proyeccto magistral estudia de factibilidad

Preliminary Feasibility Study Magistral Project

Department of Ancash, Peru

Report Prepared for

Inca Pacific Resources Inc.

Report Prepared by

October 2006

Preliminary Feasibility Study Magistral Project

Department of Ancash, Peru

IncaPacific Resources Inc. 1550 625 Howe Street

Vancouver, B.C. V6C 2T6 Canada

SRK Consulting (Canada) Inc.

Suite 800, 1066 West Hastings Street Vancouver, B.C. V6E 3X2

Tel: 604.681.4196 Fax: 604.687.5532

E-mail: [email protected] Internet: www.srk.com

SRK Project Number: 2CI004.006

October 2006

SRK Consulting Preliminary Feasibility Study Magistral Project Page i

CAE/sdc Magistral-43-101.PreFeasStudy.Report.2CI004.006.CAE.20061101.Rev50.doc, Nov. 1, 06 October 2006

Table of Contents 1 Executive Summary..................................................................................................... 1

1.1 Introduction .......................................................................................................................1 1.2 Climate ..............................................................................................................................1 1.3 Property Tenure ................................................................................................................3 1.4 Geology and Resource Estimate .......................................................................................3 1.5 Mining and Reserves.........................................................................................................5

1.5.1 Geotechnical Overview ...........................................................................................................5 1.5.2 Mining Overview......................................................................................................................6 1.5.3 Mineral Reserves ....................................................................................................................7 1.5.4 Mine Production Schedule ......................................................................................................7 1.5.5 Major Mining Equipment..........................................................................................................8

1.6 Metallurgy and Process Facilities ......................................................................................9 1.6.1 Metallurgical Test Work...........................................................................................................9 1.6.2 Flowsheet Development........................................................................................................11 1.6.3 Process Facility .....................................................................................................................12

1.7 Mine Waste Management and Water Control .................................................................. 14 1.7.1 Waste Rock Dumps...............................................................................................................14 1.7.2 Tailings Management Facility................................................................................................14 1.7.3 Water Control ........................................................................................................................15

1.8 Infrastructure and Support Facilities ................................................................................ 16 1.8.1 Access Road .........................................................................................................................16 1.8.2 Power Line.............................................................................................................................17 1.8.3 Concentrate Pipeline .............................................................................................................17 1.8.4 Water Treatment Plant ..........................................................................................................18 1.8.5 Port of Chimbote ...................................................................................................................18 1.8.6 Communications....................................................................................................................19 1.8.7 Magistral Site.........................................................................................................................19 1.8.8 Conchucos Office ..................................................................................................................21 1.8.9 Lima Office ............................................................................................................................21

1.9 Capital Cost Estimate ...................................................................................................... 21 1.9.1 Mining ....................................................................................................................................24

1.10 Operating Cost Estimate ................................................................................................. 27 1.10.1 Manpower Basis ....................................................................................................................28 1.10.2 Estimate Basis.......................................................................................................................29 1.10.3 Mining ....................................................................................................................................29 1.10.4 Processing Plant ...................................................................................................................29 1.10.5 G&A and Support Services ...................................................................................................31 1.10.6 Environmental Health & Safety .............................................................................................33 1.10.7 Water Treatment Plant ..........................................................................................................33

1.11 Project Development Plan ............................................................................................... 33 1.12 Environmental and Permitting..........................................................................................36 1.13 Socio-Economics............................................................................................................. 37 1.14 Project Economics........................................................................................................... 37

1.14.1 Model Inputs ..........................................................................................................................37 1.14.2 Mine & Process Production ...................................................................................................38 1.14.3 Gross Income from Mining ....................................................................................................39 1.14.4 Operating Costs ....................................................................................................................39 1.14.5 Capital Costs .........................................................................................................................40

1.15 LoM Project Cash Flow ................................................................................................... 40 1.15.1 Project Sensitivity ..................................................................................................................41

1.16 Project Opportunities and Risks....................................................................................... 43 1.16.1 Resource Model Review .......................................................................................................43

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1.16.2 Reserves and Mining.............................................................................................................43 1.16.3 Metallurgy and Processing ....................................................................................................44 1.16.4 Infrastructure .........................................................................................................................44 1.16.5 Mine Waste Management and Water Control .......................................................................44

2 Introduction ................................................................................................................ 45 2.1 Terms of Reference......................................................................................................... 45 2.2 Basis of the Report .......................................................................................................... 45 2.3 Limitations & Reliance on Information.............................................................................. 47 2.4 Disclaimers & Cautionary Statements for US Investors ................................................... 48 2.5 Mineral Resource and Mineral Reserve Statements & LoM Plans ................................... 48 2.6 Price Strategy.................................................................................................................. 48 2.7 Qualifications of Consultant (SRK) .................................................................................. 49 2.8 Terms of Reference......................................................................................................... 50 2.9 Abbreviations................................................................................................................... 52

3 Property Location and Description .......................................................................... 53 3.1 Property Location ............................................................................................................ 53 3.2 Company Ownership and Land Tenure ........................................................................... 53 3.3 Adjacent Properties ......................................................................................................... 62 3.4 Access............................................................................................................................. 64 3.5 Climate ............................................................................................................................ 66 3.6 Local Resources and Infrastructure ................................................................................. 67 3.7 Physiography...................................................................................................................68 3.8 Project History ................................................................................................................. 68

3.8.1 General History .....................................................................................................................68 3.8.2 Anaconda Historic Mineral Resource Estimates...................................................................71 3.8.3 2004 AMEC Block Model Estimate .......................................................................................76

4 Geology and Resource Estimate .............................................................................. 79 4.1 Geological Setting ........................................................................................................... 79

4.1.1 Regional Geology..................................................................................................................79 4.1.2 Major Structural Features......................................................................................................79 4.1.3 Property Geology ..................................................................................................................82 4.1.4 Magistral Deposit Geology ....................................................................................................86

4.2 Deposit Types ................................................................................................................. 99 4.3 Mineralisation ................................................................................................................ 100

4.3.1 Styles of Mineralisation .......................................................................................................100 4.3.2 Mineralisation Exposed at Surface and in Underground Workings.....................................100 4.3.3 Mineralisation in Mixed and Intrusive Rocks.......................................................................102 4.3.4 Mineralisation in Prograde and Distal Skarn .......................................................................105 4.3.5 Late Stage Quartz-Calcite-Sulphide Veins..........................................................................105 4.3.6 Implications to Modelling .....................................................................................................106

