Report to:

Technical Report and Preliminary Assessment of the Zafranal Project, Per

Document No. 1295840100-REP-R0001-05

1295840100-REP-R0001-05

Report to:

TECHNICAL REPORT AND PRELIMINARY ASSESSMENT OF THE ZAFRANAL PROJECT, PER

EFFECTIVE DATE: JANUARY 16, 2013

Prepared by Marinus Andre De Ruijter, P.Eng. Gregory Z. Mosher, P.Geo. Hassan Ghaffari, P.Eng. Monica Danon-Schaffer, Ph.D., P.Eng. Sabry Abdel Hafez, Ph.D., P.Eng. Carlos Guzmn Wilson Muir, P.Eng.
AS/jc

Suite 800, 555 West Hastings Street, Vancouver, British Columbia V6B 1M1 Phone: 604-408-3788 Fax: 604-408-3722

1295840100-REP-R0001-05

TABLE OF CONTENTS
1.0 SUMMARY ....................................................................................................................... 1-1
1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 INTRODUCTION .................................................................................................................. 1-1 PROPERTY DESCRIPTION ................................................................................................... 1-3 HISTORY............................................................................................................................ 1-3 GEOLOGICAL SETTING ....................................................................................................... 1-4 MINERAL RESOURCES ........................................................................................................ 1-4 MINERAL PROCESSING AND METALLURGICAL TESTING ........................................................ 1-5 1.6.1 MINERAL PROCESSING ...................................................................................... 1-5 1.6.2 METALLURGICAL TESTING ................................................................................. 1-5 MINING .............................................................................................................................. 1-5 PROJECT INFRASTRUCTURE ............................................................................................... 1-6 ENVIRONMENTAL ............................................................................................................... 1-7 CAPITAL AND OPERATING COSTS ....................................................................................... 1-8 1.10.1 CAPITAL COST ESTIMATE .................................................................................. 1-8 1.10.2 OPERATING COST ESTIMATE ............................................................................. 1-8 ECONOMIC ANALYSIS ......................................................................................................... 1-9 1.11.1 SENSITIVITY ANALYSIS .................................................................................... 1-10 PROJECT DEVELOPMENT PLAN ......................................................................................... 1-12 OPPORTUNITIES AND RECOMMENDATIONS ........................................................................ 1-12

2.0 3.0 4.0 5.0 6.0

INTRODUCTION .............................................................................................................. 2-1 RELIANCE ON OTHER EXPERTS .................................................................................. 3-1 PROPERTY DESCRIPTION AND LOCATION ................................................................ 4-1 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ............................................................................................................. 5-1 HISTORY.......................................................................................................................... 6-1
6.1 6.2 6.3 6.4 ZAFRANAL MAIN ZONE ....................................................................................................... 6-1 VICTORIA ZONE ................................................................................................................. 6-2 SICERA NORTE ZONE ......................................................................................................... 6-2 SICERA SUR ZONE ............................................................................................................. 6-2 REGIONAL GEOLOGY.......................................................................................................... 7-1 PROPERTY GEOLOGY......................................................................................................... 7-2 7.2.1 ZAFRANAL MAIN ZONE ...................................................................................... 7-2 7.2.2 VICTORIA ZONE ................................................................................................ 7-4 7.2.3 SICERA NORTE ZONE ........................................................................................ 7-4

7.0

GEOLOGICAL SETTING AND MINERALIZATION ......................................................... 7-1

7.1 7.2

1295840100-REP-R0001-05

7.3

7.2.4 SICERA SUR ZONE ............................................................................................ 7-5 MINERALIZATION ................................................................................................................ 7-6 7.3.1 ZAFRANAL MAIN ZONE ...................................................................................... 7-7 7.3.2 VICTORIA ZONE ................................................................................................ 7-7 7.3.3 SICERA NORTE ZONE ........................................................................................ 7-8 7.3.4 SICERA SUR ZONE ............................................................................................ 7-8

8.0 9.0

DEPOSIT TYPES ............................................................................................................. 8-1 EXPLORATION ................................................................................................................ 9-1

9.1 9.2 9.3 9.4 ZAFRANAL MAIN ZONE ....................................................................................................... 9-1 VICTORIA ZONE ................................................................................................................. 9-1 SICERA NORTE ZONE ......................................................................................................... 9-1 SICERA SUR ZONE ............................................................................................................. 9-1 ZAFRANAL MAIN ZONE ..................................................................................................... 10-1 VICTORIA ZONE ............................................................................................................... 10-2 SICERA NORTE ZONE ....................................................................................................... 10-3 SICERA SUR ZONE ........................................................................................................... 10-4 REVERSE CIRCULATION SAMPLING ................................................................................... 11-1 DRILL CORE SAMPLING .................................................................................................... 11-1 QUALITY ASSURANCE/QUALITY CONTROL PROCEDURES ................................................... 11-2 STANDARDS ..................................................................................................................... 11-2 BLANKS ........................................................................................................................... 11-6 DUPLICATES .................................................................................................................... 11-8

10.0

DRILLING ....................................................................................................................... 10-1

10.1 10.2 10.3 10.4

11.0

SAMPLE PREPARATION, ANALYSES AND SECURITY............................................. 11-1

11.1 11.2 11.3 11.4 11.5 11.6

12.0 13.0

DATA VERIFICATION ................................................................................................... 12-1 MINERAL PROCESSING AND METALLURGICAL TESTING...................................... 13-1
13.1 13.2 13.3 13.4 13.5 13.6 INTRODUCTION ................................................................................................................ 13-1 CHRONOLOGY OF METALLURGICAL TEST WORK................................................................ 13-1 MINERALOGY ................................................................................................................... 13-2 FEED GRADE ................................................................................................................... 13-5 MINERALIZED MATERIAL CHARACTERISTICS ...................................................................... 13-6 GRINDABILITY .................................................................................................................. 13-7 13.6.1 CRUSHER WORK INDEX................................................................................... 13-7 13.6.2 ABRASION INDEX ............................................................................................ 13-8 13.6.3 BOND BALL MILL WORK INDEX ........................................................................ 13-9 13.6.4 JK SAG MILL COMMINUTION TEST RESULTS ................................................... 13-9 FLOTATION TESTS.......................................................................................................... 13-10 13.7.1 BULK SULPHIDE FLOTATION .......................................................................... 13-11 13.7.2 FLOTATION PROGRAMS ................................................................................. 13-12 13.7.3 FLOTATION TESTING GRIND SIZE EVALUATION ............................................ 13-12 13.7.4 FLOTATION COLLECTOR REAGENT EVALUATION .......................................... 13-13

13.7

ii

1295840100-REP-R0001-05

13.8 13.9 13.10 13.11 13.12

13.7.5 FLOTATION PH EVALUATION ....................................................................... 13-14 13.7.6 FLOTATION ROUGHER FLOTATION TIME ...................................................... 13-15 13.7.7 FLOTATION REGRIND.................................................................................. 13-15 13.7.8 FLOTATION CLEANER PH EVALUATION ........................................................ 13-16 13.7.9 FLOTATION LOCKED CYCLE TESTING .......................................................... 13-16 13.7.10 FLOTATION FINAL CONCENTRATE ELEMENTAL ANALYSIS ............................. 13-19 13.7.11 FLOTATION VARIABILITY TESTS (ROUGHER) ................................................ 13-19 SETTLING TEST WORK (TAILINGS) .................................................................................. 13-24 ENVIRONMENTAL TESTING.............................................................................................. 13-24 SOLVENT EXTRACTION AND ELECTROWINNING PROCESSING FACILITY ............................. 13-24 CONCLUSIONS ............................................................................................................... 13-24 RECOMMENDED ADDITIONAL TEST WORK ....................................................................... 13-24 EXPLORATORY DATA ANALYSIS ........................................................................................ 14-1 14.1.1 ASSAYS .......................................................................................................... 14-1 14.1.2 CAPPING ........................................................................................................ 14-2 14.1.3 COMPOSITES .................................................................................................. 14-2 BULK DENSITY ................................................................................................................. 14-2 GEOLOGICAL INTERPRETATION ......................................................................................... 14-3 SPATIAL ANALYSIS ........................................................................................................... 14-6 RESOURCE BLOCK MODEL ............................................................................................. 14-10 INTERPOLATION PLAN .................................................................................................... 14-10 MINERAL RESOURCE CLASSIFICATION ............................................................................ 14-11 MINERAL RESOURCE TABULATION .................................................................................. 14-11 BLOCK MODEL VALIDATION ............................................................................................ 14-14

14.0

MINERAL RESOURCE ESTIMATES ............................................................................. 14-1

14.1

14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9

15.0 16.0

MINERAL RESERVE ESTIMATES ................................................................................ 15-1 MINING METHODS ........................................................................................................ 16-1

16.1 16.2 16.3 INTRODUCTION ................................................................................................................ 16-1 INITIAL INFORMATION ....................................................................................................... 16-1 PIT OPTIMIZATION ............................................................................................................ 16-4 16.3.1 TECHNICAL AND ECONOMIC PARAMETERS ....................................................... 16-5 16.3.2 PIT OPTIMIZATION OUTPUT ............................................................................. 16-6 16.3.3 MINING INVENTORY ......................................................................................... 16-9 MINING PHASES ............................................................................................................. 16-12 MINING SCHEDULE ......................................................................................................... 16-13 16.5.1 PLANNING CRITERIA ...................................................................................... 16-13 16.5.2 PRODUCTION PLAN ....................................................................................... 16-14 MINE EQUIPMENT FLEET ................................................................................................ 16-20 SCHEDULE OF MINE EQUIPMENT .................................................................................... 16-20 INTRODUCTION ................................................................................................................ 17-1

16.4 16.5 16.6 16.7

17.0

RECOVERY METHODS................................................................................................. 17-1

17.1

iii

1295840100-REP-R0001-05

17.2 17.3 17.4

17.5

17.6

17.7

SUMMARY ........................................................................................................................ 17-1 PLANT DESIGN ................................................................................................................. 17-4 17.3.1 MAJOR DESIGN CRITERIA ................................................................................ 17-4 17.3.2 OPERATING SCHEDULE AND AVAILABILITY........................................................ 17-5 PROCESS PLANT DESCRIPTION ........................................................................................ 17-5 17.4.1 PRIMARY CRUSHING ....................................................................................... 17-5 17.4.2 COARSE MATERIAL STOCKPILE AND RECLAIM .................................................. 17-6 17.4.3 GRINDING AND CLASSIFICATION ...................................................................... 17-6 17.4.4 FLOTATION AND REGRIND CIRCUITS ................................................................ 17-7 17.4.5 CONCENTRATE HANDLING ............................................................................. 17-10 17.4.6 TAILINGS THICKENER .................................................................................... 17-10 17.4.7 REAGENT HANDLING AND STORAGE .............................................................. 17-11 17.4.8 ASSAY AND METALLURGICAL LABORATORY .................................................... 17-13 17.4.9 WATER SUPPLY ............................................................................................ 17-13 17.4.10 AIR SUPPLY .................................................................................................. 17-14 17.4.11 ON-LINE SAMPLE ANALYSIS ........................................................................... 17-14 SOLVENT EXTRACTION-ELECTROWINNING PROCESSING FACILITY.................................... 17-14 17.5.1 INTRODUCTION ............................................................................................. 17-14 17.5.2 SUMMARY..................................................................................................... 17-14 17.5.3 PLANT DESIGN.............................................................................................. 17-15 PROCESS PLANT DESCRIPTION ...................................................................................... 17-16 17.6.1 DUMP LEACHING ........................................................................................... 17-16 17.6.2 SOLVENT EXTRACTION .................................................................................. 17-17 17.6.3 ELECTROWINNING CIRCUIT............................................................................ 17-18 WATER SUPPLY REVERSE OSMOSIS PLANT ................................................................. 17-18 INTRODUCTION ................................................................................................................ 18-1 PROCESS PLANT AND ANCILLARY FACILITIES .................................................................... 18-4 18.2.1 FACILITIES DESCRIPTIONS ............................................................................... 18-5 WAREHOUSE, MAINTENANCE, AND CONCENTRATE OPERATIONS FACILITIES ....................... 18-7 18.3.1 MAINTENANCE SHOP AND WAREHOUSE ........................................................... 18-7 18.3.2 CONCENTRATOR OPERATING FACILITY ............................................................ 18-7 18.3.3 FUEL STORAGE AND DISTRIBUTION.................................................................. 18-7 TAILINGS MANAGEMENT FACILITY ..................................................................................... 18-7 LEACH FACILITY ............................................................................................................... 18-8 ROADS ............................................................................................................................ 18-9 18.6.1 OVERVIEW ...................................................................................................... 18-9 18.6.2 EXISTING ACCESS ROADS ............................................................................. 18-10 18.6.3 NEW ACCESS ROADS .................................................................................... 18-10 18.6.4 SITE ROADS ................................................................................................. 18-10 FRESH WATER SUPPLY AND DISTRIBUTION ..................................................................... 18-11 18.7.1 SEAWATER DESALINATION PLAN ................................................................... 18-11 18.7.2 PUMPING AND CONVEYING THE WATER TO THE MINE ..................................... 18-12 18.7.3 DRINKING WATER PLANT .............................................................................. 18-12 POWER SUPPLY AND DISTRIBUTION ................................................................................ 18-12

