Lagunas Norte PDF
Lagunas Norte PDF
Lagunas Norte PDF
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2 INTRODUCTION
Roscoe Postle Associates Inc. (RPA) was retained by Barrick Gold Corporation (Barrick) to
prepare an independent Technical Report on the Lagunas Norte Gold Mine (the Mine) in
Peru. The purpose of this report is to support the public disclosure of Mineral Resource and
Mineral Reserve estimates at the Mine as of December 31, 2015. This Technical Report
conforms to National Instrument 43-101 Standards of Disclosure for Mineral Projects.
Barrick is a Canadian publicly traded mining company with a large portfolio of operating
mines and projects. The Lagunas Norte Mine is located in the District of Quiruvilca in the
Province of Santiago de Chuco and the Department of La Libertad, in north-central Peru.
The mine site is approximately 90 km east of the coastal city of Trujillo.
The Mine is owned and operated by Minera Barrick Misquichilca S.A. (MBM), a wholly-
owned Peruvian subsidiary of Barrick. The mine is part of the Alto Chicama property. A
2.51% Net Smelter Return (NSR) royalty is paid to a Peruvian state company, Activos
Mineros S.A.C. (Activos Mineros), formerly Centromin Peru S.A. (Centromin). In December
2006, Centromin transferred all of its rights and obligations with respect to the mine to
Activos Mineros.
Lagunas Norte is a large open pit, heap leach gold and silver mine in the high Andes
Cordillera. Operations include open pit mining of gold-silver ore, crushing, and extraction of
precious metals using heap leaching and Merrill Crowe recovery. Since Lagunas Norte
started production in March 2005, the mine has recovered 9.0 million ounces (Moz) of gold
and 9.0 Moz of silver from approximately 222 million tonnes (Mt) of ore averaging 1.53 g/t Au
and 3.7 g/t Ag.
Under the current mine plan, which incorporates the Refractory Project, open pit mining and
leaching of oxide material on the HLF will continue from 2016 to 2023. From 2016 to 2021,
the refractory ore is planned to be mined and stockpiled. Permitting and completion of
detailed engineering on the Refractory Project are expected to take up to four years from
2016 to 2019. Construction and commissioning of the new circuit is expected to take
approximately two years from 2020 to 2021, with first refractory gold production expected in
late 2021 and continuing to 2029. The plan contemplates an initial capital investment of
approximately $640 million for the installation of a 6,000 tonnes per day grinding-flotation-
autoclave and carbon-in-leach processing circuit to treat the refractory material. As
contemplated by the study, average annual production in the first five years is expected to be
240,000 ounces of gold at all-in sustaining costs of $625 per ounce.
The PFS on the Refractory Project will form the basis for a more detailed feasibility study
(FS). Capital estimates contained within the PFS may increase or decrease as a result of
changes incorporated at the feasibility study stage. Capital allocation decisions will be
evaluated as the Refractory Project advances through additional stages of the development.
The PFS on the Refractory Project supports the conversion of approximately 2.1 million
ounces of measured and indicated refractory sulphide gold resources to mineral reserves,
which could significantly extend the mine life. Based on the current reserves and mine plan,
which incorporates the Refractory Project, mine production is planned until 2023, while the
stockpiled material will continue to be processed until 2029. The addition of a refractory
processing facility could also unlock other potential refractory mineralization sources in the
region surrounding Lagunas Norte.
In addition to the Refractory Project, Barrick has recently conducted a technical review of the
Lagunas Norte operation with the objective of identifying potential opportunities for cost
reductions and revenue enhancement. These opportunities are referred to in this Technical
Report as the “Value Realization Initiatives”.
