to support the construction schedule.
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Candente Copper Corp. will establish a project group to undertake the execution of
the project under an EPCM organizational structure. The Candente team will be
supported by outside specialist consultants to perform the EPCM work.
Candente organization for operations will be established during the project execution
phase and will be engaged as the customer of the project.
Local contractors will be available to carry out most of the work, minimizing the import
of people and equipment.
Existing local ports are available to import equipment and materials coming from out
of the country.
Access from the port to the site access road has no restrictions for freight size
(e.g., bridges and tunnels).
Suitable aggregates for structural fill and concrete production are available or can be
produced on site.
During construction, camp units will be purchased to meet future operations
requirements, and the rest of the units will be hired as needed. Upon completion of
construction, the basic camp will be upgraded to house the operations personnel and
the remaining units will be utilized on site for additional accommodation for
contractors and other personnel.
To meet the target commissioning date of October 2014, it is recommended that
long-lead procurement start in January 2012.
The project execution schedule duration is currently 30 months from Notice to Proceed
through to final completion of the second ball mill line within the process plant.
The key milestones for the project include the following:
Notice to Proceed........................................................................1 January 2013
Start Site Establishment Work ....................................................4 January 2013
Start Access Road to Site ................................................................ 1 April 2013
Start Concrete Works ....................................................................... 1 April 2013
Start Tailings Dam............................................................................. 1 July 2013
Start Pre-stripping (mine) ............................................................1 October 2013
Permanent Power Complete .......................................................... 30 June 2014
Diversion Dam Complete ..................................................... 30 September 2014
Start Mining .................................................................................1 October 2014
Commence Plant Commissioning ...............................................1 October 2014
Process Plant Mechanical Complete .................................... 30 December 2014
Ready to Deliver Ore ..................................................................1 January 2015
1st Ball Mill line Commissioning Complete ................................25 January 2015
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Diversion Channel Complete ....................................................30 January 2015

2nd Ball Mill line Commissioned ..................................................... 30 June 2015
A high level schedule of these major activities is provided in Figure 12-1.
Figure 12-1: High Level Execution Schedule
EXECUTION PLAN Rev A - August 2010
ACTIVITY
2010
2011
2012
2013
2014
2015
DURATION Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
ENVIRONMENTAL PERMITTING
STUDIES AND APPROVALS
Notice to proceed
ENGINEERING DESIGN
PROCUREMENT AND CONTRACTS
SITE CAPTURE
PORT by Others
ACCESS ROADS
TRANSMISSION LINE TO SITE
PROCESS PLANT
TAILINGS
INFRASTRUCTURE
OPEN PIT
LEGEND
General Activity
At Risk Activity
Critical Milestones
Activities by Others
The Caariaco project has both advantages and challenges related to execution.
Advantages are as follows:
Caariaco is a green fields site that has a relatively hospitable climate. Both rainfall
and temperatures are moderate.
The elevation is reasonable, and it will be possible to place the camp adjacent to the
mine and plant site.
Access to water for operations is nearby, reducing piping requirements.
The current configuration of the site and mill is not overly complex.
Power, although not currently available, should be readily supplied from a relatively
close power station, and the government is planning works in the area before power
is needed at the site.
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Caariaco has an agreement in place with another company that plans to construct a
port facility before Canariaco begins operations. Canariaco would share the use of
that facility, helping to reduce the scope of this part of the project.
Labour should be readily accessible locally.
Execution challenges are mainly centred around topography. At present, there is no
suitable access for construction. The characteristically steep terrain at the site and
surrounding areas will complicate construction of the project access road and other site
roads, but this should be manageable through good planning. Elevations at the site vary,
and flat land for laydown areas is at a premium.
The key to project execution success is ensuring that site access is available before
Notice to Proceed is issued. No site capture is planned before this date. An existing 4x4
road to the site will be used before the proposed main access road is completed.
Facilities already on site include an exploration camp and a helipad, which can be used in
the early stages of site establishment.
During the initial stages of execution, the construction of the water containment dam in
the river and the associated diversion ditch will commence to allow sufficient water
storage prior to start-up. Access to the pit area for pre-stripping works is also a key
consideration. A light fleet of diesel-powered equipment will be used in the early stages
of pre-stripping.
A peak workforce of approximately 1,500 people is anticipated at the site during the
construction phase. Early recruitment will be required to hire qualified workers and to
establish various training programs, including those designed to employ residents of local
communities in order to develop skills required to participate in mine development and
subsequent operations.
The health and safety of people and the protection of the environment and community are
imperative and integral to all aspects of the project execution.
12.2
General Execution Strategy
12.2.1
Project Organization and Staffing

Project execution will be managed by a composite team consisting primarily of EPCM
contractor personnel reporting to the Owners project team, supplemented by selected
operations personnel. A contract stripping fleet will be engaged early on for pre-stripping
activities on site; the Owners team will ramp up before plant start-up. The plant
operations team will be mobilized and will be responsible for development of operational
readiness, training manuals, procedures, and policies, and will also participate in quality
control and commissioning. Once the project is commissioned, the construction team will
be demobilized and the operations team will assume responsibility for the project.
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12.2.2
Engineering Strategy
Project systems and equipment will be designed to local, Canadian and international
standards as appropriate and will include a maximum of pre-assembly and modularization
of components, consistent with cost optimization. The project systems will be designed in
the metric system of units. Some of the work designated for the engineering phase of the
project will be initiated prior to project approval.
It is essential that the original equipment manufacturers (OEMs) be involved in the initial
stages and that the degree of their involvement, input, and output is agreed upon. This
will eliminate a large amount of rework and additional costs. The vendors of major
equipment will be required to provide technical support engineers to oversee the
installation of vendor equipment. In addition, support will be required during inspection,
commissioning, and for training.
12.2.3
Basic Engineering and Procurement

Regulatory approval for initiating work in the field is expected to be received at the end of
December 2012. To meet the commissioning target date, it is recommended that the
engineering design and detailing start in July 2012 and the long-lead procurement phase
start in January 2012.
The main scope of work for basic engineering covers critical equipment and final
definition of major equipment and facilities with long-lead procurement cycles. Examples
are the construction camps and services, SAG and ball mills, primary crusher, mining
equipment, and power transformers. The procurement plan will designate priority for
each of these packages based on delivery durations and the construction schedule. A list
of equipment falling in this category is shown in Table 12-1.
Table 12-1:
Long-Lead Equipment and Packages

Delivery
(weeks)
Item
Mining shovels
Mine haul trucks
SAG mill and ball mill
Mill motors and starter/switchgear
Semi-mobile crushing station (primary crusher)
Flotation tank cells
Overland belt conveyors package
Mill feed and pebble conveyors
Power transformers
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70
40
60
60
70
50
65
45
52

A more-detailed listing of scope of work items for basic engineering is as follows:

provide support for environmental permitting
prepare and issue the EPCM contractor project execution plans
finalize the contracting strategy, including the development of construction and
contract work packages
finalize the procurement plan and strategy
prepare specifications and procurement packages for long-lead equipment
hold long-lead equipment vendor meetings to finalize technical details and place
orders
prepare contracts for the construction camp, logging and site clearing, and bulk
earthworks
begin the preparation of detailed process and instrumentation diagrams (P&IDs)
update the logistics plan
develop a capital cost report format.
12.2.4
Detailed Engineering
Detailed engineering will form part of the engineering design and detailing phase of the
project and will lag but run in parallel with basic engineering. Detailed engineering of the
plant site will start July 2012, and all engineering is planned to be completed by July 2013
to support construction of the access road and process plant starting in early 2013. The
TMF design will be completed by July 2013 to allow earthworks to follow directly after this.
The scope of work will include all engineering, procurement, and contracting activities to
deliver a safe and operable mine, processing plant, and auxiliary site facilities to meet
Candente performance requirements. This includes the estimation and procurement of all
bulks required for free-issue to contractors, including first-fills of oils and lubricants.
The scope of work for the detailed engineering phase will be to:
finalize P&IDs incorporating recommendations from basic engineering HAZOP to suit
vendor packages and revised process flow diagrams (PFDs)
conduct HAZOPs and issue recommendations
conduct Risks and Opportunities session (update existing risk register)
finalize equipment list
finalize line list
finalize all piping and equipment specifications
implement procurement plan and place orders for balance of equipment and
packages
finalize equipment load list
model process plant equipment, using 3D PDMS (plant design management system)
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model piping in 3D PDMS

conduct model reviews for plant operation and maintenance
conduct constructability review
finalize layouts and building sizes
generate pipe support package
generate piping specialty items list
finalize piping material take-offs (MTOs) and prepare piping isometrics
develop procurement packages and procure controls and instrumentation (C&I),
electrical, and piping components
develop project QA/QC plan
finalize construction and contract work packages
finalize logistics plan
finalize construction plan, including HSEC
establish project management and materials database
finalize the operational readiness plan
monitor capital costs
provide home office support for field engineers through the construction phase.
Document control procedures will be implemented to provide regular monitoring and
tracking of all project documents. Engineering deliverables and vendor documentation
will be loaded into a master document list along with associated completion dates.
Progress for each deliverable will be monitored by engineering disciplines and evaluated
against the master schedule to ensure completion dates are maintained to support the
procurement, contracting, and construction activities.
The project estimate will be structured around a defined work breakdown structure.
When engineering overall reaches approximately 30% completion, and basic engineering
is complete, the project estimate will be updated to incorporate any changes in scope,
schedule, or execution strategy. When engineering reaches 70% completion, a definitive
estimate and schedule will be prepared for use in monitoring costs and progress for the
rest of the project.
Cost control during the engineering and procurement phases of the project will consist of
weekly updates of planned versus actual hours and expenditures. Engineering costs will
be monitored against engineering hours and actual productivity versus planned
productivity. Capital expenditures will be tracked against the control estimate, with
executed purchase orders evaluated against the estimated costs. Comprehensive
monthly cost reports will be produced to identify any cost trends and develop any required
mitigation plans. Changes and trends will be monitored and controlled through a change
order and trending system that incorporates the appropriate approval process to meet
Candente corporate requirements.
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Construction costs will be updated weekly to identify trends and monitor cost
performance. Costs will be tracked at the construction work package level, with detailed
reports generated monthly. Formal construction contract change order procedures will be
developed for change control and will be utilized to control and monitor construction costs
and schedule changes.
12.2.5
Contract Strategy
The following contracting strategy for the execution plan has been used for the basis of
the prefeasibility study estimate. The strategy is based on the assumption that project
delivery will be under the direction and coordination of an EPCM contractor. Contract
packages will be prepared to allow local contractors to quote. Some construction
activities such as concrete work may be divided into appropriate packages so that local
companies can compete. During detailed design, a survey of contractor availability and
willingness to contract under the assumed terms will be undertaken. Most packages will
be firm price or firm unit price contracts. Contractors will provide their own bussing for
workers as required. Fuel will be provided to the contractors at a per litre cost. Fuel
supply will be at a central point.
12.2.5.1
Direct Contracts / Work Packages
Project Access Road Firm price for mobilization and demobilization and unit rates
for work. Upgrade existing road and bridges as required as part of site capture.
Contractor will be responsible for accommodation arrangements off site; space will be
provided at construction camp for staging works from the site.
Initial Site Preparation Firm price for mobilization and demobilization and unit rates
for work. Starting directly after Notice to Proceed. Works would include site
establishment, environmental controls, and installation of services such as water and
sewer. Contractor will be responsible for on-site accommodation for own workforce.
Earthworks Firm price for mobilization and demobilization and unit rates for work.
Clearing the plant site, including roads and locations of proposed on-site facilities.
Construction of major earthworks, including the plant site, access road, site-wide
access roads, plant site area, and truckshop area.
Camp Firm price for supply and installation of permanent camp and mob and
demob. Design, supply, and erection of the camp, the EPCM site offices,
construction lunchrooms, and ablution facilities.
Aggregates & Batch Plant Firm price for mob and demob, unit rate for crushing &
screening of aggregates and batching & delivery of concrete. Mobile crushing and
screening plant will be set up once Notice to Proceed is given to commence
stockpiling aggregates for civil and concrete works. Batch plant includes concrete
trucks to batch and deliver concrete to pour site. Includes supply of cement and
additives.
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Site-Wide Concrete and Buried Services Installation Firm price with unit rates.
Detailed excavation, forming, and pouring, supply, and placement of all embeds,
stripping, and backfill with structural fill for all concrete works. Work includes the
installation of all buried services and utilities within the process plant site and
truckshop areas, including electrical grounding, water lines, firewater mains and
hydrants, and sewage lines.
Construction Power Firm price for powerline plus cost reimbursable. Supply and
install powerline from transmission connection to plant site and distribution of
construction power.
Structural Steel Firm price for mob and demob with unit rates. This will be divided
into two contractsfabrication and delivery as one contract, and erection as the
other. Work would include detailing, supply, and erection of the process mill building,
and supply and erection of cladding and roofing.
Process Plant Mechanical/Piping Firm price. Mechanical and piping from the
primary crusher through to, and including, the process plant. Commissioning and
start-up assistance will be cost-reimbursable. Site rough grading, concrete, and
buried services to the site by others.
Process Plant Electrical/Instrumentation Firm price. Electrical, instrumentation, and
controls from the primary crusher through to, and including, the process plant.
Site Power Firm price. This would be divided into two contractsmain substation
and power, including emergency power as one contract, and electrical distribution and
instrumentation, including yard lighting and grounding, as the other.
Truckshop, Mill Maintenance, and Warehouses Firm price. Vertical contract, from
the concrete anchor bolts up, to design, supply, construct, and commission the
truckshop complex, mill maintenance facility, and warehouse building. Vendor
start-up assistance and operator training will be cost-reimbursable. Site
rough-grading, concrete, and buried services to the site by others.
TMF Embankments Charge-out-rate (clearing and earthworks) and unit rates with
firm price for mob and demob (embankment construction). Clearing and earthworks
for the TMF embankment and associated water management structures.
Construction of the tailings embankment, including preparation of materials filter
zones. Includes foundation preparation and spreading and compacting mass rockfill
provided. Concrete and aggregate supply by others. Tailings and reclaim pipelines
and facilities will be one package.
Diversion/Seepage Embankments and Diversion Channel Charge-out-rate (clearing
and earthworks) and unit rates with firm price for mob and demob (embankment and
channel construction). Clearing and earthworks for the diversion and seepage
embankments, diversion channel, and associated water management facilities.
Construction of the embankments and channel, including preparation of materials
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filter zones. Includes foundation preparation and spreading and compacting mass
rockfill. Concrete and aggregate supply by others.
12.2.5.2
Service Contracts
Catering Firm price for mob and demob plus unit rate per camp-day. Provide
catering, house-keeping, and janitorial services for the construction site.
Surveying Per day rate. Workers and equipment to support site-wide survey
control.
Security Per day rate. Provide site security services.
Site Geotechnical QA Per day rate. Includes QA/QC for concrete, soils.
Fuel Supply Supply of construction fuel, including fuel tanks and dispensing
equipment.
Medical Services Per day rate. Provide site medical services. Emergency
evacuation equipment and medical equipment could be Owner-supplied.
General Site Services Fixed fee plus cost-reimbursable. Site-wide general services
such as waste transfer station operation, camp maintenance, generator operation and
maintenance, site garbage removal from each major work area, sanitary pumpout
services, etc., fuel dispensing and reconciliation, light vehicle maintenance.
Personnel Transport Daily or per trip rate. Personnel transport (bus) between site,
camp, and air terminal.
Drill & Blast Unit rates with firm price mob and demob. Contractor to supply own
storage facilities. Includes supply of all materials, designs, drilling, and blasting.
12.2.6
Procurement
For the Caariaco project, procurement will consist of planning, purchasing, contracts
execution, and materials management, which together form the overall procurement work
for the EPCM phase of the project. A preliminary list of major and minor equipment,
materials, and services, as well as contracting packages, has been developed to form the
basis for the prefeasibility study. The detailed strategy and procurement plans will be
finalized during basic engineering.
Procurement activities will begin early so that potential suppliers of major equipment and
providers of third-party design services can be identified and approached. The EPCM
contractor will conduct a procurement planning session to provide the foundation for the
procurement plan and will address the following issues:
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at project start-up, initiate and implement a scope clarification and project options
checklist, which will be reviewed with Candente, to establish and clarify details
pertaining to commercial and procurement-related activity
review and integrate Candente procurement polices into a project procedure guideline
confirm procurement packages, including definition of supply, design-supply, and
design-supply-erect packages
establish a qualified vendors list, including identification of local suppliers of goods
and materials
identify items to be procured by the project versus those to be supplied by installation
contractors
work with the transport logistics and construction management groups to establish a
process for freight-forwarding and site warehousing as part of the overall logistics
plan
develop vendor QA/QC and shop inspection plans
develop a strategy to maximize regional and local benefits as required and defined by
Candente
align vendor drawing schedule requirements with engineering work milestone
packages and construction milestones
develop a detailed procurement schedule.
The Procurement Plan will be prepared during basic engineering, in conjunction with the
detailed engineering and construction schedule.
Once the detailed procurement plan is finalized and approved, and the related key target
dates have been established for all activities, the approved procurement procedures will
be implemented immediately throughout the project. The procurement plan will be
detailed in the overall project schedule. If a trend develops that indicates slippage, then a
specific recovery plan will be developed immediately to ensure the target dates are met.
Procurement will be prioritized so that long-lead major equipment is selected and
locked-in during basic engineering; vendor data are received in time to support basic and
detail engineering; and equipment and components delivery suits the overall project
schedule.
Complete firm price quotations will be solicited and price breakdowns requested based on
the Procurement Plan developed for the project.
Potential suppliers will be screened so that requests for quotations can focus on suppliers
that have the ability and interest to best serve the project needs. Bid lists will be as
approved by Candente.
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12.3
Site Access
A detailed description of existing and proposed site access roads is provided in Section 8,
Infrastructure, of this report. The site can be accessed via a rough 4x4 road for site
establishment, although a more suitable road is required before bringing major equipment
on site. Timely completion of the site access works is key to ensuring project completion
in the scheduled period.
Existing Access Road This road is approximately 87 km long and will be upgraded
as part of the initial activities and used to access the site during site establishment. It
would be unsuitable for use during the major construction phase and operational
purposes.
Project Access Road Construction of the permanent access road will start April
2013 and be completed April 2014. The access road will be constructed from both
ends simultaneously. Once constructed, a security checkpoint at the intersection with
the main road will be set up to control all traffic using the road.
Site Access Road As part of the above works, the access road from the TMF to the
site will also be constructed upon Notice to Proceed to enable access for early
earthworks.
Other Site Roads A number of other site roads will be constructed to allow access
to work areas. Some of these roads will be difficult to construct because of
complexities due to the steep terrain, but they must be completed to meet the project
schedule.
12.4
Weather
12.4.1
General
The site is not subject to extreme weather. Average annual rainfall is not excessive and
temperatures are relatively mild. As such, no special management of conditions resulting
from adverse weather is needed during construction.
12.4.2
Water Management
Because of the steep terrain at the site, erosion control will be an important aspect of
construction. All diversion drains, sediment ponds, and other required sediment and
erosion control measures will be constructed before earthworks begin. Cut-off drains will
divert runoff from adjoining catchments around the site to reduce the amount of contact
water that would require treatment.
Water management on site will start January 2013 with construction of the diversion
channel. Approximately half the final length of the diversion channel required to allow pit
waste dumping will be completed by the start of October 2013. Waste disposal of
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material stripped and excavated at the plant site is not dependent on the diversion
channel. Work on the main diversion dam will commence in April 2013 and be completed
by October 2014. The water stored behind this dam will be the primary source of water
for the plant at start-up.
12.5
Construction Execution
12.5.1
Camp Requirements
Off-site Camps Camp facilities for any off-site construction works, such as the road
and transmission line, will be the responsibility of the contractors. The access road
contractor will provide a camp at the road head adjacent to the existing main road.
The earthworks contractor for the TMF and seepage collection dam will provide a
construction camp near the TMF. Rooms will be available in the plant site
construction camp for workers engaged in construction of the power lines and access
road near the plant site.
Construction / Permanent Camp A camp will be provided at the plant site for the use
of contractors at a per person per day cost. The Construction Manager will be
responsible for the camp. Each contractor will be responsible for garbage and waste
removal; disposal sites will be designated by the Construction Manager. Both the
construction camp and the permanent camp will be placed in the same location,
between the mill / mine site and the tailings area, to allow easy access for most of the
workforce both during construction and operations. Earthworks to prepare the
construction camp site will commence in January 2013, closely followed by
installation of the camp services. The construction camp will be ready by May 2013.
Additional units will be brought in as required to meet demand, with the expected
peak being in the order of 1,500 beds. The core, which includes the kitchen, dining,
and recreation facilities, will remain in place for the permanent camp. Permanent
camp units used during construction will also remain in place once construction is
complete. These units will be upgraded to suit operational requirements.
12.5.2
Aggregate and Concrete Production