18.0

PROJECT INFRASTRUCTURE ..................................................................................... 18-1

18.1 18.2 18.3

18.4 18.5 18.6

18.7

18.8

iv

1295840100-REP-R0001-05

18.9

OTHER INFRASTRUCTURE............................................................................................... 18-13

19.0 20.0

MARKET STUDIES AND CONTRACTS ........................................................................ 19-1 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT .......................................................................................................................... 20-1
20.1 20.2 ENVIRONMENTAL STUDIES................................................................................................ 20-1 ENVIRONMENTAL PERMITTING .......................................................................................... 20-2 20.2.1 ENVIRONMENTAL IMPACT ASSESSMENTS ......................................................... 20-2 20.2.2 OTHER PERMITS ............................................................................................. 20-2 20.2.3 MINE CLOSURE PLAN ...................................................................................... 20-3 20.2.4 ENVIRONMENTAL LEGISLATION ........................................................................ 20-3 20.2.5 PERUVIAN ENVIRONMENTAL GUIDELINES ......................................................... 20-5 20.2.6 APPLICABLE INTERNATIONAL STANDARDS ........................................................ 20-5 ENVIRONMENTAL MANAGEMENT PLAN .............................................................................. 20-6 20.3.1 POTENTIAL ENVIRONMENTAL IMPACTS ............................................................. 20-6 TAILINGS MANAGEMENT ................................................................................................... 20-7 20.4.1 TAILINGS DRAINAGE ........................................................................................ 20-7 20.4.2 TAILINGS MONITORING .................................................................................... 20-8 20.4.3 TAILINGS FACILITY CLOSURE ........................................................................... 20-9 SULPHIDE TAILINGS MANAGEMENT ................................................................................... 20-9 MINE CLOSURE AND RECLAMATION ................................................................................ 20-10 20.6.1 PROGRESSIVE RECLAMATION ........................................................................ 20-10 20.6.2 FINAL CLOSURE ............................................................................................ 20-10 SOCIAL AND COMMUNITY CONSIDERATIONS .................................................................... 20-13 20.7.1 PROJECT LOCATION AND AREA OF DIRECT INFLUENCE ................................... 20-13 20.7.2 CONSULTATION WITH COMMUNITIES .............................................................. 20-14 20.7.3 COMMUNITY RELATIONS PLAN ....................................................................... 20-15 CAPITAL COST ESTIMATES ............................................................................................... 21-1 21.1.1 INTRODUCTION ............................................................................................... 21-1 21.1.2 ESTIMATE BASE DATE AND VALIDITY PERIOD EXCHANGE RATE ........................ 21-2 21.1.3 ESTIMATE APPROACH ..................................................................................... 21-2 21.1.5 OWNERS COSTS ............................................................................................ 21-8 21.1.6 SUSTAINING CAPITAL .................................................................................... 21-10 21.1.8 MINING CAPITAL COST ESTIMATE .................................................................. 21-10 21.1.9 PROCESS PLANT CAPITAL COST ESTIMATE .................................................... 21-14 21.1.10 TAILINGS MANAGEMENT FACILITY CAPITAL COST ESTIMATE ........................... 21-14 21.1.11 LEACH FACILITY ............................................................................................ 21-15 21.1.12 POWER SUPPLY ............................................................................................ 21-18 21.1.13 WATER SUPPLY ............................................................................................ 21-18 OPERATING COST ESTIMATES ........................................................................................ 21-19 21.2.1 SUMMARY..................................................................................................... 21-19 21.2.2 MINING OPERATING COST ESTIMATE ............................................................. 21-20 21.2.3 PROCESS PLANT OPERATING COST ESTIMATE............................................... 21-23 21.2.4 TAILINGS MANAGEMENT FACILITY OPERATING COST ESTIMATE ...................... 21-24 21.2.5 GENERAL AND ADMINISTRATIVE COSTS ......................................................... 21-25

20.3 20.4

20.5 20.6 20.7

21.0

CAPITAL AND OPERATING COSTS ............................................................................ 21-1

21.1

21.2

1295840100-REP-R0001-05

21.2.6 21.2.7

LEACH FACILITY OPERATING COST ESTIMATE ................................................ 21-27 WATER SUPPLY OPERATING COST ESTIMATE ................................................ 21-29

22.0

ECONOMIC ANALYSIS ................................................................................................. 22-1

22.1 22.2 22.3 22.4 22.5 22.6 22.7 22.8 INTRODUCTION ................................................................................................................ 22-1 PRE-TAX MODEL .............................................................................................................. 22-2 22.2.1 MINE/METAL PRODUCTION IN FINANCIAL MODEL .............................................. 22-2 22.2.2 BASIS OF FINANCIAL EVALUATIONS .................................................................. 22-4 SUMMARY OF FINANCIAL RESULTS ................................................................................... 22-5 SENSITIVITY ANALYSIS ..................................................................................................... 22-6 POST-TAX FINANCIAL ANALYSIS ........................................................................................ 22-8 ROYALTIES .................................................................................................................... 22-10 SMELTER TERMS ........................................................................................................... 22-10 TRANSPORTATION LOGISTICS ......................................................................................... 22-10 22.8.1 INSURANCE................................................................................................... 22-11

23.0 24.0

ADJACENT PROPERTIES ............................................................................................ 23-1 OTHER RELEVANT DATA AND INFORMATION ......................................................... 24-1
24.1 PROJECT EXECUTION PLAN .............................................................................................. 24-1 24.1.1 INTRODUCTION ............................................................................................... 24-1 24.1.2 PROJECT APPROACH ...................................................................................... 24-1 24.1.3 PROJECT EXECUTION SUMMARY ..................................................................... 24-3 24.1.4 ENGINEERING ................................................................................................. 24-4 24.1.5 PROCUREMENT............................................................................................... 24-4 24.1.6 CONSTRUCTION MANAGEMENT........................................................................ 24-5 24.1.7 CONSTRUCTION SCHEDULE ............................................................................. 24-7 24.1.8 PRE-OPERATIONAL TESTING AND START-UP .................................................. 24-10 RISK ANALYSIS ................................................................................................................ 25-1 GEOLOGY ........................................................................................................................ 25-3 MINING ............................................................................................................................ 25-3 CONCENTRATOR .............................................................................................................. 25-5 LEACH FACILITY ............................................................................................................... 25-5 TAILINGS AND WATER MANAGEMENT ................................................................................ 25-6 OWNERS COSTS ............................................................................................................. 25-6 ENVIRONMENTAL ............................................................................................................. 25-6 SUMMARY ........................................................................................................................ 26-1 RISK ANALYSIS ................................................................................................................ 26-2 26.2.1 SOCIAL/POLITICAL .......................................................................................... 26-2 26.2.2 ENVIRONMENTAL ............................................................................................ 26-2 MINING ............................................................................................................................ 26-3 GEOLOGY ........................................................................................................................ 26-3

25.0

INTERPRETATION AND CONCLUSIONS .................................................................... 25-1

25.1 25.2 25.3 25.4 25.5 25.6 25.7 25.8

26.0

RECOMMENDATIONS .................................................................................................. 26-1

26.1 26.2 26.3 26.4

vi

1295840100-REP-R0001-05

26.5

26.6 26.7 26.8 26.9 26.10 26.11 26.12 26.13 26.14

CONCENTRATOR .............................................................................................................. 26-4 26.5.1 WATER MANAGEMENT .................................................................................... 26-4 26.5.2 CLEANER FLOTATION CIRCUIT CONFIGURATION ............................................... 26-4 26.5.3 CYCLONE OVERFLOW/ROUGHER FLOTATION FEED .......................................... 26-4 26.5.4 WATER TREATMENT PLANT ............................................................................. 26-5 26.5.5 PRIMARY GRINDING CIRCUIT ........................................................................... 26-5 26.5.6 COPPER RECOVERY ....................................................................................... 26-5 FUTURE METALLURGICAL TEST WORK .............................................................................. 26-5 CONCENTRATE HANDLING TRADE-OFF .............................................................................. 26-6 PRODUCT TRANSPORTATION ............................................................................................ 26-6 LEACH FACILITY ............................................................................................................... 26-6 SITE LAYOUT ................................................................................................................... 26-7 TAILINGS MANAGEMENT FACILITY ..................................................................................... 26-7 WATER SUPPLY ............................................................................................................... 26-8 POWER SUPPLY AND DISTRIBUTION .................................................................................. 26-8 ENVIRONMENTAL ............................................................................................................. 26-8

27.0 28.0

REFERENCES ............................................................................................................... 27-1 CERTIFICATES OF QUALIFIED PERSON ................................................................... 28-1

LIST OF TABLES
Table 1.1 Table 1.2 Table 1.3 Table 1.4 Table 1.5 Table 1.6 Table 2.1 Table 4.1 Table 10.1 Table 10.2 Table 10.3 Table 10.4 Table 11.1 Table 11.2 Table 11.3 Table 11.4 Table 11.5 Table 11.6 Table 13.1 Table 13.2 Table 13.3 General Project Information ............................................................................... 1-1 Zafranal Property Resource Estimate Synopsis ................................................ 1-4 Summary of Mining Details ................................................................................ 1-6 Capital Cost Summary ....................................................................................... 1-8 Operating Cost Summary................................................................................... 1-9 Metal Production from the Project .................................................................... 1-10 Summary of QPs ................................................................................................ 2-1 Zafranal Property Mineral Concessions ............................................................. 4-3 Zafranal Main Zone Assay Descriptive Statistics............................................. 10-1 Victoria Zone Assay Descriptive Statistics ....................................................... 10-2 Sicera Norte Zone Assay Descriptive Statistics............................................... 10-3 Sicera Sur Zone Assay Descriptive Statistics .................................................. 10-4 Zafranal Property Control Samples.................................................................. 11-2 Zafranal Property Standards ............................................................................ 11-3 Zafranal Property Over-Limit Standards .......................................................... 11-4 Zafranal Property Blank Descriptive Statistics ................................................. 11-6 Zafranal Property Over-limit Blanks ................................................................. 11-6 Zafranal Property Duplicate Sample Descriptive Statistics ............................. 11-8 Test Work Programs and Reports ................................................................... 13-2 Mineral Composition of Phase III Composite Samples ................................... 13-3 Mineral Liberation of Phase III Composite Samples ........................................ 13-4

vii

1295840100-REP-R0001-05

Table 13.4 Table 13.5 Table 13.6 Table 13.7 Table 13.8 Table 13.9 Table 13.10 Table 13.11 Table 13.12 Table 13.13 Table 14.1 Table 14.2 Table 14.3 Table 14.4 Table 14.5 Table 14.6 Table 14.7 Table 14.8 Table 14.9 Table 16.1 Table 16.2 Table 16.3 Table 16.4 Table 16.5 Table 16.6 Table 16.7 Table 16.8 Table 16.9 Table 16.10 Table 16.11 Table 16.12 Table 16.13 Table 16.14 Table 16.15 Table 16.16 Table 16.17 Table 16.18 Table 17.1 Table 17.2 Table 19.1 Table 21.1 Table 21.2 Table 21.3 Table 21.4 Table 21.5 Table 21.6 Table 21.7 Table 21.8 Table 21.9

