Operations
Two major accomplishments define Buenaventura's operations in 2012, namely the commissioning of two new mines in Peru: Mallay and Breapampa.
In May, Mallay, located in the district of Oyon, near Uchucchacua, started up operations in a concentrator plant with a rated capacity of 500TPD for the treatment of polymetallic ores and the production of lead/silver and zinc concentrates.
Two months later in July, the Breapampa mine, located in the province of Parinacochas, Ayacucho, started up the operation of the Parccaorcco Pit, by stockpiling ore on its leach pads and feeding it into the ADR plant in October to produce gold-loaded activated carbon to be treated at the Antapite plant.
With these two new operations, the Company's total accumulated production for 2012 considering the output of the 12 mines it currently operates (underground mines: Uchucchacua, Orcopampa Poracota Julcani, Recuperada, Antapite, Mallay, Ishihuinca and Paula; and open pit mines: Breapampa, La Zanja and Tantahuatay), amounted to 578,511 ounces of gold, 16.7 million ounces of silver, 20,633 DST lead fines, 22,433 DST zinc fines and 445 DST copper fines, that resulted from the processing of 2.3 million DST of ore mined from 9 underground mines and 21.7 million DST mined from the 3 open pit mines (Table 1).
Exploration and development activities were also stepped up in the reporting year. In this context, a total of 98,142 meters of exploration and development work and 207,425 meters of diamond drills were completed, representing a 15.10% increase in underground workings and an 18.10% increase in meters drilled, compared with year 2011. In the case of the 3 open pit mines, a total of 43,176 meters were drilled, bringing the total number of meters drilled in Buenaventura-operated mines to 250,601 meters.
Regarding its brownfield exploration properties (Yumpag, Anamaray, Chanca, Ocoruro, Pariguanas and Tambomayo) 10,260 meters of workings and 47,655 meters of drills were completed.
Ore reserves in our operational underground mines as of December 31, 2012, reported 7.0 million DST, broken down by content as follows: 507 thousand oz of gold, 84.7 million oz of silver, 102 thousand DST of lead fines and 129 thousand DST of zinc fines (Table 2).
Ore reserves at the open pit mines directly operated by Buenaventura as of December 31, 2012, totaled 69.2 million DST, with 1.2 million ounces of gold and 24.5 million ounces of silver.
Total ore reserves including our share participation in these mines amounted to 41.7 million DST, broken down as 1.2 million oz of gold, 97.9 million oz of silver, 101 thousand DST of lead fines and 129 thousand DST of zinc fines (Table 2).
Total ore resources in the 12 mines operated by Buenaventura, and including our share participation in these mines, amounted to 228.3 million DST, broken down as 2.3 million oz of gold, 101.7 million oz of silver, 98 thousand DST of zinc fines and 80 thousand DST of lead fines.
Including our brownfield exploration properties (Yumpag, Chanca, Pariguanas at 60% and Tambomayo) total ore resources as of December 31, 2012, totaled 230.2 million DST, including 2.8 million oz of gold, 119.5 million oz of silver, 137 thousand DST of zinc fines and 101 thousand DST of lead fines (Table 4).
UCHUCCHACUA
Total ore processed at this mining unit in the reporting year totaled 1.2 million DST of ore mined mainly from the areas of Socorro, Carmen and Huantajalla. This produced 11.3 million oz of silver, 9,636 DST of lead fines and 10,824 DST of zinc fines, in lead-silver and zinc concentrates (Table 1). Of the total number of ounces of silver produced, 532,757 oz were recovered in bars as a result of cyanide leaching.
Uchucchacua's mineral reserves as of 31 December 2012, totaled 5.7 million DST of ore with 12.68 oz/DST of silver, 1.25% of lead and 1.77% of zinc, which represents 72.1 million oz of silver, 71,139 DST of lead fines and 100,345 DST of zinc fines, which translates into an increase of 11.53 % in the content of silver compare to the previous year (Tables 2 and 3).
Mineral resources at Uchucchacua amounted to 3.8 million DST with 13.36 oz/DST of silver, 1.59% of lead and 2.14% of zinc, which translates into 50.2 million oz of silver, 59,768 DST of lead fines and 80,322 DST of zinc fines.
Mineral resources in the Mining District of Uchucchacua as of December 31, 2012, were 4.0 million DST with 13.16 oz/DST of silver, 1.54% of lead and 2.04% of zinc, which translates into 52.8 million oz of silver, 62 thousand DST of lead fines and 82 thousand DST of zinc fines (Table 4).