It is currently assumed that a suitable source of rock for producing concrete aggregates
will be found and quarried on site adjacent to the work areas. A mobile crushing and
screening plant will be established for the production of aggregates for civil and concrete
purposes. A concrete batch plant will also be erected on site to supply and deliver
ready-mix concrete to the concreting contractor. Quality control and inspection will be the
responsibility of the Construction Manager.
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12.5.3
Mine / Mill Site
12.5.3.1
Open Pit
Preproduction pit activities will start during the construction period. Pre-stripping work will
commence using contract labour and diesel equipment in September 2013, before the
electrical power system is commissioned, to achieve the required quantities of stripping
before start-up. Once electricity is available, the mine fleet will be mobilized to
commence mining and delivery of ore independently of the pre-stripping work, before the
truckshop and warehouse facilities are complete.
12.5.3.2
Crushers, Conveyors, and Coarse Ore Stockpile
Earthworks related to the crusher and overland conveyor will commence in January 2013.
Construction of MSE walls and concrete placement for the permanent crusher are
planned to start soon after, while concrete work for the overland conveyor will start two
months later. All facilities will be complete and ready for plant commissioning in
December 2014.
12.5.3.3
Process Plant
The process plant will be a large central structure housing the mills, flotation cells, several
related ancillary structures, process systems, and tankage. Upon Notice to Proceed,
early construction activities will focus on the plant site area. Earthworks will start
immediately to ensure start-up in January 2015.
Once the mill building platform has been excavated, work on the grinding section will
begin with the building perimeter foundations, followed by the mill mat foundations and
mill piers, all starting in April 2013.
Buildings will not be enclosed. Mill shells and other large equipment will be placed in the
building as erection progresses. Delivery of these items is required to start by July 2013.
Work in the flotation end of the building will also begin with the building perimeter
foundations to enable steel erection to proceed in a sequenced fashion, commencing in
July 2013, as footings are completed.
The acid plant, roaster, coarse ore storage, tailings thickener, overland conveyor, and
primary crusher are included as part of the process plant.
Mechanical completion, electrical work, piping, and material transport installations will
begin as soon as major equipment installations are completed in October 2013. All of the
work culminates in the first ball mill line being completed by the end of January 2015 and
the second ball mill line following at the start of July 2015. Start-up water will be supplied
from the diversion impoundment.
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12.5.3.4
Infrastructure
A transmission line is required to provide power to the site. Work on the line will start
upon Notice to Proceed. The power supply system is expected to be commissioned and
the pit electrified so that the bulk of the pre-strip work can be carried out with the large
mining equipment. Construction power will be one of the site capture activities and be
completed early in the construction schedule.
Ancillary buildings are located primarily in three areas on the site. Earthworks in the plant
site area, which also includes the truckshop, diesel storage area, warehouse, shops, and
mine dry, will commence in January 2013. The camp and administration area is planned
to be complete by June 2014.
The emulsion and explosives storage area, set a safe distance away from other facilities,
will be used during pre-stripping and earthworks drill-and-blast activities.
12.5.3.5
Details of the tailings management facility (TMF) for the project are provided in Section 7
of this report. Work on the coffer dams, starter embankment, seepage collection
embankment, and arsenic residue storage facility will commence in July 2013.
Construction will continue until December 2014 when the starter dam is complete and the
TMF system is ready for plant start-up.
12.6
Traffic/Logistics
Logistics will be a critical to the success of the project.
12.6.1
Construction Volumes
Inbound freight during construction is classified into the following types based on the
group respondible for its procurement and delivery to the project site:.
Project-Supplied Plant and Materials All project-supplied plant and materials
procured offshore will be supplied FOB from a designated port of export. The vendor
responsible for transport will arrange for transfer to the project of goods at the port of
import, from where the projexct will assume responsibility for transportation to the
project site.
With some execptions, project-supplied equipment and materials procured

domestically will be supplied ex-works, with the project assuming responsibilty for
its transport to the project site. Exceptions will include structural steel, cement,
and fuel, which will be procured under terms of delivery into storage at the project
site.
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Contractors Construction Plant and Materials Contractors will be responsible for

transport and logistics of all equipment and materials necessary for the completion of
their scope of work, with the exception of temporary contruction infrastructure and
facilities to be supplied by the project.
Project-Supplied Infrastructure and Facilities The following project-supplied facilities
and equipment will be procured delivered to the project site: construction camps, fuel
storage and distribution, waste collection and disposal, laydown areas and
warehousing, heavy-lift cranes, and other common services such as ambulances and
fire-fighting equipment.
Project-Supplied Construction Materials and Supplies These include fuel, food, and
supplies for the contruction camps, and other consumables, which wil be procured
delivered to to the project site.
12.6.2
Project Logistics Organization
12.6.2.1
Project Logistics Group
Overall responsibility for project logistics will reside with the Project Logistics Group
(PLG), who will be responsible to ensure that equipment and materials are delivered
safely and cost effectively in accordance with the project schedule and in observance of
project requirements such as applicable local legislation and regulations. The PLG
Mamager will report to the Project Materials Manager. PLG will work closely with
enginering and construction, suppliers and vendors, and third-party service providers,
including freight forwarders, customs brokers, transport companies, and other logistics
service providers.
12.6.2.2
Freight-Forwarding
The project freight forwarder will be responsible for arranging the transport of project
cargos by ocean carrier or airline from point of purchase through to release at the port of
discharge.
12.6.2.3
Customs Clearance
The customs broker will represent the project in front of the SUNAT, the Peruvian
Customs authorities, who will authorize the import of materials and equipment based on
the shipping documentation submitted along with payment and any technical information
requested by the authorities. The customs broker will coordinate pre-clearance
processes and pre-shipment inspection with freight forwarders.
12.6.2.4
Logistics Management System
A project-wide logistics management system will be used for all project-supplied

equipment and materials. This will be linked to the integrated ERP system and will
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provide interfaces to contracts, procurement, and payment systems, as well as external

parties.
12.6.3
Logistics Infrastructure and Services
12.6.3.1
Off-shore Consolidation Centres
The use of off-shore consolidation centres will be decided upon as part of a total cost of
delivery analysis once orders have been placed for major equipment and materials,
vendores have assigned the work to subcontractors, and the sourcing, timing, and volume
of freight are known with greater certainty.
12.6.3.2
Ocean Transport
The project, through its agents, will arrange for the ocean transport to Peru for all
project-supplied equipment and materials procured offshore. Most equipment and
materials will be delivered by container and break-bulk lines that make scheduled calls at
ports in Peru. As with the decision to use off-shore consolidation centres, the decision to
use charter ships for transport of break-bulk cargoes is best made once the selected
vendors have assigned the work to subcontractors and the sourcing, timing, and volume
of freight are known with greater certainty.
12.6.3.3
Ports in Peru
Peruvian freight forwarders recommend three ports: Callao, Paita, and Salaverry
(Figure 12-2). Each of these ports is described in the following subsections. Upon initial
assessment, the port of entry will be Callao or Paita,depending on the ocean carrier and
its ports of call, customs regulations, the availability of heavy-lift cranes and other
transport services locally, the route survey of roads and highways between the port and
the mine site, and ,of course, the total cost of delivery.
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Figure 12-2: Ports and Transport Infrastructure in Peru
Port of Callao
The Port of Callao (122'43"S, 778'48"W) is Peru's main commercial port (Figure 12-3).
Located about 24 km southwest of Lima and 1,005 km south of the project site, it handled
more than 20.7 Mt of cargo in 2007. The port is administered by La Empresa Nacional de
Puertos ENAPU S.A. (ENAPU).
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The port occupies an area 47 ha, has 28 berths, and has 26.5 ha of storage area,
including 2.1 ha of covered space and 24.3 ha given over to container terminals. The
maximum depth of water available at the berth face is 11 m. There is limited onshore
crane capacity, and most vessels load and discharge using their own cranes; however,
local cranes, including those for heavy-lifts up to 96 tonne capacity, are available for hire.
Callao is the main port in Peru for the receipt of imported cargoes because several other
ports are designated as originating ports only. Cargoes often clear customs through
Callao and then connect to final destination by cabotage. The port offers a wide range of
third-part stevedoring, logistics, and transportation service providers.
With about 2,500 calls a year, the port is served by both regular and tramp lines.
Container shipping lines making regular calls at Callao include APL, Mearsk, MSC,
Hapag Lloyd, CMA CGM, and CSAV. Break-bulk lines calling at the port include BBC,
Seaboard, CCNI, and Transmares.
Figure 12-3: Port of Callao
Port of Paita
The Port of Paita (54'41"S, 816'55"W), the northernmost main port in Peru
(Figure 12-4), is 60 km west of the city of Piura and 551 km by road from the project site.
As part of the privatization of port operations in Peru, Concenssion Terminales Portuarios
Euroandinos (TPE) officially took over the administration from ENAPU on 7 October 2009.
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The finger wharf is 365 m long x 36 m wide and has four ship berths. Maximum available
water depth at the berth face is about 10 m. Principal cargoes handled through the port
include bulk and bagged fishmeal, bulk grains and fertilizers, phosphorous rock, and
general cargoes and containers. The capacity of the berth to accept heavy loads is not
known and would have to be confirmed with the port operator.
Shore-side crane capacity is limited, and most vessels use their own cranes to load and
discharge cargoes. Local facilities include warehouses and open laydown areas. The
availability of local transport and logistics services are limited. Container shipping lines
calling regularly at Paitia include APL, Mearsk, MSC, Hapag Lloyd, CMA CGM, and
CSAV. Break-bulk lines call only under full-load inducement.
Local shipping agents report that customs regulations currently prohibit direct imports
through Paita. Therefore, all inbound cargoes would have to clear customs in Callao, or
the project would have to obtain customs clearance authorization before shipment to
discharge at Paita.
Figure 12-4: Port of Paita
Port of Salaverry
The Port of Salaverry (813'S, 7859'W) is 550 km by road north of Lima and 445 km by
road from the project site (Figure 12-5). The operator is ENAPU.
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Because it is exposed to constant swell and is subject to silting, the Salaverry is in fact an
artificial harbour formed by a 700 m long breakwater. Even with the breakwater
protection, however, operations at the berth are affected by ocean swells. Dredging
operations are constant.
The port has two finger wharves, each approximately 230 m long and providing four ship
berths. Maximum available water depth at the berth face is about 8 m. Shore-side crane
capacity is limited, and most vessels use their own cranes to load and discharge cargoes.
Local facilities include warehouses and open laydown areas, but the availability of local
transport and logistics services is limited. The capacity of the berth to accept heavy-loads
is not known and would have to be confirmed with the port operator.
While it was once a regular call, the port is no longer a scheduled port-of-call for lines
serving Peru. Break-bulk carriers would only call at Salaverry under full-load inducement.
As with Paita, local shipping agents report that customs regulations currently prohibit
direct imports through Salaverry. Therefore, all inbound cargoes would have to clear
customs in Callao, or the project would have to obtain custom clearance authorization
before shipment to and discharge at Salaverrry.
Figure 12-5: Port of Salaverry
12.6.3.4
Marshalling Yards and Warehouses
All projected-supplied material and equipment procured off shore that cannot be moved
directly to site will be staged in a marshalling yard adjacent to the port operated by a third
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party. Such cargoes include, for example, freight awaiting customs clearance, which will
be stored in a clearly identified and fenced, bonded-goods area; or those for which limited
storage area is available on site. Hazardous and dangerous cargoes will be stored a
secured area, with access restricted to authorized personnel only. Special loads, such as
those requiring escort of special equipment, will be staged in the marshalling yard to await
transport to site. Less-than-full truck loads will be staged to await consolidation with other
loads. Goods arriving at a port in containers subject to demurrage will be unloaded and
re-loaded into project containers that will then be used for storage of these materials at
the project site.
12.6.3.5
Road Transport
Road Network
For this study the proposed transport route was adopted from the port of Callao.
Ultimately the choice of port and associated road access will be dependent upon the
ocean carrier and their ports of call, customs regulations, the availability of heavy-lift
cranes and other transport services locally, the route survey of the roads and highways
between the port and the mine site, and ,of course, the total cost of delivery.
The main highway, Peru Highway 1, which runs parallel to the coast, connects the ports
of Callao and Paita with Chiclayo. From Chiclayo, the road route to the mine follows a
paved, Highway 1B north through Motupe (Figures 12-5 and 12-6) until it intersects with
Highway 3N, the Corral Quemado Road, just south of the town of Olmos. After passing
through La Pilca, the Corral Quemado Road climbs along a series of high ridges before
descending to follow the river valley (Figure 12-8). Grades along the route are reported to
be steep in places and should be surveyed to ensure they do not exceed the permissible
limits for heavy-haul transport.
On narrow roads through towns and villages, oversize loads will occupy almost the entire
width of the road, and overhead wires will, where they cannot be lifted, limit the maximum
permissible load height (Figure 12-9). Oversize loads will either have to by-pass these
locations or be scheduled for transport during off-peak hours.
Eight bridges were noted to have posted load limits of only 36 tonnes, whereas others
had load limits of up to 60 tonnes. Because the gross vehicle weight of the heaviest
loads will exceed bridge load capacities, these bridges will have to be surveyed to
determine their maximum permissible load capacities, available clearance envelope, and
estimated cost of temporary works, if required.
Heavy rains from January to March cause numerous rockfalls and washouts, forcing road
maintenance crews to work continuously to keep the road open (Figure 12-10). The
bridge at El Silencio, for instance, was reported to have been recently flooded-out and
closed for a month, stopping all traffic. At higher elevations, dense fog reduces visibility
to near zero and traffic slows to a crawl for extended periods. A toll gate on the outskirts
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of Chiclayo has a bypass for oversize loads. Another bypass will need to be constructed
at a second toll gate just past the intersection of the Highway 1B and the Corral Quemado
Road (Figure 12-11). There are no fuelling stations of note between Chiclayo and the
mine site.
Figure 12-6: Highway 1B, North of Mopute (view 1 of 2)
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Figure 12-7: Highway 1B, North of Mopute (view 2 of 2)
Figure 12-8: Section of Corral Quemado Road at Lower Elevation along River
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Figure 12-9: Limited Clearance Envelope on Road between Chiclayo and Project Site
Figure 12-10: Washout on Road North of Mopute washout has since been repaired
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Figure 12-11: Toll Booth near Intersection of Highway 1B and

Corral Quemado Road (bypass required)
Highway Regulations
Regulations for dimensions and weight limits on standard loads are as follows:
Gross vehicle weight ............................................................................ 48 tonnes
Maximum length ........................................................................................... 20 m
Maximum width ........................................................................................... 2.6 m
Maximum height ................................... 4.10 m general cargo/ 4.6 m containers
Loads whose dimensions or weight exceed those specified for a standard load, but which
are less than the following, require a permit, but not a detailed route survey with analysis
of bridges and culverts along the route:
Gross vehicle weight ........................................................................... 60 tonnes
Maximum length ........................................................................................... 25 m
Maximum width ........................................................................................... 4.5 m
Maximum height ............................................................................................ 5 m
Loads requiring permits must be accompanied by escort cars and police escorts
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Truck Transport
A contract will be awarded for national trucking of regular loads of project-supplied plant
and materials. A second contract will be awarded for transport of overweight and oversize
loads.
In addition to managing the transport of project requirements over local roads, the
trucking contractor will provide a daily service between Lima for the transport of
construction consumables, supplies, and materials required urgently on site.
The heavy-haul contractor will survey the routes between the ports of Callao, Salaverry,
and Paita and the mine site to establish the limiting dimensions and weights that can be
transported along these routes. This contractor will obtain all necessary licences and
permits, determine what upgrades are required for existing roads, bridges, and
infrastructure to accommodate project cargo, and coordinate with local municipalities and
authorities for the movement of these loads.
Determining the critical load profile for design of access road upgrades and selecting the
haulage equipment are subject to a final road survey, haulage equipment specifications,
and the outcome of a modularization study.
12.6.3.6
Airports and Air Freight
The major airport in the region is Capitn FAP Jos A. Quiones Gonzles International
Airport in Chicalyo. As the principal airport of Lambayeque, it is served by a several local
passenger airlines. The runway is about 2,520 m long.
Equipment and materials procured offshore and required urgently on site, where size or
weight does not exceed carriers limits, will be flown by international freight carriers to
Lima for customs clearance and be trucked to site. It is not known if the Chiclayo airport
is certified to handle international freight.
12.6.3.7
Hazardous and Dangerous Goods
Hazardous and dangerous goods will be stored in clearly marked and, if necessary,
fenced areas. Access to these areas will be restricted to authorized personnel.
12.6.4
Project Containers
During construction, containers will serve two purposes. On receipt at the port of import,
materials transported in containers provided by a shipping line will be transhipped to a
project container to avoid demurrage on the ocean container. They will also be used to
store equipment and materials procured domestically that must not be stored in the open.
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12.6.5
Personnel Transport
Private vehicle access to the mine site will be limited to those issued a visitors pass.
Construction contractors will provide bus service for their own personnel. Except for
those who live locally, project construction staff on rotation will be transported to Chiclayo
site by a bus fleet contracted by the project. Project managers and staff based in Lima
who need to attend meetings on site will use the twice-weekly charter flight passenger
service to Chiclayo, where a bus chartered by the project will transport them to site.
12.7
Project Master Schedule

The project schedule is an essential planning tool for project success. The schedule will
alert management to the need for timely corrective actions to ensure the project finishes
on time.
The EPCM project schedule, provided in Appendix H, has been developed to reflect the
project scope of work and supports the project execution plan. Key milestones,
engineering design, long-lead procurement items, major contracts, construction, and
commissioning have all been incorporated into the master schedule. This schedule will
form the basis for all future detailed schedule revisions, management reporting, resource
loading, and cash flow projections.
A high level summary schedule of the EPCM project schedule is provided in Figure 12-12.
During project execution, a detailed master schedule will be prepared and updated at
regular intervals to monitor progress, track changes, and forecast trends. Engineering
and procurement deliverables will be monitored for compliance with budgets and
milestones. Weekly updates and detailed monthly reports will be issued and recovery
plans developed where necessary to maintain scheduled progress for key engineering
and procurement deliverables.
Construction activities will be developed in detail with the construction contractors, and all
tasks will be loaded into the master schedule according to the project work breakdown
structure. Productivity will be monitored weekly against the tasks to ensure scheduled
completion of construction work packages. Progress will be measured by earned value
analysis to forecast construction productivity. Particular attention will paid to critical path
activities and milestones to ensure the overall construction program maintains the
targeted completion date. Detailed monthly schedule updates will be provided to identify
trends, track changes, and report on completion relative to approved milestones.
The project schedule for the construction phase of the project shows an estimated project
duration of 25 months from the start of construction to commissioning and start-up of the
first plant processing train. The schedule will identify critical path tasks and key
milestones, which in turn determine the overall project duration.
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Figure 12-12: High Level Execution Schedule

EXECUTION PLAN Rev A - August 2010
ACTIVITY
2010
2011
2012
2013
2014
2015
DURATION Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
ENVIRONMENTAL PERMITTING
STUDIES AND APPROVALS
Notice to proceed
ENGINEERING DESIGN
PROCUREMENT AND CONTRACTS
SITE CAPTURE
PORT by Others
ACCESS ROADS
TRANSMISSION LINE TO SITE
PROCESS PLANT
TAILINGS
INFRASTRUCTURE
OPEN PIT
LEGEND
General Activity
At Risk Activity
Critical Milestones
Activities by Others
One of the keys to achieving the schedule is timely procurement of long-delivery

equipment, not only for delivery of that equipment, but also for release of critical vendor
information required for detailed engineering.
12.8
Project Controls
Project controls will encompass estimating, scheduling, cost control, and progress control,
along with all associated reporting. Change control is also included and will cover
monitoring, reporting, and control of project costs against a control budget prepared
during the engineering design stage. The definitive project cost estimate is planned to be
prepared when detailed engineering reaches 70% completion.
The EPCM schedule will be the tool for measuring progress. The project master
schedule will be developed and updated regularly throughout the project.
12.8.1
Scheduling
The planning process will establish goals, milestones, key relationships, engineering,
procurement, and construction priorities and the project critical path. The project master
schedule is the framework from which the Plan date is established for all activities. The
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schedule will provide detail and resource logic for engineering, procurement, and
construction activities. The following key activities will form the basis of the schedule:
mechanical completion, pre-commissioning, commissioning, and start-up sequences
for main process systems
critical design activities and interfaces
critical connection requirements (process and services)
placement of purchase orders for major equipment with long-lead times
main milestones for material take-offs, manufacturing, purchasing, on-site delivery,
and installation
vendor critical design information (vendor data)
definition and award of main construction contracts.
During project development, schedule monitoring will track the progress of the following:
drawings and documents for engineering and construction work packages
monthly updates of the schedule as purchases are made and firm dates are
established for the delivery of vendor drawings, equipment, and materials
changes made as engineering develops and the construction sequence for various
elements and work packages is adjusted
schedule adjustments to reflect Project Change Notices (PCNs) affecting the
schedule.
During project execution, the detailed master schedule will be updated at regular intervals
to monitor progress, track changes, and forecast trends. Engineering and procurement
deliverables will be monitored for compliance with the budgets and milestones. Weekly
updates and detailed monthly reports will be issued and, where necessary, recovery
plans will be developed to maintain scheduled progress for key engineering and
procurement deliverables.
Construction activities will be developed in detail with the construction contractors, and all
tasks will be loaded into the master schedule according to the project WBS. Productivity
will be monitored weekly against the tasks to ensure scheduled completion of
construction work packages (CWPs). Earned value progress measurement will be
utilized to analyze and forecast construction productivity. Particular attention will paid to
critical path activities and milestones to ensure the overall construction program maintains
the targeted completion date. Detailed monthly schedule updates will be provided to
identify trends, track changes, and report schedule to approved milestones.
The EPCM master schedule is included in Appendix H.
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12.8.2
Cost Control
Effective cost control is critical to the success of projects. Commencing with the feasibility
estimate, the cost control process must be transparent, reliable, and timely. From an
information management standpoint, four main processes can be defined, as outlined
below.
Information is entered into a Project Control Structure and is continuously updated to
manage the budget, detect any potential deviations, and provide accurate and timely cost
trend information. A change control procedure will be implemented to validate any
change, identify the nature of the change, and determine whether the budget will vary or
not. The primary objective of cost control is to maintain, through multiple procedures, a
constant forecast of the project final cost updating weekly during the execution phase.
A control estimate will be prepared when detailed engineering is approximately 70%
complete to provide a detailed breakdown of costs for control purposes. The estimate will
be prepared according to Class 2 of the American Association of Cost Engineers (AACE).
All cost information for original budgets, forecasted costs, and cost changes will be
reported on regularly in a format tailored to the project requirements.
12.9
Commissioning and Operational Readiness
12.9.1
Operator Training
The local communities will be a source of both skilled and unskilled labour, but
development of the project will require some skilled labour from outside the region.Work
opportunities within the district are scarce, only 4.9% of the population has wage work.
The working age populations skills and qualifications are very low and intensive training
will be required, even for the less demanding positions. As there are no mining projects in
the area the population has no experience in mining or related side businesses (catering,
security, cleaning). Outside of the project influence area, the principal towns of Chiclayo
and Cajamarca could provide a higher rate of qualified personnel with a broader
experience in the mining sector.
The best philosophy for a stable workforce is to make the hiring of local employees a
priority for the long term. Given the shortage of skilled labour in the mining industry and
the desire for local hire, training will be a key aspect of the project. The Candente
operations group will need to develop both on-site and off-site training programs to
mitigate potential problems with an untrained workforce during start-up.
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12.9.2
Commissioning Program
Commissioning and start-up will be preceded by mechanical completion and
pre-commissioning. Mechanical completion is generally defined as the installation of the
facility in accordance with the contract, drawings, specifications, and vendor
documentation. Pre-commissioning is generally defined as running the system without
feed. Equipment is started and stopped through the programmable logic controller (PLC)
or the distribution control system (DCS) to ensure all safety and process interlocks are
functioning properly. At this time, the Owners team and the EPCMs check-out team
should integrate to ensure the operational understanding is clear. The completion of
these pre-commissioning activities signifies the transfer from EPCM contractor to Owner.
Turnover packages and their documentation will complete the process, together with as
built drawings.
The commissioning phase begins when feed is introduced to the process plant. The
Owner generally takes responsibility for this phase with assistance from the EPCM
contractor and installation contractors. Commissioning will be done as per the traditional
five-step system in place:
C1 = static checks
C2 = dynamic commissioning
C3 = cold commissioning
C4 = hot commissioning
C5 = ramp-up to full production.
A complete pre-commissioning and commissioning plan and schedule by system should
be developed before these activities commence.
12.10
Health, Safety, Environment, and Community (HSEC)