4.4 Exploration ....................................................................................................................108 4.4.1 Topographic Surveys ..........................................................................................................108 4.4.2 Geological Mapping.............................................................................................................111 4.4.3 Surface Sampling ................................................................................................................111 4.4.4 Underground Mapping and Sampling .................................................................................112 4.4.5 Geophysical Studies............................................................................................................117 4.4.6 Petrographic Studies ...........................................................................................................118 4.4.7 Mineralogical Studies ..........................................................................................................118

4.5 Drilling ........................................................................................................................... 119 4.5.1 Minera Magistral (Cerro de Pasco) Drilling, 1969-1973......................................................122 4.5.2 Anaconda Peru Drilling 1999-2001 .....................................................................................124

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4.5.3 Ancash Cobre (Inca Pacific) Drilling 2004...........................................................................125 4.5.4 Ancash Cobre (Quadra) Drilling 2005 .................................................................................127 4.5.5 Ancash Cobre Drilling 2006.................................................................................................129

4.6 Sampling Methods......................................................................................................... 129 4.6.1 Minera Magistral (Cerro de Pasco) Sampling 1969-1973...................................................129 4.6.2 Anaconda Sampling 1999-2001..........................................................................................130 4.6.3 Ancash Cobre Drill Core Sampling 2004 ............................................................................131 4.6.4 Ancash Cobre Drill Core Sampling 2005 ............................................................................131

4.7 Sample Preparation, Analysis and Security ................................................................... 132 4.7.1 Minera Magistral ..................................................................................................................132 4.7.2 Anaconda, Peru...................................................................................................................132 4.7.3 Ancash Cobre 2004.............................................................................................................134 4.7.4 Ancash Cobre 2005.............................................................................................................135

4.8 Data Verification ............................................................................................................ 138 4.8.1 Definitions............................................................................................................................138 4.8.2 Minera Magistral Program ...................................................................................................139 4.8.3 Anaconda Program .............................................................................................................139 4.8.4 Ancash Cobre 2004 Program..............................................................................................143 4.8.5 Ancash Cobre Program.......................................................................................................150

4.9 Mineral Resource Estimates.......................................................................................... 161 4.9.1 Introduction..........................................................................................................................161 4.9.2 Resource Model Database..................................................................................................161 4.9.3 Models .................................................................................................................................163 4.9.4 Estimation............................................................................................................................176 4.9.5 Resource .............................................................................................................................181 4.9.6 Checks and Comparisons ...................................................................................................185

5 Mine Design, Reserves and Planning..................................................................... 188 5.1 Pit Slope Design............................................................................................................ 188

5.1.1 Introduction..........................................................................................................................188 5.1.2 Structural and Geotechnical 2006 Program ........................................................................188 5.1.3 Evaluation Methodology......................................................................................................191 5.1.4 Findings ...............................................................................................................................193 5.1.5 Recommendations and Further Work .................................................................................204

5.2 Mining Overview............................................................................................................ 206 5.2.1 Open Pit Mining...................................................................................................................206 5.2.2 Underground Mining............................................................................................................206

5.3 Conversion of Resources to Reserves........................................................................... 207 5.4 Pit Limits Optimisation ................................................................................................... 210 5.5 Pit Designs ....................................................................................................................212

5.5.1 Pit Slopes ............................................................................................................................212 5.5.2 Mine Design.........................................................................................................................213

5.6 Mineral Reserves .......................................................................................................... 221 5.7 Mine Production Schedule............................................................................................. 223 5.8 Mining Equipment.......................................................................................................... 224 5.9 Mine Labor .................................................................................................................... 230 5.10 Dewatering .................................................................................................................... 232

5.10.1 Dewatering Wells ................................................................................................................232 5.10.2 In-Pit Dewatering.................................................................................................................234

6 Metallurgy and Process Flowsheet ........................................................................ 236 6.1 Metallurgical Testwork................................................................................................... 236 6.2 Mineralisation Studies ................................................................................................... 236

6.2.1 CIMM ...................................................................................................................................236 6.2.2 G&T .....................................................................................................................................237

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6.3 Historical Test Work ...................................................................................................... 240 6.3.1 Lakefield Test Program in 2000 ..........................................................................................240 6.3.2 CIMM Test Program in 2001 ...............................................................................................240 6.3.3 G&T Test Program in 2005 .................................................................................................240 6.3.4 CIMM Grindability Test Work ..............................................................................................241 6.3.5 G&T Grindability Test Work.................................................................................................242

6.4 Flotation Test Work ....................................................................................................... 242 6.4.1 Lakefield Flotation Test Work..............................................................................................242 6.4.2 CIMM Flotation Test Work...................................................................................................243 6.4.3 G&T Flotation Test Work.....................................................................................................244

6.5 Metallurgical Performance............................................................................................. 256 6.5.1 Process Plant Recoveries ...................................................................................................256 6.5.2 Reagents .............................................................................................................................257

6.6 Flowsheet Development ................................................................................................ 258 6.6.1 Design Basis........................................................................................................................258 6.6.2 Primary Crushing.................................................................................................................258 6.6.3 Grinding ...............................................................................................................................259 6.6.4 Rougher-Scavenger Flotation .............................................................................................259 6.6.5 Regrinding and Cleaner Flotation .......................................................................................259 6.6.6 Selective Flotation ...............................................................................................................259 6.6.7 Concentrate and Tailings Thickening..................................................................................260 6.6.8 Copper Concentrate Filtration .............................................................................................260 6.6.9 Molybdenum Concentrate Filtration and Drying..................................................................260

7 Processing Facility .................................................................................................. 261 7.1 Process Description....................................................................................................... 261

7.1.1 Throughput Capacity and Production Schedule .................................................................265 7.1.2 Crushing ..............................................................................................................................267 7.1.3 Ore Reclaim.........................................................................................................................267 7.1.4 Grinding ...............................................................................................................................267 7.1.5 Bulk Copper-Molybdenum Flotation....................................................................................268 7.1.6 Copper-Molybdenum Separation ........................................................................................269 7.1.7 Copper Concentrate Thickening .........................................................................................269 7.1.8 Molybdenum Concentrate Thickening.................................................................................270 7.1.9 Copper Concentrate Filtration .............................................................................................270 7.1.10 Molybdenum Concentrate Leaching-Filtration-Drying.........................................................270 7.1.11 Mill Process Tailings............................................................................................................270 7.1.12 Reagents .............................................................................................................................270 7.1.13 Mill Building .........................................................................................................................271 7.1.14 Plant Services .....................................................................................................................271 7.1.15 Process Controls .................................................................................................................271

