Capestone Technical Report PDF

Capstone Mining Corp.
2100 – 510 West Georgia Street

Vancouver, BC, V6B 0M3, Canada
Tel: 604-684-8894 Fax: 604-688-2180
www.capstonemining.com
Report Date: February 23, 2016 Effective Date: January 1, 2016
Pinto Valley Mine Life Extension - Phase 3 (PV3) Pre-Feasibility Study

NI 43-101 Technical Report
Pinto Valley Mine, Miami, Arizona
Authors:
Capstone Mining Corp.
Prepared by:
Gregg Bush, P.Eng.
Amec Foster Wheeler Environment &
Infrastructure Inc.
Tony J. Freiman, PE
Kirkham Geosystems Ltd
Capstone Mining Corp. Garth Kirkham, PGeo., FGC
Suite 2100 – 510 W Georgia Street KWM Consulting Inc
Vancouver, British Columbia, V6B 0M3 Ken Major, P.Eng.
Canada Independent Mining Consultants, Inc.
John Marek, PE, SME-RM
SRK Consulting (U.S.), Inc.
Corolla Hoag, CPG, SME-RM
Date and Signature Page
The effective date of the Pinto Valley Mine PV3 Prefeasibility Study for Pinto Valley Mine in Miami,
Arizona, is 1 January 2016.
Prepared by:
Signed and Sealed February 23, 2016
Gregg Bush, P. Eng
Corolla Hoag, CPG, SME-RM
Tony J. Freiman, PE
Garth Kirkham. P.Geo, FGC
Kenneth W. Major, P.Eng
John Marek, PE, SME-RM
Pinto Valley Mine Life Extension Study, February 2016 Page | 2

Table of Contents
1 Summary ............................................................................................................................................. 14
1.1 Project Description...................................................................................................................... 14
1.2 Accessibility, Climate Local Resources and Physiography .......................................................... 15
1.3 History and Ownership ............................................................................................................... 16
1.4 Geology and Mineralization ........................................................................................................ 16
1.5 Exploration, Sampling and Drilling .............................................................................................. 16
1.6 Mineral Resource ........................................................................................................................ 17
1.7 Mineral Reserves......................................................................................................................... 18
1.8 Mining Methods and Mine Plan.................................................................................................. 18
1.9 Mineral Processing and Metallurgical Testing ............................................................................ 20
1.10 Project Infrastructure.................................................................................................................. 21
1.11 Environment................................................................................................................................ 21
1.12 Closure Plan and Costs ................................................................................................................ 21
1.13 Permitting ................................................................................................................................... 21
1.14 Operating Cost and Sustaining Capital........................................................................................ 22
1.15 Economic Analysis ....................................................................................................................... 22
1.16 Interpretation and Conclusions .................................................................................................. 23
1.17 Recommendations ...................................................................................................................... 23
2 Introduction ........................................................................................................................................ 24
2.1 Overview ..................................................................................................................................... 24
2.2 Qualified Persons ........................................................................................................................ 24
2.3 Site Visits ..................................................................................................................................... 24
2.4 Sources of Information ............................................................................................................... 25
2.5 Units of Measurement ................................................................................................................ 25
2.6 Frequently used Acronyms, Abbreviations, Definitions and Units of Measure.......................... 25
3 Reliance on Other Experts .................................................................................................................. 31
4 Property Description and Location ..................................................................................................... 32
4.1 Location....................................................................................................................................... 32
4.2 Tenure, Ownership and Encumbrances ...................................................................................... 32
4.3 Environmental Liabilities ............................................................................................................. 33
4.4 Permitting ................................................................................................................................... 33
4.5 Royalties ...................................................................................................................................... 33
5 Accessibility, Climate, Local Resources, Infrastructure and Physiography ......................................... 34
5.1 Accessibility ................................................................................................................................. 34

5.2 Climate and Topography ............................................................................................................. 35
5.3 Local Resources and Infrastructure ............................................................................................ 35
5.4 Physiography ............................................................................................................................... 35
6 History ................................................................................................................................................. 36
7 Geological Setting and Mineralization ................................................................................................ 37
7.1 Local Geology and Alteration ...................................................................................................... 39
7.1.1 Pinal Schist .......................................................................................................................... 41
7.1.2 Dripping Spring Quartzite ................................................................................................... 41
7.1.3 Mescal Limestone ............................................................................................................... 41
7.1.4 Precambrian Basalt ............................................................................................................. 41
7.1.5 Troy Quartzite ..................................................................................................................... 41
7.1.6 Martin Limestone ................................................................................................................ 41
7.1.7 Escabrosa Limestone ........................................................................................................... 42
7.1.8 Naco Group ......................................................................................................................... 42
7.1.9 Whitetail Conglomerate ...................................................................................................... 42
7.1.10 Gila Group (Conglomerate) ................................................................................................. 42
7.1.11 Alluvium .............................................................................................................................. 42
7.2 Intrusive Phases .......................................................................................................................... 42
7.2.1 Pre-Mineralization Intrusions ............................................................................................. 43
7.2.2 Intra-Mineralization Intrusive Phases ................................................................................. 44
7.3 Regional Structural Framework .................................................................................................. 47
8 Deposit Types...................................................................................................................................... 48
9 Exploration .......................................................................................................................................... 53
10 Drilling ................................................................................................................................................. 54
11 Sample Preparation, Analyses, and Security ...................................................................................... 55
12 Data Verification ................................................................................................................................. 72
13 Mineral Processing and Metallurgical Testing .................................................................................... 73
13.1 Metallurgical Testwork – 2014 Technical Report Summary ....................................................... 73
13.1.1 Grinding............................................................................................................................... 73
13.1.2 Flotation .............................................................................................................................. 75
13.2 PV3 Metallurgical Testwork (2014) ............................................................................................. 83
13.3 Plant Operations Review October 2015...................................................................................... 85
13.3.1 Summary ............................................................................................................................. 85
13.4 Metallurgical Models .................................................................................................................. 86
13.4.1 Crushing .............................................................................................................................. 86

13.4.2 Grinding............................................................................................................................... 86
13.4.3 Flotation .............................................................................................................................. 88
13.5 Metallurgical Variability .............................................................................................................. 89
13.6 Processing Factors or Deleterious Elements............................................................................... 89
14 Mineral Resource Estimates ............................................................................................................... 90
14.1 Data Evaluation ........................................................................................................................... 90
14.2 Computerized Geologic and Domain Modeling .......................................................................... 91
14.3 Topography ............................................................................................................................... 105
14.4 Composites................................................................................................................................ 106
14.5 Outliers...................................................................................................................................... 112
14.6 Tonnage Factor ......................................................................................................................... 113
14.7 Block Model Definition ............................................................................................................. 114
14.8 Mineral Resource Classification ................................................................................................ 116
14.9 Mineral Resources .................................................................................................................... 117
14.10 Model Validation....................................................................................................................... 119
14.11 Model Risks ............................................................................................................................... 120
15 Mineral Reserve Estimates ............................................................................................................... 121
15.1 Floating Cones ........................................................................................................................... 121
15.2 Statement of Mineral Reserve .................................................................................................. 126
16 Mining Methods................................................................................................................................ 127
16.1 Phase Design ............................................................................................................................. 127
16.2 Slope Stability............................................................................................................................ 129
16.3 Mine Production Schedule ........................................................................................................ 132
16.4 Mine Material Storage .............................................................................................................. 135
16.5 Annual Mine Drawings .............................................................................................................. 136
16.6 Mine Operations and Equipment.............................................................................................. 147
16.6.1 Mine Equipment Requirements Assumptions .................................................................. 147
16.7 Operating Equipment Requirements ........................................................................................ 148
16.7.1 Drilling ............................................................................................................................... 148
16.7.2 Loading .............................................................................................................................. 150
16.7.3 Hauling .............................................................................................................................. 152
16.7.4 Major Auxiliary Equipment ............................................................................................... 153
16.8 Mine Personnel Requirements ................................................................................................. 154
17 Recovery Methods ............................................................................................................................ 155
17.1 Mill Process Design Criteria (2014) and Current Flow Sheet .................................................... 155
17.2 Process Criteria: 2015 Pinto Valley Operations Review............................................................ 156

17.3 Process Plant Opportunities ..................................................................................................... 157
17.4 Plant Design .............................................................................................................................. 157
17.4.1 Primary Crushing ............................................................................................................... 157
17.4.2 Secondary and Tertiary Crushing (Fine Crushing) ............................................................. 157
17.4.3 Grinding............................................................................................................................. 158
17.4.4 Flotation ............................................................................................................................ 158
17.4.5 Concentrate Dewatering ................................................................................................... 159
17.4.6 Tails Thickening ................................................................................................................. 159
17.5 SX-EW ........................................................................................................................................ 159
18 Project Infrastructure ....................................................................................................................... 160
18.1 Site Infrastructure ..................................................................................................................... 160
18.2 Tailings Storage ......................................................................................................................... 160
18.3 Tailings Characteristics.............................................................................................................. 160
18.4 Facility Design ........................................................................................................................... 161
18.4.1 Design of TSF4 ................................................................................................................... 161
18.4.2 Design of TSF3 ................................................................................................................... 162
18.5 Stability and Seepage Analysis .................................................................................................. 163
18.6 Tailings Storage Facilities Operation ......................................................................................... 163
18.6.1 TSF4 Operation.................................................................................................................. 163
18.6.2 TSF3 Operation.................................................................................................................. 164
18.7 Monitoring ................................................................................................................................ 164
19 Market Studies and Contracts .......................................................................................................... 166
19.1 Copper ....................................................................................................................................... 166
19.2 Global Production ..................................................................................................................... 166
19.3 Copper Concentrate Market ..................................................................................................... 167
19.4 Supply ........................................................................................................................................ 167
19.5 Copper Prices ............................................................................................................................ 167
19.6 Treatment Charge / Refining Charge ........................................................................................ 167
19.7 Pinto Valley Mining Corporation............................................................................................... 168
19.8 Markets and Contracts.............................................................................................................. 168
20 Environmental Studies, Permitting and Social or Community Impact ............................................. 169
20.1 Current Environmental and Regulatory Context ...................................................................... 169
20.1.1 Key Environmental Regulations and Permits .................................................................... 169
20.1.2 Site Management Systems and Training........................................................................... 169
20.1.3 Site Health, Safety, and Industrial Hygiene Program ........................................................ 169
20.1.4 Site Characterization Studies to Support Environmental Permitting ............................... 170
20.2 Environmental Issues, Monitoring, and Management ............................................................. 170
20.2.1 Groundwater ..................................................................................................................... 170
20.2.2 Surface Water, Stormwater, Process Water, and Wastewater ........................................ 171
20.2.3 Air Quality and Abatement ............................................................................................... 171
20.2.4 Noise Monitoring and Abatement .................................................................................... 171
20.2.5 Tailings Storage ................................................................................................................. 171
20.2.6 Waste Rock Storage .......................................................................................................... 172
20.2.7 Hazardous, Regulated, and Solid Wastes.......................................................................... 172
20.2.8 Process and Stormwater Ponds / Catchment Berms ........................................................ 172
20.2.9 Remaining Evaluations ...................................................................................................... 172
20.3 Environmental Permit Review Related to PV3 ......................................................................... 173
20.3.1 Federal Permitting ............................................................................................................ 173
20.3.2 State Permitting ................................................................................................................ 175
20.3.3 Mined Land Reclamation Plan .......................................................................................... 177
20.3.4 Summary of Key Permitting Considerations ..................................................................... 178
20.4 Mine Closure and Reclamation ................................................................................................. 181
20.4.1 Closure and Reclamation Plan .......................................................................................... 181
20.4.2 Closure and Post-Closure Costs ........................................................................................ 181
20.5 Social and Community .............................................................................................................. 182
21 Capital and Operating Costs ............................................................................................................. 184
21.1 Operating Costs......................................................................................................................... 184
21.1.1 Mine Operating Costs ....................................................................................................... 184
21.1.2 Plant Operating Costs ....................................................................................................... 185
21.1.3 General and Administration Costs .................................................................................... 186
21.2 Capital Costs .............................................................................................................................. 186
21.2.1 Site Sustaining Capital ....................................................................................................... 186
21.2.2 Mine Capital Costs ............................................................................................................ 186
21.2.3 Tailings Capital .................................................................................................................. 186
22 Economic Analysis............................................................................................................................. 187
23 Adjacent Properties .......................................................................................................................... 188
23.1 Carlota Mine (Active) ................................................................................................................ 188
23.2 BHPB Globe-Miami Area Operations ........................................................................................ 188
23.3 FMI Miami Operations .............................................................................................................. 188
24 Other Relevant Data and Information .............................................................................................. 189
25 Interpretation and Conclusions ........................................................................................................ 190
25.1 Geology and Mineral Resources ............................................................................................... 190
25.2 Mining and Mineral Reserves ................................................................................................... 190

25.3 Mineral Processing and Metallurgical Testing .......................................................................... 190
25.4 Capital and Operating Costs...................................................................................................... 190
25.5 Permitting ................................................................................................................................. 190
25.6 Risks .......................................................................................................................................... 191
26 Recommendations ............................................................................................................................ 192
27 References ........................................................................................................................................ 193

Table of Tables
Table 1-1: Mineral Resources at 0.17% TCu Cutoff, after 1 January 2016 (metric units) ........................... 18
Table 1-2: Mineral Reserves, Remaining after 1 January 2016 (metric units) ............................................ 18
Table 1-3: Mine Extraction Plan (metric units) ........................................................................................... 19
Table 1-4: Mill Feed Schedule ..................................................................................................................... 20
Table 1-5: Unit Cost Summary .................................................................................................................... 22
Table 1-6: Capex Cost Summary ................................................................................................................. 22
Table 2-1: Qualified Persons Responsibilities by Section ........................................................................... 24
Table 2-2: Acronyms and Abbreviations ..................................................................................................... 25
Table 2-3: Glossary ...................................................................................................................................... 28
Table 11-1: Analytical Results for Replicate Pulp Assays 2006 Pinto Valley Mine QA/QC Program........... 59
Table 11-2: Total and Stepwise Sampling Estimates and Analytical Variances .......................................... 61
Table 11-3: Duplicate Pair Analytical Variance for %TCu ............................................................................ 67
Table 11-4: Duplicate Pair Analytical Variance for %Mo ............................................................................ 67
Table 13-1: Ore Lithological Distribution for the Life of Mine .................................................................... 74
Table 13-2: Bond Ball Mill Work Index Modeling (metric tonnes) ............................................................. 74
Table 13-3: Staged Recovery Predictions.................................................................................................... 79
Table 13-4: Copper Flotation Recovery Model ........................................................................................... 81
Table 13-5: Bond Work Index Test Results ................................................................................................. 84
Table 13-6: Rougher Flotation Recovery .................................................................................................... 84
Table 13-7: Comparing Flotation Test Recovery to Projected Recovery .................................................... 85
Table 13-8: Production Model (2014) ......................................................................................................... 86
Table 13-9: Production Model (2015) ......................................................................................................... 87
Table 14-1: List of Drillholes used in PVM 2015 Resource Estimate and Model Update ........................... 90
Table 14-2: Assay Statistics ......................................................................................................................... 91
Table 14-3: Assay Statistics by Mineralized Zone ..................................................................................... 105
Table 14-4: Correlogram Model Data by Metal ........................................................................................ 114
Table 14-7: Interpolation Parameters....................................................................................................... 115
Table 14-8: Mineral Resources at 0.17% TCu Cutoff Grade1, 2 - Imperial ............................................... 119
Table 14-9: Mineral Resources at 0.17% TCu Cutoff Grade1, 2 (Metric Units) ........................................ 119
Table 15-1: Base Case Floating Cone Input – Pinto Valley Project ........................................................... 122
Table 15-2: Mineral Reserves, Remaining After 1 January 2016 (metric) ................................................ 126
Table 16-1: Inter-ramp Slope Angles, from SRK Consulting ...................................................................... 130
Table 16-2: Mine Extraction Plan – Mill Rate of 54,000 TPD (2016), 56,000 TPD (2017 and beyond) ..... 133
Table 16-3: Mill Feed Schedule – Includes low grade stockpile 2038 and 2039....................................... 134
Table 16-4: Mine Major Equipment Fleet Requirement ........................................................................... 147
Table 16-5: Maximum Equipment Availabilities and Use of Availabilities................................................ 148
Table 16-6: Drill Requirements – Blast Hole Drill...................................................................................... 149
Table 16-7: Mined Tonnage Movement by Shovel and Loader Fleets (re-handle is not included).......... 150
Table 16-8: Shovel Requirements - Hitachi EX5600 Loading Cat789D Trucks .......................................... 151
Table 16-9: Wheel Loader Requirements - Cat 994 Loading Cat789D Trucks .......................................... 152
Table 16-10: Cat 789D Haul Truck Requirements ..................................................................................... 153
Table 16-11: Hourly and Mine Supervisory Personnel ............................................................................. 154
Table 20-1: Summary of Key Permitting Considerations. ......................................................................... 179
Table 21-1: Unit Cost Summary ................................................................................................................ 184
Table 21-2: Mine Unit Cost Summary ....................................................................................................... 185
Table 21-3: Process Operating Cost Summary .......................................................................................... 185
Table 21-4: Capex Cost Summary ............................................................................................................. 186

Table of Figures
Figure 1-1: Current Pinto Valley Site Facilities (Capstone Mining Corp, 2014)........................................... 15
Figure 4-1: Pinto Valley Mine Location Map (Google Maps, 2015) ............................................................ 32
Figure 5-1: Pinto Valley Mine Location ....................................................................................................... 34
Figure 7-1: Pinto Valley Mine Geology Plan................................................................................................ 39
Figure 7-2: Generalized Columnar Lithology Sections for the Castle Dome Area ...................................... 40
Figure 8-1: Anatomy of a Telescoped Porphyry System (Sillitoe, 2010) ..................................................... 49
Figure 8-2: Generalized Alteration-Mineralization Zoning Pattern for Telescoped Porphyry Copper
Deposits (Sillitoe, 2010) .............................................................................................................................. 50
Figure 8-3: Pinto Valley Mine Alteration and Mineralization Plan Map ..................................................... 51
Figure 11-1: Analytical Results from Standard Reference Materials .......................................................... 57
Figure 11-2: Relative Half Differences in Replicate Pulp Analyses (compares original PVM copper assays
with Skyline repeats)................................................................................................................................... 58
Figure 11-3: Comparison of 15 Field Duplicate Samples ............................................................................ 60
Figure 11-4: Comparison of Field Duplicate Samples - Skyline ................................................................... 62
Figure 11-5: Comparison of Field Duplicate Samples – ALS Global ............................................................ 63
Figure 11-6: Comparison of Coarse Duplicate Samples - Skyline................................................................ 64
Figure 11-7: Comparison of Coarse Duplicate Samples – ALS Global ......................................................... 65
Figure 11-8: Comparison of Pulp Duplicate Samples - Skyline ................................................................... 66
Figure 11-9: Scatterplots showing Field Duplicates for %TCu for 2015 Drilling ......................................... 68
Figure 11-10: Scatterplots showing Field Duplicates for %Mo for 2015 Drilling ........................................ 69
Figure 11-11: Scatterplots Coarse Duplicates for %TCu for 2015 Drilling .................................................. 69
Figure 11-12: Scatterplots Coarse Duplicates for %Mo for 2015 Drilling ................................................... 70
Figure 11-13: Scatterplots Pulp Duplicates for %TCu for 2015 Drilling ...................................................... 70
Figure 11-14: Scatterplots Coarse Duplicates for %Mo for 2015 Drilling ................................................... 71
Figure 13-1: Bond Ball Mil Work Index ....................................................................................................... 73
Figure 13-2: Copper Feed Grade vs Recovery ............................................................................................. 76
Figure 13-3: Copper Recovery vs Soluble Copper Content ......................................................................... 76
Figure 13-4: 2007 Fleet Model .................................................................................................................... 77
Figure 13-5: Rougher Flotation Recovery of Copper Sulfides ..................................................................... 78
Figure 13-6: Moly Recovery to the Copper Rougher Concentrate ............................................................. 79

Figure 13-7: Fleet Simulated Rougher Flotation Recovery ......................................................................... 80
Figure 13-8: ALS Testwork Recovery vs Mass Pull ...................................................................................... 82
Figure 13-9: Metallurgical Influence of Regrind Product Size .................................................................... 82
Figure 13-10: Graphical Interpretation of Work Index Model (2014) ........................................................ 87
Figure 13-11: Rougher Recovery ................................................................................................................. 88
Figure 14-1: Plan View Showing Drillholes Used ........................................................................................ 91
Figure 14-2: Plan View Showing Major Faults ............................................................................................ 92
Figure 14-3: Plan View of Entire Lithological Model ................................................................................... 93
Figure 14-4: Plan View of Lithological Model for Central Mine Fault Block with Location of Cross-Sections
.................................................................................................................................................................... 94
Figure 14-5: Northwest-Southeast (A-A’) Cross-Section looking Northeast............................................... 95
Figure 14-6: North-South (B-B’) Cross-Section looking East ....................................................................... 95
Figure 14-7: Plan View of Lithological Model for Gold Gulch Fault Block with Location of Cross-Sections97
Figure 14-8: Southwest-Northeast Cross-Sections (A-A’) ........................................................................... 98
Figure 14-9: Southwest-Northeast Cross-Sections (B-B’) ........................................................................... 99
Figure 14-10: Plan View of Grade Shell Models: ≥0.3%TCu (ore) in red; <0.3%TCu and ≥0.1%TCu (low
grade mineralization) in green; and <0.1%TCu (waste) in blue. ............................................................... 100
Figure 14-11: Plan View of Mine and Gold Gulch Fault Block Grade Shell Models: ≥0.3%TCu (ore) in red;
<0.3%TCu and ≥0.1%TCu (low grade mineralization) in green; and <0.1%TCu (waste) in blue. .............. 101
Figure 14-12: Plan View of Mine and Gold Gulch Fault Block Grade Shell Model; ≥0.3%TCu (ore) in red;
<0.3%TCu and ≥0.1%TCu (low grade mineralization), Faults in grey........................................................ 102
Figure 14-13: Plan View of Mine and Gold Gulch Fault Block Grade Shell Model showing ≥0.3%TCu (ore)
in red. ........................................................................................................................................................ 103
Figure 14-14: Northwest-Southeast Cross-Section (A-A’) ≥0.3%TCu in red, <0.3%TCu and ≥0.1%TCu
Grade Shells in green. ............................................................................................................................... 104
Figure 14-15: Southwest-Northeast Cross-Section (B-B’) ≥0.3%TCu in red, <0.3%TCu and ≥0.1%TCu in
green. ........................................................................................................................................................ 104
Figure 14-16: Box Plot with Domain Solids ............................................................................................... 105
Figure 14-17: Plan View of Topographic Solid .......................................................................................... 106
Figure 14-18: Box Plot for Copper Composites by Zone ........................................................................... 107
Figure 14-19: Box Plot for Molybdenum Composites by Zone ................................................................. 108
Figure 14-20: Contact Plots for Copper .................................................................................................... 109
Figure 14-21: Contact Plots for Copper .................................................................................................... 110

Figure 14-22: Contact Plots for Molybdenum .......................................................................................... 111
Figure 14-23: Contact Plots for Molybdenum .......................................................................................... 112
Figure 14-24: Cumulative Frequency Plot for %TCu ................................................................................. 113
Figure 14-25: Cumulative Frequency Plot for %Mo .................................................................................. 113
Figure 14-26: Block Model Bounds ........................................................................................................... 114
Figure 14-27: Plan View of Block Model at Elevation 3050’ with TCu Grades.......................................... 118
Figure 15-1: Floating Cone at $2.75/lb Copper, Used as Guidance for Phase Design Blue Line is the
Patented Claim Boundary ......................................................................................................................... 124
Figure 15-2: Final Pit Design for Mineral Reserve ..................................................................................... 125
Figure 16-1: Location of Phase Designs on the 3860 Bench ..................................................................... 129
Figure 16-2: Pit Slope Design Sectors Map ............................................................................................... 131
Figure 16-3: Mine Plan – Mill Rate of 54,000 TPD (2016) Increased to 56,000 TPD (2017+) ................... 135
Figure 16-4: End of 2016 ........................................................................................................................... 137
Figure 16-5: End of 2017 ........................................................................................................................... 138
Figure 16-6: End of 2018 ........................................................................................................................... 139
Figure 16-7: End of 2019 ........................................................................................................................... 140
Figure 16-8: End of 2020 ........................................................................................................................... 141
Figure 16-9: End of 2022 .......................................................................................................................... 142
Figure 16-10: End of 2025 ......................................................................................................................... 143
Figure 16-11: End of 2030 ......................................................................................................................... 144
Figure 16-12: End of 2038 ......................................................................................................................... 145
Figure 16-13: End of 2039 (After West Dump Reclamation) .................................................................... 146
Figure 17-1: Simplified Pinto Valley Process Flowsheet ........................................................................... 156
Figure 18-1: TSF4 Layout up to 4180 ft elevation (2039).......................................................................... 162
Figure 19-1: Major Uses of Copper: Usage by Region and End-Use Sector - 2013................................... 166
Figure 20-1: Perspective view looking north, -30 degrees at planned LOM waste rock, leaching, and
tailings facilities. Future decommissioned LP (gold), existing and expanded tailings (gray), marginal
grade dumps (blue) and planned LOM waste rock (red) .......................................................................... 178

1 Summary
The purpose of this report is to disclose the updated mineral resource and mineral reserve estimates for
the Capstone Mining Corp. (Capstone) Pinto Valley Mine (PVM) through a planned extension of mining
and milling operations to 2039 from 2026. The 13-year mine life extension will require mine equipment
additions and replacements, a tailings storage facility expansion, and a new waste rock storage facility.
The remaining PVM facilities are adequate to support the mine life extension. Processing throughput
will increase from 54,000 tpd in 2016 to 56,000 tpd in 2017, through to the end of mine life. Permit
amendments will be required from the US Forest Service (USFS) and Arizona Department of
Environmental Quality (ADEQ). The information contained herein has been prepared by Qualified
Persons (QPs) and is aligned with National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (NI 43-101).
Capstone contributed to multiple sections of this report and compiled the report. Consultants
contributing to this report include Amec Foster Wheeler Environment & Infrastructure Inc. (AMEC);
Independent Mining Consultants, Inc. (IMC); Kirkham Geosystems Ltd.; KWM Consulting Inc.; and SRK
Consulting (U.S.), Inc. (SRK). Personnel from each of these companies have signed off as QPs, as defined
in NI 43-101, for their specific sections of the technical report that they are responsible for preparing.
This technical report has an effective date of 01 January 2016. All information and assumptions
discussed in this report were determined as of the effective date. In Section 1, tables and production
statistics are reported in imperial and metric units. In the remainder of the report, imperial and metric
units are used interchangeably and are identified for each table and figure. Cost estimates are based on
2015 US Dollars (US$).
Capstone is a Canadian-based metals mining company committed to the responsible development of
the mine’s assets and surrounding environment. Capstone’s focus is on the production of copper at
three producing mines: Pinto Valley Mine - copper-molybdenum (Cu-Mo) located in Arizona, United
States; the Cozamin Mine - copper-silver-zinc-lead (Cu-Ag-Zn-Pb) in Zacatecas, Mexico; and the Minto
Mine copper-gold-silver (Cu-Au-Ag) in Yukon, Canada. Capstone’s headquarters are in Vancouver,
Canada, and the company is listed on the Toronto Stock Exchange. Further information is available at
www.capstonemining.com.
1.1 Project Description

PVM is an open pit mine producing copper and molybdenum concentrates. The administration, ore
processing, tailings, waste rock storage, and maintenance facilities are located on the property in close
proximity to the pit. The processing facility consists of three crushing stages, ball mills, copper flotation
stages, a molybdenum flotation circuit, and associated thickeners for concentrates and tailings. Current
tailings storage facilities (TSFs) can be expanded to store additional material requirements. An SX-EW
facility is also located on the property and produces copper cathode from heap leaching of low grade
material (see Figure 1-1).

Figure 1-1: Current Pinto Valley Site Facilities (Capstone Mining Corp, 2014)
1.2 Accessibility, Climate Local Resources and Physiography

PVM is located in Gila County approximately 80 miles east of Phoenix, Arizona, and 3 miles north of US
Highway 60 (US 60) on Forest Road (FR) 287. The site can also be accessed from Tucson, Arizona, by
traveling north on State Route 77 (SR 77), then west on US 60.
PVM’s moderate, semi-arid regional climate allows for year-round operation. The average annual
precipitation is 18.92 inches. Average daily temperatures range from average 97°F in July to a low of
34°F in January.
The historic mining towns of Miami and Globe are the closest to PVM, with a total population of
approximately 10,000 residents. Local services are used if available, with the remainder of services
coming from the greater Phoenix area.

The terrain surrounding the mine property is generally mountainous where elevations range from 3,500
ft. to 5,000 ft. above mean sea level.
1.3 History and Ownership

The Globe-Miami district is one of the oldest and most productive mining districts in the United States,
with its first recorded production occurring in 1878. More than 15 billion pounds (lb) of copper have
been produced.
The Pinto Valley mine property was originally owned by Miami Copper Company in 1909, and
transitioned through various owners until the early 1970s when the mine, mill and other infrastructure
was constructed by Cities Service Company. The mine has been owned by Newmont, Magma Copper
and BHP Billiton. BHP Billiton sold the PVM to Capstone in October 2013.
PVM operated continuously from 1974 with the exception of a short shutdown in 1983, and from 1998-
2007 and 2008 to 2012. It has operated continuously since the 2012 re-start.
1.4 Geology and Mineralization

Several mines and numerous prospects have been developed in the Globe-Miami district. Larger mines
in the district are porphyry copper deposits associated with Paleocene (59 megaanni [Ma]–63 Ma)
granodiorite to granite porphyry stocks. The porphyry copper deposits have been dismembered by
faults and affected by later erosion and minor oxidation. Vein deposits and possible exotic copper
deposits are also found within the district.
The primary minerals of the porphyry copper deposits are chiefly pyrite and chalcopyrite, with minor
amounts of molybdenite; gold and silver are recovered as byproducts. Sphalerite and galena occur
locally in very small amounts. Hydrothermal alteration associated with the deposits include potassic,
argillic, sericitic, and propylitic mineral assemblages.
The PVM deposit is a hypogene ore body with chalcopyrite, pyrite, and minor molybdenite as the only
significant primary sulfide minerals. The primary host rock for the PVM porphyry copper deposit is the
Precambrian-age Lost Gulch Quartz monzonite, which is equivalent to the Oracle or Ruin
granite. Formation of the deposit was associated with the intrusion of small bodies and dikes of granite
porphyry and granodiorite.
1.5 Exploration, Sampling and Drilling

Surface mapping and drilling are the main sources of data for the resource estimation.
The pre-2006 PVM drilling programs consists of core, rotary, and churn drillholes. Churn holes defined
much of the early mineralization, which has been mostly mined out. Later drilling was done to infill the
original grid to 200 ft spacing. Drilling that has occurred since the 1986 construction of the original block
model includes 10 core holes and 3 reverse circulation rotary (RC) holes drilled in 1992. From January
1996 to April 1997, 67 RC exploration and infill holes were drilled: 48 RC holes (totaling 29,665 ft) drilled
in 1996 and 19 RC holes (totaling 8,520 ft) drilled in 1997.

Drilling campaigns from 2006 to 2008 had various purposes, including exploration, resource delineation
and verification, and geotechnical drilling. The campaigns included 63 geotechnical holes and 17
piezometers drilled in 2008.
The drilling campaign in 2010 focused on exploration, while the 2011 and 2012 campaigns focused on
infill drilling for resource classification upgrade in support of restarting operations. Ten holes were
drilled in 2010, 40 holes were drilled in 2011, and 64 holes were drilled in 2012.
Since the last update in 2014 an infill RC program consisting of 43 holes aimed at 2016 and 2017
production, as well as 13 geotechnical holes were drilled and assayed. Data from the RC program has
been incorporated into the 2015 block model.
1.6 Mineral Resource

Surfaces and solids were supplied by PVM for the lithology domains, grade shells, and major faults. A 45
ft composite length was used in order to minimize the smoothing of the grades, reduce the influence of
very high-grade samples, and to match the 45 ft pit benches. A maximum radius of influence of 150 ft
was applied to values greater than 1.6% total copper (TCu) and 0.05% Mo.
The average bulk dry density for ore-grade mineralized rock, primarily Lost Gulch Quartz monzonite, is
12.75 ft3/ton. A tonnage factor of 12.75 ft3/ton has been used although the in situ bulk dry densities for
all PVM rock types range from 12.1 ft3/ton for Pinal Schist to 13.0 ft3/ton for Whitetail Conglomerate.
The block model grades for copper and molybdenum were estimated using ordinary kriging. During
grade estimation, search orientations were designed to follow the general trend of the mineralization in
each of the zone domains. The estimation plan includes the following:
 Store the mineralized zone code and percentage of mineralization.
 Estimate the grades for each of the metals with the three mineralization domains and the
granodiorite using ordinary kriging in a single pass in each case.
Include a minimum of 2 composites and a maximum of 16, with a maximum of 4 from any 1 drillhole.
The mineral resources are listed in Table 1-1 for %TCu and %Mo. These mineral resources are listed at a
base-case cutoff grade of 0.17% TCu.

Table 1-1: Mineral Resources at 0.17% TCu Cutoff, after 1 January 2016 (metric units)
Tonnes
Classification %Cu %Mo Contained Cu (M Lbs) Contained Mo (M Lbs)
(millions)
Measured (M) 648 0.34 0.008 4,844 119
Indicated (I) 772 0.26 0.006 4,388 106
Total M & I 1,420 0.30 0.007 9,231 224
Inferred 126 0.25 0.005 687 14
The economic assumptions for the reasonable prospects pit include: $3.30/lb Cu, $10.00/lb Mo, 88% Cu recovery, 50% Mo recovery, $1.50/ton
mining costs, $1.50/ton G&A costs, $5.00/ton milling costs, and a pit slope of 45°.
Note: Summation errors due to rounding.
1.7 Mineral Reserves

The mineral reserve was developed in line with industry guidelines by tabulating the contained
measured and indicated (proven and probable) material inside of the designed pit at the mill cutoff
grades. The schedule utilizes a variable cutoff grade to the mill that fluctuates between 0.17 to 0.22
%TCu, resulting in a low-grade stockpile that is processed at the end of the mine life. Stockpile material
is included in the reserve. The final pit design and the mineral reserve do not include low grade leach
dump material in the economic analysis or mineral reserve.
Table 1-2: Mineral Reserves, Remaining after 1 January 2016 (metric units)
Cutoff Ore
Class
Cu % M tonnes Cu % %Mo
Proven 0.18-0.17 350.1 0.33 0.009
Probable 0.18-0.17 123.7 0.25 0.007
Proven and Probable 0.18-0.17 473.8 0.31 0.009
Economic inputs to the block model were USD$2.75/lb Cu and USD$12.50 Moly
Note: Summation errors due to rounding
The qualified person for the mineral reserve is John Marek of IMC. John Marek did not audit or verify the
block model or the statement of mineral resources. Scientific and technical information about the
mineral reserves is based on forward-looking information. Metal price assumptions, resource modelling
assumptions, factors applied and risks are explained in the relevant sections of this report. Changes in
these could impact the mineral reserve in a positive or negative way.
1.8 Mining Methods and Mine Plan

PVM utilizes conventional open-pit hard rock mining methods, employing drilling, blasting, loading and
hauling to move copper bearing sulfide ore to the primary crusher. The mine plan in this study increases
mine life to 2039. Total mining rates will increase from 42.5 M tonnes in 2016 to 48.5 M tonnes in 2018
and decrease from 2032 to 2039. No significant changes are made to mining equipment fleets. The
areas mined in this study are the south east, east and north walls of the Pinto Valley pit, along with
deepening the pit with every pushback. Waste rock is to be placed on the Main Dump and a new dump
named the West Dump, situated in a valley immediately west of the Main Dump. The mine extraction
plan is shown in Table 1-3 and the mill feed schedule in Table 1-4.