The EPCM contractor will prepare a site-specific HSEC program for the project, which will
be based on:
corporate HSEC policies and procedures of the Owner
corporate HSEC policies and procedures of the EPCM contractor
the Health, Safety and Reclamation Code for Mines in Peru
the Occupational Health and Safety (OHS) regulations where applicable under the
inspection jurisdiction of local agencies
HSEC risk assessment of the site
environmental permit requirements and site regulations
current industry practice.
The program will set the minimum requirements for the project, including the level and
frequency of statistical reporting. The program will form part of the standard tender
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documents, and all contractors will be requested to prepare their own site-specific HSEC
programs, based on their corporate standards, that must meet or exceed the project
HSEC program. Construction safety will be managed and monitored by the EPCM
contractors qualified safety personnel throughout the construction program. Safety
management and responsibility will transition to the Owners safety team before the
commissioning phase of the project.
Before the start of construction, the safety management staff will meet with the applicable
Mines Inspector to review the site HSEC plan, address any concerns of the local
agencies, and establish a working relationship with agency representatives.
An Environmental Management System will be implemented. During construction,
management of the environmental program will by the EPCM contractors environmental
staff in conjunction with Candentes environmental team. Management and monitoring of
the environmental program will be based on the site-specific permit requirements for the
project. Responsibility for environmental management will fully transition to the Candente
team at the start of the commissioning phase.
12.10.1
Safety
On-site emergency medical facilities will be provided during the construction phase.
These will consist of first aid facilities equipped to comply with local agency and Candente
standards, with specific provisions made for work on a remote site. Medical personnel
will be appropriately qualified, with communications links established to off-site medical
expertise. Procedures and arrangements for emergency medical evacuations will be
established before the start of construction. Each phase of the work will require individual
procedures as the nature, location, and scope of the construction work changes. The
emergency medical staff and facilities will be capable of handling industrial construction
incidents. They will be equipped with an ambulance and fire truck for incidents and
evacuations, and will be supported by pre-arranged access to emergency air medivacs to
the nearest suitable hospital if needed.
12.10.2
Security
Security issues in terms of unauthorized access or removal of or damage to property are
anticipated. Contracted security staff will be present on site during construction to
monitor the camp and construction areas and the project access points.
Security policies and procedures will be developed before the start of construction and
will be included in all tender and purchase order packages, with a requirement that all
personnel and contractors on site comply with the site environmental program.
Responsibility and operation of the security program will transition to the Candente team
prior to commissioning. The Candente operational security programs will be in force
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during commissioning and will be incorporated into the commissioning procedures and
planning.
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CONTENTS
13.0
CAPITAL COST ESTIMATE .................................................................................13-1

13.1 Summary...................................................................................................13-1
13.2 Estimate Support Documents ....................................................................13-2
13.3 Estimate Responsibility .............................................................................13-2
13.4 Currency ...................................................................................................13-3
13.5 Work Breakdown Structure .......................................................................13-3
13.6 Basis of Estimate ......................................................................................13-3
13.6.1 Direct Costs ...................................................................................13-3
13.6.1.1 Development of Quantities and Costs........................... 13-3
13.6.1.2 Instrumentation............................................................. 13-5
13.6.1.3 Equipment and Material Pricing .................................... 13-5
13.6.1.4 Direct Field Labour ....................................................... 13-6
13.6.1.5 Growth and Waste Factors ........................................... 13-7
13.6.1.6 Mine ............................................................................. 13-8
13.6.1.7 Process Plant ............................................................... 13-8
13.6.1.8 On-Site Infrastructure ................................................... 13-9
13.6.1.9 Tailings Management ................................................... 13-9
13.6.1.10 Project Access Road .................................................. 13-10
13.6.1.11 Water Diversion .......................................................... 13-10
13.6.1.12 Port Site ..................................................................... 13-10
13.6.2 Indirect Costs...............................................................................13-10
13.6.2.1 Temporary Construction Facilities and Services ......... 13-11
13.6.2.2 Construction Equipment ............................................. 13-12
13.6.2.3 Construction Catering and Housekeeping .................. 13-12
13.6.2.4 EPCM ......................................................................... 13-12
13.6.2.5 Freight ........................................................................ 13-12
13.6.2.6 Vendors Representatives........................................... 13-13
13.6.2.7 Start-up and Commissioning ...................................... 13-13
13.6.2.8 Taxes and Duties ....................................................... 13-13
13.6.2.9 Capital Spares and Warehouse Supplies ................... 13-13
13.6.2.10 First Fills ..................................................................... 13-13
13.6.2.11 Owners Costs ............................................................ 13-13
13.7 Contingency ............................................................................................13-14
13.8 Escalation ...............................................................................................13-14
13.9 Working Capital .......................................................................................13-14
13.10 Sustaining Capital ...................................................................................13-15
13.11 Capital Cost Exclusions...........................................................................13-15
TABLES
Table 13-1: Summary of Capital Costs ............................................................................................ 13-1
Table 13-2: Capital Cost Estimate Input ........................................................................................... 13-2
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TOC i

Table 13-3: Conversion Rates based on Q3 2010 ........................................................................... 13-3

Table 13-4: Hourly Labour Rate ....................................................................................................... 13-7
Table 13-5: Labour Productivity Factors .......................................................................................... 13-7
Table 13-6: Summary of Growth and Waste Factors ....................................................................... 13-8
Table 13-7: Mine Capital Costs ........................................................................................................ 13-8
Table 13-8: Concentrator Capital Costs ........................................................................................... 13-9
Table 13-9: On-Site Infrastructure .................................................................................................... 13-9
Table 13-10:Port Site Capital Costs ................................................................................................ 13-10
Table 13-11:Indirect Capital Costs .................................................................................................. 13-11
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TOC ii

13.0
CAPITAL COST ESTIMATE
13.1
Summary
The total estimated Owner-operated capital cost to design and build the Caariaco Norte
Copper Project in Peru at 95,000 t/d, as described in this report, is $1.599 billion. This
cost assumes an Owner-operated mining fleet and process plant, and self-performed
preproduction development. The estimate covers the direct field costs of executing the
project, plus the Owners indirect costs associated with design, construction, and
commissioning. The estimate is summarized in Table 13-1; a detailed estimate is
provided in Appendix J along with the Basis of Estimate document for the project.
All costs are expressed in 3rd quarter (Q3) 2010 U.S. dollars. No allowance has been
included for escalation, interest or financing fees, taxes or duties, or working capital
during construction. The level of accuracy for the estimate is 20% of estimated final
costs, as per AACE Class 4 definition.
Table 13-1: Summary of Capital Costs
WBS
Area
1000
2000
3000
4000
5000
5300
7000
Mining
Process Plant
Tailings Management
Project Access Road
Water Diversion
2010
($000)
326,615
381,277
133,444
101,527
38,795
50,753
26,887
Total Direct
9000
9100
PP11
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11 March 2011
1,059,298
Owners Cost
Indirects
52,899
243,076
Total Indirects
295,975
Contingency
Total Capital Cost
243,903
1,599,176
-
Total
1,599,176
Page 13-1

13.2
Estimate Support Documents

The capital cost estimate was based on the following documents and information:
process flow diagrams
project scope of facilities
equipment list
design criteria
general arrangement drawings
electrical single-line diagram
supplemental sketches where required
major equipment budget quotations from vendors
budget pricing for bulk materials
regional climatic data
discipline material takeoffs
project development schedule
project execution plan
project work breakdown structure (WBS) and code of accounts
AMEC in-house data.
13.3
Estimate Responsibility
The estimate reflects the combined efforts of Candente, AMEC, and Ausenco. AMEC
was responsible for the coordination of all data being assembled into the estimate.
Ausenco provided cost input appropriate to a prefeasibility-level study for the port site.
Table 13-2 outlines the responsibilities of each company for providing capital cost
information.
Table 13-2: Capital Cost Estimate Input

Consultant
Responsibility
Candente Copper Corp.

(Candente)
Owners costs
AMEC
Designs and estimates for site layout, mining, surface materials handling, process
plant, product storage and loading, ancillary buildings, tailings pipelines, on-site
utilities, incoming transmission lines and substations, power distribution, control
systems, tailings management facilities, water management facilities, environmental,
closure costs, overall compilation of all direct costs, and construction indirect costs
(EPCM, camp, catering, temporary facilities, construction services, spares, vendor
reps, commissioning, first fills, freight, contingency)
Ausenco Sandwell
Engineering Inc
Port site development and utilities, concentrate receiving, storage, and handling
design, quantities, estimate
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13.4
Currency
Conversion rates from other currencies, as used for commodity guidelines, are illustrated
in Table 13-3 based on Q3 2010 U.S. dollars.
Table 13-3: Conversion Rates based on Q3 2010
U.S. Currency
Currencies
Exchange
Cdn
EURO
PEN
AUS
GBP
1.1111
0.7752
2.8570
1.3130
0.6803
1.00
1.00
1:00
1:00
1:00
Note: Currency conversion rates discussed with AMEC and determined by Candente
13.5
Work Breakdown Structure

The estimate was developed in accordance with the prefeasibility study criteria,
philosophy, and preliminary project design. The work breakdown structure (WBS) is
provided in detail in the Basis of Estimate document in Appendix J.
13.6
Basis of Estimate
The project scope developed in the Basis of Estimate, December 2010, forms the basis of
the capital cost estimate. A number of facility designs reflect the results of trade-off
studies conducted during the course of the prefeasibility phase. Where engineering
assessment was performed for the designs, the cost impact is included in the capital cost
buildup. For designs where engineering assessment was incomplete, an allowance was
made and added to the capital estimate in the appropriate cost area.
13.6.1
Direct Costs
13.6.1.1
Development of Quantities and Costs

Engineering material take-offs are based on neat line quantities derived from project
drawings and sketches. Normal and acceptable allowances were included for each
discipline as appropriate.
Conceptual quantities were prepared where drawing
information was not available. Metric units are assumed throughout the estimate.
Bulk material components include cement, miscellaneous structural steel (stairs,
handrails, ladders), building materials, and associated building construction items. These
were priced with base cost as freight on board (FOB) from Callao, Peru. Freight costs to
transport materials from Houston and other ports to Callao and on to the site are included
in indirect costs. Pricing was based on information received from vendor budget
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quotations, historical data, and recently awarded purchase orders for similar materials on
other projects. An allowance for contractor wastage and loss is included.
All construction materials were assumed to be supplied from South America, North
America, and the U.K. Costs for the items listed below are a combination of budget
pricing from local suppliers contacted specifically for this project and relevant in-house
data.
Civil Allowances for bulking or compaction of materials were made in the unit prices
and are not included in the estimates of earthworks quantities. Quantities in the plant
and port site areas are based on mapping of ground topography at 1 m contours.
Mass earthworks estimates were based on soils studies, Autodesk Land Desktop
models (or equivalent), drawings, and sketches. Detailed excavation and backfill
quantities for earthworks related to buildings and structures were developed for each
area, based on estimated foundation sizes.
Civil construction equipment was estimated on a unit basis, developed using historical
data. Unit costs include fuel and maintenance. The cost of diesel fuel trucked to site
during construction is estimated to be $0.72/L based on $80/bbl oil.
For aggregate production, allowances are included for a crusher (400 t/h) and
screening plant to be set up at the plant site to process 2 Mt of material, and for a
mobile crusher (100 t/h) to process 0.3 Mt of material for access road construction.
The estimate and reuse assumptions include: excavation in soil, 70% re-use for
backfill and 30% to waste dump (2.5 km haul); excavation in rock, 100% re-use for
rockfill and haul to crusher for road-surfacing material.
An equipment productivity loss averaging 20% on earthworks activities is incorporated
in the estimate. This accounts for machine efficiency, machine downtime, shift
turn-around, weather delays, and site conditions, based upon a 10-hour single
working shift and 9 production months per year.
Concrete Quantities and classifications were determined from preliminary drawings,
with allowances made for overpour and wastage. The unit rate includes the
preparation of aggregate material, transport and stockpiling, supply of cement,
batching of concrete, transport and placing, formwork, reinforcing steel, and concrete
finishing. The rate was derived for the project from suppliers in Peru.
Embedded Metal Quantities were determined from preliminary sketches. The unit
price, developed from historical data, includes supply, fabrication, and installation
(based on carbon steel fabrication) of embedded metal and anchor bolts.
Structural Steel Quantities and breakdowns were based on preliminary GA
drawings and material take-offs. Weights include allowances for connections and
base plates. The unit price includes steel purchase, detailing, fabrication, and
erection labour. The rate was derived for the project from international suppliers.
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Mechanical Equipment The equipment was itemized and priced as per the project
equipment list. Motors were identified and are included with equipment costs.
Vendor budget quotations were obtained for all major items based on preliminary
specifications. Installation hours were obtained from in-house data and vendor
guidelines, where appropriate.
Mechanical (plate-work and tanks) Plate-work weights were calculated from
relevant drawings where available and from sketches, with allowances made for
necessary stiffeners, weirs, launders, etc. The unit prices, developed from historical
data, include material purchase, detailing, fabrication, and installation.
Overland Piping Overland and buried underground services piping quantities were
based on the overall site plan and profile drawings. The unit price, from both projectspecific quotes and historical data, includes materials, fabrication, wastage, pipe
handling, and testing.
Process Piping The cost of process and service piping (within battery limits) was
based on a percentage of the total equipment cost for the area. These factor
allowances for the various areas are based on historical data. The unit prices for
large equipment are based on quotes. Factors for the small equipment include
materials purchase, shop and field fabrication, and installation.
Electrical The electrical estimate was based on single-line diagrams and connected
loads detailed in the flowsheets. Major electrical equipment prices were based on
quotations. Bulk material prices were based on current in-house pricing. The costs of
electrical items, within battery limits of the plant downstream of MCC starters, are
based on a percentage of the total equipment cost within the area. These factor
allowances for the various areas are based on historical data. Lengths for overhead
lines and high-voltage cable were obtained from the overall plot plan. The building
lighting and grounding estimate was based on a dollar per square metre allowance for
the area of the building.
13.6.1.2
Instrumentation
Allowances were made for instruments, wiring, support stands, and tubing based on an
equipment factor.
13.6.1.3
Equipment and Material Pricing

Budget quotes were obtained from vendors for each piece of significant equipment with a
value greater than $250,000 and include the following:
point of manufacture
cost in Q3 2010 U.S. dollars
delivery duration
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cost of estimated spares

vendor assistance costs
shipping weight and dimensions
export packing
freight from point of manufacture to marshalling location at Callao, Peru.
Where possible, budget cost quotations were requested from three vendors.
All other equipment prices were based on telephone quotations with email confirmation or
in-house data for recently completed or quoted projects.
Quotes were received for 70% of the total mechanical equipment value.
13.6.1.4
Direct Field Labour

Labour rates were calculated using typical Peruvian wages and benefits based on recent
cost surveys. These were blended with expatriate support labour to achieve appropriate
crew mixes. Labour work hours and rotations will be based on the following:
Local labour 10 days on, 3 days off, 10-hour days
Overseas foreign labour 6 weeks on 2 weeks off, 10-hour days
The all-inclusive labour cost per hour is based on the following criteria:
base labour wage rate
overtime premiums and casual overtime allowance
benefits and burdens
insurance
appropriate crew mixes
small tools and consumables
temporary facilities and services such as construction buildings, shops, office supplies
field office overheads
home office overheads
construction supervision
general expense and profit
fire watch
first aid and safety supplies
ongoing and final clean-up
contractor survey
retention and safety bonuses
mobilization and de-mobilization
travel costs and travel time
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living-out allowance for local labour only.

For the work described in this report, the hourly labour rates shown in Table 13-4 were
used for the various trade crews.
Labour productivity factors were applied against North American work hours to
accommodate available construction knowledge or training levels of field craft, extended
work weeks, remote project location, and weather. These factors are shown in Table
13-5.
Table 13-4: Hourly Labour Rate
Area
Rate
($/h)
Civil
Concrete
Structural Steel
Architectural
Mechanical
Piping
Electrical
Instrumentation
HVAC
Painting and Insulation
14.00
14.00
15.00
13.50
15.75
15.75
15.50
15.50
15.75
12.50
Table 13-5: Labour Productivity Factors

Area
Factor
Civil (included in unit rate)

Structural Earthworks
Concrete
Steel
Architectural
Mechanical
Piping
Electrical
Instrumentation
HVAC
Coatings
13.6.1.5
1.00
2.13
2.00
2.25
2.00
2.40
2.43
2.25
2.25
2.43
2.05
Growth and Waste Factors

The growth and wastage factors used in the estimate are summarized in Table 13-6.
Growth factors are based upon the level of development of the design at the current stage
in the study. As the project progresses from prefeasibility through the various study
phases, the level of detail in the design will increase and the growth factor will decrease.
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Table 13-6: Summary of Growth and Waste Factors
13.6.1.6
Discipline
Factor
(%)
Earthworks
Swelling and compaction factors included in the individual unit rates, by

material type
Concrete
Concrete supply costs includes provision for over-pour and wastage in

unit rate
Structural
Steel
15
To cover connections, stiffeners, clips, base plates, and gussets in the

quantity
Mechanical
5
2
1
On equipment less than $2M

On equipment more than $2M and less than $5M
On equipment more than $5M
Piping
5
10
For fittings and routing on overland piping quantities

For plant process and service piping quantities (no growth on allowances)
Electrical
2
5
10
On equipment more than $2M

On equipment less than $2M
On cable quantities
Remarks
Mine
Mine capital costs include the mine mobile equipment, pre-stripping, mine access roads,
earthworks associated with water diversion around the mind, dewatering, and drainage,
and the explosives facilities. The explosives emulsion plant will be provided by a
contractor based on bulk supply and is included in the contractors rate buildup. The mine
capital costs total $327 million, as outlined in Table 13-7.
Table 13-7: Mine Capital Costs
Area
13.6.1.7
($000)
Open Pit Mine Development

Mine Mobile Equipment
Mine Infrastructure (including truckshop)
75,545
207,539
43,531
Total
326,615
Process Plant
This area includes all process equipment and structures from the primary crusher to the
tailings management and reclaim water systems, as well as concentrate handling and
loadout on site. The direct capital cost of the process plant is $381 million, as detailed in
Table 13-8.
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Table 13-8: Concentrator Capital Costs
13.6.1.8
Area
($000)
Primary Crushing and Conveying

Concentrator
53,925
327,352
Total
381,277
On-Site Infrastructure
This area covers the infrastructure and facilities required to support the mine/mill
operations, including plant site preparation, civil costs, and permanent accommodations.
Site and services capital totals $133 million, as outlined in Table 13-9.
Table 13-9: On-Site Infrastructure
Area
($000)
Site Preparation & Civil Works

On-site Service Roads
Non Process Facilities
Plant Mobile Equipment
Bulk Storage
Utilities / Services
Communication
Power Supply and Distribution (including transmission lines)
10,834
21,667
20,747
12,938
2,143
17,327
2,417
45,371
Total
13.6.1.9
133,444
Tailings Management
This area covers the tailings embankment construction and facilities, including seepage
infrastructure and reclaim costs. The direct capital totals $101.5 million, as outlined in
Table 13-9.
Table 13-10: Tailings Management
Area
($000)
Tailings Dam
Tailing Pipeline
Tailings Seepage Pump Station and Pipeline
De-Pyrite Flotation Plant
Arsenic Residue Storage Facility
Reclaim Barge
Waste Dump Seepage Pump Station and Pipeline
44,584
13,549
8,161
2,800
231
21,651
10,551
Total
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101,527
Page 13-9

13.6.1.10 Project Access Road

This area covers the project access road from Corral Quernado Road to the site. Direct
capital costs total $39 million.
13.6.1.11 Water Diversion
This area covers the construction of a diversion channel around the proposed waste
management facility, including the freshwater diversion embankment and associated
seepage infrastructure and facilities. Water diversion capital totals $51 million, as
outlined in Table 13-9.
Table 13-11: Water Diversion
Area
($000)
Diversion Channel
Construction Diversion System
Freshwater Diversion Embankment
Waste Rock Seepage Collection Embankment
37,386
2,833
7,743
2,791
Total
50,753
13.6.1.12 Port Site

Costs for the port site facilities to be constructed by Candente include port site
development and utilities, and concentrate receiving, storage, and handling. The
shiploader and dock are being built and paid for by Lumina; Candente is paying a usage
fee, which is carried in the operating costs. Candente direct construction costs at the port
total $27 million, as outlined in Table 13-10.
Table 13-10: Port Site Capital Costs
13.6.2
Area
($000)
Port Development
Port Site Facilities & Services
25,323
1,564
Total
26,887
Indirect Costs
Indirect costs for the project total $296 million and include the services required to support
the construction activities as listed in Table 13-11.
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Page 13-10

Table 13-11: Indirect Capital Costs

Area
($000)
Temporary Construction Facilities & Services

Construction Equipment
Construction Accommodation & Catering
Freight
Vendors Representatives
Start-up and Commissioning
EPCM
Capital and Warehouse Spares
First Fills
Owners Costs
Total
13.6.2.1
50,057
26,750
13,500
48,090
2,850
1,500
84,083
8,049
8,198
52,899
295,976
Temporary Construction Facilities and Services

This account includes all temporary buildings and services required during construction
and commissioning. The estimate of $50 million was based on durations from the
construction schedule and in-house data for material purchases. These include, but are
not limited to:
temporary construction warehouses and service facilities
construction utilities
waste handling
construction communications
construction management and Owners office equipment and supplies
temporary construction power and distribution
construction equipment rental and crane over 90 tonnes
site maintenance
medical services
material off-loading
pre-site access drug testing
scaffolding
laydown areas
site security services
site surveying
janitorial services
site bussing
safety training
soils and concrete testing.
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11 March 2011
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13.6.2.2
Construction Equipment
The estimate of $27 million for construction equipment is based on historical data and an
allowance of $7.50 per work hour. It does not include the following:
supply and operation of the batch plant and concrete transit trucks, which are
included in the concrete supply unit prices
rental of earthmoving equipment, which is included in the civil costs.
13.6.2.3
Construction Catering and Housekeeping