In the Socorro area exploration efforts focused on the Gina, Lesly, Deisy, Maricela, Ramal Vanesa and Lilia veins, at various levels, while in the Carmen area exploration efforts focused on the Ramal Rosalia, Karen, Lucia 2, Karla, Susy, Raquel and Alexandra veins at levels 4450, 4300 and 4060. In the Huantajalla area, the exploration team concentrated its attention on the Vania, Sara, Jackie, Esperanza, Paula, Plomopampa 2, Angelica, Rosalinda and Mariana ore bodies and/or veins, at different levels.
A total of 23,236 meters of exploration work and 52,494 meters of diamond drills were completed and this has allowed us to find 2.1 million DST of new ore containing 10.59 oz/DST of silver, which has helped to restore a great part of its reserves.
In regard to the development of mine infrastructure, the Luz Shaft was deepened by 68 meters, down to level 3,843 m.a.s.l; Ramp 626 - 1 was advanced by 554 meters reaching 3,785 m.a.s.l; and Ramp 626 was advanced by 323 meters to the 3.853 m.a.s.l. level.
By the end of the year under review we completed the third expansion of the Mesapata tailings dam. This 65,000 m3 capacity tailings dam is designed to store filtered cyanide tailings.
As from the end of 2012 we have begun working on a cost control program that also seeks to enhance process efficiency. For this end, the Company hired Alexander Proudfoot, a consulting company that has been working hand in hand with Uchucchacua's local staff.
BROWNFIELD EXPLORATIONS UCHUCCHACUA
Yumpag
Here the Company completed 526 meters of diamond drills, intercepting the sedimentary sequence of the Casapalca, Celendin and Jumasha Formations. Drills also cut the Cachipampa fault and 2 tensional breccia structures with veinlets of calcite and disseminated pyrite.
Our investment to date, amounts to US$1.8 million, which includes the initial expenses made in the Cochapata prospect.
To date, resources here have been estimated at 253 thousand DST with 10.20 oz/DST of silver, 0.15% of lead and 0.39% of zinc in a width of 7.36 meters, bearing contents of 2.6 million ounces of silver, 380 DST of lead fines and 987 DST of zinc fines, identified in the Angelica and Tomasa ore bodies.
Potential ore content is estimated at 283 thousand DST with 10.54 oz/DST of silver, 0.15% of lead and 0.38% of zinc hosted in the abovementioned ore bodies.
Cochapata
This prospect is located in the hamlet of Pampahuay, Community of Oyon, Province of Oyon, Lima Region. Access from the Uchucchacua mine, is along a weather-dirt road 33 km to the southeast, near the Chacua Grande project.
The interest in this area is centered on the presence of the 120x110 meters, tectonic Toro Breccia, which is controlled by the Cochapata Norte and Cochapata Sur faults that have caused fracturing of the host rock, in which mineralizing solutions have been emplaced.
Exploration in this prospective area began with geological mapping at a scale of 1/2000 and systematic sampling of structures with a view to program diamond drills. We are waiting for permission from the community to prepare an EIS in order to further our exploration activities.
A total of 1,151 meters of underground exploration workings and 5,580 meters of drilling were completed here. Based on the results of this work, we were able to measure 33 thousand DST of low-grade ore with 2.73 oz/DST silver, 0.79% of lead and 8.05% of zinc, distributed in the San Francisco, Falla Longitudinal and Jancapata veins.
MALLAY
As mentioned at the beginning of this report, Mallay started up operations in May 2012, and by the end of that year it had accumulated 114,166 DST of ore mined mainly from Manto Isguiz. This produced 682,708 ounces of silver, 107 ounces of gold, 4,952 DST of lead fines and 6,711 DST of zinc fines in silver - lead and zinc concentrates. For 2013, we expect Mallay to produce 179,000 DST which translates into 1.2 million ounces of silver, 7,448 DST of lead fines and 10,425 DST of zinc fines.
Exploration and development efforts in the reporting year completed an area of 9,389 meters and 20,380 meters of diamond drills.
Mineral reserves were estimated at 288,113 DST with 10.87 oz/DST of silver, 6.24% of lead, 7.09% of zinc and 0.026 oz/DST of gold, which represents 3.1 million ounces of silver, 7,596 ounces of gold, 17,978 DST of lead fines and 20,427 DST of zinc fines, hosted in the Isguiz ore body, specifically in the Maricielo, Maricarmen, Erika, Maricruz and Danae veins, which will be further explored at varying levels.