Table 1-3: Mine Extraction Plan (metric units)
Year Cut Off Ore Mined to Mill Ore Mined to Low Grade Stockpile Waste Total Mined
% Tcu M tonnes Tcu % Mo% M tonnes Tcu% Mo% M Tonnes M tonnes
2016 0.18 19.8 0.36% 0.008% 0.0 0.00% 0.000% 22.7 42.5
2017 0.19 20.4 0.34% 0.008% 1.0 0.18% 0.007% 23.5 44.9
2018 0.19 20.4 0.32% 0.011% 1.8 0.19% 0.007% 26.2 48.5
2019 0.17 20.4 0.32% 0.011% 0.0 0.00% 0.000% 28.2 48.6
2020 0.18 20.4 0.35% 0.013% 0.0 0.00% 0.000% 28.1 48.5
2021 0.19 20.4 0.35% 0.008% 0.8 0.19% 0.005% 27.3 48.5
2022 0.18 20.4 0.32% 0.007% 0.0 0.00% 0.000% 28.1 48.5
2023 0.17 20.4 0.29% 0.007% 0.0 0.00% 0.000% 28.1 48.5
2024 0.17 20.4 0.29% 0.008% 0.0 0.00% 0.000% 28.1 48.5
2025 0.17 20.4 0.36% 0.010% 0.0 0.00% 0.000% 28.1 48.5
2026 0.17 20.4 0.40% 0.014% 0.0 0.00% 0.000% 28.1 48.5
2027 0.17 20.4 0.33% 0.014% 0.0 0.00% 0.000% 28.1 48.5
2028 0.17 20.4 0.30% 0.010% 0.0 0.00% 0.000% 28.1 48.5
2029 0.22 20.4 0.28% 0.009% 9.6 0.20% 0.007% 18.5 48.5
2030 0.22 20.4 0.31% 0.009% 1.6 0.20% 0.007% 26.5 48.5
2031 0.18 20.4 0.32% 0.010% 0.0 0.00% 0.000% 28.1 48.5
2032 0.19 20.4 0.31% 0.009% 0.2 0.19% 0.006% 4.1 24.7
2033 0.17 20.4 0.28% 0.008% 0.0 0.00% 0.000% 3.0 23.4
2034 0.17 20.4 0.29% 0.007% 0.0 0.00% 0.000% 3.0 23.4
2035 0.17 20.4 0.27% 0.008% 0.0 0.00% 0.000% 1.4 21.8
2036 0.17 20.4 0.25% 0.008% 0.0 0.00% 0.000% 0.3 20.7
2037 0.17 20.4 0.29% 0.006% 0.0 0.00% 0.000% 0.0 20.4
2038 0.17 9.9 0.28% 0.004% 0.0 0.00% 0.000% 0.0 9.9
2039 0.00 0.0 0.00% 0.000% 0.0 0.00% 0.000% 0.0 0.0
Total 458.9 0.31% 0.009% 15.0 0.20% 0.007% 437.1 910.9

Table 1-4: Mill Feed Schedule
Payable Copper in
Year Mill Feed Mill Head Grade Payable Moly
Concentrate
M tonnes % Cu % Mo M lbs M lbs
2016 19.76 0.36% 0.008% 133.3 1.0
2017 20.44 0.34% 0.008% 130.9 1.4
2018 20.44 0.32% 0.011% 120.0 2.2
2019 20.44 0.32% 0.011% 124.4 2.2
2020 20.44 0.35% 0.013% 134.8 2.6
2021 20.44 0.35% 0.008% 132.2 1.6
2022 20.44 0.32% 0.007% 122.2 1.3
2023 20.44 0.29% 0.007% 110.5 1.3
2024 20.44 0.29% 0.008% 110.5 1.6
2025 20.44 0.36% 0.010% 138.3 2.0
2026 20.44 0.40% 0.014% 153.9 2.9
2027 20.44 0.33% 0.014% 127.4 2.8
2028 20.44 0.30% 0.010% 115.7 2.0
2029 20.44 0.28% 0.009% 106.5 1.7
2030 20.44 0.31% 0.009% 119.1 1.9
2031 20.44 0.32% 0.010% 122.2 2.1
2032 20.44 0.31% 0.009% 118.3 1.8
2033 20.44 0.28% 0.008% 106.1 1.6
2034 20.44 0.29% 0.007% 110.0 1.4
2035 20.44 0.27% 0.008% 102.6 1.6
2036 20.44 0.25% 0.008% 95.2 1.7
2037 20.44 0.29% 0.006% 109.1 1.2
2038 20.44 0.24% 0.006% 90.2 1.2
2039 4.402 0.20% 0.007% 16.0 0.3
Total 473.8 0.31% 0.009% 2,749.4 41.4
Economic inputs were USD$2.75/lb Cu and USD$12.50 Moly, average recoveries 88% Cu, 46% Mo, payable metal 96.5% Cu, 97% Mo.
1.9 Mineral Processing and Metallurgical Testing

The PVM mill consists of a standard three stage crushing, ball mill grinding, flotation and thickening
facilities. Mill throughput is estimated to increase from 54,000 tpd in 2016 to 56,000 tpd in 2017
through improvements in maintenance and operating practices. No changes to the mill flowsheet are
necessary to obtain the increased throughput.
The PV2 and PV3 studies performed a significant amount of metallurgical test work which included:
o Bond ball mill work index tests
o Mineralogy tests
o Open and locked cycle flotation tests
Results from these tests validated that the processing parameters for the current ore are adequate to
estimate recoveries in future push backs. No changes to the plant are required to successfully recover
copper-moly from the extended reserve base.

1.10 Project Infrastructure
Site infrastructure in place is adequate to support mining and milling operations through 2039 with the
exception Tailings Storage Facility #4 (TSF4), which will need to be raised 175 ft from the current
permitted height to accommodate the increased storage requirements. Increasing TSF4 in elevation
will require permit amendments and additional land requirements.
1.11 Environment
PVM has well-established environmental, health/industrial hygiene, and safety procedures and
protocols. These procedures adhere to federal and state requirements and to internal Capstone
guidance to reduce impacts to the environment and to provide a safe work environment for employees
and contractors. Numerous site characterization studies have been completed at PVM to support
operations, environmental permitting efforts, closure planning, and other investigations. PVM is subject
to health and safety regulations under the supervision of the Mine Safety and Health Administration
(MSHA), Arizona State Mine Inspector’s Office (ASMIO), Arizona Department of Transportation, and
other federal and state agencies. Capstone is committed to its employees and to the communities in
which it works to operate under high standards of corporate safety, environmental and social
responsibility. PVM has established relationships with the local communities and stakeholders;
communication channels are in place for direct interaction with stakeholders as required.
1.12 Closure Plan and Costs

Planning for site closure and the post-closure monitoring period, and preparing a demonstration of
financial assurance for the company to address closure and post closure costs is managed under the
Mined Land Reclamation Plan (MLRP) and Aquifer Protection Permit (APP) programs administered by
ASMIO and the Arizona Department of Environmental Quality (ADEQ), respectively. The MLRP identifies
post-mining land uses and addresses post-closure public safety, reclamation, and revegetation of
disturbed lands. The APP closure plan focuses on reducing post closure groundwater impacts through
engineering designs and controls, site inspections, and groundwater monitoring. Closure commitments
are also in place for disturbance on U.S. Forest Service (USFS) lands including roads, pipelines, and
powerlines.
The costs associated with closure and reclamation of PVM are estimated at $143.5 million (M) spread
out over a 30 year post-closure period (2039 – 2068). Direct and indirect closure costs and post-closure
monitoring and maintenance costs are designated according to the requirements of each permit
program.
1.13 Permitting
The major authorizations permitting and governing operations for PVM include an APP, Air Quality
Permit, Arizona Pollutant Discharge Elimination System (AZPDES) Individual permit, and Multi-Sector
General Permit (MSGP) for storm water discharge all issued by ADEQ, a MLRP approved by ASMIO, and a
Plan of Operations (POO) approved by the USFS.

PVM has all of the necessary permits to conduct mining activities through LOM with the exception of
renewal and consolidation of land use authorizations that are being developed for the USFS and a future
amendment to the APP to address the decommissioning and closure of the leaching facilities and the
construction of a future planned facilities. The POO compiles several special use permits and other
authorizations for PVM to use USFS lands adjacent to the private lands where mining activities occur.
The proposed expansion of the existing tailings facility and pit onto USFS lands will be included in the
land use renewal and consolidation Plan of Operations application and will initiate National
Environmental Policy Act (NEPA) reviews. The need for a Clean Water Act Section 404 Permit will be
determined during that time. These reviews consider input from PVM, USFS, other regulatory agencies
and the public.
1.14 Operating Cost and Sustaining Capital

The LOM operating cost for PVM is projected to be $9.83/tonne milled. These costs do not include
TC/RC and concentrate transportation costs. The operating costs are detailed in Table 1-5.
Table 1-5: Unit Cost Summary
Item Units Life of Mine Average Cost
Mining Cost $/t moved 1.67
Mining Cost $/t milled 3.25
Milling Cost $/t milled 5.10
G&A Cost $/t milled 1.48
Total $/t milled 9.83
Life of mine average C1 cost including TC/RC and concentrate transportation cost is estimated to be
$2.05/lb of payable copper.
The LOM sustaining capital costs have been estimated for the project operating until 2039 and are
summarized in Table 1-6. Including capital into the C1 calculation results in an average all-in cost of
$2.29/lb copper payable for the life of the project.
Table 1-6: Capex Cost Summary
Item Units Life of Mine Total
Site Sustaining Costs US$M 191.6
Mine Equipment, Purchases and Rebuilds US$M 182.6
Mine Equipment Component Replacements US$M 253.1
Tailings Upgrades US$M 24.0
Total Capex US$M 651.3
1.15 Economic Analysis

Capstone Mining Corp. is not required to disclose the results of the economic analysis, as per Item 22,
Form 101F1 of the National Instrument 43-101 “Standards of Disclosure for Mineral Projects”.

1.16 Interpretation and Conclusions
The major conclusions from the study are:
 Industry standard methods for estimating resources, reserves, operating and sustaining capital
costs have been used.
 Mineral resources have been estimated at 1,420 million tonnes of measured and indicated
material averaging 0.30% total copper and 0.007% molybdenum.
 Mineral reserves have been estimated at 473.8 M tonnes of combined proven and probable
material averaging 0.31% total copper and 0.009% molybdenum.
 Expansion of the tailings and waste storage facilities are required to support the extended life of
mine plan, which will require modified permits and additional land.
 The two major items required to execute the extended mine life are an amendment to the
current APP and approval of amended consolidated US Forest Service POO.
While there are significant risks with mining projects, many of those risks are mitigated by being in
production and the required infrastructure already in place. The major risks remaining that could affect
the execution of this study include:
 Financial market conditions, including supply, demand and prices of base metals, goods and
services.
 Regulatory and permitting environment complexities, changes and delays
 Droughts and/or regulatory changes impacting water supply
1.17 Recommendations
Key recommendations have been noted below:
 Actual vs predicted ore reconciliations should be carefully evaluated in the short and medium
term to determine if additional drilling is required.
 Ensuring the recommended pit slope angles are achieved is one of the primary keys to success
of this plan. This is to be accomplished through ongoing geotechnical mapping and monitoring
the effectiveness of slope depressurization. Drilling programs may be required to increase
confidence levels of predictions.
 Continue efforts to improve operating efficiency of all equipment.
 An evaluation of bottlenecks limiting production above 56,000 tonnes per day.
 Monitor phreatic levels in the tailings storage facilities to ensure they are within design
standards.
 Initiate environmental analyses and the permitting process in 2016.

2 Introduction
2.1 Overview
This technical report was prepared by Capstone Mining Corp. to disclose mineral resources and reserves
and operational plans for the mine. The technical report conforms to NI 43-101 standards with an
effective date of 01 January 2016.
Capstone is a leading intermediate exploration and mining company with a focus on copper production.
Capstone is based in Vancouver, British Columbia, and owns three operating mines located throughout
North America. These include PVM in Miami, Arizona; Cozamin Mine in Zacatecas, Mexico; and Minto
Mine in Yukon, Canada. Capstone is listed on the Toronto Stock Exchange under the symbol ‘CS’.
2.2 Qualified Persons

This technical report has been prepared by multiple parties and compiled by Capstone. The following
QPs, as defined in NI 43-101, have undertaken work in the preparation of the technical report:
Table 2-1: Qualified Persons Responsibilities by Section
Qualified Person Designation(s) Company Section(s)
1.1-1.3, 1.14-1.17, 2 - 6,
Gregg Bush P. Eng Capstone Mining Corp. 18.1, 19, 21.1.2, 21.1.3,
21.2.1, 22, 24, 25, 26
Corolla Hoag CPG, SME-RM SRK Consulting (U.S) Inc. 1.11, 1.12, 1.13, 20, 23
Amec Foster Wheeler Environment &
Tony Freiman PE 1.10, 18.2-18.7, 21.2.3
Infrastructure, Inc.
1.4-1.6, 7, 8, 9, 10, 11, 12,
Garth Kirkham P.Geo, FGC Kirkham Geosystems Ltd.
14
Kenneth W. Major P. Eng KWM Consulting Inc. 1.9, 13, 17
1.7, 1.8, 15, 16, 21.1.1,
John Marek PE, SME-RM Independent Mining Consultants, Inc.
21.2.2
2.3 Site Visits

All Qualified Personnel listed in Section 2.2 have visited PVM numerous times. Recent site visits were
performed as follows.
Mr. Gregg Bush has visited PVM numerous times since Capstone Mining Corp. purchased the mine in
October 2013. His latest visit was from 31 August to 3 September 2015 where environmental, safety,
operational and cost performance were reviewed.
Ms. Corolla Hoag has visited PVM numerous times since 2006. Her latest site visit was on 21 December
2015 to review progress of a drilling and core logging program to verify hydrogeologic properties of the
faults flanking the open pit as inputs to the updated groundwater model.

Mr. Tony Freiman has been involved in PVM since 1997 and visits PVM at least on a quarterly basis to
conduct tailings embankment audits. His latest visit was on 22 December 2015 to conduct a quarterly
audit and discuss future work scopes with PVM staff.
Mr. Garth Kirkham most recently visited the property on the 16th and 17th of April 2015 and previously
on 14 May 2013. In his trips, he has inspected the mine site infrastructure, core logging and processing
facilities, pit, outcrop and core storage facilities.
Mr. Ken W. Major last visited PVM on 21 October 2015 to inspect the fine crushing circuit and discuss
recent operational achievements and obtain recent data.
Mr. John Marek last visited PVM on 19 June 2015 to meet with PVM engineering staff to discuss new
mine plans, equipment productivities and costing estimates.
2.4 Sources of Information

The information included in this technical report is based on data provided by PVM, Capstone, public
information, previous reports, and industry standards. Sources of this data are diamond drilling,
blasthole drilling, surveys, geotechnical information and actual historic production. Key documents that
have been relied upon are listed in Section 27.
2.5 Units of Measurement

Measurements are stated in imperial and metric units. Tables and graphs are clearly labeled with the
units of measurement used.
2.6 Frequently used Acronyms, Abbreviations, Definitions and Units of

Measure
The tables in this section provide standard references used in this report. Frequently used abbreviations
and acronyms are listed in Table 2-2.
Table 2-2: Acronyms and Abbreviations
Acronym /
Name
Abbreviation / Symbol
ADEQ Arizona Department of Environmental Quality
ADWR Arizona Department of Water Resources
Ag silver
AMEC Amec Foster Wheeler
APP Aquifer Protection Permit
ASCu acid-soluble copper
ASMIO Arizona State Mine Inspector’s Office
AZPDES Arizona Pollutant Discharge Elimination System
BHP BHP Billiton Ltd.
BLM Bureau of Land Management
BWi Bond ball work index

Acronym /
Name
CAA Clean Air Act
Capstone Capstone Mining Corp.
CIM Canadian Institute of Mining, Metallurgy and Petroleum
Cu copper
Cu-Mo copper-molybdenum
CWA Clean Water Act
ESA Endangered Species Act
F Fahrenheit
FLEET Flotation Economic Evaluation Tool
FMI Freeport-McMoRan Copper & Gold Inc.
FOB fine ore bin
FOS factor of safety
FR Forest Road
ft foot
G&A general and administrative
gpm gallons per minute
hp horsepower
HSEC Health, Safety, Environment, and Community
IMC Independent Mining Consultants, Inc.
IT information technology
K tons kiloton (1,000 short tons)
K tonne kilotonne (1,000 metric tonnes)
kW kilowatt
kWh kilowatt hour
lb pound
LOM life-of-mine
M million
Ma megaannus (million years)
MBWi modified Bond work index
mi2 square miles
MLRP Mined Land Reclamation Plan
mm millimeter
Mo molybdenum
MoS2 molybdenum disulfide
MSG Multi-Sector General
MSHA Mine Safety and Health Administration
M tonnes million tonnes (metric)
M tons million short tons
mtpd Metric tonnes per day
NEPA National Environmental Policy Act

Acronym /
Name
NI 43-101 National Instrument 43-101 – Standards of Disclosure for Mineral Projects
NPV net present value
NSR net smelter return
oz troy ounce
PLS pregnant leach solution
POC point-of-compliance
PV2 Pinto Valley Phase 2 Study (PFS – mine life to 2026)
PV3 Pinto Valley Phase 3 Study – mine life to 2039
PVM Pinto Valley Mine
QA/QC quality assurance / quality control
QP Qualified Person
Quadra Quadra FNX Mining Ltd.
RC reverse circulation
ROM run-of-mine
RQD rock quality designation
Skyline Skyline Assayers and Laboratories
SMARRCO San Manuel Arizona Railroad Company
SMU selective mining unit
SR 77 State Route 77
SRK SRK Consulting (U.S.), Inc.
SRP Salt River Project
SWPPP Stormwater Pollution Prevention Plan
SX-EW solvent extraction and electrowinning
t metric tonne
TC/RC treatment charge / refining charge
TCu total copper
t/d metric tonnes per day
TNF Tonto National Forest
ton short ton (2000 lb)
tonne metric tonne (1000 kg)
tpd tonnes per day
tph tonnes per hour
tpoh tonnes per operating hour
TSF tailings storage facility
US$ US Dollars
US 60 US Highway 60
USACE US Army Corps of Engineers
USFS US Forest Service
USFWS US Fish and Wildlife Service
V volt

Acronym /
Name
VFD variable frequency drive
WRI WestLand Resources Inc.
WWTP wastewater treatment plant
yd yard
yr year
Zn zinc
~ approximately
° degrees
µm microns
σ standard deviation
A glossary of geological and mining terms is provided in Table 2-3.
Table 2-3: Glossary
Term Explanation
Alluvium Clay, silt, sand, gravel, or similar material deposited by running water.
Hydrothermal alteration that introduces clay minerals, including kaolinite,
Argillic
smectite, and illite.
Assay The chemical analysis of mineral samples to determine the metal content.
Biotite Common phyllosilicate mineral within the mica group.
Bornite A copper iron sulfide mineral with a chemical composition of Cu5FeS4.
A rock composed of broken fragments of minerals or rock cemented
Breccia
together by a fine-grained matrix.
Capital expenditure All expenditures that are not classified as operating costs.
Chalcopyrite A copper iron sulfide mineral with a chemical composition of CuFeS2.
A unit-less statistical measure of the dispersion of the data set normalized to
Coefficient of variation
the mean.
Collar The mouth or opening of a borehole.
A combination of more than one sample result to provide an average result
Composite
over a larger distance.
A metal-rich product resulting from a mineral enrichment process such as
Concentrate gravity concentration or floatation, in which most of the desired mineral has
been separated from waste material in the ore.
Cretaceous A geological period from 145 Ma to 66 Ma.
The initial process of reducing ore particle size in order to render it more
Crushing
amenable for further processing.
The level of mineral in an ore below which it is not economically feasible to
Cutoff grade
mine it.
Diabase A fine-grained mafic igneous rock with fine plagioclase crystals.
Dilution Unwanted waste that is mined with ore.
Dip The angle of drilling (or of a structure) relative to horizontal.
Disulfide A sulfide containing two atoms of sulfur in its molecule or empirical formula.

Term Explanation
A transitional area of vegetation between two different plant communities,
Ecotone
such as forest and grassland, with some characteristics of each.
Geologic epoch (56 Ma–33.9 Ma). A subpart of the Paleogene period (23.03
Eocene
Ma–66 Ma).
Fault The surface of a fracture along which movement has occurred.
Galena A natural mineral form of lead sulfide, with a chemical composition of PbS.
A nonmetallic or worthless metallic mineral associated with the ore
Gangue
minerals.
General Mining Law of US law that authorizes and governs prospecting and mining on federal public
1872 lands.
Grade The measure of concentration of a mineral within mineralized rock.
Diagrammatic representation of data distribution by calculating the
Histogram
frequency of occurrence.
Hypogene Applied to mineral deposits or ore deposits formed by ascending hot waters.
Igneous Primary crystalline rock formed by the solidification of magma.
Joint Ore Reserves Committee. A professional code of practice that sets
JORC minimum standards for the public reporting of mineral exploration results,
mineral resources, and ore reserves.
Statistical concept in which data at certain locations help to estimate a value
for a point that has not been sampled. Kriging weighs known grades such
Kriging
that variation of the estimation is minimized and the standard deviation is
equal to zero.
Lithological Geological description pertaining to different rock types.
Mean Arithmetic average.
A Mineral Reserve is the economically mineable part of a Measured and/or
Indicated Mineral Resource. It includes diluting materials and allowances for
losses, which may occur when the material is mined or extracted and is
defined by studies at Pre-Feasibility or Feasibility level as appropriate that
include application of Modifying Factors. Such studies demonstrate that, at
Mineral Reserve the time of reporting, extraction could reasonably be justified. The reference
point at which Mineral Reserves are defined, usually the point where the ore
is delivered to the processing plant, must be stated. It is important that, in
all situations where the reference point is different, such as for a saleable
product, a clarifying statement is included to ensure that the reader is fully
informed as to what is being reported.
A Mineral Resource is a concentration or occurrence of solid material of
economic interest in or on the Earth’s crust in such form, grade or quality
and quantity that there are reasonable prospects for eventual economic
Mineral Resource extraction. The location, quantity, grade or quality, continuity and other
geological characteristics of a Mineral Resource are known, estimated or
interpreted from specific geological evidence and knowledge, including
sampling.

Term Explanation
The process by which ore is crushed, ground, and subjected to physical or
Milling chemical treatment to extract the valuable metals to a concentrate or
finished product.
A silvery-white, very hard, metallic element in the chromium group. Used in
Molybdenum
nickel-based alloys that are heat- and corrosion-resistant.
The variability in the results of a sample taken repeatedly from the same
Nugget
location.
Pluton A body of igneous rock that cools below the surface of the earth.
In geostatistics, a population formed from grades having identical or similar
Population characteristics. Ideally, one given population is characterized by a linear
distribution.
Porphyry An igneous rock consisting of large-grained crystals in a fine-grained matrix.
Protore The rock below the sulfide zone of a supergene enrichment deposit.
Pyrite An iron sulfide with the chemical composition of FeS2.
Specimen with analytically determined grade values for the components
Sample
being studied.
Pertaining to rocks formed by the accumulation of sediments, formed by the
Sedimentary
erosion of other rocks.
Sill The variation value at which a variogram reaches a plateau.
Lime-bearing siliceous rock produced by the metamorphic alteration of
Skarn
limestone or dolomite.
A high-temperature pyrometallurgical operation conducted in a furnace, in
which the valuable metal is collected to a molten matte or doré phase and
Smelting
separated from gangue components that accumulate in a less dense molten
slag phase.
Sphalerite The chief zinc sulfide mineral with a chemical composition of ZnS.
Stockwork An interconnected network of veins.
The direction of line that is formed by the intersection of strata surfaces
Strike
with the horizontal plane, always perpendicular to the dip direction.
Sulfide A sulfur-bearing mineral.
Relating to the enrichment of mineral deposits by solutions moving
Supergene
downward through the rocks.
Tailings Finely ground waste rock from which valuable minerals have been extracted.
Thickening The process of concentrating solid particles in suspension.
Variation In statistics, the measure of dispersion around the mean value of a data set.
A graph that displays the variability of an element by increasing the spacing
Variogram
between samples.
Vein A sheet-like body of crystallized minerals intruded into a host rock.
Vug A small cavity in rock, usually lined with a crystalline mineral incrustation.

3 Reliance on Other Experts
This technical report has been prepared by QPs and employees of Capstone on behalf of Capstone. The
QPs have relied on Capstone for legal, tax, permitting, topographic surveys, operating and capital costs
information. Where possible, this information has been verified, and there is no reason to believe that
information has been withheld that would affect the conclusions of the report.

4 Property Description and Location
PVM owns approximately 9.5 square miles (mi2) of contiguous patented land, about 330 unpatented
mining claims around the perimeter of the patented land and a 27 acre ranch including 35,000 acre
grazing allotment with the US Forest Service.
4.1 Location
This property is located at the west end of the Globe-Miami mining district, approximately 11 miles west
of Globe and 80 miles east of Phoenix, Arizona, at 33°23′32″ N and 110°58′15″ W (Figure 4-1).
Figure 4-1: Pinto Valley Mine Location Map (Google Maps, 2015)
4.2 Tenure, Ownership and Encumbrances

PVM owns approximately 9.5 square miles (mi2) of contiguous patented land and holds about 330
unpatented mining claims around the perimeter of the patented land.
PVM is a combination of fee land, patented mining and mill site claims, and unpatented mining and mill
site claims. As a whole, the land supports open-pit mining, ore processing, tailings storage, waste rock
disposal, and the operation of an SX-EW plant. The unpatented mining claims and mill sites are

accessible under the provisions of the US General Mining Law of 1872, subject to approval from the
USFS after the completion of an environmental analysis under NEPA. The document is supported by a
proposed Plan of Operations governing portions of the property. Use of the fee lands and patented
mining claims and mill sites are governed by an MLRP and an APP, both issued by the ADEQ.
The core of PVM consists of 69 patented lode mining claims. Also included in the property are 53
patented mill sites. Adjacent to and nearby the patented claims are 329 unpatented lode mining claims
and mill sites. Most of the unpatented mining claims and mill sites were staked on federal land
administered by the USFS, but a limited number of the unpatented mining claims and mill sites are on
federal land administered by the Bureau of Land Management (BLM). Seven parcels of fee (private) land
are associated with the property.
Capstone owns the patented mining claims and fee land parcels, which are private lands that provide
the owner with both surface and mineral rights. The fee lands are located by legal description and
recorded at the Gila County Recorder’s Office. The patented mining claims, mill sites, and fee lands are
subject to annual property taxes. As long as the property taxes are paid annually on these claims, there
is no expiration date.
4.3 Environmental Liabilities

PVM is an existing mine with existing environmental liabilities. These are described in Section 20
Environmental and estimates for closure and reclamation costs are included in the report.
4.4 Permitting
All required permits for current operation to 2026 have been obtained and are current except for the
USFS consolidated Plan of Operations, which is in the process of being amended. New permits are
required to extend the operation to 2039. Refer to Section 20 – Environmental Studies, Permitting, and
Social or Community Impact for detailed permit information, including a list of required permits. The
current key environmental items required to extend operations to 2039 are a modified:
 Expansion Plan of Operations, and
 Aquifer Protection Permit (APP) to permit the increased waste rock storage, a new waste rock
storage and expanded tailings facilities.
4.5 Royalties
There are 30 unpatented lode claims located outside of the PVM property boundary that have a 2% net
smelter return (NSR) royalty. The proposed mine plan does not impact those claims, and as such, no
royalty payments are expected.

5 Accessibility, Climate, Local Resources, Infrastructure and
Physiography
5.1 Accessibility
PVM is located in a mountainous region in southeastern Arizona, 6 miles west of the town of Miami and
13 miles northeast of the town of Superior.
Primary road access to the mine is along US 60, which runs east and west 3 miles south of the mine site.
The highway’s maximum elevation (4,600 ft) occurs just west of PVM.
FR 287 provides a paved connection from US 60 to the mine security gate. This route also serves as the
main access for the neighboring Carlota Mine, owned by KGHM International Ltd. The USFS retains
responsibility and liability for this public road.
geology.com 2014
Figure 5-1: Pinto Valley Mine Location

5.2 Climate and Topography
PVM’s moderate, semi-arid regional climate allows for year-round operation. The average annual
precipitation is 18.9 inches and falls in a bimodal pattern. Most rainfall occurs during the winter and
summer months, with dry periods in the spring and fall. May and June are typically the driest months of
the year.
The average annual maximum temperature for the period of record is 77°F. July is the warmest month,
with an average maximum temperature of 97°F. The average annual minimum temperature for January,
the coolest month, is 34°F.
The terrain surrounding the mine property is generally mountainous. The Pinto Valley Mine elevations
range from about 3500 ft (1,067) m to 5000 ft (1,524 m) above mean sea level.
5.3 Local Resources and Infrastructure

Miami and Globe are the main towns in the area. The largest number of jobs in the area are generated
by mining related activities. The communities are supported by appropriate medical, fire, police, public
works, transportation and recreational facilities. Medical facilities are available at the Cobre Valley
Community Hospital located in Miami. Fire, police, public works, transportation, and recreational
facilities are in place and fully functioning. The community has an adequate supply of permanent and
temporary housing to accommodate the Pinto Valley Mine's current workforce.
5.4 Physiography
PVM is located in east-central Arizona, in the structural transition zone between the Sonoran section of
the Basin and Range physiographic province to the south-southwest and the Colorado Plateau to the
north. The terrain surrounding the mine property is generally mountainous, dominated by sharp
landforms and prolific exposures of a variety of bedrock formations present in the region.
PVM lies entirely along the eastern flank of Pinto Creek, with numerous southwest-trending to
northwest-trending ephemeral Pinto Creek tributaries crossing the property. Most of the headwaters of
these tributaries originate along a regional surface water divide that runs north to south near the
eastern PVM property line. All surface water runoff from the site ultimately flows into Pinto Creek, just
west of the boundary of the property. Pinto Creek flows from the south to the north into Roosevelt
Lake, an artificial impoundment constructed along the Salt River.
PVM is near the boundary of areas mapped as the Interior Chaparral biotic community and the Arizona
Upland subdivision of Sonoran desert scrub biotic community.

6 History
The Globe-Miami district is one of the oldest and most productive mining districts in the United States,
with its first recorded production occurring in 1878. Since that time, more than 15 billion pounds of
copper have been produced in the Globe-Miami mining district. Prior to the construction of PVM, a
chalcocite-enriched zone of the deposit was mined from 1943 until 1953 as the Castle Dome
underground mine.
The Pinto Valley open pit mine and concentrator went into production in 1974. The SX-EW plant began
processing PLS from the leach dumps in 1981. In February 1998, mining and milling operations were
suspended and environmental permits were maintained during the suspension of operations, as were
the water and electrical systems. SX-EW facilities and cathode copper production continued during the
suspension of mining and milling operations.
The mine has had two restarts since the 1998 shutdown. The mine resumed sulfide operations in mid-
2007 for 18 months to January 2009 and then went into care and maintenance with only leaching
operations continuing. The second restart began in December 2012 and included extensive
rehabilitation of the site and purchase of a new mining fleet. PVM produced 143 M lbs of copper in
2014 and 134 M lbs of copper in 2015.
Ownership of Pinto Valley has changed numerous times since its inception. At the time of construction
and commissioning, it was owned by Cities Service Company, who had recently merged with Tennessee
Corporation. Occidental Petroleum Corporation acquired Cities Service Company in late 1982 and sold
the Miami operations to Newmont Mining Corporation in 1983. At this time, the company's name was
changed to Pinto Valley Copper Corporation. In 1986, Newmont merged the Pinto Valley Copper assets
into Magma Copper Company holdings, and Pinto Valley Copper became the Pinto Valley Mining
Division of Magma Copper Company. In 1995, Broken Hill Proprietary Company Limited purchased
Magma Copper Company. With the merger of Broken Hill Proprietary Company Limited and Billiton in
2001, the Pinto Valley Mining Division became Pinto Valley Operations of BHP. In 2013, Capstone
purchased Pinto Valley Operations, now referred to as Pinto Valley Mine

7 Geological Setting and Mineralization
PVM is located within the Globe-Miami mining district of central Arizona. Several mines and numerous
prospects have been developed in the area. Larger mines in the district are porphyry copper deposits
associated with Paleocene granodiorite to Granite Porphyry stocks. The porphyry copper deposits have
been dismembered by faults and affected by later erosion and minor oxidation. Vein deposits and
possible exotic copper deposits are also found within the district.
The Globe-Miami district contains igneous, metamorphic, and sedimentary rocks of Precambrian,
Paleozoic, Tertiary, and Quaternary age. Precambrian basement rocks largely consist of Early
Proterozoic Pinal Schist (~1700 Ma) intruded by granites correlative with peraluminous two-mica granite
batholiths that comprise the Proterozoic basement rocks throughout southern Arizona and New Mexico.
The Late Proterozoic Apache Group consists of (from oldest to youngest): the Pioneer Formation,
including the basal Scanlan Conglomerate; the Dripping Spring Quartzite, including the Barnes
Conglomerate; the Mescal Limestone; and, minor basalt closely associated with the Mescal. These units
are intruded by Apache Diabase sills of various thicknesses.
Paleozoic rocks in the district are the Cambrian Troy Quartzite, Devonian Martin Limestone,
Mississippian Escabrosa Limestone, and Pennsylvanian to Permian Naco Formation.
A large pluton of Schultze Granite was intruded into the Precambrian and Paleozoic wall rocks. Near the
northern-most exposures at the Inspiration mineral deposit, it has various textures and compositions
that have been called Granodiorite, Quartz Monzonite, and Porphyritic Quartz Monzonite. A separate,
Granite Porphyry has been mapped at Pinto Valley, Copper Cities, Diamond H, and Miami East, and is
seen near the vein-controlled mineralization at Old Dominion.
Tertiary sedimentary and volcanic rocks cover the mineralized units. The Whitetail Conglomerate was
formed as a result of regional uplift which contains weathered clasts of older rocks in a red iron oxide-
rich, very fine-grained matrix. A Miocene ash-flow tuff, known as the Apache Leap Tuff, covered the
area following the Whitetail Conglomerate, and further Basin and Range faulting and subsequent
erosion produced the Tertiary to Quaternary Gila Conglomerate from all older rocks. On the west side
of the Pinto Valley open pit, the Gila Conglomerate contains a basalt sill.
The hydrothermal ore deposits in the district comprise vein deposits and typical porphyry copper
deposits. On the basis of predominant metals, the vein deposits can be further divided into copper
veins, zinc-lead veins, zinc-lead-vanadium-molybdenum veins, manganese-zinc-lead-silver veins, gold-
silver veins, and molybdenum veins. The primary minerals of the porphyry copper deposits are chiefly
pyrite and chalcopyrite with minor amounts of molybdenite; gold and silver are recovered as by-
products. Sphalerite and galena occur locally in very small amounts. Silicate alteration associated with
the deposits includes potassic, argillic, sericitic, and propylitic alterations.
The deposit is a hypogene ore body with chalcopyrite, pyrite, and minor molybdenite as the only
significant primary sulfide minerals. It is the underlying protore of the chalcocite-enriched Castle Dome
deposit that was exhausted in 1953 (Peterson et al., 1951).
The primary host rock for the porphyry copper deposit is the Precambrian-age Lost Gulch Quartz
Monzonite, which is equivalent to the Oracle Granite or Ruin Granite (Breitrick and Lenzi, 1987).