Construction camp sizing was based on camp loading and the construction schedule.
The estimate includes a 1,500-person camp at the plant site.
The camp will be
purchased and used during the construction period and be refurbished in the first year of
operations. Costs for purchase of the camp facilities are included in the direct permanent
accommodation costs. Allowances are included in the indirect costs for housekeeping
and catering services during the construction phase of the project. The cost of
$13.5 million is based on direct labour hours, obtained from in-house data on similar
projects, with an additional allowance to cover the following:
EPCM staff
vendor representatives
contractors supervision and staff
suppliers personnel
Owners personnel.
Costs were estimated and provided for the supply of camp site services such as water
treatment, sewage, and associated miscellaneous piping.
13.6.2.4
EPCM
The capital cost estimate of $84 million was based on a percentage of the DFC. The
EPCM estimate for the shiploading port facilities was prepared by Ausenco, also based
on a percentage.
13.6.2.5
Freight
Freight costs of $48 million were estimated from information provided by vendor quotes to
staging areas in either Houston or Callao and Pita. Where information was not provided,
freight costs to the staging area were estimated based on previous experience and
historical data. Freight costs from marshalling areas for ocean and barging were based
on estimated loads and weights together with the freight rates.
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13.6.2.6
Vendors Representatives
Vendor representative costs of $3 million were based on information provided by the
vendors or on historical data for similar projects. Travel time of two days portal-to-portal
was included in the vendor time required on site. Airfares, lodging, and other out-ofpocket expenses were accounted for as a rate per round-trip. Cost has been included in
the Indirects for the assistance of vendor representatives during installation.
13.6.2.7
Start-up and Commissioning

One month of contractor assistance in pre-commissioning and commissioning of the plant
has been included as well as costs for the EPCM contractors assistance during this
period, totalling $1.5 million.
13.6.2.8
Taxes and Duties

Taxes and duties are excluded from the capital cost estimate and included within the
financial analysis.
13.6.2.9
Capital Spares and Warehouse Supplies

Costs were estimated at $8 million. Spare parts are based on an allowance of 6% of the
process and 5% of the mobile equipment purchase value.
Wear spares such as liners, pump impellers, and conveyor belting are treated as
operations inventory and are carried in Working Capital in the financial analysis.
Some commissioning spares were provided by vendors, and the remaining were
estimated based on historical data.
13.6.2.10 First Fills

First fills of $8 million is an allowance for the acquisition of necessary consumables to
cover the initial grinding charge and one months supply of grinding media and reagents
for operation of the concentrator.
13.6.2.11 Owners Costs
Candente prepared the Owners costs of $53 million for the capital cost estimate based
on a percentage of the direct costs and experience with projects of similar magnitude and
complexity. Owners costs are incurred from the beginning, with the project authorization,
until completion of the commissioning program, assumed to be one month after
mechanical completion of the project. Costs after this point are treated as operating
costs.
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11 March 2011
Page 13-13

The bulk of these costs consist of employees and contracted services according to
descriptions in Section 12, Project Execution Plan, of this document. The following costs
are incorporated within the items:
PM salary/benefits design phase
housing/relocation
travel including home trips
labour/supplies/training/pre start-up
insurance
environmental and construction permits
laboratory, office, and shop equipment lists and costs
land purchase
third-party consulting
forest clearing and replanting.
Costs for project acquisition, prior feasibility studies, environmental assessment baseline
work and reporting, and other project costs preceding the project authorization are not
included in the capital cost estimate.
13.7
Contingency
Contingency accounts for unforeseen costs within the project scope and was calculated
using an average (of both direct and indirect capital costs) factor of 18%, which is
believed to be appropriate for the level of engineering work performed in the preparation
of this prefeasibility progress report. Contingency has been applied to all the capital cost
estimates in this report, excluding working and sustaining capital. Input variables used in
calculating the contingency are a result of information gathered from all parties involved in
the basis of the estimate. The contingency is $244 million, resulting in an overall
estimate of $1.599 billion. The contingency does not allow for items beyond the scope of
work or under exclusions, as listed below. A breakdown of the contingency is provided in
appendix J.
13.8
Escalation
Escalation is excluded from the estimate.
13.9
Working Capital
Working capital is excluded from the estimate and is a separate line item in the financial
model.
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13.10
Sustaining Capital
Sustaining capital for replacement of the mine and plant mobile equipment, tailings dam
construction, water management and treatment facilities, electrical equipment, and
community support is estimated to be $196.75 million over the life of the project.
Sustaining capital includes the following:
capital replacement of mine and plant mobile equipment
pit dewatering and drainage control systems
replacement of electrical equipment
freight cost
catering cost
EP cost.
13.11
Capital Cost Exclusions

The following items were specifically excluded from the capital cost estimate:
cost of financing and interest during construction
costs due to currency fluctuations
operating costs
working capital
cost of previous and further study
changes to design criteria
scope changes or accelerated schedule
changes in Peruvian law
site mitigation identification and removal of currently unidentified contaminated soils
(major oil and fuel spills, heavy metals, pesticides, asbestos solids)
deferred capital
other duties and taxes
closure and reclamation (included in financial model)
schedule delays such as those caused by:
scope changes
delay in notice to proceed
labour disputes
unavailability of sufficient or experienced craft labour
undefined geotechnical or environmental conditions
unidentified or adverse subsurface soil conditions
other external influences
receipt of information beyond the control of EPCM contractors.
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Page 13-15

CONTENTS
14.0
OPERATING COST ESTIMATE ...........................................................................14-1

14.1 Summary...................................................................................................14-1
14.2 Basis of Estimate ......................................................................................14-2
14.2.1
Wages and Salaries ..................................................................14-2
14.2.2
Schedules of Work ....................................................................14-2
14.2.3
Energy Costs ............................................................................14-2
14.2.4
Transportation Costs .................................................................14-3
14.3 Mine Operating Costs ...............................................................................14-3
14.3.1
Summary ..................................................................................14-3
14.3.2
Basis of Mine Operating Cost Estimate .....................................14-5
14.3.3
Mine Personnel .........................................................................14-6
14.3.4
Mine Expenses .........................................................................14-8
14.3.4.1
Drilling, Blasting, Loading, and Hauling .................14-8
14.3.4.2
Mine Support .......................................................14-10
14.3.4.3
General Mine .......................................................14-10
14.3.5
Equipment Operating Costs ....................................................14-11
14.4 Process Operating Costs ........................................................................14-11
14.4.1
Summary ................................................................................14-11
14.4.2
Process Personnel ..................................................................14-12
14.4.3
Consumables ..........................................................................14-13
14.4.4
Process and Ancillary Power Consumption Costs ...................14-14
14.4.5
Process Plant Maintenance Supplies Cost ..............................14-15
14.5 General and Administrative Operating Costs...........................................14-15
14.5.1
Summary ................................................................................14-15
14.5.2
Site Services ...........................................................................14-16
14.5.3
Access Road Maintenance .....................................................14-16
14.5.4
Environment ............................................................................14-16
14.5.5
Miscellaneous .........................................................................14-16
TABLES
Table 14-1:
Table 14-2:
Table 14-3:
Table 14-4:
Table 14-5:
Table 14-6:
Table 14-7:
Table 14-8:
Table 14-9:
Table 14-10:
Table 14-11:
Average Operating Costs ............................................................................................ 14-1

Typical Labour Costs ................................................................................................... 14-2
Annual Direct Mine Operating Costs ($000) ................................................................ 14-4
LOM Mining Cost by Category ($000) ......................................................................... 14-4
Mining Staff and Labour............................................................................................... 14-7
LOM Operating Costs by Activity ................................................................................. 14-9
LOM Support Costs ................................................................................................... 14-10
LOM General Mine Costs .......................................................................................... 14-11
Average Annual Processing Costs ............................................................................ 14-12
Process Plant Personnel ........................................................................................... 14-13
Liner and Grinding Media Annual Costs .................................................................... 14-14
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TOC i

Table 14-12: Process Reagent Annual Costs ................................................................................. 14-14

Table 14-13: Average Annual Power Consumption ........................................................................ 14-15
Table 14-14: Summary of G&A Cost Estimate ............................................................................... 14-15
FIGURES
Figure 14-1: LOM Mining Cost Breakdown ...................................................................................... 14-5
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11 March 2011
TOC ii

14.0
OPERATING COST ESTIMATE
14.1
Summary
The operating costs for the Caariaco Norte project are based on an Owner-operated
mining fleet and process facility and have been prepared in third quarter 2010 U.S.
dollars. The operating cost estimate excludes:
contingency
allowance for escalation
sales tax
concentrate shipping
copper smelter treatment and refining charges
import duties.
In addition to the Owner-operated mining fleet, a number of options were developed
during the course of the study for financial analysis, including:
Contractor mining fleet
Owner-operated/leased mining fleet
Owner-operated/leased mining fleet with leased electrical supply and processing
equipment, including crushing, grinding, and flotation.
Details for these options are provided in Section 16, Financial Evaluation.
The Owner-operated case is the basis for the remainder of this section.
The operating cost estimates have been assembled by area and component, based on
estimated staffing levels, consumables, and expenditures, according to the mine plan and
process design. Average operating costs are shown in Table 14-1. Detailed calculations,
spreadsheets, and backup reports for the operating costs are included in Appendix J.
Table 14-1: Average On-Site Operating Costs
Area
Unit
US$
Unit
US$/lb Cu
Mining
Processing
General & Administration
$/t processed
$/t processed
$/t processed
2.74
3.11
0.43
$/lb Cu
$/lb Cu
$/lb Cu
0.360
0.408
0.056
Total On-Site Operating Costs
$/t processed
6.28
$/lb Cu
0.824
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Page 14-1

14.2
Basis of Estimate
14.2.1
Wages and Salaries

Average salary and wage rates used were based on AMEC in-house data from recent
projects in South America. All positions and job classifications were categorized into the
one of eight levels for the calculation of labour costs. The various levels and typical job
classifications within each are summarized in Table 14-2. The calculation of all-in labour
costs includes an allocation of 50% above the costs shown in Table 14-2 to cover all
statutory payments, company-sponsored benefit plans and programs, and costs
associated with vacation, sick leave, and absenteeism.
Table 14-2: Typical Labour Costs
Typical Positions
Manager
Superintendent, Chief Engineer
General Foreman, Engineer, Geologist
Supervisor, Planner, Accountant
Equipment Operator, Technician, Tradesman
Clerk, Apprentice
Trainee, Assistant Operator
Labourer
14.2.2
Level
Annual Salary or Wages

($)
Level 0
Level 1
Level 2
Level 3
Level 4
Level 5
Level 6
Level 7
250,000
120,000
80,000
60,000
30,000
25,000
20,000
15,000
Schedules of Work
The work schedule assumes production will operate 24 h/d, 7 d/wk, 365 d/a.
Considering the location of the proposed Caariaco Norte mine and the lack of immediate
local accommodations, the mine will construct a camp to house employees. The camp
will be complete with dormitories, a cafeteria, and recreational facilities. Employees will
work 12 h/d on a 3-weeks-in/3-weeks-out schedule.
14.2.3
Energy Costs
Diesel
Based on a WTI average price of US$80.00 per barrel, a diesel cost of $0.72/L, including
delivery, was used for operating cost calculations. The diesel cost was confirmed with
multiple Peruvian sources.
Project No.: 165270

11 March 2011
Page 14-2

Electricity
The power price for the project was based on costs submitted by a Peruvian utility
provider at $50.51/MWh. The cost includes the price of power, connection fee,
transmission costs, and the cost of generation.
14.2.4
Transportation Costs
Transportation costs are included within the costs for supplies and materials calculated
for mining and processing and are based on conventional highway truck supply. Costs
per tonne were based on quotations from local trucking firms. Transport cost for supplies
and materials priced from the closest port to site is $25/t. Transport from Lima is $35/t,
and an allowance of $260/t, based on quotations from freight-forwarders, is included to
cover both sea and land freight for bulk goods procured internationally.
14.3
Mine Operating Costs
14.3.1
Summary
The mine operating cost estimate incorporates costs for operating and maintenance
labour, staff, and operating and maintenance supplies for each year. Operating and
maintenance supplies are based on a combination of in-house and vendor-supplied data
and are exclusive of taxes. Consumables (fuel, explosives, supplies etc.) were calculated
from expected use, unit consumptions, and allowances for minor items, based on inhouse information combined with first principle costs developed for project specifics.
The annual direct production mining cost estimates are shown in Table 14-3 and the LOM
totals in Table 14-4. A percentage breakdown of the LOM production costs is illustrated
in Figure 14-1. All mining costs are based on production Years 1 to 22. Preproduction
costs have been capitalized and are included in the capital cost estimate. Detailed
annual costs are provided in Appendix C.
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Table 14-3: Annual Direct Mine Operating Costs ($000)

Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Total
Table 14-4:
Labour
Fuel &
Lube
Power
Consumables,
Parts, Other
Total
$/t mined
$/t milled
15,586
15,795
15,795
15,795
15,839
15,795
15,795
15,795
15,839
15,548
15,548
15,548
15,590
15,548
15,548
15,296
14,511
13,508
12,384
12,429
12,553
7,684
27,898
26,913
26,319
26,356
26,796
25,050
26,113
27,968
27,007
24,640
24,794
22,810
24,380
24,104
25,283
25,195
22,216
16,649
15,675
17,848
20,157
6,766
1,445
1,490
1,490
1,476
1,473
1,473
1,473
1,473
1,473
1,473
1,473
1,473
1,473
1,473
1,466
1,321
1,256
1,016
887
838
790
190
49,425
72,583
54,898
55,260
70,623
58,141
58,122
68,152
57,162
52,531
53,800
51,389
46,658
47,485
64,659
54,820
45,942
40,410
40,149
37,482
38,946
13,552
94,354
116,781
98,501
98,888
114,731
100,459
101,503
113,388
101,481
94,191
95,615
91,220
88,101
88,610
106,956
96,632
83,925
71,582
69,094
68,598
72,446
28,192
1.32
1.56
1.31
1.35
1.57
1.38
1.39
1.55
1.39
1.29
1.31
1.25
1.21
1.21
1.48
1.51
1.39
1.49
1.67
1.76
1.99
3.80
3.40
3.37
2.84
2.85
3.31
2.90
2.93
3.27
2.93
2.72
2.76
2.63
2.54
2.56
3.09
2.79
2.42
2.06
1.99
1.98
2.09
4.04
323,729
510,939
28,391
1,132,190
1,995,248
1.38
2.74
LOM Mining Cost by Category ($000)
Operating Costs
Total
$/t mined
$/t milled
Admin/Overhead
Drilling
Blasting
Loading
Hauling
Support
Ancillary
Dewatering
114,152
101,710
303,170
205,359
944,514
266,757
45,587
14,000
0.08
0.07
0.21
0.14
0.66
0.19
0.03
0.01
0.16
0.14
0.42
0.28
1.30
0.37
0.06
0.02
1,995,248
1.38
2.74
Total
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11 March 2011
Page 14-4

Figure 14-1: LOM Mining Cost Breakdown
Pit Dewatering,
1%
Total Mine
Overhead, 6% Drilling, 5%
Ancillary, 2%
Blasting, 15%
Support, 14%
Loading, 10%
Hauling, 47%
14.3.2
Basis of Mine Operating Cost Estimate

Operating costs were derived by applying equipment productivities, equipment hourly
operating costs, labour requirements, and wages and salaries to the production forecast.
Hourly and supervision labour will work 12-hour shifts, 2 shifts per day, on a 1-week-on/
1-week-off shift rotation. With the exception of the blasting crew and general labourers,
all hourly labour and supervisory personnel will rotate between day and night shifts.
Management and technical support staff will work the day-shift only, with the exception of
the Mine Shift Supervisor, who will rotate with the crews.
Equipment operator labour requirements and supplies are based on equipment hours and
installed machines calculated from engineering estimates of productivities and activities,
quantities of material moved, and hourly equipment operating rates. Other support labour
within the mining operation was determined by engineering estimates of activities. The
supply costs for production and ancillary equipment include such items as fuel, tires,
lubricants, ground-engaging tools, and other consumables. Higher-cost items are based
on supplier quotations, and minor costs are taken from recent projects.
Maintenance labour requirements and supplies for production and support equipment are
also based on calculated equipment hours, hourly equipment operating rates, estimates
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11 March 2011
Page 14-5

of mechanical availabilities, and maintenance labour intensities for each fleet type. The
costs for maintenance labour, spare parts, major components, and consumables
(including lubricants) are included in the build-up of unit operating costs.
14.3.3
Mine Personnel
The mine will be headed by the Mine Superintendent, who will report to the General
Manager.
Open pit operations functions include drilling, blasting, loading, and hauling of ore and
waste, haul road construction/maintenance, and mine dewatering. The number of
operators is based on the annual equipment requirements and the crew schedule,
ensuring that sufficient operators are available on each crew to operate the equipment.
Mine maintenance will be overseen by a maintenance superintendent with overall
property-wide maintenance responsibilities. The number of mine maintenance personnel
is based on the number of major pieces of equipment. Over the life of mine, the ratio of
maintenance personnel to pieces of equipment is approximately 1.25. The ratio of
maintenance labourers to operators is approximately 0.49 over the life of mine.
Property-wide maintenance staff counts are shown in Table 14-5 and further details of
staffing assignments are provided in Appendix C.
Labour costs associated with the engineering department, under the direction of the
technical services superintendent, and the geology department, under the direction of the
chief geologist, are also covered in this area.
Staff and labour requirements vary over the mine life and are shown by period in
Appendix C. Maximum numbers of staff and hourly personnel are shown in Table 14-5.
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Table 14-5: Mining Staff and Labour

Position
No.
Mine Operations Department Fixed Personnel

Tool Crib Attendant
Warehouse Attendant
General Mine Labourer
Trainee
Water Management Labourer
Mine Superintendant
Mine General Foreman
Mine Shift Supervisor
Mine Trainer
Clerk
Blast Supervisor
4
4
8
4
4
1
2
4
1
2
2
Subtotal Mine Operations
36
Mine Maintenance Department Fixed Personnel

Light Duty Mechanic
Lube Truck Driver
Apprentice
HV Electrical
Mine (General) Manager
Maintenance Superintendant
Mobile Maintenance General Foreman
Mobile Maintenance Supervisor
Maintenance Planner
Clerk (Maintenance)
Clerk/Assistant (Planning)
Electrical General Foreman
4
4
4
4
1
1
2
4
2
2
1
1
Subtotal Mine Maintenance
30
Engineering Department Fixed Personnel

Chief Mining Engineer
Senior Mining Engineer
Mining Engineer
Mine Technologist
Surveyor
Geotechnical Engineer
Dispatcher
2
2
2
6
4
1
4
Subtotal Engineering
21
Geology Department Fixed Personnel

Chief Geologist
Senior Geologist
Geologist
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1
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2
Page 14-7

Position
No.
Sampling Technician
Subtotal Geology
Total Fixed Personnel
95
Equipment Operators
Primary Equipment
P&H 4100C Shovel
930E Haul Truck
Sandvik1190E Drill
8
4
84
12
8
Subtotal Primary Equipment
116
Support Equipment
Komatsu D475A Track Dozer
Komatsu D375A Track Dozer
Komatsu GD825A Motor Grader
Komatsu WD900 Rubber-tired Dozer
Komatsu HD785 Water Truck
Cat 740 Articulated Truck
6
9
2
4
4
4
3
1
12
Subtotal Support Equipment
45
Equipment Maintenance Personnel

Loading
Hauling
Drilling
Support
9
32
8
30
Subtotal Maintenance
78
Total Mine Operators & Maintenance
239
Total Mining Workforce
334
14.3.4
Mine Expenses
14.3.4.1
Drilling, Blasting, Loading, and Hauling

These categories include both operating and maintenance costs. All costs are based on
associated production equipment hours as provided in Appendix C. A breakdown of the
operating costs for each category is shown in Table 14-6.
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Page 14-8

Table 14-6: LOM Operating Costs by Activity

Cost
($000)
Item
Drilling
Operating Costs
Personnel Costs
Materials & Supplies
17,293
26,717
Maintenance Costs
Personnel Costs
6,917
50,783
Drilling Total
101,710
Blasting
Operating Costs
External Services
284,141
19,029
Blasting Total
303,170
Loading
Operating Costs
Personnel Costs
10,988
31,225
Maintenance Costs
Personnel Costs
7,912
155,234
Loading Total
205,359
Hauling
Operating Costs
Personnel Costs
73,857
499,349
Maintenance Costs
Personnel Costs
External Services
27,696
331,066
12,545
Hauling Total
944,514
The Materials & Supplies category captures all costs for maintenance and repair: parts,
ground-engaging tools, undercarriage, special wear items, structures, buckets, bodies,
drill bits, drill consumables, all based on recent in-house projects, and the shipping
associated with these parts. External Services include contractor and professional
service charges. Yearly operating cost summaries are provided in Appendix C.
Powder factor calculations were used to design drill pattern sizes and annual drill
requirements. Allowances of 5% were applied to cover re-drills in all material. Drill
Project No.: 165270

11 March 2011
Page 14-9

accessory costs are based on estimated life and unit prices from in-house data. Fuel
supply is based on a price of $0.72/L. The power cost used is 0.0505/kWh.
Explosives will be supplied as a down the hole service. A quotation was received in
which a monthly service charge was given, as well as costs for consumables. The
monthly service charge was applied equally for all periods, while consumables costs
varied with blasting requirements. Diesel fuel, water, and power will be supplied by mine
operations.
14.3.4.2
Mine Support
Mine support includes pit cleanup, in-pit ramp maintenance, haul road maintenance,
dozing, road grading, haul road dust control, and water control. A breakdown of the
support operating costs is shown in Table 14-7. Yearly operating costs are detailed in
Appendix C.
Table 14-7: LOM Support Costs
Cost
($000)
Item
Support
Operating Costs
Personnel Costs
42,873
86,262
Maintenance Costs
Personnel Costs
External Services
28,420
107,845
1,356
Total Support
266,757
Ancillary
14.3.4.3
45,587
Total Ancillary
45,587
General Mine
This category includes costs for the following:
general mine equipment
mine water management
mine labourers and training
mine supervisory staff
maintenance supervisory staff
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engineering and geology

grade control
software user fees
engineering and geotechnical supplies
external engineering support.
A breakdown of the general mining costs is shown in Table 14-8.
This category contains costs for engineering and geotechnical supplies, training, travel,
consulting services, sampling, software licensing and maintenance, and crusher plant
operation. The yearly overhead requirements are detailed in Appendix C.
Table 14-8: LOM General Mine Costs
Cost
($000)
Item
14.3.5
Personnel Costs
Dewatering
Consulting/Professional Services
Other Expenses
108,212
14,000
2,640
3,300
Total
128,152
Equipment Operating Costs

