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Project Description

Piedras Verdes Mine - Overview

General Overview

CDM controls a portfolio of 30 titled mining concessions encompassing an area of ~57k hectares, including one recently acquired titled concession covering ~52k hectares. CDM has fully paid all claim license fees and taxes both for concessions owned and otherwise under its control. CDM owns 25 of the 30 concessions, the other 5 concessions are owned by Grupo Rexgo, S.A. de C.V. (“GR”). CDM exploits the concessions it does not own pursuant to an agreement between CDM and GR executed in March 1997.

The PV Mine utilizes conventional truck and shovel mining methods. Three alternative process options are utilized for copper recovery:

  • ROM heap leach;
  • Crushed ore heap leach; and
  • Crushing, grinding, and froth flotation.

Copper is produced as LME Grade A cathode from the SX/EW process and in concentrate from the flotation plant.

Ore is mined using conventional open pit methods, 24 hours per day, 365 days per year. Mining follows a traditional drill, blast, load haul dump sequence of mining. Ore and waste are hauled out of the pit. Currently waste is hauled to dumps located north and northeast of the current pit configuration. These dump areas will continue to be active for the foreseeable future. As areas within the pit footprint are depleted, waste material will be backhauled and placed within in-pit dumps. Ore material is hauled to selected areas depending on its grade and physical characteristics. Lower grade oxides and supergene material is hauled directly to the ROM leach area where it is stacked in 5m high lifts prior to irrigation. Higher grade oxides and supergene material is hauled to the primary crusher or stockpiled depending on daily grade and alteration constraints.

PV Mine Location and Access

The PV Mine is located in Sonora, one of Mexico’s safest states with a long history of copper mining. Sonora also represents Mexico’s most important state in terms of mining production and in particular, copper production. Piedras Verdes is the third largest copper mine in Sonora and in Mexico.

The PV Mine is strategically well-positioned in Sonora. It is ~20 km predominately by paved roads from the town of Álamos (population 9,000), and ~50 km from the town of Navojoa (population 160,000). Both towns offer employees the opportunity to live in attractive surroundings with access to excellent schools and universities and provide Piedras Verdes a large and qualified human resource base.

  • Air: located 111 km (~90 minute drive) from Ciudad Obregón Airport that has 10 commercial flights daily and is also 22 km from the 5,000 foot paved runway at Álamos available to general aviation.
  • Road: connected by 14 km access road to a secondary road that reaches (i) the Mocuzarit Dam to access State Highway 162, (ii) the Álamos/Navojoa Highway or (iii) the Pan-American Highway that passes through Navojoa.
  • Rail: ~50 km to Sonora’s mainline north-south railway that passes through Navojoa.
  • Port: located 250 km from the deep-water port of Guaymas (from which copper concentrate is blended and exported by both trading and mining companies).

PV Mine Supplies

Power

A 14.8 km long, 115 kV power line connects the Comisión Federal de Electricidad (Federal Electricity Comission, “CFE”) grid to the mine owned and maintained substation with a continuous capacity of 25 MW. A 34.5 kV CFE transmission line provides power to the El Tabelo well field.

The cost of electricity delivered at high tension in Mexico is ~$0.10/kWh, which is ~35% cheaper than Chile, the largest copper producing country in the world. Unlike other mining jurisdictions, additional electrical capacity is freely available.

Water

CDM holds concessions authorizing it to use 16 wells up to a combined tested capacity more than enough for the operational requirements throughout the life of mine.

A network of 10 cm (4"), and 14.7 cm (6") high-density polyethylene (“HDPE”) piping connects the well field to a central 39.2 cm (16") collection line for the mine and plant site. The collection line carries the water to a booster tank, from which water is pumped to a main 3,785 mP3P capacity storage tank via a 16” HDPE pipeline.

Climate

For eight to nine months of the year, the climate is arid to semi-arid. Nightly low temperatures in December and January range between 5°C and 8°C. Daily highs of 38°C and 42°C occur during May through August. The daily average annual high temperature is 32.5°C.

Elevation in the project area ranges from 150 to 300 m above Mean Sea Level (“MSL”). Vegetation is a mix of desert cactus, open grassland, and sub-tropical shrubs and trees. Surface water sources in the region include the Rio Mayo and Mocuzarit Lake. The lake is 3 km north of the mine.

Jurisdiction

Mexico is an economic leader in Latin America and is the world’s 11th largest economy by GDP (International Monetary Fund 2011). It offers a dynamic economic environment and is expected to maintain strong economic growth with projected real GDP growth of 3.6% and 4.0% in 2012 and 2013 respectively (Goldman Sachs Economic Research). These near term growth projections also reflect Mexico’s long-term economic potential, real GDP is expected to approximately triple by 2020.

Mining has been a major component of the Mexican economy since the sixteenth century. The Secretaría de Economía (Ministry of the Economy, “SE”) is responsible for the development of mining, it participates internationally through its Fideicomiso de Fomento Minero (Mining Development Trust, “FIFOMI”) unit. The federal government is represented by FIFOMI and Secretaría de Medio Ambiente y Recursos Naturales (The Ministry of the Environment and Natural Resources, “SEMARNAT”) at major mining events throughout the world.

Mexico is a mining friendly jurisdiction. It is the largest producer of silver in the world with 17% of world production and one of the world's largest producers of other minerals and base metals. Mexico is the third largest producer of copper in Latin America after Chile and Peru. It is the world’s eleventh largest producer of copper and fifth of zinc.

The Mexican constitution establishes that minerals belong to the state. The concept of a mineral claim is therefore characterized as that of a mining concession issued by the state. These concessions have an initial term of 50 years and may be extended. Fees payable in respect of mineral concessions are administrative in amount. The exploration, exploitation and beneficiation of the minerals have preference over any other use for land subject to concessions. With the exception of hydrocarbons, radioactive materials and salt, applicable law allows up to 100 percent foreign ownership in the exploration, development and production of minerals.