Formation of the deposit was associated with the intrusion of small bodies and dikes of granite porphyry
and granodiorite that are of similar composition and age as the Schultze Granite (~61.2 Ma). Copper
mineralization has been dated at 59.1 Ma (Creasey, 1980).
Primary sulfide ore minerals consist of pyrite, chalcopyrite, and minor molybdenite that occur in veins
and microfractures, and less abundantly as disseminated grains, predominantly in biotite sites. The ore
zone grades outward into a pyritic zone with higher total sulfide content, and the ore zone grades
inward toward the low-grade core, which has lower total sulfides. Molybdenum distribution generally
reflects copper distribution, with higher molybdenum values usually found in the higher-grade copper
zones.
Sulfide deposition is controlled to some extent by the host rock. For the most part, the host is Lost
Gulch Quartz Monzonite and porphyritic quartz monzonite, which are similarly altered and mineralized.
The sulfide content decreases in Precambrian aplite intrusions. Aplite usually contains less than 0.25%
copper, whereas adjacent quartz monzonite may have as much as 0.6% copper. The deficiency of
copper in aplite is probably due to the absence of biotite, which makes up approximately 7% of quartz
monzonite. Disseminated chalcopyrite shows an affinity for biotite, where it is seen to be either
disseminated through the biotite or partially replacing it. Additional chalcopyrite is present in veins that
cut both rock types.
Small intrusions of granite porphyry extend beyond the main mapped unit mimicking the pit outline.
While quartz monzonite constitutes ore (more than 0.3% copper), the granite porphyry does not usually
contain ore grades (~0.15%–0.2% copper). Granite porphyry contains sulfide veins, but generally lacks
disseminated sulfides in biotite sites.
The shell has the appearance of a hook in plan view and mimics the pit outline. Rock located south of
the ore has decreasing sulfide content and numerous barren quartz veins. This area has been
interpreted as a low-grade core, and this low-grade zone corresponds spatially with the granite
porphyry, which is seen as a poor lithologic host for ore-grade mineralization elsewhere in the deposit.
Rock located north of the ore has progressively more abundant, late-stage quartz-pyrite-sericite veins.
The South Hill Fault cuts the ore shell and associated alteration to the south. The shallow, dipping Flat
Fault cuts off the ore beneath the southern limb of the grade shell. The sections suggest that the
original configuration of the copper zone was that of a distorted, inverted bowl, with its long axis striking
approximately N80E.
The deposit is bound by post-mineral faults. The South Hill Fault is on the south side of the deposit, the
Jewel Hill Fault is on the east side, and the Gold Gulch Fault is on the west side. Minor post-mineral
normal displacement has taken place on the Dome Fault, a pre-mineral structure that strikes
northeasterly across the north limb of the deposit.
Diabase forms thin dikes in pit exposures. These dikes commonly contain higher copper content than
the surrounding quartz monzonite. In the eastern part of the deposit, a diabase sill lies at the top of the
ore; west of the Gold Gulch Fault, diabase is mineralized by pyrite and chalcopyrite veins with abundant
magnetite near mineralized granite porphyry.

A geological mapping exercise of PVM was conducted in early 2012 using the Anaconda method,
producing three geographic information system-registered layers showing geology, alteration style, and
mineralization.
7.1 Local Geology and Alteration

The following sections describe the main rock, alteration, and mineralization types on site. Figure 7-1
shows PVM geology in plan view. Figure 7-2 illustrates the generalized columnar sections of
sedimentary and volcanic rocks for the Castle Dome (i.e. PVM) area.
BHP 2012
Figure 7-1: Pinto Valley Mine Geology Plan

Peterson et al., 1951
Figure 7-2: Generalized Columnar Lithology Sections for the Castle Dome Area

7.1.1 Pinal Schist
Lower Precambrian Pinal Schist is a fine-grained, well-bedded sediment dominated by biotite, lesser
muscovite, and quartz, and in some areas, such as south of the South Hill Fault, bears garnet and
chlorite. Grain sizes range from coarse quartz sericite schist to fine-grained quartz, sericite, and chlorite
schist, which at times display magmatic segregation of biotite and quartz-rich seams up to 0.6 inches
wide. The rock is extensively deformed, bearing tight to isoclinal folding and faulted extensively by
various intrusive events.
7.1.2 Dripping Spring Quartzite

Precambrian Dripping Spring Quartzite contains a range of internal variation, from upper coarse- to
medium-grained quartzite with cross bedding to lower thinly laminated fine-grained, well-sorted
sediments at the base. This unit is typified by variably colored beds of fine sediment that display the
well-sorted nature of the rock, which preserves current direction and energy regimes. Beds range from
red brown to red-purple to purple-black, alternating with thin beds of arenaceous shale.
7.1.3 Mescal Limestone

Mescal Limestone, a sedimentary unit, was observed mainly in the northwestern part of the study area.
It is composed of limestones, dolomites, and large amounts of chert. This Precambrian unit overlies the
Pinal Schist and is overlaid by the Precambrian basalt.
7.1.4 Precambrian Basalt

Precambrian basalt, a basic volcanic unit, was recognized in the northern limit of the PVM tenements.
This rock is black, with vesicles and some calcite calcedonic amygdales. This unit overlies the Mescal
Limestone and is covered by the Troy Quartzite.
7.1.5 Troy Quartzite

Troy Quartzite, a Cambrian unit, is a distinct marker unit underlying the Martin Limestone, with
unconformable boundaries separating upper and lower limestone units. Welded by cherts and siliceous
cements, this fine-grained sediment is very resistant to weathering; therefore, it forms ridges and
escarpments adjacent to limestone units. Where outcropped, the quartzite is a well bedded, well-
sorted unit that forms gullies and gorges when exposed, sculptured by surface waterways. A quartzite
conglomerate bed exists at the base of this unit that comprises well rounded quartz pebbles in a sandy
silicified matrix; iron oxide staining gives this rock its characteristic red-brown color.
7.1.6 Martin Limestone

Martin Limestone is a massive sequence of layered brown- to gray-colored carbonaceous rocks with
only a minor presence of fossil fragments. It is interbedded with fine red sandstones and shales. This
unit overlies the Troy Quartzite and it underlies the Escabrosa Limestone.

7.1.7 Escabrosa Limestone
Escabrosa Limestone is a more massive, poorly bedded limestone; this unit outcrops as bold cliff faces,
appearing medium to light gray, underlying the Naco Group (limestone). Mississippian in age, these
lower beds appear oolitic with nodular calcareous formations; some beds contain crinoid fragments.
7.1.8 Naco Group

Naco Group (hereafter referred to by the informal site name of Naco Limestone) is dominantly thinly
bedded limestone units and has a mid-gray color with thin laminations of calcareous sediments and
marls separating limestone beds displaying crinoids, bivalves, and other marine fossil fragments. Lower
horizons and the basal unit consist primarily of cherts, marls, and well-bedded calcareous sediments.
7.1.9 Whitetail Conglomerate

Tertiary in age, the Whitetail Conglomerate is distinguished from other sedimentary units by the
exclusion of dacite and tuff. Mostly well bedded and often hematite-rich in both matrix and coating of
clasts, this unit outcrops only where it is revealed by the erosion of the dacite cover. The unit is matrix-
supported, displaying gradational fining-up sequences. Clasts are subrounded to angular in a poorly
sorted matrix, with some quartzite horizons comprising well rounded quartz-rich and lithic fragments
cemented by coarse quartz sands. This unit overlies and postdates mineralization, and therefore has
little potential for economic value.
7.1.10 Gila Group (Conglomerate)

The Gila Group (hereafter referred to by the local site name Gila Conglomerate) overlies and is the
youngest of all sedimentary units of Tertiary and Quaternary age. The unit is distinguished by the
inclusion of all local rock types: the Apache Group, Paleozoic limestones, diabase, and dacite tuff, with
some Pinal Schist fragments. Poorly sorted, but in parts moderately well stratified, it is compositionally
matrix-supported. The unit is composed of dominantly cobble- to pebble-sized subrounded clasts. The
composition of the rock is highly variable, often representing the dominant local lithology. Clast sizes
decrease to the east of the project area, where the unit becomes more of a distal fan conglomerate with
bedding stratification. The Gila Conglomerate overlies and postdates mineralization, and therefore has
little potential for economic value.
7.1.11 Alluvium
Tertiary and Quaternary alluvium is a poly-lithologic detritus of some boulder-sized, but mostly cobble-
and more finely sized, poorly sorted and poorly cemented sediments. Detritus lines the low-lying areas,
commonly occurring at the base of steep slopes undergoing active erosion. Components often show
evidence of reworking, resedimentation, and welding by modern calcrete and silcrete cements.
7.2 Intrusive Phases

In the PVM area, a series of intrusive bodies has been mapped with litho-chemistries ranging from
intermediate to acid digenetic composition. Units have been classified according to mineralogy,
crosscutting, and inclusion. The intrusive history of porphyry copper (molybdenum) emplacement in the

Pinto Valley district is classified into pre-, intra-, and post mineralization stages. Descriptions of copper
bearing intrusive events are detailed below.
7.2.1 Pre-Mineralization Intrusions

7.2.1.1 Manitou Granite
Manitou Granite is prevalent in the southeast portion of the study area, approximately 2,300 ft from the
PVM pit. Occupying an area of approximately 0.08 mi2 and outcropping as elongated bodies trending in
a northeasterly direction, this unit intrudes the Precambrian Pinal Schist basement. The Manitou
granite itself has been intruded by Precambrian Ruin Granite and a series of fine- and coarse-grained
aplitic intrusive phases related to this magmatic event. The Schultze Granite was the last unit to intrude
the Manitou Granite in a much later Tertiary period.
Macroscopically, this rock is dark brown with a phaneritic texture; it is equigranular and medium-
grained, with anhedral crystals of quartz (20%), subhedral undifferentiated mafic minerals (7%),
anhedral muscovite (5%), orthoclase (25%), and subhedral-euhedral plagioclase (38%).
This unit has a prevalent slight to moderate foliation that has deformed the original equigranular
texture. Minerals are generally elongated, with the long axis of grains ordered in a preferred orientation
or, in some cases, partially destroyed; this has been observed in some locations with respect to mafic
minerals. Manitou Granite is the youngest Precambrian intrusive.
7.2.1.2 Willow Spring Granodiorite
Willow Spring Granodiorite is an intrusive unit that outcrops in the southeastern sector of the study
area, occupying approximately 0.16 mi2. This unit outcrops as elongated bodies trending north-
northeast, intruded by Precambrian Ruin Granite and Tertiary Schultze Granite. It is also in fault contact
with the Gila Conglomerate unit.
Macroscopically, this granite is mottled by dark brown minerals and has a slightly porphyritic, phaneritic,
and inequigranular texture with medium-sized grains. The rock is composed of quartz, anhedral-
subhedral (15%); biotite-amphibole (12%), which is partially replaced by chlorite; orthoclase (15%),
subhedral-euhedral, ranging from 4 to 10 mm; and subhedral-euhedral plagioclase (38%).
Crosscutting relationships and Creasey (1980) have dated this intrusive unit as Precambrian.
7.2.1.3 Ruin Granite
Ruin Granite is an intrusive unit that outcrops over an area of approximately 0.81 mi2, which has been
exposed primarily by the excavation of the PVM pit. This rock is the primary host rock of copper
mineralization in economic concentrations and has been dated to Precambrian age (Creasey 1980). The
granite has also experienced a series of magmatic-hydrothermal events, resulting in the emplacement of
porphyry copper systems. The Ruin Granite is in fault contact with the Pinal Schist unit to the south and
a stacked series of faults to the west, with repetitious sedimentary units. Granites of the southeastern
sector of the study area have been intruded by the Willow Spring Granodiorite and Tertiary Schultze
Granite, and in one area it is in fault contact with the Gila Conglomerate. A zone to the north of the
PVM pit puts the Ruin Granite in contact with Precambrian Dripping Spring Quartzite sediments and
diabase dike intrusions.

Macroscopically, this rock is pinkish-brown, with phaneritic, inequigranular coarse texture and anhedral
quartz crystals (25%), anhedral-subhedral biotite (7%), anhedral muscovite (3%), subhedral-euhedral
orthoclase (35%) with some phenocrysts up to 60 mm, and subhedral euhedral plagioclase (38%).
There has been a series of aplitic phases related to Ruin Granite emplacement; the highest
concentration of these is in the southeastern sector of the outcrop. Numerous small dikes also occur
within the PVM pit. The aplitic intrusive units are pinkish-brown and dominated by equigranular quartz.
They have a fine grained, sugary texture and are dominated by potassic feldspar. The intrusive complex
related to the Ruin Granite is Precambrian in age (Creasey, 1980).
7.2.1.4 Diabase
Diabase is a sub-volcanic Cretaceous or later unit that is most prevalent in the northern area of the
project; but it also occurs as sills and minor dikes throughout most of the project area. This unit
occupies approximately 0.58 mi2 of the project area. The diabase most commonly intrudes Precambrian
units, such as the Apache Group sediments and Ruin Granite. The unit is generally covered by post
sedimentary units, including the Martin, Escabrosa, and Naco Limestones, and is partially covered by
Gila Conglomerate and the Apache Leap Tuff.
This unit is of fine- to medium-grained mafic composition, bearing pyroxene and hornblende mafic
minerals, and lesser plagioclase. This unit has different phases, with early medium to coarse textures
that range to later, fine-grained textured intrusions.
This unit commonly contains 1%–2% disseminated pyrite and trace chalcopyrite, but it will bear stronger
sulfide content, especially chalcopyrite, when proximal to a porphyritic source.
7.2.1.5 Schultze Granite
Schultze Granite is Tertiary in age; this plutonic body has been dated at 61 Ma from similar outcrops
sampled in the Miami-Inspiration area (Creasey 1980). This unit represents the main pre-mineral stage
of the Laramide intrusions and the magmatic source of the metal-bearing porphyritic intrusions in the
district. This unit outcrops generally in the southern part of the project area with batholitic dimensions
of 0.58 mi2 outcrops. This unit has also been observed intruding the Ruin Granite and Pinal Schist. In
some places, the unit is covered by Quaternary basalt and is in fault contact with the Gila Conglomerate.
Macroscopically, this rock has phaneritic texture and inequigranular texture of medium- to coarse-sized
grains, with books of biotite (8%), subhedral 1 mm–3 mm sizes; quartz (20%), subhedral 2 mm–8 mm
sizes; K-feldspar of orthoclase variety (25%), subhedral-euhedral 3 mm–15 mm sizes; and plagioclase
(47%) with 2 mm–4 mm sizes.
7.2.2 Intra-Mineralization Intrusive Phases

In the Pinto Valley district, a suite of porphyritic intrusive units have been identified that have age and
genetic relationships with a number of igneous events. Intrusives were found to have a composition
varying from quartz monzonite to granite. The following sections describe these units.
7.2.2.1 Early Granite Porphyry
A family of porphyritic intrusives appears in the form of dikes and stocks in the central sector of the PVM
pit. A number of small finger-like projections stemming from granitic porphyry stocks and dikes also

exist in the western section of the pit, with a predominant northeast trend. This early granite porphyry
unit has been observed intruding the country rock Ruin Granite, and as having been crosscut by the
intramineral late granodiorite phases.
Macroscopically, the rock is pinkish-brown to gray, phaneritic, and of porphyritic texture with an
inequigranular grain shape. Mineral composition comprises 40% phenocrysts with approximately 60%
groundmass, characterized by aggregates of quartz and feldspar: quartz eye phenocrysts (3%–7%) are
euhedral-subhedral and range between 2 and 4 mm in size; books of biotite (5%–8%) are subhedral and
range between 1 mm and 3 mm; orthoclase feldspar (20%–25%) is euhedral subhedral and ranges
between 3 mm and 5 mm; and plagioclase (60%–65%) is subhedral-euhedral, ranging between 2 mm
and 5 mm.
A number of additional observations of this unit’s magmatic-hydrothermal activity suggests this
intrusive phase is responsible for introducing mineralization into the PVM system. A clear relationship
exists between the development of strong late magmatic and early hydrothermal potassic alteration (K-
feldspar, biotite, and silica). Early hydrothermal activity has also produced extensive quartz “A” vein
development, along with sulfide mineralization where chalcopyrite content is greater than pyrite. The
presence of quartz “B” veinlets with minor molybdenite content also occurs in close proximity to the “A”
vein sets.
7.2.2.2 Intramineral Granite Porphyry
An intramineral phase of porphyry has been identified in the northeastern sector of the PVM pit.
Intramineral granite porphyry outcrops as a stock elongate in an east west direction hosted in Ruin
Granite, though crosscutting relationships were not observed between this and the earlier granite
porphyry. This intrusive unit mainly crosscuts the Ruin Granite, Pinal Schist, and diabase.
In a hand specimen this rock is brown-gray with a phaneritic texture, and inequigranular with a strong
porphyritic texture, including 40%–45% phenocrysts and 55%–60% as groundmass with aggregates of
quartz and feldspar. Mineralogically, eye quartz forms 10%–15% of the rock; grains are euhedral
subhedral and range between 2 mm and 4 mm. Books of biotite form 3%–5%; grains are subhedral and
range between 1 mm and 3 mm. Orthoclase feldspar forms 30%–35%; grains are euhedral-subhedral
and range between 4 mm and 10 mm. Plagioclase forms 50%–55%; grains are subhedral euhedral and
range between 2 mm and 5 mm.
This porphyritic unit exhibits minor hydrothermal alteration, and only displays minor potassic alteration
and “A” quartz vein sets. Minor disseminated mineralization has been observed. The unit was found
with a zone of strong phyllic alteration in the PVM deposit associated with extensive “D” veining. The
observed mineralogy and alteration styles suggest that this intrusive was emplaced later in the
magmatic hydrothermal history of the PVM porphyry copper deposit.
7.2.2.3 Intramineral-Late Granodiorite
The Intramineral-Late granodiorite unit outcrops as a large body in the southeastern area of PVM, with a
second zone in the west mapped as northeast trending minor bodies. Crosscutting relationships suggest
that this unit intruded into both porphyritic units in the mine.
In a hand specimen, this rock is gray-brown with a phaneritic texture. It is equigranular, of fine- to
medium-sized grain with the following mineral composition: hornblende (5%, subhedral-euhedral, 1

mm–2 mm); books of biotite (5%, subhedral, 1 mm–2 mm); K-feldspar (10%, subhedral, 2 mm–3 mm);
quartz (12%); and crystals of plagioclase (68%, subhedral–euhedral, 2 mm–3 mm).
This unit exhibits only minor mineralization as 1%–2% disseminated pyrite chalcopyrite; thin quartz
veins exist but are generally unmineralized. Only weak hydrothermal alteration was observed and
described as a weak potassic alteration; this suggests that this intrusive unit was injected late in the
Laramide intrusive history. Crosscutting relationships indicate that this unit truncates the late magmatic
potassic event.
7.2.2.4 Porphyritic Granodiorite
The porphyritic granodiorite intrusive unit was observed in the southwestern boundary of PVM as a
small body intruding into the Pinal Schist and the Schultze Granite (Figures 7-3 and 7-5).
In a hand specimen, this unit has medium-sized grains, inequigranular with some porphyritic textures,
with the following mineral composition: quartz (10%, anhedral, 1 mm–3 mm); books of biotite (8%,
subhedral-euhedral, 1 mm–3 mm); hornblende (2%, subhedral, averaging 1 mm–2 mm); K feldspar
(15%, subhedral, 2 mm–4 mm); and plagioclase (65%, subhedral-euhedral, 2 mm–6 mm).
This intrusive was found at a site that had been disturbed by a small shaft and old workings. Copper
oxide was evident, coating rocks close to the mouth of the small mine opening. Minor hydrothermal
alteration was observed as chlorite replacing mafic minerals. This intrusive is most probably related to
the granodioritic intrusive event in the PVM area.
7.2.2.5 Breccia Porphyry
Near the southeastern boundary of the PVM area, two sub-outcrops of a unit with intrusive brecciaed
features were found. This unit is called the breccia porphyry and intrudes the Ruin Granite as a small
dike swarm.
In a hand specimen, this unit displays a brecciated texture, composed predominantly of a groundmass
material (~70%), with surrounding fragments of rock and broken eye quartz (10%–15%) that range in
size from 2 mm to 4 mm.
This unit was tested using a portable infrared mineral analyzer spectrometer for hydrothermal alteration
minerals, revealing an upper crustal association of dickite-kaolinite-pyrite. Some leaching of minerals,
mainly jarosite and minor goethite, was also confirmed by TerraSpec analysis. This is an extremely
important finding because it can be concluded that the mineral is associated with the advanced argillic
alteration zone in the upper crust.
Microscopic study of thin sections revealed the presence of a brecciated texture. Intrusive fragments of
granite monzogranite were observed with clearly defined borders, but some had moderately rounded
margins, indicating a lack of any reaction with the matrix. The matrix is composed of rock flour, various
clay species, disseminated dickite, and traces of muscovite and brown biotite.
Features described in this rock suggest a stage of phreatic brecciation, possibly related to the activity of
a nearby hydrothermal system.

7.3 Regional Structural Framework
A number of structural events were identified during the mapping exercise, showing a high level of
complexity in both the extent of deformation and the timing of the various events. Considerable
deformation of the units has persisted from the Precambrian era to Tertiary Basin and Range events,
involving the reactivation of many earlier structures.
The main structures identified in the project are related directly to a set of lineaments, faults, and
fractures with a north-south orientation.
The oldest fault observed is the South Hill Fault. Field observations suggest that this fault controlled the
emplacement of all the Precambrian intrusive phases along a northeast trend. The last reactivation
along this fault has reverse movement, with a southeastern dip that has truncated mineralization of the
PVM deposit; this fault has placed the Pinal Schist over the Ruin Granite.
Most north-south structures are a product of extensional deformation from the Basin and Range event;
the best example is the Gold Gulch Fault that separates, via horst and graben blocks, the Apache Group
sediments and the Ruin Granite, respectively. Other large faults are the Dome Fault and the Jewel Hill
Fault, with normal movement and more restricted deformational features.
Locally, the fault systems at surface present a north-northwest pattern with normal movements. Some
minor reverse and transcurrent faults were observed and are closely related to extremely large
structures, such as the Riedel-type faults, which all show subvertical dips.

8 Deposit Types
PVM is classified as a copper-molybdenum porphyry system. Extensive literature exists on porphyry
deposits due to their large size and economic importance. The following description of a porphyry
deposit is from a summary by Sillitoe (2010).
Porphyry deposits are typically centered on polyphase stocks and porphyry dyke swarms, with skarn
deposits formed adjacent to and epithermal deposits above the porphyry mineralization. The metal
endowment of a porphyry system is related to the geochemistry of the oxidized magmas that contribute
to the formation of the stocks and dykes, with gold and/or molybdenum commonly found in association
with copper. Porphyry deposits typically occur in association with Mesozoic and Tertiary intrusions,
probably as a result of poor preservation of older rocks.
Porphyry systems are typically zoned from a potassic-altered (biotite-potassium feldspar) core overlying
barren, calcic-sodic-altered rock, upward through phyllic altered (sericite or chlorite-sericite) margins to
propylitic-altered (chlorite-epidote) rocks (Figure 8-1). Porphyry systems also grade upward into
advanced argillic and silicic alteration related to epithermal mineralization. Alteration zoning may be
complex and overlapping due to successive injections of magma into country rocks. The vertical
distance between porphyry mineralization and overlying epithermal mineralization may range from
1,000 yd to several thousand yards.
Hypogene copper mineralization is disseminated and veinlet-hosted in addition to being zoned from
bornite-rich in the core through chalcopyrite to pyrite in distal areas. Magnetite (in copper-gold
porphyries) and molybdenite (in copper-molybdenum porphyries) are common accessory minerals.
Quartz veins and veinlets as stockworks and sheeted arrays are present throughout these systems, and
typically occur in a sequence from early quartz-feldspar “A” veins, through quartz-sulfide (mainly
chalcopyrite-molybdenite) “B” veins with potassic altered margins, to late sulfide-dominant (primarily
pyrite) “D” veins with phyllic altered margins (Gustafson and Hunt 1975), as shown in Figure 8-1.
Veining in copper-gold deposits may differ slightly, with quartz-magnetite-chalcopyrite and magnetite-
dominant “M” veins present or dominant (Arancibia and Clark 1996).

Figure 8-1: Anatomy of a Telescoped Porphyry System (Sillitoe, 2010)

Figure 8-2: Generalized Alteration-Mineralization Zoning Pattern for Telescoped Porphyry Copper
Deposits (Sillitoe, 2010)

BHP 2012
Figure 8-3: Pinto Valley Mine Alteration and Mineralization Plan Map

Due to the large amount of disseminated pyrite in most porphyry systems, these systems are susceptible
to supergene weathering and leaching. Copper is oxidized and leached from areas above the water
table and deposited as chalcocite and other supergene copper minerals at or near the water table,
leading to enrichment in copper grades. Supergene chalcocite enrichment can increase grades locally by
200% to 300% or more, with a significant impact on the overall economics of these deposits.
Proximal skarn deposits are typically located laterally from porphyry deposits where the igneous body
intrudes calcareous host rocks (Meinert 2000). They consist of replacement bodies within (endoskarn)
or marginal to (exoskarn) the causative intrusion. Skarn may be particularly well developed in
limestones and other calcium or carbonate-rich rocks. Skarn alteration assemblages include garnet,
pyroxene, wollastonite, magnetite, actinolite, pyrite, magnetite, and chalcopyrite.
Copper-molybdenum porphyry and skarn mineralization are all found in close proximity within the PVM
area. Skarn is a relatively minor unit in comparison the scale of the overall porphyry deposit.
Mineralization is associated with an overlap of phyllic and potassic alteration, a supergene chalcocite
blanket, and adjacent areas of hornfelsing and skarn alteration.

9 Exploration
No exploration has been completed since the mine was purchased in 2013.

10 Drilling
Drilling documentation was limited to internal reports, and there were no other listings for vintage data,
methods used, or pre 2010 drilling procedures.
The pre-2006 PVM drilling programs comprised a combination of core, rotary, and churn drillholes.
Churn holes defined much of the early Castle Dome mineralization, which has been mined out. Post-
Castle Dome holes were drilled on an original spacing of 400 ft east-west and 200 ft north-south. Later,
drilling was done to infill the original grid to 200 ft spacing in some areas. Drilling that has occurred
since the 1986 construction of the block model includes 10 core holes (E52 through E61) and 3 RC rotary
holes (RC62 through RC64) drilled in 1992. From January 1996 to April 1997, 67 RC exploration and infill
holes were drilled: 48 RC holes (AD- and NR-Series totaling 29,665 ft) drilled in 1996 and 19 RC holes
(WW- and 97-Series totaling 8,520 ft) drilled in 1997. The WW- and 97 Series were drilled in the interior
pit and through the Gold Gulch and Continental Faults. Seven of the exploration holes were drilled east
of the existing pit; these laid the groundwork for future plans of an east pit expansion, known as the
Satellite Pit.
The current PVM drill hole database contains a significant amount of drilling that defined the grades in
the block model that have been mined out, especially as they relate to the historic Castle Dome mining
activity.
All drillhole collar locations were surveyed. The majority of the drillholes are vertical and, therefore, do
not have downhole surveys. However, a majority of the inclined holes do have downhole surveys.
Drilling campaigns from 2006 to 2008 had various purposes, including delineation, exploration,
geotechnical, and resource classification upgrade drilling. The campaigns included 18 G-Series
geotechnical holes and 11 HW-Series holes drilled in 2007; and 17 PZ-Series holes, 17 S-Series holes, 24
B-Series holes, and 4 DH-Series holes drilled in 2008.
The drilling campaign in 2010 focused on exploration, while the 2011 and 2012 campaigns focused on
infill drilling for resource classification upgrade in support of restarting operations. Ten holes were
drilled in 2010, 40 holes were drilled in 2011, and 64 holes were drilled in 2012.
In 2014, 10 geotechnical holes, and in 2015, an infill RC program consisting of 43 holes aimed at 2016
and 2017 production, as well as 3 geotechnical holes were drilled and assayed. Data from these drill
programs have been incorporated into the 2015 block model.
A total of 897 drillholes were used for the PVM 2015 resource estimate model.

11 Sample Preparation, Analyses, and Security
Once drilling is completed, the core is transported to the core handling facility. Here it is placed in wax-
covered core boxes with depth markers for every drill run of up to 10 ft. QuickLogs are done at core
reception which includes initial lithology and a visual estimation of mineralization and alteration,
particularly biotite content. The mine is set up on a bar code system for ease of handling and to track
the core and samples. There is a triple bar code tag: the first tag is for the half core that remains in the
box, the second tag is for the split that is sent to the lab for analysis, and the third tag is for the coarse
duplicate and is used to tag the pulps and rejects. The core is logged for geology and split by saw at one
of two stations.
The QuickLog data and the detailed logs are entered into an acQuire® relational database system which
also records the collar, survey, assay, lithology, alteration, mineralization, and geotechnical (RQD) data.
These data are tagged and tracked using the bar codes, and all subsequent assay information provided
by the laboratory, including the QA/QC data, is linked to the database. The system is secured by BHP
using protocols and procedures which appear to be extremely stringent. A dispatch report is created
which is then sent to the laboratory and subsequently matched against the shipments. Deviations and
discrepancies are reported and investigated. Any updated assay data from the laboratory is linked to
the bar code system and relayed to the company electronically via Excel® CSV files and imported into
acQuire® automatically. The data are imported into MineSightTM for the purpose of resource estimation.
A number of different companies and laboratories have provided assay services to Pinto Valley over the
years. Details of sampling and assaying procedures used during the earlier stages of operation are not
readily available. Procedures used by outside labs that ran assays for some of the later drilling
campaigns, such as those performed by Mountain States for the RC holes and Chemex for the AD holes,
are also not readily available. The analytical procedures currently in place at Pinto Valley are in line with
industry standards for total copper, but procedures are BHP-specific with respect to acid soluble copper
(i.e., digestion with 10% sulfuric acid, placed in a hot bath at 40oC, and read after 40 minutes).
Samples were assayed for total copper and acid soluble copper. Composites representing 30-50 ft of the
sample rejects were made and these composites were assayed for total copper, oxide copper,
molybdenum, sulfur, and trace metals of gold and silver. Comparisons were made between the total
copper and acid soluble copper assays from the original assay intervals and the composite intervals.
Independent audits of the Pinto Valley assays were conducted in 1992 and 2000. Results were as
follows:
• assay values in the Pinto Valley database have been reliably entered;
• total copper assays in the Pinto Valley database are reproducible and can be considered
representative within normally-accepted limits of error;
• total copper assays in holes below the current pit base can also be considered
representative within normally-accepted limits of error, except in the deeper parts of some
RC holes where they may be low-biased. However, using these assays to estimate grades in
the model is acceptable because they will tend to provide a conservative rather than an
overly optimistic estimation of grades;

• acid soluble assays in the Pinto Valley database vary considerably depending on the drilling
campaign and;
• reserves, resources, and production at Pinto Valley are reported as sulfide copper, which is
calculated by subtracting acid soluble copper from total copper. Because biases exist in the
acid soluble copper assays, this procedure generates sulfide copper values that are biased
relative to each other as a function of the drilling campaign. However, sulfide copper values
are only slightly lower than overall total copper values, so it can be reasonably assumed that
the sulfide copper values are also globally correct within normally-accepted limits of error.
As part of the start-up Feasibility Study done in 2006, a QA/QC program was conducted on 101
randomly selected drillhole assay interval pulp samples and 15 randomly selected core assay intervals.
Samples were sent to Skyline Assayers and Laboratories (Skyline Labs) in Tucson, Arizona to be analyzed
for total copper and acid soluble copper. Skyline Labs was instructed to analyze the samples for acid
soluble copper using BHP lab procedures. Before the lab processed these samples, BHP provided
instructions for the pulp sample analytical procedures and also provided a sequential pulp sample list.
Included in this QA/QC program for the Feasibility Study were seven sets of a known National Institute
of Standards and Technology (NIST) standard pulps: Copper Ore Mill Heads standard at 0.84% Total
Copper, and a Copper Mill Tails standard at 0.091% Total Copper. These known standard sets were
inserted in sequential order for analysis preceding the 15th pulp sample in the analytical run. All relative
precisions are discussed at a 95% confidence level (estimated using the Student’s T-distribution).
The analytical results from the standard samples are shown in Figure 11-1; both include standards
supplied by the Pinto Valley Operations (PVO) project team and those used by Skyline Labs for internal
QA/QC. A relative bias of -2% (Skyline Labs is lower than acceptable) is determined from these samples,
with a relative precision of 4% for the standards greater than 0.1% Cu and 10% for the reference sample
containing 0.09% Cu. These results provide an estimated precision for pulp and instrumentation
sampling.

Note: PVO refers to PVM under BHP ownership; wt% Cu = %TCu
Figure 11-1: Analytical Results from Standard Reference Materials
The re-assay program for stored pulp samples shows that historical quality control measures used in the
PVM analytical laboratory were variable: at times they were extremely good, but at other times they
were less so, although still acceptable. The relative half differences (RHDs) of the samples are presented
in sequential order in Figure 11-2, which shows that the drillhole series is well correlated with the
variability and bias of repeat assays. Because of the consistent results from the reference standards
included in the samples submitted to Skyline, it can be assumed that the variability in the drilling
programs originate with the analytical precision at PVM and not at Skyline.

Note: Samples are shown in sequential order of analyses, but are grouped by drillhole identification;
percentages refer to %TCu.
Figure 11-2: Relative Half Differences in Replicate Pulp Analyses (compares original PVM copper assays
with Skyline repeats)
Table 11-1 shows the statistical summaries of the 2006 QA/QC program on replicate pulp assays, broken
down by drilling campaign. Although similarities exist between the WW-, RC-, and E-Series holes, there
are only limited samples from the latter two series, and these tend to be low-grade. Because the WW-
and 97-Series holes were both drilled at approximately the same time and were drilled at a much
different time than the remaining holes, these holes should be categorized as having similar laboratory
quality practices. The AD-Series holes seem to have been assayed under different protocols and are
grouped with the E-Series because of their similar drilling dates. Additional information presented
below further suggests this grouping for the purpose of estimating analytical uncertainty. Based on the
replicate pulp program, the AD- and E-Series holes have a relative bias of +2.5% (original assays higher
than Skyline) and precision of 6%, compared to the remaining holes that have a bias and precision of
approximately −1.5% and 9%, respectively.

Table 11-1: Analytical Results for Replicate Pulp Assays 2006 Pinto Valley Mine QA/QC Program
Drillhole Data Copper Average (%) Linear Fit Average Relative
No.
Program Subset Skyline PVM Slope RHD* ARHD† Precision‡
All Data 29 0.254 0.247 0.95 0 0.049 0.138
WW-, RC- &
>0.1%
E-Series 23 0.313 0.303 −0.017 0.035 0.103
TCu Only
All Data 50 0.277 0.291 1.05 0.016 0.034 0.135
AD-Series >0.1%
45 0.302 0.318 0.025 0.025 0.058
TCu Only
97-Series All Data 22 0.300 0.290 0.91 −0.016 0.029 0.08
All Data 101 0.275 0.278 1.00 0.004 0.037 0.123
All Samples >0.1%
90 0.304 0.307 0.005 0.029 0.074
TCu Only
* RHD defined as (PVM − Skyline)/(PVM + Skyline).
† Absolute relative half difference.
‡ Relative precision calculated as the square root of the average squared relative half difference at the
95% confidence level, as estimated through Student's t-distribution.
Fifteen field duplicates of split core from drillholes lying in sequence between E-21 and E-60 are
summarized in Figure 11-3. The relative bias between the two core halves is nearly identical to that
seen in lab assays for the AD-Series holes, with PVM core assays approximately 3% higher grade than
the replicate values. The relative precision of the two core halves at copper grades above 0.1% TCu is
slightly more than double the analytical precision of AD-Series pulp replicates. The AD-Series replicate
pulp assays plot on a near-perfect least squares linear fit from the E-Series duplicate core assays (Figure
11-3), which suggests an excellent correlation between field duplicates.

2006 PVM QA/QC Program
Figure 11-3: Comparison of 15 Field Duplicate Samples
Based on the E- and AD-Series results, the total relative sampling standard deviation for the split core
samples above 0.1% TCu is estimated to be approximately 8%; 86% of the sampling variance is due to
core splitting and sample preparation errors, and 14% is due to analytical variance within the PVM lab.
Instrumentation errors associated with the QA/QC analytical process are responsible for approximately
0.5% of the total variance. The relative bias of approximately 2.5% between PVM and Skyline is the
result of an absolute bias of −2.7% between Skyline and the international standard; these results are
summarized in Table 11-2.
The sampling and preparation errors of the RC samples could not be fully determined due to a lack of
field duplicates. Field sampling of RC cuttings are generally associated with lower variances than
sampling of drill core, which can offset the higher laboratory variances measured for the 1996 and 1997
programs. The analytical bias seen in these samples, corrected for the Skyline bias, is estimated to be
4% lower than the international standards.