Head Values Composite Samples ................................................................ 13-5 Head Values Variability Samples .................................................................. 13-5 Specific Gravity Results by Rock Type Classification ..................................... 13-6 Crusher Bond Work Index Results Phase I .................................................. 13-7 Crusher Bond Work Index Results by Rock Type Classification ..................... 13-8 Abrasion Index Results by Rock Type Classification ...................................... 13-8 Bond Ball Mill Index Results by Rock Type Classification ............................... 13-9 Drop Weight Index Results by Rock Type Classification............................... 13-10 Locked Cycle Concentrate Summary ............................................................ 13-19 Variability Tests Comparison of Results ..................................................... 13-22 AMEC-Minproc 2011 Zafranal Main Zone Resource Estimate at 0.2% Copper Cut-off .................................................................................................. 14-1 Zafranal Property Drillhole and Sample Quantities.......................................... 14-1 Zafranal Mineral Zone Bulk Density Measurements ........................................ 14-3 Zafranal Property Variograms and Search Ellipse Parameters ....................... 14-7 Zafranal Property Block Model Parameters ................................................... 14-10 Zafranal Property Kriged Resource Synopsis at 0.2% Copper Cut-off ......... 14-11 Zafranal Main Zone Kriged Resource Estimate at 0.2% Copper Cut-off ...... 14-12 Victoria Zone Kriged Resource Estimate at 0.2% Copper Cut-off................. 14-13 Sicera Norte and Sicera Sur Zones Kriged Resource Estimates at 0.2% Copper Cut-off ................................................................................................ 14-13 Grade-tonnage Table for Zafranal Main........................................................... 16-2 Grade-tonnage Table for Victoria..................................................................... 16-2 Grade-tonnage Table for Sicera Sur ................................................................ 16-3 Grade-tonnage Table for Sicera Norte............................................................. 16-3 Inter-ramp and Overall Slopes Recommended for Zafranal Main Pit.............. 16-4 Mining Costs ..................................................................................................... 16-5 Whittle Run Results Zafranal Main Zone .................................................... 16-7 Whittle Run Results - Victoria Zone............................................................... 16-7 Whittle Run Results Sicera Norte Zone ...................................................... 16-8 Whittle Run Results Sicera Sur Zone ......................................................... 16-8 Zafranal Main Zone Whittle Pit Mineral Resource ......................................... 16-9 Victoria Zone Whittle Pit Mineral Resource ................................................. 16-10 Sicera Norte Zone Whittle Pit Mineral Resource ......................................... 16-11 Sicera Sur Zone Whittle Pit Mineral Resource ............................................ 16-11 Total Mineral Inventory from Whittle Pits ..................................................... 16-12 80,000 t/d Mining Plan Summary By Planning Period ................................... 16-15 80,000 t/d Mining Plan Summary By Planning Period ................................... 16-16 Mining Equipment Requirements ................................................................... 16-21 Major Design Criteria........................................................................................ 17-4 Major Design Criteria for the Leach SX-EW Plant ......................................... 17-15 Commercial Terms for Sale of Products .......................................................... 19-1 Capital Cost Summary ..................................................................................... 21-1 Details of Owners Costs .................................................................................. 21-9 Summary of Mining Costs .............................................................................. 21-11 Mining Pre-production Unit Costs .................................................................. 21-11 Initial Mining Equipment Fleet ........................................................................ 21-12 Other Mining Investments .............................................................................. 21-13 Process Plant Capital Cost ............................................................................ 21-14 Tailings Management Facility Capital Costs .................................................. 21-15 Leach Facility Capital Cost............................................................................. 21-15

viii

1295840100-REP-R0001-05

Table 21.10 Table 21.11 Table 21.12 Table 21.13 Table 21.14 Table 21.15 Table 21.16 Table 21.17 Table 21.18 Table 21.19 Table 21.20 Table 21.21 Table 21.22 Table 22.1 Table 22.2 Table 22.3 Table 22.4 Table 25.1 Table 25.2 Table 26.1

Power Supply and Distribution Capital Cost .................................................. 21-18 Water Supply Capital Costs ........................................................................... 21-19 Operating Cost Summary............................................................................... 21-19 Mine Unit Operating Cost Summary .............................................................. 21-20 Relevant Consumables Prices ....................................................................... 21-20 Mining Operating Cost Summary ................................................................... 21-22 Concentrator Annual Operating Cost Summary ............................................ 21-23 Tailings Management Facility Sustaining and Operating Costs .................... 21-24 G&A Cost Estimate ........................................................................................ 21-25 Assay Laboratory Costs ................................................................................. 21-26 Leach Facility Supply Costs ........................................................................... 21-27 Leach Facility Operating Cost 10,000 t/a Cathode ..................................... 21-28 Water Supply Operating Cost Estimate ......................................................... 21-30 Metal Production from the Zafranal Project ..................................................... 22-2 Summary of Pre-tax Financial Results............................................................. 22-5 Components of the Various Taxes................................................................... 22-9 Summary of Post-tax Financial Results ......................................................... 22-10 Mining Plan ....................................................................................................... 25-4 Mining Pre-production and Production Costs .................................................. 25-4 Recommended Future Work ............................................................................ 26-1

LIST OF FIGURES
Figure 1.1 Figure 1.2 Figure 1.3 Figure 1.4 Figure 4.1 Figure 4.2 Figure 7.1 Figure 7.2 Figure 7.3 Figure 7.4 Figure 13.1 Figure 13.2 Figure 13.3 Figure 13.4 Figure 13.5 Figure 13.6 Figure 14.1 Figure 14.2 Figure 14.3 Figure 16.1 Figure 16.2 Figure 16.3 Figure 16.4 Figure 16.5 Property Location Map ....................................................................................... 1-2 Pre-tax NPV Sensitivity Analysis...................................................................... 1-11 Pre-tax IRR Sensitivity Analysis ....................................................................... 1-11 Pre-tax Payback Sensitivity Analysis ............................................................... 1-12 Property Location ............................................................................................... 4-2 Zafranal Property Mineral Concessions and Mineral Zone Locations ............... 4-5 Tectonic Belts of Southeastern Per ................................................................. 7-1 Zafranal and Victoria Geology............................................................................ 7-3 Sicera Norte Zone Geology................................................................................ 7-5 Sicera Sur Zone Geology ................................................................................... 7-6 Copper Head Grade versus Recovery for Rock Type ................................... 13-11 LCT Procedure Plenge................................................................................ 13-17 LCT Procedure G&T ................................................................................... 13-18 Rougher Recovery versus Copper Feed Grade G&T Variability Tests ...... 13-20 Rougher Recovery versus Copper Feed Grade Plenge Variability Tests .. 13-21 Assay Comparison, Copper Head Grade ...................................................... 13-23 Perspective View of the Zafranal and Victoria Mineral Zones ......................... 14-4 Perspective View of the Sicera Norte Mineral Zones ...................................... 14-5 Perspective View of the Sicera Sur Mineral Zones.......................................... 14-5 Inter-ramp and Overall Slope Angle by Domain .............................................. 16-4 General Mine Configuration ........................................................................... 16-13 Total Tonnage Mining Plan ............................................................................ 16-17 Concentrator Feed ......................................................................................... 16-18 Leach Facility Feed ........................................................................................ 16-19

ix

1295840100-REP-R0001-05

Figure 17.1 Figure 18.1 Figure 18.2 Figure 18.3 Figure 18.4 Figure 22.1 Figure 22.2 Figure 22.3 Figure 22.4 Figure 22.5 Figure 24.1 Figure 24.2 Figure 24.3

Simplified Process Flowsheet Zafranal Project ............................................ 17-3 Overall Site Layout ........................................................................................... 18-2 Site Layout........................................................................................................ 18-3 Site View from Concentrator Location ............................................................. 18-4 Plant Site Layout .............................................................................................. 18-5 Total Metal Production .................................................................................... 22-3 Pre-tax Undiscounted Annual and Cumulative Net Cash Flows ..................... 22-5 Pre-tax NPV Sensitivity Analysis...................................................................... 22-6 Pre-tax IRR Sensitivity Analysis ....................................................................... 22-7 Pre-tax Payback Sensitivity Analysis ............................................................... 22-7 Project Management Organization Chart ........................................................ 24-2 CM Organization Chart .................................................................................... 24-6 Preliminary Project Development Schedule Summary .................................... 24-8

GLOSSARY
UNITS OF MEASURE
above mean sea level ...................................................................................................................... acre .................................................................................................................................................. ampere ............................................................................................................................................. annum (year).................................................................................................................................... billion................................................................................................................................................ billion tonnes .................................................................................................................................... billion years ago ............................................................................................................................... British Thermal Unit ......................................................................................................................... centimetre ........................................................................................................................................ cubic centimetre ............................................................................................................................... cubic feet per minute........................................................................................................................ cubic feet per second ....................................................................................................................... cubic foot.......................................................................................................................................... cubic inch ......................................................................................................................................... cubic metre ...................................................................................................................................... cubic yard......................................................................................................................................... Coefficients of Variation ................................................................................................................... day ................................................................................................................................................... days per week .................................................................................................................................. days per year (annum) ..................................................................................................................... dead weight tonnes .......................................................................................................................... decibel adjusted ............................................................................................................................... decibel ............................................................................................................................................. degree .............................................................................................................................................. degrees Celsius ............................................................................................................................... diameter ........................................................................................................................................... amsl ac A a B Bt Ga BTU cm 3 cm cfm 3 ft /s 3 ft 3 in 3 m 3 yd CVs d d/wk d/a DWT dBa dB C

1295840100-REP-R0001-05

dollar (American).............................................................................................................................. dollar (Canadian) ............................................................................................................................. dry metric ton ................................................................................................................................... foot ................................................................................................................................................... gallon ............................................................................................................................................... gallons per minute (US) ................................................................................................................... gigajoule........................................................................................................................................... gigapascal ........................................................................................................................................ gigawatt............................................................................................................................................ gram ................................................................................................................................................. grams per litre .................................................................................................................................. grams per tonne ............................................................................................................................... greater than...................................................................................................................................... 2 hectare (10,000 m ) ......................................................................................................................... hertz ................................................................................................................................................. horsepower ...................................................................................................................................... hour.................................................................................................................................................. hours per day ................................................................................................................................... hours per week ................................................................................................................................ hours per year .................................................................................................................................. inch .................................................................................................................................................. kilo (thousand) ................................................................................................................................. kilogram ........................................................................................................................................... kilograms per cubic metre ................................................................................................................ kilograms per hour ........................................................................................................................... kilograms per square metre ............................................................................................................. kilometre .......................................................................................................................................... kilometres per hour .......................................................................................................................... kilopascal ......................................................................................................................................... kilotonne........................................................................................................................................... kilovolt .............................................................................................................................................. kilovolt-ampere................................................................................................................................. kilovolts ............................................................................................................................................ kilowatt ............................................................................................................................................. kilowatt hour ..................................................................................................................................... kilowatt hours per tonne (metric ton) ................................................................................................ kilowatt hours per year ..................................................................................................................... less than........................................................................................................................................... litre ................................................................................................................................................... litres per minute ............................................................................................................................... megabytes per second ..................................................................................................................... megapascal...................................................................................................................................... megavolt-ampere ............................................................................................................................. megawatt ......................................................................................................................................... metre ................................................................................................................................................ metres above sea level ...................................................................................................................

