Características clínicas

Three block models were developed by Minera Guanaco for the proposed Defensa, Perseverancia, and Dumbo open pit areas, however, it was determined that only the Defensa and Perseverancia areas would be mined by open pit methods and the Dumbo deposit would be mined by underground methods. As a result, an underground Mineral Reserve was developed for the Cachinalito and Dumbo vein systems.

The Guanaco mine was previously operated with two heap leach pads that contain partially-leached material. Due to constraints for new leach pad areas and positive recovery testwork on the partially leached ore, some of the old heap leach material will be removed from the pads, re-crushed, and placed on the new pad for re-leaching.

This material is included in the open pit Mineral Reserve statement.

17.2.1 Optimization Parameters

Mineral Reserves were estimated using a base case of US$825/oz Au and US$12.50/oz Ag.

Open Pit

Pit optimization was completed by using a L–G-developed pit shell that considered

deposit was used for the pit optimization. Design parameters used for the estimate are presented in Table 17-10.

Table 17-10: Open Pit Optimization Design Parameters

Design Criteria Units Defensa Perseverancia Mining

Base Mining Cost Estimate US$/t 2.50 2.50 Vertical Mining Adjustment Cost (Up) US$/t 0.007 0.007 Vertical Mining Adjustment Cost (Down) US$/t 0.009 0.009

Dilution (%) % 15.00 15.00

Processing Oxide Processing & Admin Cost US$/t 8.00 8.00

Sulphide Processing & Admin Cost US$/t 8.00 8.00

Oxide Density g/cc 2.5 2.5

Sulphide Density g/cc 2.5 2.5

Oxide Au Recovery (mine ore) % 60.0 60.0 Sulphide Au Recovery (mine ore) % 60.0 60.0 Oxide Au Recovery (leach pad material) % 46.0 46.0 Sulphide Au Recovery (leach pad material) % 46.0 46.0 Oxide Ag Recovery (mine ore) % 40.0 40.0 Sulphide Ag Recovery (mine ore) % 40.0 40.0 Oxide Ag Recovery (leach pad material) % 30.0 30.0 Sulphide Ag Recovery (leach pad material) % 30.0 30.0

Au Selling Cost US$/oz 3.00 3.00

Ag Selling Cost US$/oz - -

Au Price US$/oz 825.00 825.00

Ag Price US$/oz 12.50 12.50

Heap Leach Capacity t/d 4,000 4,000

Maximum benches mined per year 10 10

During the optimization process a small factor was included in the calculation to account for added costs incurred for mining at higher (US$0.007/t) and lower (US$0.009/t) elevations compared to the base case. This value was estimated by AMEC and based on recommended truck performance and operating costs.

A dilution factor of 15% that was provided by Minera Guanaco was used for the pit optimization. AMEC considers the percentage to be reasonable for the 5 m benches in the proposed mine design. This has the effect of increasing the processed tonnage by 15% with a similarly reduced overall Au and Ag grade.

The cut-off grade used for the open pit Mineral Resource calculation was based on the following cash flow variables and equations:

• Au Price = US$825.00/oz

• Ag Price = US$12.50/oz

• Au Recovery = 69%

• Ag Recovery = 40%

• Cost of Processing = US$8.00/t

• Cost of Sales = US$3.00/oz

If revenue ≥ cost, then the block is classified as ore, otherwise the block is considered waste.

Underground

The primary planned underground mining method is sublevel open stoping. Stopes were assumed to have a maximum 60 m height with sublevels at 20 m. The estimated design dilution is 1.5 m at the walls (0.75 m each side) for an approximate overall dilution figure of about 19%. For design purposes it was assumed that there would be a recovery of about 85% (losses in pillars and floors). This recovery should improve when the drifts are opened and better information is available and pillars can be left in waste or in low-grade ore. Remnant pillar material was extracted from the estimate prior to declaration of mineral reserves.

Where higher-grade mineralization is present, or ground conditions warrant, cut-and-fill methods were envisaged: these could either be drift-and-fill and/or bench-and-fill.

Cut-off grades were established using input parameters are included in Table 17-11.

Table 17-11: Underground Optimization Design Parameters

Parameter Value Underground mining cost US$26.30/t

Processing cost US$15/t General costs US$5/t Refining and sales costs US$10/oz Au Gold price US$1,000/oz Metallurgical recovery 93%

Cut-off grade (Au) 1.56 g/t

Stope design, however, was based on a cut-off grade of 2.00 g/t Au, assuming a more conservative gold price of US$800/oz. The cut-off grade established in Table 17-11 was used for material that must be mined as part of the logical mining sequence when no additional development is required.

17.2.2 Mineral Reserve Statement

Mineral Reserves for the Guanaco Project were developed on mineralization that had been classified as Measured and Indicated Mineral Resources.

The classifications used for Mineral Reserves are those outlined by the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves. These equate to Proved and Probable Ore Reserves under the JORC Code.

Open pit Mineral Reserves are presented in Table 17-12. The Qualified Person is Douglas Chapman, P.E., an AMEC employee, and the effective date of the estimate is 29 May, 2010.

Table 17-12: Open Pit Probable Mineral Reserve, Effective Date May 29, 2010, Douglas Chapman, P.E.

Area Category Tonnage (kt) Au (g/t) Ag (g/t) Au Metal (koz)

Ag Metal (koz)

Defensa Probable 322 1.37 10.65 14 110

Perseverancia Probable 370 1.57 8.63 19 103

Phase I Probable 3,898 0.51 2.77 64 347

Phase II Probable 4,437 0.57 2.56 82 365

Total Probable 9,026 0.62 3.18 179 923 Notes to accompany Open Pit Mineral Reserve Table:

1. Open pit Mineral Reserves are defined with a Lerchs-Grossmann pit shell

2. Open pit Mineral Reserves are reported using commodity prices of US$825/oz Au and US$12.50/oz Ag.

3. Tonnages are rounded to the nearest 1,000 tonnes, grades are rounded to two decimal places;

4. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content;

5. Tonnage and grade measurements are in metric units. Gold and silver ounces are reported as troy ounces.

Underground Mineral Reserves are presented in Table 17-13. The Qualified Person is Alfonso Ovalle, MAusIMM, an AMEC employee, and the effective date of the estimate is 29 May, 2010.

Table 17-13: Underground Mineral Reserves, Effective Date May 29, 2010, Alfonso Ovalle, MAusIMM

Area Category Tonnes Au Grade Ag Grade Au Metal Ag Metal

(kt) (g/t) (g/t) (koz) (koz)

Cachinalito Central Proven 334,341 6.68 3.52 71,807 37,838

Probable 406,933 5.71 3.87 74,706 50,633

Notes to accompany Mineral Reserve Tables:

1. Underground Mineral Reserves are confined to designed stopes. Remnant pillar material that cannot be mined has been removed from the estimate, and 19% dilution has been applied;

2. Underground Mineral Reserves are reported using commodity prices of US$825/oz Au and US$12.50/oz Ag.

3. Tonnages are rounded to the nearest 1,000 tonnes, grades are rounded to two decimal places;

4. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content;

5. Tonnage and grade measurements are in metric units. Gold and silver ounces are reported as troy ounces.