Table 11-2: Total and Stepwise Sampling Estimates and Analytical Variances
Total Relative Errors Stepwise Relative Error
Drillhole Samples No. Standard Standard
Bias Variance Bias Variance
Deviation Deviation
Core Sampling Variance
12 0.032 0.0760 0.00577 0.006 0.070 0.00495
(E-Series core duplicates)
PVM Analytical Variance
45 0.025 0.0287 0.00082 −0.001 0.028 0.00079
(AD-Series pulp replicates)
Skyline Analytical Variance
7 −0.027 0.0058 0.00003 −0.027 0.006 0.00003
(reference material)
RC Variance
Unknown
(WW- and 97-Series)
PVM Analytical Variance
(WW- / 97-Series pulp 43 −0.017 0.0454 0.00206 −0.044 0.045 0.00203
replicates)
Skyline Analytical Variance
7 −0.027 0.0058 0.00003 −0.027 0.006 0.00003
(reference material)
The PVM QA/QC procedures have been based on leading practices as defined by BHP and used
throughout BHP's group of assets. These have been developed in conjunction with other BHP base
metal mines. These processes continue to be utilized on-site, to the best of the authors’ knowledge.
Prior to the 2010 through 2013 drilling campaigns, there is limited information with respect to the
molybdenum analyses and QA/QC. Charts shows the respective laboratory; Skyline and ALS Global,
results of the analyses for the field (Figure 11-4 and Figure 11-5), coarse (Figure 11-6 and Figure 11-7)
and pulp (Figure 11-8) duplicates. The molybdenum QA/QC illustrate that quality control measures used
at both laboratories are variable and that there is a relatively high failure rate for all analyses methods.
As there are no reference sample analyses (ie. Standards), it is difficult to ascertain whether the cause of
the issues and lack of analytical precision originate at PVM or at Skyline and ALS Global however with
both laboratories experiencing similar failure rates.

Figure 11-4: Comparison of Field Duplicate Samples - Skyline

Figure 11-5: Comparison of Field Duplicate Samples – ALS Global

Figure 11-6: Comparison of Coarse Duplicate Samples - Skyline

Figure 11-7: Comparison of Coarse Duplicate Samples – ALS Global

Figure 11-8: Comparison of Pulp Duplicate Samples - Skyline

Assays are imported to the Capstone server for approval. This is done for each batch according to the
criteria above. The following procedures are used to approve the QA/QC for each batch.
1. Enter the Capstone data portal, and select the area, project, and batch list.
2. Review QA/QC results, particularly “Company Standards,” blanks, and “Lab Standards,” for
approval.
Review the field duplicates, coarse duplicates, pulp duplicates, and lab assay repeats as well. This
information is then compiled to generate a QA/QC report detailing any errors associated with the
splitting and crushing procedures for that particular batch.
All drilling since May 2015 update was performed with a comprehensive QAQC program in place that
included the regular submission of duplicate samples and blanks along with the in-house QAQC program
conducted by the analyzing lab and reported on all received assay certificates. Assay results were
routinely inspected when received to insure that all QAQC criteria were satisfied before results were
deemed acceptable and entered into acQuireTM. New assays incorporated into this resource estimate
included samples from the GTH-14, GTH-15, and PVRC-15 series for a total of 2,426 samples.
Blanks consisted of high purity silica chips and were inserted in the sample stream in order to detect any
contamination. A total of 60 blanks were inserted over the course of the drilling programs, with the vast
majority of these reporting below detection limit values for TCu and Mo. All analyses fall below the 5x
detection limit failure criteria (detection limits are 0.01% for TCu and 0.0005% for Mo) that have been
specified, meaning all blank analyses are considered acceptable.
Duplicate samples include field, coarse, and pulp duplicates, which are inserted in the sample stream to
test the variation between measurements at the various stages in the sample collection, preparation,
and analysis processes, respectively. Overall analytical variance for duplicate pairs inserted over the
course of the drilling programs can be seen in Table 11-3 and Table 11-4 for TCu and Mo, and display
expected trends of decreasing variance moving from field to pulp duplicates.
Table 11-3: Duplicate Pair Analytical Variance for %TCu
Average Mean Pair
Duplicate Type Bias (%TCu) Correlation Coefficient
Relative Difference (%)
Field 0.004 0.972 13.08
Coarse -0.018 0.978 5.29
Pulp -0.014 0.996 5.45
Table 11-4: Duplicate Pair Analytical Variance for %Mo

Average Mean Pair
Duplicate Type Bias (%Mo) Correlation Coefficient
Relative Difference (%)
Field 0.023 0.955 14.65
Coarse -0.042 0.975 8.94
Pulp 0.025 0.974 8.77
A total of 183 field duplicates were submitted for analysis with a scatterplot of the results shown in
Figure 11-9 and Figure 11-10. Warning and error lines are set at respective 15% and 20% limits with
regard to the relative difference between duplicate pair assays. Returned TCu analyses show that 23

duplicate pairs lie between warning and error limits and 27 lie outside of error limits, while Mo analyses
show that 7 duplicate pairs lie between warning and error limits and 39 lie outside of error limits.
A total of 74 coarse duplicates were submitted for analysis with a scatterplot of the results shown in
Figure 11-11 and Figure 11-12. Warning and error lines are set at respective 10% and 15% limits with
regard to the relative difference between duplicate pair assays. Returned TCu analyses show that 2
duplicate pairs lie between warning and error limits, and 4 lie outside of error limits; Mo analyses show
that 1 duplicate pairs lie between warning and error limits and 10 lie outside of error limits. This scatter
results in correlation coefficients of 0.978 and 0.975 for TCu and Mo, respectively, with average mean
pair relative differences (AMPRD) of 5.29 for TCu and 8.94 for Mo.
A total of 68 pulp duplicates were submitted for analysis with a scatterplot of the results shown in Figure
11-13 and Figure 11-14. Warning and error lines are set at respective 5% and 10% limits with regard to
the relative difference between duplicate pair assays. Returned TCu analyses show that two duplicate
pairs lie between warning and error limits, and three lie outside of error limits; Mo analyses show that
one duplicate pair lies between warning and error limits and nine lie outside of error limits. This scatter
results in correlation coefficients of 0.996 and 0.974 for TCu and Mo, respectively, with average mean
pair relative differences (AMPRD) of 5.45 for TCu and 8.77 for Mo.
SKYLINE
CuT_MEA_pct : Check Stage S
1.1
1.0
0.9
0.8
0.7
Check
0.6
0.5
0.4
0.3
0.2
0.1
0.0
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1
Original
X=Y Warning Error RMA Regression Threshold Normal Warning Error
Figure 11-9: Scatterplots showing Field Duplicates for %TCu for 2015 Drilling

SKYLINE
Mo_MEA_pct : Check Stage S
0.024
0.022
0.020
0.018
0.016
0.014
Check
0.012
0.010
0.008
0.006
0.004
0.002
0.000
0.000 0.001 0.002 0.003 0.004 0.005 0.006 0.007 0.008 0.009 0.010 0.011 0.012 0.013 0.014 0.015 0.016 0.017 0.018 0.019 0.020 0.021 0.022 0.023 0.024
Original
Figure 11-10: Scatterplots showing Field Duplicates for %Mo for 2015 Drilling
SKYLINE
CuT_MEA_pct : Check Stage C
0.6
0.4
Check
0.2
0.0
0.0 0.2 0.4 0.6
Original
Figure 11-11: Scatterplots Coarse Duplicates for %TCu for 2015 Drilling

SKYLINE
Mo_MEA_pct : Check Stage C
0.013
0.012
0.011
0.010
0.009
0.008
Check
0.007
0.006
0.005
0.004
0.003
0.002
0.001
0.000
0.000 0.001 0.002 0.003 0.004 0.005 0.006 0.007 0.008 0.009 0.010 0.011 0.012 0.013
Original
Figure 11-12: Scatterplots Coarse Duplicates for %Mo for 2015 Drilling
SKYLINE
CuT_MEA_pct : Check Stage P
0.6
0.4
Check
0.2
0.0
0.0 0.2 0.4 0.6
Original
Figure 11-13: Scatterplots Pulp Duplicates for %TCu for 2015 Drilling

SKYLINE
Mo_MEA_pct : Check Stage P
0.011
0.010
0.009
0.008
0.007
Check
0.006
0.005
0.004
0.003
0.002
0.001
0.000
0.000 0.001 0.002 0.003 0.004 0.005 0.006 0.007 0.008 0.009 0.010 0.011
Original
Figure 11-14: Scatterplots Coarse Duplicates for %Mo for 2015 Drilling
In the QP’s opinion, the sample preparation, analysis QA/QC and security protocols follow accepted
industry standards. Based on the data and results, it is the authors opinion that the complied database
is valid and of sufficient quality to be used for this mineral resource estimate.

12 Data Verification
Garth Kirkham, P.Geo., FGC, visited the property on May 14, 2013 and April 16-17, 2015. The site visits
included an inspection of the core logging facilities, offices, pit tour, outcrops, drill collars, core storage
facilities, core receiving area, and core sawing stations, and a tour of the major centers and surrounding
towns that are affected by the mining operation.
The tour of the offices and core logging and storage facilities showed a clean, well-organized,
professional environment. On-site staff led the author through its chain of custody and methods used at
each stage of the logging and sampling process.
The QP randomly selected four complete drillholes from the database and laid the core out at the core
storage area. Site staff supplied the logs and assay sheets so the author could verify the core and logged
intervals. The data correlated with the physical core, and no issues were identified. In addition, the
author toured the complete core storage facility, pulling and reviewing core throughout the tour. No
issues were identified and recoveries appeared to be very good to excellent.
The QP is confident that the data and results are valid, based on the site visit and inspection of all
aspects of the project; this confidence extends to the methods and procedures used. It is the opinion of
the independent author that all work, procedures, and results have adhered to best practices and
industry standards required by NI 43-101. No duplicate or verification samples were taken to verify
assay results, but the author believes that the work is being conducted by a well-respected, large, multi-
national company that employs competent professionals who adhere to industry best practices and
standards.
The QP also visited Skyline on 15 May 2013. The laboratory tour was performed by Jim Martin, Senior
Chemist and Arizona Registered Assayer (No. 11122), who provided a complete review of the laboratory
facilities, laboratory preparation procedures, instrumentation, assay methods, QA/QC protocols, and
reporting procedures. The laboratory appeared to be operated in a very professional manner, as is
expected from a widely used North American laboratory facility. Skyline, because of its long standing
service to many large copper mines, appears to specialize in and have extensive experience with the
assay processes and procedures for copper. Skyline has been ISO 17025 certified since 2008.
The reconciliation of production grades as compared to those defined by drill data (both legacy and
current) and predicted by the block model which resulted in excellent correlations particularly within
the core mine block. Reconciliation of the production data further away from the mine block,
particularly within the Castle Dome area were less favorable however an extensive remodeling of the
deposit was completed to rectify these discrepancies and are now within reasonable tolerances.

13 Mineral Processing and Metallurgical Testing
PVM has operated since 1974 with two recent shut downs (1998-2007, 2008-2012). The mill has
undergone a number of process optimizations during its operating life and recent restarts, with
equipment upgrades and/or replacements.
In 2014 Capstone initiated the PV3 project to evaluate an extension of the mine life. The process
operating data has been analyzed to develop the operating design criteria and basic metallurgical
testwork completed to confirm the criteria for future ore sources. The design criteria provides the basis
for increasing mine life and plant throughput defined in this technical report.
13.1 Metallurgical Testwork – 2014 Technical Report Summary
13.1.1 Grinding
Bond ball work index tests and/or modified Bond work index tests were competed on drill core samples
for the PV2 Project. Figure 13-1 provides an analysis of the Bond ball mill work index data. Table 13-1 is
an indication of the lithological ore distributions expected in the mine plan included in this report.
The predominant ore type has been identified as Ruin Granite and the data indicates that the work
index is distributed over a narrow range from 13.5 kWh/t to 15.5 kWh/t. Further analysis completed by
BHP indicated based on the location within the pit that there may be an opportunity to split the Ruin
Granite into “soft” and “hard” classifications.
Figure 13-1: Bond Ball Mil Work Index

Diabase was found to have the highest BMWi ranging from 17.0 kWh/t to 17.5 kWh/mt. Diabase makes
up 2.9% of the ore.

Based on simplified grinding calculations and using the Ruin Granite “soft” ore for the baseline
throughput projections were that there could be a 12% decrease in mill throughput for the Ruin Granite
“hard” ore and a 38% decrease in mill throughput for the Diabase ore. There is some limited control to
try to maintain throughput but this would require coarser grinds that could have a negative impact on
recoveries.
Table 13-1: Ore Lithological Distribution for the Life of Mine
% by Average BMWi
Lithology
Tonnage (kWh/mt)
30 - Diabase 2.9% 17.1
50 - Granodiorite 0.3% 13.1
60 - Granite Porphyry 2.4% 15.0
72 - Aplite 0.4% 13.8
11 – Ruin Granite 94.1% 14.1-14.9
Grand Total 100% 14.5
Crushed ore is distributed to the fine ore bin for distribution to the 6 single stage ball mills. The ball
mills are 18ft Ø x 21ft long with 4000hp motors. A review of the ball mills, and the ball mill operating
practices, has shown that the ball mills have the capability to operate using the full mill power draw.
Ball charging practices provide the ability to operate near or above the installed power.
Shift operating data for the crushing plant and grinding circuit have shown that the ball mill feed
(crushing plant product) F80, since September 2013 has been averaging about 11mm. These readings
are taken by the SPLIT System that uses digital analysis of the conveyor load to determine the size
distributions. A review of the cyclone overflow distributions for each of the grinding circuits indicates
that the grinding product, P80, has averaged about 280 microns.
A work index model based on the Bond ball mill work index equations was used to develop a throughput
model that estimated the plant throughput based on ore work index for varying F80 and P80 conditions,
Table 13-2.
Table 13-2: Bond Ball Mill Work Index Modeling (metric tonnes)
F80 =6.5mm / P80 F80 = 8mm / P80 = F80 = 9.5mm / P80 F80 = 8mm / P80 F80 = 11mm / P80
Wi = 315µm (TPD) 315µm (TPD) = 315µm (TPD) = 270µm (TPD) = 280µm (TPD)
95% 24hr 95% 24hr 95% 24hr 95% 24hr 95% 24hr
12 69466 73122 64998 68419 60821 64022 59134 62246 56042 58991
13 64359 67746 60092 63254 56147 59102 54812 57696 51773 54498
14 59252 62371 55186 58090 51473 54182 50489 53146 47505 50005
14.3 57720 60758 53714 56541 50071 52706 49192 51781 46224 48657
15 54145 56995 50280 52926 46799 49262 46167 48596 43236 45512
15.1 53634 56457 49789 52409 46332 48770 45734 48141 42809 45062
16 49038 51619 45373 47761 42125 44342 41844 44046 38967 41018
17 43931 46243 40467 42597 37451 39422 37522 39496 34699 36525
17.3 42399 44630 38995 41048 36049 37946 36225 38131 33418 35177
18 38824 40867 35561 37433 32777 34502 33199 34946 30430 32032

The PVM also provided an analysis of the monthly ore mined tonnage and related that to the drillhole
work index information for the zones mined. For August, September and October 2013 the average
work indexes from the mine block model were 14.8, 14.6 and 14.7 kWh/t respectively. Based on these
work indexes the model would have limited mill throughput to 49200 stpd (44700 mt/d), on a 95%
operating availability basis.
Various operating periods have been analyzed to evaluate the plant throughput. There has been a
steady improvement of plant operating time through 2013 and the grinding circuit availability has been
improving. Based on the instantaneous readings from the weightometers on the mill feed conveyors it
was estimated that the plant feed rate averaged about 400 short tons per hour per mill. Assuming the
mill availability will be 95% the estimated throughput is about 55000 short tons per day (50000 metric
tonnes per day). From this the indications are that the mill is operating at 10% higher throughput than
the work index model indicates.
A sample of mill feed was collected from a ball mill feed conveyor in January 2014 to confirm previous
observations. The sample was sent to ALS in Kamloops for testing. The sample was screened to
determine the feed size distribution and then the sample was subjected to Bond ball mill work index
tests at screen closing sizes of 106µ and 300µ. Based on the mine plan and geological evaluation of the
mill feed it was believed that the feed sample could have had as much as 8% Diabase mixed with Ruin
Granite.
The test results showed:
 Feed size distribution, F80 = 12434µ
 Bond ball mill work index, 106µ = 15.0 kWh/t
 Bond ball mill work index, 300µ = 14.7 kWh/t
13.1.2 Flotation
In October 2006 BHP completed a review of past metallurgical testwork. The compilation was made of
all test work that was conducted in the plant lab between 1992 and 1995, and of which the reports were
located in the PVM library. Figure 13-3 summarizes the grade-recovery relationship for rougher
flotation.

Figure 13-2: Copper Feed Grade vs Recovery
Low recoveries were attributed to the presence of soluble copper. Figure 13-3 provides an indication of
the influence of acid soluble copper on the rougher flotation recovery.
Figure 13-3: Copper Recovery vs Soluble Copper Content

For the PV2 Project BHP completed additional testwork with SGS. The bulk of this testwork focused on
development of metallurgical simulations to represent the plant operation. The rougher kinetic
flotation tests on the three ore type composites indicated that good recoveries can be achieved for the
Ruin Granite (Potassic Alteration) and Granite Porphyry samples with approximately 90% recovery. For
the Ruin Granite (Sericite Alteration) sample the recoveries were approximately 80%. Additional
rougher flotation kinetics tests were conducted to assess the influence of reagent scheme, grind size
and % solids. No significant effect on final recovery was observed by changing the addition point of lime
or collector. The current plant reagent suite was tested with recovery > 93% Cu. A limited interaction
study of grind size and percent solids indicates that there was significant interaction between these
variables at laboratory scale. The highest rougher recovery was achieved at low percent solids and finer

grind size, however, at higher percent solids rougher recovery becomes insensitive to grind size. It was
recommended to do additional testing and plant trials to validate these findings.
Open circuit flotation tests with regrinding of rougher concentrate and three cleaning stages were
performed on the metallurgy composite samples to evaluate the cleaning stage. Results showed that
the copper grade was in the range of 23.0 to 27.3% Cu and recovery was between 79.3 and 84.8%
copper.
In January 2013, eleven composite samples for a froth flotation study and comminution testing were
delivered to the SGS facility in Tucson, Arizona. The metallurgical study that was developed on three
composite samples indicated that the copper and molybdenum were amenable to recovery by flotation.
The metallurgical data developed have been summarized in the following paragraphs.
Rougher flotation testing was conducted for 25 minutes at a grind size of approximately 80% passing
270 microns on each of the composite samples using a scheme of reagents provided by BHP.
 Total copper rougher recovery ranged from 95.06 to 91.98%. The highest copper
recovery of 95.06 percent was obtained on the Composite 5 after a retention time of 25
minutes. It seems that a retention time of 15 minutes could be the maximum retention
time. It was recommended that a retention time factor of two should be used for plant
design.
 Molybdenum recovery ranged from 81.76 percent to 69.69 percent. The highest
molybdenum recovery of 81.76 percent was obtained on the on the Composite 5 after a
retention time of 25 minutes.
There has been a significant amount of work on the analysis of flotation recoveries for the Pinto Valley
mill. The review completed in 2012/2013 by BHP for the PV2 Project presentations generated a wide
range of observations and conclusions. The primary findings have been included in the various charts
and tables below.
Figure 13-4: 2007 Fleet Model

Figure 13-4 illustrates the predictions for total copper recovery that were developed using flotation
modeling techniques developed by SGS (Fleet). The Fleet models are typically developed by lab flotation
tests. The results shown indicate a good match to plant data.
In comparison to earlier recovery models based on a fixed final tail copper assay the Fleet model that
was generated appeared to provide a more accurate representation.
In Figure 13-5 efforts were made to compare 2013 data to the 2007 model and data. The results
indicated that the rougher recoveries for copper sulfide mineralization were comparable for the two
sets of data.
Figure 13-5: Rougher Flotation Recovery of Copper Sulfides

A comparison of the moly recovery to the copper rougher concentrate has been shown in Figure 13-6.
The results indicated that there was an increase in moly recovery for the 2013 tests compared to 2007
steps. There was no indication in any of the reports to explain any reasons for the differences.

Figure 13-6: Moly Recovery to the Copper Rougher Concentrate
In Table 13-3 the BHP report presented the predicted recovery developed from the models for the
various stages of flotation. The overall moly recovery, 47.9%, was fairly typical of by-product moly
operations. The recovery of MoS2 from the copper (bulk) cleaner concentrate to a moly concentrate will
result in another step decrease in moly recovery.
Table 13-3: Staged Recovery Predictions
Overall
Con Grade (%) Recovery (%)
Name
Mean σ Mean σ
Cu 27.14 4.62 85.18 6.44
Fe 31.63 2.63 12.58 4.39
S 36.41 2.97 32.97 23.04
Mo 0.39 0.38 47.88 23.71
Rougher
Name
Mean σ Mean σ
Cu 5.84 2.95 91.26 4.43
Fe 18.27 4.94 36.01 13.67
S 20.09 5.80 90.52 5.92
Mo 0.13 0.13 77.79 35.57
Cleaner
Name
Mean σ Mean σ
Cu 27.14 4.62 93.34 6.67
Fe 31.63 2.63 34.78 22.93
S 36.41 2.97 36.42 26.03

Overall
Mo 0.39 0.38 61.54 27.98
The model that was developed predicted a copper cleaner recovery of 93.34% which reduced the overall
copper recovery to 85%. The historical cleaner recovery at Pinto Valley was indicated in one of the
reviewed reports to be about 97.3%. Typical porphyry copper cleaners operate above the 97.3% level
and the model provided in Table 13-3 could be predicting lower recoveries than are achieved in the
plant.
Figure 13-7: Fleet Simulated Rougher Flotation Recovery

Based on the variances observed in the interpretations of previous model results the 2013 Fleet
program completed by SGS has looked at separating the flotation model into rougher and cleaner
components. The rougher flotation Fleet simulation shown in Figure 13-7 appeared to provide a
reasonable analysis of the rougher flotation data.
Table 13-4 looks at the combined copper rougher/cleaner recovery Fleet model developed in 2007 and
compares it to the 2013 rougher recovery model and the overall recovery interpretations using a fixed
cleaner flotation recovery (97.3%) and the Fleet cleaner recovery model.

Table 13-4: Copper Flotation Recovery Model
2007 %Cu Rec = 8.2381 In(%Cu) + 94.19 (Total)
%Cu Rec = 9.8864(%Cu) + 87.041 (Rougher)
2013
%Cu Rec = -18.465(%Cu)2 + 7.6287(%Cu) + 96.67 (Cleaner)
2007 Fleet 2013 Rougher 2013 Cleaner

%Cu Recovery % %Cu Recovery % %Cu Recovery %
0.10 75.20 0.10 88.03 0.10 85.61
0.20 80.90 0.20 89.02 0.20 86.75
0.30 84.30 0.30 90.01 0.30 87.87
0.40 86.60 0.40 91.00 0.40 88.05
0.50 88.50 0.50 91.98 0.50 88.18
0.60 90.00 0.60 92.97 0.60 87.95
0.70 91.30 0.70 93.96 0.70 87.35
0.80 92.40 0.80 94.95 0.80 86.36
0.90 93.30 0.90 95.94 0.90 84.98
The analysis of the FLEET cleaner flotation model indicates that the copper recovery peaks at a mill feed
grade of about 0.50% Cu. Based on this inversion and declining cleaner flotation recovery with
increasing grade the application of the fixed cleaner recovery to the model appears to provide a more
realistic expectation for the cleaner flotation circuit.
The sample, collected from the ball mill feed in January 2014 and forwarded to ALS in Kamloops, British
Columbia, was prepared for use in a preliminary metallurgical test program. The focus of the program
was to evaluate the rougher flotation recovery based on flotation feed size and flotation time. Figure
13-8 presents the results from the testwork for the copper and the moly recovery to the rougher
flotation concentrate.
The testwork was completed at different grinds. The initial tests were based on 8 minutes rougher
flotation time. The results of the initial tests indicated that the copper and moly recoveries and the
mass pull to the rougher concentrate decreased as the flotation feed became coarser. The decrease
appeared to become more significant as the flotation feed K80 approached 300 microns. Based on the
results of the preliminary tests the K80 300µ and K80 364µ flotation tests were repeated with the lab
flotation times extended to 20 minutes. The extended flotation times showed improved recoveries but
time did not achieve the same recoveries.
The grind / flotation time / recovery relationship has an impact on the throughput optimization of the
Pinto Valley process facilities.

Figure 13-8: ALS Testwork Recovery vs Mass Pull
Rougher flotation testwork has been the primary focus of most of the metallurgical test programs. The
influence of flotation feed grind and ore work index have the most significant impact metal production.
Very little recent work has been reported to the cleaners. Many of the reports and programs that touch
on the cleaners target a regrind mill product size of 50 microns. The regrind kinetic testwork that has
been recently completed at ALS. Figure 13-9 provides an indication of the influence of regrind size on
metallurgical performance.
Figure 13-9: Metallurgical Influence of Regrind Product Size

The results from the ALS testwork were comparable to operating plant data and previous testwork
programs.
13.2 PV3 Metallurgical Testwork (2014)
As part of the PFS for PV3, ore samples were collected from the zones identified in the PV3 pushbacks
and, together with a sample of the current mill feed, were shipped to BaseMet Labs in Kamloops for
metallurgical testwork.
The description of the samples that were sent to BaseMet Labs included:
 Northern Pushback Lower Level (N.PB.LL)
 Northern Pushback Mid Level (N.PB.ML)
 Eastern Pushback Lower Level (E.PB.LL)
 Eastern Pushback Mid Level (E.PB.ML)
 Eastern Pushback Upper Level (E.PB.UL)
 Aplite Composite
 ROM (run-of-mine) Composite
During the metallurgical review activity for the 2014 PV2 PFS 43-101, a metallurgical testwork program
was completed (February 2014) at ALS Labs in Kamloops BC using a ROM ore sample collected from a
ball mill feed conveyor. The procedures developed for the ALS testwork were adopted for the program
at BaseMet Labs that was initiated in October 2014.
For the BaseMet Labs program, testwork was completed on each of the Pushback samples for
comparison to the ROM, baseline sample. A comparison of the test results identified the potential
differences in metallurgical performance.
The testwork program did show that the ore zones that will be mined in the pushbacks should be able to
be processed successfully using the existing flowsheet and equipment.
For each of the samples standard laboratory test procedures were used to complete:
 Bond Ball mill work index tests
 Open circuit lab flotation tests
 Locked cycle flotation tests
Head assays were measured for each of the samples being tested. The ROM ore sample assay was
0.38% Cu. The pushback samples all had lower feed grade assays ranging from 0.22% Cu for the Aplite
composite to 0.32% Cu for the Eastern Pushback Upper Level composite. The implication of the lower
feed grade is that lower rougher flotation recoveries could be expected.
Bond rod mill and ball mill work indexes were determined for each of the samples, Table 13-5. Rod mill
test results were lower than the ball mill results indicating that the risk of a critical size build up in a SAG
mill grinding circuit will be lower. The ore types were typically medium hardness other than the Eastern
Pushback Upper Level (E.PB.UL) where the ball mill work index was 17.1.

Table 13-5: Bond Work Index Test Results
Bond Work Indexes
Ore Description (kWh/tonne)
Rod Ball
ROM 12.50 13.60
E.PB.LL. 13.00 14.10
E.PB.ML 11.10 13.20
E.PB.UL 14.80 17.10
N.PB.LL 13.10 14.50
N.PB.ML 12.20 13.20
Aplite 12.50 13.10
Flotation testwork consisted of open circuit rougher flotation tests. The rougher testwork program was
followed by regrind and open circuit cleaner flotation testwork. The rougher flotation testwork was
consistent for most of the samples tested, Table 13-6. The rougher recovery for the Eastern Pushback
Upper Level sample was the lowest and was 6% lower than the ROM sample.
Table 13-6: Rougher Flotation Recovery
Feed Recovery Lab
Ore Description
Grade 250u 300u
ROM 0.38 92.40 91.30
E.PB.LL. 0.29 87.20
E.PB.ML 0.30 89.20
E.PB.UL 0.32 85.00 84.00
N.PB.LL 0.29 90.10
N.PB.ML 0.26 87.60
Aplite 0.22 90.90
As a result of the rougher and open circuit cleaner flotation testwork 2 locked cycle flotation tests were
completed. One test was completed on a 50:50 composite of Eastern Pushback Lower and Mid Level
zones. The other test was completed on a 50:50 composite of the Northern Pushback Lower and Mid
Level zones. The locked cycle tests concluded with lower than expected concentrate grades (23%) and
overall copper recoveries of about 85% Cu. Visual observation indicated that there was a high load of
pyrite recovered to the copper concentrate. A brief microscopic examination of these concentrates
indicated that the pyrite and chalcopyrite minerals were liberated with the conclusion that higher grade
concentrates could be expected by modifying the reagent addition rates in the testwork.
The scope of this testwork program did not include reagent or testwork optimizations.
The results of the grinding testwork indicated that the ore types that will be expected in the pushbacks
will behave similarly to the range of ores currently being processed. In the 2014 43-101 Technical
Report the majority of the ore zones (Ruin Granite) tested in the Bond ball mill work index range of 13.5
to 15.5. A Diabase ore zone was identified that had higher work indexes ranging from 17.0 to 17.5. The
Eastern Pushback Upper Level ore tested in the recent program exhibited similar work index properties
to diabase ore. When the drill core sample for the Eastern Push Back Upper Level was examined in
detail it was determined that diabase was included in the sample composite. Review of the mine plan
indicates that diabase makes up less than 1% of the ore body so processing will have to be managed to
ensure minimal impact on overall throughput and recovery.
The throughput model based on target grind size for the single stage ball mill circuit defined in the
Technical Report should be applicable for PV3 ore.
For PV2 the projected copper flotation recovery based on mill feed grade for the Pinto Valley ore was
represented by:
RCu = ((9.8864) x (%Cu) + 87.041) x 0.973))
In Table 13-7 the copper flotation recovery has been projected for each of the composites and
compared to the lab flotation results. Fitting the current testwork to this model indicated that the
testwork results were consistent with previous work and that the same recovery model can be applied
for most of the Pushback ore zones.
Table 13-7: Comparing Flotation Test Recovery to Projected Recovery
Recovery
Feed
Ore Description Lab Calculated
Grade
250u 300u Rougher Combined
ROM 0.38 92.40 91.30 90.80 88.35
E.PB.LL. 0.29 87.20 89.91 87.48
E.PB.ML 0.30 89.20 90.01 87.58
E.PB.UL 0.32 85.00 84.00 90.20 87.77
N.PB.LL 0.29 90.10 89.91 87.48
N.PB.ML 0.26 87.60 89.61 87.19
Aplite 0.22 90.90 89.22 86.81
As in the grinding testwork the Eastern Pushback Upper Zone ore is the anomaly with a significantly
lower recovery (-6.0%) than the ROM. The lower recovery is also consistent with previous observations
for Diabase ores.
13.3 Plant Operations Review October 2015
13.3.1 Summary
The Pinto Valley operation has been making changes to the operating and maintenance procedures and
practices in the crushing and grinding circuits in order to identify opportunities to increase the plant
throughput. Operating data from the August 2015 through October 2015 operating period was
analyzed. This analysis of the key operating parameters indicated that:
 Primary Crushing
o Coarser Product (measured by on-line digital camera)
o 34.9% -1” (vs 45.5%)

o 45.5% -2” (vs 66.2%)
 Fine Crushing
o Improved operating availability at 84.6%
o Increased throughput (2955 stpoh)
o Coarser product (measured by on-line digital camera)
 K80 11.76mm (vs 11.00mm)
 Grinding
o Increased operating availability at 95.6%
o Increased grinding mill power (3092kW)
o Increased throughput (54300 mtpd)
13.4 Metallurgical Models
13.4.1 Crushing
Based on the various availabilities at the 0.47inch (12mm) product size the Bruno model indicates that
existing crusher facility is limited to:
 68% availability = 48470 stpd
 85% availability = 60282 stpd (54800 mtpd)
It should be noted that the Bruno model has used screens with different profiles than the screens
installed in order to attain throughputs similar to plant levels. The screens are a primary bottle neck in
increasing plant throughput.
The July 1, 2013 to January 7, 2014 crusher operating data collected by the mine was evaluated to
determine site measurement of the crusher plant capacity. Nominal throughput for each secondary
crusher circuit was estimated at about 1000 short tons per operating hour (2930tph combined).
13.4.2 Grinding
The Pinto Valley grinding circuit utilizes single stage ball mill grinding to prepare the product from the
fine crushing facility for flotation. To model the grinding circuit the focus has been to develop the model
using the Bond ball mill work index calculations and incorporating the correction factors. The variables
inputted to the Bond equation include: the Bond ball mill work index (metric); fine crushing plant
product size, F80; the grinding circuit product size, P80. When compared to the plant data for an ore
work index of 14.6 there was an indication that the grinding circuit throughput was about 10% higher
than projected by the work index model. The plant data was analyzed from 3 months of 2014
continuous operating activity. Table 13-8 projects the plant throughput, in short tons per hour, for a
range of work indexes from 13.5 to 16.5. The 10% model adjustment has been included.
Table 13-8: Production Model (2014)
Plant Adjustment (stpd) 62981 59445 56161 53107 50262 47610 45134
Plant Adjustment (mt/d) 57255 54041 51056 48279 45693 43282 41031
Model Throughput (mt/d) 52050 49128 46414 43890 41539 39347 37301
Grinding Availability 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0%
Plant Feed Rate (t/h) 2282.9 2154.8 2035.7 1925.0 1821.9 1725.7 1636.0
Feed Size, F80 (μm) 11000 11000 11000 11000 11000 11000 11000
Product Size, F80 (μm) 280 280 280 280 280 280 280
Ball Mill Work Index, Wi 13.5 14.0 14.5 15.0 15.5 16.0 16.5
Drive Losses 3% 3% 3% 3% 3% 3% 3%
Unit Power, kWh/t 7.84 8.31 8.79 9.30 9.83 10.37 10.94
Motor, kw available 17904 17904 17904 17904 17904 17904 17904
Motor, hp available 24000 24000 24000 24000 24000 24000 24000
Motor, hp installed 24000 24000 24000 24000 24000 24000 24000
Figure 13-10 provides a graph and linear equation for the interpretation of the model results for the
specific conditions of F80 = 11000µ and P80 =280µ. The model and representative equation will change
for varying feed and product conditions.
Figure 13-10: Graphical Interpretation of Work Index Model (2014)

(F80 = 11000µ, P80 = 280µ)
Table 13-9 is a projection of the grinding circuit throughput applying the 2015 measurements of circuit
operating parameters.
Table 13-9: Production Model (2015)
Plant Adjustment (stpd) 64836 61169 57766 54602 51658 48915 46357
Plant Adjustment (mt/d) 58942 55608 52514 49638 46962 44468 42142
Model Throughput (mt/d) 53583 50553 47740 45126 42693 40426 38311
Grinding Availability 95.6% 95.6% 95.6% 95.6% 95.6% 95.6% 95.6%
Plant Feed Rate (t/h) 2334.4 2204.4 2079.9 1966.0 1860.0 1761.2 1669.1
Feed Size, F80 (μm) 11760 11760 11760 11760 11760 11760 11760
Product Size, F80 (μm) 280 280 280 280 280 280 280
Ball Mill Work Index, Wi 13.5 14.0 14.5 15.0 15.5 16.0 16.5

Drive Losses 3% 3% 3% 3% 3% 3% 3%
Unit Power, kWh/t 7.95 8.42 8.92 9.43 9.97 10.53 11.11
Motor, kw available 18549 18549 18549 18549 18549 18549 18549
Motor, hp available 24864 24864 24864 24864 24864 24864 24864
Motor, hp installed 24000 24000 24000 24000 24000 24000 24000
13.4.3 Flotation
The metallurgical review indicated that modelling of the flotation recovery has not produced consistent
models. The PV2 project requires the push back of the open pit in multiple directions and the
expectations should be that the mill performance will be very similar to the existing mill. Figure 13-11 is
a representation of the FLEET simulated rougher flotation recovery for copper.
Figure 13-11: Rougher Recovery

From the review of the various models it was apparent that none of the models that had been
developed were very representative. Flotation of porphyry type copper deposits typically requires a
simple flowsheet approach.
Based on the information that has been presented it is recommended that the copper flotation recovery
model adopt a simple linear model to represent the rougher flotation recovery followed by a fixed
cleaner flotation recovery.
Copper Rougher Recovery:
[RRCu=(9.8864) x (%Cu)+87.041]
Copper Cleaner Recovery:
RCCu = 97.3%

Overall Copper Recovery:
[RCu=((9.8864) x (%Cu)+87.041) x 0.973)]
Through the discussions it was implied that the flotation of diabase ores resulted in recoveries 5% to 6%
lower than for the other lithologies. On review of the reports and presentation there was no reference
to flotation of diabase ores found. Based on the discussions the following metallurgical model is
recommended for determining the copper recovery for diabase ores.
[RCu (diabase)=((9.8864) x (%Cu)+82.041) x 0.973)]
The Moly recovery is dependent on the ore feed grade and the performance of the bulk concentrate
separation circuit. Moly is a by-product stream that has a very low mill feed grade. The estimated Moly
circuit recovery to moly concentrate when the circuit is operating is 47%.
13.5 Metallurgical Variability

As indicated previously most of the ore reserve is Ruin Granite. This is typical of the ore that has been
more recently processed in the PVM circuit. The range of work index measurements for the various test
samples was very narrow with ruin granite ranging from 13.5 to 15.5. The flotation testwork has also
been consistent for the ruin granite. The diabase ores have a higher work index and poorer
metallurgical performance but the expected impact on mill performance is minimal with the diabase
blended with the ruin granite.
13.6 Processing Factors or Deleterious Elements

No processing factors or deleterious elements that may have a significant effect on potential economic
extraction have been identified. Increased pyrite in some of the PV3 testing did result in some lower
recovery tests but it is anticipated that these impacts can be handled by adjusting processing reagent
schemes as per current practice at Pinto Valley.