As a result of its mining-supportive governmental policies, stability, OECD tax regime, proximity and its abundance of metal resources, Mexico has attracted extensive and diverse investment from foreign mining companies. Over 200 mining companies operate in Mexico of which over 60 are producing assets. 53 of these 60 companies are subsidiaries of foreign companies. Currently ~40% of mine production and ~70% of investments in exploration are undertaken by foreign investors.

Mineralization

Two types of hypogene alteration styles host copper mineralization in the Piedras Verdes copper porphyry deposit. Potassic alteration is the earliest copper-mineralizing event. This style of alteration is indicated by the presence of secondary biotite and potassium feldspar. Disseminated chalcopyrite and bornite constitute the most abundant copper minerals in this alteration type. Potassic alteration is hosted in the batholithic intrusive rocks, metasediments and quartz feldspar porphyry.

The second, cross cutting, copper bearing alteration event is defined by sericitic-illite-chalcocite alteration. This alteration type also cross cuts all earlier alteration styles including potassic alteration. Sericite-illite-chalcocite alteration ranges from incipient to intense, with the intense phases resulting in complete destruction of the host lithology. Chalcocite occurs as disseminations, coatings on fractures, and veinlets. In hand samples of potassicaly altered rocks that have been over printed by the sericite-illite-chalcocite mineralization, chalcocite is seen rimming existing sulfides such as chalcopyrite and pyrite.

Oxidation of hypogene and secondary sulphides generated supergene chalcocite, chrysocolla, neotocite/tenorite, limonite copper mineralization, cuprite, native copper and minor amounts of malachite, brochantite, libethenite, and azurite. The mineralization model generated for the resource estimate utilized three different mineralization categories, oxide, secondary and hypogene. The oxide category is modeled on the complete absence of copper sulfide minerals as logged in the core and reverse circulation drill holes. The secondary category is the occurrence both supergene and hypogene chalcocite, the hypogene mineralization category is indicated by the presence of chalcopyrite as the primary copper bearing mineral.

Where chalcocite is logged as an overprint on hypogene mineralization, this occurrence would be modeled as secondary.

Secondary copper mineralization at Piedras Verdes shows the effects of in-situ oxidation, as well as leaching and supergene enrichment. More than one episode of leaching is indicated. Following early episodes of oxidation and enrichment, there was considerable remobilization of copper, both vertically and laterally, along faults.

North-South Mineralization Types

Geology

Piedras Verdes is an elongated porphyry copper deposit that, based on exploration to date, is 5 km long in an east-west direction and over 1 km wide in a north-south direction. Mineralization is predominantly within Triassic-Jurassic metasedimentary units and various intrusives phases of the batholithic scale, granodiorite to quartz monzonite intrusives and an aphanitic, porphyrytic quartz feldspar porphyry. Supergene copper mineralization is present as azurite, neotocite, chrysocolla, native copper cuprite and chalcocite. Hypogene copper mineralization consists of chalcocite, chalcopyrite and bornite as the main copper minerals.

Major northwest trending dextral strike slip shear zones and northwest trending sinestral strike slip shear zones control the emplacement of the deposit. Younger north striking normal fault zones cut across the deposit and have had repeated movements. The latest displacements on some faults occurred subsequent to supergene enrichment. A leached and oxidized cap demarcates the surface expression of the deposit with a characteristic reddish-brown color caused by iron oxides.

Piedras Verdes Geological Map

Geologic Cross Section

crushing system & stacking

A Crushing System was purchased and installed in late 2010 to process selectively mined higher-grade ore. This Crushing System is utilized to crush the ore to a size range that would improve percolation of acid solutions (raffinate) through the heaps and to screen altered ore to reduce high clay content fines to levels that allow good permeability and copper recovery.

The crushed and screened ore is then moved through a series of conveyors and placed on the leach pads using a TNT grasshopper and stacking system.

Management plans to add a tertiary crushing plant and an agglomeration drum system in 2014 to further improve the leach recovery by decreasing crushed particle size, reducing segregation and improving tolerance of fines in the circuit.

Heap Leach Material Handling

Primary and Secondary Industrial Crusher Operations (Crushing System)

Heap Leaching & Solvent Extraction/Electrowinning

The warm, relatively dry climate at the PV Mine lends itself to a heap leach operation.

The process consists of leaching the ROM and crushed ores with acidified solutions (raffinate recycled from the SX/EW plant). As the solution percolates through the heap, it dissolves copper from the oxide and chalcocite ores. Iron containing minerals such as pyrite also oxidize and dissolve to form ferric sulfate solution, which is the active leaching agent for chalcocite ores. The copper-rich solution is termed “pregnant leach solution” (“PLS”).

The process design for the CDM Piedras Verdes Leach SX/EW operation was originally based on a nominal production rate of 32 ktpa of LME Grade A copper Cathode using conventional sulfuric acid/ferric sulfate heap leaching and ROM ore.

The entire leach pad is lined using a composite liner system consisting of a prepared base material, synthetic liner, and layer of suitably sized material to both protect the liner from damage during ore placement and to promote rapid drainage of the PLS. The PLS collection system is a network of HDPE pipes that collect the PLS and delivers it to the PLS ponds. These collection pipes are placed above the geomembrane liner in shallow collection trenches, which generally follow the natural drainages along original ground contours. The PLS flows by gravity to the PLS collection pond where it is pumped to the SX plant feed pond and subsequently flows by gravity to the SX plant.

Leach Pads with PLS Pond

Radial Stacker

PLS Pond

Solvent Extraction Plant

Electrowinning Plant

Cathode Stripping Device

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