Resources totaled 179,639 DST with 11.56 oz/DST of silver, 4.62% of lead, 5.12% of zinc and 0.06 oz/DST of gold, containing 2.1 million ounces of silver, 10,812 ounces of gold, 8,299 DST of lead fines and 9,198 DST of zinc fines. Ore potential is 1.3 million DST.
BROWNFIELD EXPLORATIONS MALLAY
Chanca
At this ore deposit, located north of Mallay, a total of 3,906 meters of underground workings and 10,421 meters of drilling were completed, apart from rehabilitating 1,466 meters of old mine workings at levels 440 and 400.
Measured mineral resources, indicated and inferred, totaled 147,096 DST with 9.26 oz/DST of silver, 0.016 oz/DST of gold, 1.68% of lead and 1.23% oz/DST of zinc, containing 1.4 million ounces of silver, 2,354 ounces of gold, 2,471 DST of lead fines and 1,809 DST of zinc fines. Ore potential is estimated to be in the order of 50,000 DST.
Work at this project has focused on 2 areas of exploration, one of which is part of the old Chanca mine. In this area, we rehabilitated the old levels and we are now developing new mine workings to explore some of the veins found below level 400, in order to go under the ore shoots intercepted by 4 drills. Also, the Santo Toribio vein was intercepted by 3 horizontal drills, drilled from level 440. We plan to further this finding in 2013.
The other area is known as the "covered" area, and was detected as a result of a 17 drill-hole campaign, drilled from the surface, with which we have increased resources in the Santa Rosa and Camila veins.
MANGANESE SULFATE PLANT PROJECT
PROCESADORA INDUSTRIAL RIO SECO
This project is located 102 km north of Lima and will have a sulfuric acid leaching plant to separate the manganese content from the lead-silver concentrate produced at Uchucchacua.
The Manganese Sulfate Project is a chemical processing plant designed to improve the quality and rate of recovery of the silver-lead-manganese concentrates being produced at Uchucchacua. This innovative processing method will give the product added value while allowing us to increase reserves, as we will be able to include those mineralized zones with high manganese content. Another goal is to produce 22,000 tonnes per year of manganese sulfate monohydrate.
The project will be equipped with a sulfuric acid plant as a gas treatment system and a crystallization plant that will produce manganese sulfate monohydrate in the form of crystals.
The design and detail engineering of the sulfuric acid plant was developed by Haldor Topsoe, a Danish company, while the crystallization plant was commissioned to GEA, a French company.
The estimated investment amount of the project is US$90.8 million. The plant will start-up operations in May 2013.
ORCOPAMPA
The Orcopampa mine processed 508,647 DST of ore extracted from the Chipmo mine, with 0.492 oz/DST of gold and 0.43 oz/DST of silver, producing 240,134 ounces of gold and 111,046 ounces of silver in doré bars.
Additionally, 492,240 DST of old flotation tailings stored in tailings facility 3 were re-treated using carbon-in-leach processing, enabling us to produce 20,242 oz of gold and 314,574 oz of silver (Table 1).
Apart from this, 134,886 DST of ore mined from the Poracota mine were processed, with 0.183 oz/DST of gold and 0.18 oz/DST of silver, producing 19,238 ounces of gold and 16,181 ounces of silver in concentrate (Table 1).
Total production at the Orcopampa plant was 279,617 ounces of gold and 441,801 ounces of silver.
Ore reserves at Chipmo, as of December 31, 2012, totaled 1.1 million DST with 0.421 oz/DST of gold and 0.54 oz/DST of silver, which translates into 459,265 oz of gold and 589,081 oz of silver (Table 2).
Ore reserves at Poracota reported 36,487 DST with 0.332 oz/DST of gold and 0.08 oz/DST of silver, which represents 12,114 oz of gold and 2,882 oz of silver.
Mineral ore resources at Chipmo as of end of year 2012, reported 420,030 DST with 0.435 oz/DST of gold and 5.05 oz/DST of silver, which represents 182,713 oz of gold and 2.1 million oz of silver. At Poracota, resources in sulfides, totaled 29,212 DST with 0.386 oz/DST of gold, containing 11,275 ounces of gold, while resources in oxides, were 4.1 million DST with 0.032 oz/DST of gold and 0.137 oz/DST of silver that translate into 130,894 ounces of gold and 562,314 ounces of silver.