14 Mineral Resource Estimates
The following sections detail the methods, processes, and strategies used to calculate the mineral
resource estimate for the PVM deposit for the Pinto Valley 3 PFS (“PV3”).
TCu and Mo% were estimated and reported in the Pinto Valley 2 PFS (“PV2”), with effective date January
1, 2014. A more accurate representation of dilution and its impact on the estimated grades at or near
the mineralization boundary of the 0.1% TCu grade shell was needed. During 2015, additional drilling
was performed in and around particular problem areas which was incorporated into the model to
increase precision. In addition, the lithology and grade solids were refined and remodeled to
incorporate the new data and also to reflect a better understanding of the deposit from site knowledge
and observations. In addition, a multi-percent model was used to account for the effect of dilution
particularly within the blocks at the boundaries.
Moreover, it was deemed prudent to review the classification of resources. The block model does
perform excellently at the core of the deposit based on yearly reconciliation results however, it became
evident that accuracy and confidence drops off at the ore/waste boundary.
In addition, acid soluble copper (ASCU) was estimated in order to provide an indication and guidance
regarding the oxide/sulfide interface however, ASCu is not reported within this technical report. The
reason being that the ASCu data within the database is incomplete and therefore not reliable for
accurately estimating resources attributable to the oxides. In addition, much of the oxides appear to
have been extracted during historic operations.
14.1 Data Evaluation

The data used to update the geological model and subsequently used for the estimation of resources for
PV3 consisted of a csv export from the master resource database that is stored in an onsite acQuire
server. The export included a total of 897 drillholes on PVM property (Table 14-1), most of which reside
within the surrounding pit area, and contained data for collar, survey, lithology, mineralization type, and
assays (CuAs%, CuT%, and Mo%). The dataset included: 1) blank intervals that are either intervals for
which there is no data or data has not yet been entered; 2) zeroes which represent actual zeroes on
assay certificates/documents and are likely to represent an older methodology before ½ detection limit
values were used in place of zero and; 3) negative values that are typically -1, and represent intervals for
which there is a conclusive absence of data. Table 14-2 shows the statistics for the complete database
for TCu%, ASCu% and Mo%, respectively. Figure 14-3 shows a plan view for the drillholes used in the
analysis.
Table 14-1: List of Drillholes used in PVM 2015 Resource Estimate and Model Update
Drillhole Source Number
Original BHP resource drillholes 778
PVRC-13 series (+) 59
Subtotal 837
GTH-14 series (+) 10
Subtotal 847
PZ-14 series (+) 4

Drillhole Source Number
Subtotal 851
PVRC-15 series (+) 43
Subtotal 894
GTH-15 series (+) 3
Total 897
Table 14-2: Assay Statistics

Valid Length Max Mean Median SD CV
TCu% 89,056 655,510 8.16 0.26 0.23 0.23 0.88
All ASCU% 79,746 563,410 5.96 0.01 0.00 0.05 5.33
Mo% 76,367 564,564 1.03 0.007 0.005 0.009 1.304
Figure 14-1: Plan View Showing Drillholes Used
14.2 Computerized Geologic and Domain Modeling

The lithology domains along with the grade shells were revised and remodeled for PV3. The numeric
coding for the lithology domains is as follows:
• 70 Aplite Dikes

• 30 Diabase Dikes
• 50 Granodiorite
• 60 Granite Porphyry
• 11 Ruin Granite
• 40 PLG
• 90 PMCG
• 10 PSG
Figure 14-2 shows a plan view of the major fault planes that bound the PVM deposit. These are the
West End, Gold Gulch, South Hill, Jewel Hill, Dome, and Bummer Faults. Figure 14-3 shows a plan view
of the lithology solids for the PVM deposit, which have been interpreted and modeled in Aranz LeapFrog
Geo™ software (“Leapfrog”). The primary units are the Ruin Granite, granodiorite, and granite
porphyry, in addition to a series of small, flat-lying aplite dikes and near-vertical diabase dikes.
Figure 14-2: Plan View Showing Major Faults

The PVM lithological model consists of 9 lithological groups (Figure 14-3). From youngest to oldest they
are: Post-Mineralization Conglomerates (PMCG), Granodiorite (50), Granite Porphyry (60), Paleozoic
Limestones (PLG), Diabase (DIABASE), Apache Group (APG), Aplite (APLITE), Ruin Granite (RRG), and
Pinal Schist (PSG). As economic mineralization only occurs in two of the fault blocks (Mine and Gold
Gulch). These blocks are discussed in more detail below.

Figure 14-3: Plan View of Entire Lithological Model
PVM sits primarily within the central Mine fault block which is shown in detail in Figure 14-4, Figure 14-5
and Figure 14-6. The primary host rock is the Precambrian Ruin Granite (RRG unit), which is cut by a
myriad of slightly younger aplite sills and two Precambrian diabase dykes. Mineralization occurred with
the intrusion of two Tertiary units: the Granite Porphyry (60 unit) and the Granodiorite (50 unit). The
Granite Porphyry is considered to have been the main mineralizing unit and as such it also contains
generally economic mineralization itself, though the Granodiorite was very late in the mineralizing event
and contains very little in the way of economic copper grades.

Figure 14-4: Plan View of Lithological Model for Central Mine Fault Block with Location of Cross-Sections

Figure 14-5: Northwest-Southeast (A-A’) Cross-Section looking Northeast
Figure 14-6: North-South (B-B’) Cross-Section looking East

A smaller, though significant, amount of mineralization is found within the Gold Gulch fault block (Figure
14-7, Figure 14-8 and Figure 14-9). The Gold Gulch fault block happens to be a small shear zone that is
bounded by two relatively close major faults, making it the most structurally complex fault block in the
model. As with the Mine fault block, the primary host for mineralization within the Gold Gulch block is
the Precambrian Ruin Granite (RRG unit), which is cut by several slightly younger aplite sills (APLITE unit)
and a single, branching Precambrian diabase dykes.
The Gold Gulch fault block is further complicated by the stratigraphically overlying Apache Group (APG
unit), Paleozoic Limestone (PLG unit), and Post-Mineralization Conglomerate (PMCG unit), as well as the
later intrusion of the Tertiary Granodiorite (50 unit). Pinal Schist (PSG unit) is the basement unit within
the Gold Gulch fault block and is intruded by the Ruin Granite (RRG). A number of small intervals of
Granite Porphyry (60 unit) are also present in this block, but they were not modeled as they are not
considered significant.

Figure 14-7: Plan View of Lithological Model for Gold Gulch Fault Block with Location of Cross-Sections

Figure 14-8: Southwest-Northeast Cross-Sections (A-A’)

Figure 14-9: Southwest-Northeast Cross-Sections (B-B’)
The PVM grade shell model consists of two boundaries (0.3%TCu and 0.1%TCu) which produces three
grade shell volumes: (1)≥0.3%TCu, (2)<0.3%TCu but ≥0.1%TCu, and (3)<0.1%TCu (Figure 14-10). As the
Central Mine and Gold Gulch fault blocks contain the majority grade shells (1) and (2), they are
described in more detail below (Figure 14-10, Figure 14-11, Figure 14-12, Figure 14-13, Figure 14-14 and
Figure 14-15). Note that the figures are shown with the pre-mined topography.
As expected, the vast majority of the ≥0.3%TCu grade shell volume occurs within the bounds of the Ruin
Granite and Granite Porphyry lithological units, though there are also rare instances of this grade shell
volume occurring in the Granodiorite unit. This is likely due to local assimilation of the other two
mineralized granitic units within the late Granodiorite. Overall orientation of the grade shells (steeply
northward-dipping and northeast-striking) supports this hypothesis. A general trend was applied to all
three of the grade shells using three curved polylines to outline trends observed in the drillhole
intervals. The trend was applied to improve connectivity of the volumes, specifically the ≥0.3%TCu
grade shell volume.

Figure 14-10: Plan View of Grade Shell Models: ≥0.3%TCu (ore) in red; <0.3%TCu and ≥0.1%TCu (low
grade mineralization) in green; and <0.1%TCu (waste) in blue.
Figure 14-11: Plan View of Mine and Gold Gulch Fault Block Grade Shell Models: ≥0.3%TCu (ore) in red;
<0.3%TCu and ≥0.1%TCu (low grade mineralization) in green; and <0.1%TCu (waste) in blue.
Figure 14-12: Plan View of Mine and Gold Gulch Fault Block Grade Shell Model; ≥0.3%TCu (ore) in red;
<0.3%TCu and ≥0.1%TCu (low grade mineralization), Faults in grey.
Figure 14-13: Plan View of Mine and Gold Gulch Fault Block Grade Shell Model showing ≥0.3%TCu (ore)
in red.
Figure 14-14: Northwest-Southeast Cross-Section (A-A’) ≥0.3%TCu in red, <0.3%TCu and ≥0.1%TCu
Grade Shells in green.
Figure 14-15: Southwest-Northeast Cross-Section (B-B’) ≥0.3%TCu in red, <0.3%TCu and ≥0.1%TCu in
green.
Due to the issues encountered in and around the granodiorite unit, box plots were useful in analyzing
whether this unit could be treated independently of the other lithological units in the estimation
process. In addition, of potential concern was whether the diabase and aplite dikes would require
segregation as a separate set of domain classes during the estimation process. Box plots were run for
the various lithology units, as shown in Figure 14-15, which illustrates that the aplite dikes are very
similar in nature to the Ruin Granite, which are interpreted to crosscut horizontally. Therefore, the Ruin
Granite and the aplite dikes were grouped as a common domain for the estimation. Furthermore, the
diabase dikes are also very similar, as is the granite porphyry, so it was decided that creating subsets of
the lithologic units within the mineralized envelopes was not necessary. However, it is clear that the
granodiorite exhibits lower grade than the other units and should be treated separately particularly
when considering that there have been issues during mining in and around the granodiorite. Table 14-3
lists the assay statistics which show each element within the mineralized solids.
Figure 14-16: Box Plot with Domain Solids
Table 14-3: Assay Statistics by Mineralized Zone

Valid Length Max Mean Median SD CV
TCu 22,254 164,615 2.93 0.05 0.04 0.07 1.4
<0.1% ASCu 18,476 130,574 1.29 0.01 0.00 0.01 2.4
Mo% 19,529 148,668 0.206 0.003 0.001 0.005 1.8
TCu 28,857 221,804 2.44 0.20 0.19 0.10 0.5
0.1 –
ASCu 27,051 203,473 1.24 0.01 0.00 0.02 2.2
0.3%
Mo% 26,144 199,413 1.03 0.006 0.005 0.01 1.5
TCu 34,429 241,406 8.16 0.46 0.42 0.22 0.5
>0.3% ASCu 32,404 217,875 4.83 0.01 0.00 0.05 4.0
Mo% 28,047 194,192 0.127 0.011 0.010 0.009 0.8
TCu 85,540 627,824 8.16 0.26 0.23 0.23 0.9
Total ASCu 77,931 551,922 4.83 0.01 0.00 0.03 3.6
Mo% 73,720 542,272 1.030 0.007 0.005 0.009 1.3
14.3 Topography
The topography used is the current topographic surface as at December 31, 2015. Figure 14-17: Plan
View of Topographic Solid shows the topographic solid with the ‘reasonable prospects’ pit overlain in
plan view.
Figure 14-17: Plan View of Topographic Solid
14.4 Composites
It was determined that a 45 ft composite length minimizes the smoothing of the grades, and also
reduces the influence of typically narrow, higher-grade samples. This falls into alignment with the 45 ft
bench height used for mine planning.
Figure 14-18 and Figure 14-19 show the box plots for copper and molybdenum within the mineralized
envelopes. The basic statistics shown in the figures indicate that the copper and molybdenum data are
reasonably distributed. Copper composites have a relatively low coefficient of variation while the CV for
the molybdenum composites is relatively high particularly within the >0.3% grade shell.
Figure 14-18: Box Plot for Copper Composites by Zone
Figure 14-19: Box Plot for Molybdenum Composites by Zone
Figure 14-20 through Figure 14-23 show contact plots copper and molybdenum within the 0.1% and
0.3% grade envelopes for copper. As expected, the copper values show a clear, abrupt transition at the
contact between the 0.1%–0.3% and the 0.3% TCu grade envelopes justifying a hard boundary. In
addition, the contact plots at the 0.1% boundary, also shows an abrupt transition and therefore also
justifies a hard boundary. However, the contact plot for molybdenum shows little, if any, transition
between the two grade envelopes. This shows that the molybdenum may be evaluated and
interpolated as one continuous mineralized domain.
Figure 14-20: Contact Plots for Copper
Figure 14-21: Contact Plots for Copper
Figure 14-22: Contact Plots for Molybdenum
Figure 14-23: Contact Plots for Molybdenum
14.5 Outliers
Cumulative frequency plots shown in Figure 14-24 and Figure 14-25 for %TCu and %Mo illustrate that at
1.6% TCu and 0.05% Mo, there is a break in the log normal plot. This represents 0.1% of the copper
composites and 0.4% of the molybdenum composites, which require implementation of a grade-limiting
strategy.
One is by physically cutting the grades of the assays or composites, and the other is by limiting the
influence that a high-grade sample has by limiting the distance to which it contributes to the grade of a
block estimate. In the case of the PVM deposit, the distance (radius) threshold chosen was 150 ft, which
equates to the adjacent, adjoining blocks and no farther.
Figure 14-24: Cumulative Frequency Plot for %TCu
Figure 14-25: Cumulative Frequency Plot for %Mo
14.6 Tonnage Factor

As with the 2014 Resource Estimate, the average bulk dry density for ore-grade mineralized rock,
primarily Lost Gulch Quartz Monzonite, is 12.75 ft3/ton. Although the in-situ bulk dry densities for all
PVM rock types range from 12.1 ft3/ton for Pinal Schist to 13.0 ft3/ton for Whitetail Conglomerate,
12.75 ft3/ton has been used for all reserve calculations. Further, production reconciliations tend to
support the 12.75 ft3/ton factor; it had been reported in production comparisons that even though the
block model under-predicted tonnage, the 12.75 ft3/ton tonnage factor that was used still provided a
reasonable estimate. Since the resources remaining in the ground are geologically the same as the
resources already mined from the primary zone, it is reasonable to assume that this density will also
provide globally reasonable estimates of remaining resource tonnages.
14.7 Block Model Definition
The block model used is the same as that for the March 2014 mineral resources defined according to the
limits shown in Figure 14-26.
The block model is orthogonal and non-rotated, reflecting the orientation of the deposit. The chosen
block size was 100 ft × 100 ft × 45 ft to roughly reflect the available drillhole spacing and bench height
and to adequately represent the deposit with a representative amount of discrete points in three
dimensions. In addition, this was the selected SMU for past operations and for going forward.
Figure 14-26: Block Model Bounds

The spatial evaluation of the data was conducted using a correlogram instead of the traditional semi-
variogram. The correlogram is normalized to the variance of the data and is less sensitive to outlier
values; this generally gives cleaner results. Correlograms were generated for the distribution of total
copper (%TCu) within each of the grade shells using the commercial software package Sage 2001,
developed by Isaacs & Co. Correlogram model data is shown in Table 14-4.
Separate correlograms were also generated for used for oxide (%ASCu) within each of the grade shells
and are shown in Table 14-5. Table 14-6 shows the correlogram model produced for the molybdenum
(%Mo) for all data irrespective of grade shell.
Table 14-4: Correlogram Model Data by Metal
Range Y Range X Range Z Rotation Z Rotation X Rotation Y
Zone Metal C0 C1 C2
(ft) (ft) (ft) (deg) (deg) (deg)
0.213 0.453 0.334 121.2 493.7 207.2 5 -78 35
>3% %TCu
1,228.7 2,386.1 525.5 -14 4 1
%TCu 0.206 .48 .314 224.8 414.7 173.5 1 37 8
Zone Metal C0 C1 C2
0.1 –
668.4 2,240.6 1,108.1 -8 51 -20
0.3%
0.134 0.663 0.204 153.9 204.6 540.6 5 12 11
<0.1% %TCu
1,108.2 18,672.4 1,767.6 41 87 51

Zone Metal C0 C1 C2
0.111 0.597 0.292 323.4 412.6 123.5 61 28 7
>3% %ASCu
7,375.3 1575.2 814.7 27 7 6
0.1 – 0.113 0.65 0.237 67.8 232.7 201.6 56 -6 8
%ASCu
0.3% 2326.2 4757.3 791.3 21 12 4
0.284 0.391 0.326 44.7 154.5 588.2 -1 4 -55
<0.1% %ASCu
3404.4 2174.9 803.5 40 6 -10

Zone Metal C0 C1 C2 Range Y Range X Range Z Rotation Z Rotation X Rotation Y
0.211 0.362 0.427 70.0 341.8 250.7 6 4 -35
>3% %ASCu
3,435.1 1,603.0 1,003.2 74 -8 43
Table 14-7: Interpolation Parameters

Range Range Range Rotation Rotation Rotation Min # Max # Max # Composites
X (ft) Y (ft) Z (ft) Z X Y Composites Composites / DDH*
750 750 300 0 0 0 4 16 5
*Diamond Drillhole
The estimation strategy for %TCU and %ASCu employed a four stage process. The grades for %TCU and
%ASCu are estimated using ordinary kriging within each of the respective grade shells separately and
stored. In addition, the grades are estimated within the granodiorite unit only using inverse distance to
the second power as there is insufficient data to derive meaningful variograms. The final %TCU and
%ASCu grades are then combined on a relative weighted basis using the partial as a percentage to do
the weighting.
The estimation plan includes the following:
• Store the mineralized zone code and percentage of mineralization.
• Estimate the grades for each of the metals within each of the mineralized grade shells using
ordinary kriging in a single pass.
• Estimate the grades for each of the metals within granodiorite unit using ID2 in a single pass.
• Include a minimum of 2 composites and a maximum of 16, with a maximum of 4 from any 1
drillhole.
• Combine the individual grades into a whole block diluted grade by weighting by the partials
stored as a percentage.
The estimation of %Mo was performed using a single pass ordinary kriging run irrespective of grade shell
domain or lithology domain.
The amount of data available for estimating Ag, Au and Fe is limited and therefore estimating these
elements in the same manner would not result in any meaningful results.
14.8 Mineral Resource Classification

The spatial variation pattern incorporated in the semi-variogram and the drillhole spacing can be used to
help predict the reliability of estimation for copper metal. (In this case, there are two potentially
economic metals, however copper is the greatest contributor to NSR. Therefore, copper variation will
dominate estimation uncertainty and ultimately determine drill spacing.) The measure of estimation
reliability or uncertainty is expressed by the width of a confidence interval or the confidence limits.
Then, by knowing how reliably metal content must be estimated to adequately plan, it is possible to
calculate the drillhole spacing necessary to achieve the target level of reliability. For instance, Indicated
resources may be adequate for planning in most prefeasibility work. For feasibility studies, it is not
uncommon to require Measured resources to define the production within the payback period, and
then Indicated resources for scheduling beyond payback time.
In the case of the current deposit, there is some information available from several domains, and the
spacing between holes varies with much of the data at a spacing of about 200 ft. Results from this study
will be validated against current and future drilling.
Confidence intervals are intended to estimate the reliability of estimation for different volumes and
levels of drillhole spacing. A narrower interval implies a more reliable estimate, and attempts should be
made to have enough closely spaced holes in the drilling to accurately determine the spatial correlation
structure of copper samples less than 200 ft apart.
The study is based on the ideas outlined in the next several paragraphs. Using hypothetical, regular drill
grids and the variograms from the composited drillhole sample data, confidence intervals or limits can
be estimated for different levels of drillhole spacing and production periods or equivalent volumes. The
confidence limits for 90% relative confidence intervals should be interpreted as follows.
The method of estimating confidence intervals is an approximate method that has been shown to
perform well when the volume being predicted from samples is sufficiently large (Davis 1997). In this
case, the smallest volume where the method would most likely be appropriate is the production from
one year. Using these guidelines, an idealized block configured to approximate the volume produced in
one month is estimated by ordinary kriging, using the idealized grids of samples.
Relative variograms are used in the estimation of the block. Relative variograms are used rather than
ordinary variograms because the standard deviations from the kriging variances are expressed directly in
terms of a relative percentage.
The kriging variances from the ideal blocks and grids are divided by twelve (assuming approximate
independence in the production from month to month) to get a variance for yearly ore output. The
square root of this kriging variance is then used to construct confidence limits under the assumption of
normally distributed errors of estimation. For example, if the kriging variance for a block is 2m then the
kriging variance for a year is 2y = 2m/12. The 90% confidence limits are then confidence limit = ±1.645
× y.
The confidence limits for a given production rate are a function of the spatial variation of the data and
the sample or drillhole spacing. For this exercise, the drillhole grids tested were 900 × 900 ft, 600 × 600
ft, 300 × 300 ft, and 150 × 150 ft.
The following details the grid spacing for each resource category to classify resources are:
Measured
Note that based on the Canadian Institute of Mining (CIM) definitions, continuity must be
demonstrated in the designation of measured (and indicated) resources; therefore, no
measured resources can be declared based on one hole. The uncertainty based on current
information suggests a spacing of 150 ft may be required to classify measured resources.
Indicated
Resources in this category could be delineated from multiple drillholes located on a
nominal 500 ft square grid pattern.
Inferred
Resources in this category include any material not falling in the categories above, and
within a maximum 750 ft of one hole.
The spacing distances are intended to define contiguous volumes, and they should allow for some
irregularities due to actual drillhole placement. The final classification volume results typically must be
smoothed manually to come to a coherent classification scheme.
To further ensure confidence and continuity, the blocks were displayed at the chosen thresholds of
approximately 150 ft and 500 ft to the nearest composite, and a boundary was digitized to create a
smooth surface and to reduce the “spotted dog” effect. A solid was then created and coded back into
the model by majority code, and using >50% partials to be classified as measured or indicated. The
remainder that is greater than 500 ft, but not more than 750 ft from nearest composite, was classified
as Inferred.
14.9 Mineral Resources

CIM Definition Standards for Mineral Resources and Mineral Reserves (May 2014) define a mineral
resource as follows:
[A] concentration or occurrence of diamonds, natural solid inorganic material, or natural solid
fossilized minerals in or on the Earth’s crust in such form and quantity and of such a grade or
quality that it has reasonable prospects for eventual economic extraction. The location,
quantity, grade, geological characteristics, and continuity of a mineral resource are known,
estimated or interpreted from specific geological evidence and knowledge.
The “reasonable prospects for eventual economic extraction” requirement generally implies that
quantity and grade estimates meet certain economic thresholds and that mineral resources are
reported at an appropriate cutoff grade, taking into account extraction scenarios and processing
recovery.
The “reasonable prospects for eventual economic extraction” were tested using floating cone pit shells
based on reasonable economic assumptions. The economic assumptions include the following:
$3.30/lb Cu, $10.00/lb Mo, 88% Cu recovery, 50% Mo recovery, $1.50/ton mining costs, $1.50/ton G&A
costs, $5.00/ton milling costs, and a pit slope of 45°. The pit optimization results are used solely for the
purpose of testing the “reasonable prospects for eventual economic extraction” and do not represent an
attempt to estimate mineral reserves. The optimization results are used to assist with the preparation
of a mineral resource statement and to select and appropriate reporting assumptions.
It is important to note that the resources are reported below the most current topography at the
effective date which is the January 1, 2016 topographic surface as shown in Figure 1-17. In addition, the
method used for reporting the resources is by creating a solid between the 2016 topography and the
“reasonable prospects” pit and then reporting the volumes as a percentage of the partial blocks as
opposed to less accurate method of whole block reporting. Figure 14-27 shows a plan view of the %TCu
grades for blocks falling within the reasonable prospects pit.
Figure 14-27: Plan View of Block Model at Elevation 3050’ with TCu Grades
The mineral resources are listed in Table 14-8 for %TCu and %Mo.
The mineral resources were estimated by Kirkham Geosystems Ltd and are effective January 1, 2016.
The estimate includes results from drill programs conducted in 2015 and a revised geological model,
revised grade shell models and adjustments to the estimation strategy based on a better, current
understanding of the character of the deposit particularly at the boundaries.
Table 14-8: Mineral Resources at 0.17% TCu Cutoff Grade1, 2 - Imperial
Contained
Imperial Copper Molybdenum Contained
Molybdenum
(MTons) (%) (%) Copper (M Lbs)
(M Lbs)
Measured (M) 714.2 0.34 0.008 4,843.4 118.6
Indicated (I) 851.3 0.26 0.006 4,387.8 105.6
Total M&I 1,565.5 0.30 0.007 9,231.5 224.1
Inferred 138.9 0.25 0.005 686.7 13.9
1. Mineral Resources are reported inclusive of Mineral Reserves.
2. Totals may not be exactly due to rounding.
3. The economic assumptions include the following: $3.30/lb Cu, $10.00/lb Mo, 88% Cu recovery, 50% Mo recovery,
$1.50/ton mining costs, $1.50/ton G&A costs, $5.00/ton milling costs, and a pit slope of 45°
Table 14-9: Mineral Resources at 0.17% TCu Cutoff Grade1, 2 (Metric Units)
Contained
Metric Copper Molybdenum Contained
Molybdenum
(M Tonnes) (%) (%) Copper (M Lbs)
(M Lbs)
Measured (M) 647.9 0.34 0.008 4,843.4 118.6
Indicated (I) 772.3 0.26 0.006 4,387.8 105.6
Total M&I 1,420.2 0.30 0.007 9,231.5 224.1
Inferred 126.0 0.25 0.005 686.7 13.9
1. Mineral Resources are reported inclusive of Mineral Reserves.
2. Totals may not be exactly due to rounding.
3. The economic assumptions include the following: $3.30/lb Cu, $10.00/lb Mo, 88% Cu recovery, 50% Mo recovery,
$1.50/ton mining costs, $1.50/ton G&A costs, $5.00/ton milling costs, and a pit slope of 45°
Mineral resources are not mineral reserves until they have demonstrated economic viability. Mineral
resource estimates do not account for a resource’s mineability, selectivity, mining loss, or dilution.
These estimates include Inferred mineral resources that are normally considered too geologically
speculative for the application of economic considerations; therefore, they are unable to be classified as
mineral reserves. Also, there is no certainty that these Inferred mineral resources may be converted
into Measured or Indicated resources as a result of future drilling or after applying economic
considerations.
14.10 Model Validation

A graphical validation was done on the block model. The purposes of the graphical validation are as
follows:
• Visually check the reasonableness of the estimated grades based on the estimation plan and
the nearby composites.
• Compare the general drift and the local grade trends of the block model to the drift and
local grade trends of the composites.
• Ensure that all required blocks are estimated.
• Check that, within the model blocks, the topography has been properly accounted for.
• Check the manual order-of-magnitude estimates for tonnage to determine reasonableness.
• Inspect and explain, when necessary, the high-grade blocks created as a result of outliers.
A full set of cross sections, long sections, and plans were used to check the block model visually,
showing the block grades and the composite. There was no evidence that any blocks were wrongly
estimated. It appears that every block grade can be explained as a function of the following:
• Surrounding Composites
• Correlogram Models Used
• Estimation Plan Applied
These validation techniques include the following:

• A visual inspection done on a section-by-section and plan-by-plan basis.
• Inspection of grade tonnage curves.
• Histograms of varying cut-off grades that demonstrate a relatively uniform, normal
distribution.
• Swath plots (drift analysis) that compare the ordinary kriged blocks with the inverse
distance and nearest neighbor estimates.
• Inspection of histograms to determine the distance of the first composite to the nearest
block and the average distance to blocks for all composites used.
• Model checks for change of support.
• Detailed reconciliations with blasthole and production data.
14.11 Model Risks

As resource models are an estimate, there are inherent risks related to the input data used,
interpretation of data and geology, subjective confidence and continuity. All efforts are taken to
mitigate these potential risks however, the following should be noted in the case of the resource
estimate reported herein.
There remains some uncertainly related to the interface between oxides and sulfides as the data,
particularly the historic data, has limited ASCu sampling results. Modelling has been performed with the
existing dataset and is used as a guide for the location of the interface. Estimation risks are very limited
within the core of the deposit where most of the oxide has been mined out however, there is some
uncertainty within the pit walls when pushing back.
Creation of the grade shells and lithologies are performed using LeapFrogTM which employs implicit
modelling. It should be noted that the same data can result in slightly varying representations so there
are risks related to these models particularly at the boundaries. Specifically, there is a risk related to the
delineation of granodiorite especially in the Castle Dome area as this is estimated separately due to its
low grade and reconciliation issues in the past.
The inferred resources for any deposit are relatively uncertain by definition. Additional drilling will be
required to more accurately characterize the grades when inferred resources are encountered during
mining.
15 Mineral Reserve Estimates
The mineral reserve was developed by IMC and is the total of all proven and probable category material
planned for processing from the mine plan. Development of the final open pit design and mineral
reserve was based on the best economic limit. There were no limits or constraints incorporated from
the current operating permit at Pinto Valley. The qualified person for the mineral reserves is John
Marek, President of IMC.
The mineral reserve at PVM is based on industry standard mine planning practices than are applied at
similar open pit mines. The floating cone algorithm combined with practical phase designs and trials of
alternative mine production schedules were used to set the mine plan and production schedule. The
mineral reserve is the total of all material planned for processing within the mine production schedule.
Early in the development of this mine plan, IMC designed a series of preliminary phases or push backs
that initially targeted a floating cone that was based on a copper price of $2.75/lb. Additional
expansions beyond that price were also developed using metal prices as high as $3.50/lb copper.
Mine schedules were developed that progressively added pushbacks to the mine life. The impact of
each additional pushback on the mine plan was evaluated economically.
When complete, the schedule analysis did not support the production of all material that was within the
$2.75/lb floating cone. Two pushbacks (east and north walls) were proven to be economic. The west
and southwest pushbacks did not contribute to the overall project economics on a time value of money
basis because of their high strip ratios and the time required to release the ore at depth. The east and
north walls of the floating $2.75 cone were used as the guide to develop the final PV3 pushback
sequence for this study.
15.1 Floating Cones