Operating costs for the mine mobile equipment were built up from two basic components;
operating costs and maintenance costs. Operating costs include operator labour costs,
diesel and electrical power, tires, and other consumables. Maintenance costs include
maintenance personnel costs, lube, oil and filters, undercarriage, ground-engaging tools,
special wear items, and repair and maintenance reserve. Hourly consumption rates and
costs were estimated using in-house and manufacturer data. A yearly breakdown of
operating costs for each fleet is provided in Appendix C.
14.4
Process Operating Costs
14.4.1
Summary
Processing costs include the costs of operating and maintaining the processing facilities,
from the primary crusher through to concentrate loadout, as well as treatment of
concentrate in the on-site roasting facility, production of by-product sulphuric acid,
provision of process and reclaim water pumping, and tailings management. Tailings
management includes pumping mill tailings to the tailings management facility and
treatment of some of the tailings to remove pyrite and other sulphide materials for
continuous placement of sands on the tailings dam. The processing costs account for the
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Page 14-11

expenses associated with purchasing consumables, equipment maintenance, personnel,

and power consumption.
Consumables costs include items such as crusher liners, mill liners, grinding media, all
chemical reagents, and an allocated cost for office / laboratory supplies. The reagent
costs are inclusive of freight for shipping the items to site.
Workforce organization, salaries, and hourly costs were based on AMEC in-house data
for recent South American projects.
Equipment maintenance supplies and materials are estimated as a percentage of the
capital cost of equipment.
Power consumption was derived from the estimated load of individual pieces of
equipment on the equipment list.
The average annual processing costs are shown in Table 14-9.
Table 14-9: Average Annual Processing Costs
Item
Average
($/a)
Labour
Reagents and Consumables
Power
Maintenance Supplies
24,526,600
37,529,300
39,083,800
6,729,800
0.71
1.08
1.13
0.19
107,869,500
3.11
Total
14.4.2
$/t Milled
Process Personnel
The processing operations will be led by the Mill Superintendent, who will report directly
to the site General Manager.
All employees will operate on a 3-weeks-in/3-weeks-out schedule with a staggered
rotation.
Buildup of the process workforce is summarized in Table 14-10.
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Table 14-10: Process Plant Personnel

Staff
Number of Positions
Process Plant Staff

Mill Superintendent
Operations General Foreman
Operations Shift Foreman
Chief Metallurgist
Senior Metallurgist
Plant Metallurgist
Chief Assayer
Assay Technician
Sample Prep
Trainer
Clerk
1
1
4
1
6
8
2
8
8
1
2
Total Plant Staff
42
Process Plant Labour

Control Room Operator and Assistant
Crusher Operator and Assistant
Grinding Operator and Assistant
Dewatering Operator and Assistant
Flotation Operator
Filtration Operator
Reagent Mixing
Utility Operator
WTP/STP/Labourer
8
12
10
8
12
4
4
2
18
Total Plant Labour
78
Total Plant Personnel
14.4.3
120
Consumables
The major process consumables consist of grinding media and flotation reagents.
Crusher liner and the grinding liner consumptions were calculated based on wear rates
per tonne of mill feed and steel unit costs on recent vendor quotations for this project.
Grinding media consumption for the SAG and primary ball mills was estimated by using
the standard AMEC modified Bond method for ball consumption. Costs associated with
crushing and grinding liner replacements and grinding media are summarized in
Table 14-11.
Freight-associated charges were based on a rate of $35/t for cargo transport from Lima
for SAG and ball mill media and liners, and of $260/t for ceramic regrind media and
rubber liners sourced in Belgium.
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Table 14-11: Liner and Grinding Media Annual Costs

Annual Cost *
($)
Item
Primary Crusher Concaves/Mantles
SAG Mill Liners
Ball Mill Liners
Regrind Mill Liners
SAG Mill Media
Ball Mill Media
Regrind Mill Media
156,000
3,155,400
2,305,900
160,000
11,650,800
9,570,300
2,348,400
Total Steel
29,346,800
* including freight
Flotation reagent consumptions were derived from laboratory testwork and scaled up to
plant consumption rates based on industrial experience from other operating sites.
Reagent unit costs are based on third quarter 2010 quotations FOB Lima. Lime costs are
FOB a northern Peru port. Annual costs, inclusive of freight to site, are listed in
Table 14-12.
Table 14-12: Process Reagent Annual Costs
Annual Cost *
($)
Reagent
Lime
AP3894
MIBC
PAX
Flocculant
Roaster Reagents
2,258,500
2,470,600
1,131,600
823,500
1,248,300
250,000
Total Reagents
8,182,500
* including freight
14.4.4
Process and Ancillary Power Consumption Costs

Average annual power consumption in the process plant and associated areas is
summarized in Table 14-13. Power consumption was estimated at an average of
773,937 MWh/a. The power consumption in the pit is provided in Section 14.3.
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Table 14-13: Average Annual Power Consumption
14.4.5
Area
MWh/a
Mine Dewatering
Process Plant
Roaster and Acid Plant
Camp
Fresh and Reclaim Water Systems
37,361
610,367
48,202
21,327
56,680
Total Site Demand
773,937
Process Plant Maintenance Supplies Cost

Maintenance supplies costs are inclusive of materials for laboratory, plant, and equipment
maintenance as well as operating materials. The estimated costs were determined using
factors and allowances consistent with similar operations.
14.5
General and Administrative Operating Costs
14.5.1
Summary
The general and administrative (G&A) operating costs are the labour and overhead
expenses for cost centres that are not directly linked to the mining and process
disciplines. G&A for each cost centre was estimated either from first principles or input
from AMEC based on other operations.
Maintenance costs have been assigned to G&A to cover maintenance costs not specific
to either the process plant or mine.
A summary of G&A annual operating costs is shown in Table 14-14.
breakdown of the G&A costs is included in Appendix J.
A detailed
Table 14-14: Summary of G&A Cost Estimate

Detail
Site Services
Access Road Maintenance
Environment
Freight Charges
Miscellaneous
Total
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11 March 2011
Page 14-15
Average Total
($/a)
$/t milled
6,414,900
1,253,500
2,250,000
1,406,600
3,500,000
0.19
0.04
0.06
0.04
0.10
14,825,000
0.43

14.5.2
Site Services
Costs associated with site services include camp operations, transportation costs for
personnel, general site vehicle operation and maintenance, communications, security,
medical and safety supplies, computer hardware and software, office supplies, and
domestic water treatment. Camp and catering includes food costs, fixed costs for
administration of camp and catering services, housekeeping and laundry costs, janitorial
services, labour costs, and profit margin. Based on AMEC in-house data, the daily
estimated allowance is $17.26 per person.
The costs of operating the construction camp are included under the capital cost section
of the estimate.
All other costs are allowances based on averages for similar operations.
14.5.3
Access Road Maintenance

The cost of maintaining the access road to site, a distance of approximately 47 km, plus
the power line to be installed along its alignment, is $26,000 / km / annum based on a
quotation received during the previous phase of the study.
14.5.4
Environment
The environmental-associated costs include environmental monitoring requirements and
costs for ongoing construction equipment and materials for the various containment
impoundments and diversions on site.
14.5.5
Miscellaneous
Cost allowances include off-site training and attendance at conferences, insurance,
corporate services and travel, community development, and various consulting and legal
fees. Costs for annual insurance premiums and fees are based on preliminary
discussions and a quote received from Marsh Canada Limited, a risk and insurance
services firm.
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Page 14-16

CONTENTS
15.0
MARKETING ........................................................................................................15-1
15.1 Summary...................................................................................................15-1
15.2 Concentrate Product Quality .....................................................................15-1
15.3 Production .................................................................................................15-2
15.4 Market Treatment Charges .......................................................................15-3
15.5 Long-Term Smelter Charges .....................................................................15-4
15.5.1 Payable Metals ..............................................................................15-5
15.5.2 Refining Charges ...........................................................................15-5
15.5.3 Penalties........................................................................................15-5
15.5.4 Payment ........................................................................................15-5
15.5.5 Concentrate Market .......................................................................15-5
15.6 Acid Market ...............................................................................................15-6
TABLES
Table 15-1: Analysis* of Copper (Cu) Concentrate (calcine, d.b.) ................................................... 15-2
Table 15-2: Mining Production Parameters ...................................................................................... 15-3
Table 15-3: Projected Annual TC/RC Levels ................................................................................... 15-4
FIGURES
None
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TOC i

15.0
MARKETING
15.1
Summary
This section presents the marketing assessment for the Caariaco Norte project.
Assumptions are based on metallurgical data to date and reports commissioned from Neil
S. Seldon & Associates Ltd. (NSA) (Appendix K)i to examine the copper concentrate and
acid markets.
NSAs commentary and outlook on concentrate marketability and related smelter charges,
including treatment, refining, penalty details, payment timing, metal accountability, and
other contract terms, are based on NSA market knowledge and use of data available in
the public domain. NSA has not contacted any smelters to specifically discuss the
marketability of the Caariaco Norte concentrates. As the project progresses through the
next phase of study, it is recommended that some contact be made with smelters to
discuss the acceptability of the proposed calcine from the Caariaco project and
associated treatment and refining charges.
A high-level evaluation of the marketability of sulphuric acid by-product from the proposed
roasting facility was completed by Caliper Metals Corp (CMC) on behalf of NSA
(Appendix K)ii. Future supply demand for both local Peruvian and Chilean acid markets
suggests a net deficit for the near term. CMC has indicated that, from a project
perspective, this is a positive project inclusion as domestic options are likely to increase,
although Chile remains a viable export alternative. CMCs opinion on long-term prices in
Chile and Peru is in the range of $75 to $85/t.
All costs in this section reflect U.S. dollars.
15.2
Concentrate Product Quality

The anticipated quality of the copper concentrate to be produced is based on
metallurgical testing carried out by SGS Lakefield in Santiago and Outotec (Sweden) AB
and is discussed in Section 5, Metallurgy, of this report. The relevant parameters are
presented in Table 15-1. More information on the concentrate treatment circuit is provided
in Section 6, Processing.
Other than arsenic, no other significant deleterious constituents are anticipated, although
it should be noted that antimony is near the normal penalty levels before roasting of the
concentrate occurs and significantly below penalty limits post roast. Overall, the
concentrates are considered to be of good quality.
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Table 15-1: Analysis* of Copper (Cu) Concentrate (calcine, d.b.)

Element
Copper
Iron
S (sulphide)
Gold
Silver
Arsenic
Antimony
Bismuth
Cadmium
Cobalt
Chlorine
Lead
Molybdenum
Nickel
Zinc
Aluminum Oxide
Calcium Oxide
Chromium (III) Oxide
Magnesium Oxide
Manganese Oxide
Potassium Oxide
Silica
Sodium Oxide
Titanium Dioxide
Vanadium Pentoxide
Symbol
Unit
Average
Cu
Fe
2S
Au
Ag
As
Sb
Bi
Cd
Co
Cl
Pb
Mo
Ni
Zn
Al2O3
CaO
Cr2O3
MgO
MnO
K2O
SiO2
Na2O
TiO2
V2O5
%
%
%
g/t
g/t
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
31
27.5
20
3.4
113
0.2
0.1
0.075
0.001
0.003
0.05
0.023
0.1
0.008
0.25
3.8
0.06
0.04
0.3
0.001
0.75
9.1
0.25
0.25
0.001
* Preliminary analysis
15.3
Production
This progress report is based on the preliminary production parameters for Years 1 to 22
as shown in Table 15-2 and detailed in Section 4, Mine Plan and Production.
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Table 15-2: Mining Production Parameters

Copper Concentrate
Year
Ore Milled
(kt)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Life of Mine
15.4
Dry Weight
(tonnes)
27,740
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
34,675
6,974
376,500
517,600
459,700
399,200
463,500
436,200
436,500
423,000
377,700
311,600
303,700
360,200
400,800
424,700
432,800
415,400
324,900
297,900
357,900
445,200
471,300
102,500
728,214
8,538,800
Grade
(% Cu)
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
Copper Contained
(klb)
Gold Contained
(oz)
Silver Contained
(oz)
253,900
349,100
310,000
269,200
312,600
294,200
294,400
285,200
254,700
210,100
204,800
242,900
270,300
286,400
291,800
280,200
219,100
200,900
241,400
300,300
317,800
69,100
39,800
56,000
51,400
39,000
46,700
47,700
49,900
49,600
44,300
32,700
26,100
32,900
37,600
41,500
43,900
42,100
30,300
24,000
29,400
41,400
45,300
8,500
1,204,700
1,190,500
1,022,000
1,087,900
1,130,400
1,094,000
1,015,600
933,400
845,300
738,300
769,300
889,400
944,900
959,700
982,500
907,900
705,800
722,100
838,100
979,400
979,400
222,800
5,758,400
860,100
20,163,400
Market Treatment Charges

The estimation of treatment and refining charges for the study is based on long term
projections (post 2013) contained in a report prepared by Neil S. Seldon & Associates
Ltd. (Appendix K) and current AMEC in-house data.
The key determinants for future treatment and refining charges (TC/RC) are the
supply/demand balance for copper concentrates, smelter economics, and spot market
activity as assessed by NSA.
NSA indicated that the annual benchmark numbers have essentially troughed and that a
gradual increase can be expected over the next two to three years, resulting in treatment
charges approaching equilibrium levels around 2013. Until late summer 2010, it was a
reasonable forecast that 2011 levels would remain similar to those in 2010, raising the
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Page 15-3

question of how much levels could increase year-by-year, assuming no major unforeseen
changes. However, in late September and October 2010, there was a dramatic increase
in spot terms, which rose to approximately $80.00 TC and $0.08 RC, and higher, but have
since fallen back.
In summary, NSA suggests the scenario shown in Table 15-3 for the period beginning in
2011.
Table 15-3: Projected Annual TC/RC Levels
TC $/dmt
RC c/lb
PP
PP Base
PP %
PP Cap
2011
Annual
2012
Annual
2013
Annual
Long-term
60/65
6/6.5
N/A
N/A
N/A
N/A
65/70
6.5/7
N/A
N/A
N/A
N/A
70/5
7/7.5
N/A
N/A
N/A
N/A
77.50
7.75
$2.50
+5
5 cents
Looking forward to post 2012, charges will ultimately be required to approach a

sustainable economical level for the smelting industry. Given such economics and the
expectation of higher copper prices, reflecting the falling dollar value, price participation or
some form of price sharing, such as a step up in the level of TC/RC at higher prices,
could eventually reappear, as indicated in the table above. For simplicity, NSA suggests
the following longer-term assumptions: $77.50 TC, $0.0775 RC, and a PP formula of plus
5% above a price of $2.50, with a cap of $0.05 in constant dollars.
TC and RC are not the only terms used in valuing concentrates, however. Payments and
deductions are a matter of negotiation and will vary with many factors, including supply,
demand, and customs in individual markets. NSA suggests the terms outlined in Section
15.5 below as an indication of standard long-term smelter charges, based on CIFFO
(Cost Insurance and Freight Free Out) delivery to smelter ports.
Analyst opinions on long-term projections for smelter TC/RCs vary. According to NSA the
long-term projection is $77.5 and $7.75 for TC and RC, respectively. For the financial
analysis (see Section 16, Financial Evaluation), AMEC used TC and RC levels of $75/t
and $7.50/t, respectively. Following discussions with NSA regarding the probable range
on long-term projection, the benchmarked figures used by AMEC were determined to be
reasonable and fell within the range considered by NSA.
15.5
Long-Term Smelter Charges

AMEC used the following smelter terms:
Treatment Charge ..................... $75 per dmt CIFFO main smelter port
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Page 15-4

15.5.1
Payable Metals
Copper....................................... pay 96.5% with a minimum deduction of 1 unit
Silver ......................................... g/dmt pay 90%
Gold:
<1 gram per dmt ................... no payment
1 to 3 grams per dmt............. pay 90%
3 to 5 grams per dmt............. pay 93%
15.5.2
Refining Charges
Copper....................................... $0.075 per pound payable copper
Gold ........................................... $5 to $7 per ounce
Silver ......................................... $0.40 to $0.70
15.5.3
Penalties
Arsenic ...................................... $3.00 per 0.1% over 0.2%
Antimony ................................... $3.00 to $4.00 per 0.1% over 0.1%
Bismuth ..................................... $3.00 to $5.00 per 0.01% over 0.03 to 0.05%
AMEC used a penalty limit of 0.2% for arsenic, which differs from NSAs recommendation
of 0.1%. As noted previously, the smelter term assumptions are at a high level and
preliminary in nature, given that no contact has been made with smelters regarding
specific Caariaco concentrates.
15.5.4
Payment
Provisional ................................. 90% 3 to 15 days after vessel arrival in Asia, India
Final........................................... 10% balance when all facts known
15.5.5
Concentrate Market
From a chemical quality standpoint, the Caariaco Norte concentrate production is
anticipated to be readily acceptable to smelters. At 32% copper and with sulphur content
around 20% the higher copper and lower sulphur content of the partially roasted
concentrate is seen as important to smelters today as the copper content of concentrates
for mines such as Escondida are falling, and as a result, smelter input blends have fallen
to plus/ minus 28%.
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15.6
Acid Market
The partial roasting facility would generate approximately 140 kt/a of by-product sulphuric
acid. Caliper Metals Corp (CMC), on behalf of NSA, was commissioned to produce a
high-level evaluation of the marketability of the acid both domestically in Peru and in the
export market. CMCs report (Appendix K) was received in January 2011.
Specific focus areas of the evaluation include detail on the historical and future supply
demand fundamentals both in-country, within Peru and for Chile, which is the logical
export counterparty.
The following commentaries are extracts from the report.
Acid markets in Chile and Peru are centred on the consumption of acid for SX/EW leach
processes and metallurgical acid supply. Chile in particular has evolved into an intensive
user of acid to supply its large and growing base of SX/EW production. It is anticipated
that total SX/EW production volumes will remain significant and will fully utilize domestic
Chilean acid-producing capacity and still require additional imports.
The acid market dynamics in Peru are considerably different and on a reduced scale.
Operations and developments in copper mining are still in the early stages relative to
potential.
The future project profile for Peru predicts strong growth and when implemented will
affect the acid trade flow significantly. The trend is set for Peru to transition from a net
exporter to a more balanced market in the next decade.
Perus geographic proximity to Chiles SX/EW-consuming northern regions offers
competitive advantages over deliveries of Chilean domestic acid from central regions.
The Chile/Peru supply demand balances remain in net deficit for the period examined
ending in 2017. From a Peruvian acid producer perspective, this is particularly positive as
domestic options increase while Chile remains a viable export alternative.
Long-term acid prices (FOB Tampa) are forecast to be in the range of $60/t to $70/t.
Volatility, however, will be high due to sudden changes in supplydemand patterns both
on a global and regional basis and the slow corrective response times inherent in the
industry.
It is also assumed that the markets specific to Peru and Chile will carry a premium to the
global price owing to the persistent structural deficit forecast over the next decade.
Premiums will likely be in the $10 to $15 range assuming global surpluses are not
significant. Therefore, long-term prices in Chile and Peru are expected to be in the range
of $75/t to $85/t, with considerable volatility.
Market opportunities for Caariaco Norte acid will arise both domestically and in northern
Chile. When reviewing logistics related to the export market, the main acid terminals in
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Peru are located in the south at Pisco and Ilo to service export volumes from
Cajamaquilla and Ilo. While it is possible to deliver by truck to the Pisco facility, the
distance is considerable. Investigation of possible terminal installations in the north
should be reviewed and could be tied to planned concentrate port facilities.
Known ocean freight rates from PiscoIlo into Mejillones are approximately $20/t to $30/t.
Given the preliminary status of this evaluation, high-level total export delivery costs are
likely to be $60/t to $80/t, depending on whether a northern port can be used versus
Pisco.
For the purpose of this progress report, AMEC used a long-term acid price of $90/t based
on preliminary discussions with CMC and NSA in October 2010. A more detailed market
study for domestic and export acid markets is recommended for the feasibility study.
i
ii
For internal use only and not for publication

For internal use only and not for publication
Project No.: 165270

11 March 2011
Page 15-7

CONTENTS
16.0
FINANCIAL EVALUATION ...................................................................................16-1

16.1 Summary and Conclusions .......................................................................16-1
16.2 Valuation Methodology ..............................................................................16-1
16.3 Financial Model Parameters ......................................................................16-2
16.3.1 Mineral Resource and Mine Life ....................................................16-2
16.3.2 Metallurgical Balance.....................................................................16-2
16.3.3 Transport and Insurance Charges .................................................16-2
16.3.4 Metal Prices and Foreign Exchange ..............................................16-3
16.3.5 Operating Costs.............................................................................16-3
16.3.6 Capital Costs .................................................................................16-3
16.3.7 Royalties........................................................................................16-4
16.3.8 Working Capital .............................................................................16-4
16.3.9 Taxes ............................................................................................16-4
16.3.10 Reclamation ...............................................................................16-5
16.3.11 Financing ...................................................................................16-5
16.3.12 Inflation ......................................................................................16-5
16.3.13 Salvage Value............................................................................16-5
16.4 Results and Sensitivity Analysis ................................................................16-5
TABLES
Table 16-1:
Table 16-2:
Table 16-3:
Table 16-4:
Table 16-5:
Table 16-6:
Long-Term Metal Price Assumptions ............................................................................ 16-1

Base Case Metallurgical Copper Recovery .................................................................. 16-2
Base Case Prices for Financial Evaluation ................................................................... 16-3
Base Case Cashflow ..................................................................................................... 16-7
Cashflow Analysis for Four Cases ................................................................................ 16-8
Results of Sensitivity Analysis for Base Case with NPV @ 8% .................................... 16-8
FIGURES
No table of figures entries found.
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Page 16-1

16.0
FINANCIAL EVALUATION
16.1
Summary and Conclusions

The results of the economic analysis discussed in this section represent forward-looking
information as defined under Canadian securities law. The results depend on inputs that
are subject to a number of known and unknown risks, uncertainties, and other factors that
may cause actual results to differ materially from those presented here. All costs included
in this section are in US$.
Four cases were assessed using the financial model:
Case 3 Leased Mining Equipment
Case 4 Leased Mining, Mill, and Electrical Equipment.
The case identified herein as the base case is Case 3, Leased Mining Equipment. Unless
otherwise specified, discussions and numbers within this section are related to the base
case.
The long-term metal prices adopted for the project are listed in Table 16-1.
Table 16-1: Long-Term Metal Price Assumptions
Metal
Unit
Cu
Au
Ag
$/lb
$/oz
$/oz
Price
2.25
1,015.00
15.85
When valuing the project at a standard 8% discount rate after tax, the resulting net
present value (NPV) for the base case is $1,063 million with an internal rate of return
(IRR) of 18.8%. The project is most sensitive to metal prices and capital cost but less
sensitive to operating costs.
16.2
Valuation Methodology
The project has been evaluated using a discounted cash flow (DCF) analysis. Cash
inflows consist of annual revenue projections for the mine and two years of preproduction.
Cash outflows such as capital, operating costs, and taxes are subtracted from the inflows
to arrive at the annual cash flow projections.
To reflect the time value of money, annual net cash flow (NCF) projections are discounted
back to the project valuation date using several discount rates. The discount rate
appropriate to a specific project depends on many factors, including the type of
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commodity and the level of project risks, such as market risk, technical risk, and political
risk. The discounted present values of the cash flows are summed to arrive at the
projects net present value (NPV).
In addition to NPV, internal rate of return (IRR) and payback period are also calculated.
The IRR is defined as the discount rate that results in an NPV equal to zero. Cash flows
are taken to occur at the end of each period. Capital cost estimates have been prepared
for initial development and construction of the project and for ongoing operations
(sustaining capital).
The resulting net annual cash flows are discounted back to the date of valuation end-ofyear 2010 dollars and totalled to determine NPVs at the selected discount rates. The IRR
is calculated as the discount rate that yields a zero NPV. The payback period is
calculated as the time needed to recover the initial capital spent.
16.3
Financial Model Parameters
16.3.1
Mineral Resource and Mine Life