Total resources in the District of Orcopampa (Chipmo and Poracota), including the sulfides for underground mining and oxides for open pit mining, were 4.5 million of DST with 0.072 oz/DST of gold and 0.59 oz/DST of silver which signify 324,882 ounces of gold and 2.6 million ounces of silver.
Ore potential at Chipmo is estimated at 517,240 DST with 0.396 oz/DST of gold and 3.37 oz/DST of silver, while that of Poracota amounts to 238,505 DST.
At Chipmo, 579.874 DST of ore was found with 0.422 oz/DST of gold and 0.51 oz/DST of silver, mainly in the Nazareno, Prosperidad, Angela, Concepcion and Esperanza veins; while at Poracota, new ore found was 127,402 DST with 0.226 oz/DST of gold and 0.15 oz/DST of silver.
Tailings dam N°4 was put into operation at the end of 2012, giving the mine another 4 years of storage capacity.
At Orcopampa, year 2012 saw the completion of 13,283 meters of exploration and development work, mainly in the Nazareno, Lucia, Susan and Esperanza veins. Drilling totaled 33,630 meters, and intercepted the Nazareno, Ramal Natividad and Lucia veins. At Poracota, 9,554 meters were subjected to exploration work and 34,361 meters of drilling was completed (8,413 meters of which were drilled at Huamanihuayta Oeste).
At Chipmo, the Nazareno Shaft was deepened by 59 meters down to 3,078 m.a.s.l., and the Prometida Shaft was advanced by 29 meters, down to 3,200 m.a.s.l. Ramp 21 was advanced by 29 meters down to 3,904 m.a.s.l.
Metallurgical testing to improve gold recovery from the minerals mined from Manto Aguila confirmed the need for re-milling this ore to less than 80% - 200 m; for this end, we have acquired three METSO SMD350 ultra-fine milling mills, which should be put into operation by mid- 2013.
BROWNFIELD EXPLORATIONS IN THE DISTRICT OF ORCOPAMPA
26,156 meters of drilling were completed in the areas of Huamanihuayta Oeste, Pariguanas and Ocoruro, as part of the brownfield explorations program.
Huamanihuayta Oeste
At the Huamanihuayta Oeste Project, located 1 km to the SW of the Poracota Mine, meters drilled totaled 8,413 meters (reported as having been completed at Poracota). Results showed interesting anomalous gold grades ranging between 0.105 g/t Au and 28.440 g/Au for cuts made between 0.60 meters and 68.25 meters, intercepting the Malena, Silvana and Paola structures.
On the basis of these cuts, ore measured by drills performed in the Silvana and Malena veins totaled 265,915 DST with 0.190 oz/DST of gold, however these are not considered as potential ore or resources due to their low grade.
We intend to carry out an additional 4,800 diamond drilling campaign in two specific zones: 2,400 meters at Huamanihuayta Oeste, to assess the new Juliana, Milagros and Marely structures, the SW extension of the Malena structure and others such as Silvana and Paola; and another 2,400 meters at Faculla, to explore the chargeability anomaly that there is at-depth, which would indicate the SW prolongation of the system of silicified structures of Poracota and Huamanihuayta Oeste.
Ocoruro
The Ocoruro Project, located in the district of Chilcaymarcaa, 2 km to the W - SW of the Chipmo mine, saw the completion of 17 diamond drills in the year under review. These were performed in the area of Laguna Seca, Huaylla and Rosario-Natividad, and totaled 10,301 meters, with encouraging results that indicate the possible presence of concentrations of economic ore.
Twelve drill holes were completed in the Huaylla area, toward the Ocoruro, Ocoruro Norte, Evelyn and Pamela veins. Four drill holes were completed in the Laguna Seca sector, directed towards the structures of Ocoruro North, Macarena, Penelope and Guadalupe. None of these produced good results.
Pariguanas (60% BVN)
This project, located in the district of Chachas, province of Castilla, on lands owned by the Chachas community, contains a silver vein system in which we have completed 7,442 meters of drilling in 27 holes, to explore the Claudia, Erika, Rocio and Pitanayo veins. Unfortunately, results were not as good as expected since the cuts were in fact faults, which means no new resources here.