US$ Cdn$ dmt ft gal gpm GJ GPa GW g g/L g/t > ha Hz hp h h/d h/wk h/a " k kg 3 kg/m kg/h 2 kg/m km km/h kPa kt kV kVA kV kW kWh kWh/t kWh/a < L L/m Mb/s MPa MVA MW m masl

xi

1295840100-REP-R0001-05

metres Baltic sea level ..................................................................................................................... metres per minute ............................................................................................................................ metres per second ........................................................................................................................... metric ton (tonne) ............................................................................................................................. microns ............................................................................................................................................ milligram........................................................................................................................................... milligrams per litre ............................................................................................................................ millilitre ............................................................................................................................................. millimetre.......................................................................................................................................... million............................................................................................................................................... million bank cubic metres ................................................................................................................. million bank cubic metres per annum............................................................................................... million tonnes ................................................................................................................................... million years ago .............................................................................................................................. minute (plane angle) ........................................................................................................................ minute (time) .................................................................................................................................... month ............................................................................................................................................... Nuevo sol (Peruvian currency) ......................................................................................................... ounce ............................................................................................................................................... pascal .............................................................................................................................................. centipoise ......................................................................................................................................... parts per million................................................................................................................................ parts per billion................................................................................................................................. percent ............................................................................................................................................. pound(s) ........................................................................................................................................... pounds per square inch ................................................................................................................... revolutions per minute...................................................................................................................... second (plane angle) ....................................................................................................................... second (time) ................................................................................................................................... specific gravity ................................................................................................................................. square centimetre ............................................................................................................................ square foot ....................................................................................................................................... square inch ...................................................................................................................................... square kilometre .............................................................................................................................. square metre .................................................................................................................................... thousand tonnes .............................................................................................................................. three dimensional............................................................................................................................. Three Dimensional Model ................................................................................................................ tonne (1,000 kg) ............................................................................................................................... tonnes per day ................................................................................................................................. tonnes per hour ................................................................................................................................ tonnes per year ................................................................................................................................ two dimension .................................................................................................................................. volt ................................................................................................................................................... week ................................................................................................................................................ weight/weight ...................................................................................................................................

mbsl m/min m/s t m mg mg/L mL mm M 3 Mbm 3 Mbm /a Mt Ma ' min mo S/. oz Pa mPas ppm ppb % lb psi rpm " s SG 2 cm 2 ft 2 in 2 km 2 m kt 3D 3DM t t/d t/h t/a 2D V wk w/w

xii

1295840100-REP-R0001-05

wet metric ton................................................................................................................................... year (annum)....................................................................................................................................

wmt a

ABBREVIATIONS AND ACRONYMS

Abeinsa Infrastructuras Medio Ambiente S.A. ................................................................................. abrasion index ................................................................................................................................. acid rock drainage ........................................................................................................................... acid-base accounting ....................................................................................................................... Amdel Mineral Laboratories ............................................................................................................. ammonium nitrate/fuel oil ................................................................................................................. AQM Copper Inc. ............................................................................................................................. areas of direct influence ................................................................................................................... artisanal and small-scale miners ...................................................................................................... Asociacin Nacional del Agua ......................................................................................................... atomic absorption spectrophotometer .............................................................................................. atomic absorption ............................................................................................................................ audio-frequency magneto-telluric ..................................................................................................... Australia and New Zealand Banking Group Limited ........................................................................ Autoridad Autnoma de Majes......................................................................................................... bill of materials ................................................................................................................................. Bond ball mill work index ................................................................................................................. Bond rod mill work Index.................................................................................................................. Certificate of Non Existence of Archaeological Remains ................................................................. CESEL Ingenieros ........................................................................................................................... chalcocite ......................................................................................................................................... chalocopyrite.................................................................................................................................... community relations program........................................................................................................... Compaia Minera Zafranal S.A.C. ................................................................................................... construction management................................................................................................................ copper .............................................................................................................................................. crusher work index ........................................................................................................................... cumulative net cash flow .................................................................................................................. cut-off grade..................................................................................................................................... diamond drillhole.............................................................................................................................. Direccin General de Asuntos Ambientales Mineros ....................................................................... Direccin General de Capitanias y Guardacostas del Per ............................................................. Directorate the Direccin General de Asuntos Ambientales Energticos ........................................ distributed control system ................................................................................................................ drop weight index ............................................................................................................................. Engineering, Procurement and Construction Management ............................................................. environmental impact assessment................................................................................................... Environmental Management Plan .................................................................................................... Free Carrier ..................................................................................................................................... front end loader................................................................................................................................ G&T Metallurgical Services Ltd........................................................................................................ ABEIMA Ai ARD ABA Amdel ANFO AQM ADI ASM ANA AAS AA ATM ANZ Autodema BOMs BWi RWi CIRA CESEL Ch Cp CRP CMZ CM Cu CWi CNCF COG DDH DGAAM DICAPI DGAAE DCS DWi EPCM EIA EMP FCA FEL G&T

xiii

1295840100-REP-R0001-05

general and administrative ............................................................................................................... glass reinforced plastic .................................................................................................................... gold .................................................................................................................................................. health and safety management plan ................................................................................................ Health, Safety, and Environmental .................................................................................................. heating, ventilation, and air-conditioning .......................................................................................... high-density polyethylene ................................................................................................................ induced polarization ......................................................................................................................... inductively coupled plasma .............................................................................................................. inductively coupled plasma-spectrometer ........................................................................................ Instituto Geolgico Minero Metalrgico ............................................................................................ intermediate leach solution .............................................................................................................. internal rate of return........................................................................................................................ International Finance Corporation.................................................................................................... International Organization for Standardization ................................................................................. iron ................................................................................................................................................... joint venture ..................................................................................................................................... Knight Pisold Ltd. ........................................................................................................................... Ley del Sistema Nacional de Evaluacin de Impacto Ambiental ..................................................... life-of-mine ....................................................................................................................................... locked cycle tests ............................................................................................................................. London Metal Exchange .................................................................................................................. Maintenance and Repair Contract ................................................................................................... material take-offs ............................................................................................................................. Maximum Permissible Levels .......................................................................................................... mechanically stabilized earth ........................................................................................................... metal leaching.................................................................................................................................. methyl isobutyl carbinol.................................................................................................................... Minera AQM Copper Per SAC ....................................................................................................... Ministerio de Energa y Minas.......................................................................................................... National Instrument 43-101.............................................................................................................. NCL Ingeniera y Construccin S.A. ................................................................................................ net cash flow .................................................................................................................................... net present value ............................................................................................................................. net smelter royalty ........................................................................................................................... non-acid generating ......................................................................................................................... operation, maintenance and surveillance manual ............................................................................ ordinary kriging ................................................................................................................................ organic/aqueous .............................................................................................................................. Personal Protective Equipment........................................................................................................ piping and instrumentation diagrams ............................................................................................... Plenge Laboratories ......................................................................................................................... polyethersulfone .............................................................................................................................. polyvinyl-pyrollidone......................................................................................................................... potassium amyl xanthate ................................................................................................................. potentially acid generating ...............................................................................................................

G&A GRP Au HSMP HSE HVAC HDPE IP ICP ICP-MS INGEMMET ILS IRR IFC ISO Fe JV Knight Pisold Ley del SEIA LOM LCTs LME MARC MTOs MPLs MSE ML MIBC AQM Per MEM NI 43-101 NCL NCF NPV NSR NAG OMS OK O/A PPE P&IDs Plenge PES PVP PAX PAG

xiv

1295840100-REP-R0001-05

pregnant leach solution .................................................................................................................... preliminary economic assessment ................................................................................................... process design criteria ..................................................................................................................... Project Execution Plan ..................................................................................................................... project management system ............................................................................................................ project management team ............................................................................................................... project procedures manual .............................................................................................................. pyrite ................................................................................................................................................ Qualified Person .............................................................................................................................. quality assurance/quality control ...................................................................................................... request for proposal ......................................................................................................................... reverse circulation ............................................................................................................................ reverse osmosis ............................................................................................................................... rock quality designation ................................................................................................................... Royal Bank of Canada ..................................................................................................................... run-of-mine ...................................................................................................................................... SAG Mill Comminution ..................................................................................................................... salt water reverse osmosis .............................................................................................................. selective mining unit......................................................................................................................... semi-autogenous grinding................................................................................................................ semi-detailed Environmental Impact Assessment ........................................................................... sewage treatment plant.................................................................................................................... SGS Lakefield Research Ltd............................................................................................................ SociedadTerral S.A. ......................................................................................................................... solvent extraction-electrowinning ..................................................................................................... sulphur ............................................................................................................................................. tailings management facility ............................................................................................................. Tetra Tech Wardrop ......................................................................................................................... time-domain electromagnetic ........................................................................................................... Traffic and Logistics ......................................................................................................................... Universal Transverse Mercator ........................................................................................................ volume to volume ............................................................................................................................. World Geodetic System ................................................................................................................... Zafranal Project ............................................................................................................................... Zafranal Property .............................................................................................................................

PLS PEA PDC PEP PMS PMT PPM Py QP QA/QC RFP RC RO RQD RBC ROM SMC SWRO SMU SAG EIAsd STP SGS Lakefield Terral SX-EW S TMF Tetra Tech TEM T&L UTM v/v WGS the Project the Property

xv

1295840100-REP-R0001-05

1.0
1.1

SUMMARY
INTRODUCTION
Tetra Tech Wardrop (Tetra Tech) was retained by AQM Copper Inc. (AQM) to prepare a National Instrument 43-101 (NI 43-101) compliant preliminary economic assessment (PEA) for the Zafranal Project (the Project) in Per. The Zafranal Property (the Property) is located about 90 km northwest of the city of Arequipa in southern Per (Figure 1.1). The Property contains four zones of porphyry-style copper mineralization: Zafranal Main, Victoria, Sicera Norte and Sicera Sur. The Zafranal concentrator has been designed to process a nominal 29,200,000 t/a (80,000 t/d) of copper-gold porphyry material from an open pit operation and produce a marketable copper concentrate of 28% copper containing about 3 g/t gold. The Zafranal leach facility has been designed to treat approximately 20,000 t/d of oxide and secondary copper material to produce 10,000 t/a of copper cathode. General information for the Project is summarized in Table 1.1.
Table 1.1 General Project Information
Description Estimated Mineral Resources (Measured + Indicated) Estimated Mineral Resources (Inferred) Concentrator Feed Leach Facility Feed Life-of-mine (LOM) Milling Rate Strip Ratio Total Project Initial Capital Cost Total Overall Operating Cost
4 3 2 1

Unit t t t t years t/d waste/mineralized material US$ million US$/t processed US$ million years %

Amount 557,191,000 53,738,000 425,310,000 87,226,000 15 80,000 1.06 1,520 8.29 1,332 1.9 26.7

Net Present Value (NPV) at 8% Discount Rate before Tax and Government Royalities Payback After Start of Mill Production Internal Rate of Return (IRR) Note:
1 2 3 4

Measured + Indicated Resource constrained by a Whittle economic shell is 510.7 Mt. Inferred Resource constrained by a Whittle economic shell is 4.9 Mt. This is a rounded figure. Includes feed for flotation and leach; operating cost for flotation only is US$8.86/t.

All dollar figures presented in this report are stated in US dollars, unless otherwise specified.
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 1-1 1295840100-REP-R0001-05

Figure 1.1

Property Location Map

This PEA report has been prepared by Tetra Tech for AQM based on work by the following independent consultants:

NCL Ingeniera y Construccin S.A. (NCL): commissioned by AQM to conduct the mining engineering. Knight Pisold Ltd. (Knight Pisold): power, tailings management and overall site water balance.
1-2 1295840100-REP-R0001-05

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

CESEL Ingenieros (CESEL): completed a conceptual level study to determine the point at which electrical infrastructure to the Project site could reasonably interconnect with the Peruvian electric power system. Transmin Metallurgical Consultants (Transmin): supervised metallurgical test work for the Project. Abeinsa Infrastructuras Medio Ambiente S.A. (ABEIMA): performed engineering for the desalinated water supply and pipeline.

Each section of this report has been prepared by a Qualified Person (QP). Details of the QPs responsibility for each section of this report are provided in Section 28.0.

1.2

PROPERTY DESCRIPTION
The Property is located in southern Per about 150 km by road (90 km straight-line distance) northwest of the city of Arequipa on the border between the District of Huancarqui in the Province of Castilla and the District of Lluta in the Province of Caylloma. The approximate centre of the Property is located at 1602 28 south latitude and 7214 19 west longitude (Universal Transverse Mercator (UTM) 18S 794000E/8224000N using the World Geodetic System (WGS) (WGS84). The nearest major centre is Arequipa which is serviced by scheduled flights and is the major supply center for regional mining activity. Approximately 85 km of the estimated 150 km of road between Arequipa and the Property is paved, which includes a section of the Pan-American Highway. The last 65 km is gravel, of which 15 km is via private access road constructed to access the Property. Within the Property, AQM has constructed and maintains a network of access and drill roads. The regional climate is dry, with temperatures ranging between about 12C in winter and 28C in summer. Precipitation is scarce and agriculture generally possible only in river valleys with accesible irrigation. The Property is located outside zones of agricultural activity and there are no communities located on the Property. Characteristic vegetation is comprised generally of scarce grasses, cacti and shrubs. Valley bottoms within the Property are typically filled with active alluvium and are bare of vegetation.