The Mineral Resource is discussed in Section 3, Geology, of this report and the mine life
in Section 4, Mine Plan and Production. In the financial model it was assumed that a total
resource of 728 Mt was mined through open pit methods. The mineralized material is to
be processed at an average rate of 34.7 Mt/a.
16.3.2
Metallurgical Balance
The mineral processing and metallurgy are discussed in Sections 5 and 6. Because
Caariaco Norte Candente will be a primary copper producer, particular attention has
been placed on the relationship between copper grade and recovery. Recovery and
grade assumptions are summarized in Table 16-2.
Table 16-2: Base Case Metallurgical Copper Recovery
Item
Cu Grade
Cu Recovery
Cu Recovered to Concentrate
16.3.3
Unit
Value
%
%
Avg k lb/a
0.4
89.7
262
Transport and Insurance Charges

The product will be transported by road to the closest harbour and shipped to
international consumers at a cost of $781 million over the life of the mine. This includes a
0.15% insurance premium based on the value of the transported product.
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16.3.4
Metal Prices and Foreign Exchange

To reflect some of the advantage that Caariaco Norte is expected to gain from the
current high price scenario; AMEC applied the following reverting cost curve values to
estimate future metal prices for each case. Use of reverting curves is based on the
industry consensus view that long-term metal prices will tend to revert to a level that is
lower (or higher) than current bullish (or bearish) spot prices. The spot price is used as
the starting point, and the rate at which reversion occurs is measured from observation of
historical prices.
Table 16-3: Base Case Prices for Financial Evaluation
16.3.5
Year
Copper
$/lb
Gold
$/oz
Silver
$/oz
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2.92
2.77
2.65
2.56
2.50
2.44
2.40
2.37
2.34
2.32
2.25
2.25
1,159
1,132
1,111
1,094
1,080
1,069
1,060
1,052
1,046
1,041
1,015
1,015
20.96
20.00
19.25
18.64
18.15
17.76
17.43
17.17
16.95
16.76
15.85
15.85
Operating Costs
The operating costs for the project are discussed in Section 14. The project does not
appear to be sensitive to changes in operating cost. Life-of-mine operating costs are
estimated to be $1.24/lb recovered Cu, including smelter and transport costs, for the base
case.
16.3.6
Capital Costs
Capital costs are detailed in Section 13 of this report and summarized in the project cash
flow analysis in Appendix L. Four different scenarios were investigated. For the base
case, the mobile mining equipment is leased from equipment vendors. Start-up capital
costs for the base case, which excludes the leased equipment, are estimated at
$1,437 million for the mine construction phase as well as $71 million in sustaining capital
to replace mining and other equipment during the life of the mine. In terms of the
Peruvian Tax Law, mining equipment and the processing plant are depreciated over the
Project No.: 165270

11 March 2011
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life of the asset, based upon 5 to 10 year replacement periods. The rest of the capital
items are depreciated over the life of the mine.
The other three scenarios assessed include full Owner purchase and operated mine and
process facilities, contractor mining, and full lease of process and electrical equipment in
addition to mining equipment. The capital cost for the full Owner-operated and financed
option is $1,599 million for pre-production capital and $206 million to sustain the
operation. If the contract mining option were considered, then the cost could be reduced
to $1,405 million and $63 million for preproduction and sustaining capital, respectively.
The cost of the option involving full lease of mine and major process and electrical
equipment reduces to $1,191 million and $207 million.
16.3.7
Royalties
Royalty payments are calculated as a function of metal revenue recovered from the areas
that are subject to royalty agreements. A sliding scale is applied to the royalties,
calculated on the positive pre-tax cash flow after recovery of the capital expenditure and
operating expenses. The royalty is 1% on the first $60,000,000, 2% on the next
$60,000,000, and 3% on pre-tax cash flow over $120,000,000.
Over the life of the mine, the NPI royalty is estimated to total $338 million.
16.3.8
Working Capital
Working capital is considered to be a temporary use of funds, incurred at the start up of
operations and intended to fund mining and production operations until the receipt of
revenues. As revenues and costs typically vary from year to year, the working capital will
also change each year. However, all working capital is theoretically recovered at the end
of the project. The formal definition of working capital is current asset value minus current
liabilities. For the sake of simplicity, a good approximation for this project is three months
of operating costs, which was used in this analysis. Working capital reaches a level of
$66 million in the first year of operation and a life-of-mine maximum of $82 million the
following year.
16.3.9
Taxes
AMEC does not provide detailed tax analysis, but has attempted to apply the relevant
allowances, deductions, and taxes to the maximum advantage of Candente based on
other projects in Peru. A labour profit-sharing tax of 8% is applied to net taxable income.
This is then deductible before the 30% corporate income tax rate is applied. AMEC
recommends that Candente should engage a suitably qualified and experienced tax
professional during the next phase of the project to investigate this in depth. Based on
the current financial evaluation, taxes remitted to the Peruvian Government could
Project No.: 165270

11 March 2011
Page 16-4

potentially amount to $1,661 million. An additional $481 million could potentially be paid
out as labour profit-sharing tax.
16.3.10
Reclamation
Decommissioning and reclamation are expected to continue for some time after the end
of production, for an initial estimated total cost of $58 million.
16.3.11
Financing
The base case economic analysis is based on the leasing the mining equipment; this was
compared to a 100% Owner-financed option and a contract miner option. Indicative
financing terms were received from vendors, and average lease terms were applied to all
the leased equipment. These terms were 3% deposit and the balance repayable over five
years at 5% interest. It is suggested that detailed lease terms be applied in the financial
model for the next level of study to assess possible opportunities to improve the project
returns.
16.3.12
Inflation
The base case economic analysis assumes that no inflationary adjustments are made.
Capital and operating costs are based on fourth quarter 2010 US dollars.
16.3.13
Salvage Value
No salvage value was incorporated into the model; it is assumed at this early stage of
investigation that the cost of demolition will negate the salvage value. If funds are
generated through the sale of assets at the end of the project, then these will be invested
back in the company to assist in covering the cost of mine closure. The current
investigations suggest that there is potential for the mine to continue operating after the
currently assumed life of mine.
16.4
Results and Sensitivity Analysis

The pre-tax cumulative cash flow for the base case is US$5,998 million with an IRR of
26.8%. The cash flow analysis shows that the project will generate a positive cash flow in
all operating years except Year -2 and Year -1 on a pre-tax basis. The annual positive
cash flow results in a payback period of 2.9 years. At an 8% discount rate, the pre-tax net
present value (NPV) of the project is US$1,983 million.
On an after-tax basis, the cumulative net cash flow is $3,855 million and the IRR is
18.8%. Again, all operating years except Year -2 and Year -1 show a positive cash flow.
Payback period is 4.1 years. At an 8% discount rate, the after-tax NPV is $1,063 million.
Project No.: 165270

11 March 2011
Page 16-5

A simplified cashflow spreadsheet of the base case is included as Table 16-4.

Four cases were assessed using the financial model:
Case 3 Leased Mining Equipment (Base Case for this study)
Case 4 Leased Mining, Mill and Electrical Equipment
The cash flow analysis for all the cases are included as Table 16-5.
Sensitivity analysis was performed on the base case taking into account variations in the
metal price, operating cost, foreign exchange, and mining cost. Analysis shows that the
Canariaco project is most sensitive to changes in metal prices, as this directly affects the
revenue stream.
The analysis shows that the project is less sensitive to capital expenditure and operating
cost. The sensitivities of the two costs are very similar. Considering that the project is
priced in US dollars, the effects of exchange rate variation do not apply in the current
model, although in reality some equipment, supplies, and services will be priced in Euros
or the local Peruvian currency.
The results of the sensitivity analysis are shown in Table 16-6 and Figure 16-1.
Project No.: 165270

11 March 2011
Page 16-6

Table 16-4: Base Case Cashflow

Cash Flow
Calendar year
Project year
Production year
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
1
-3
2
-2
3
-1
4
1
5
2
6
3
7
4
8
5
9
6
10
7
11
8
12
9
13
10
14
11
15
12
16
13
17
14
18
15
19
16
20
17
21
18
22
19
23
20
24
21
25
22
Life of Mine
Metal prices
Gold
Silver
Copper
Pay Metal
Gold
Silver
Copper
Pay Value
Gold
Silver
Copper
Total
Kozs
Kozs
Klbs
US$000
US$000
US$000
US$000
Concentrate transport
Land freight
Port storage & handling
Ocean freight
Insurance charges
Total
US$000
US$000
US$000
US$000
US$000
(192,019)
(110,274)
(457,188)
(21,647)
(781,128)
(8,747)
(5,023)
(20,826)
(1,206)
(35,801)
Smelting
Treatment
Cu refining
Au refining
Ag refining
Total
US$000
US$000
US$000
US$000
US$000
(640,244)
(416,665)
(3,955)
(7,205)
(1,068,069)
Net Smelter Return
US$000
Acid Revenue
US$000
NSR Plus Acid Revenue
1,159
20.96
2.92
1,132
20.00
2.77
1,111
19.25
2.65
1,094
18.64
2.56
1,080
18.15
2.50
1,069
17.76
2.44
1,060
17.43
2.40
1,052
17.17
2.37
1,046
16.95
2.34
1,041
16.76
2.32
1,015
15.85
2.25
1,015
15.85
2.25
1,015
15.85
2.25
1,015
15.85
2.25
1,015
15.85
2.25
1,015
15.85
2.25
1,015
15.85
2.25
1,015
15.85
2.25
1,015
15.85
2.25
1,015
15.85
2.25
1,015
15.85
2.25
1,015
15.85
2.25
791
18,014
5,555,529
37.70
976.39
253,064
52.03
1,069.81
336,744
47.74
918.38
295,653
36.18
977.62
259,975
43.39
1,015.86
304,860
44.25
983.14
281,809
46.33
912.68
282,018
46.03
838.83
273,986
41.12
759.61
247,269
30.39
663.46
200,857
23.46
691.29
196,419
29.53
799.24
237,031
33.77
849.12
260,894
38.50
862.40
275,006
40.79
882.95
279,781
39.06
815.92
269,536
27.23
634.23
208,298
21.58
648.94
193,218
26.41
753.14
235,688
37.16
880.13
287,149
40.68
880.15
309,493
7.68
200.25
66,780
832,910
308,989
13,289,674
14,431,573
357,437
43,688
20,461
739,664
803,814
58,910
21,399
932,530
1,012,839
53,045
17,676
784,407
855,127
39,585
18,224
666,692
724,501
46,867
18,441
760,981
826,288
47,302
17,456
688,536
753,294
49,105
15,909
677,430
742,443
48,432
14,399
649,317
712,148
43,018
12,872
579,758
635,648
31,629
11,122
466,952
509,703
23,815
10,957
441,942
476,714
29,972
12,668
533,320
575,960
34,272
13,459
587,011
634,741
39,082
13,669
618,764
671,515
41,404
13,995
629,507
684,906
39,645
12,932
606,456
659,033
27,638
10,052
468,670
506,360
21,901
10,286
434,740
466,927
26,807
11,937
530,298
569,042
37,717
13,950
646,086
697,753
41,286
13,950
696,360
751,597
7,790
3,174
150,255
161,220
(11,639)
(6,684)
(27,712)
(1,519)
(47,555)
(10,219)
(5,869)
(24,331)
(1,283)
(41,701)
(8,986)
(5,160)
(21,394)
(1,087)
(36,627)
(10,537)
(6,051)
(25,088)
(1,239)
(42,916)
(9,740)
(5,594)
(23,191)
(1,130)
(39,655)
(9,748)
(5,598)
(23,208)
(1,114)
(39,667)
(9,470)
(5,438)
(22,547)
(1,068)
(38,524)
(8,547)
(4,908)
(20,349)
(953)
(34,757)
(6,942)
(3,987)
(16,529)
(765)
(28,223)
(6,789)
(3,899)
(16,164)
(715)
(27,567)
(8,193)
(4,705)
(19,506)
(864)
(33,268)
(9,017)
(5,179)
(21,470)
(952)
(36,618)
(9,505)
(5,459)
(22,631)
(1,007)
(38,603)
(9,670)
(5,553)
(23,024)
(1,027)
(39,275)
(9,316)
(5,350)
(22,181)
(989)
(37,836)
(7,200)
(4,135)
(17,142)
(760)
(29,235)
(6,678)
(3,835)
(15,901)
(700)
(27,115)
(8,146)
(4,678)
(19,396)
(854)
(33,074)
(9,925)
(5,700)
(23,631)
(1,047)
(40,302)
(10,697)
(6,143)
(25,470)
(1,127)
(43,437)
(2,308)
(1,326)
(5,496)
(242)
(9,371)
(29,164)
(18,980)
(188)
(391)
(48,723)
(38,808)
(25,256)
(260)
(428)
(64,752)
(34,072)
(22,174)
(239)
(367)
(56,852)
(29,961)
(19,498)
(181)
(391)
(50,031)
(35,133)
(22,865)
(217)
(406)
(58,621)
(32,477)
(21,136)
(221)
(393)
(54,227)
(32,501)
(21,151)
(232)
(365)
(54,249)
(31,575)
(20,549)
(230)
(336)
(52,690)
(28,496)
(18,545)
(206)
(304)
(47,551)
(23,148)
(15,064)
(152)
(265)
(38,629)
(22,636)
(14,731)
(117)
(277)
(37,761)
(27,317)
(17,777)
(148)
(320)
(45,561)
(30,067)
(19,567)
(169)
(340)
(50,142)
(31,693)
(20,625)
(193)
(345)
(52,856)
(32,243)
(20,984)
(204)
(353)
(53,784)
(31,063)
(20,215)
(195)
(326)
(51,799)
(24,005)
(15,622)
(136)
(254)
(40,017)
(22,267)
(14,491)
(108)
(260)
(37,126)
(27,162)
(17,677)
(132)
(301)
(45,272)
(33,092)
(21,536)
(186)
(352)
(55,166)
(35,667)
(23,212)
(203)
(352)
(59,435)
(7,696)
(5,009)
(38)
(80)
(12,823)
12,582,376
719,289
900,533
756,574
637,843
724,751
659,412
648,527
620,934
553,340
442,851
411,386
497,131
547,981
580,057
591,847
569,397
437,108
402,686
490,696
602,284
648,724
139,025
269,306
12,267
16,324
14,332
12,602
14,778
13,661
13,671
13,282
11,986
9,737
9,521
11,490
12,647
13,331
13,562
13,066
10,097
9,366
11,425
13,920
15,003
3,237
US$000
12,851,683
731,557
916,856
770,906
650,445
739,529
673,073
662,198
634,215
565,327
452,587
420,907
508,621
560,627
593,388
605,409
582,463
447,205
412,052
502,121
616,204
663,727
142,263
Production costs
Mining
Process
G&A
Acid
Lease Payment - Mining
Total
US$000
US$000
US$000
US$000
US$000
US$000
(1,995,248)
(2,265,380)
(311,342)
(62,838)
(316,092)
(4,950,902)
(94,354)
(86,296)
(11,860)
(2,862)
(31,842)
(227,214)
(116,781)
(107,870)
(14,825)
(3,809)
(38,104)
(281,389)
(98,501)
(107,869)
(14,825)
(3,344)
(37,069)
(261,608)
(98,888)
(107,869)
(14,825)
(2,941)
(37,051)
(261,574)
(114,731)
(107,869)
(14,825)
(3,448)
(37,051)
(277,925)
(100,459)
(107,869)
(14,825)
(3,188)
(9,054)
(235,394)
(101,503)
(107,869)
(14,825)
(3,190)
(682)
(228,070)
(113,388)
(107,869)
(14,825)
(3,099)
(854)
(240,035)
(101,481)
(107,869)
(14,825)
(2,797)
(1,171)
(228,143)
(94,191)
(107,869)
(14,825)
(2,272)
(2,003)
(221,161)
(95,615)
(107,869)
(14,825)
(2,222)
(2,325)
(222,856)
(91,220)
(107,869)
(14,825)
(2,681)
(1,928)
(218,524)
(88,101)
(107,869)
(14,825)
(2,951)
(2,330)
(216,077)
(88,610)
(107,869)
(14,825)
(3,111)
(21,271)
(235,686)
(106,956)
(107,869)
(14,825)
(3,165)
(21,904)
(254,720)
(96,632)
(107,869)
(14,825)
(3,049)
(21,843)
(244,218)
(83,925)
(107,869)
(14,825)
(2,356)
(21,674)
(230,649)
(71,582)
(107,869)
(14,825)
(2,185)
(21,522)
(217,984)
(69,094)
(107,869)
(14,825)
(2,666)
(4,405)
(198,860)
(68,598)
(107,869)
(14,825)
(3,248)
(1,143)
(195,683)
(72,446)
(107,869)
(14,825)
(3,501)
(433)
(199,074)
(28,192)
(21,695)
(2,982)
(755)
(433)
(54,057)
Royalty payment
Net Smelter Return
Stage 1 royalty
Stage 2 royalty
Stage 3 royalty
Net profits royalty
US$000
US$000
US$000
US$000
US$000
12,582,376
(125,824)
(112,624)
(99,424)
(337,871)
719,289
(7,193)
(6,593)
(5,993)
(19,779)
900,533
(9,005)
(8,405)
(7,805)
(25,216)
756,574
(7,566)
(6,966)
(6,366)
(20,897)
637,843
(6,378)
(5,778)
(5,178)
(17,335)
724,751
(7,248)
(6,648)
(6,048)
(19,943)
659,412
(6,594)
(5,994)
(5,394)
(17,982)
648,527
(6,485)
(5,885)
(5,285)
(17,656)
620,934
(6,209)
(5,609)
(5,009)
(16,828)
553,340
(5,533)
(4,933)
(4,333)
(14,800)
442,851
(4,429)
(3,829)
(3,229)
(11,486)
411,386
(4,114)
(3,514)
(2,914)
(10,542)
497,131
(4,971)
(4,371)
(3,771)
(13,114)
547,981
(5,480)
(4,880)
(4,280)
(14,639)
580,057
(5,801)
(5,201)
(4,601)
(15,602)
591,847
(5,918)
(5,318)
(4,718)
(15,955)
569,397
(5,694)
(5,094)
(4,494)
(15,282)
437,108
(4,371)
(3,771)
(3,171)
(11,313)
402,686
(4,027)
(3,427)
(2,827)
(10,281)
490,696
(4,907)
(4,307)
(3,707)
(12,921)
602,284
(6,023)
(5,423)
(4,823)
(16,269)
648,724
(6,487)
(5,887)
(5,287)
(17,662)
139,025
(1,390)
(790)
(190)
(2,371)
Closure & salvage

Closure costs
Total
US$000
US$000
(57,650)
(57,650)
Earnings
Earnings before taxes, depreciation & amortization
Deductible interest
Earnings before taxes, depreciation & amortization
US$000
US$000
US$000
7,505,260
484,564
610,251
488,402
371,536
441,662
419,696
416,472
377,352
322,383
219,941
187,509
276,983
329,912
342,100
334,734
322,963
205,243
183,787
290,340
404,252
446,991
28,185
7,505,260
484,564
610,251
488,402
371,536
441,662
419,696
416,472
377,352
322,383
219,941
187,509
276,983
329,912
342,100
334,734
322,963
205,243
183,787
290,340
404,252
446,991
28,185
US$000
7,505,260
484,564
610,251
488,402
371,536
441,662
419,696
416,472
377,352
322,383
219,941
187,509
276,983
329,912
342,100
334,734
322,963
205,243
183,787
290,340
404,252
446,991
28,185
US$000
(1,487,717)
US$000
US$000
US$000
US$000
US$000
6,017,543
(481,403)
5,536,139
(1,660,842)
(2,142,245)
(200,436)
(200,436)
284,128
(22,730)
261,398
(78,419)
(101,150)
(139,740)
(139,740)
470,511
(37,641)
432,870
(129,861)
(167,502)
(140,126)
(140,126)
348,275
(27,862)
320,413
(96,124)
(123,986)
(140,216)
(140,216)
231,320
(18,506)
212,814
(63,844)
(82,350)
(102,619)
(102,619)
339,042
(27,123)
311,919
(93,576)
(120,699)
(46,785)
(46,785)
372,911
(29,833)
343,078
(102,923)
(132,756)
(45,656)
(45,656)
370,816
(29,665)
341,150
(102,345)
(132,010)
(45,871)
(45,871)
331,481
(26,518)
304,963
(91,489)
(118,007)
(46,107)
(46,107)
276,276
(22,102)
254,174
(76,252)
(98,354)
(45,743)
(45,743)
174,198
(13,936)
160,263
(48,079)
(62,015)
(45,430)
(45,430)
142,079
(11,366)
130,713
(39,214)
(50,580)
(45,329)
(45,329)
231,655
(18,532)
213,122
(63,937)
(82,469)
(45,309)
(45,309)
284,602
(22,768)
261,834
(78,550)
(101,318)
(46,217)
(46,217)
295,883
(23,671)
272,212
(81,664)
(105,334)
(46,385)
(46,385)
288,349
(23,068)
265,281
(79,584)
(102,652)
(46,911)
(46,911)
276,052
(22,084)
253,968
(76,190)
(98,274)
(46,959)
(46,959)
158,284
(12,663)
145,621
(43,686)
(56,349)
(46,805)
(46,805)
136,983
(10,959)
126,024
(37,807)
(48,766)
(46,496)
(46,496)
243,845
(19,508)
224,337
(67,301)
(86,809)
(46,469)
(46,469)
357,783
(28,623)
329,160
(98,748)
(127,371)
(45,742)
(45,742)
401,250
(32,100)
369,150
(110,745)
(142,845)
(26,365)
(26,365)
1,820
(146)
1,675
(502)
(648)
Net earnings
US$000
5,363,014
383,415
442,749
364,416
289,186
320,963
286,940
284,461
259,345
224,029
157,926
136,929
194,514
228,593
236,766
232,082
224,689
148,894
135,022
203,532
276,881
304,147
27,537
Capital expenditure
Construction capital
Sustaining capital
Working capital
Debt drawdown
Debt repayment
Total
US$000
US$000
US$000
US$000
US$000
US$000
(1,437,159)
(70,438)
0
0
0
(1,507,597)
(606,908)
(606,908)
Net project cash flow