Estimated Indicated plus Inferred resources confirmed by drilling in the two most interesting veins are as follows: San Pedro and Pitanayo, total 312.598 DST with 22.16 oz/DST of silver and 0.019 oz/DST of gold with a width of 1.32 meters, representing 6.9 million ounces of silver and 6,089 ounces of gold.
In November work on crosscut 4730 directed toward the San Pedro vein was started, reporting an accumulated advancement of 39.70 meters as of December 2012. Exploration efforts will be intensified in 2013, with mine workings in the Pitanayo and San Pedro veins and the construction of crosscuts, galleries and chimneys.
Aseruta
In this prospect the year under review saw the completion of 275 hectares of mapping, including sampling in the Azucena, Aurora, Angela, Alicia, Amparo, Milagros and Lizet veins.
Geological reviewing of this sector was also intensified, and this resulted in the discovery of 18 additional veins, which added to the 12 veins discovered in the campaign of 2011, now total 30 veins. Total length of the outcrops increased from 6,500 meters to 12,000 meters, with an average width of 1.20 meters.
IP and resistivity geophysical surveys were carried out over 23.90 line km, revealing the possible presence of two significant anomalous areas. At depth, the first could be a body of silicified hydrothermal breccia, with pyrite and gray sulfides, between elevations 4,450 and 4,125 m.a.s.l.; while the second geophysical anomaly lying below elevation 4,000 m.a.s.l. , coincides with the favorable level of mineralization of the Calera vein, suggesting potential for in-depth exploration.
Results obtained in 2012, consolidate the Aseruta project as a new, very important target that could contain a potential of 1.1 million DST with 1.20 meters wide and ore grades of more than 10 oz/DST silver.
JULCANI
This mining operation processed 141,820 DST of ore with 18.50 oz/DST of silver, 0.017 oz/DST of gold, 1.94% of lead and 0.32% of copper (Table 1). Of this, 2.4 million oz of silver, 1,220 ounces of gold, 2,529 DST of lead fines and 423 DST of copper fines have been recovered, which compared with 2011's production reflects a 0.41% increase in silver, a 22.47% increase in lead and a 40.52 % drop in gold (Table 1).
Reserves as of December 31, 2012, totaled 424,605 DST with 18.56 oz/DST of silver, 1.88 % of lead, 0.50% of copper and 0.017 oz/DST of gold (Table 2), which represents 7.9 million ounces of silver, 7,398 ounces of gold, 7,990 DST of lead fines and 2,102 DST of copper fines, which are basically in the Acchilla 7B, Ramal Lucia, Manto, Lucía Piso, Jesus, Catalina, Jesus R3, Jesus R2 and Cayetana veins, all in the Acchilla area, and the Maria Jesus, Fatima, Estela R 1, Magdalena, Betsabe, Apolo, Maria Lizbeth, Veronica and Cecilia veins in the Estela area and in vein 28.
Mineral resources as of December 31, 2012, totaled 315,475 DST with 19.06 oz/DST of silver, 1.98% of lead, 0.60% of copper and 0.034 oz/DST of gold, containing 6.0 million ounces of silver, 10,659 ounces of gold, 6,254 DST of lead fines and 1,903 DST of copper fines (Table 4), located in the same veins as the ore reserves.
Potential ore totaled 361,390 DST with contents of 19.27 oz/DST of silver, 1.84% of lead, 0.61% of copper and 0.026 oz /DST of gold.
A total of 12,668 meters of exploration work and 12,830 meters of diamond drilling were completed, enabling us to find 166,410 DST with 18.42 oz/DST of silver, 1.54% of lead, 0.39% of copper and 0.003 oz/DST of gold (Table 1).
By the end of the reporting year, we concluded with the installation of the 8 'x10' Magensa mill. This will allow us to increase the treatment capacity to 500 DST/day once the mine normalizes its extraction system. A new tailings pumping system is also being installed. This includes 4x3 Warman series of pumps.
Shaft 993 Estela was deepened by 40 meters, down to level 620, and we also installed new 300 HP winches each at shafts 487 and Jesus, at the Acchilla mine.
RECUPERADA
Recuperada processed 117,600 DST of ore, with 4.19 oz/DST of silver, 3.20% of lead and 4.88% of zinc (Table 1), producing 467,475 oz of silver, 3,516 DST of lead fines and 4,898 DST of zinc fines.