1.3

HISTORY
The mineral potential of the Main Zone deposit was initially discovered by artisanal small-scale miners (ASM) working the narrow gold veins in the nearby batholith formation. Through their exploration of the area, they became aware of surface exposures of copper mineralization and in 2003 brought this mineralization to the attention of Teck geologists who were conducting regional exploration for porphyry deposits. The Zafranal Main Zone was immediately staked by Teck. Currently, ASM

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

1-3

1295840100-REP-R0001-05

activity continues on the periphery of the Zafranal porphyry systems where artisanal miners are allowed to actively mine auriferous quartz veins.

1.4

GEOLOGICAL SETTING
Bedrock within the Property area includes Jurassic volcaniclastic and sedimentary rocks, Cretaceous granodiorite and Paleocene to late Cenozoic diorite intrusives and dikes. Most of these units have been deformed by regional-scale and local shear zones, often resulting in schistose and gneissose textures. The four mineral zones of interest, Zafranal Main, Victoria, Sicera Norte and Sicera Sur, have similar bedrock geology but differ sufficiently to warrant the separate descriptions that follow.

1.5

MINERAL RESOURCES
Mineral resources for the Project were classified in accordance with NI 43-101 requirements. Table 1.2 summarizes the estimated Measured, Indicated, and Inferred Mineral Resources.
Table 1.2 Zafranal Property Resource Estimate Synopsis
Tonnes (t) Kriged: All Zones Measured Zafranal Main Zone Measured Total Victoria Zone Measured Total Kriged: Total Measured Kriged: All Zones Indicated Zafranal Main Zone Indicated Total Victoria Zone Indicated Total Sicera Norte Zone Indicated Total Sicera Sur Zone Indicated Total Kriged: Total Indicated Kriged: Total Measured + Indicated Kriged: All Zones Inferred Zafranal Main Zone Inferred Total Victoria Zone Inferred Total Sicera Norte Zone Inferred Total Sicera Sur Zone Inferred Total Kriged: Total Inferred Note: 12,665,000 31,470,000 6,170,000 3,432,000 53,738,000 0.29 0.25 0.25 0.31 0.27 0.04 0.03 0.02 0.03 0.03 319,042,000 54,731,000 34,005,000 28,322,000 436,100,000 557,191,000 0.38 0.25 0.26 0.30 0.35 0.36 0.08 0.04 0.02 0.03 0.06 0.07 107,907,000 13,184,000 121,091,000 0.43 0.31 0.42 0.08 0.03 0.08 Cu (%) Au (g/t)

Mineral resources which are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources have a high degree of uncertainty as to their existence, and a great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred resource will ever be upgraded to a higher category.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

1-4

1295840100-REP-R0001-05

1.6
1.6.1

MINERAL PROCESSING
M I N ER AL P R OC E S SI N G

AND

METALLURGICAL TESTING

The Project will be an open pit operation with mill feed rate of 80,000 t/d with the processing of copper-bearing plant feed based on crushing, grinding and flotation methodology. The final concentrate will be transported from site by truck to a regional port site facility. The process method includes a single semi-autogenous grinding (SAG) mill followed by two ball mills. The tailings will be thickened to an approximate pulp density of 65% solids by weight, then transported by pipeline using gravity to the tailings management facility (TMF) roughly 10 km downhill from the process plant to a natural basin. The recovery of copper from oxidized copper-bearing material and secondary sulphide will also be conducted. A solvent extraction-electrowinning (SX-EW) facility will produce 10,000 t of cathode copper per year from the run-of-mine (ROM) dump leaching of the mineralized material. Approximately 20,000 t/d of material with a feed grade of about 0.23% copper will be dumped on suitably prepared leach pads and treated with acid solution. The overall copper recovery is estimated to be 60%. After upgrading the copper-bearing solution by solvent extraction, the copper will be recovered by electrowinning.

1.6.2

M ET AL L U R GI C A L T E ST I N G
Metallurgical test work conducted at various laboratories has defined the process parameters required for the overall design of the concentrator. These parameters include, amongst others, a mineralogical investigation to describe the copper-bearing phases and gold present in the plant feed material, the determination of the crushability, grinding and abrasion index values required for the design of the comminution circuit, and various flotation details such as duration of flotation, the amount of reagents required, and establishing the recovery and concentrate grade of the final product. The concentrate produced will have a copper grade of 28% copper and contain about 3 g/t of gold with the respective recoveries of 87.7% and 49.0%. Limited test work was carried out to recover copper from oxide and secondary sulphide material using acid and bacterial leaching processes followed by SX-EW.

1.7

MINING
The Project will be an open pit mine utilizing a truck-and-shovel mining approach. A mine production schedule was developed for the 17-year project starting with approximately 2 years of pre-stripping followed by 15 years of production. A variable cut-off grade of between 0.18% and 0.25% total copper was used for planning mine production to supply the concentrator. A fixed cut-off grade of 0.15%

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

1-5

1295840100-REP-R0001-05

total copper was used for sending material to the leach pads. The annual mine production, comprised of plant feed material, leach feed material and waste, peaked at 78,208,000 t/a, with a 15-year LOM stripping ratio of 1.06. The ultimate pit design was optimized based on a Gemcom Whittle pit generated by using a price of $2.70/lb copper and $1,100/oz gold, then modified to incorporate haul roads and safety berms. Table 1.3 summarizes the mining details.
Table 1.3
Description Mine Life (Production) Mining Inventory Strip Ratio Total Feed (Mill and Leach) Mining Operating Cost

Summary of Mining Details

Unit years t waste/mineralized material t US$/t milled and leached Amount 15 1,056,497,000 1.06 512,566,000 2.56

1.8

PROJECT INFRASTRUCTURE
As a comprehensive greenfield development, the Project will require the development of supporting infrastructure. These items include:

a process plant or concentrator that will include crushing, grinding, flotation, regrinding, concentrate filtration, concentrate thickener, tailings thickener facilities and assay laboratory separate structures that will be erected for facilities such as a warehouse, maintenance shop, administration offices, and other supporting infrastructure a partially-lined TMF, using geomembrane, and two structural earth dams, two waste rock dumps and a low grade sulphide stockpile a leach facility including an SX-EW plant and heap leach pads a network of access and on-site roads a fresh water supply and distribution system, including a seawater desalination plant on the coast power supply and distribution infrastructure, including a 220 kV substation other infrastructure including truck shop, temporary construction camp, permanent camp, and laydown areas.

Details of the Project infrastructure are provided in Section 18.0.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

1-6

1295840100-REP-R0001-05

1.9

ENVIRONMENTAL
Based on the Ley del Sistema Nacional de Evaluacin de Impacto Ambiental (Ley del SEIA) or National Environmental Impact Assessment System Law, an informal baseline study for the Project was performed in 2011 and 2012 and covered physical, biological, socio-economic, and cultural areas. Environmental settings, permits and registrations, and environmental management strategies that may be required for the Project are summarized in Section 20.0. The Project will be subject to an environmental assessment in the future. A conceptual level Plan de Manejo Ambiental or Environmental Management Plan (EMP), was prepared and potential impacts associated with the Zafranal TMF were identified as part of this PEA. Further details are discussed in Section 20.0. A more detailed environmental management and closure plan for the Project will be developed in the prefeasability study. However, a cost estimate has been included in this PEA as part of the capital and operating cost estimates. A preliminary environmental baseline study was performed for the Project. This study will be used to define the scope of work for the formal baseline study, which will commence during the next stage of project evaluation and is mandatory in order to complete an obligatory Environmental Impact Assessment (EIA) and secure the mine operating permits. AQM has had a limited EMP in place for the past 34 months as a result of a semi-detailed Environmental Impact Assessment (EIAsd) that was submitted for exploration activities only, and subsequently approved for the Project by the Peruvian government. There are Peruvian mining environmental guidelines provided by the Mining and Energy Ministry that cover monitoring protocols for air and water quality, water management, acid mine drainage management, evaluation of impacts resulting from mining-metallurgical activities and others. With regards to tailings water management, free water from discharged tailings and seasonal runoff will collect in a small pond in the south end of the tailings impoundment, from which the water will evaporate. No operational spillway will be required for the impoundment during operations; however, a spillway will be constructed at closure. Sufficient freeboard to contain extreme precipitation events will be maintained during mine operations. The TMF will be a zero-discharge facility and the tailings embankments will incorporate a geomembrane liner and grout curtains to minimize seepage to the environment (as required).

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

1-7

1295840100-REP-R0001-05

1.10
1.10.1

CAPITAL

AND

OPERATING COSTS

C A PI T AL C O ST E ST I M AT E
As summarized in Table 1.4, an initial capital cost of US$1,519.7 million is estimated for the Project. All currencies in this section are expressed in US dollars. The accuracy range of the capital cost estimate is 35%. This estimate is prepared with a base date of Q3 2012 and does not include any escalation past this date. The quotations used in this estimate were obtained in Q3 2012, and are budgetary and non-binding. CESEL provided some equipment prices and the remainder were obtained from recent historical data. Freight costs and taxes were provided by AQM. For nonmajor equipment (i.e. equipment less than $100,000), costing was based on in-house data or quotes from recent similar projects. All equipment and material costs include Free Carrier (FCA) manufacturer plant Incoterms 2010. Other costs such as spares, taxes, duties, freight, and packaging were covered separately in the Indirects section of the estimate.
Table 1.4 Capital Cost Summary
Capital Cost ($ '000) 367,689 240,995 37,099 55,108 115,340 204,535 50,255 67,778 177,961 202,912 1,519,672

Description Mining and Pre-production Development Process Plant Leach Facility Tailing and Water Management Plant Infrastructure Fresh Water Supply Power Supply and Distribution Indirects Owners Costs Indirects Contingency (18%) Total Capital Cost

1.10.2

O PE R AT I N G C O ST E ST I M AT E
On-site operating costs are estimated to be US$8.29/t of mineralized material processed and include mining, processing, leaching, general and administrative (G&A), and plant services cost. The unit costs summarized in Table 1.5 are based on treatment of 425,310,000 t by flotation and 87,256,000 t by leaching and 365 days of operation.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

1-8

1295840100-REP-R0001-05

Table 1.5

Operating Cost Summary

Unit Cost (US/$/t milled and leached) 2.56 4.23 0.94 0.49 0.07 8.29

Area Mining Processing Leaching G&A Tailings and Water Management Total Operating Cost

Details of the Projects capital and operating costs are provided in Section 21.0.

1.11

ECONOMIC ANALYSIS
An economic evaluation of the Project was prepared by Tetra Tech based on a pretax financial model. All currencies in this section are expressed in US dollars. For the 15-year mine life, the following pre-tax financial parameters were calculated using the base case metal prices of $3.00/lb copper and $1,274/oz gold:

26.7% IRR 1.9-year payback on an initial capital cost of $1,520 million $1,332 million NPV using an 8% discount rate.

AQM commissioned Ernst & Young, Per to prepare a tax model for the a post-tax economic evaluation of the Project with the inclusion of applicable taxes and the Peruvian governments mining royalty (Section 22.0). The post-tax financial results are as follow:

17.4% IRR 2.6-year payback on an initial capital cost of $1,520 million $588 million NPV using an 8% discount rate.

Metal revenues projected in the cash flow models were based on the average metal values indicated in Table 1.6.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

1-9

1295840100-REP-R0001-05

Table 1.6

Metal Production from the Project

Description Value 15
1

Mine Life (Years) Material Milled/Leached Total Tonnes to Mill ('000) Average Annual Tonnes to Mill ('000) Total Tonnes to Leaching (000) Average Annual Tonnes to Leaching (000) Average Grade Copper (%) Mill Gold (g/t) Mill Copper (%) Leaching Gold (g/t) Leaching Total Production Copper (000 lb) Mill Gold (000 oz) Mill Copper (000 lb) Leaching Average Annual Production Copper (000 lb) Mill Gold (000 oz) Mill Copper (000 lb) Leaching Note:
1

425,310 28,354 87,256 6,712 0.378 0.071 0.230 0.085 3,105,452 479 265,863 207,030 32 20,451

Leaching is active for 13 years.

