Resource World Magazine

f e b r u a r y / m a r c h 2 0 1 6 www.resourceworld.com 55 kGhM and Abacus update Ajax Project feasibility KGHm polska mied s.A. [KGH-Warsaw], 80%, and Abacus mining & exploration corp. [AME-TSXV], 20%, have completed an updated, independent NI 43-101 compli- ant Feasibility Study for the Ajax Project, a past-producing mine near Kamloops, British Columbia, Canada. The updated study supersedes the earlier version dated January 2012 and details specific techni- cal and economic conditions related to the construction and operation of the proposed copper, gold and silver mine. Herbert Wirth, CEO of KGHM, told Resource World, "We have now completed basic engineering work which required more than 800 drawings and a detailed technical model of the mine." The study changed the project's general arrangement whereby the facilities have been moved farther from the Kamloops community. "Many people, including gov- ernment agencies, have expressed concerns about possible impacts to the environment – including in areas such as air quality, water quality and human health – as a result of the project's proximity to Kamloops," said Wirth. "In response, the Ajax Project was redesigned in its general arrangement in 2014 to address community concerns, changes that saw significant adjustments made to the configuration and placement of key infrastructure, including the tailings storage facility." "The changes included relocation of key infrastructure more south from the original general arrangement, optimization of mine infrastructure and technological changes that correspond with the local concerns about safety," said Wirth." In addition, technology improvements have been incorporated and an increase has been planned for the processing facil- ity's throughput, from 60 to 65,000 tonnes per day. Measured and indicated mineral resources are estimated at 568 million tonnes containing 0.26% copper, 0.18 g/t gold and 0.35 g/t silver that include proven and probable mineral reserves of 426 mil- lion tonnes grading 0.29% copper, 0.19 g/t gold and 0.39 g/t silver, as compared to the 503 million tonnes of reserves of 0.27% copper and 0.17 g/t gold reported in the 2012 Feasibility Study. Contained metal content in the reserves was calculated at 1.2 million tonnes (2.7 billion pounds) of copper, 2.6 million ounces of gold and 5.3 million ounces of silver. Average annual production of cop- per and gold in concentrate is expected to amount to, respectively, 58,000 tonnes of copper and 125,000 ounces of gold. Mine life is calculated at 18 years. Silver produc- tion is variable throughout the mine life of which only a portion of the recovered metal will meet payable thresholds. The project's pre-tax economics are a US $429 million NPV (8% discount rate) and a 13.4% IRR. Under the base case sce- nario, payback is approximately 6.5 years. Initial capital expenditures, estimated at US $1,307 million, reflect the introduction of several technological changes, aimed at increasing metals recovery during pro- cessing, decreasing operating costs, and reducing environmental impact (such as changes in preliminary milling and ore transport systems as well as technologi- cal solutions at the processing plant, and in the tailing storage system). Economic parameters based on long-term copper, gold and silver prices: US $3.21/lb copper, US $1,200/oz gold and US $16/oz silver. "We have a long-term horizon and take into account copper prices characterized by cyclical fluctuations," said Wirth. The C1 cash-cost is calculated at US $1.37/pound. Mine construction will last 2.5 years. The schedule for construction and first copper concentrate production will be reviewed following receipt of per- mits. "We expect a positive decision from the BC provincial government on its appli- cation for an environmental certificate in late 2016," said Wirth. "A federal govern- ment decision is expected in early 2017. KGHM filed its Application/EIS with the provincial government in September as well, kicking off a review process that will continue through 2016. The Ajax Project team will continue the work required to obtain environmental approvals, as well as the permits to operate the mine." Wirth said that the Ajax Project Application/EIS compiled more than 45 studies that specifically examine possible impacts to the natural and human envi- ronment. "We believe the Application/EIS addresses all key environmental concerns, either in the way the Ajax Project has been designed or in the nature of proposed miti- gation measures," he said. Wirth noted that, "KGHM has worked closely with local First Nations for years, and has a good relationship with area bands. KGHM has consulted extensively with local bands about the Ajax Project, listened to their concerns, and involved bands in the research and development of the project. We are also actively involved in negotiating a project agreement with First Nations that would set out the nature of future working relationships between all parties." He added, "That said, the issues related to First Nations rights and land title in BC are complex, and disputes, including court actions, around the nature and defi- nition of land tenure in BC have gone on for years. These matters are bigger than the Ajax Project, and the work required to find resolution will require leadership and involvement from both provincial and fed- eral governments." Regarding mine life, Wirth said, "We are actively seeking to extend life-of-mine by identifying additional resource poten- tial within close vicinity to currently planned open pit. In 2015, we drilled over 15,000 metres of core samples." n Herbert Wirth, CEO of KGHM Polska Miedź S.A. mINING

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