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Located in Lima Department, Peru, the Santander Mine enjoys ease of accessibility and modern infrastructure including a 2,000-tonne-per-day (tpd) processing/concentrate plant.
Underground development commenced in mid-2012 with approximately two kilometres of 5-metre-by-4-metre ramp and decline completed near year-end 2012. Three portals have been constructed to accommodate up to 4-5,000 tpd of mining from the three Magistral deposits via high-speed, one-way trackless mining. By year-end 2012 more than 100,000 tonnes of mineralized material (grading 5.6% zinc, 0.65% lead and 1.65 oz/t silver) will have been been stockpiled to feed the mill upon start-up.
Trevali's new discoveries on the project, the three Magistral deposits (North, Central and South), form the basis of the current NI43-101 mineral resource estimates of 6,264,000 indicated tonnes grading 3.62% Zn, 1.30% Pb and 43 g/t Ag (for a contained metal inventory of 500 million lbs. zinc, 180 million lbs. lead and 8.7 million oz. silver) and an additional inferred resource of 13,845,000 tonnes at 4.62% Zn, 0.40% Pb and 21 g/t Ag (for a contained metal inventory of 1.4 billion lbs. zinc, 121 million lbs. lead and 9.3 million oz. silver). The resource estimate is based on 190 drill holes (42,000.8 metres), 109 sawn channel samples (1,819.56 metres) and 10,585 geochemical assays, in addition to 318 historic drill holes (18,507.29 metres), 947 historic channel samples (5,245.55 metres) and 7,812 historic assays for the Santander Pipe deposit. The resource estimate was conducted by and under the supervision of Greg Greenough, PGeo, an independent qualified person and senior resource geologist at Golder Associates Ltd. of Mississauga, Canada, and utilized a 3-per-cent Zn-eq cut-off grade -- which is the nominal base case estimated grade of material that can be mined and processed considering all applicable costs. The mineral resources identified in the associated tables are based on ordinary-kriged (OK) capped values. (Please review Disclaimer)
Mining operations at Trevali's 100%-controlled Santander Mine are being undertaken with development partner Glencore International that has provided the 2,000-tonne-per-day mill/concentrate plant and will also serve as mill operator and contract mining for Trevali. Glencore has entered into a life-of-mine concentrate offtake agreement for 100% of Santander project production (at 2,000tpd) at International Benchmark terms.
The Company's production decision is based only on Indicated and Inferred Mineral Resources and not Mineral Reserves and do not have demonstrated economic viability. Inferred Mineral Resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is therefore no certainty that the conclusions of the production decision will be realized. Additionally where Trevali discusses exploration/expansion potential, any potential quantity and grade is conceptual in nature and there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
LocationThe Property is located on the western edge of the Altiplano, which forms the Western Cordillera of the Andes, in the Central Peruvian Polymetallic Belt.
It is accessible by road from Lima, either via the town of Huaral and continuing through the villages of Acos and Tingo to Santander (distance of 215 km) or via the town of Canta to Santander, a distance of 200 km (Fig. 1).
OwnershipThe Company, through its Peruvian subsidiary, Trevali Peru S.A.C., has acquired from Compaņia Minerales Santander S.A.C. ("Santander") of Lima, Peru, owners of the Santander Property, the exclusive right for a period of 50 years (with an automatic 50-year extension) to engage in exploration, development, exploitation, processing and commercialization activities at the Santander Property. The agreement also allows for the exclusive use of the existing infrastructure, including the historic 1,000-person camp, associated support facilities and an ore-processing/concentrate plant, as well as the lease of the Tingo hydroelectric plant.
In addition, the Company, through its Peruvian subsidiary, Trevali Peru S.A.C., has effectively acquired approximately 97% of the current outstanding qualified liabilities of Santander.
(Note: remaining ownership held by combination of Peruvian tax authorities and minor creditors)
InfrastructureThe infrastructure includes a historic 1,000-person camp (now fully refurbished to a modern 500-person camp) and associated support facilities. Glencore International, as part of the formal agreement, is providing and will operate a modern 2,000-tonne-per-day concentrate plant to produce silver-lead and zinc concentrates. Additionally, the Tingo hydroelectric generating facility is located approximately 17 km down-valley to the West and is connected to the mine site.
Property BackgroundThe former Santander Mine is classified as a polymetallic High Temperature Carbonate (HTC) or Carbonate Replacement Deposit (CRD). Modern mining activities commenced on the principal Santander Pipe from 1958 until 1991 to an approximate depth of 480 metres. Approximately 8 million tonnes of mineralized material were mined historically grading +7% zinc, 1- 4% lead and 60 g/t silver with additional copper credits. Due to a combination of hyper-inflation and low metal prices, mining ceased in approximately 11% zinc mineralization at 480-500 metres below surface. Mineralization remains open at depth with reported zinc grades of 11% in multiple replacement or manto bodies.
Typically, such Carbonate Replacement Deposits (CRDs) can comprise multiple lens and have the potential to form significant mining camps.
The 4,455-hectare (44 km2) property contains numerous outcropping polymetallic mineralized bodies (Magistral North, Central, South and Puajanca South).
Current WorkOngoing development at Santander is in the final phase with initial mining and milling operations currently scheduled to commence in Q2-2013. All critical mill and processing infrastructure is now in place and underground development continues to progress well with over 2 kilometres of ramp completed to date. Approximately 100,000 tonnes of mineralized material averaging 5.6% zinc, 0.65% lead and 1.65 oz/t silver has now been stockpiled on surface for processing upon commissioning of the 2,000 tonne-per-day plant.
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