1.11.1

S EN S I T I VI T Y A N A L Y SI S
Sensitivity of the Projects pre-tax NPV, IRR to the Project key variables was investigated. Using the base case as a reference, each of the key variables was changed between 30% at 10% intervals while holding the other variables constant. The following key variables were investigated:

copper price gold price capital costs operating costs.

As shown in Figure 1.2, the Project NPV, calculated at an 8% discount, is most sensitive to the copper price and, in decreasing order operating costs, capital costs, and gold price.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

1-10

1295840100-REP-R0001-05

Figure 1.2

Pre-tax NPV Sensitivity Analysis

3,500

NPV@8% Discount Rate (US$M)

3,000 2,500 2,000 1,500 1,000 500 0 -30% -500 -20% -10% 0% 10% 20% 30% Copper price Gold price Capital costs Operating costs

% Change from Base Case

As shown in Figure 1.3, the Project IRR is most sensitive to the copper price followed by the capital costs, operating costs and gold price.
Figure 1.3 Pre-tax IRR Sensitivity Analysis

45%
Internal Rate of Return (%)

40% 35% 30% 25% 20% 15% 10% 5% 0% -30% -20% -10% 0% 10% 20% 30% Copper price Gold price Capital costs Operating costs

% Change from Base Case

As shown in Figure 1.4, the payback period is most sensitive to the copper price and less sensitive to the rest of parameters.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

1-11

1295840100-REP-R0001-05

Figure 1.4

Pre-tax Payback Sensitivity Analysis

6.0
Payback Period (years)

5.0 4.0 3.0 2.0 1.0 0.0 -30% -20% -10% 0% 10% 20% 30% Copper price Gold price Capital costs Operating costs

% Change from Base Case

1.12

PROJECT DEVELOPMENT PLAN

The Project will take approximately three years of construction activities to complete from the time all engineering is completed and permits granted. A high-level project development plan and schedule is provided in Section 24.0.

1.13

OPPORTUNITIES

AND

RECOMMENDATIONS

Based on the work carried out in this PEA and the resultant economic evaluation, this study should be followed by an additional study in order to further assess the economic viability of the Project. Detailed opportunities and recommendations for the Project are provided in Section 26.0.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

1-12

1295840100-REP-R0001-05

2.0

INTRODUCTION
Tetra Tech, in collaboration with NCL and Knight Pisold, prepared this technical report for the Project in general accordance with the guidelines provided in NI 43-101 Standards of Disclosure for Mineral Projects. A summary of QPs responsible for each section of this report is provided in Table 2.1.
Table 2.1 Summary of QPs
Report Section 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0 17.0 18.0 Summary Introduction Reliance on Other Experts Property Description and Location Accessibility, Climate, Local Resources, Infrastructure and Physiography History Geological Setting and Mineralization Deposit Types Exploration Drilling Sample Preparation, Analyses, and Security Data Verification Mineral Processing and Metallurgical Testing Mineral Resource Estimates Mineral Reserve Estimates Mining Methods Recovery Methods Project Infrastructure 18.1 18.2 18.3 18.4 18.5 18.6 18.7 Introduction Process Plant and Ancillary Facilities Warehouse, Maintenance, and Concentrate Operations Facilities Tailings Management Facility Leach Facility Roads Fresh Water Supply and Distribution Company All Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech NCL NCL Tetra Tech Tetra Tech Tetra Tech Tetra Tech Knight Pisold Tetra Tech Tetra Tech Tetra Tech QP Sign off by Section Hassan Ghaffari, P.Eng. Hassan Ghaffari, P.Eng. Gregory Z. Mosher, P.Geo. Gregory Z. Mosher, P.Geo. Gregory Z. Mosher, P.Geo. Gregory Z. Mosher, P.Geo. Gregory Z. Mosher, P.Geo. Gregory Z. Mosher, P.Geo. Gregory Z. Mosher, P.Geo. Gregory Z. Mosher, P.Geo. Gregory Z. Mosher, P.Geo. Marinus Andre De Ruijter, P.Eng. Gregory Z. Mosher, P.Geo. Carlos Guzmn Carlos Guzmn Marinus Andre De Ruijter, P.Eng. Hassan Ghaffari, P.Eng. Hassan Ghaffari, P.Eng. Hassan Ghaffari, P.Eng. Wilson Muir, P.Eng. Hassan Ghaffari, P.Eng. Hassan Ghaffari, P.Eng. Hassan Ghaffari, P.Eng. table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

2-1

1295840100-REP-R0001-05

Report Section 18.8 18.9 19.0 20.0 21.0 Power Supply and Distribution Other Infrastructure

Company Knight Pisold Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech NCL Tetra Tech Knight Pisold Tetra Tech Knight Pisold Tetra Tech Tetra Tech NCL Tetra Tech Knight Pisold Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech Tetra Tech All All All All

QP Wilson Muir, P.Eng. Hassan Ghaffari, P.Eng. Sabry Abdel Hafez, Ph.D., P.Eng. Monica Danon-Schaffer, Ph.D., P.Eng. Hassan Ghaffari, P.Eng. Hassan Ghaffari, P.Eng. Hassan Ghaffari, P.Eng. Hassan Ghaffari, P.Eng. Hassan Ghaffari, P.Eng. Hassan Ghaffari, P.Eng. Hassan Ghaffari, P.Eng. Carlos Guzmn Hassan Ghaffari, P.Eng. Wilson Muir, P.Eng. Hassan Ghaffari, P.Eng. Wilson Muir, P.Eng. Hassan Ghaffari, P.Eng. Marinus Andre De Ruijter, P.Eng. Carlos Guzmn Marinus Andre De Ruijter, P.Eng. Wilson Muir, P.Eng. Marinus Andre De Ruijter, P.Eng. Marinus Andre De Ruijter, P.Eng. Marinus Andre De Ruijter, P.Eng. Sabry Abdel Hafez, Ph.D., P.Eng. Gregory Z. Mosher, P.Geo. Hassan Ghaffari, P.Eng. Sign off by Section Sign off by Section Sign off by Section Sign off by Section

Market Studies and Contracts Environmental Studies, Permitting and Social or Community Impact Capital and Operating Costs 21.1 21.1.1 21.1.2 21.1.3 21.1.4 21.1.5 21.1.6 21.1.7 21.1.8 21.1.9 Capital Cost Estimates Introduction Estimate Base Date and Validity Period Exchange Rate Estimate Approach Cost Basis by Project Owners Costs Sustaining Capital Elements of Costs Mining Capital Cost Estimate Process Plant Capital Cost Estimate

21.1.10 Tailings Management Facility Capital Cost Estimate 21.1.11 Leach Facility 21.1.12 Power Supply 21.1.13 Water Supply 21.2 21.2.1 21.2.2 21.2.3 21.2.4 21.2.5 21.2.6 21.2.7 22.0 23.0 24.0 25.0 26.0 27.0 28.0 Operating Cost Estimates Summary Mining Operating Cost Estimate Process Plant Operating Cost Estimate Tailings Management Facility Operating Cost Estimate General and Administrative Costs Leach Facility Operating Cost Estimate Water Supply Operating Cost Estimate

Economic Analysis Adjacent Properties Other Relevant Data and Information Interpretations and Conclusions Recommendations References Certificates of Qualified Persons

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

2-2

1295840100-REP-R0001-05

3.0

RELIANCE ON OTHER EXPERTS

In preparation of this report, Tetra Tech has relied upon others for information, and disclaims responsibility for information derived from reports pertaining to mineral tenure, property ownership, surface rights, environment, royalties, and social issues. Neither Tetra Tech nor the authors are qualified to provide extensive comment on legal issues, including mineral tenure status associated with the Project, and therefore, ownership information is provided for information purposes only. Tetra Tech has reviewed and analyzed data and reports provided by AQM, together with publicly available information augmented by direct field examination, drawing its own conclusions. Information from third-party sources is quoted or referenced throughout this technical report and is disclosed in Section 27.0. Tetra Tech used (or relied upon) information from these sources under the assumption that the contents are accurate. The QPs who prepared this report relied upon information provided by the following experts who are not QPs for the purposes of this report:

Mr. Alvaro Fernandez-Baca, Consulting Geologist of AQM has been relied on for advice on matters relating to geological exploration, drilling and quality assurance/quality control (QA/QC). Mr. Lorenzo de la Puente, General Manager of AQM Per has been relied on for advice on matters relating to the mineral concessions and ownership of the Project and permitting requirements pertaining to the Project. Mr. Fernando Tori Vargas and Ms. Jessica Espinola, of Ernst & Young, Per in Lima Per, have been relied on for advice on matters relating to taxes in the economic modelling. Mr. Tori Vargas is a Partner in the Tax Services department. Ms. Jessica Espinola is a Senior Tax Manager and conducted the detailed review of the post-tax model. Mr. Carlos Derpsch of Ayrmin Consultorias y Representacions Ltda (Ayrmin) located in Santiago Chile, has been relied on for advice on matters relating to smelting, refining and transportation terms for copper concentrate as well as copper cathode.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

3-1

1295840100-REP-R0001-05

4.0

PROPERTY DESCRIPTION AND LOCATION

The Property is located in southern Per about 150 km by road (90 km straight-line distance) northwest of the city of Arequipa on the border between the District of Huancarqui in the Province of Castilla and the District of Lluta in the Province of Caylloma. The approximate centre of the Property is located at 1602 28 south latitude and 7214 19 west longitude UTM 18S 794000E/8224000N using WGS84 (Figure 4.1). The datum selected for the Project reporting is WGS84 coordinate system using the UTM 18S horizontal projection. Earlier work was performed using the datum of PSAD 56 and where appropriate this work has been re-stated in WGS84. The Property is 33,552.19 ha in area and is comprised of 33 concessions and ten mining claims, the details of which are presented in Table 4.1 and shown in Figure 4.2. Ownership of a concession carries the right to both explore and exploit a property, although additional permits are necessary prior to obtaining the actual right to mine. Concessions are held for as long as annual Mining Good Standing Fees are paid. Failure to pay the annual Mining Good Standing Fees for two consecutive years will result in the mining title being terminated. Table 4.1 shows the next annual Mining Good Standing Fees payment, which is June 30, 2013. By that time, the annual Mining Good Standing Fees will be paid for the 2013 to 2014 tax year to keep the concessions in good standing for the following two years. For the purposes of this report, there are four mineral zones of interest: Zafranal Main, Victoria, Sicera Norte and Sicera Sur. The approximate locations of these zones are also shown on Figure 4.2. In 2009, AQM, through its wholly-owned Peruvian subsidiary Minera AQM Copper Per SAC (AQM Per), acquired from Teck Per the right to earn a 51% interest in the Property. Teck Per retained the right to earn back to a 60% interest in the Property. In the event Teck Per did not elect to exercise the back-in, AQM had the right to increase its interest up to 100%. In 2010, the option agreement was amended whereby AQM Per and Teck Per formed a 50/50 joint venture (JV) to explore and develop the Property. AQM was immediately vested to a 50% interest in the Property and all cash payment obligations held by AQM, and all royalties and back-in rights held by Teck Per were cancelled in exchange for the granting of five million AQM shares to Teck Per and the commitment by AQM to fund $10.7 million in exploration expenditures in addition to the $7.5 million already spent by AQM on the Property. Under the terms of the JV

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

4-1

1295840100-REP-R0001-05

agreement, Teck Per has the right to become project operator when a production decision has been made. In the meantime, AQM is the Project operator. The Property includes the Chicharron option (4,700 ha) that Teck Per purchased from BHBP Minerals but which remains subject to a 1.5% net smelter royalty (NSR) capped at $2.0 million. None of the four mineral zones discussed in this report falls within the Chicharron option area.
Figure 4.1 Property Location

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

4-2

1295840100-REP-R0001-05

Table 4.1

Zafranal Property Mineral Concessions

Next Annual Mining Good Standing Fee Payment

Name Zafranal Concessions AMALIA GUILLERMINA CAMPANERO 1 CAMPANERO 2 CHARO 1 CHICHARRON_11 CHICHARRON_N_5 CHICHARRON_N_6 CHICHARRON_N_7 CHICHARRON_N_8 SICERA 1 SICERA 2 SICERA 3 SICERA 4 ZAFRANAL 1 ZAFRANAL 10 ZAFRANAL 11 ZAFRANAL 12 ZAFRANAL 13 ZAFRANAL 14 ZAFRANAL 15 ZAFRANAL 16 ZAFRANAL 17 ZAFRANAL 18 ZAFRANAL 2 ZAFRANAL 21 ZAFRANAL 3 ZAFRANAL 34 ZAFRANAL 35 ZAFRANAL 36 ZAFRANAL 4 ZAFRANAL 7 ZAFRANAL 8 ZAFRANAL 9 Total Area

