It results in a reduction in total costs and optimization of the metallurgy and mine plan.
Corani hosts one of the world’s largest undeveloped silver-lead-zinc deposits and is a critical component of Bear Creek’s project portfolio. It is located in the Department of Puno in southern Peru, in a mining-friendly area with favourable access and good infrastructure and was discovered by the Company in 2006. A number of economic studies of the Corani deposit have been conducted on behalf of Bear Creek, including a feasibility study entitled "Corani Project, Form 43-101F1 Technical Report, Feasibility Study" dated December 22, 2011 (the "2011 Corani Feasibility Study").
An Environmental and Social Impact Assessment (the "ESIA") for Corani was approved by the government of Peru in 2013.
The 2015 Corani Feasibility Study, led by M3 Engineering & Technology Corporation ("M3"), Tucson, AZ with support by Global Resource Engineering ("GRE"), Denver, CO and others, reflects significant modifications to the processing and construction designs of the Corani operation as envisioned in the 2011 Corani Feasibility Study.
These modifications include: dry-stacking of the tailings resulting in elimination of the tailings impoundment and fresh water storage dams; revision of the mine sequencing plan and new metallurgical recovery modeling with higher confidence in recovery predictions; and reconfiguration of infrastructure layouts and equipment selection for certain areas of the processing facility.
As a result, total capital costs have been reduced, the proposed Corani operation is expected to be more efficient, and its physical and environmental footprint are expected to be reduced. The optimized 2015 Corani Feasibility Study has defined a large, low-cost, economically robust, low-impact operation that the Company believes will benefit shareholders and local and national Peruvian stakeholders alike.
Andrew Swarthout, President and CEO of the Company, commented "Corani remains one of the world’s largest undeveloped silver-base metal deposits and is the key driver for growth at Bear Creek. As a result of the modifications to the Corani mine design in the updated 2015 Corani Feasibility Study, we have created a more compact, efficient and cost-effective operation with a smaller physical and environmental footprint, which we expect will result in a shorter and less costly path to permitting.
"We were able to further refine the geo-metallurgical model and mine sequencing, which led to an 8% increase in overall silver recovery with a 7% increase in silver reporting to the lead concentrate relative to zinc, partially offsetting the effects of the small ore reserve reduction."
Mr. Swarthout continues, "As a result of a reduction in total capital costs and optimization of the metallurgy and mine plan, the key financial metrics of the Corani project were significantly improved, including a 43% increase in the project’s after-tax Net Present Value (at a 5% discount rate), which is now estimated at $660 M. Even using the June 1, 2015 silver, lead and zinc prices of $16.71/oz, $0.87/lb and $0.98/lb respectively, Corani has a Net Present Value of $372 M and a 14.9% Internal Rate of Return. Add to this the low all-in sustaining costs per payable silver ounce (below zero in the first five years and $3.85 over the life of the mine on a by-product basis) and it is clear Corani is a robust, undeveloped silver-base metal deposit even at current depressed metal prices."
Key Modifications Included in the 2015 Corani Feasibility Study
Optimized Processing
Dry-stacking of tailings: The change to dry-stacking of concentrator tailings is the most significant optimization in the 2015 Corani Feasibility Study and had a substantial effect on the project economics as well as the physical and environmental footprint of the proposed operation. Dry-stacking eliminates the need for the tailings dam and one of the fresh water storage dams, and co-disposal of the tailings and waste-rock eliminates one of the waste rock dump sites envisioned in the 2011 Corani Feasibility Study. Dry-stacking involves filtering the tailings to remove water, which is then recycled to the concentrator, reducing the water requirements. The filtered tailings are then mixed with waste rock and stacked in "lifts" within already-approved waste rock disposal sites. Dry-stacking technology is used successfully at various mining operations world-wide, including the Cerro Lindo silver-base metal mine in Peru. Not only does dry-stacking create a smaller, more efficient project footprint and reduce the total capital requirements for Corani (see "Capital and All-In Sustaining Costs", below), elimination of the tailings dam and reduction of the project footprint will save time and lower the engineering costs associated with securing a mine permit.
Primary Crusher and grinding mills: The selection of the primary crusher, from a gyratory to a jaw reduced the amount of earthwork and the footprint required, which resulted in capital expenditure ("CapEx") savings. The sizes for both the Semi-Autogenous Grinding ("SAG") and ball mills remained relatively unchanged, however, the size of the motors for both mills increased from 5,500 kW to 7,000 kW due to the additional grinding test work results.
Flotation: The elimination of the 3rd cleaner scavenger and the change of the 2nd cleaner mechanical cells to one column cell, reduced the equipment footprint and also provided CapEx savings for both lead and zinc circuits. The change to a column cell for the 2nd stage cleaners will also allow to maximize lead and zinc grades in each circuit respectively.
Regrind mills: The change of the regrind mills from ball mills to tower mills, reduced the footprint of the equipment and resulted in additional CapEx savings.
Optimized Mine Sequence and Improvements in Recoveries
Mine Sequencing: The mine sequencing plan has been modified in order to complete mining from the Corani Este pit in the 6th year to begin accepting co-disposal of waste rock and filtered tailings. This allows for shorter haul distances and eliminates or reduces the size of the waste dump facilities, which is expected to result in lower operating costs, easier permitting and reduced final mine closure costs. Although the revised mine sequencing adds approximately $17 M in pre-production stripping, this capital expenditure is far outweighed by the expected operating and capital cost benefits.
Metallurgy and Recoveries: Significant improvements were made in the understanding of metal recovery stemming from a thorough analysis of the metallurgical test work data and the associated geochemical data base. Previously ore within each metallurgical type was treated fairly homogenously. The new method allowed for the estimation of recovery in a distinct and predictable metallurgical manner, resulting in continuous recovery model that was applied to each block of the block model based on geology and mineralogy. Ultimately, this predictive model resulted in higher-confidence in metallurgical recoveries that led to improvements in mine planning.
Overall, expected silver and zinc recoveries increased by approximately 8% each and lead recoveries decreased by 8% from those cited in the 2011 Corani Feasibility Study. Because of the better understanding of metallurgical recoveries, some of the transitional materials (mixed oxide and sulfide) were eliminated from the mine plan as a result of low estimated flotation recovery, reducing the silver reserves by approximately 15.5% (see "2015 Corani Reserve and Resource Estimates" below) but only reducing the payable silver by 5.6% from 160 M oz in the 2011 Corani Feasibility Study to 151 M oz in the 2015 Corani Feasibility Study, thus achieving the objective of higher efficiencies in mining and processing.
Optimized Layout
The 2015 Corani Feasibility Study optimizations include various layout modifications that benefit the project economics. The crusher was relocated to create shorter and more efficient haul profiles. As mentioned previously, one waste dump (the East Dump) has been eliminated and pit backfilling has accelerated. Additionally, the South Water pond is no longer necessary due to reduction in water consumption with the dry tailings disposal method.
Importantly, as a result of the optimized layout, the Corani mine and processing infrastructure is entirely located on land to which Bear Creek owns 100% of the surface rights.