Pre-Tax
After tax
US$000
US$000
5,997,662
3,855,417
(606,908)
(606,908)
Taxation
Earnings before taxes
Deductions
Depreciations
Total Deductions
Net taxable income
Labour Profit Sharing Tax
Taxable Income subject to Corporate Tax
Corporate income tax
Total tax paid
US$/oz
US$/oz
US$/lb
Summary of Cash Flow

Cumulative net cash flow
Undiscounted
US$000
2.5%
(57,650)
(57,650)
Pre-Tax
After tax
5,997,662
3,855,417
(818,909)
(11,342)
(65,754)
(7,460)
(16,482)
(1,977)
6,409
(4,746)
1,277
(4,453)
(5,660)
(5,804)
11,448
(818,909)
(77,096)
(23,942)
4,431
(3,469)
(10,113)
5,643
(818,909)
(818,909)
407,468
306,319
586,310
418,808
492,833
368,847
368,067
285,717
431,549
310,850
425,340
292,583
(1,975)
1,828
(1,722)
(2,705)
(861)
3,915
(147)
(4,427)
3,054
880
325,437
227,083
220,821
158,807
416,324
284,314
Project Net Present Value (After Tax)

4,500
US$000
US$000
US$000
US$000
US$000
3,395,140
2,588,605
1,983,089
1,520,971
763,306
2,040,471
1,481,321
1,063,416
746,126
231,322
Internal rate of return
US$000
26.8%
18.8%
Years
2.9
4.1
0%
4%
6%
8%
10%
15%
0%
4,000
3,500
3,000
US$ Million
Net present value

Discounted at 4%
Discounted at 6%
Discounted at 8%
Discounted at 10%
Discounted at 15%
2,500
2,000
5,998
3,395
2,589
1,983
1,521
763
3,855
2,040
1,481
1,063
746
231
1,500
Payback period
1,000
500
Previous results:
Summary of Cash Flow
After tax
0%
2%
4%
6%
8%
10%
12%
14%
16%
Discount Rate (%)
Cumulative net cash flow

Undiscounted
US$000
5,649,010
3,575,069
Net present value

Discounted at 4%
Discounted at 6%
Discounted at 8%
Discounted at 10%
Discounted at 15%
US$000
US$000
US$000
US$000
US$000
3,182,681
2,414,132
1,835,905
1,394,074
669,592
1,882,125
1,355,417
960,035
658,907
169,109
Internal rate of return
US$000
25.2%
17.7%
Years
3.1
4.4
Payback period
Project No.: 165270

11 March 2011
Pre-Tax
8.4%
9.3%
10.8%
13.2%
36.8%
Page 16-7
372,925
254,917
(2,499)
3,379
(4,191)
(260)
(1,865)
(342)
(19,217)
(226)
(3,358)
(5,399)
(5,770)
(4,927)
(4,089)
2,985
(451)
5,542
3,696
3,291
(1,013)
(1,631)
60,628
(4,451)
(2,207)
(19,443)
(8,756)
(10,697)
(1,104)
5,092
3,696
3,291
(1,013)
(1,631)
60,628
210,334
153,985
187,484
138,718
293,632
206,823
183,059
132,478
274,776
192,307
310,469
209,150
333,344
228,010
324,037
221,385
321,859
223,585
403,239
275,869
445,360
302,515
88,813
88,165

Table 16-5: Cashflow Analysis for Four Cases
Item
Unit
Case 3
Base Base
Case Case
Value Value
Case 1
Owner
Owner
Operated Operated
Value
Value
Case 2
Contract Contract
Mining
Mining
Value
Value
Case 4
Equip. Equip.
Lease Lease
Value
Value
$/lb
$/oz
$/oz
2.25
1015
15.85
3.00
1015
15.85
2.25
1015
15.85
3.00
1015
15.85
2.25
1015
15.85
3.00
1015
15.85
2.25
1015
15.85
3.00
1015
15.85
%
$000,000
$000,000
$000,000
Years
1
26.8
5,998
1,983
1,521
2.9
1
37.2
9,823
3,520
2,796
2.1
25.8
6,017
1,968
1,501
3.0
35.8
9,842
3,504
2,776
2.3
27.0
5,754
1,919
1,476
2.8
37.8
9,579
3,456
2,751
2.1
29.9
5,847
1,989
1,547
2.6
42.0
9,672
3,525
2,822
1.9
%
$000,000
$000,000
$000,000
Years
18.8
3,855
1,063
746
4.1
26.5
6,319
2,053
1,567
3.0
18.1
3,868
1,041
720
4.2
25.5
6,331
2,031
1,541
3.1
18.8
3,696
1,021
717
4.0
26.7
6,162
2,011
1,538
2.9
20.7
3,759
1,087
786
3.9
29.6
6,222
2,077
1,607
2.7
Metal Prices
Copper
Gold
Silver
Pre-Tax
IRR
CNCF*
NPV 8%
NPV 10%
Payback
After Tax
IRR
CNCF*
NPV 8%
NPV 10%
Payback
*CNCF = cumulative net cashflow
Table 16-6: Results of Sensitivity Analysis for Base Case with NPV @ 8%
Factor
-30%
-20%
Change in Factor
-10%
0%
10%
20%
30%
Exchange rate
Capital expenditure
Operating expenditure
Metal price
932
1,323
1,312
(195)
932
1,193
1,185
182
932
1,062
1,059
557
932
671
679
1,681
932
541
552
2,056
Project No.: 165270

11 March 2011
Page 16-8
932
932
932
932
932
802
806
1,307

Figure 16-1: Graph of Sensitivity Analysis Results for Base Case

Candente - Sensitivity of NPV @ 8%
NPV @ 8% (US$ million)
2,500
2,000
1,500
Capex
Opex
1,000
Price
500
Xrate
0
(500)
-40%
-30%
-20%
-10%
0%
10%
Change in Factor
Project No.: 165270

11 March 2011
Page 16-9
20%
30%
40%

CONTENTS
17.0
RISK AND OPPORTUNITIES ...............................................................................17-1

17.1 Summary...................................................................................................17-1
17.2 Risks .........................................................................................................17-1
17.2.1 High-Risk Items .............................................................................17-1
17.2.2 Medium-Risk Items ........................................................................17-4
17.2.3 Low-Level Risks ............................................................................17-5
17.2.4 Very Low Risk Items ......................................................................17-6
17.3 Opportunities.............................................................................................17-6
17.3.1 High-Level Opportunities ...............................................................17-6
17.3.2 Medium-Level Opportunities ..........................................................17-6
17.3.3 Low-Level Opportunities ................................................................17-6
17.3.4 Very Low Level Opportunities ........................................................17-8
TABLES
Table 17-1: Risk and Opportunities Classification ............................................................................ 17-2
Table 17-2: Caariaco Project Risks ................................................................................................ 17-3
Table 17-3: Caariaco Project Opportunities ................................................................................... 17-7
FIGURES
None
Project No.: 165270

11 March 2011
TOC i

17.0
RISK AND OPPORTUNITIES
17.1
Summary
This section summarizes the key risks and opportunities that have been identified during
the course of the prefeasibility study for the Caariaco Norte project to date. Risk
exposures are not static, and the evaluation will need to be updated as the project
proceeds.
The risks are ranked by priority in Section 17.2 and described in terms of areas that
should be investigated further as the project continues into the feasibility and subsequent
basic and detailed engineering phases. The risks were rated by factors (F), which were
calculated as the product of probability (P) and impact (I). Each of these two categories
was ranked from 1 to 5 for increasing likelihood and severity, respectively. For example:
(P of 4) (I of 3) = F of 12. The highest risk rating possible would therefore be 25.
Strategies and a proposed course of action were identified for each risk. The risk factors
were then evaluated for probability and impact post-implementation of the proposed
strategies or actions. For all risks identified thus far, the severities could be decreased to
very low after implementing the proposed actions.
The opportunities identified during the prefeasibility study to date are described in Section
17.3.
Table 17-1 summarizes all identified risks and opportunities according to their probability
and impact classification.
17.2
Risks
The identified risks are summarized in Table 17-2. Details for each risk are provided
below, organized according to the risk classification shown in the table.
17.2.1
High-Risk Items
Geotechnical Design of +900 m Pit Highwall The current design is based on
assessment of scoping level information, visual inspection of available core, and
limited physical testing of available material. The data from the planned site
investigations are considered to be key in increasing the understanding of the
joint patterns and geotechnical complexities associated with the highwall
(approximately 925 m high) and the sensitivity of the highwall slope to pit
depressurization and rock mass strength. If future geotechnical investigations
result in a change in the overall pit slope angles, then the stripping ratio and
consequently project mining costs, could be affected considerably.
Project No.: 165270

11 March 2011
Page 17-1

Table 17-1: Risk and Opportunities Classification

5
P
r
o
b
a
b
i
l
i
t
y
3.3
3.11, 3.12,
3.13
3.4
3.2
2.2
3.19
3.7, 3.8,
3.9, 3.14
3.5, 3.10
2.4
3.1, 3.17
3.6, 3.15,
3.16, 3.18
2.1, 2.6, 2.9,

2.14, 2.15,
2.16
1
-5
-4
-3
-2
2.18
2.3, 2.5,
2.10, 2.17
2.7
-1
2.11, 2.12
2.13
2.8
Impact
Opportunities
Threats
Priority Bands
Compound Opportunity Risk Score

(Probability x Impact)
Very Low
Low
Medium
High
Very High
0 to -5
-6 to -10
-11 to -15
-16 to -20
-21 to -25
Very Low
Low
Medium
High
Very High
Compound Threat Risk Score

(Probability x Impact)
Very Low
Low
Medium
High
Very High
Probability
1
2
3
4
5
Project No.: 165270

11 March 2011
Very Low
Low
Medium
High
Very High
0 to 5
6 to 10
11 to 15
16 to 20
21 to 25
Very Low
Low
Medium
High
Very High
Impact
%
<10
10-30
30-50
50-70
>70
Page 17-2
Opportunity
-1
-2
-3
-4
-5
Very Low
Low
Medium
High
Very High
Threat
1
2
3
4
5

Table 17-2: Caariaco Project Risks

Risk
No.
Risk Rating
Risk Description
2.1
Naturally occuring land slides into

diversion channel
2.2
Dust load from COS
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.11
2.12
2.13
2.14
2.15
2.16
2.17
2.18
Risk Owner
Score
Post-Action
Classification
Very Low
Very Low
Very Low
Very Low
Very Low
Very Low
The route needs to be flown and a more accurate

contour data set developed for design purposes. May
need to look at alternate road alignments.
Very Low
Low
Continue to work with Community
Very Low
Very Low
Score
Geotechnical
12
Medium
Process
Low
Very Low
Low
Low
16
High
12
Medium
10
Downtime during relocation of

Reclaim Barges from Fresh Water
Civil
2
pond to TMF
The narrowness of the road will
cause constructability issues during
construction of the pipeline by
restricting access to the site as the
equipment necessary to install the
pipeline will block the road for
Owner
4
extended periods of time. Similarly,
during operations, repair and
maintenance on the pipelines will
further restrict access to and from
the plant site.
The stockpile feed conveyor having
Materials
an inclination greater than 14
3
Handling
degrees
Geotechnical risk associated with a
Geotechnical
4
+900m highwall
The design of the main access road
is based on low quality contour data
possibly leading a less then optimal
Civil
3
design with the risk of it not being
feasible to construct in some
sections.
Obtaining permits for project
Owner
2
Laydown has been taken up by the
Roasting Plant. There are no other
Construction/
4
locations in the vacinity of the plant
Operations
to create laydown areas.
Project delay due to market
conditions driving delivery of long
Construction
3
lead capital equipment
Decrease in copper metal price
Owner
3
Escalation in commodity pricing
Owner
3
Port available for 50,000 DWT in
Owner
3
Phase 2
Cyclone sand dam construction is
dependent on availability of
Geotechnical
3
sufficient sized material in the
tailings slurry
Definition of foundation conditions
Geotechnical/Civ
3
for TMF and TMF embankment
il
ARD/ML potential of cyclone sands Geotechnical/Civ
3
used for TMF dam construction
il
Availability of borrow material for
Geotechnical/Civ
3
TMF embankment
il
Eurpoean sourced capital is
Owner
3
sensitive to exchange rate
Project No.: 165270

11 March 2011
Risk Rating
P
Classification
Proposed Strategies / Actions

Slope stability assessment for Feasibility Study.
Possible rerun of tradeoff study for diversion channel
vs tunnel option
Determine whether the COS requires cover for dust
control mitigation - arsenic content
Minimize downtime by installing all reclaim piping and
valves prior to shutdown of process and have a detail
schedule/plan in place
Schedule movements and prioritize road access

requirements.
Material tests to confirm whether conveying at greater

than 14 degrees is suitable. Modify the conveyor
geometry to reduce the inclination below 14 degrees.
Complete geotechnical assessment of slope during
Feasibility Study
Low
Will need to manage supplies at a remote location and

bring to site on an as needed basis
Low
Advance engineering and purchase of long lead

equipment
Very Low
4
4
12
12
Medium
Medium
Market driven
Market driven
3
3
4
4
12
12
Medium
Medium
Low
Continue to work with Lumina on port development
Low
Low
Additional testwork to confirm availabiltiy of material in

required particle size range
Very Low
12
Medium
Field investigations
Very Low
12
Medium
Testwork
Very Low
Low
Field investigations
Very Low
Low
Market driven
Low
Page 17-3

17.2.2
Medium-Risk Items
Metal Price The project financials are most sensitive to metal prices and capital cost.
In the current economic climate, metal pricing for copper and gold is strong and is
expected to remain so into the initial years of production at Caariaco Norte. A
significant decrease in copper price would affect the projected cash flow for the project.
Escalation in Commodity Pricing In line with the sensitivity to metal prices and capital
cost, significant increases in commodity pricing are a risk in the current economic
climate and would directly affect the project cash flow through capital and operating
costs.
Obtaining Permits for Project Many applications for permits will need to be filed to
allow for timely execution of project work. Receipt of the necessary permits for project
development will depend on the completion of an Environmental and Social Impact
Assessment that is acceptable to the relevant regulatory agencies in Peru and the
negotiation of surface access rights for the project area from the local community. A
comprehensive ESIA for the Canariaco project is currently underway under the
guidance of AMEC Earth and Environmental. During the prefeasibility phase, it has
taken longer than Candente anticipated to negotiate drilling permits with the local
community. While the community continues to support the project, the permit
application has been delayed for more than six months. Other applications could
potentially encounter similar delays. By continuing to work closely with the local
communities, Candente is confident that this risk can be managed
Main Access Road Routing The design of the main access road is based on lowquality contour data. This could lead to a less-than-optimum design with a risk that the
road may not be constructible in some sections. Aerial or land reconnaissance
followed by more detailed geotechnical investigations along the proposed road routing
is recommended to decrease the risk in the design of this road.
Landslide and Diversion Channel A naturally occurring landslide was observed to
have taken place in the vicinity of the proposed diversion channel. The functionality of
the channel may be at risk. Further assessment of the valley slopes will be required to
assess the severity of this risk and whether it can be mitigated through regular
maintenance of the channel.
TMF Foundation Foundation conditions for the embankment and impoundment affect
stability, seepage considerations, and geological risks to the impoundment. No sitespecific investigations have been carried out to date.
ARD/ML Potential Cyclone Sand used for TMF Dam Construction The proposed
pyrite flotation circuit will remove a large portion of the pyrite, thus reducing the ARD
potential significantly. During future stages of design, additional geochemical
evaluation will be necessary to determine if the product has residual ARD or metalsleaching potential at neutral pH.
Project No.: 165270

11 March 2011
Page 17-4

17.2.3
Low-Level Risks
Width of Tailings Line Access Road The tailings line access road has been designed
with a single lane. Because the equipment necessary to install the pipeline will block
the road for extended periods of time, the restricted width could block access to the
site. Similarly, access to and from the plant site could be restricted during operation,
repair, and maintenance of the pipeline. Use of the road will need to be scheduled and
prioritized for vehicular access.
Coarse Ore Stockpile and Dusting The open-air design of the coarse ore stockpile is
typical of many operating mines however, it could result in non-compliant dust loading
during dry periods. Dust suppression or a stockpile cover may be required.
Stockpile Feed Conveyor Incline Angle The design incline angle of the stockpile feed
conveyor is 14. Testwork is required to confirm that this angle is appropriate for this
material.
Delivery of Long-Lead Capital Equipment Market conditions may increase delivery
schedules for long-lead capital equipment items. Equipment may need to be secured
and purchased earlier than anticipated.
Construction Laydown Area There is limited laydown area for construction purposes
in the vicinity of the process plant. A suitable area nearby must be identified.
Port Availability It has been assumed based on discussions with Lumina that the
marine facilities to be developed by Lumina will be for its Phase 2 development, i.e.,
capacity for fully loaded vessel sizes of up to 50,000 dwt (instead of 33,000 dwt) and a
berth in 15 m water depth. This should be confirmed in negotiations with Lumina,
because acceptable berth availabilities for Candente will only be possible if the Phase
2 implementation is complete.
Cyclone Sand Dam Construction The primary risk for construction of the TMF
embankment with cyclone sands is that a very high proportion of cyclone underflow,
around 80%, needs to be available as sand at all times. The cyclone product
modelling is based on a hypothetical particle size distribution for the feed to the
cyclones. Future stages of design need to verify that the required volume of underflow
for raising of the tailings embankment is available throughout the constructed life of the
embankment. If this is not the case, then it could be necessary to place additional
borrowed material into the dam or possibly change to an alternative material for dam
construction.
Availability of Embankment Construction Materials A very large volume of fill material
is required for the starter embankment. This could be a risk to cost and schedule if the
borrow materials are not available close to the embankment site.
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Exchange Rate Capital expenditures for materials that may be sourced in Europe
and consequently priced in Euros may be sensitive to exchange rates, which therefore
represents some risk.
17.2.4
Very Low Risk Items

Relocation of Barges from Freshwater Reservoir to TMF The execution plan for the
plant start-up includes relocation of the barge from the freshwater reservoir to the TMF.
If not executed well, then start-up could be delayed.
17.3
Opportunities
The identified opportunities for the project are summarized in Table 17-3. These
opportunities are discussed below in accordance with the classification shown in the
table.
17.3.1
High-Level Opportunities
18 Month Mine Plan The mine plan for the first 18 months of operations should be
optimized to maximize the IRR and reduce the project payback period.
17.3.2
Medium-Level Opportunities
Resource Estimate Additional drilling should be continued in the vicinity of Caariaco
Norte with the objective of reclassifying Inferred resources to Indicated and/or
Measured resources
Additional Resources There is good potential to discover and delineate additional
resources at the Caariaco Sur and Quebrada Verde targets near the Canariaco Norte
deposit.
Materials for Tailings Dam Construction A trade-off study including, among other
factors, the available geochemical characterization data, was conducted to determine
the method of tailings dam construction. A more in depth trade-off assessment is
recommended to confirm the dam construction methodology that would incur the
lowest life-of-mine costs.
17.3.3
Low-Level Opportunities
Leasing of Equipment The possibility of leasing equipment for the mine, mill, and
electrical infrastructure should be evaluated to determine if it could improve the project
economics.
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Table 17-3: Caariaco Project Opportunities

Opp
No.
3.1
3.2
3.3
3.4
3.5
3.6
Opp Rating
Opportunity Description
Reduce costs by reducing target
concentrate copper grade
Optimize tonnage throughput based
on ore hardness
Optimize mineplan for first 18
months
Leasing of equipment to reduce
initial capital cost
Reduction in roaster operating costs
via optimization of arsenic feed
grades
Increased recoveries for low grade
material.
Opp Owner
Score
Classification
Proposed Strategies / Actions
Process
-3
-6
Low
Process/Geolog
y/Mining
Testwork and tradeoff study in Feasibility Study
-1
-4
Very Low
Geology/Mining
-4
-16
High
Mining/Process/
Electrical
-2
-8
Low
Mining/Process
-1
-3
Very Low
Evaluate arsenic distribution in deposit and optimize

mine plan. Some ore may not require roasting.
Process
-2
-4
Very Low
Testwork to be conducted for Feasibility Study
Populate resource block model with ore hardness

Domaining of supergene layer (20 m) representing the
first 18 months of production
Some work completed in PFS. Further investigation
may be warranted.
3.7
Reduce capital costs by removing

final tailings thickener from flowsheet
Process
-2
-6
Low
3.8
Reduce transport cost for

concentrate by shipping dry
Process
-2
-6
Low
3.9
Reduce capital cost - COS conveyor

- wrap around motor
Electrical
-2
-6
Low
3.10
Reduce the cost of the Stockpile

Feed conveyor
Materials
Handling
-1
-3
Very Low
3.11
Additional drilling for resource

estimate
Geology
-4
-12
Medium
3.12
Additional resources
Geology
-4
-12
Medium
Use waste rock for tailings dam

construction
Additional hydrologic data could
reduce costs associated with
designs to manage storm flow
volumes
Transport of tailings cyclone
underflow by gravity
Geotech/
Mining
-4
-12
Medium
Civil
-2
-6
Low
Civil
-2
-4
Very Low
Evaluation of design
Civil
-2
-4
Very Low
Testwork of tailings and compaction rates and ulitimate

settling density
Civil
-3
-6
Low
Civil
-2
-4
Very Low
Owner
-3
-9
Low
3.13
3.14
3.15
3.16
3.17
3.18
3.19
Decrease tailings deposition volume

TMF site location and management
plan to be updated to confirm
optimum economic selection
Tailings Management Plan to be
further developed and optimized
Finance terms for lease equipment
Evaluate potential in a trade off study in Feasibility

Study
Tradeoff study of dry vs re-wetted calcined
concentrate. Capital and operating costs for trucking
from site to port
Tradeoff study for wound rotor vs wrap around motor
for COS feed conveyor during Feasibiltiy Study
Split the stockpile feed conveyor into 2 conveyors.
Having a short conveyor feeding the stockpile will
reduce the the amount of structural steel required for
the cantilivered head end due to much lower forces
being transmitted by the conveyor.
Increase classification of Inferred to Indicated and or
Measured resources
Discover and delineate additional resources at
Canariaco Sur and Quebrada Verde
Characterisation of waste rock for tailings dam
construction
Continue with data collection
Update of tradeoff study

