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Preliminary Economic Assessment

PEA Highlights

In February 2014 Coffey Mining and Alquimia Conceptos S.A. prepared an NI 43-101 compliant PEA and mineral resources estimate on the Vizcachitas project.

The results of this study show that the property contains an indicated resource of 1,038 million tonnes grading 0.434 % Cu Eq, (0.37% Cu and 0.012% Mo) containing an estimated 8.5 billion pounds of copper and 281 million pounds of molybdenum , and an inferred sulphide resource of 318 million tonnes grading 0.405 % Cu Eq (0.345% Cu and 0.013% Mo) at a 0.3% CuEq1. cut-off containing an estimated 2.4 billion pounds of copper and 88 million pounds of molybdenum. The resource estimate was based on a total of 146 drill holes and 40,383 metres drilled.

The PEA evaluated four mining scenarios feeding flotation facilities with a throughput of 44 ktpd, 88 ktpd, 176 ktpd and 88 ktpd with a step up in production to a final throughput of 176 ktpd. The 176 ktpd case was selected to be the base case as it produced the highest net present values (NPV).

On a pre-tax basis, the base case, results in an NPV of $746 million, internal rate of return (IRR) of 11.4%, and an estimated payback period from initial commercial operations (Payback Period) of 5.9 years.

The after income tax net present value (NPV), internal rate of return (IRR) and payback periods for the 176 ktpd case are shown in the table below.

The Mining Royalty Tax is deducted in all cases.

Description Unit Before Income Tax After Income Tax
Assumed Leverage1
After Income Tax No Leverage
Net Present Value -8% kUSD 745,818 454,179 274,446
IRR % 11.43% 11.54% 9.45%
Payback Period 2 years 5.9 6.5 6.0

(1) See PEA for assumptions
(2) Referred to the first operation yea

Note: The Preliminary Economic Assessment is considered preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the Preliminary Economic Assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

 
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