The floating cone computer algorithm is a tool that provides guidance to mine design. The algorithm
applies approximate costs and recoveries, and approximate pit slope angles, to establish theoretical
economic breakeven pit wall locations. Economic benefit was applied to measured and indicated
(proven and probable) ore only for this study. Inferred category mineralization is considered to be
waste in the project evaluation.
Economic input applied to the cone algorithm is necessarily preliminary, as it is one of the first steps in
the development of the mine plan. The cone geometries should be considered as approximate, as they
do not assure access or working room. The important result of the cones is the relative change in
geometry between cones of increasing metal prices. Lower metal prices result in smaller pits, which
provide guidance to the design of the initial pushbacks. The change in pit geometry as metal prices are
increased indicates the best directions for the succeeding phase expansions to the ultimate pit.
Table 15-1 summarizes the input data to the floating cone. Process recoveries and estimated process
costs were developed from budget and historical information provided by Capstone. Slope angles were
provided by the geotechnical engineering consulting firm, SRK Consulting (SRK) with review and input in
specific areas by Call and Nicholas (CNI). Mine operating costs were based on the 2015 Five Year Budget
provided by PVM. Floating cones require overall slope angles for input. The overall angle (OSA) that
was used in the cones to account for the impact of haul roads are shown on the table.
Multiple floating cones were completed at a range of metal prices. Copper prices ranging from $2.00/lb
to $4.00/lb were applied within the cone runs. The base case metal prices for design were set at
$2.75/lb copper price and $12.50/lb molybdenum by Capstone. Molybdenum prices for the multiple
cones were set at the same ratio to base case as copper. For example, a floating cone at $2.20/lb
copper utilized a molybdenum price of (2.20/2.75 × 12.50 = $10.00/lb).
The costs and recoveries result in the following simplified cutoff grades if the contribution of
molybdenum is not included in the cutoff calculation.
 Internal or Marginal Cutoff = 0.17% Total Copper
 Breakeven Cutoff = 0.22% Total Copper
IMC completed an additional analysis to determine the impact of molybdenum on the floating cone
results and the cutoff grade calculations. Molybdenum provides the equivalent value of about 0.02%
total copper. Comparisons of grade tonnage curves between a net smelter return (NSR) cutoff approach
applying the molybdenum credit and a simple total copper cutoff grade were sufficiently close that the
reserve and mine plan will be based on the total copper cutoff.
Figure 15-1 illustrates the floating cone that was produced at $2.75 copper. Figure 15-2 illustrates the
final pit design that was used to develop the mineral reserve. Comparing the two indicates that the
west and southwest areas that were economic in the floating cone but not economic in the phase by
phase analysis were not included in the final pit design.
Table 15-1: Base Case Floating Cone Input – Pinto Valley Project
Cone Input Item Cost or Recovery
Mining Cost Inputs to Cones
Direct Mine Operating Cost $1.60/tonne
Haulage Cost Increment per Bench $0.041/tonne /bench depth above/below 4040 bench
Average Total Mining Cost With Haul Increment $2.05/tonne
Bench Discounting 1%/bench of depth below the 4895 bench
Process Costs for Mill Operation
General and Administrative Cost $1.52/tonne
Milling Cost $5.14/tonne
Flotation Process Recovery - Copper
All Except Diabase Recovery (%) = ((Cu Grade × 9.8864) + 87.041) × 0.973
Diabase Recovery (%) = ((Cu Grade × 9.8864) + 82.041) × 0.973
Molybdenum Recovery 45%
Concentrate Transport Costs
International Transport $ 116.04/dry tonne
Domestic Transport $ 14.95/dry tonne
Total Transport $ 130.99/dry tonne
Treatment and Refining Costs for Copper
Moisture Content of Copper Concentrate 9%
Copper Concentrate Grade 27.50%
Copper Smelting Recovery 96%
Copper Smelting Cost $90/dry tonne
Copper Refining Cost $0.090 (refining cost/lb recovered Cu)
Total Cost /lb recovered Cu $0.4326 (SMRF cost/lb recovered Cu – net credits)
Treatment and Refining Costs for Molybdenum
Molybdenum Payable from Roaster 97%
Molybdenum Roasting Costs $1.50/lb recovered Mo
Molybdenum Concentrate Moisture Content 4.50%
Molybdenum Concentrate Grade 48.00%
Net Transport and Roasting Cost for Molybdenum $1.50 (cost/lb recovered Mo)
Metal Prices for Base Case
Copper Price $2.75/lb Cu
Molybdenum Price $12.50/lb Mo
Slope Angles, SRK Recommendations Floating Cone Slope (IRA Angles/OSA Angles)
Pinal Schist in Gold Gulch/West End Fault Zone 27°/27° OSA Used for Floating Cone
Pinal Schist Shear 27°/24°
South wall Unit Pinal Schist 27°
West wall Post Mineral Group, West Wall Shear 32°/30°
East wall Post Mineral Group 48°/42°
West wall Diabase / Limestone 42°
East wall Diabase/Limestone 48°/42°
Northwest Pit Bottom Corner [1] 45°
Ruin Granite, All walls 48°/42°
Bummer Fault Zone (0-120, 160-360) 42°
Bummer Fault Zone (120-160) 36°
Granodiorite in Gold Gulch/West End Shear Zone 28°
East wall Granodiorite 46°/40°
Granite Porphyry, All [1] 34°
Diabase in Gold Gulch/West End Shear Zone 32°/30°
Waste Rock, All 32°/27°
[1] Slope Angle Modifications during Late 2015 based on operational experience and guidance by CNI.
Figure 15-1: Floating Cone at $2.75/lb Copper, Used as Guidance for Phase Design Blue Line is the Patented Claim Boundary
Figure 15-2: Final Pit Design for Mineral Reserve
15.2 Statement of Mineral Reserve
The mineral reserve was developed by tabulating the contained measured and indicated (proven and
probable) material inside of the designed pit at the mill cutoff grades. The mineral reserve is based on
the PV mine schedule in Table 16-3. The schedule utilizes a declining cutoff grade to improve the
project return on investment. The initial cutoff grades are 0.18/0.19% TCu in 2016/2017 which reduce
to internal cutoff grade (0.17% TCu) in 2023. During 2029 to 2032, the cutoff is again elevated to
maintain a consistent head grade.
PVM has operated a run-of-mine (ROM) dump leach on low-grade sulfide ores for many years. This
study assumes that leaching will cease after 2018 due to waste rock storage requirements. The final pit
design and the mineral reserve have not included the ROM dump leach in the floating cone analysis or in
the mineral reserve. Material that is incurred at ROM leach grade is treated as waste. It is not
incorporated into the statement of mineral reserves on Table 15-2. Table 15-2 summarizes the mineral
reserves at PVM remaining after 1 January 2016.
The mineral reserves and the mining plan are based on an in-place tonnage factor of 2.513 tonnes/m3
(12.75 ft3/short ton).
The qualified person for the estimation of the mineral reserve is John Marek of Independent Mining
Consultants, Inc. John Marek did not audit or verify the block model or the statement of mineral
resources. The Pinto Valley block model was transferred to IMC during December 2015. The installation
and tabulation of the model was confirmed in conjunction with Mr. Kirkham and the Pinto Valley mine
planning department.
Changes to the resource model could impact the mineral reserve in a positive or negative way. Changes
could occur due to improved interpretation and/or additional drilling and sampling in the Pinto Valley
district.
Metal price changes could materially change the estimated mineral reserves in either a positive or
negative way. Pit wall instability could impact the remaining reserves in a negative way depending on
the time and area of occurrence. Capstone and their geotechnical contractors have addressed pit wall
stability.
Table 15-2: Mineral Reserves, Remaining After 1 January 2016 (metric)
Cutoff Mineral Reserve Contained Metal
Class
%TCu M tonnes %Tcu %Mo Cu M Lbs Mo M Lbs
Proven 0.18-0.17 350.1 0.33 0.009 2,550.3 71.8
Probable 0.18-0.17 123.7 0.25 0.007 691.2 20.1
Proven and Probable 0.18-0.17 473.8 0.31 0.009 3,241.5 91.9
Tonnes are in metric tonnes of 1000 kg
Moly is molybdenum metal
Base metal prices USD$2.75/lb and USD$12.50/lb Moly
16 Mining Methods
PVM is an open-pit hard-rock mine, producing copper bearing sulfide ore to a conventional milling and
flotation concentrator. Conventional open-pit mining utilizes the cycle of drilling, blasting, loading, and
hauling of material to the respective destinations. Ore is hauled to the primary crusher for processing,
low-grade material is hauled to low-grade stockpiles and stored for later processing, and waste rock
material is hauled to waste storage facilities. Mining is accomplished on 45 ft benches. The qualified
person for this section is John Marek of IMC.
This prefeasibility study incorporates a moderate mill throughput increase in addition to extending the
mine life beyond 2026 to 2038. The current mill capacity of 54,000 tonnes per day (19,760 ktonnes/yr)
will be expanded to 56,000 tonnes per day (20,440 ktonnes/yr) beginning in 2017. The mine production
schedule was developed with the goal of maintaining mill feed and maximizing the project return on
investment.
The mine plan is scheduled to move 116,400 tpd (42,480 ktonnes/yr) of total material during 2016 and
123,100 tpd (44,900 ktonnes/yr) in 2017. Beginning in 2018, the mine will ramp-up to the total tonnage
movement of 132,900 tpd (48,500 ktonnes/yr) until ore is exposed in the final mine phase in 2031.
From then on, the total material movement reduces to slightly more than the ore rate.
The mine plans presented in this section were developed by Independent Mining Consultants, Inc.,
(IMC), based upon the block model of the deposit that was developed and provided by G. Kirkham. The
model blocks are 100 by 100 ft on plan with 45 ft bench heights.
The mining plan is reported in Metric units. One tonne is a metric tonne of 1,000 kilograms, equivalent
to 2204.62 lbs. Ktonnes means 1,000 tonnes. Metal grades are in percent by weight.
16.1 Phase Design

The Pinto Valley Mine has been operated on and off since the 1970s. There are areas of the existing
PVM pit that have had slope stability issues over time. Specific areas are the southwest corner of the pit
in the Pinal schist rock type and the northeast side of the pit near the Bummer Fault. Designing phase
expansions in these areas must consider the geotechnical impacts and practical constraints they impose.
Phase designs that were developed for this study do not mine any of the Pinal Schist. Updated stability
analysis by SRK indicates that the Bummer Fault will not have a significant impact in the future.
Areas to the east and north of the current PVM pit will be expanded. The phase that pushes back the
northern wall will mine through some historic waste and leach dump material before encountering solid
rock. That material is mined at a shallower angle than the solid rock below.
The phase designs were partially guided by the results of the floating cones that were summarized
previously. However, far more important in the design of the mine phases are the challenges of working
with the existing access pattern and the geotechnical constraints on the design.
PVM engineering has developed four phase designs for the current operation that incorporate the
current pit bottom as well as east and south-east expansions. In addition to the PVM designed phases,
IMC has designed three pushbacks that expand the pit beyond 2026 that further develop the pit to the
east and north.
In total, there are seven phase designs that were used as input to the development of the PVM
schedule. The mining phases are a combination of work completed by Pinto Valley engineering staff and
IMC. The phase designs in order of extraction are:
PV1_v2c Designed by PV Engineering Staff, PV1 (current pit bottom)
PV2 _v2c_ECD Designed by PV Engineering Staff, East Castle Dome
PV2_v2c_JH Designed by PV Engineering Staff, Jewel Hill
PV2_v2c_WCD Designed by PV Engineering Staff, West Castle Dome
East Phase Designed by IMC for PV3
North Phase No. 1 Designed by IMC for PV3
North Phase No. 2 Designed by IMC for PV3
Phase PV1_v2c reflects the current operation in the bottom of the Pinto Valley mine to be completed in
year 2018. Jewel Hill is an eastern pushback that was designed to continue the operation through year
2022. The Jewel Hill phase has been sub-phased by PVM Engineering to enable development in the
Castle Dome area to the south to proceed ahead of the Jewel Hill eastern portion.
The location of the phase designs, particularly Jewel Hill, East, and North are illustrated on Figure 16-1.
Inter-ramp slope angles for the phase design are summarized in the next subsection. The overall and
inter-ramp slopes were reviewed and recommended by geotechnical contractor SRK Consulting (SRK).
In addition to slope angles, the following road and pushback geometries complete the mine design
parameters:
 Haul Road Width: 115-ft
 Haul Road Grade: 10% Maximum
 Minimum Width Between Pushbacks: 300-ft Nominal
The tonnage and grade at multiple cutoff grades were tabulated from the designed phases on a bench-
by-bench basis. Those tabulations were used as input to the development of the mine production
schedule.
Figure 16-1: Location of Phase Designs on the 3860 Bench
16.2 Slope Stability

The slope stability analysis was completed by Mr. E. Wellman, at SRK Consulting. Mr. Wellman has been
working on the slope stability analysis at the Pinto Valley Mine since 2006. The latest recommendations
from SRK were presented in the “PV3 Geomechanical Data Report, Pinto Valley Mine, Miami AZ” by SRK
Consulting, April 2015. Some of the slope angle recommendations have been locally modified by PVM
after review by SRK and Call & Nicholas, Inc.
SRK Consulting recommended slope angles for the pit have been based on stability analyses and criteria
developed with Capstone. For PV3, a 10-hole, 10,403-ft drilling program was completed to fill in data
gaps in the existing geotechnical database. The pit slope design process involves determining the
appropriate bench geometry and inter-ramp slope angles, as well as checking wall stability.
To evaluate the potential of overall slope failures involving major faults or weak rock mass, the available
geologic, hydrologic, and geotechnical data from PVM were assessed.
Mining of slopes in the Pinal schist is not planned in the design. For reference, slopes in the Pinal Schist
have a history of displacement and are at limit equilibrium Factor-of-Safety = 1.0. PVM has safely
maintained operational activities with displacing slopes using a range of mitigating controls based on
observation and a slope monitoring program.
 Slope depressurization is recommended for operational considerations and is required
for stability of the Whitetail conglomerate and the granodiorite in the west wall.
 The recommended slope angle in each domain of the pit is the flattest angle produced
by the catch bench, inter-ramp, or overall slope analyses.
The recommended inter-ramp slope angles for design of the phases is summarized on Table 16-1.
Table 16-1: Inter-ramp Slope Angles, from SRK Consulting
Single Bench Double Bench
Sector
45 ft Height 90 ft Height
Ruin Granite - 48
Whitetail Southwest 35 -
Whitetail Northeast 48
West Wall Shear Zone 28-32 -
Diabase 42 48 East Wall
Pinal Schist 27 -
Pinal Schist Shear Zone 24 -
Granodiorite 40 48 Lt 200 ft high
Limestone West 40 West Wall 48 East Wall-
Historic Waste Dumps 32 -
In addition, a Granite Porphyry unit was intersected in the southeast section of the pit that was
originally interpreted as part of the Granodiorite. The Granite Porphyry has recently been interpreted
separately with an inter-ramp slope angle of 34 degrees. In addition to the southeast corner of the pit,
The Granite Porphyry also impacts a portion of the northeast wall in the PV3 East pushback.
Figure 16-2: Pit Slope Design Sectors Map
16.3 Mine Production Schedule
Pinto Valley mill production is currently planned at 54,000 tpd for 2016. The mill production rate is
planned to increase to 56,000 tpd for 2017 and all future years. The mine production schedule was
developed to release and deliver the required ore to the mill and maximize the project return on
investment.
The total material production rates in the mine were selected after the development of several
alternative schedules which compared alternatives of mining equipment loading capacity. For example,
if an additional shovel was purchased, the mine could move more waste. A higher waste rate would
allow for a higher cutoff grade and a corresponding higher head grade to the mill. The capital cost of
that shovel and the operating cost of moving more material were compared to the benefit of producing
higher grade ore on a time value of money basis.
The alternative schedules and equipment tradeoff evaluations were completed with input from the PVM
engineering and operations department to confirm the production capacity of the equipment being
considered. The best economic schedule resulted using the current equipment fleet without adding any
new or larger units.
At this time, PVM operates the following loading equipment:
 2, Hitachi EX5600 hydraulic front shovels with 29.1 cubic meters (38 cubic yard) buckets
 2, Cat 994 front end loader equipped with 17.2 cubic meter (22.5 cubic yard) buckets.
Productivity of the two shovels will be somewhat limited during 2016 due to some narrow geometries in
the bottom of the current pit. Those conditions will be improved during 2016 and 2017 so that the
shovels will achieve more efficient productivity by 2018. IMC and PVM established the following total
material movement schedule based on the production capacities of the two shovels assisted by a 994
Front Loader.
2016: 42,480 k tonnes/year = 116,384 tonnes/day
48,500 k tonnes/year is maintained until release of ore from the final pushback in year 2032
On average, one operating 994 will contribute about 13% of the loading capacity from 2018 onward.
Prior to that time, the two 994s will contribute up to 25% of the required loading capacity.
PVM is currently operating, the PV3 mine plan and schedule is a continuation and extension of the
current operation. Some road pioneering will be required to begin the development of the Jewel Hill
and East Phase of the pit.
Cutoff grades were established to maximize the project NPV for the selected equipment capacity and
total material rate. The cutoff grade for the mine schedules are based on total copper cutoff grades.
The mill feed cutoff grade changes over time, from 0.19%-0.18% TCu during 2016 through 2022 reducing
to 0.17% TCu in 2023. During 2029 through 2032, the cutoff is increased to values between 0.18% and
0.22% TCu to improve head grade and the project time value economics.
During periods when the mill cutoff is above 0.18%, material with grade between the mill cutoff and
0.18% is stockpiled for later processing. The stockpile cutoff is set at a value slightly higher than internal
or marginal cutoff to incorporate the re-mining costs from the stockpile to the crusher.
The mine extraction schedule is illustrated on Table 16-2. Mining from the pit ends mid way through
2038 and stockpile material rehandling commences through till Q1 2039. The mill feed schedule is
shown in Table 16-3. These tables are based on Proven and Probable Mineral Reserves only.
Figure 16-3 illustrates the mine schedule in graphic form.
Table 16-2: Mine Extraction Plan – Mill Rate of 54,000 TPD (2016), 56,000 TPD (2017 and beyond)
Year Cut Off Ore Mined to Mill Ore Mined to Low Grade Stockpile Waste Total Mined
% Tcu M tonnes Tcu % Mo% M tonnes Tcu% Mo% M Tonnes M tonnes
2016 0.18 19.8 0.36% 0.008% 0.0 0.00% 0.000% 22.7 42.5
2017 0.19 20.4 0.34% 0.008% 1.0 0.18% 0.007% 23.5 44.9
2018 0.19 20.4 0.32% 0.011% 1.8 0.19% 0.007% 26.2 48.5
2019 0.17 20.4 0.32% 0.011% 0.0 0.00% 0.000% 28.2 48.6
2020 0.18 20.4 0.35% 0.013% 0.0 0.00% 0.000% 28.1 48.5
2021 0.19 20.4 0.35% 0.008% 0.8 0.19% 0.005% 27.3 48.5
2022 0.18 20.4 0.32% 0.007% 0.0 0.00% 0.000% 28.1 48.5
2023 0.17 20.4 0.29% 0.007% 0.0 0.00% 0.000% 28.1 48.5
2024 0.17 20.4 0.29% 0.008% 0.0 0.00% 0.000% 28.1 48.5
2025 0.17 20.4 0.36% 0.010% 0.0 0.00% 0.000% 28.1 48.5
2026 0.17 20.4 0.40% 0.014% 0.0 0.00% 0.000% 28.1 48.5
2027 0.17 20.4 0.33% 0.014% 0.0 0.00% 0.000% 28.1 48.5
2028 0.17 20.4 0.30% 0.010% 0.0 0.00% 0.000% 28.1 48.5
2029 0.22 20.4 0.28% 0.009% 9.6 0.20% 0.007% 18.5 48.5
2030 0.22 20.4 0.31% 0.009% 1.6 0.20% 0.007% 26.5 48.5
2031 0.18 20.4 0.32% 0.010% 0.0 0.00% 0.000% 28.1 48.5
2032 0.19 20.4 0.31% 0.009% 0.2 0.19% 0.006% 4.1 24.7
2033 0.17 20.4 0.28% 0.008% 0.0 0.00% 0.000% 3.0 23.4
2034 0.17 20.4 0.29% 0.007% 0.0 0.00% 0.000% 3.0 23.4
2035 0.17 20.4 0.27% 0.008% 0.0 0.00% 0.000% 1.4 21.8
2036 0.17 20.4 0.25% 0.008% 0.0 0.00% 0.000% 0.3 20.7
2037 0.17 20.4 0.29% 0.006% 0.0 0.00% 0.000% 0.0 20.4
2038 0.17 9.9 0.28% 0.004% 0.0 0.00% 0.000% 0.0 9.9
2039 0.00 0.0 0.00% 0.000% 0.0 0.00% 0.000% 0.0 0.0
Total 458.9 0.31% 0.009% 15.0 0.20% 0.007% 437.1 910.9
Table 16-3: Mill Feed Schedule – Includes low grade stockpile 2038 and 2039
Payable Copper in
Year Mill Feed Mill Head Grade Payable Moly
Concentrate
M tonnes % Cu % Mo M lbs M lbs
2016 19.76 0.36% 0.008% 133.3 1.0
2017 20.44 0.34% 0.008% 130.9 1.4
2018 20.44 0.32% 0.011% 120.0 2.2
2019 20.44 0.32% 0.011% 124.4 2.2
2020 20.44 0.35% 0.013% 134.8 2.6
2021 20.44 0.35% 0.008% 132.2 1.6
2022 20.44 0.32% 0.007% 122.2 1.3
2023 20.44 0.29% 0.007% 110.5 1.3
2024 20.44 0.29% 0.008% 110.5 1.6
2025 20.44 0.36% 0.010% 138.3 2.0
2026 20.44 0.40% 0.014% 153.9 2.9
2027 20.44 0.33% 0.014% 127.4 2.8
2028 20.44 0.30% 0.010% 115.7 2.0
2029 20.44 0.28% 0.009% 106.5 1.7
2030 20.44 0.31% 0.009% 119.1 1.9
2031 20.44 0.32% 0.010% 122.2 2.1
2032 20.44 0.31% 0.009% 118.3 1.8
2033 20.44 0.28% 0.008% 106.1 1.6
2034 20.44 0.29% 0.007% 110.0 1.4
2035 20.44 0.27% 0.008% 102.6 1.6
2036 20.44 0.25% 0.008% 95.2 1.7
2037 20.44 0.29% 0.006% 109.1 1.2
2038 20.44 0.24% 0.006% 90.2 1.2
2039 4.402 0.20% 0.007% 16.0 0.3
Total 473.8 0.31% 0.009% 2,749.4 41.4
Assumptions used: Recovery as per the formulas provided by K. Major, P.Eng and reported in each block
along with 96.5% payable copper. Moly recoveries assume a ramp up from 30% in 2016 to 47% by 2019
and 97% payable.
Figure 16-3: Mine Plan – Mill Rate of 54,000 TPD (2016) Increased to 56,000 TPD (2017+)
16.4 Mine Material Storage

PVM has historically operated a dump leach operation in the Gold Gulch drainage that collects pregnant
solution and produces copper by SXEW. For this PV3 mine plan, the dump leach operations are assumed
to cease in 2018. All material with grade less than the low grade stockpile cutoff or the mill feed cutoff
(when operating at internal cutoff) is allocated to a waste storage area.
A minor amount (1 Mt) of low-grade material will be stored in Castle Dome in 2017. The majority of
low-grade material will otherwise be stored to the south of the current heap leach dumps and 200 feet
outside of the North final pushback.
During each year of the mine plan, waste material is allocated to the waste storage area based on the
shortest haul time.
Currently, PVM is utilizing three dump areas north of the pit. Those three areas are called the Gold
Gulch East dump, the Gold Gulch West Dump, and the New Leach Dump. IMC has been directed to use
those three storage areas for the years 2016 through 2020. In 2018, the three separate dump footprints
are assumed to be combined for a single waste storage facility called the Main Dump.
During 2020, the Main Dump will develop a large footprint that includes the previous three dump areas
in order to lower overall haulage requirements for the mine and increase overall storage capacity.
Northwest of the mine is an area that is called Gold Gulch. That area is the current location of the
pregnant solution collection pond from low grade ore leaching, a part of the SX-EW process. Prior to
2023 (and approval of an APP amendment application) the area will be available for waste rock storage.
Starting in 2023, the mine plan begins mining from the north wall with the shortest haul being the West
Dump in Gold Gulch. The West Dump will fill in the valley to the northwest of the pit and west of the
Main Dump. Construction for the West Dump has been assumed to utilize high dump heights (up to 700
ft). When the dump is at capacity, it will be dozed to 28.6 degrees.
The Main Dump is built in 45 ft vertical lifts. Dumps that were originally designed by Pinto Valley
engineering (Leach, Gold Gulch East, and Gold Gulch West) utilized dump angles of 31.05 degrees with
15 ft setbacks between lifts for an overall average of 28.7 degrees. The IMC design of the Main Dump
utilizes a 37 degree dump face with a 23 ft set back resulting in an overall angle of 28.6 degrees.
A consistent tonnage factor of 1.93 kg/tonne (swell factor of 1.3) has been used to calculate all storage
capacities. Figure 16-13 is an illustration of the end result of all waste storage facilities at the end of the
PV3 mine plan.
16.5 Annual Mine Drawings

Annual mine and dump drawings for the mine plan are presented on Figure 16-4 through Figure 16-13.
Figure 16-4: End of 2016
Figure 16-13: End of 2039 (After West Dump Reclamation)
16.6 Mine Operations and Equipment
Mine equipment requirements for the mine plan were calculated based on the annual mine production
schedule, the mine work shift schedule, and equipment productivity estimates. Total material handled
by the mining equipment peaks at 48.5 million tonnes per year during 2018 through 2031.
The decision to continue with the current loading equipment fleet without additional units was
described earlier in this section in the tradeoff between capital investment and mine head grade
benefits. The major addition to mining equipment will be the addition of two haul trucks in 2020 due to
the increased haul distance that will occur as the mine gets deeper and the dumps get higher.
Table 16-4 presents a summary of the total mine fleet that is required for the life of mine. This table
takes the fleet replacements and rebuilds into account to show available units on site.
Mine equipment requirements were not estimated for the following activities:
1. Construction of any major surface water diversion channels and settlement ponds and
dams, other than the ditching and sedimentation ponds for the waste storage areas.
2. Road construction outside of the immediate mine area.
3. Clearing brush and stripping topsoil-growth media in advance of mining or dumping.
4. Contouring or reclamation of dumps at the end of the project.
Table 16-4: Mine Major Equipment Fleet Requirement
16.6.1 Mine Equipment Requirements Assumptions

IMC calculated the requirements for major mine equipment at PVM. This information has been
combined with input from the mine site to establish the overall mine equipment list. The mine is
scheduled to work two 12 hour shifts per day, 7 days a week, 52 weeks per year.
Major equipment unit types addressed are:
 Blasthole Drills
 Loading Equipment (shovels + loaders)
 Haul Trucks
 Major Auxiliary Equipment
For years 2016 and 2017, IMC has coordinated equipment use schedules with PVM operations. From
2018 onward, IMC has applied standard IMC equipment calculations for the remainder of the mine life.
During a shift, IMC calculates efficient hours by accounting for mine site delays and operation
inefficiency. In this, IMC assumes that the mine site will have 1 hour of scheduled delays relating to shift
change and lunches/breaks. An operation efficiency of 50 minutes of every hour is then applied for
unforeseen delays (shovel backups, operator inefficiency).
Efficient Hours / Shift = (12 hour shift – 1 Hour Delay) * (50/60 Operation Efficiency) = 9.17 Hours
IMC calculates availability and use of availability as follows.
[number of shifts the machine is available to work]

Availability =
730
[number of shifts the machine actually works]

Use of Availability =
[available shifts]
Table 16-5 is a summary of the maximum availabilities and use of availabilities that have been applied
for each equipment type. IMC has assumed the equipment accumulates 11.0 metered hours per shift.
Table 16-5: Maximum Equipment Availabilities and Use of Availabilities
Use of
Equipment Type Availability
Availability
Cat MD6420 Blast Hole Drill 80.0% 95.0%
Hitachi EX5600 Shovel 85.0% 95.0%
Cat 994F Loader 85.0% 95.0%
Cat 789 Haul Truck 85.0% 95.0%
Cat D10T Track Dozer 85.0% 88.0%
Cat 834H Wheel Dozer 85.0% 85.0%
Cat 16M Motor Grader 85.0% 88.0%
Cat 777F Water Truck 85.0% 78.0%
Cat 336EL Aux Excavator 85.0% 75.0%
Cat 980H Aux Loader 85.0% 85.0%
16.7 Operating Equipment Requirements
16.7.1 Drilling
PVM provided an estimate of drill productivity from their budget forecast for the next 4 years. That
information was provided in terms of feet of hole drilled per year. IMC converted that information to
tonnage drilled per shift for ore and waste. Current practice utilizes different drill patterns for ore and
waste with a higher powder factor in ore to induce more breakage and improve crushing throughput.
All mined material requires drilling and blasting; with the exception of the old waste and leach dumps
and the low grade stockpiles
Table 16-6 summarizes the required operating shifts, the fractional drill fleet, the rounded drill fleet, the
fleet utilization, and the number of operators required per year. The table reflects the required number
of drills per year. Table 16-6 indicates more drills on site in the later years than Table 16-5, The three
drills that are on site are underutilized in the later years of the mine when only two drills are required.
Table 16-6: Drill Requirements – Blast Hole Drill
16.7.2 Loading
The loading fleet consists of two Hitachi EX5600 hydraulic front shovels equipped with 29.1 cubic
meters (38 cubic yard) buckets and two Cat 994 front end loader equipped with 17.2 cubic meter
(22.5 cubic yard) buckets. These units are matched with Cat 789 haul trucks.
Table 16-7 illustrates the loading unit distribution between shovels and loaders throughout the mine
life. Mine production between the loaders and shovels are rebalanced yearly from 2016-2017. This
is due to the less than optimal operating conditions encountered in the planned pit bottom. By
2018, IMC has assumed that PVM will have improved conditions to slightly raise loading production
for the shovels reducing loader requirements for a mine increased total production rate of 48.5 Mt.
From 2018 on, the shovels will handle the bulk of the mine tonnage (42.4 M tonnes) with a lesser
reliance on the loader fleet for production (6.1 M tonnes). The loaders will also support the shovels
during shovel moves and with material blending.
The hydraulic shovels are the primary loading units at the mine. Table 16-8 summarizes the
hydraulic shovel loading requirements by year, including the required shifts, the fractional and
rounded fleet, the fleet utilization, and the number of operators.
The productivity calculation assumes that the trucks are always loaded to their body limit. The 789
truck load is 174.4 dry tonnes (179.6 wet) for ore and waste. Loader material movements depend
on the required mine utilization as shown in Table 16-9.
The Cat 994 wheel loader will also assist as auxiliary and backup service in addition to assisting
primary production. Beginning 2032, the loaders are scheduled as auxiliary equipment only as the
shovels will handle the remaining production. Table 16-9 summarizes the wheel loader loading
requirements by year, including the required shifts, the fractional and rounded fleet, the fleet
utilization, and the number of operators.
Table 16-7: Mined Tonnage Movement by Shovel and Loader Fleets (re-handle is not included)
By Total
By Shovels Shovel % Loader %
Year Loaders Moved
K tonnes of Total of Total
K tonnes K tonnes
2016 31,860 10,620 42,480 75.0% 25.0%
2017 33,675 11,225 44,900 75.0% 25.0%
2018 42,438 6,063 48,500 87.5% 12.5%
2019 42,525 6,075 48,600 87.5% 12.5%
2020 42,438 6,063 48,500 87.5% 12.5%
2021 42,438 6,063 48,500 87.5% 12.5%
2022 42,438 6,063 48,500 87.5% 12.5%
2023 42,438 6,063 48,500 87.5% 12.5%
2024 42,438 6,063 48,500 87.5% 12.5%
2025 42,438 6,063 48,500 87.5% 12.5%
2026 42,438 6,063 48,500 87.5% 12.5%
2027 42,438 6,063 48,500 87.5% 12.5%
2028 42,438 6,063 48,500 87.5% 12.5%
2029 42,438 6,063 48,500 87.5% 12.5%
2030 42,438 6,063 48,500 87.5% 12.5%
2031 42,438 6,063 48,500 87.5% 12.5%
2032 24,693 0 24,693 100.0% 0.0%
2033 23,443 0 23,443 100.0% 0.0%
2034 23,445 0 23,445 100.0% 0.0%
2035 21,820 0 21,820 100.0% 0.0%
2036 20,725 0 20,725 100.0% 0.0%
2037 20,440 0 20,440 100.0% 0.0%
2038 20,440 0 20,440 100.0% 0.0%
2039 4,402 0 4,402 100.0% 0.0%
Total 819,156 106,733 925,888
Table 16-8: Shovel Requirements - Hitachi EX5600 Loading Cat789D Trucks

Total Loading Shifts/ Fract. Actual Fleet # of # of
Year
K tonnes Shifts Year Fleet Fleet Util. Crews Oper.
2016 31,860 1,159 730 1.97 2 0.79 4 8
2017 33,675 1,225 730 2.08 2 0.84 4 8
2018 42,438 1,129 730 1.92 2 0.77 4 8
2019 42,525 1,132 730 1.92 2 0.78 4 8
2020 42,438 1,129 730 1.92 2 0.77 4 8
2021 42,438 1,129 730 1.92 2 0.77 4 8
2022 42,438 1,129 730 1.92 2 0.77 4 8
2023 42,438 1,129 730 1.92 2 0.77 4 8
2024 42,438 1,129 730 1.92 2 0.77 4 8
2025 42,438 1,129 730 1.92 2 0.77 4 8
2026 42,438 1,129 730 1.92 2 0.77 4 8
2027 42,438 1,129 730 1.92 2 0.77 4 8
2028 42,438 1,129 730 1.92 2 0.77 4 8
2029 42,438 1,129 730 1.92 2 0.77 4 8
2030 42,438 1,129 730 1.92 2 0.77 4 8
2031 42,438 1,129 730 1.92 2 0.77 4 8
2032 24,693 657 730 1.11 2 0.45 4 8
2033 23,443 624 730 1.06 1 0.85 4 4
2034 23,445 624 730 1.06 1 0.85 4 4
2035 21,820 581 730 0.99 1 0.80 4 4
2036 20,725 552 730 0.94 1 0.76 4 4
2037 20,440 544 730 0.92 1 0.75 4 4
2038 20,440 544 730 0.92 1 0.75 4 4
2039 4,402 117 182 0.80 1 0.64 4 4
Total 819,156 22,439 16,060 0.77
Table 16-9: Wheel Loader Requirements - Cat 994 Loading Cat789D Trucks
Total Loading Shifts/ Fract. Actual Fleet # of # of
Year
K tonnes Shifts Year Fleet Fleet Util. Crews Oper.
2016 10,620 565 730 0.96 1 0.77 4 4
2017 11,225 597 730 1.01 1 0.82 4 4
2017 6,063 522 730 0.89 1 0.72 4 4
2019 6,075 523 730 0.89 1 0.72 4 4
2020 6,063 522 730 0.89 1 0.72 4 4
2021 6,063 522 730 0.89 1 0.72 4 4
2022 6,063 522 730 0.89 1 0.72 4 4
2023 6,063 522 730 0.89 1 0.72 4 4
2024 6,063 522 730 0.89 1 0.72 4 4
2025 6,063 522 730 0.89 1 0.72 4 4
2026 6,063 522 730 0.89 1 0.72 4 4
2027 6,063 522 730 0.89 1 0.72 4 4
2028 6,063 522 730 0.89 1 0.72 4 4
2029 6,063 522 730 0.89 1 0.72 4 4
2030 6,063 522 730 0.89 1 0.72 4 4
2031 6,063 522 730 0.89 1 0.72 4 4
2032 0 200 730 0.34 1 0.27 4 4
2033 0 200 730 0.34 1 0.27 4 4
2034 0 200 730 0.34 1 0.27 4 4
2035 0 200 730 0.34 1 0.27 4 4
2036 0 200 730 0.34 1 0.27 4 4
2037 0 200 730 0.34 1 0.27 4 4
2038 0 200 730 0.34 1 0.27 4 4
2039 0 50 182 0.34 1 0.27 4 4
Total 106,733 9,925 16,972 0.73
16.7.3 Hauling
The current truck fleet at PVM consists of 18 Cat 789 haul trucks. Truck productivity was estimated
using haul time simulation. IMC measured haul profiles for each time period, material type,
pushback and destination for input to simulation. In total 124 profiles were measured.
Truck haulage times of each profile were calculated and the resulting tonnage per truck shift was
used to calculate the required truck operating shifts for each year.
Each of the trucks will be rebuilt once at about 60,000 hours and replaced at about 120,000 hours.
Trucks will be loaded to their body limit of 174.4 dry tonnes (179.6 wet). Shovel and loader loading
unit distribution for truck load times calculated from Table 16-7.
Table 16-10 summarizes the total truck shifts, fractional and actual fleet size, fleet utilization, and
number of operators for each year for the hauling fleet. The EX5600 is the primary loading unit for
the fleet. The Cat 994 wheel loader serves as a backup loading unit typically accounting for 12.5% of
total material.
From year 2016 to 2019, an average of 18 trucks are required which increases to a maximum of 20
trucks for years 2020 to 2029. The rebuild and replacement schedule maintains 20 trucks in the
fleet through 2033. They are underutilized to some degree when the requirement is less than 20
trucks.
Table 16-10: Cat 789D Haul Truck Requirements

Tonnes Loaded Truck Shifts/ Fract. Rounded Fleet # of # of
Year Shovel Loader Total
Shifts Year Fleet Fleet Util. Crews Oper.
(K tonnes) (K tonnes) (K tonnes)
2016 31,860 10,620 42,480 10,468 730 17.76 18 0.80 4 58
2017 33,675 11,225 44,900 10,392 730 17.63 18 0.79 4 57
2018 42,438 6,063 48,500 10,636 730 18.04 18 0.81 4 59
2019 42,525 6,075 48,600 10,352 730 17.56 18 0.79 4 57
2020 42,438 6,063 48,500 11,729 730 19.90 20 0.80 4 65
2021 42,438 6,063 48,500 11,588 730 19.66 20 0.79 4 64
2022 42,438 6,063 48,500 10,980 730 18.63 19 0.79 4 60
2023 42,438 6,063 48,500 10,669 730 18.10 18 0.81 4 59
2024 42,438 6,063 48,500 11,827 730 20.06 20 0.81 4 65
2025 42,438 6,063 48,500 11,835 730 20.08 20 0.81 4 65
2026 42,438 6,063 48,500 11,895 730 20.18 20 0.81 4 65
2027 42,438 6,063 48,500 10,990 730 18.64 19 0.79 4 61
2028 42,438 6,063 48,500 8,507 730 14.43 15 0.78 4 47
2029 42,438 6,063 48,500 11,790 730 20.00 20 0.81 4 65
2030 42,438 6,063 48,500 8,986 730 15.24 16 0.77 4 50
2031 42,438 6,063 48,500 10,372 730 17.59 18 0.79 4 57
2032 24,693 0 24,693 7,129 730 12.09 12 0.81 4 39
2033 23,443 0 23,443 7,530 730 12.77 13 0.79 4 42
2034 23,445 0 23,445 7,580 730 12.86 13 0.80 4 42
2035 21,820 0 21,820 7,451 730 12.64 13 0.79 4 41
2036 20,725 0 20,725 6,728 730 11.41 12 0.77 4 37
2037 20,440 0 20,440 8,137 730 13.80 14 0.80 4 45
2038 20,440 0 20,440 6,529 730 11.08 11 0.81 4 36
2039 4,402 0 4,402 779 182 5.30 6 0.71 4 17
Total 819,156 106,733 925,888 224,876 16,972 0.80 4
16.7.4 Major Auxiliary Equipment

Major auxiliary equipment refers to the mine major equipment which is not directly responsible for
production, but which is scheduled on a regular basis. Equipment operating requirements,
operating cost per shift, and personnel requirements were estimated for this equipment.
The primary function of the auxiliary equipment is to support the major production units, and
provide safe and clean working areas. Equipment types included in the auxiliary mine fleet are:
 4, Caterpillar D10T Track Dozers
 3, Caterpillar 834H Wheel Dozers
 2, Caterpillar 16M Graders
 3, Caterpillar 777F Water Truck
 1, Caterpillar 980H Auxiliary Loader
 1, Caterpillar 336EL Auxiliary Excavator
 2, Caterpillar 777F Fuel and Lube Trucks
The operating hours and shift requirements for the auxiliary equipment are based on current and
planned scheduling practice at PVM.
16.8 Mine Personnel Requirements