Mineral reserves, as of 31 December 2012, totaled 114,485 DST with 8.80 oz/DST of silver, 4.04% of lead and 7.05% of zinc (Table 2), which means 1.0 million ounces of silver, 4,625 DST of lead and 8,071 DST of zinc, located mainly in the Teresita 1 and Ramal 95 veins and also in the Esperanza area veins.
Mineral resources at Recuperada reported 121,560 million DST with 8.50 oz/DST of silver, 4.67% of lead and 6.74% of zinc, with contents of 1.0 million oz of silver, 5,677 DST of lead and 8,193 DST of zinc (Table 4).
Ore potential is 498,920 DST with 5.70 oz/DST of silver, 2.28 % of lead and 2.51 % of zinc, of which 304.105 DST are hosted in the area of Escopeta and the rest in the areas of Teresita and Esperanza.
A total of 9,494 meters of exploration work was completed and 7,995 meters of diamond drilling, which enabled us to find 117,375 DST with 8.69 oz/DST of silver, 4.02% of lead and 7.00% of zinc.
Shaft 3 at Teresita was deepened by 14 meters down to level 3,940 m.a.s.l. while shaft 2 was deepened by 5 meters to an elevation of 4,007 m.a.s.l.
At Esperanza's shaft 2, work is underway to complete the infrastructure, housing and winch chamber. The Camucha ramp was advanced by 135 meters down to elevation 4,488 m.a.s.l.
In 2012 changes were introduced to the flotation circuits, the most important being the installation of a OK-20 cell for the flotation of the zinc Rougher and a 5 'x5' mill for re-milling the zinc particles.
ANTAPITE
At Antapite a total of 86,113 DST of ore was processed with 0.142 oz/DST of gold and 0.219 oz/DST of silver (Table 1), mined mainly from the Zorro Rojo Norte, Soledad Olvidada, Pampenita Piso, Pampenita 1, Susan and Juana Solitaria veins, producing 11,720 oz of gold and 13,254 oz of silver in doré bars.
Ore reserves as of December 31, 2012 reported 47,745 DST with 0.300 oz/DST of gold and 0.22 oz/DST of silver, representing contents of 14,324 ounces of gold and 10,504 ounces of silver (Table 2) hosted primarily in the Antapite, Fabiola, Pampenita 1, Pampenita Piso and Pucarumi veins.
Mineral resources totaled 6,790 DST with 0.280 oz/DST of gold and 0.20 oz/DST of silver which translates into 1,901 ounces of gold and 1,358 ounces of silver, found mainly in the Pucarumi, Carolina and Furiosa veins (Table 4). In addition there are 53,280 DST of ore potential.
In 2012 new ore discovered totaled 104,397 DST of ore with 0.214 oz/DST of gold and 0.22 oz/DST of silver in the Soledad Olvidada, Pampenita 1 and Alicia veins. Exploration efforts completed 9,117 meters of explorative workings, mostly in the Antapite, Furiosa, Pucarumi R Norte, Veronica, Pampenita 1, Fabiola, Luz, Nidia and Pampenita Piso veins. A total of 26,947 meters in diamond drills were also completed.
Exploration of the Pucarumi, Furiosa and Carolina veins, at levels 3070 and 3020, as well as that of the Alicia and Pampenita 1 veins which host resources will enable us to find additional new mineral reserves in 2013. Also very important for the future, is the construction of the crosscut towards the southeast at level 3,070 to explore the southeast extension of the Zorro Rojo vein.
The plant operated continuously until the month of May, and conducted only partial campaigns in the months of July, August, September and December.
As from November 2012, the mine began to receive charged coal from Breapampa for desorption and the production of doré bars. For such end, we installed five new electrowinning cells and a storage tank for decharged coal.
SHILA - PAULA
Our Shila- Paula operation processed 53,890 DST with 0.359 oz/DST of gold and 1.10 oz/DST of silver from mineral mined from our Paula mine.
Ore reserves at Paula, as of December 31, 2012 totaled 8,371 DST with 0.397 oz/DST of gold and 0.92 oz/DST of silver, containing 3,323 oz of gold and 7,732 oz of silver (Table 2). These reserves are mainly hosted in the Nazareno, Nazareno 3, Lucia, Angelica Maria, Maria Belen, Liliana, Ramal Crucero, Ramal Chapi and Ana Belen veins.
Ore resources as of end of year 2012, reported 31,427 DST with 0.373 oz/DST of gold and 0.91 oz/DST of silver, which represents 11,722 oz of gold and 28,630 oz of silver. Mineral potential is estimated at 38,105 DST.