8 Mine Waste Management and Water Control ........................................................ 272 8.1 Geochemistry ................................................................................................................ 272

8.1.1 Overview of Testing Programs............................................................................................272 8.1.2 Static Test Results ..............................................................................................................272 8.1.3 Kinetic Testing.....................................................................................................................274 8.1.4 Water Quality Estimates......................................................................................................274 8.1.5 Conclusions and Considerations for Waste and Water Management ................................275

8.2 Water Balance............................................................................................................... 276 8.2.1 General................................................................................................................................276 8.2.2 Catchments .........................................................................................................................277 8.2.3 Climate and Hydrology ........................................................................................................277 8.2.4 Mine Layout .........................................................................................................................283 8.2.5 Pit Inflow..............................................................................................................................283 8.2.6 Waste Rock Dumps.............................................................................................................284

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8.2.7 Mill Water Balance and Reclaim Water...............................................................................284 8.2.8 Tailings Pond.......................................................................................................................284 8.2.9 Runoff Diversion System.....................................................................................................285 8.2.10 Water Treatment Plant ........................................................................................................285 8.2.11 Closure Conditions ..............................................................................................................285 8.2.12 Results.................................................................................................................................286 8.2.13 Conclusions .........................................................................................................................287 8.2.14 Recommendations ..............................................................................................................287

8.3 Tailings Management Facility ........................................................................................ 294 8.3.1 Tailings Production..............................................................................................................294 8.3.2 Site Selection ......................................................................................................................294 8.3.3 Design Criteria.....................................................................................................................294 8.3.4 Foundation Conditions ........................................................................................................295 8.3.5 Description of the Proposed Tailings Management Facility ................................................295 8.3.6 Construction ........................................................................................................................302 8.3.7 Operation.............................................................................................................................302 8.3.8 Water Management.............................................................................................................302

8.4 Waste Rock Dumps....................................................................................................... 303 8.4.1 Overburden and Waste Rock Production............................................................................303 8.4.2 Site Selection ......................................................................................................................303 8.4.3 Design Criteria.....................................................................................................................304 8.4.4 Foundation Conditions ........................................................................................................304 8.4.5 Description of the Proposed Waste Rock Dumps...............................................................305 8.4.6 Construction ........................................................................................................................305 8.4.7 Water Management.............................................................................................................306

9 Infrastructure and Ancillary Facilities.................................................................... 309 9.1 Access Road ................................................................................................................. 309 9.2 Power Line .................................................................................................................... 312 9.3 Concentrate Pipeline ..................................................................................................... 314 9.4 Water Treatment Plant .................................................................................................. 316

9.4.1 Introduction..........................................................................................................................316 9.4.2 Discharge Criteria................................................................................................................317 9.4.3 Water Treatment Technology Selection..............................................................................318

9.5 Port of Chimbote ........................................................................................................... 321 9.5.1 Weather ...............................................................................................................................323 9.5.2 Rivers ..................................................................................................................................323 9.5.3 Bathymetry ..........................................................................................................................325 9.5.4 Bay Sediments ....................................................................................................................325 9.5.5 Tides....................................................................................................................................325 9.5.6 Waves..................................................................................................................................325 9.5.7 Currents...............................................................................................................................326 9.5.8 Alternative 1: Sider Perus Pier ...........................................................................................327 9.5.9 Alternative 2: Chimbotes Fishing Pier ................................................................................327 9.5.10 Alternative 3: New Pier in the South Area...........................................................................329 9.5.11 Warehouse ..........................................................................................................................330

9.6 Communications............................................................................................................ 333 9.7 Magistral Site.................................................................................................................333

9.7.1 Administration Building........................................................................................................333 9.7.2 Mine Truck Shop .................................................................................................................333 9.7.3 Processing Plant Office .......................................................................................................333 9.7.4 Process Plant Maintenance Facilities, Changehouse and Warehouse ..............................333 9.7.5 Laboratories.........................................................................................................................334 9.7.6 Medical Clinic ......................................................................................................................335 9.7.7 Site Security ........................................................................................................................335

9.8 Conchucos Office .......................................................................................................... 335

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9.9 Lima Office .................................................................................................................... 335

10 Capital Cost Estimate .............................................................................................. 336 10.1 Basis of Estimate........................................................................................................... 338

10.1.1 Introduction..........................................................................................................................338 10.1.2 Scope of the Estimate .........................................................................................................338 10.1.3 Reference Documents.........................................................................................................339 10.1.4 Material Take-Offs and Pricing Basis ..................................................................................339

10.2 Mining............................................................................................................................ 340 10.3 Processing Plant (WBS 100-1100) ................................................................................ 343 10.4 Infrastructure and Support Facilities .............................................................................. 343

10.4.1 Access Road (WBS 2000)...................................................................................................343 10.4.2 Power Lines and Substation (WBS 2100)...........................................................................343 10.4.3 Water Treatment Plants (WBS 1600)..................................................................................344 10.4.4 Concentrate Pipeline (WBS 2200) ......................................................................................344 10.4.5 Tailings Dam (WBS 1900)...................................................................................................344 10.4.6 Magistral Site (WBS 1300) ..................................................................................................344 10.4.7 Conchucos Office (WBS 1400) ...........................................................................................344 10.4.8 Chimbote Port (WBS 1500).................................................................................................344 10.4.9 Lima Office (WBS 2300)......................................................................................................345

10.5 EPCM (WBS 2500)........................................................................................................ 346 10.6 Vendor Commissioning (WBS 2600) ............................................................................. 346 10.7 Process Plant Initial Spares (WBS 2700)....................................................................... 346 10.8 Process Critical Capital Spares (WBS 2800) ................................................................. 346 10.9 Mine Initial Spares & Fills (WBS 2900) .......................................................................... 346 10.10 Process Plant First Fills (WBS 3000) .................................................................. 346 10.11 Owners Costs (WBS 3100) ................................................................................ 348 10.12 Sustaining Capital ............................................................................................... 348 10.13 Mine Closure and Reclamation Costs ................................................................. 349 10.14 Contingency........................................................................................................ 349 10.15 Added Value Tax (IGV) ....................................................................................... 349

11 Operating Cost Estimate ......................................................................................... 350 11.1 Manpower Basis............................................................................................................ 351 11.2 Estimate Basis............................................................................................................... 352 11.3 Mining............................................................................................................................ 352