Mine operations and maintenance labor manpower are provided to operate and maintain the
equipment listed previously. Table 16-11 summarizes the required hourly personnel and the mine
salaried and supervisory staff for the mine life.
Table 16-11: Hourly and Mine Supervisory Personnel
17 Recovery Methods
17.1 Mill Process Design Criteria (2014) and Current Flow Sheet
The various unit operations of PVM have been evaluated to develop the basic process design criteria for
the mill. Where possible, the operating data has been compared to testwork and/or simulation models
to determine suitability for the design criteria. The key elements of the process design criteria include
the following.
Primary Crusher
o Product Size Distribution (operating data)
▪ 80%: 3.5 inches
▪ 45%: 1 inch
▪ 30%: 0.5 inch
Secondary/Tertiary Crushers
o Crushing circuit availability: 75% (projected/historical)
o Crushing circuit P80: 11 mm (operating data)
o Standard Cone Crusher Feed Rate: 3000 tpoh (operating data)
Grinding Circuit
o BMWi: 14.7 (metric) (testwork)
o Grinding circuit availability: 95% (projection)
o Daily Throughput, Nominal: 53,800 stpd (48900mt/d) (model/operating data)
o Cyclone overflow P80: 280 μm (operator input)
Copper Flotation
o Rougher feed density: 37% solids
o Rougher flotation lab residence time: 8 minutes (ALS kinetic tests)
o Plant residence time: 24.8 minutes
o Scale up factor: 3.1 (target > 2.0)
Figure 17-1 is a simplified process flow sheet representing the main unit operations applied in the Pinto
Valley mill.
Figure 17-1: Simplified Pinto Valley Process Flowsheet
17.2 Process Criteria: 2015 Pinto Valley Operations Review

Primary Crusher
o Product Size Distribution (operating data)
▪ 45.5%: -2 inch
▪ 34.9%: -1 inch
Secondary/Tertiary Crushers
o Crushing circuit availability: 84.6% (measured)
o Crushing circuit P80: 11.76 mm (operating data)
o Standard Cone Crusher Feed Rate: 2955 tpoh (operating data)
Grinding Circuit
o BMWi: 14.3 (metric) (nominal)
o Grinding circuit availability: 95.6% (operating data)
o Daily Throughput, Nominal: 59,100 stpd (53700 mt/d) (model/operating data)
o Cyclone overflow P80: 280 μm (operator input)
Copper Flotation
o Rougher feed density: 37% solids
o Rougher flotation lab residence time: 8 minutes (ALS kinetic tests)
o Plant residence time: 16.4 minutes
o Scale up factor: 2.1 (target > 2.0)
17.3 Process Plant Opportunities

There is potential for further increases in the Pinto Valley crushing and grinding circuits with minimal
capital expense. These increases will likely result from monitoring and controlling the crusher product
size distributions from both the primary crushing and fine crushing circuits, further increases in the
operating time of both the crushers and the ball mills and further optimization of the ball mill power
utilization. Targeting a grinding mill utilization of 97.5% there is potential to increase the nominal
throughput to 56,000 mtpd.
17.4 Plant Design

The following are the descriptions of the primary unit processes in the Pinto Valley mill. Based on the
evaluation of the existing plant equipment, current operating results, and process models, and
maintaining the design criteria and operating parameters identified in Sections 17.1 through 17.3, it has
been determined that the Pinto Valley mill has an estimated capacity (2015) of 52,000 mtpd. With
further circuit optimization and tuning, it is believed that the crushing and grinding circuit throughput
can be increased to 56,000 mtpd.
17.4.1 Primary Crushing

ROM ore is delivered by haul truck to a Fuller Traylor™ 60 inch × 89 inch gyratory primary crusher. The
trucks discharge directly into the crusher, which is set in a dump pocket. The crushed ore is withdrawn
from a surge pocket under the crusher by an apron feeder, which discharges onto the primary conveyor.
The primary conveyor transports the primary crushed ore to the coarse ore stockpile, which has a
nominal live capacity of 30,000 tons. Based on digital size analysis of the primary crusher discharge, the
P80 of the primary crushed ore is approximately 3.5 inches. The fine product distribution is attributed
to ore fragmentation and mine blasting practices. The discharge product averages 66% −2 inch and 45%
−1 inch. The amount of fines in the feed has a significant influence on the production capacity of the
fine-crushing facility.
17.4.2 Secondary and Tertiary Crushing (Fine Crushing)

The coarse ore is reclaimed from the coarse ore stockpile by six apron feeders, which feed three coarse
ore reclaim belts. Each coarse ore reclaim belt discharges onto a 7 ft × 16 ft Simplicity™ double-deck
vibrating screen. Each screen oversize feeds a secondary 7 ft Nordberg™ standard cone crusher. Screen
undersize from the secondary screens is sent to the FOB, with a nominal live capacity of 44,000 tons.
The secondary crushers operate in open circuit. Crusher product from all three secondary crushers is
forwarded via a common conveyor system to the tertiary crusher feed bin. Ore is withdrawn from the
tertiary crusher feed bin by six feeders and delivered directly to six 8 ft × 20 ft Simplicity™ double-deck
vibrating screens. The screen undersize from the tertiary screens is sent via a common conveyor system
to the Fine Ore Bin (FOB). The screen oversize is crushed by six 7 ft Nordberg™ tertiary shorthead cone
crushers. The product from the six shorthead crushers is added to the secondary crusher product on the
common conveyor system to feed the tertiary feed bin, so that tertiary crushing is in closed circuit. At
the current plant throughput, the P80 of the fine-crushing plant is about 11 mm.
17.4.3 Grinding
Fine ore is reclaimed from the FOB and fed directly to six 18 ft × 21 ft, 4,000 hp Allis-Chalmers™ overflow
ball mills. Each ball mill is an independent circuit consisting of discharge sump, pump, and cyclone
cluster. Water is added to the ball mill feed to achieve the desired percent solids content for grinding.
Additional water is required at the ball mill discharge sump to maintain the optimal operation of the
cyclones. Each circuit is equipped with three 33-inch inclined cyclones. Cyclone overflow slurry gravity
feeds the rougher flotation banks, while the underflow discharges back to the ball mill feed sump. The
ball mills operate in closed circuit with the cyclones, with a circulating load estimated at 300%.
Xanthate, dithiophosphate, diesel, and lime are added to the grinding circuit to prepare the ore in the
slurry for flotation.
17.4.4 Flotation
The flotation circuit operates as a staged process designed for the recovery of copper and molybdenum
to individual concentrates. The primary focus of the rougher flotation circuit is to optimize recovery of
the primary sulfide minerals from the gangue into a reduced mass for economic downstream
processing. Cleaner flotation delivers economic concentrate grades for marketing while maintaining
high recoveries.
The flotation reagents used include Flomin™ C-3430 (Xanthate), C-2420 (dithiophosphate), and F-171
(frother). Some of the flotation reagents have been added to the grinding circuit for slurry conditioning,
with addition rates augmented in the flotation circuit where required.
Regrinding of the rougher concentrate is required to provide the further mineral liberation to allow high
concentrate grades and recoveries from the cleaners. The molybdenum in the PVM ore is recovered to
the bulk cleaner concentrate with the copper. The molybdenum flotation circuit provides the
separation of the copper and molybdenum into respective concentrates for marketing.
17.4.4.1 Rougher Flotation
The rougher flotation circuit consists of sixty-five 1,000 ft3 Wemco™ cells configured in three trains, with
cyclone overflow from two ball mills feeding each train. Frother is added to the head of the rougher
flotation cells, with other reagents (that were added at grinding) added as required. The rougher
section is operated in open circuit, with the rougher tailings going directly to the final tailings.
17.4.4.2 Regrind
The rougher concentrate is delivered to the regrind ball mill circuit. Rougher concentrate is combined
with the regrind ball mill discharge and pumped to the closed-circuit cyclones. The target product for
regrind cyclone overflow is P80 of 50 μm. The cyclone overflow is fed to the cleaner flotation circuit,
while the underflow is sent to two regrind mills. The regrind mills operate in closed circuit with the
cyclones.
17.4.4.3 Cleaner Flotation
The cleaner circuit consists of four 8 ft diameter × 40 ft tall column flotation cells operated in parallel.
The column cell concentrate, the final copper-molybdenum bulk concentrate, contains 27%–29% Cu and
0.35%–0.7% Mo. The column cell tails are sent to the cleaner scavenger flotation bank. The cleaner
scavenger bank comprises fifteen 300 ft3 Wemco™ flotation cells. The concentrate from the first five
cells is recirculated to the column cells. The concentrate from cells 6 to 15 is recirculated to the head of
the cleaner scavenger bank. The tails of the cleaner scavenger bank are sent to final tailings.
17.4.4.4 Molybdenum Plant
The copper-molybdenum concentrate from the cleaner columns is thickened before being sent to the
molybdenum plant. The plant comprises four banks of Agitair™ rougher cells of six 50 ft3 cells each and
three stages of cleaning using column cells. Sodium hydrosulfide is added to the slurry to provide
depression of copper and iron sulfides. Fuel oil is added as a molybdenum promoter.
17.4.5 Concentrate Dewatering

The molybdenum rougher tailing is the final copper concentrate reporting to two 90 ft copper
thickeners. The final molybdenum product is thickened in a 26 ft molybdenum thickener, filtered on a
disk filter, dried, and bagged for shipment.
The final copper concentrate is thickened to 60% solids and flows by gravity from the copper thickeners
to either of two 900 m3 copper concentrate slurry storage tanks. The slurry is pumped from the storage
tanks to the filter plant. Previously, copper concentrate was pumped off-site to a filter plant. The
process flow sheet has been modified to include an Eimco™ pressure filter and on-site copper
concentrate storage shed to manage concentrate shipments.
17.4.6 Tails Thickening

Tailings from the three rougher banks and the cleaner scavenger bank are combined and feed three 350
ft tailings thickeners where water is reclaimed, and the tails are thickened and sent on to the TSFs.
TSF4 is the primary location for the disposal of tailings from the Pinto Valley mill. TSF3 is used only for
initial start-up and in emergency should a problem arises with the TSF4.
In early 2016, a new tailings pump station and pipeline will be operational. Details of tailings pumping
and storage are described in Section 18.
17.5 SX-EW
The PVM SX-EW plant was built and commissioned in 1981 to process solutions from the leach grade
material placed on the leach dumps north of the pit. Through 1998, approximately 450 M tonnes of
0.13% TCu material had been placed on the leach, resulting in production of 10 to 15 M lbs of cathode
copper per year in the early 2000s. Over the last few years, the SX-EW has produced in the range of 5 to
8 M lbs of cathode per year due to the declining residual copper inventory in the leach piles. The PV3
plan utilizes the leach area and pregnant solution pond as waste rock storage, resulting in leaching
operations being discontinued at the end of 2018.
18 Project Infrastructure
18.1 Site Infrastructure
Existing project infrastructure includes:
 Mine Equipment Maintenance Facilities (North Barn, Main Shop, wash bays, tire change area)
 Offices complexes (admin, mine, mill)
 Heavy and light vehicle fuel storage and distribution
 Explosives Plant
 Pit dewatering pumps and pipelines
 Concentrate dewatering, storage and loadout
 Warehousing and Change Rooms
 Stormwater ponds and pumping systems
 Internal roads and access road FSR 287
 Water wells and water pumping systems
 First aid facility
 Assay lab
 Power lines and transformers
 Tailings storage and distribution facilities
The increase in mineral reserves will only impact the tailings storage and distribution facilities. All other
infrastructure is adequate to support the mine life increase to 2039.
18.2 Tailings Storage

PVM currently operates two tailings storage facilities (TSFs) – TSF3 and TSF4. TSF4 is the primary
storage facility, and TSF3 is used when maintenance is required on the TSF4 tailings distribution system
or during plant upset conditions. Previously used TSFs at PVM include Cottonwood TSF and TSF1/2,
which have been closed and mostly reclaimed.
TSF4 has been evaluated and was determined to be capable of storing 500 M tons (454 M tonnes) dry
weight of tailings at a settled density of 95 lb/ft3. TSF4 would rise from the current ~3,850 ft crest
elevation to the planned 4,180 ft crest elevation at an average 17 ft-per-year rate of rise.
TSF3, once the USFS plan of operations is amended, will be capable of storing 21 M tons (19 M tonnes)
of tailings at a settled density of 90 lb/f3. Within the current patented land boundary, TSF3 is capable of
storing 5 Mt of tailings. TSF3 is designated to be used intermittently for a maximum of 32 days per year,
or 10 ft of raise per year.
18.3 Tailings Characteristics

The average annual daily mill throughput in 2016 is expected to be 59,900 tpd (54,000 metric) (dry
weight), increasing to 61,700 tpd (56,000 metric) in 2017 through 2039. The total tailings storage
requirement is 517 M tons (469 M tonnes) for the 23-year mine life. A mill availability of 95% is
anticipated. The tailings distribution and water reclamation systems have been evaluated for a tailings
production rate of 64,950 tpd. The design tailings pipeline flow rate is calculated to be 12,930 gpm with
55% solids.
The tailings gradation test results, performed by AMEC, indicate that approximately 10% of the particles
are finer than 4.8 µm, approximately 50% of the particles are finer than 112 µm, and approximately 80%
of the particles are finer than 360 µm.
18.4 Facility Design
18.4.1 Design of TSF4

Figure 18-1 presents the layout of TSF4. TSF4 was placed in service in 1977. The crest of the TSF4 was
at elevation 3,870 ft in the 4th Quarter of 2015. The tailings impoundment surface immediately below
the dam crest is about 3,842 feet. The mine plan mill production will result in TSF4 raised to elevation
4,180 ft over 23 years. The dam is constructed in an upstream manner, with a cycloned sand shell.
The raise of TSF4 is constrained by the patented land boundary. Boundary dams are required along the
eastern edge of the facility to prevent the migration of tailings to the adjacent USFS land. The boundary
dams are currently being built in a staged manner using rockfill. A project is underway to evaluate and
obtain permitting for the use of cycloned sands for the boundary dam construction, which presents
potential for significant cost savings. The PV3 prefeasibility project also includes modification of the
USFS POO with the goal to allow placement of tailings beyond the current land boundary. The
permitting requirements required for this are described in Section 20.3 of this report. The tailings
deposition plan for PV3 considers that the permit will be secured by 2025, to allow TSF4 tailings
deposition beyond the current property boundary beginning in 2026.
Figure 18-1: TSF4 Layout up to 4180 ft elevation (2039)
18.4.2 Design of TSF3

TSF3 was placed in service in 1973 and was operated until early 2009 to a crest elevation of 3,740 ft,
with a maximum height of 451 ft. In 2011 and 2012, the configuration of the facility was altered by
shifting the active deposition inward from the dam crest. The inset TSF starter embankment is
constructed to an elevation of 3,767 ft. The raise of TSF3 is also currently constrained by the patented
land boundary. A raise of boundary dam will be required at the southwestern portion of the facility to
prevent the migration of tailings to the adjacent USFS land.
The mine plan includes raising of the boundary dam by an additional 12 ft. The TSF3 main embankment
will be raised in a sequence of centerline and upstream lifts. These raises will provide 5 million tons of
storage capacity to an elevation of 3,780 ft.
Modifications to the current USFS POO are ongoing. Once the agreement is in place, the plan is for TSF3
to be raised to elevation 3,857 ft, which will provide about 21 million tons of tailings storage.
18.5 Stability and Seepage Analysis

Past performance and stability analyses of TSF3 and TSF4 indicate that these facilities meet ADEQ
stability safety requirements for static and pseudo-static (associated with a seismic event of a 975-year
recurrence interval) conditions. Dynamic analyses of TSF3 and TSF4 were completed in 2015. The
results indicate that for design-level ground motions caused by earthquakes with magnitudes of 5.0 to
6.5 and for Peak Ground Acceleration (PGA) values about 0.085g, the damage to the embankment is
“none or slight.”
Amec Foster Wheeler has performed annual reviews of the operation of TSF3 and TSF4 from 1998 to the
present. Studies and monitoring of TSF4 reveal that the facility benefits from drainage provided by the
underlying permeable foundation materials. These fluids are reclaimed in downgradient wells.
TSF3, while having historical issues with seepage on embankment slopes, will be used intermittently and
with a revised configuration with deposition of the tailings inset from the prior dam crest. Operational
controls have been developed to limit the number of days per year that TSF3 should be operated and for
the maximum yearly raise rate.
18.6 Tailings Storage Facilities Operation

Mill throughput will average 61,700 tpd (56,000 metric) at 95% availability. The mill tailings are
thickened to approximately 50% to 57% solids by weight, and are conveyed from the thickener
collection box to the TSF3 junction for approximately 7,500 ft through a 34-inch diameter DR 15.5 HDPE
pipeline operating under gravity open flow conditions. A new Combined Tailings Booster Pump station,
to deliver tailings to both TSF3 and TSF4, is currently under construction near this location, scheduled
for commissioning in April 2016.
The tailings’ settled density was measured, in earlier Amec Foster Wheeler studies, between 85 lb/ft3
and 114 lb/ft3 at an in-situ moisture content of 4% to 33%. Average dry densities of 90 lb/ft3 for TSF3
and 95 lb/ft3 for TSF4 were used for the volumetric calculations of this study. These estimated averages
were developed based on the measured values and a review of literature data, and have accounted for
additional capacity that may be gained from future consolidation of existing tailings.
18.6.1 TSF4 Operation

From the TSF3 junction, the tailings are currently conveyed via gravity pressure flow through a 28-inch
diameter Naylor (carbon steel) polyurethane-lined pipeline for approximately 16,080 ft, transitioning to
34-inch diameter DR 15.5 HDPE pipe for the final 3,160 ft, terminating at the TSF4 Booster Pump Station.
The existing TSF4 Tailings Booster Pump Station consists of three parallel trains, each with two pumps in
series. All pumps are rubber-lined Warman Model AH 14/12 slurry pumps. The second-stage pumps in
each train are controlled by variable frequency drives (VFDs). Normal operation consists of running two
trains with the third train on standby.
The existing TSF4 Tailings Booster Pump Station will be removed from service in April 2016 and replaced
with the Combined Tailings Booster Pump Station. Delivery of tailings to TSF4 will be through 3 stages of
pumping. The third stage pumps are equipped with VFDs for flow control.
The discharge from the TSF4 Tailings Booster Pump Station consists of a 24-inch polyurethane-lined
steel pipeline up the south side of the TSF4 embankment to the dam crest. The pipeline continues
across the dam crest to the far abutment. Taps for cyclones are spaced approximately 50 ft apart. Up to
16 cyclones may be in operation at any one time. The fine-grained fraction from the cyclone overflow is
piped to the TSF beach. The coarse cyclone underflow material is used to construct the dam
embankment.
The existing reclaim water system consists of barge-mounted pumps and two booster pump stations
conveying water from the southern end of the TSF4 decant pool to the Mill Water Supply Tank. The
nominal design flow rate is 6,500 gpm.
The existing dual barge pumps are Hazleton Model 12DA Type VNCC with 21.5-inch impellers. The
drivers are Westinghouse 186 kW, 3-phase, 4,160 V, 1,174 rpm motors. Both booster pump stations
have two parallel Allis-Chalmers Model 3415 12 × 14 horizontal split case pumps with full-size 45.72 mm
impellers rated for 1,780 rpm. The drivers are GE 450 kW, 3-phase, 4,160 V, 1,800 rpm motors. All of
the reclaim pumps are controlled (kept within their rated pump curve) by back pressure valves that are
partially closed (increasing the back pressure) as the pond level rises.
As the TSF4 decant pool rises, the first booster pump station will no longer be needed and will be
abandoned. At that time, the second booster pump station will be relocated.
18.6.2 TSF3 Operation

One stage of pumping will be used to deliver tailings from the new Combined Tailings Booster Pump
Station to TSF3. The tailings will be conveyed by a 24-inch diameter Naylor Schedule-40 Steel and 24-
inch DR 11 HDPE pipeline for 1,700 ft to the 18-inch Naylor Steel distribution ring, with 6-inch rubber
hose laterals to peripheral discharge ports spaced at roughly 80 ft apart.
The existing reclaim water system at TSF3 consists of a single trailer-mounted 8 × 6 self-priming
centrifugal pump with an engine drive. The pump conveys water from the southern end of the TSF3
Pool to the Mill Water Supply Tank. Eight-inch rubber suction hose is connected to an intake float. A 6-
inch rubber discharge hose connects to a larger steel pipeline.
18.7 Monitoring
A series of piezometers has been installed to monitor groundwater fluctuations at the current and
previously operated TSFs. The piezometers consist of open standpipes, pneumatic, and vibrating wire
piezometers. The piezometers are measured monthly. Fifty new piezometers were installed in 2015, all
of these piezometers are connected to automated data recorders.
Quarterly monitoring reports of the piezometer readings are prepared and reviewed by the designated
PVM engineer to verify that the TSFs are operated, and are performing, as designed. An annual
monitoring report, which includes a summary and graphs of the piezometer measurements, is
submitted to ADEQ.
The active and former TSFs are inspected annually by PVM’s consulting geotechnical engineer.
Feedback is provided on the operation of the TSFs and recommendations, if necessary, are provided to
the PVM management and engineering groups.
19 Market Studies and Contracts
19.1 Copper
Copper and copper-based alloys are used in a variety of applications that are used to increase standards
of living. Its continued production and use is essential for society's economic development.
Copper is an important contributor to the national economies of mature, newly developed, and
developing countries. Mining, processing, recycling, and the transformation of metal into a multitude of
products creates jobs and generates wealth. These activities contribute to building and maintaining a
country's infrastructure and create trade and investment opportunities. Copper will continue to
contribute to society’s development well into the future.
Copper and copper-based alloys are used in a variety of applications that are used to increase standards
of living. Its continued production and use is essential for society's economic development. The
consumption of refined copper in its variety of applications is expected to increase at a compound
average growth rate (CAGR) of 2% between now and 2035, requiring significant primary mine
development over the period.
19.2 Global Production

Since 1900, demand for refined copper increased from less than 0.5 Mt to over 21 Mt in 2013 at a
compound annual growth rate of 3.2% per year. Figure 19-1 describes the distribution of copper
consumption by region of the world and end uses.
Source: International Copper Study Group
Figure 19-1: Major Uses of Copper: Usage by Region and End-Use Sector - 2013
19.3 Copper Concentrate Market
Smelter production capability (concentrate demand) forecast for 2015 is 19.0Mt (Cu contained),
representing a potential 10.1% increase from 2014. Smelter output capability growth is expected to
continue at an overall CAGR of 5.3% p.a. over the period 2014 to 2018. However, with the timing of
some projects remaining uncertain and mines subject to disruptions, a lack of concentrates and
secondary feed material may moderate this increase to around 3.8% p.a. in terms of actual production.
Global smelter production capability is forecast to grow by an average of 1.2% p.a. through to 2035.
19.4 Supply
Global mine production continued to grow during 2014 reaching 18.6Mt, 2.5% higher than the total
achieved during 2013. This increase compares with an 8.2% increase seen in 2013 and a compound
annual average growth rate (CAGR) of just 1.8% over the period 2002 to 2012. Additions to mine
capacity during the period 2014 through to 2018 represent a CAGR of 3.1%. Beyond 2018, mine
production is expected to decline due to reserve depletion to reach 16.3Mt by 2025 and 11.4Mt by
2035. This means that over the forecast period, existing mine production is expected to decline by an
average rate of 2.1% annually. As a result, beyond 2018, increased demand and attrition at existing
mines will mean that the primary market will return to a deficit unless mine projects are developed.
19.5 Copper Prices

In an environment of declining and volatile commodity prices and a gentler demand growth trajectory,
mining companies have embarked on programs of cost efficiency, focusing on sustainable cost
reduction, improving productivity, disposal of non-core assets as well as increasing shareholder returns.
This is leading to portfolio simplification, a decline in overall investment, with a focus on quality projects
as marginal developments are deferred. This pullback in exploration budgets sets the scene for the
potential of an even wider gap to emerge between supply and demand.
As a result, over the forecast period to 2035, it is expected that the market will begin to tighten, once
again, and move back towards a deficit from 2018, leading to a recovery in prices.
19.6 Treatment Charge / Refining Charge

China is the leading importer of copper concentrate and has the greatest capacity for smelting and
refining. As a result, China will set the marginal cost for smelting and refining. This is due to a desire to
reduce the country’s reliance on imports of value-added copper products by installing domestic
processing capacity.
The annual treatment charge / refining charge (TC/RC) in 2014 was $92/9.2 or 23.6 cents/lb., on a
combined basis. For 2015, the annual TC/RC moved up to $107/10.7, or 27.4 cents/lb., on a combined
basis and sufficient to attract investment in smelting and refining capacity in China and to sustain
continued demand for copper concentrate. TC/RC are expected to be comparable in 2016 with 2015
and begin moderating beyond 2017.
19.7 Pinto Valley Mining Corporation
PVM’s current and long term copper concentrate production forecasts are between 190-220 ktonnes
per year. The copper concentrate has two potential destinations; smelters in Arizona (domestic) and
smelters in Asia (international). The domestic bound concentrate is trucked directly to the smelters
from PVM. The international bound concentrate has historically been trucked to the San Manuel
Arizona Railroad (SMARRCO) facility in San Manuel, Arizona, where it was loaded onto trains, shipped to
the Port of Guaymas in western Mexico, and then loaded onto ships destined for Asia. The usage of the
SMAARCO facility has been discontinued at the end of 2015 and the concentrate will be placed in
containers that will be trucked directly to the Port of Guaymas for international shipping.
19.8 Markets and Contracts

The quality of the copper concentrate produced at PVM is highly desired by traders and smelters due to
an above-average copper content and lack of deleterious elements. The proliferation of high arsenic
bearing concentrates, in the market, has only strengthened the demand for concentrates of PVM
quality. Contracting strategy will be based on the existing contracts of varying tenure with an emphasis
to increase domestic sales providing a higher NSR. Copper concentrate will be sold internationally and
to smelters in North America (domestic).
In all cases, the concentrate price will be based on the published London Metals Exchange prices
averaged over the applicable quotational period for the payable element (copper), less applicable
TC/RC.
For the molybdenum sulfide concentrate, demand is weaker as a result of a weaker global steel market.
Sales are being made on an ad hoc basis to interested parties. The molybdenum concentrate price is
based on the published molybdenum oxide price, less a discount to cover the costs of converting the
sulfide material to oxide through roasting.
The full production of copper cathode has been sold through a competitive tendering process to a single
buyer. Cathode pricing is based on the London Metals Exchange pricing for copper cathode at the
applicable quotational period for the monthly deliveries.
20 Environmental Studies, Permitting and Social or Community
Impact
This section summarizes the environmental issues identified on site, existing permit status,
environmental monitoring, and permitting efforts that may be required throughout the mine life
identified in this study. PVM’s health and safety, and social and community programs are also
discussed.
20.1 Current Environmental and Regulatory Context
20.1.1 Key Environmental Regulations and Permits

The principal permitting agencies providing oversight of the operation and closure of PVM are the
Arizona Department of Environmental Quality (ADEQ) and the Arizona State Mine Inspectors Office
(ASMIO). Other agencies include the U.S. Forest Service (USFS) – Tonto National Forest (TNF), Arizona
Department of Water Resources (ADWR), and the U.S. Army Corps of Engineers (USACE).
The majority of the environmental permits for the operation are in effect for the life of mine (or until
substantive changes are needed). Exceptions are the Arizona Pollutant Discharge Elimination System
(AZPDES) Individual permit, and Multi-Sector General Permit (MSGP) for stormwater discharge and the
Air Pollution Control Permit, which are included in permit programs that require renewal by ADEQ every
5 years.
Other minor permits, registrations, and licenses required for operation include a federal MSHA
registration number, Arizona state mining ID number, hazardous materials and hazardous waste ID
numbers, solid waste management inventory number, waste water, leach field, septic permits, radio and
other communications licenses, blasting operator registrations, exploration/well drilling permits, and
laboratory/nuclear instrumentation licenses and registrations.
Status of the environmental permitting for the operation are discussed in Section 20.3, below.
20.1.2 Site Management Systems and Training

Environmental systems are in place at PVM to ensure that all permit compliance monitoring and
reporting obligations are properly managed, and that the staff have the relevant training to ensure the
programs and compliance requirements are implemented. Work flow management of routine
inspections, sampling events, and reporting are coordinated by the environmental supervisor. All
employees receive environmental orientation training related to air quality, groundwater, stormwater,
hazardous materials, and waste management; environmental department staff receive specialized
environmental and regulatory training from internal and external sources.
20.1.3 Site Health, Safety, and Industrial Hygiene Program

Safety is at the heart of PVM’s business philosophy and “work responsibly” is one of Capstone’s four
core values. Safety is built into all levels of the business, at the highest level it is part of Capstone’s
“Code of Conduct” and governance through Capstone Environment, Health, Safety and Sustainability
(EHSS) Policy overseen by an EHSS Committee. Each new employee is required to make a commitment
to safety acknowledged by signing the Code of Conduct.
PVM is subject to health and safety regulations under the supervision of the Mine Safety and Health
Administration (MSHA), ASMIO, Arizona Department of Transportation (ADOT), and other federal and
state agencies. New miner training, annual refresher training and training certification to operate
specialized equipment is handled internally at site. Specific health and safety plans and traffic
management plans will be developed for projects that are outside of routine operations throughout the
mine life.
Safety incidents and accidents are reported via an integrated internal notification system. Incidents,
property damage, and injuries are investigated by the area supervisors, assisted by PVM’s Health,
Safety, Environment & Community (HSEC) department and other relevant internal personnel, to review
the causes, and develop preventative and remedial plans.
The safety procedures and personal protective equipment requirements for routine work, emergency
reporting and response protocols, and training such as risk review procedures and environmental
training are well documented and reinforced by the HSEC department as part of employee training. The
HSEC department also oversees industrial hygiene-related programs such as hearing conservation
programs that test employee hearing, monitor noise levels, and work with operations, as required, to
mitigate excessive noise. The department activities include a respiratory protection program, fatigue
management, annual medical examinations, the “back-to-work” assessment following a workplace
illness or injury, the drug and alcohol program and fitness for duty program. Health-related programs
managed primarily by the Human Resources Department include new employee medical screenings.
20.1.4 Site Characterization Studies to Support Environmental Permitting

Site studies have been completed to support prior and current state and federal environmental permit
approvals and authorizations. The characterization studies include: climate, groundwater, stormwater,
surface water, ore and gangue mineral types and metal concentrations, geochemical behavior of
relevant rock and wastes (i.e. non-mineralized formations, waste rock, leach ore, tailings, and pit walls),
process solutions, biological and cultural resources, waters of the United States (WOTUS) delineations,
and plant species suitable for revegetation.
20.2 Environmental Issues, Monitoring, and Management

The environmental monitoring and management is driven by federal and state regulatory requirements
and Capstone’s commitment to environmental stewardship and reducing impacts of the operation on
the environment. Systems are in place to ensure that all permit compliance monitoring and reporting
obligations are properly managed. A summary of the monitoring and management program is
presented below.
20.2.1 Groundwater
Water quality analyses of various constituents are required on a quarterly, annual, and biennial basis
from designated seeps/springs, and Point-of-Compliance (POC) wells. Routine self-monitoring report
forms are submitted to ADEQ with the results of water quality monitoring and site inspections.
APP compliance reporting requires an annual demonstration of the adequacy of pit containment (i.e. the
Open Pit is a sink with evaporation exceeding the groundwater flowing inwards from surrounding areas
into the Open Pit). A comprehensive groundwater report is required by ADEQ every 5 years to assess
adequacy of POC wells and the passive hydraulic containment in the Open Pit.
20.2.2 Surface Water, Stormwater, Process Water, and Wastewater

Monitoring and sampling of mixed stormwater and seepage water discharges at specific outfall locations
and seeps that could enter Pinto Creek is required by AZPDES Permit No. AZ0020401; discharge limits
are set for a number of constituents. Site facility maps are updated annually to show seepage zones,
constructed and natural drainage structures, pipelines, pump stations and pump capacities, and all
monitoring points associated with Clean Water Act compliance. Best management practices (BMPs)
have been established for all non-discharge containment structures. Routine inspections and
maintenance are conducted to ensure BMPs are maintained.
The wastewater treatment plant (WWTP) is authorized to operate with a maximum daily flow of 25,000
gallons per day. The WWTP system has compliance monitoring requirements and discharge limits set
for fecal coliform and total nitrogen as measured downgradient of the chlorination tank on the effluent
line.
20.2.3 Air Quality and Abatement

As part of the mine’s synthetic minor air quality permit, specific controls, including dust collectors,
electro-static precipitators and water sprays are used at key areas of the facility to reduce the
generation and distribution of air pollutants. The permit requires regular monitoring of the air quality
control equipment and air quality at the facility. No new permits or permit amendments are required to
support the mine life extension identified in this study; however air dispersion modeling may be
required as part of the NEPA review discussed below.
20.2.4 Noise Monitoring and Abatement

Maintaining a healthy environment with respect to proper lighting, and acceptable noise and vibration
levels is part of the safety program. The facilities and equipment operating in high noise environments
have been designed to reduce noise to the best extent possible through use of structural barriers or
noise reduction materials. Employees are required to wear hearing-protective equipment appropriate
to the noise level and duration of exposure. The HSEC Department maintains a Hearing Conservation
program and works with operations, as appropriate, to mitigate excessive noise.
20.2.5 Tailings Storage

Per current APP requirements, a maximum disposal rate of 29 million tonnes (32 million short tons) is
permitted to be disposed on TSF3 and TSF4 on an annual basis, and design heights are in effect for both
facilities. Limited capacity remains on TSF3 so discharge to this facility is capped at a specified number
of days per year. TSF4 will require a modification to the APP by approximately 2025 to establish new
design heights and annual disposal volumes. TSF3 and TSF4 are inspected quarterly and after significant
rainfall events for evidence of crest failure, toe slippage, substantial cracks, and erosion features. TSF1
has been reclaimed and is inspected for seepage and erosion features. AMEC performs an annual
inspection of the two active impoundments (TSF3 & TSF4) and prepares a report that is written and
stamped by an Arizona-registered engineer and submitted to ADEQ. Associated seepage toe drains and
caissons are to be kept free of debris, sediments, vegetation, and other obstructions.
Environmental monitoring for the expanded TSF4 is not expected to require additional downgradient
POC wells or surface water discharge point monitoring from the seepage and stormwater collection
ponds. Any new monitoring related to the expanded facilities, including compliance with tailings
disposal and design height limits, will be conducted as required by the relevant governmental agencies.
20.2.6 Waste Rock Storage

Waste rock is currently placed in the Main Dump on top of the leach pad. An additional dump, planned
to be built in approximately 2023, will be permitted through an amendment to the APP. There are a
number of historic waste rock storage facilities at PVM some of which have been consolidated through
time into single facilities. One facility (Southside Dump 14) is in post-reclamation status. Each facility
has a specific design storage capacity limit and is to be managed to reduce acid rock drainage.
20.2.7 Hazardous, Regulated, and Solid Wastes

Hazardous and regulated wastes are collected and stored on site prior to shipment to a recycling facility
or permitted waste disposal facility as appropriate. Chemicals brought on site must be approved in
advance by PVM.
A solid waste landfill facility to dispose of construction debris is located within the footprint of the
Northside Dump 9.3 west of the Open Pit and north of the North Barn. PV uses standard industry
methods to cover and compact active dump areas to eliminate blowing debris, and disease vectors.
PVM has a scrap program in place to minimize waste placed in the solid waste landfill. Office and non-
hazardous shop refuse is collected by a local hauler.
20.2.8 Process and Stormwater Ponds / Catchment Berms

The PLS and Raffinate ponds, and stormwater ponds, basins and catchments are inspected on a routine
frequency and after significant storm events. Inspection results and required repairs are documented.
20.2.9 Remaining Evaluations

All permitting requirements for the LOM have been identified and addressed. Selected data are being
collected and studies updated to reflect changes expected for the remaining LOM and to support PV3
permit approvals. These include data or studies related to climate, biological and cultural resources,
WOTUS, groundwater, and geochemical behavior of representative PV3 tailings and waste rock. If
Capstone elects to further optimize the resource or revises the LOM designs envisioned in this PFS,
additional environmental evaluations and permitting may be required.
20.3 Environmental Permit Review Related to PV3
The following analysis is a brief review of current federal and state permits and requirements with
respect to new, expanding and ongoing operations and closure planning at PVM. Any potential actions
or permit amendments that will be required by the PVM LOM expansion are noted.
20.3.1 Federal Permitting