Area (ha)

Unique Code

Holder

200.00 1,000.00 400.00 1,000.00 1,000.00 1,000.00 700.00 1,000.00 1,000.00 1,000.00 500.00 900.00 1,000.00 1,000.00 600.00 600.00 1,000.00 1,000.00 1,000.00 500.00 1,000.00 1,000.00 1,000.00 27.20 1,000.00 525.00 1,000.00 700.00 500.00 799.99 1,000.00 500.00 500.00 25,952.20

010172503 010278208 010278108 010554007 010210403 010209003 010209103 010209203 010209303 010248903 010295003 010313703 010330303 010135403 010360803 010360903 010260704 010260804 010260904 010261004 010261104 010261204 010261304 010175103 010261604 010175303 010262904 010263004 010263104 010269403 010313803 010340003 010357503 -

AQM CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ CMZ -

30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

4-3

1295840100-REP-R0001-05

Name Zafranal Mining Claims AQM IV AQP I AQP II AQP III AQP V AQP VII AQP VIII AQP X AQP XI AQP XII Total Area Note:

Area (ha)

Unique Code

Holder

Next Annual Mining Good Standing Fee Payment

500.00 800.00 500.00 900.00 800.00 1,000.00 900.00 500.00 700.00 1,000.00 7,600.00

010033810 010209809 010209909 010210009 010145910 010294310 010479310 010015111 010166411 010166311 -

AQM AQM AQM AQM AQM AQM AQM AQM AQM AQM -

30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 30/06/2013 -

CMZ = Compaia Minera Zafranal S.A.C.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

4-4

1295840100-REP-R0001-05

Figure 4.2

Zafranal Property Mineral Concessions and Mineral Zone Locations

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

4-5

1295840100-REP-R0001-05

The main permits, required to carry out all current and planned exploration work including drilling activities are the EIAsd, the authorization for water use, and the surface access rights to the Property. The EIAsd permit currently in place is valid until August 1, 2013 and allows for drilling up to 226 platforms on the Zafranal Main, Victoria, Sicera Norte and Sicera Sur zones. A modification to the EIAsd permit to allow drilling additional areas on the Property is in progress at the time this report was prepared by Tetra Tech. Surface rights to the Property are held by the Autoridad Autnoma de Majes (Autodema), the agency of the Arequipa Regional Government that manages the Majes Siguas Special Project. AQM acquires the right of access to the Property from Autodema on an annual basis through a renewable contract which was recently renewed and became effective on April 1, 2012. A fee equivalent to $30.00/ha is payable on an annual basis to maintain access rights to the Property. In April 2012, AQM paid Autodema $167,000 for the right of access to 5,531 ha of mining concessions currently being explored on the Property. A Mining Good Standing Fee equivalent to $3.00/ha is also payable on an annual basis to maintain the concessions in good standing. In addition, a penalty of $6.00/ha is charged for those concessions older than seven years that have not recorded a minimum investment by AQM. In June 2012, AQM paid a total of $199,000 in concession fees. To record an investment, AQM is required to file an annual information form detailing the investments in mining activities in the Property and the amount of money spent on sustainability development programs, including community relations and environmental management programs. In compliance with the recently approved regulation to formalize artisanal and small mining activity, AQM is engaged in a process to sign an exploitation agreement with the company formed by approximately 200 artisanal miners who are operating within the Property (in areas of no interest to the Project). Additionally, a closure plan is required to be submitted to the authority for the reclamation of the works areas disturbed by the artisanal miners. The informal miners have up to two years to comply with all the requirements established by the current legislation to be formalized as artisanal or small miners.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

4-6

1295840100-REP-R0001-05

5.0

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The Property is located in the Cordillera Occidental about 90 km (150 km by road) northwest of Arequipa. The Property area is characterized by steep, dissected topography with elevations between about 1,000 and 3,300 masl. The four mineral zones of interest to this report are located between elevations of 2,000 and 2,850 masl. The Property is well-removed from agricultural areas and does not contain any communities or settled areas. The climate in this part of Per is dry, with temperatures ranging between about 12C in winter and 28C in summer. The climate is such that exploration and mining can readily be carried out on a year-round basis. Rain is scarce and agriculture is possible only in river valleys where irrigation is available. However, occasionally the area is subject to heavy downpours and flash flooding in the river valleys. Characteristic vegetation on the Property is comprised primarily of grasses, cacti and shrubs. Valley bottoms within the Property are typically filled with active alluvium and are bare of vegetation. The nearest major centre is the city of Arequipa which is serviced by scheduled flights and is the major supply center for mining activity in this part of Per. About 85 km of the 150 km of roadway from Arequipa and the Property is paved, including the Pan-American Highway. The last 65 km is by gravel road of which 15 km are via a private access road originally constructed by Teck Resources. Within the Property, AQM has constructed and maintains a network of access and exploration roads. Through an agreement with Autodema, AQM has rights to explore and exploit the Property subject to securing the necessary environmental and sectorial permits. As the Property and surrounding area is virtually uninhabited and the land used for no other purpose, it is improbable that any difficulty would be encountered in obtaining the necessary surface rights for any contemplated mining activity. There are sufficient areas within the Property for processing plants as well as storage of mining waste and tailings disposal as well as leach pads for material determined to be viable for this means of metal extraction. Water does not appear readily available within the Property. For the purposes of this report, it was assumed that the water for the Project will be supplied from a saltwater desalination plant on the shores of the Pacific Ocean, approximately 115 km to the southwest of the proposed plant site.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

5-1

1295840100-REP-R0001-05

Electricity would be obtained from a national grid substation which is accessible within 115 km of the location currently considered most suitable for a processing plant. Whether sufficient excess electricity would be available for a new mining operation is not known as a power deficit is forecast for the area; however, additional power lines and upgrades of existing lines are under construction and several hydroelectric projects and gas fired power stations are also planned which would mitigate these forecasted shortfalls in power supply. Skilled mining personnel are currently available in the general area. Arequipa is a mining district with a number of large operating mines, however a deficit of trades people is forecasted as the mining industry grows within the region. Expected shortages of skilled labour in the future will need to be mitigated by extensive training and recruiting programs.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

5-2

1295840100-REP-R0001-05

6.0

HISTORY
Artisanal miners actively mine for gold in the auriferous quartz veins on the periphery of the Zafranal porphyry systems. It is not known when the artisanal miners began working in this area but they were well aware of surface exposures of copper mineralization in what is now the Zafranal Main Zone. In 2003, these miners brought this mineralization to the attention of Teck geologists who were conducting regional exploration for porphyry deposits. The Zafranal Main Zone was immediately staked by Teck. With the exception of gold production by artisanal miners, there has been no commercial production from the Property.

6.1

ZAFRANAL MAIN ZONE

Teck explored the Zafranal Main Zone during the period 2003 through 2005, starting with surface rock sampling that confirmed the extensive presence of porphyry-style geology and alteration and copper and gold mineralization. In 2004 Teck drilled 22 reverse circulation (RC) holes (7,000 aggregate metres) and four core holes (1,556 aggregate metres). The RC drilling outlined a 1 km- long enriched copper blanket in porphyritic dioritic intrusive rocks. Mineralized intercepts ranged from a minimum thickness of 4 m with an average grade of 0.62% copper (ZFRC04-016) to a maximum intercept of 110 m with an average grade of 1.02% copper (ZFRC04-008). The core holes were drilled to confirm the RC drill results. Diamond drillhole (DDH) DDH04-001 which was a twin of ZFRC04-008 intersected 166 m with an average grade of 1% copper. Two other holes intersected significant intervals of copper mineralization (ZFDDH04-002 intersected 92 m with an average grade of 0.94% copper and ZFDDH04-004 intersected 77 m with an average grade of 1.80% copper). A further 10 RC holes were drilled in 2005 to test for possible eastern, northern and western extensions of mineralization intersected by previous drill campaigns. Extensions to the then-known limits of mineralization were found in all three directions. In 2004, following the first phase of drilling, orientation-scale time-domain electromagnetic (TEM) and audio-frequency magneto-telluric (ATM) surveys were carried out. The ATM survey was successful in differentiating between altered and unaltered and mineralized and unmineralized rocks.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

6-1

1295840100-REP-R0001-05

Between 2006 and 2007, Teck conducted scout drilling in peripheral areas of the Property, looking for possible porphyry targets concealed beneath the Tertiary cover. No further work was done on the Zafranal Main Zone between 2005 and May 2009 when AQM acquired an option on the Property.

6.2

VICTORIA ZONE
The Victoria Zone is contiguous with the eastern end of the Zafranal Main Zone but was not discovered until 2011 as AQM extended their drill coverage of the Zafranal Main Zone in that direction.

6.3

SICERA NORTE ZONE

The Sicera Norte Zone is located about 10 km northwest of the Zafranal Main Zone and was identified and explored by Teck in 2004 when they carried out surface sampling and geological mapping. This work identified the geological setting as being similar to other porphyry occurrences in the area and established the general distribution of surface copper and gold mineralization. No further exploration took place here until AQM began their current exploration program in 2010. Teck did not own the concession hosting Sicera Norte, as it was held by an individual until purchased by AQM in 2010.

6.4

SICERA SUR ZONE

Sicera Sur is located about 5 km south of Sicera Norte and in the 1990s was owned by Compaia Minera Milpo S.A.A. who carried out surface sampling. During the mid1990s, Phelps Dodge optioned the Property, carried out additional surface sampling and drilled two core holes, the results of which did not encourage them to continue exploring the prospect. Teck optioned the Property from Phelps Dodge in 2004, confirmed the surface sampling results obtained by Phelps Dodge, and drilled four RC holes to test for the possible presence of mineralization beneath gravels that border the area of exposed mineralization. Three of these holes were drilled in an area where faulting has placed bedrock over recent gravels and so were unsuccessful in testing for the presence of mineralization beneath the gravel cover. The fourth hole (CH07RC-011) was drilled within 120 m of outcropping mineralization and intersected 120 m of copper mineralization with an average grade of 0.23% copper.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

6-2

1295840100-REP-R0001-05

7.0

GEOLOGICAL SETTING AND MINERALIZATION

REGIONAL GEOLOGY
Southern Per is divisible into three major, northwest-trending tectonic belts, from east to west, the Sierra Oriental, Altiplano and Sierra Occidental. All three developed as a result of the subduction of the Nazca oceanic plate beneath the continental South American Plate. Subduction is estimated to have begun during the Late Triassic, about 200 Ma and the ongoing process is termed the Andean Orogeny (Figure 7.1).
Figure 7.1 Tectonic Belts of Southeastern Per

7.1

Source: Rivera et al 2010.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

7-1

1295840100-REP-R0001-05

The Property is located within the Sierra Occidental and is underlain by thin Paleozoic-age sedimentary strata and by Mesozoic-age intrusive rocks. Subduction-related igneous intrusive and related volcanic rocks were emplaced into the Sierra Occidental throughout Mesozoic and Cenozoic time. The Coastal Batholith, of high-potassium granitoid composition and of Lower Jurassic to Upper Eocene age and comprised of multiple intrusions, is the dominant feature of the Cordillera Occide. Major intrusive periods have been dated to around 100, 80, and 75 to 60 Ma before present day. Cenozoic-age volcanic and volcaniclastic rocks cap the Cordillera Oriental. The distribution of mineralization within the Property is controlled by the IquipiClavelinas Fault System, an east-to-northwest-trending regional-scale system of transcurrent faults that are related to displacements caused by subduction. These faults are deep-seated and movement on them within the Property area appears to have developed a dilational shear system that focused the emplacement of both the host diorites as well as the porphyry-style copper mineralization that is contained within them.