11.3.1 Mining Labour......................................................................................................................354 11.4 Processing Plant ........................................................................................................... 358

11.4.1 Process Plant Labour ..........................................................................................................359 11.5 G&A and Support Services............................................................................................ 363

11.5.1 Magistral Site.......................................................................................................................363 11.5.2 Conchucos Office ................................................................................................................365 11.5.3 Chimbote Port .....................................................................................................................367 11.5.4 Lima Office ..........................................................................................................................368

11.6 Environmental, Health and Safety ................................................................................. 369 11.7 Water Treatment Plants................................................................................................. 370

12 Project Implementation ........................................................................................... 372 12.1 Project Schedule ........................................................................................................... 372

12.1.1 At Risk Activities ................................................................................................................372 12.1.2 Engineering .........................................................................................................................372 12.1.3 Procurement ........................................................................................................................372 12.1.4 Construction ........................................................................................................................372 12.1.5 Mine Pre-production ............................................................................................................373

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12.2 Contracting Strategy...................................................................................................... 373 12.2.1 Engineering .........................................................................................................................373 12.2.2 Procurement ........................................................................................................................373

13 Environmental and Permitting ................................................................................ 376 13.1 General ......................................................................................................................... 376 13.2 Baseline Studies............................................................................................................ 377 13.3 Permitting ...................................................................................................................... 378 13.4 Mine Closure ................................................................................................................. 382

14 Socio-Economics..................................................................................................... 383

15 Economic Analysis .................................................................................................. 385 15.1 Model Inputs.................................................................................................................. 385

15.1.1 General Criteria ...................................................................................................................385 15.1.2 Mine & Process Production .................................................................................................386 15.1.3 Gross Income from Mining ..................................................................................................386 15.1.4 Operating Costs ..................................................................................................................387 15.1.5 Capital Costs .......................................................................................................................387

15.2 Base Case Analysis....................................................................................................... 388 15.3 Sensitivity Analysis to Base Case.................................................................................. 388

16 Project Opportunities and Risks............................................................................. 395 16.1 Reserves and Mining..................................................................................................... 395

16.1.1 Structural Geology...............................................................................................................395 16.1.2 Mining ..................................................................................................................................396

16.2 Metallurgy and Processing ............................................................................................ 397 16.3 Infrastructure .................................................................................................................398 16.4 Mine Waste Management & Water Control.................................................................... 398

16.4.1 Geochemistry ......................................................................................................................398

17 Certificates of Qualified Persons............................................................................ 400

18 References................................................................................................................ 412

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List of Tables

Table 1.1: Magistral Mineral Resource Estimate MDA 2005........................................................5 Table 1.2: Pit Slope Recommendations per Slope Design Sector ..................................................6 Table 1.3: Magistral Mineral Reserves by Pit Phases.....................................................................7 Table 1.4: Magistral Mine Production Schedule..............................................................................8 Table 1.5: Major Mine Equipment Fleet Requirements ...................................................................8 Table 1.6: Mineral Composition of the Three Ore Types............................................................... 10 Table 1.7: Fragmentation characteristics of the Three Ore Types ................................................ 10 Table 1.8: Summary of Waste Rock Dumps................................................................................. 14 Table 1.9: Type 3 Road Design Parameters................................................................................. 17 Table 1.10: Pre-production Capital Costs for Magistral ($000s).................................................... 22 Table 1.11: LoM Sustaining Capital ($000s) ................................................................................. 23 Table 1.12: Pre-Production Mining & Fixed Facilities Initial Capital costs (excl. IGV Tax)............. 25 Table 1.13: Mining Equipment Initial & Sustaining Capital Costs (excl. IGV Tax).......................... 26 Table 1.14: LoM Operating Cost Summary................................................................................... 27 Table 1.15: Concentrate Transport Operating Cost Summary ...................................................... 28 Table 1.16: LoM Labour Requirements for Magistral .................................................................... 28 Table 1.17: LoM Process Plant Operating Costs .......................................................................... 30 Table 1.18: Project Development Plan Budget .......................................................................... 35 Table 1.19: General Model Criteria............................................................................................... 38 Table 1.20: Mine and Process Production .................................................................................... 38 Table 1.21: Gross Income from Mining (US$000s) .......................................................................39 Table 1.22: LoM Operating Cost Estimate (US$).......................................................................... 39 Table 1.23: Capital Cost Summary (US$000s) ............................................................................. 40 Table 1.24: LoM Project Cash Flow (US$000s)............................................................................ 41 Table 1.25: Base Case Economic Sensitivities (US$ million)........................................................ 41 Table 1.26: Base Case Economic Sensitivities (US$ million @ NPV8%)........................................ 42 Table 1.27: Base Case Economic Sensitivities (US$ million @ NPV8%)...................................... 42 Table 1.28: Base Case Economic Sensitivities (US$ million @ NPV8%)...................................... 42 Table 1.29: Economic Sensitivities Metal Price (US$ million @ NPV8%) .................................. 42 Table 2.1: Key Project Personnel ................................................................................................. 50 Table 2.2: Units of Measure & Abbreviations................................................................................ 52 Table 3.1: Magistral Concessions Optioned from Centromin ........................................................ 57 Table 3.2: Magistral Ancash Cobre Concessions ......................................................................... 60 Table 3.3: Magistral Property Mining Concession Details and Payments ..................................... 62 Table 3.4: Prospects and Old Mines in the Vicinity of Magistral.................................................... 63 Table 3.5: Road Access Route Alternatives.................................................................................. 66 Table 3.6: Meteorological Parameters at Conchucos Station (1964-1980) (After AMEC 2004)..... 67 Table 3.7: Summary of Work History on Now-Privatised Magistral Concessions .......................... 69 Table 3.8: Anaconda 2000 Polygonal Historic Resource Estimate ............................................... 72 Table 3.9: Anaconda 2000 Geostatistical Block Model Historic Resource Estimate...................... 72 Table 3.10: In-situ Bulk Densities Used in the 2000 Geostatistical Resource Estimate................. 73 Table 3.11: Lithologies and Codes Used in 2001 Resource Model ............................................... 73 Table 3.12: Alteration Facies and Codes Used in 2001 Resource Model ..................................... 74 Table 3.13: 2001 Geostatistical Resource Estimate: Measured Resources.................................. 75 Table 3.14: 2001 Geostatistical Resource Estimate: Indicated Resources ................................... 75 Table 3.15: 2001 Geostatistical Resource Estimate: Inferred Resources ..................................... 75 Table 3.16: 2001 Geostatistical Resource Estimate: Measured & Indicated Resources ............... 76 Table 3.17: Domain Codes and Descriptions................................................................................ 77 Table 3.18: Bulk Density Values by Domain and Rock Type within each Domain......................... 77