SOURCES OF INFORMATION
RPA Principal Geological Engineer Luke Evans, M.Sc., P.Eng., RPA Principal Mining
Engineer Hugo Miranda, MBA, RM (ChMC), and RPA Principal Metallurgist, Brenna Scholey,
P.Eng., visited the mine from January 6 to 7, 2015 and held meetings at the Barrick offices in
Trujillo and Lima on January 8 and 9, 2015, respectively. Discussions were held with the
following Barrick and MBM personnel:
Hugo Roman, General Manager of Operations Lagunas Norte
Angel Vera, Manager of Operations Mine
Roberto Chumpitazi, Manager of Human Resources
Aldo Leon, Manager of Environment - EIA
Joe Pezo, Manager of Process
Isaias Kleinerman, Manager of Health and Safety
Manuela Hillenbrand, Manager of Community Relations
Jesus Yalan, Chief Hydrologist
Jose Nizama, Manager of Technical Services
Michael Sanchez, Superintendent of Geology
Fernando Porras, Superintendent of Engineering
Percy Maguiña, Superintendent of Metallurgy
Cesar Espejo, Superintendent of Leaching
Pedro Bobadilla, Process Plant Superintendent
Raul Orellana, Manager of Environment
Kelly Diaz, Senior Supervisor of Environment
Carlos Diaz, Senior Supervisor of Mining Properties
Carlos Salguero, Superintendent of Purchasing
Martin Castro, Senior Cost Supervisor
Melissa Vasquez, Senior Modelling Geologist
Augusto Mariscal, Supervisor Ore Control Geologist
Angela Zapana, Supervisor Modelling Geologist
Cristhel Becerra, AcQuire Database Administrator
Mario Poma, Senior Geotechnical Supervisor
Frank McCann, Barrick Regional Manager, Engineering and Planning
Benjamin Sanfurgo, Senior Manager of Resource and Reserve Modelling
Cristian Monroy, Manager of Reserves and Resources
Cristobal Valenzuela, Senior Modelling Geologist
The Lagunas Norte Mine has been the subject of Technical Reports and resource/reserve
technical audits as follows:
August 2015, NI 43-101 Technical Report, RPA
Mr. Evans reviewed the geology, sampling, assaying, and resource estimate work and is
responsible for Sections 2 to 5, 7 to 12, 14, and 23. Mr. Miranda reviewed the mining,
reserve estimate, and economics and is responsible for Sections 15, 16, 18, 19, 21, and 22.
Ms. Scholey reviewed the metallurgical, environmental, and permitting aspects and is
responsible for Sections 13, 17, and 20. The authors share responsibility for Sections 1, 6,
24, 25, 26, and 27 of this Technical Report. RPA would like to acknowledge the excellent
cooperation in the transmittal of data by Barrick and MBM personnel.
The documentation reviewed, and other sources of information, are listed at the end of this
report in Section 27 References.
LIST OF ABBREVIATIONS
Units of measurement used in this report conform to the Imperial system. All currency in this
report is US dollars (US$ or $) unless otherwise noted.
Data, reports, and other information supplied by Barrick and other third party
sources.
For the purpose of this report, RPA has relied on ownership information provided by Barrick.
RPA has not researched property title or mineral rights for the Lagunas Norte property and
expresses no opinion as to the ownership status of the property.
RPA has relied on Barrick for guidance on applicable taxes, royalties, and other government
levies or interests, applicable to revenue or income from Lagunas Norte.
Except for the purposes legislated under provincial securities laws, any use of this report by
any third party is at that party’s sole risk.
LAND TENURE
The Alto Chicama mining property encompasses four mining concessions; Acumulación Alto
Chicama (formerly Derecho Especial del Estado N° 1, 2 y 3), Los Angeles, Las Lagunas 15
and Las Lagunas 16, totalling 19,181.2760 ha (Table 4-1). In December 2002, MBM
acquired the mining concession “Acumulación Alto Chicama” encompassing 18,002.3216 ha
from Centromin, the Peruvian state mining company, pursuant to an international bid
process. The Lagunas Norte Mine is located on this mining concession. Production at
Lagunas Norte is subject to 2.51% NSR royalty, payable semi-annually to Activos Mineros
S.A.C. (Activos Mineros), formerly Centromin, on the extraction of gold and all other
minerals. Under the terms of agreement with Centromin, MBM paid Centromin an advance
contractual royalty of $2 million. In December 2006, Centromin transferred all of its rights
and obligations with respect to the mine to Activos Mineros, a state mining company.
The “Los Angeles” mining concession was acquired by MBM from Pan American Silver Peru
S.A.C. through a Transference Contract dated June 28, 2004. The “Las Lagunas 15” and
“Las Lagunas 16” mining concessions were granted by the Peruvian government on January
30, 2001. The Acumulación Alto Chicama mining concession has no expiry date since it is in
exploitation phase. In order to maintain its validity, however, a Validity Fee, of $3.00/ha,
must be paid no later than June 30 each year. Non-fulfillment for two consecutive years
results in expiration of a mining concession. The Validity Fee payments for the Alto Chicama
property were up to date as of December 2014. The Los Angeles, Las Lagunas 15 and 16
mining concessions pay, in addition to the Validity Fee, a Penalty of $20/ha per annum
because they are not in production. Non-payment of the Validity Fee and Penalty for two
consecutive years results in expiration of a mining concession. The Validity Fee payments
for the Alto Chicama property were up to date as of December 2015.
On December 29, 2004, Barrick entered into a Legal Stability Agreement with the Peruvian
government. The Legal Stability Agreement provides increased certainty with respect to tax,
administrative, and exchange stability to MBM, regarding the four mining concessions, for 15
years. The 15 year period commenced as of January 1, 2006 and ends on December 31,
2020. Under the terms of the Legal Stability Agreement which includes tax stability, Barrick
is required to pay national and municipal taxes in effect at December 29, 2004 and is subject
to a 32% income tax rate instead of the 30% general rate. In December 2014, the Peruvian
government enacted certain tax reform measures. Corporate income tax rates will be
gradually reduced from 28% in 2015 to 26% for 2019 and future years. The withholding tax
on dividends will gradually increase from 6.8% for 2015 to 9.3% for 2019 and future years. In
January 2015, Barrick made a limited election out of the tax stability provisions included in
the Legal Stability Agreement in order to benefit from the reduced income tax rates.