New ore found was 34,971 TCS with 0.368 oz/DST of gold and 1.06 oz/DST of silver, which resulted from the completion of 11,397 meters of exploration work and 27,201 meters of diamond drills.
In order to find new reserves it is necessary to continue exploration of the Nazareno, Nazareno 3, Lucia, Angelica Maria, Liliana, Maria Belen and Celinda veins. Shaft 158 at Paula was advanced by 15 meters down to elevation 4,736 m.a.s.l.
SHILA-PAULA BROWNFIELD EXPLORATIONS
Tambomayo
The Tambomayo project is a Pb- Zn ore deposit with significant Au and Ag content.
Mineral resources in the Mirtha vein were estimated at 1.3 million DST with 0.323 oz/ST of gold, 7.69 oz/ST of silver, 1.50% of lead and 2.86% of zinc, representing contents of 409,983 ounces of gold, 9.8 million ounces of silver, 19,039 DST of lead and 36,302 DST of zinc TCS, in addition to a mineral potential of 511,565 DST.
This silver - gold project saw the completion of 5,163 meters of underground workings at levels 4890, 4840 and 4740 and 4740, while diamond drill holes were completed for 13,385 meters, intercepting the Olivia and Mirtha veins.
Exploration will be continued in these veins including drill works both towards the east and at depth, increasing the scope of the grid, in order to grow resources.
Metallurgical tests performed to date have indicated the possibility of using mixed treatment processes: cyanide leaching of Au and Ag followed by differential flotation of Pb and Zn.
To date, the ore has been characterized and the pre-cyanidation system has been designed. Pre- cyanidation milling must achieve at least 80% - 635m.
ISHIHUINCA
Ishihuinca processed 17,751 DST of ore from various exploration campaigns, with 0.261 oz/ST of gold and 0.18% of copper, and recoveries of 4,016 oz of gold and 22 DST of copper fines.
Ore reserves, as of December 31, 2012, reported 12,497 DST with 0.334 oz/ST of gold which translates into 4,326 ounces of gold. Ore resources on the other hand totaled 2,938 DST with 0.369 oz/ST of gold representing 1,085 ounces of gold. Mineral potential is 12,830 DST with 0.209 oz/DST of gold. New ore found totaled 12,120 DST with 0.334 oz/DST of gold.
BREAPAMPA
The Breapampa project, located in the district of Chumpi, province of Parinacochas, region of Ayacucho is an ore deposit amenable to open pit mining, with proven reserves in Cerro Parccaorcco of 5,645 million DST of ore disseminated in oxides with grades of 0.035 oz/ST gold and 0.628 oz/ST silver with an estimated heap leach recovery rate of 65% for gold and 10% for silver. The estimated useful life of the mine is 2 years. Operations are scheduled to begin in May of 2012 with an initial production of 5,500 ST/D the first year, and escalating to 10,000 ST/D towards the end of the second year.
Ore reserves, which are disseminated in oxides and located in the Parccaorcco mountain, account for 5.1 million DST with 0.038 oz/DST of gold and 0.73 oz/DST of silver, that represent 197,119 ounces of gold and 3.7 million ounces of silver.
Mineral resources, which are also found in oxides, totaled 1.7 million DST with 0.019 oz/DST of gold and 0.11 oz/DST of silver which translates into 31,747 ounces of gold and 179,436 ounces of silver, of which 730,471 DST with 0.019 oz/DST of gold and 0.13 oz/DST of silver are in the Senccata prospect and 962,321 DST with 0.019 oz/DST of gold and 0.09 oz/DST of silver, are hosted in the Pucagallo prospect. Ore from both these prospects could eventually be treated at the Breapampa plant.
Total meters drilled were 10,387 in the areas around the open pit, and were performed to evaluate mineralization found below the quaternary material. This work enabled us to detect an ore body of 590,677 DST with an ore grade of 0.017 oz/DST of gold and 0.396 oz/DST of silver, and with 9,950 oz of gold and 13.565 oz of silver. New ore found reported 67,412 DST with contents of 0.038 oz/DST of gold and 0.73 oz/DST of silver.
In the areas of Pucagallo and Senccata, IP geophysical surveying was carried out over 8 lines completing a total of 27.35 km. This work allowed us to confirm the presence of silicified ore bodies from north to south at depths of more than 50 meters.