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Table 3.19: AMECs 2004 Resource Estimate Measured, Indicated, and Inferred ..................... 78 Table 4.1: Magistral Exploration History ..................................................................................... 108 Table 4.2: Reference Survey Coordinates on the Magistral Property (after Acuna, 2001) .......... 109 Table 4.3: Geochronology of Magistral Rocks ............................................................................ 111 Table 4.4: Magistral Project Drilling Summary ............................................................................ 119 Table 4.5: Samples Shipped for Analysis by Anaconda Peru ..................................................... 133 Table 4.6: Analytical Methods for Drill Core 2004....................................................................... 135 Table 4.7: Sampling and Assaying Summary 2004 .................................................................... 135 Table 4.8: Analytical Methods 2005............................................................................................ 136 Table 4.9: Sampling and Assaying Summary 2005 .................................................................... 136 Table 4.10: Detection Limits for Elements Analysed by CIMM ICP-AES, 2005........................... 137 Table 4.11: Twin Check Assays: RMA Regression Statistics...................................................... 142 Table 4.12: Coarse Check Assays: RMS Registration Statistics................................................. 142 Table 4.13: Pulp Check Assays: RMA Regression Statistics ...................................................... 142 Table 4.14: Accepted Values of Certified Reference Materials ................................................... 145 Table 4.15: Types and Frequencies of QA/QC Samples ............................................................ 145 Table 4.16: Check Assays: RMA Fit Values ............................................................................... 149 Table 4.17: Types and Frequencies of QA/QC Samples Inserted in the 2005 Drill Campaign .... 151 Table 4.18: 2005 Standard Sample Data: WCM Cu113.............................................................. 152 Table 4.19: 2005 Standard Sample Data: WCM Cu117.............................................................. 152 Table 4.20: 2005 Standard Sample Data: GBM396-6C .............................................................. 152 Table 4.21: 2005 Blank-Sample Data......................................................................................... 155 Table 4.22: Data Loaded and Used in the MDA Model ............................................................... 162 Table 4.23: Copper Zone............................................................................................................ 163 Table 4.24: Descriptive Statistics of the Copper Domains .......................................................... 165 Table 4.25: Descriptive Statistics of the Copper Domain Composite Data.................................. 166 Table 4.26: Molybdenum Zones ................................................................................................. 167 Table 4.27: Descriptive Statistics of the Molybdenum Domains.................................................. 169 Table 4.28: Descriptive Statistics of the Molybdenum Domain Composite Data ......................... 170 Table 4.29: Descriptive Statistics of the Arsenic Domains .......................................................... 171 Table 4.30: Descriptive Statistics of the Arsenic Domain Composite Data.................................. 171 Table 4.31: Descriptive Statistics of the Silver Domains ............................................................. 174 Table 4.32: Descriptive Statistics of the Silver Domain Composite Data..................................... 175 Table 4.33: Specific Gravity Data Used in the MDA Model ......................................................... 176 Table 4.34: Specific Gravity Data Used in the Previous Model ................................................... 176 Table 4.35: Criterial for Resource Classification Individual Models ............................................. 183 Table 4.36: 2005 Magistral Measured Resources....................................................................... 184 Table 4.37: Magistral Indicated Resources................................................................................. 184 Table 4.38: Magistral Measured and Indicated Resources ......................................................... 185 Table 4.39: Magistral Inferred Resources................................................................................... 185 Table 4.40: 2004 & 2005 Magistral Resource Estimates Comparison Measured & Indicated .. 187 Table 4.41: 2004 and 2005 Magistral Resource Estimates Comparison Inferred..................... 187 Table 5.1: Summary of the Fault Structures ............................................................................... 195 Table 5.2: Domain 1 Fault and Joint Structures Limestone................................................... 197 Table 5.3: Domain 2 Fault and Joint Structures Skarn and Porphyry.................................... 198 Table 5.4: Domain 3 Fault and Joint Structures SE Limestone and Skarn and Porphyry ...... 198 Table 5.5: Domain 4 Fault and Joint Structures NW Limestone and Skarn and Porphyry...... 198 Table 5.6: Kinematic Analysis Summary of Domains 1............................................................... 199 Table 5.7: Kinematic Analysis Summary of Domain 2 ................................................................ 199 Table 5.8: Kinematic Analysis Summary of Domain 3 ................................................................ 199 Table 5.9: Kinematic Analysis Summary of Domain 4 ................................................................ 200 Table 5.10: Rock mass parameters used in the Slope/W limit equilibrium modelling. ................. 200