The mining concessions are shown in Figure 4-2. Note that the Las Lagunas 15 and Las
Lagunas 16 mining concessions overlap with Acumulación Alto Chicama, so the effective
area for the four combined mining concessions is 19,181.2760 ha. MBM controls surface
rights totalling 4,067.8721 ha in the mine area and the mine area has a fenced perimeter
(Figure 4-2 and Table 4-2). Surface rights are sufficient to mine the current reserves and all
reserves lie within MBM controlled lands.
The Acumulación Alto Chicama mining concession, subject to a 2.51% NSR payable semi-
annually to Activos Mineros, formerly Centromin, is shown in Figure 4-3.
RPA is not aware of any environmental liabilities on the property. MBM has all required
permits to conduct the proposed work on the property. RPA is not aware of any other
significant factors and risks that may affect access, title, or the right or ability to perform the
proposed work program on the property.
Guayaquil BRAZIL
Cuenca
Machala
a
z
Tumbes
Iquitos Leticia
g
Loja
Macará Nauta Tabatinga
Talara
Sullana
Paita
Piura LAGUNAS NORTE MINE
Moyobamba Yurimaguas
6° 6°
Chachapoyas
Tarapoto u PERU
Chiclayo
South
Cajamarca Cruzeiro America
do Sul
LA LIBERTAD Santa
Trujillo Salaverry Lucia Pucallpa
SOUTH PERU
Tingo
Chimbote María
Huaraz Rio
PACIFIC Huánuco Branco
Goyllarisquizga Cerro
de Pasco
Atalaya Assis Brasil
Huacho Iñapari
OCEAN La Oroya
Tarma Cobija
Lima
12° Callao Huancayo Manú 12°
Puerto
Legend: Maldonado
Huancavelica
Quillabamba Machupicchu
National capital Ayacucho (ruins)
Chincha
Region capital Pisco Alta Abancay Cusco
Town San Martín Ica
International boundary
Region boundary Rurrenabaque
CHILE
Lagunas Norte Mine
0 100 200 Kilometers
La Libertad Region, Peru
0 100 200 Miles
Location Map Transverse Mercator Projection, CM 75W
4-4
www.rpacan.com
790,000 795,000 800,000 805000
9,140,000
9,140,000
AMAZONAS
N LAMBAYEQUE
N
CAJAMARCA
SAN
MARTIN
Map Area
LA LIBERTAD
9,135,000
9,135,000
HUANUCO
ANCASH
9,130,000
9,130,000
9,125,000
9,125,000
LAS
LAGUNAS 15
9,120,000
9,120,000
LAS
ALTO
LAGUNAS 16
CHICAMA
Legend:
Benefit Concession Alto Chicama (2963.9700 ha)
9,115,000
9,115,000
4-5
www.rpacan.com
790,000 795,000 800,000 805,000
9,140,000
9,140,000
AMAZONAS
N LAMBAYEQUE
N
CAJAMARCA
SAN
MARTIN
Map Area
LA LIBERTAD
9,135,000
9,135,000
HUANUCO
ANCASH
9,130,000
9,130,000
91,250,00
9,125,000
LAS
LAGUNAS 15
9,120,000
9,120,000
LAS
ALTO
CHICAMA
LAGUNAS 16
Legend:
Benefit Concession Alto Chicama (2963.9700
9,115,000
9,115,000
4-6
www.rpacan.com
Most consumables and people working at the mine are transported along this route.
CLIMATE
The property is considered to have mountain climate. The air temperature ranges from -4°C
to +16°C, with an average daily temperature of 7°C. The recorded seasonal air temperature
fluctuations are small. The prevailing wind direction is from the north-northeast to east-
northeast. The average wind velocity at Lagunas Norte is 17 km/hr, with a maximum
recorded of 51 km/hr. Precipitation at Lagunas Norte occurs primarily in the form of rainfall.
Dry, wet, and transitional periods can be distinguished during the year. The dry period is
observed from June through August, with the average monthly rainfall less than 40 mm. The
driest month is July, with the average monthly rainfall of 20 mm. The wet period is observed
from October through April, with the average monthly rainfall greater than 100 mm. The
wettest month is March, with the average monthly rainfall of 230 mm. The months of May
and September may be classified as transitional, with the average monthly rainfall amounts
of 89 mm and 79 mm, respectively. The maximum daily rain on record for the period from
1965 through 2002 is 61 mm. Strong electric storms are frequent during the wet period.