Design development
Discussion with vendors
Concentrate Copper Grade The target grade for the copper concentrate should be
assessed to optimize the overall costs related to handling, transportation and
treatment.
Final Tailings Thickener A trade-off study is required to determine if overall tailings
and reclaim water handling costs could be reduced by eliminating the tailings thickener
from the process flowsheet.
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Concentrate Shipping Costs The potential to reduce overland shipping costs from the
plant to the port by transporting dry instead of wet concentrate should be evaluated.
Coarse Ore Conveyor Motor A trade-off study should be completed for a wound rotor
motor versus a wrap-around motor on the coarse ore stockpile conveyor.
Hydrologic Data More-accurate data and a longer period of record could help reduce
design storm flows and volumes.
TMF Site Location and Management Technology Although a trade-off study was
carried out to select the preferred TMF site and tailings management technology as
part of the preliminary prefeasibility work, it is recommended that these aspects
continue to be reconsidered, given that this is a critical feature of the project. New
technologies could also arise to make alternative tailings management schemes more
favourable.
Finance Terms The equipment finance terms used in the financial model are
comparable to those used elsewhere in the industry for junior mining companies. As
the project reaches a more advanced stage of development, and if a major mining
company obtains a major share in Candente, then there may be potential to negotiate
more-favourable lease terms.
17.3.4
Very Low Level Opportunities

Low-Grade Recoveries Testwork is required to evaluate process recoveries for lowgrade material. Further testwork and optimization of process parameters could result
in higher recoveries.
Concentrate Roasting Requirements The arsenic distribution in the resource should
be evaluated in more detail and optimized in the mine plan to reduce costs associated
with roasting.
Ore Hardness The mill tonnage throughput should be optimized through an ore
hardness model in the block model.
Stockpile Feed Conveyor A trade-off study should be completed to evaluate a single
stockpile feed conveyor versus splitting it into two sections. A short conveyor would
the amount of structural steel required for the cantilevered head by transmitting lower
forces to the structure.
Transport of Tailings Cyclone Underflow The possibility of transporting diluted tailings
underflow from the cyclone plant to the TMF by gravity alone should be investigated to
save on pumping costs; this could, however, be offset by additional costs for higher
reclaim pumping.
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Tailings Deposition Volume Based on more detailed tailings deposition modelling, it

might be possible to store the tailings more efficiently and reduce the height of the final
embankment.
Tailings Management Plan Evaluation of the tailings management system and
cyclone sand embankment raising system as a whole could result in operational and
cost savings. This could include alternative pumping and piping arrangements, or
varying the method of tailings sand placement and compaction at the tailings
embankment.
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Page 17-9

CONTENTS
18.0
CONCLUSIONS ...................................................................................................18-1
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TOC i

18.0
CONCLUSIONS
AMEC has applied industry-standard mining, process design, and construction methods
and economic evaluation practices in this assessment of the Caariaco Norte project.
Sufficient and representative samples and information were available to estimate a
mineral resource, conduct metallurgical testing, and complete this prefeasibility study
progress report.
Sufficient work has been undertaken on the permitting and environmental aspects of the
project to gain an understanding of the regulatory requirements that will need to be met to
construct, operate, and close the mine.
After the currently proposed pit is mined, the Caariaco Norte deposit will still contain
resources, particularly at depth. In this study, the Whittle optimization analysis and
subsequent mine design were based on a copper price of $2.25/lb. If a higher copper
price were used, then the optimal Whittle shell could be expected to expand, and the
total mill feed and mine life would increase.
The Caariaco Sur deposit has been interpreted previously to contain a potential
resource, but limited exploration drilling has been carried out to date. Considering
preliminary indications that Caariaco Sur material contains minimal arsenic, it represents
an exploration target that could make ore blending an option and potentially eliminate
some of the arsenic mitigation requirements currently included in this study.
The process plant, as designed, will handle 95,000 t/d through a typical crushing and twostage grinding circuit. The primary flotation circuit will produce a bulk concentrate that will
be reground and upgraded in a three-stage cleaner circuit. The results of ongoing
metallurgical testwork indicate that the ore responds positively to the typical grinding and
conventional flotation methodologies for such deposits. In this study, AMEC has begun
optimizing a concentrator flowsheet that appears to be viable with respect to the known
mineralization of the deposit. The Outotec partial roast process has been confirmed to
reduce the levels of impurities in the concentrate to below smelter penalty limits and will
produce a saleable concentrate throughout the mine life.
Based on the additional data, updated knowledge, and refined assumptions at this stage
of study, the results show that the project achieves a 18.8% post-tax IRR at a long term
copper price of $2.25/lb. The copper price required to produce a breakeven cash flow
(discounted at 8% and post-tax) is $1.75/lb based on a flat copper price and flat prices of
$1,015/oz Au and $15.85/oz Ag. The sensitivity analyses show that the project is most
sensitive to copper price, followed by grade, capital cost, and operating cost, in that order.
The project is very sensitive to metal prices and to be economic requires a copper price
above $2.00/lb, depending on the hurdle rate and assuming none of the other
opportunities for economic improvement are realized. The project may permit the
hedging of metal prices to mitigate metal price risks.
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AMEC recommends that, should Candente management deem the economic possibilities
to be worth pursuing, they proceed with information-gathering to advance the project to a
feasibility study level. Upon performing the necessary sampling and testwork, a feasibility
study could improve the construction and operational design, scheduling, costing, and
economic analysis.
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CONTENTS
19.0
RECOMMENDATIONS.........................................................................................19-1
19.1 General .....................................................................................................19-1
19.2 Recommendations for Feasibility Study ....................................................19-1
19.3 Recommendations from Progress Report..................................................19-2
19.3.1
Geology....................................................................................19-2
19.3.2
Mining ......................................................................................19-3
19.3.3
Metallurgy ................................................................................19-4
19.3.4
Tailings Management Facility ...................................................19-5
19.3.5
Infrastructure ............................................................................19-6
19.3.6
Surface Water Management .....................................................19-6
19.3.7
Environmental Considerations ..................................................19-7
19.3.8
Execution Plan .........................................................................19-7
19.3.9
Marketing .................................................................................19-7
19.3.10 Financial Evaluation .................................................................19-8
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19.0
RECOMMENDATIONS
19.1
General
Typical of most mining ventures, a large number of risks and opportunities could affect
the outcome of the Caariaco Norte project. Many of these risks and opportunities are
based on the current level of scientific information, (such as drilling and testwork results),
or lack of control over external drivers (metal price, exchange rates). Higher-level
engineering studies are therefore recommended to reduce and manage the risks and to
refine the opportunities.
General recommendations include reassessing the mine plan to see if increasing the strip
ratio, for example, could extend the life of the mine, assumed for the current study to be
21 years, and proceeding with further confirmation testwork of the process flowsheet
during the variability program planned for the next phase of study.
Further environmental evaluation is also recommended. Specifically, considering the
potential for air emissions associated with the roaster operation, a program of air
monitoring should be initiated to establish baseline conditions at the project site. It is also
recommended that a study be undertaken to determine the potential project development
impacts and should include socioeconomic assessments of any potential relocation
requirements.
19.2
Recommendations for Feasibility Study

Following are the main recommendations for the completion of a feasibility study:
Site investigations, including drilling, test pitting, packer tests, and seismic lines to
provide additional samples and information for:
geotechnical and structural characterization
hydrological mapping
increased definition of the mineral resource
waste rock characterization and metallurgical variability testwork
Six-month program estimated to cost $4 million.
Metallurgical and mineral processing tests should include, but not be limited to:
characterization of mineralization in various parts of the deposit
further crushing and milling characterization
optimization of flotation recovery and reagent use
confirmation of current processing assumptions such as concentrate thickening
and filtration rates
confirmation testing of acid production quantities
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further testing of the behaviour of arsenic mineralization in flotation

further characterization of mill feed variability
confirmation testing of arsenic reduction in concentrate to reflect deposit variability
Eight-month program estimated to cost $1.0 million.
ML/ARD testing and development of a PAG/non-PAG rock model
Six-month program estimated to cost $0.25 million
Pursuit of environment assessment and permitting.
Estimated cost $2 million.
Conduct a feasibility study.
Estimated cost $2.5 million.
19.3
Recommendations from Progress Report

Recommendations presented in the report are summarized below by area.
19.3.1
Geology
Eastwest oriented, 100 m spaced vertical sections for alteration types and intensities
were prepared by Candente. These were simplified by AMEC, and the resulting
bench plan polygons were extended beyond the limits of the available drill hole
information to cover the block model extents. AMEC recommends that a full review of
the alteration interpretation be completed on vertical sections reconciled to bench
plans for the next level of study.
Copper mineralization at Caariaco Norte is related to porphyry intrusions, breccias,
and potassic, propylitic, phyllic, argillic, and advanced argillic alteration; however, the
limits of mineralization in the deposit are not well known. AMEC recommends
building a mineral zonation model for the next phase of study. A combination of
lithology, alteration, and mineral zones should provide more robust support for the
mineralized envelope and the definition of grade estimation domains.
Topographic contour limits were based on a photogrammetric interpretation
undertaken on aerial photographs accurate to 1 m (x, y, z). Errors noted in the digital
terrain model (DTM) by SRK (2009) were surveyed. These points were used in
conjunction with the original topographic data to minimize the differences found.
Although AMEC did not find a constant elevation difference between the surveyed
collars and the DTM, AMEC is of the opinion that further investigation is required for
the next level of study to provide the precision necessary for earth-movement
estimates.
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From the analysis of cumulative distribution plots, AMEC defined a threshold of

250 ppm As for low- and high-grade arsenic populations relative to this deposit. By
splitting the data, AMEC reduced the global CV from 1.7 to 0.7 and 1.1 for low- and
high-grade samples, respectively. Arsenic values (>400 ppm) are concentrated in the
northwest and south-centre parts of the deposit, and AMEC could not clearly define
domains based on lithology, alteration, or a combination of both. AMEC recommends
that once the mineralogical model has been constructed, the arsenic distribution
should be evaluated along the interpreted units.
AMEC assigned density values to blocks based upon the lithological codes. In
AMECs opinion, these density values are reasonable for use in mineral resource
estimation at this preliminary level of study, but recommends executing a continuous
program of specific gravity determinations from core samples using preferably the
same laboratory and determination procedures.
Because the lateral extents of the lithological interpretations are not fully defined by
drill data in some areas of the deposit, AMEC expanded the interpretation beyond the
limits of the available drill hole information to cover the block model extents. Although
AMEC considers such extrapolation to be reasonable, additional drilling should be
performed to increase the level of confidence of the lithological interpretation in these
areas.
19.3.2
Mining
A single elongated waste rock management facility (WRMF) will be developed
adjacent to the pit, extending along the valley. Bottom-up methods will be used for
construction. Preliminary waste rock characterization suggests that potentially acid
generating (PAG) rock will be present, and so encapsulation storage methods may be
required. More rock geochemistry information is required to develop a waste rock
characterization block model and plan for handling these materials. This work is
recommended for the next phase of study.
To determine potential dewatering requirements, the bedrock has been divided into
three regimes. The upper regime, generally less than 100 m deep, could be
dewatered with vertical wells if the hydraulic conductivities were high enough; this
should be confirmed moving into the next phase of the study.
For the purpose of this progress study, a mine plan was generated using LG pit shells
adjusted by minimum mining width. The next iteration of mine planning will require pit
phase designs that consider pioneering access to upper benches, internal ramp
access, minimum mining widths, and depressurizing and dewatering requirements.
During the next iteration of mine planning, AMEC recommends that cutoff optimization
be performed in conjunction with the use of a more-detailed shell selection
methodology. Although the proposed site layout and topography do not lend
themselves to the space required for a substantial low-grade stockpile, a cutoff profile
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11 March 2011
Page 19-3

featuring elevated cutoffs in the early years could still improve project value without
stockpiling. Cutoff optimization can provide economic benefits with or without
stockpiling low-grade material. Both approaches should be evaluated to establish the
value to the project of a low-grade stockpile. If the value sufficiently exceeds the cost
of displacing waste rock storage to make the space for the stockpile, then it should be
incorporated into the plan.
A site investigation program has been proposed and planned during the prefeasbility
study, but not yet conducted, to support geotechnical pit design at a prefeasibility
level. The data from the site investigation are considered to be key in understanding
the joint patterns and geotechnical complexities associated with the highwall
(approximately 925 m high) and the sensitivity of the highwall slope to pit
depressurization and rock mass strength. It is recommended that this program be
completed to further the development of the open pit geotechnical design.
19.3.3
Metallurgy
The roasting tests show that the expected arsenic content will normally result in a
calcine with a residual arsenic content of 0.05% to 0.2% unless calcium is present
either in the gangue or from the reagent systems. The ACL and ACS calcines
produced a concentrate that would not incur a smelter penaltyor, if so, it would be
minor. The ACP calcine, did not perform as expected and contained a level of
arsenic that would incur a penalty. This may be due to the presence of excess lime
used for pH control in the cleaning circuit. It may be necessary to examine this issue
in additional work by determining ways to either reduce lime levels in the plant
(e.g., pre-roast concentrate washing), blend with other concentrates, or treat the
concentrate further.
Given that the results for the three composites were weighted equally, further
definition of the distribution of these sample types and their representation in the LOM
plan is recommended. This can be achieved through the variability flotation testwork
program currently planned for the next phase of work.
The unoptimized cleaner flotation results indicate that the cleaning requires a high pH
level of approximately 12 to produce reasonable copper concentrate grades. In
addition, the mixed reagent did not perform as well as the sole use of A3894. The
mixture was a particular disadvantage for the ACP material and also slightly worse for
ACS but fairly similar for ACL. Subsequent analysis of the testwork indicated that
collector was not added properly in cleaning. At the time of reporting, mineralogical
and size analysis was underway to further investigate the cause of the cleaning seen
with the mixed reagent suite. Although there will be a compensating effect in the
impurity roasting step, which will see an uplift in final copper concentrate grade
suitable for sale, it is recommended that more material be obtained for a series of
locked-cycle tests to examine this aspect in more detail.
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It is recommended that further composite preparation for testing of the partial roasting
process be correlated to the mine plan so that the results would be more
representative of what will be processed through the LOM.
Further testwork is required to define the variability of the ore characteristics and to
develop the information needed to support process design criteria and variability
responses for use in the feasibility study.
19.3.4

The starter embankment will have a maximum height of 105 m (measured vertically at
the embankment centreline) and contain a total volume of 12.5 Mm3. It is
recommended that the starter embankment position and storage requirements be
reassessed moving in the next phase of work to optimize the design.
The design objective for the TMF is to keep the PAG tailings within the TMF
impoundment saturated at all times. To achieve this, the PAG tailings will be
deposited subaqueously and flooded with a minimum 2 m of water cover. At this time
it is uncertain when the water quality in the TMF will be acceptable for discharge.
Delaying discharge, i.e., holding excess water above the minimum requirement of
2 m, will result in the build-up of a surplus of water within the impoundment. The
water quality and excess water discharge schedule should be re-evaluated in the next
phase of work.
The proposed seepage collection (SC) embankment design includes a compacted
earthfill / rockfill embankment with filter / transition zones and a low-permeability,
bituminous geomembrane on the upstream face. This is based on similar
embankment designs previously permitted and constructed in Peru. Other
alternatives such as the following should be considered during the next phase of
work:
low-permeability core soil (clay-core) embankments with rockfill shells
clay liner on the upstream face
alternative geomembrane materials.
Trade-off studies should be conducted to determine the most appropriate design,
considering the availability of local borrow materials and the costs to supply and
install synthetic and/or imported materials.
Approximately 80% of the underflow tailings will need to be available for placement at
the tailings embankment at all times during raise construction to maintain adequate
storage and freeboard. This level of availability must be confirmed during subsequent
stages of design, when additional information on anticipated tailings particle size
distribution would be available. In the event that the dam raising schedule cannot be
fully met using cyclone underflow tailings, it could be necessary to augment the dam
fill with earthfill / rockfill material.
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11 March 2011
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Geotechnical drilling and test pitting is required at the embankment sites. The work
should include:
drill sampling of the soil units for visual classification and geotechnical laboratory
testing
bedrock coring to define the bedrock geology and any problematic bedrock such
as limestone or weak sedimentary rock structures such as claystones
angling some of the boreholes extended into bedrock to intercept any sub-vertical
geologic structure that may control the secondary hydraulic conductivity of the
bedrock, including potential faulting in the valley bottom that may control the
valley alignment
packer permeability testing within the bedrock to obtain a profile of hydraulic
conductivity versus depth in the valley bottom and on the abutments
installing piezometers and groundwater monitoring wells in select boreholes to
support baseline studies.
The use of geophysical survey methods such as seismic refraction along and across
the dam axes is recommended to calibrate and extend borehole information.
19.3.5
Infrastructure
The route of the access road to site will be reviewed and optimized once moreaccurate contour data are obtained during the feasibility study. Following this phase,
a road reconnaissance field trip will be recommended, followed by a geotechnical site
investigation to confirm the route.
19.3.6

Potential evapo-transpiration data from the Incahuasi station were used in conjunction
with the project site precipitation data to determine the mean annual and monthly
runoff distribution for the project site. It is recommended that hydrometric stations be
installed to measure surface water flows at the project site.
Mean annual precipitation at or the project site (rainfall only) is estimated to be
1,025 mm. This estimate is derived from monthly precipitation data for the El Limon
station, adjusted for altitude by a correlation factor of 2.9 based on the limited project
site precipitation data available at this time. The correlation factor should be reviewed
as more information is acquired from the site climate monitoring station.
The 10-year period of record for the El Limon station is a limited time frame for
performing a frequency analysis, and inaccuracies can be expected for longer return
periods. The frequency analysis should therefore be revisited when more information
becomes available for both the EI Limon station and the project site.
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19.3.7
Historical data from the Ro Caariaco hydrometric station are available for a 31-year
period. Four hydrological assessments have been completed to date. Further data
will be acquired during the next phase of the study.
Twenty-three protected mammal species have been recorded within the greater
project footprint area. Candente plans to commission a relocation assessment for
endangered and protected mammals as part of the next phase of study.
19.3.8
Execution Plan
To meet the target commissioning date of October 2014, it is recommended that
long-lead procurement start in January 2012.
The ports of Callao and Paita in Peru are considered possible points of delivery for
construction materials. The main highway, Peru Highway 1, which runs parallel to the
coast, connects both ports with Chiclayo, the nearest major city to Caariaco Norte. .
From Chiclayo, the road route to the mine follows a paved, Highway 1B north through
Motupe until it intersects with Highway 3N, the Corral Quemado Road, just south of
the town of Olmos. After passing through La Pilca, the Corral Quemado Road climbs
along a series of ridges before descending to follow the river valley. Grades along the
route are reported to be steep in places and should be surveyed to ensure they do not
exceed the permissible limits for heavy-haul transport.
19.3.9
Marketing
NSA has not contacted any smelters to specifically discuss the marketability of the
Caariaco Norte concentrates. As the project progresses through the next phase of
study, it is recommended that some discussions be held with smelters to discuss the
acceptability of the proposed calcine from the Caariaco project and associated
treatment and refining charges.
For the purpose of this progress report, AMEC used a long-term acid selling price of
$90/t based on preliminary discussions with CMC and NSA in October 2010. A more
detailed market study for domestic and export acid markets is recommended for the
feasibility study.
When reviewing logistics related to the export market, the main acid terminals in Peru
that service export volumes from Cajamaquilla and Ilo are in the south, at Pisco and
Ilo. While it is possible to deliver by truck to the Pisco facility, the distance is
considerable. Investigation of possible terminal installations in the north should be
reviewed and could be tied to planned concentrate port facilities.
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19.3.10
Various tax allowances are granted by the Peruvian Government, including one on
capital expenditure that benefits the local communities. In AMECs opinion, Candente
should engage a suitably qualified and experienced tax professional during the next
phase of the project to investigate this in depth.
Indicative financing terms were received from vendors, and average lease terms were
applied to all the leased equipment. It is suggested that detailed lease terms be
applied in the financial model for the next level of study to assess possible
opportunities to improve the project returns.
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Page 19-8

Cañariaco Norte Copper Project Pre-Feasibility Study Progress Report

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Caariaco Norte Copper Project

Pre-Feasibility Study Progress Report

Submitted to: Candente Copper Corp.

CANDENTE COPPER CORP.

Mine Plan and Production

Tailings and Waste Rock Management

Infrastructure and Ancillary Facilities

Surface Water Management

Conceptual Closure Plan

Project Execution Plan

Capital Cost Estimate

Operating Cost Estimate

Risks and Opportunities

Project No.: 165270

CANDENTE COPPER CORP.

Resource and Geology

Metallurgical Testwork and Material Balance

Drawings, Flowsheets, and Lists

Project No.: 165270

CANDENTE COPPER CORP.

Geology and Mineral Resources ................................................................................ 8

Mine Plan and Production ........................................................................................ 11

Tailings Management Facility .................................................................................. 22

Infrastructure and Ancillary Facilities........................................................................ 23

Surface Water Management .................................................................................... 26

Environmental Considerations ................................................................................. 27

Conceptual Closure Plan ......................................................................................... 28

Project Execution ..................................................................................................... 29

Capital Cost Estimate .............................................................................................. 30

Project No.: 165270

CANDENTE COPPER CORP.

Operating Cost Estimate .......................................................................................... 31

Concentrate Marketing ............................................................................................ 32

Risk and Opportunities ............................................................................................ 36

General Location Map ....................................................................................................... 1

Project No.: 165270

CANDENTE COPPER CORP.

Purpose and Objectives of Report

Project No.: 165270

General Location Map

CANDENTE COPPER CORP.

Project Background and History

Project No.: 165270

CANDENTE COPPER CORP.

Property Location, Description, and Access

Project No.: 165270

CANDENTE COPPER CORP.

Project No.: 165270

Property Access Routes and Infrastructure

CANDENTE COPPER CORP.

Project No.: 165270

CANDENTE COPPER CORP.

Project No.: 165270

Caariaco Concessions held by Candente Copper Corp. (as of 29 October 2010)

CANDENTE COPPER CORP.

Municipality Permits to Construct

Project No.: 165270

CANDENTE COPPER CORP.

Geology and Mineral Resources

Project No.: 165270

CANDENTE COPPER CORP.

Mineral Resource Statement for Caariaco Norte at a 0.2% Cu Cutoff Grade

Project No.: 165270