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Table 5.11: Factors of Safety for the more Critical Slope Directions for the Overall Slope.......... 201 Table 5.12: Pit Slope Recommendations per Slope Design Sector ............................................ 202 Table 5.13: Packer Testing Results in Area of Open Pit ............................................................. 203 Table 5.14: SRK Pit Optimisation Economic Parameters............................................................ 211 Table 5.15: Magistral Mineable Inventory Reported by Whittle ................................................... 211 Table 5.16: Summary of Recommended Overall Slope Angles .................................................. 212 Table 5.17: Summary of Overall Angles Used in Whittle Pit Limits Analysis ............................... 212 Table 5.18: Pit Design Parameters............................................................................................. 213 Table 5.19: Magistral Mineral Reserves ..................................................................................... 221 Table 5.20: Magistral Phase Pit Quantities................................................................................. 222 Table 5.21: Magistral Ultimate Pit Quantity Comparison to Whittle Pit Shell ............................... 222 Table 5.22: Magistral Mine Production Schedule........................................................................ 224 Table 5.23: Major Mine Equipment Fleet Requirements ............................................................. 225 Table 5.24: Mine Support Equipment Requirements .................................................................. 226 Table 5.25: Tailings Dam Construction Waste Rock Schedule ................................................... 228 Table 5.26: Mine Department Budget for Various Support Operations ....................................... 230 Table 5.27: Mine Department Labor Requirements .................................................................... 231 Table 6.1: Mineral Composition of the Three Ore Types............................................................. 237 Table 6.2: Fragmentation Characteristics of the Three Ore Types.............................................. 237 Table 6.3: Crushing Index .......................................................................................................... 240 Table 6.4: SAG Power Index ...................................................................................................... 241 Table 6.5: CIMM Ball Mill Work Indices ...................................................................................... 241 Table 6.6: G&T Grindability Test Results.................................................................................... 242 Table 6.7: Lakefield Locked Cycle Test Results ......................................................................... 243 Table 6.8: Composite Head Assays for CIMM Metallurgical Test Work ...................................... 243 Table 6.9: CIMM Metallurgical Test Results for Locked Cycle Tests........................................... 244 Table 6.10: Head Assays for G&T Metallurgical Program........................................................... 245 Table 6.11: G&T Metallurgical Test Results for Bulk Concentrate .............................................. 245 Table 6.12: Bulk Concentrate Assays......................................................................................... 249 Table 6.13: Molybdenum Deportment in Bulk Concentrate......................................................... 254 Table 6.14: G&T Metallurgical Test Results for Copper-Molybdenum Separation....................... 254 Table 6.15: Final Concentrate Assays ........................................................................................ 255 Table 6.16: Metallurgical Results from Dewatering Test Work.................................................... 256 Table 6.17: Process Plant Reagents .......................................................................................... 257 Table 7.1: Major Equipment List for the Magistral Process Plant ................................................ 263 Table 7.2: Summary of the Design Criteria for the Process Plant ............................................... 264 Table 7.3: LoM Process Plant Production Schedule ................................................................... 266 Table 8.1: Estimated Runoff for Quebrada Magistral. ................................................................. 280 Table 8.2: Comparison of Site and Regional Monthly Precipitation (Dec-04 to Dec-05).............. 282 Table 8.3: Scenario Annual Summaries ..................................................................................... 286 Table 8.4: Schedule of Dam Construction Stages ...................................................................... 302 Table 8.5: Location and Capacity of Waste Dumps .................................................................... 305 Table 9.1: Access Road Route from Lima to Chimbote to Magistral ........................................... 309 Table 9.2: Types of Road GMI Study....................................................................................... 309 Table 9.3: Summary of Predicted Source Concentrations .......................................................... 316 Table 9.4: Peruvian Ambient Water Quality and Effluent Criteria................................................ 317 Table 9.5: Summary of Treatment Effectiveness for Meeting Drinking Water Standards ............ 320 Table 9.6: Design Criteria for Port of Chimbote .......................................................................... 322 Table 10.1: Preproduction Capital Costs for Magistral ($000s) ................................................... 337 Table 10.2: LoM Sustaining Capital ($000s) ............................................................................... 338 Table 10.3: Pre-Production Mining & Fixed Facilities Initial Capital Costs (Excl. IGV Tax).......... 340 Table 10.4: Mining Equipment Initial & Sustaining Capital Costs (Excl. IGV Tax) ....................... 342

SRK Consulting Preliminary Feasibility Study Magistral Project Page xi


Table 10.5: Capital Cost Summary by WBS for the Process Plant ............................................. 343 Table 10.6: Concentrate Pipeline Cost Summary ....................................................................... 345 Table 10.7: Emergency Pond Cost Summary............................................................................. 345 Table 10.8: Overall Cost Summary............................................................................................. 345 Table 10.9: Capital Cost for Process Plant First Fills .................................................................. 348 Table 11.1: LoM Operating Cost Summary................................................................................. 350 Table 11.2: Concentrate Transport Operating Cost Summary .................................................... 351 Table 11.3: Summary of LoM Labour Staffing ............................................................................ 352 Table 11.4: Mining Operating Costs ........................................................................................... 356 Table 11.5: Mining Labour Costs................................................................................................ 357 Table 11.6: LoM Process Plant Operating Costs ........................................................................ 358 Table 11.7: Process Plant Labour Schedule............................................................................... 360 Table 11.8: LoM Process Plant Operating Costs for Consumables ............................................ 361 Table 11.9: Power Consumption ................................................................................................ 362 Table 11.10: Process Plant Mobile Equipment Operating Costs................................................. 363 Table 11.11: LoM G&A Operating Costs for the Magistral Site ................................................... 364 Table 11.12: Magistral Vehicle/Transportation Costs.................................................................. 365 Table 11.13: LoM Operating Costs for the Conchucos Office ..................................................... 366 Table 11.14: LoM Operating Costs for Port of Chimbote ............................................................ 367 Table 11.15: Annual Mobilte Equipment Costs-Chimbote Port ................................................... 368 Table 11.16: LoM Operating Cost for Lima Office....................................................................... 369 Table 11.17: LoM Operating Cost for EH&S............................................................................... 370 Table 11.18: LoM Operating Costs for Water Treatment Plant-Tailings Dam Operation ............. 371 Table 11.19: LoM Operating Costs for Water Treatment Plant-Filter Plant ................................. 371 Table 13.1: Permitting Process requirements for Mining Projects............................................... 379 Table 13.2: Requirements to be fulfilled during the Permitting Process ...................................... 380 Table 15.1: General Model Criteria............................................................................................. 385 Table 15.2: Mine & Process Production...................................................................................... 386 Table 15.3: Gross Income from Mining (US$000s) ..................................................................... 386 Table 15.4: LoM Operating Cost Estimate (US$)........................................................................ 387 Table 15.5: Capital Cost Sumary (US$000s) .............................................................................. 387 Table 15.6: LoM Project Cash FLow (US$000s)......................................................................... 388 Table 15.7: Base case Economic Sensitivity (US$ million) ......................................................... 389 Table 15.8: Base Case Economic Sensitivity Metal Price (US$ million @ NPV8%)................... 389 Table 15.9: Base Case Economic Sensitivity - Metal Price (IRR %) ........................................... 389 Table 15.10: Base Case Economic Sensitivity - Metal Price (Payback Years)............................ 389 Table 15.11: Base Case Ecopnomic Sensitivity - Capital Exp. (US$ million @ NPV8%) .............. 390 Table 15.12: Base Case Economic Sensitivity - Op Costs (US$ million @ NPV8%)..................... 390 Table 15.13: Base case Economic Sensitivities - Metal Price (US$ million @ NPV8%)................ 390