20.3.1.1 Plan of Operations (Forest Service)
Portions of PVM operations occur on federal land, thus requiring a U.S. Forest Service (USFS) approved
Plan of Operations (POO). Prior Right-of-Way authorizations and separate USFS special use
authorizations for water and power lines have expired and require renewal in conjunction with
addressing certain encroachments that have occurred on federal land without USFS authorization in the
past. Prior approved POOs remain in effect. Continued authorization for these features has been
requested in addition to new authorization for planned expansion of TSF3 and TSF4 on to Forest Service
lands.
As presently configured, the mine life extension will require use of federal lands for further planned
expansion of TSF4 and pit expansion to the east, beyond those requested though revisions to the scope
of the currently proposed POO (POO #03-12-02-010). Work is underway relative to the submittal of a
revised POO for USFS authorization to address these issues (submittal anticipated in Q1 2016) and once
authorization from the USFS is obtained, no further USFS authorization is anticipated for the execution
of the extended mine plan.
Once the POO is deemed complete by the USFS (anticipated Q4 2016), the USFS will initiate review of the
plan under NEPA. The NEPA analysis includes public involvement (through scoping) and will address a
number of environmental resource areas (e.g., endangered species, historic properties, air quality, water
quantity and quality, etc.). The NEPA review process also requires that the reviewing agency (in this case,
the USFS) develop alternatives to the proposed action that meet the purpose and need of the project
while reducing impacts to selected environmental resources.
One of two levels of NEPA review will apply to the POO:
▪ Environmental Assessment (EA) An EA requires a full analysis of impacts to a host of
environmental resource areas, as well as public scoping to determine additional potential
environmental resources to be evaluated. In order for a project to be approved, the EA must
result in a Finding of No Significant Impact (FONSI) to the evaluated environmental resources.
Note that a FONSI can be achieved through mitigation efforts proposed by the project
proponent. If the analysis completed for the EA cannot result in a FONSI, then an
Environmental Impact Statement (EIS) is required.
▪ Environmental Impact Statement (EIS) The EIS process includes additional public
involvement when compared to the EA process. Under an EIS, notification of the preparation
of an EIS is published in the Federal Register to initiate scoping; the public also has an
opportunity to review the draft EIS once it is completed. In practice, the level of
environmental resource analysis under an EIS can be similar to that for an EA, and is
dependent on the degree of impact. In addition, the USFS has requested public comment on
draft EA documents in the recent past, similar to the EIS process. The EIS results in a Record
of Decision (ROD) outlining the evaluated impacts of the project, along with the mitigation
responsibilities of the project proponent.
Approval of the POO will also include consultations with the relevant agencies under the Endangered
Species Act and the National Historic Preservation Act (discussed in Sections 20.3.1.4 and 20.3.1.5,
respectively). The final POO approval process (including NEPA review and consultations) is anticipated
to take approximately 2-3 years from the initiation of scoping. Changes to plan designs prior to scoping
can be incorporated into the process. Design changes after scoping may be incorporated into project
alternatives required to be evaluated in the NEPA document, or may require re-initiation of scoping,
resetting the final POO approval clock.
20.3.1.2 Forest Road Relocation
Currently, Forest Road (FR) 287, also commonly referred to as the Pinto Valley Road provides access to
the mine site and administrative facilities from US Highway 60. FR 287 is a public road that passes through
the Pinto Valley Mine to provide public access to ranches and for recreation on the Tonto National Forest
(TNF). The segment through the Mine on private lands is authorized by an easement and is maintained by
PVM. FR 287 is contemplated to be relocated from its current alignment for construction of the West
Dump
It is anticipated that some level of coordination with TNF will be required for relocation of FR 287. If
necessary, NEPA review for the road relocation may be completed as part of that done for the Plan of
Operations, described in Section 20.3.1.1.
20.3.1.3 CWA Section 404 Permit
Surface water features within the likely footprint of waste rock dumps, TSF3 or TSF4 expansion may be
subject to jurisdiction under the CWA. A request for an Approved Jurisdictional Delineation (AJD) was
submitted to the USACE in February 2015 and supplemented in June 2015. The outcome of the AJD will
determine the nature of the Section 404 permitting process that may be required for placement of fill in
drainages deemed jurisdictional by the USACE. If it is determined that the operation will impact waters
of the U.S. (WOTUS), a Section 404 permit application will be submitted.
The USACE process and procedures for initiation of NEPA are different from the Forest Service. Notably,
the USACE requires an alternatives analysis in accordance with CWA Section 404b1 criteria. Differing
from alternatives identification in NEPA, this evaluation requires that the USACE identify the least
environmentally damaging practicable alternative (LEDPA), which is typically that alternative that results
in the fewest impacts to WOTUS. These alternatives can inform the range of alternatives considered
during NEPA review though in practice only the single project identified as the LEDPA is considered. The
NEPA review for the Section 404 permit is anticipated to be different than that for the USFS POO, as the
federal actions for each are different. Given the currently anticipated level of impacts for the Section
404 permit, the NEPA analysis is likely to be satisfied by the Corps' completion of an EA.
The Section 404 permit process is anticipated to take 1.5 to 2 years from the submittal of the permit
application. One of the primary challenges associated with this permitting effort is to demonstrate that
the proposed action is the LEDPA, despite the fact that it involves the loss of wetland area.
20.3.1.4 Endangered Species Act Compliance
Based on a biological screening analysis there are currently two ESA-listed species were identified to
have reasonable potential to occur within the project footprint, the Arizona hedgehog cactus (AHC) and
yellow-billed cuckoo (YBC). In addition, proposed critical habitat for YBC occurs along Pinto Creek within
a mile of the proposed tailings expansion TSF3 onto Forest Service land.
Protocol level survey of AHC was completed for potentially suitable AHC habitat within the operation
expansion areas in June 2015. These surveys were completed on private PVM land in the vicinity of
proposed waste rock dump and TSF3 expansion and no AHC individuals were identified. A survey for the
presence of YBC along Gold Gulch, East Water Canyon and Pinto Creek was completed in August 2015.
No AHC or YBCU were detected during the surveys and accordingly, these species are considered
unlikely to be present or be impacted by the proposed activities.
Ultimately, the federal agencies will be responsible to determine whether or not there is likely to be an
affect to a listed species. Consultation with the U.S. Fish and Wildlife Service (FWS) under ESA Section 7
may be required for both the POO and the Section 404 permit (should a Section 404 permit be
required). The presence of proposed critical habitat immediately down steam of the project elevates
the probability that consultation will be required even though no YBC were detected during surveys in
2015. Although biological screening analysis and species-specific surveys indicate there is limited
potential for ESA-listed species to be present within the project area, there is still potential that the
federal agencies will require further review involving the FWS. As with the NEPA evaluation, the USFS
and USACE will likely conduct separate consultations as the federal actions and decision spaces will
differ. By regulation, Section 7 consultation is to take 135 calendar days, though extensions are
common depending on the extent of impacts to listed species or complexity of the analysis.
20.3.1.5 National Historic Preservation Act Section 106 Compliance
Previous cultural resource surveys have been completed to support ongoing planning on both private
and public lands at Pinto Valley Mine and in the near vicinity. There are numerous cultural resources
that are likely to be considered eligible for the National Register of Historic Places.
Consultation with the State Historic Preservation Officer (SHPO) under NHPA Section 106 is anticipated
to be required for both the POO and the Section 404 permit (should a Section 404 permit be required).
As with the NEPA evaluation, the USFS and USACE will likely conduct separate consultations as the
federal actions and decision spaces will differ. Consultation will include a review of the cultural
resources surveys and recommendations for register eligibility, as well as development, review, and
implementation of an historic properties treatment and data recovery plan. The time and cost to
complete data recovery can be substantial though the actual data recovery effort typically is not
completed until the federal permitting process is complete.
20.3.2 State Permitting

20.3.2.1 Aquifer Protection Permit
A significant amendment to the existing APP will be required to address facility expansion and
modifications within the private and TNF lands. The amendment may be in a single application or in
phases, as needed. A perspective view showing the proposed facilities is shown in Figure 20-1. This
request for a significant amendment will describe multiple facility modifications once the final
configuration is selected by Capstone. The changes include design modifications to existing facilities,
addition of new facilities, closure or removal of permitted facilities that are no longer needed, updates
to BADCT demonstrations, and updates to the closure and post-closure strategy and the site-wide
closure and post-closure cost estimates. The following permit modifications will be required:
1. Modify the design and height limit for TSF4 and update the BADCT demonstration;
2. Modify the design for Main Dump and update the BADCT demonstration;
3. Submit design and BADCT demonstration for low-grade stockpile on southwest portion of
retired LP;
4. Submit design and BADCT demonstration for new waste rock dump (West Dump) to be placed in
Gold Gulch;
5. Submit Closure Plan to decommission LP and associated facilities including PLS and Raffinate
Ponds;
6. Submit design and BADCT demonstration for a PLS draindown capture facility to replace the
decommissioned Gold Gulch PLS Pond 1A;
7. Update the site-wide closure and post-closure strategy and costs;
8. Add new POC or upgradient monitoring wells and/or seepage collection systems that may be
needed to cover gaps in groundwater monitoring or seepage control.
20.3.2.2 Arizona Pollutant Discharge Elimination System (AZPDES)
PVM currently holds an individual AZPDES permit for process water discharges to downstream receiving
waters. No additional process water discharges are proposed as part of the PV3 permitting effort and
the AZPDES permit modification is anticipated to be secured.
20.3.2.3 Arizona Multi-Sector General Stormwater Permit (AZMSG)
The existing Storm Water Pollution Prevention Plan (SWPPP) will be modified to include the LOM
facilities and BMPs. Stormwater runoff from the Main Dump remain mainly within the non-discharging
Open Pit Basin as designated on the SWPPP map; stormwater run-on flows to this new dump will be
minimized through use of berms and/or ditches. PVM’s SWPPP is reviewed at least annually to update
the location of seepage zones, pump locations, stormwater berms/diversion ditches, and any new or
expanded facilities, as needed.
20.3.2.4 CWA Section 401 Certification
If a CWA Section 404 permit is required, the application for Section 401 certification will be developed
from the Section 404 permit application materials. This process represents only a minor portion of the
Section 404 permit process, though additional scrutiny from ADEQ is anticipated given the proximity of
the impaired Pinto Creek.
20.3.2.5 State Antiquity Regulations
State regulations do not require proactive treatment of cultural sites by a land owner. They do prescribe
specific obligations with regard to the discovery of human remains during ground-disturbing activities. If
human remains are encountered as part of construction activities, work in these areas must be stopped
until the remains can be properly recovered and repatriated. Any such discoveries must be treated in
accordance with Arizona Revised Statues.
20.3.2.6 Air Quality Control Permit

PVM currently operates under a Clean Air Act (CAA) Class II “Synthetic Minor” air quality control permit.
To operate under a Class II Synthetic Minor permit, PVM agreed to limit throughput and operate control
devices to effectively manage emissions and ensure that no Criteria Pollutants generated exceed 100
tons per year. The current permit allows for PVM to operate up to 65,300 tonnes tons per day (72,000
tonnes) with the existing equipment. It is currently assumed that the increase in throughput to 56,000
tonnes per day requires no major equipment changes to the plant, resulting in the current permit being
adequate to maintain operations for the life of the mine.
20.3.2.7 Dam Safety and Water Withdrawal Permits
Dam Safety permits and water withdrawal permits are administered by the ADWR. Tailings dams are
explicitly excluded from jurisdiction and no new dam safety permits are anticipated. Two existing ADWR
permitted dam structures within the Gold Gulch that impound PLS and surface water will be modified or
withdrawn, as appropriate. Water withdrawal permits will be required for any new monitoring wells.
Any wells and borings requiring removal for development of the future mine plan will be abandoned per
ADWR abandonment requirements.
20.3.3 Mined Land Reclamation Plan

PVM is subject to closure and post-closure reclamation requirements by ASMIO. The original Mined
Land Reclamation Plan (MLRP) for PVM was approved in 1998 and has been updated, as needed, to
reflect substantive changes to the LOM plan and closure designs. The MLRP was modified in 2015 to
update the current LOM disturbance acreage and the reclamation costs related to the updated closure
regrade designs. The MLRP will be submitted to ASMIO and finalized in early 2016. Reports tabulating
new disturbance and new reclamation completed during the year are filed annually with ASMIO.
Figure 20-1: Perspective view looking north, -30 degrees at planned LOM waste rock, leaching, and
tailings facilities. Future decommissioned LP (gold), existing and expanded tailings (gray), marginal
grade dumps (blue) and planned LOM waste rock (red)
20.3.3.1 Certificate of Environmental Compatibility

It is anticipated that the mine life extension will not require a new substation or modification of the
existing high-voltage transmission line.
20.3.4 Summary of Key Permitting Considerations

A summary of key permitting considerations is provided in Table 20-1. As noted in the table, Forest
Service POO authorization and CWA Section 404 permitting are the critical path schedule drivers, and
include agency reviews and actions that are beyond PVMC control. Given these constraints,
environmental permitting may take between 3 and 4 years to complete. The estimated timeframes
provided here will continue to be evaluated as permitting progresses.
Table 20-1: Summary of Key Permitting Considerations.
Assumptions/ Estimated Schedule Start
Permit Effort Agency
Key Considerations Timeframe Point
Federal
Plan of USFS-TNF Given level of impacts, the level 2 to 3+ years Acceptance of
Operations of NEPA analysis and schedule Plan of
(Including NEPA will not differ substantially Operations as
review) whether an EA or EIS is utilized. suitable to initiate
NEPA.
Forest Road USFS-TNF Relocation of FR 287 will be 6 months to 2 Availability of
Relocation required for construction of the years depending road designs
West Dump and is consistent on TNF approach
with easement, but may require
an update to TNF Travel Plan.
CWA Section USACE Assumes an individual permit 2 to 3+ years Submittal of
404 Permit will be required for tailings permit
(Including NEPA facilities. Will need to application.
review) demonstrate LEDPA and secure
viable mitigation option.
Endangered Lead federal Assumes formal consultation for 1 to 1.5 years Submittal of
Species Act agency and potential impacts to ESA listed Biological
Compliance USFWS species as part of Section 404 Assessment to
permit and/or POO approval. federal agency at
draft NEPA
document stage.
National Historic Lead federal Cultural resource sites known to 1-2 years. Completion of
Preservation Act agency and occur within footprint of Estimated survey and
Compliance SHPO expansion areas. If federal timeframe does Acceptance of
permitting is required, a not include final Plan of
treatment plan and consultation data recovery Operations
with SHPO and local tribes will report; however, sufficient to
be required. construction evaluate impacts.
would be Federal agency
Data recovery will need to be permitted can initiate
completed before sites are following data consultation with
disturbed. recovery and an SHPO with final
out of field survey report.
report.
State
Aquifer ADEQ APP needed for waste rock and 18 to 30 months Submittal of
Protection tailings facilities; monitoring application with
Permit well installation required. baseline data and
basic engineering.
Individual ADEQ Existing permits are in place. 2 months - 2 Submittal of
AZPDES Permit PV3 facilities may affect existing years application with
outfalls and could require baseline data and
modification of the existing basic engineering.
permit to accommodate new
and modified
stormwater/seepage collection
ponds for expansion areas.
Arizona Multi- ADEQ The current AZMSG-2010 12 months Submittal of
Sector General expires on January 31, 2016. application with
Stormwater The SWPPP will have to be baseline data and
Permit modified to include PV3 basic engineering.
(AZMSGP) facilities and BMPs prior to
initiation of construction or
upon permit expiration.
Air Quality ADEQ Updates to current permit. 6 – 18 months Availability of
Control Permit detailed
emissions and
ambient air
information,
submittal of
application
Dam Safety ADWR PV3 will not utilize jurisdictional NA NA
Permit impoundments (greater than 25
ft embankment height or
greater than 50 ac-ft storage
capacity). However, withdraw
permits of existing dams in Gold
Gulch will be required.
Mined Land ASMIO Update existing MLRP. Expect 2 1 year Availability of
Reclamation rounds of comments and general
Plan responses with ASMI. arrangement, and
geotechnical and
geochemical
information
Certificate of Arizona If needed, this would be 2 to 3 years Define power
Environmental Corporation obtained by the power utility needs.
Compatibility Commission (SRP) though PVMC can affect
the process and schedule. New
or refurbished power line across
Forest Service lands will require
NEPA review.
Total 3 to 4 years
20.4 Mine Closure and Reclamation

Conceptual closure designs and cost estimates are based on the current LOM plan for mining and waste
disposal facilities.
20.4.1 Closure and Reclamation Plan

The general plan for end-of-life operations, closure, and post-closure activities is summarized in the
Closure and Post-Closure Strategy, MLRP, and POO. These documents address the general methods and
goals for site closure and reclamation within guidance and requirements provided by state and federal
agencies (ADEQ, ASMIO, USFS). Each agency focuses on its specific regulatory responsibilities. Detailed
closure plans are required to be submitted to ADEQ prior to any closure construction activities. As part
of the MLRP reporting requirements, PVM provides ASMIO with an annual tally of new disturbance and
reclamation acreages. The MLRP primarily focuses on ensuring post-mining public safety and the
reclamation and revegetation of disturbed lands. The MLRP is updated as needed to reflect substantive
changes in facility configurations or cost assumptions.
20.4.2 Closure and Post-Closure Costs

Closure and post-closure costs are tabulated by permit or approval program. Financial assurance
demonstrations for estimated closure and post-closure costs are updated with the relevant agencies
(ADEQ, ASMIO, USFS), as needed, to reflect changes in the configuration of mining and waste disposal
facilities. The APP-related closure costs address the closure and post-closure monitoring activities
related to discharging facilities (tailings, waste rock dumps, leaching pile, process ponds). Post-closure
monitoring costs are included in this estimate. As part of the closure activities, 47 wells that will not be
needed for post-closure monitoring would be abandoned. The MLRP-related closure costs address
closure activities related to ensuring public safety, facility regrading, and revegetation.
APP-related closure costs were updated and approved by ADEQ in 2015 to reflect mine expansion plans
and disturbance through 2026 including a design change in the waste rock disposal facilities. An
application recently submitted to ADEQ in November 2015 to consolidate waste rock disposal facilities
will modify the site-wide closure and post-closure costs again when the application is approved in 2016.
Site-wide closure and post-closure costs have been estimated based on the updated LOM plan to 2039
discussed in this technical report. The costs were calculated based on assumptions documented in the
Closure and Post-Closure Strategy, regrade designs and quantities prepared by AFW and SRK, and
road/utility alignments and disturbance acreages on USFS-lands as compiled by WestLand and SRK.
The total cost for PVM closure and reclamation is estimated to be $143.5 M including $102.0 M in
closure costs and $1.8 M in post-closure costs, and $39.8M in Owner’s Costs. Closure costs include
direct capital costs of $80.9M and indirect costs of $21.1M. Post-closure costs include site inspections,
maintenance, monitoring. Owner’s costs include internal G&A and labor to support the 30-year post-
closure period as well as closure designs, environmental studies and permit amendments and routine
environmental reporting, as needed.
The closure costs by regulatory permit program will be finalized when permit applications have been
submitted, reviewed, and approved by the relevant agency. Based on the LOM configuration discussed
in this technical report, however, the total closure and post-closure costs are estimated to be:
 $85.3 M – ADEQ APP program,
 $15.4 M – ASMI MLRP program, and
 $3.1 M – TNF forest service authorizations and permits.
Capstone and SRK have reviewed the estimated closure and post-closure costs of $143.5 M and believe
the cost estimates are reasonable.
20.5 Social and Community

Capstone is committed to its employees and to the communities in which it works to operate under high
standards of corporate environmental and social responsibility (Capstone, 2014; 2015). PVM operates in
accordance with recognized industry standards while complying with local and applicable regulations
and laws.
PVM has established relationships with its communities of interest and stakeholders and assigns
dedicated personnel to this aspect of its business. Communication channels are in place, and forums for
direct interaction with stakeholders are held as required. Arizona’s political climate is stable and the
state has a long history of copper resource development.
All levels of management and staff participate in community involvement initiatives, though the HSEC
department manages and tracks communication with stakeholders, ensuring timely responses to
community needs. Engagement with community stakeholders is proscribed according to PVM’s
Community Engagement Procedure. The procedure outlines stakeholder identification, documentation
processes for stakeholder engagement, communication strategies for information requests and
distributing information, donations, sponsorships and employee support, employee involvement,
memberships, documentation policies for grievances/complaints, and key roles within the organization
with respect to community engagement. Additional to the procedure are a stakeholder register and a
stakeholder analysis log containing a record of communications with stakeholders. In 2015 PVMC’s
Community Engagement Procedure was bolstered to match organization-wide Capstone standards.
PVM has policies and procedures in place to address security and emergency management. PVMC
follows the Capstone Code of Conduct for compliance with local regulations and to ensure business
ethics in its relationships with its employees, suppliers, vendors, contractor firms, regulators, and local
communities. Specific policies include:
 A Whistleblower Policy (Fraud reporting and Investigation);
 A Code of conduct that outlines the official complaint procedure; and
 An Anti-bribery Policy complements the Code of Conduct with additional guidance on
compliance with applicable anti-bribery and corruption laws and regulations.
21 Capital and Operating Costs
21.1 Operating Costs
The LOM operating cost for PVM is projected to be $9.83/tonne milled. These costs do not include
TC/RC and concentrate transportation costs. The operating costs are detailed in Table 21-1.
Table 21-1: Unit Cost Summary
Item Units Life of Mine Average Cost
Mining Cost $/t moved 1.67
Mining Cost $/t milled 3.25
Milling Cost $/t milled 5.10
G&A Cost $/t milled 1.48
Total $/t milled 9.83
The C1 cost is a measure used to calculate the operating cost of producing copper, net of byproduct
credits. The life of mine C1 cost, including mine waste stripping as an operating expense has been
estimated at $2.05/lb copper payable.
21.1.1 Mine Operating Costs

Mine operating costs were estimated for this study by IMC based on the mine plan and equipment list.
The equipment, fuel and labor were provided by PVM.
The following assumptions were made in calculating the mine operating costs:
 Costs are in 2015 dollars.
 Diesel fuel at $1.97 per U.S. gallon in 2016, $2.40 per gallon in 2017, and $2.50 per gallon long
term.
 Explosives priced at $0.2926 /lb for ANFO and $0.3327/lb for Slurry.
 Equipment operating costs provided by PVM.
 Hourly labor and salary costs provided by PVM.
Mine operating costs do not include:
 Planned component replacement programs or MARC costs, which are capitalized.
 Post mining reclamation costs.
 Process costs from the primary crusher.
 The assay laboratory and assay costs for blast holes.
 Exploration programs
The mine costs average to $1.67/metric tonne moved. The breakdown by category is shown in Table
21-2. Haulage and auxiliary equipment make up nearly half of the cost. Life of mine average cost per
tonne milled is $3.25.
Table 21-2: Mine Unit Cost Summary
Life of Mine Average Cost
Cost Type
US$/tonne mined
Drilling 0.11
Blasting 0.27
Loading 0.20
Hauling 0.62
Auxiliary 0.22
Mine General 0.05
Maintenance General 0.06
G&A 0.14
Total 1.67
21.1.2 Plant Operating Costs

The mill operating cost estimates include all costs related to the process facilities, including the
primary/secondary/tertiary crushing, mill, concentrate, tailings pumping, tailings dam and reclaim
water. The costs are based on annual budgets provided by PVM and reviewed by Gregg Bush. The
budgets are based on current operating conditions, with details for power consumption and costs,
consumables (including wear materials and reagents) and direct and indirect labor costs. The unit cost
at 54,000 mtpd is $5.21/tonne milled and $5.09/tonne milled at 56,000 mtpd, resulting in a life-of-mine
average of $5.10/tonne milled. The cost breakdown of the life-of-mine cost is shown in Table 21-3.
 Costs are in Q4 2015 USD
 Power cost is $0.065/kWhr
 Hourly labor and salary costs are based on the current PVM costs
 Maintenance and component change costs are based on PVM costs
Table 21-3: Process Operating Cost Summary
Life of Mine
Cost Type Average Cost
(US$/tonne ore)
Labor 1.37
Power 1.10
Contractors 0.35
Mechanical/Electrical Parts 0.64
Reagents 0.40
Grinding Media 0.62
Liners 0.31
Water 0.15
Oils, Grease, Lube 0.05
Other 0.11
Total 5.10
21.1.3 General and Administration Costs

General and administration costs are estimated to cost $30.2M/year for the life of the mine, including
property tax. The costs are based on budgets provided by PVM. This equates to an average cost of
$1.48/tonne milled.
21.2 Capital Costs

Life of mine capital costs have been estimated for the project operating until 2039. The table below
summarizes the LoM capital costs.
Table 21-4: Capex Cost Summary
Item Units Life of Mine Total
Site Sustaining US$M 191.6
Mine Equipment Purchases and Rebuilds US$M 182.6
Mine Equipment Planned Component Replacements US$M 253.1
Tailings Upgrades US$M 24.0
Total Capex US$M 651.3
The $651.3M capital costs equate to $0.24/lb of payable copper in the project. Adding this to the C1
cost shown in the operating cost section, results in an all-in production cost of $2.29/lb of copper
payable.
21.2.1 Site Sustaining Capital

The plant and site sustaining capital costs have been estimated to total $191.6M. These costs cover
capital to maintain the mill, tailings, site infrastructure, light vehicles and water systems as well as
permitting and engineering costs related to executing the longer mine plan.
21.2.2 Mine Capital Costs

The PVM mining fleet was summarized in Section 16. Additions to mining fleet and replacements are
estimated to cost $182.6M. Planned component replacements, and MARC contract costs are estimated
to cost $242.6. Support services (cranes, mechanic trucks, welding trucks mine communications, etc.)
are estimated to cost $10.5 over the life of mine
21.2.3 Tailings Capital

The tailings capital includes the estimated cost to construct the boundary dams up to 2026, upgrade
tailings pumping and distribution systems and additional monitoring instrumentation on the dams.
22 Economic Analysis
Under Canadian National Instrument 43-101 regulations, producing issuers may exclude the information
required for ‘Section 22 – Economic Analysis’ on properties currently in production unless the Technical
Report includes a material expansion of current production. Capstone Mining Corp. is a producing issuer
per the definition in the NI-43-101 and a material expansion is not considered in this Technical Report.
23 Adjacent Properties
The PVM site is in proximity to the following mining and exploration properties: KGHM’s Carlota Mine
adjacent to PVM, BHP Billiton closed operations in the Globe-Miami area, and Freeport-McMoRan’s
Miami operation. The sources of the information included in this section are historic records, published
reports, and public websites as well as publically disclosed information by KGHM International Ltd. and
Freeport-McMoRan Inc. (FMI). The QP has been unable to verify the information and that the
information herein is not necessarily indicative of the mineralization on the property that is the subject
of the technical report.
23.1 Carlota Mine (Active)

The Carlota Mine is adjacent to PVM and is under the sole ownership of KGHM Carlota Copper
Company, a subsidiary of KGHM International Ltd., which acquired Quadra FNX Mining Ltd. (Quadra) in
2012. Discovered in 1900, mining activity and development of the predominately oxide copper ores at
the Carlota Mine progressed through several owners until Quadra purchased the property from Cambior
Inc. in 2005. Quadra commissioned the open-pit mine in 2008, and the mine has produced an average of
25 M lb of cathode copper annually for the last 4 years, using ROM heap leach and solvent extraction
methods. The Carlota Mine became one of the first copper mines designated and permitted under
modern environmental legislation (KGHM 2014).
Nearing closure and in reclamation, the Carlota Mine is implementing a staged mine closure plan
consistent with the objectives described in the Carlota permits. The mine’s timeline for closure is in
accordance with the current permits and Arizona environmental regulations.
23.2 BHPB Globe-Miami Area Operations

BHPB maintains four closed mine and processing units in the Globe-Miami area east of PVM. The Copper
Cities, Miami, and Solitude units are approximately 5 miles east of Pinto Valley, north of the Town of
Miami. The Old Dominion Unit is 10 miles east of Pinto Valley, adjacent to the City of Globe and is a
source of water pumped to PVM via the Copper Cities Unit. The Copper Cities Unit consists of two open
pit porphyry copper mines (Copper Cities Deep Pit, Diamond H) that operated between 1951 to 1975
with associated processing facilities. Current usage for the Diamond H pit is for stormwater and sludge
management from treated water; the pit is a reservoir for supplemental process water pumped to PVM
under agreement with BHPB.
23.3 FMI Miami Operations

The Freeport-McMoRan Inc. (FMI) Miami Operation, located approximately 5 miles east of PVM
adjacent to the Town of Miami, includes an open pit copper mine, SX-EW plant, a smelter and a rod mill.
Total recorded production (1915-2015) from FMI’s Miami operation was 4,217,263 short tons of copper
and 2,873 short tons of molybdenum. On August 27, 2015, FMI announced that mining operations at
Miami would be discontinued owing to low metal prices.
24 Other Relevant Data and Information
There are no additional data that are relevant to this report.
25 Interpretation and Conclusions
25.1 Geology and Mineral Resources
The sampling, sample preparation, analyses and sample security are appropriate for the style of
mineralization and Mineral Resource estimation.
The Mineral Resource estimates are completed to industry standards using reasonable and appropriate
parameters and are acceptable for use in Mineral Reserve estimation. The resource estimates conform
to NI 43-101.
The mineral resources, effective 1 January 2016 and using a 0.17% Cu cut-off grade are:
 Measured – 647.9 M tonnes at 0.34% total copper and 0.008% molybdenum1
 Indicated – 772.3 M tonnes at 0.26% total copper and 0.006% molybdenum1
 Inferred – 126.0 M tonnes at 0.25% total copper and 0.005% molybdenum1
1
The economic assumptions for the reasonable prospects pit include: $3.30/lb Cu, $10.00/lb Mo, 88% Cu recovery, 50% Mo recovery,
$1.50/ton mining costs, $1.50/ton G&A costs, $5.00/ton milling costs, and a pit slope of 45°.
25.2 Mining and Mineral Reserves

The mineral reserves have been prepared utilizing acceptable estimation methodologies and conform to
CIM and NI 43–101 definitions. The mine design, optimization and planning techniques applied by PVM
staff and IMC follow industry standards.
The mineral reserves, effective 1 January 2016 are:
 Proven –350.1 M tonnes at 0.33% total copper and 0.009% molybdenum2
 Probable – 123.7 M tonnes at 0.25% total copper and 0.007% molybdenum2
 Total – 473.8 M tonnes at 0.31% total copper and 0.009% molybdenum2
2
25.3 Mineral Processing and Metallurgical Testing

Metallurgical expectations are reasonable based on operating history, metallurgical test work and
metallurgical models developed.
25.4 Capital and Operating Costs

Capital and operating costs have been estimated using industry standard estimating techniques and
where possible, relied on actual cost data from PVM. The costs included in this study are reflective of
current operating costs at PVM and similar sized mines in Arizona.
25.5 Permitting
Expanding the mine life to 2039 from 2026 will require revisions of two major items:
 Aquifer Protection Permit (APP) issued by the Arizona Department of Environmental Quality to
expand an existing tailings facility, waste rock storage facility and permit a new waste rock
storage facility.
 An amendment to the Plan of Operations (POO), issued by the US Forest Service, related to:
o Tailings storage expansion
o Mine expansion
o Outstanding permit renewals.
25.6 Risks
While there are significant risks with mining projects, many of those risks are mitigated by being in full
production and the required infrastructure already in place. The major risks remaining that could
materially impact the mine life are:
 Financial market conditions, including supply, demand and prices of base metals, goods and
services.
 Regulatory and permitting environment complexities, changes and delays
 Droughts and/or regulatory changes impacting water supply
 Design pit slope angles and unforeseen geotechnical conditions.
26 Recommendations
1. Actual vs predicted ore reconciliations should be carefully evaluated in the short and medium
term to determine if additional drilling is required.
2. Ensuring the recommended pit slope angles are achieved is one of the primary keys to success
of this plan. This will be accomplished through ongoing geotechnical mapping and monitoring
the effectiveness of slope depressurization. Drilling programs may be required to increase
confidence levels of predictions.
3. Additional geotechnical and metallurgical testwork prior to commencing the first PV3 pushback
in 2020.
4. Initiate major environmental analyses and permitting processes to ensure adequate time for
regulatory agency reviews.
5. Monitoring and control of the phreatic levels in the TSF embankments is critical to the
performance of the facilities. Additional geotechnical field investigations, including cone
penetration testing, exploratory drilling, laboratory testing and engineering analyses will be
required if phreatic levels in the TSF embankments rise above predicted levels. Methods to
control or mitigate the phreatic rise would be developed. A contingency of $5M has been
included in the PV3 tailings storage capital cost estimate for these efforts, expended in 2021
through 2034.
6. If the USFS POO is not obtained by 2025 additional studies need to be undertaken to raise the
TSF4 boundary dam crest elevations.
27 References
Arancibia, O. N and A. H. Clark. 1996 “Early Magnetite Amphibolite Plagioclase Alteration Mineralization
in the Island Copper Porphyry Copper Gold Molybdenum Deposit, British Columbia.” Economic
Geology 91: 402-38
Breitrick, R.A. and Lenzi, G.W., 1987, Pinto Valley Copper Deposit: Arizona Geological Survey Special
Paper 5, p. 260-265,
Capstone Mining Corp., Pinto Valley Mine, 2014 Pre-feasibility Study NI43-101 Technical Report:
published technical report prepared for Capstone Mining Corp., April 28, 2014, 256 p.
Capstone Mining Corp., Integrated Environmental, Health, Safety and Sustainability Policy, Revised
November 7, 2014: corporate policy statement available at
http://capstonemining.com/responsibility/environment/default.aspx.
Capstone Mining Corp., 2015, Sustainability Report: internal company report, 56 p., available at
http://capstonemining.com/responsibility/Sustainability-Report/default.aspx.
Creasey, S.C., 1980, Chronology of intrusion and deposition of porphyry copper ores, Globe-Miami
District, Arizona: Economic Geology, v. 75, p. 830-844.
Davis, B. M. 1997. Some Methods of Producing Interval Estimates for Global and Local Resources. SME
Preprint 97-5.
Gustafson, L. B. and J. P. Hunt. 1975. “The Porphyry Copper Deposit at El Salvador, Chile.” Economic
Geology 70: 857-912.
Meinert, L. D. 2000 “Gold in Skarns Related to Epizonal Intrusions: Reviews.” Economic Geology 13: 347-
75.
Peterson, N.P., Gilbert, C.M and Quick, G.L, 1951, Geology and Ore deposits of the Castle Dome Area,
Gila County, Arizona: U.S. Geological Survey Bulletin 971, 134 p.
Peterson, Nels Paul, 1962, Geology and Ore Deposits of the Globe-Miami District, Arizona: U.S.
Geological Survey Professional Paper 342, 151 p.
Sillitoe, R.H., 2010, Porphyry Copper System: Economic Geology, v. 105, 3-11.

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Capstone Mining Corp.

2100 – 510 West Georgia Street

Report Date: February 23, 2016 Effective Date: January 1, 2016

Pinto Valley Mine Life Extension - Phase 3 (PV3) Pre-Feasibility Study

Signed and Sealed February 23, 2016

Gregg Bush, P. Eng

Signed and Sealed February 23, 2016

Corolla Hoag, CPG, SME-RM

Signed and Sealed February 23, 2016

Signed and Sealed February 23, 2016

Garth Kirkham. P.Geo, FGC

Signed and Sealed February 23, 2016

Kenneth W. Major, P.Eng

Signed and Sealed February 23, 2016

John Marek, PE, SME-RM

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1.1 Project Description

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1.2 Accessibility, Climate Local Resources and Physiography

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1.3 History and Ownership

1.4 Geology and Mineralization

1.5 Exploration, Sampling and Drilling

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1.6 Mineral Resource

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1.7 Mineral Reserves

1.8 Mining Methods and Mine Plan

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1.9 Mineral Processing and Metallurgical Testing

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1.12 Closure Plan and Costs

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1.14 Operating Cost and Sustaining Capital

1.15 Economic Analysis

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2.2 Qualified Persons

2.3 Site Visits

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2.4 Sources of Information

2.5 Units of Measurement

2.6 Frequently used Acronyms, Abbreviations, Definitions and Units of

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4.2 Tenure, Ownership and Encumbrances

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4.3 Environmental Liabilities