SRK Consulting Preliminary Feasibility Study Magistral Project Page xii


List of Figures

Figure 1.1: Location Map................................................................................................................2 Figure 1.2: Project Development Plan Schedule........................................................................34 Figure 3.1: Location Map.............................................................................................................. 55 Figure 3.2: Map of Concessions ................................................................................................... 56 Figure 3.3: Magistral Project Access Routes ................................................................................ 65 Figure 4.1: Regional Geology and Structures ............................................................................... 81 Figure 4.2: Stratigraphic Column of the Magistral Property........................................................... 83 Figure 4.3: Geology of the Magistral Property .............................................................................. 84 Figure 4.4: Geologic Sections through Magistral Property............................................................ 85 Figure 4.5: Locations and Ages of Intrusive Stocks near Magistral............................................... 87 Figure 4.6: 2005 DDH Plan of the Magistral Deposit Area............................................................ 88 Figure 4.7: Section 1300NE Geology ........................................................................................... 89 Figure 4.8: Section 1450NE Geology ........................................................................................... 90 Figure 4.9: Section 1650NE Geology ........................................................................................... 91 Figure 4.10: Example of Orpiment/Realgar Mineralisation in Limestone....................................... 98 Figure 4.11: Quartz-Sulfide Vein Stockwork in Retrograde-Altered Skarn .................................. 103 Figure 4.12: Quartz-Chalcopyrite-Molybdenite Vein Stockwork in San Ernesto Intrusion............ 104 Figure 4.13: Late-Stage Quartz Vein with Gray Sulfide Selvages ............................................... 106 Figure 4.14: Polygonal Survey Line at Magistral......................................................................... 110 Figure 4.15: Rock Geochemistry over Magistral ......................................................................... 114 Figure 4.16: Sampling and Mapping of the San Ernesto and Arizona Drifts................................ 115 Figure 4.17: Magnetic Map......................................................................................................... 116 Figure 4.18: Drill Hole Plan Map Magistral Project...................................................................... 121 Figure 4.19: 2005 Standard Sample Data: WCM Cu113: Cu AA ............................................ 153 Figure 4.20: 2005 Standard Sample Data: WCM Cu113: Mo AA............................................ 153 Figure 4.21: 2005 Standard Sample Data: WCM Cu117: Cu AA ............................................ 154 Figure 4.22: 2005 Standard Sample Data: WCM Cu117: Mo AA............................................ 154 Figure 4.23: 2005 Standard Sample Data: GBM396-6C: Cu AA............................................. 155 Figure 4.24: Blanks Inserted into the CIMM Laboratory: Cu ICP............................................. 157 Figure 4.25: Blanks Inserted into the ALS Laboratory: Cu AA................................................. 157 Figure 4.26: Blanks Inserted into the CIMM Laboratory: Mo ICP ............................................ 158 Figure 4.27: Blanks Inserted into the ALS Laboratory: Mo AA ................................................ 158 Figure 4.28: Coarse Rejects Inserted in the ALS Laboratory Sample Stream: Cu AA............. 159 Figure 4.29: Coarse Rejects Inserted in the ALS Laboratory Sample Stream: Cu AA............. 159 Figure 4.30: Coarse Rejects Inserted into the CIMM Laboratory: Mo ICP............................... 160 Figure 4.31: Coarse Rejects Inserted into the CIMM Laboratory: Mo AA................................ 160 Figure 4.32: Section 1450NE Copper Zones .............................................................................. 164 Figure 4.33: Section 1450NE Molybdenum Zones...................................................................... 168 Figure 4.34: Section 1450NE Arsenic Zones.............................................................................. 172 Figure 4.35: Section 1450NE Copper Model .............................................................................. 178 Figure 4.36: Section 1450NE Molybdenum Model...................................................................... 179 Figure 4.37: Section 1450NE Arsenic Model .............................................................................. 180 Figure 5.1: Geotechnical Mapping Locations by Program........................................................... 189 Figure 5.2: Location of Pit Geotechnical Holes ........................................................................... 190 Figure 5.3: Major Fault Structures in Proximity to the Ultimate Pit Boundaries ........................... 194 Figure 5.4: Structural Domains ................................................................................................... 196 Figure 5.5: Magistral Mine Area Layout ...................................................................................... 215 Figure 5.6: Magistral Phase 1 Pit................................................................................................ 216

SRK Consulting Preliminary Feasibility Study Magistral Project Page xiii


Figure 5.7: Magistral Phase 2 Pit................................................................................................ 217 Figure 5.8: Magistral Phase 3 Pit................................................................................................ 218 Figure 5.9: Magistral Phase 4 Pit................................................................................................ 219 Figure 5.10: Magistral Ultimate Pit (Phase 5) ............................................................................. 220 Figure 5.11: Groundwater Well Locations................................................................................... 233 Figure 6.1: Effect of Primary Grind on Mineral Liberation ........................................................... 239 Figure 6.2: Porphyry Composite Cycle Test Flowsheet .............................................................. 246 Figure 6.3: Skarn Composite Cycle Test Flowsheet ................................................................... 247 Figure 6.4: Mixed Zone Composite Cycle Test Flowsheet .......................................................... 248 Figure 6.5: Effect of pH on Rougher Flotation & Batch Cleaner Performance - Porphyry Ore..... 250 Figure 6.6: Effect of pH on Rougher Flotation & Batch Cleaner Test Performance - Skarn Ore.. 251 Figure 6.7: Effect of pH on Rougher Flotation & Batch Cleaner Test Performance - Mixed Ore.. 252 Figure 6.8: Flowsheet for Copper-Molybdenum Separation by Selective Flotation ..................... 253 Figure 7.1: Simplified Flow Sheet for the Magistral Process Plant .............................................. 262 Figure 8.1: Water Balance Components..................................................................................... 288 Figure 8.2: Runoff Determination................................................................................................ 289 Figure 8.3: Monthly Evaporation................................................................................................. 290 Figure 8.4: Site and Regional Precipitation................................................................................. 291 Figure 8.5: Mill Water Balance Flow Sheet ................................................................................. 292 Figure 8.6: Water Balance Monthly Variation.............................................................................. 293 Figure 8.7: Tailings Impoundment Layout................................................................................... 297 Figure 8.8: Section though Magistral Valley................................................................................ 298 Figure 8.9: Storage Capacity Curve for Tailings Impoundment................................................... 299 Figure 8.10: Plan View of Tailings Dam...................................................................................... 300 Figure 8.11: Typical Section through Tailings Dam..................................................................... 301 Figure 8.12: Layout of Waste Rock Dumps ................................................................................ 307 Figure 8.13: Sections through Waste Dumps. ............................................................................ 308 Figure 9.1: Access Roads from Chimbote to Magistral Site ........................................................ 311 Figure 9.2: Power Supply Alternatives........................................................................................ 313 Figure 9.3: Vicinity Map and Cross Section of Concentrate Pipeline .......................................... 315 Figure 9.4: Location Map for the Chimbote Port ......................................................................... 324 Figure 9.5: Panaromic View of the Chimbote Fishing Pier .......................................................... 328 Figure 9.6: Port Material Flow Diagram for Alternative 2 at Chimbote Fishing Pier ..................... 331 Figure 9.7: Schematic Flow Diagram of RO Treatment Plant...................................................... 332 Figure 11.1: Organisational Chart............................................................................................... 355 Figure 12.1: Project Schedule .................................................................................................... 375

Exhibit 15.1: Life of Mine Base Case Financial Model 390

SRK Consulting Preliminary Feasibility Study Magistral Project Page 1


1 Executive Summary

1.1 Introduction

Inca Pacific Resources Inc. (Inca Pacific) commissioned SRK Consulting (SRK) to prepare a Canadian Securities Administrators National Instrument 43-101 (NI 43-101) compliant Preliminary Feasibility Study for the Magistral Project located in Peru. This Preliminary Feasibility Study is intended to be used by Inca Pacific to further the development of the Magistral Project.

SRKs opinion contained herein and effective July 10, 2006 is based on information provided to SRK by Inca Pacific throughout the course of SRK's investigations as described in the report. This report builds on the resource estimate prepared by Mine Development Associates (MDA) in December, 2005.

The Magistral property is located approximately 450 km north-northwest of Lima, Peru and approximately 140 km northeast of the seaport of Chimbote. The property lies within the District of Conchucos, Province of Pallasca in the northern part of the Department of Ancash. The elevation at Magistral varies between 3,900 and 4,400 m AMSL. (Figure 1.1). Existing data indicate there is sufficient surface area within the property to construct all necessary facilities required for production.

Inca Pacific, through its wholly owned subsidiary Compaia Minera Ancash Cobre S.A. (Ancash Cobre) has a contract with Empresa Minera del Centro del Peru S.A. (Centromin) to submit a Feasibility Study no later than December 31, 2006. This Preliminary Feasibility Study comprises the first phase of a multi-phase plan, which encompasses developing the Magistral copper-molybdenum deposit.

1.2 Climate

Magistral has a high-altitude temperate climate. Relatively dry, windy weather prevails from May to October, with a rainy season from November to April. In dry years, the summer rains may not begin until Christmas. The mountainous setting of the Magistral property has a strong local effect on the weather, and there is measurable precipitation in most months. A meteorological station was established near the Magistral camp in November 2004 and monitoring has continued since then.

Average annual precipitation at the village of Conchucos, about 7 km from Magistral, is 704 mm. The average annual temperature is 12C. Average monthly precipitation ranges from 9 mm to 140 mm, with the heaviest rainfall in January, February and March. Average monthly temperatures vary little from month to month; the lowest average monthly temperature is 11.6C and the highest is 12.3C. The elevation of the Conchucos meteorological station is nearly 1000 m lower than the Magistral camp.

Figure 1.1



1.3 Property Tenure

The property is 100% owned by Inca Pacific, through its Peruvian subsidiary Inca Pacific S.A. and the holding company Ancash Cobre.

Ancash Cobre has an agreement with Centromin to explore five mineral concessions (the Magistral Concessions), which cover an area of 250 hectares. Ancash Cobre also holds an additional ten concessions (the Ancash Concessions) with a total area (as stated in the mineral titles registry) of 5,526 hectares. These surround and are contiguous to the Magistral Concessions. The Magistral copper-molybdenum deposit is within the Magistral Concessions. In total, the Magistral property comprises fifteen mining concessions covering a total area of 5,776 hectares, excluding an area held under concession by several small third parties that lies within the Magistral 12, 13 and 14 concessions.

1.4 Geology and Resource Estimate

Magistral is a copper-molybdenum deposit located near the northeastern end of the Cordillera Blanca, a region underlain mainly by Cretaceous carbonate and clastic sequences. These units strike north to northwest and are folded into a series of anticlines and synclines with northwest-trending axes. Magistral stratigraphy is dominated by limestone of the north-striking, west-dipping Cretaceous Jumasha Formation. In the late Tertiary, the Jumasha limestone was intruded by a quartz-monzonite stock. The intrusion has an irregular elliptical shape in plan with dimensions of about 600 m east-west by 400 m north-south, at about 100 m below the surface. The hanging wall or upper flank of the intrusion plunges at -50 to -60 to the west and west-northwest and has a well-developed envelope of skarn around its perimeter. The copper-molybdenum mineralisation occurs in both the stock and the surrounding skarn, and is related to hydrothermal activity generated by the emplacement and cooling of the intrusion.

The Magistral intrusion has been subdivided into three facies, named the San Ernesto, Sara, and H. The facies are distinguished by important differences in the style and intensity of alteration, quartz-sulphide veining, and copper-molybdenum mineralisation.

The skarn surrounding the Magistral intrusion has been subdivided into three categories. These are distal skarn, which occurs outside the main skarn-limestone contact, skarn, a proximal phase that contains no dykes or sills, and Mixed Zone, a skarn phase that is intruded by numerous dikes or sills and lies adjacent to the main intrusive contact.

The most important and abundant copper-molybdenum mineralisation occurs in stockwork and sheeted zones of quartz-sulphide veins that are most common in the border zone of the Magistral stock and near the intrusion/skarn contact, especially in the Mixed Zone. The dominant sulphides are pyrite, chalcopyrite, and molybdenite. These minerals are also disseminated in the wall rocks, but where quartz-sulphide veins are absent, the copper and molybdenum grades are low. In the porphyry-style mineralisation in the Magistral stock and the Mixed Zone, chalcopyrite and



molybdenite occur together in quartz-sulphide veins and are disseminated in wall rocks. Grades in two-meter core samples from the best mineralised sections of the stock and the Mixed Zone can exceed 1.5% Cu and 0.15% Mo. The highest-grade copper mineralisation in the deposit (ranging to over 5% Cu in individual two-meter core samples) forms mantos and lenses of semi-massive chalcopyrite and pyrite in skarn. Less commonly, molybdenite also occurs in high-grade mantos in skarn, where Mo grades can exceed 1% in individual samples. As a rule, the copper mantos contain very little molybdenite, and the molybdenite mantos have low copper grades.

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