7.2

PROPERTY GEOLOGY
Bedrock within the Property area includes deformed and metamorphosed intrusive and mafic volcanic rocks of undetermined age, Jurassic volcaniclastic and sedimentary rocks, Cretaceous granodiorite and Paleocene to late Cenozoic diorite intrusives and dikes. Most of these units have been deformed by regional-scale and local shear zones, often resulting in schistose and gneissose textures. The four mineral zones of interest, Zafranal Main, Victoria, Sicera Norte and Sicera Sur, have similar bedrock geology but differ sufficiently to warrant the separate descriptions that follow.

7.2.1

Z AF R AN AL M AI N Z ON E
The Zafranal Main Zone is located within an east-trending block that is bounded by faults that belong to the Iquipi-Clavelinas Fault System. This block is bounded to the north by gneissose rocks with local mylonitic bands that formed as a result of at least two phases of deformation, including movement on the Iquipi-Clavelinas Fault, and to the south by sedimentary rocks, primarily quartzite, siltstone and wacke, tentatively assigned to the Upper Jurassic to Lower Cretaceous-age Yura Group that are also tectonically deformed (Figure 7.2).

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

7-2

1295840100-REP-R0001-05

Figure 7.2

Zafranal and Victoria Geology

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

7-3

1295840100-REP-R0001-05

The fault block contains volcano-sedimentary rocks of the Lower Jurassic-age Guaneros Formation that have been intruded by several phases of diorite to QuartzDiorite plugs and dikes of Upper Cretaceous age. The Guaneros Formation is comprised of siltstone, sandstone, debris flows, tuff, volcanic breccia and andesitic flows together with sub-volcanic units of andesitic composition. Four phases of dioritic intrusive rocks have been identified: Zafranal Diorite, Microdiorite, Quartz-diorite and Post-mineral Diorites. The Zafranal Diorite is the oldest and most abundant of the intrusive rocks, is greenish-grey and porphyritic, and occurs as stocks and dykes. The emplacement of the Zafranal Diorite is interpreted to have been accompanied by an early hypogene copper-mineralizing phase of mineralization. The Microdiorite is fine-crystalline and greenish and occurs at the eastern and western ends of the Zafranal Main Zone. The Microdiorite cuts the Zafranal Diorite and its emplacement appears to coincide with the main copper-mineralizing event. The Quartz-diorite is dark grey, commonly contains disseminated pyrite and magnetite, and cuts both the Zafranal Diorite and Microdiorite. The Quartz-diorite characteristically contains low-grade hypogene mineralization. Post-mineral dikes and minor apophyses are the last-documented intrusive event on the Property. This phase cuts the preceding three intrusive phases and is unmineralized although in some areas it is propylitically altered.

7.2.2

VICTORIA ZONE
Mineralization within the Victoria Zone (Figure 7.2) is hosted by a variety of stronglydeformed and locally metamorphosed extrusive and intrusive rocks of undetermined age, principally hornblende diorite which appears to have been intruded by mafic to ultramafic andesitic dykes and later porphyritic diorite bodies similar in texture to the Zafranal diorite in the Zafranal Main Zone. Primary volcanic textures in mafic units suggest that the intrusive rocks were emplaced into a sequence of basaltic andesite volcanic tuffs and/or flows. All of these rock units have been strongly deformed by a regional, dextral shear zone marking the contact with the Coastal Batholith. The strong deformation obscures cross-cutting relationships and primary textures and locally the deformation is so intense that the rocks are mylonitized.

7.2.3

S I C ER A N OR T E Z O N E
Sicera Norte is underlain by highly-deformed diorite and quartz-feldspar porphyritic rocks. These intrusive rocks have been thrust over unaltered and unmineralized andesitic volcanic and volcaniclastic rocks along a north-west trending, low-angle reverse fault which marks the southwestern limit of the hydrothermal system (Figure 7.3).

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

7-4

1295840100-REP-R0001-05

Figure 7.3

Sicera Norte Zone Geology

7.2.4

S I C ER A S U R Z ON E
Sicera Sur is underlain by a sequence of limestone beds and calcareous sedimentary units belonging to the Upper Jurassic/Lower Cretaceous-age Yura Group. An east-verging reverse thrust has placed older, unmineralized and unaltered, Jurassic Guaneros Formation andesite flows over the Yura Group. This sequence is intruded by at least three generations of dioritic intrusive stocks, plugs and dykes, all with very similar compositions but slightly different textures. The emplacement of these bodies appears to have been controlled by three sets of faults: an older, high-angle northwest-trending system, a later north-trending reverse system and a late, low-angle northwest-trending set of reverse faults. Most of these faults have been reactivated as normal faults (Figure 7.4).

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

7-5

1295840100-REP-R0001-05

Figure 7.4

Sicera Sur Zone Geology

Alteration is widespread within all four mineral zones and was used as a primary exploration tool during the initial stage of exploration of the Property. Propylitic (quartz, chlorite, epidote, and calcite) alteration is the most extensive type and phyllic (quartz, sericite, and pyrite) is most-closely associated with mineralization. Potassic alteration is also present in inner portions of alteration zones and is commonly replaced by retrograde phyllic alteration, as evidenced by relict, secondary biotite.

7.3

MINERALIZATION
Copper is present in all four zones in quantities of potential economic significance and occur within veins and stockworks and as disseminations. Primary (hypogene) mineralization, is nearly everywhere overlain by zones of secondary enrichment mineralization that have been categorized on the basis of copper solubility into leached, mixed, oxide, supergene and transitional.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

7-6

1295840100-REP-R0001-05

The emplacement of copper and gold are interpreted by AQM geologists as belonging to separate events; there appears to have been more than one coppermineralizing event but gold appears to have arrived in a late event that was copperpoor and is associated with quartz veins.

7.3.1

Z AF R AN AL M AI N Z ON E
The Zafranal Main Zone contains a leach cap as well as oxide and supergene zones that overlie an extensive hypogene zone. The Victoria Zone, which is contiguous with the eastern end of the Zafranal Main Zone, contains mixed, leach, supergene and transitional zones. The Sicera Norte Zone contains minor mixed, supergene and transitional zones above a wedge-shape, steeply-dipping hypogene zone. The Sicera Sur Zone contains the complete set of hypogene, mixed, leach, oxide, supergene and transition zones although, with the exception of the leach zone, all are irregular and discontinuous. Hypogene mineralization is most commonly associated with potassic alteration (quartz, biotite, chlorite and potassium feldspar) and Microdiorite is the most common host. Oxide mineralization is associated with intense phylitic (sericite, quartz, clay) alteration and characteristically is located immediately beneath the zone of leaching. Copper oxide minerals include brochantite, chrysocolla, chalcocite and tenorite as well as psilomelane. In the Zafranal Main Zone, copper oxide mineralization commonly contains remnants of secondary copper sulphides. Supergene mineralization is represented by chalcocite replacing chalcopyrite and as overgrowths on pyrite. Supergene mineralization is best developed in volcanic strata and particularly in the Zafranal Diorite in association with phylitic alteration (sericite, quartz, chlorite/biotite, clay minerals and pyrite) and is interpreted to have formed during Upper Eocene to Lower Miocene time, as evidenced by the lack of structural deformation except that caused by the youngest normal faults. Continuity of mineralization within the Zafranal Main Zone has been demonstrated by drilling to extend for about 2,500 m along strike with a width between 500 to 800 m, and has been traced over a vertical range of nearly 1,000 m.

7.3.2

VICTORIA ZONE
Mineralization occurs as a tabular body parallel to the main foliation, suggesting that it predates or is contemporaneous with the principal deformation event. Chalcopyrite occurs both as fine-grained disseminations and as patches associated with veins and stockworks. Mineralization within the Victoria Zone has dimensions of about 900 m along strike by up to 500 m width by about 400 m vertical.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

7-7

1295840100-REP-R0001-05

7.3.3

S I C ER A N OR T E Z O N E
Mineralization occurs as fine-grained disseminated chalcopyrite that is mainly hosted by phyllically-altered diorite rocks and its distribution appears to be controlled by transverse, east-northeast trending structures that crosscut the main northwesttrending foliation. Mineralization is cut by late, unmineralized diorite dikes. The Sicera Norte Zone has a strike length of about 400 m, width of about 300 m and a vertical extent of about 300 m.

7.3.4

S I C ER A S U R Z ON E
Mineralization is principally hosted by two of the three main diorite intrusive units. Two areas with strong phyllic alteration and hypogene chalcopyrite mineralization have been found, one on the northern and one on the far southern side of Sicera Sur suggesting two distinct foci for the emplacement of the mineralized porphyry bodies. Both mineralized zones remain open. Mineralization at the Sicera Sur Zone has been found over a strike length of about 800 m and both a width and vertical extent of up to 400 m.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

7-8

1295840100-REP-R0001-05

8.0

DEPOSIT TYPES
Mineralization within the Property belongs to the calc-alkalic porphyry copper deposit model. Salient characteristics of this type of mineral deposit are presented below. This description is excerpted from Panteleyev et al. 1995. DESCRIPTION This generalized model includes various subtypes all of which contain chalcopyrite in stockwork veinlets in hydrothermally altered porphry and adjacent country rock. GEOLOGICAL ENVIRONMENT Rock Types: Tonalite to monzogranite or syenitic porphyry intruding granitic, volcanic, calcareous sedimentary, and other rocks. Textures: Porphyry has closely spaced phenocrysts and microaplitic quartzfeldspar groundmass. Age Range: Mainly Mesozoic and Cenozoic, but may be any age. Depositional Environment: High-level intrusive rocks contemporaneous with abundant dikes, breccia pipes, faults as well as cupolas of batholiths. Tectonic Setting(s): Rift zones contemporaneous with Andean or island-arc volcanism along convergent plate boundaries. Uplift and erosion to expose subvolcanic rocks. Associated Deposit Types: Base-metal skarn, epithermal veins, polymetallic replacement, volcanic hosted massive replacement. DEPOSIT DESCRIPTION Mineralogy: Chalcopyrite + pyrite molybdenite; chalcopyrite + magnetite bornite Au; assemblages may be superposed. Quartz + K-feldspar + biotite anhydrite; quartz + sericite + clay minerals. Late veins of enargite, tetrahedrite, galena, sphalerite and barite in some deposits. Texture/Structure: Stockwork veinlets and disseminated sulfide grains. Alteration: From bottom, innermost zones outward: sodic-calcic, potassic, phyllic, and argillic to propylitic. High-alumina alteration in upper part of some

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

8-1

1295840100-REP-R0001-05

deposits. Propylitic or phyllic alteration may overprint early potassic assemblage. Ore Controls: Stockwork veins in porphyry, along porphyry contact, and in favorable country rocks such as carbonate rocks, mafic igneous rocks, and older granitic plutons. Weathering: Green and blue Cu carbonates and silicates in weathered outcrops, or where leaching is intense, barren outcrops remain after Cu is leached, transported downward, and deposited as secondary sulfides at water table or paleowater table. Fractures in leached outcrops are coated with hematitic limonite having bright red streak. Deposits of secondary sulfides contain chalcocite and other CU2S minerals replacing pyrite and chalcopyrite. Residual soils overlying deposits may contain anomalous amounts of rutile. Geochemical Signature: Cu + Mo Au + Ag + W + B + Sr center, Pb, Zn, Au, As, Sb, Se, Te, Mn, Co, Ba, and Rb outer. Locally Hi and Sn form most distal anomalies. High S in all zones. Some deposits have weak U anomalies.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

8-2

1295840100-REP-R0001-05

9.0
9.1

EXPLORATION
ZAFRANAL MAIN ZONE
AQM began fieldwork on the Property in June 2009 with a program of rock sampling and geological re-mapping of the Zafranal Main Zone. This work confirmed the earlier Teck Cominco results with respect to the extent of copper-gold mineralization, bedrock geology and alteration. A magneto-telluric survey (5.7 line-kilometres) was run over the Zafranal Main Zone in November 2009 and the results were combined with those from a similar survey of 5 line-kilometres carried out by Teck Cominco in 2004. The combined surveys defined a zone of low resistivity measuring about 1,000 m by 500 m that is coincident with the known surface indications of porphyry-style alteration and mineralization.

9.2

VICTORIA ZONE
No work other than drilling was done specifically within the Victoria Zone as it is immediately on strike with the Zafranal Main Zone and was covered by surface sampling and geophysical programs as part of the assessment of that zone.

9.3

SICERA NORTE ZONE

Surface rock geochemical sampling was carried out prior to the 2010 drill program described in the following section, and geophysical surveys (19.7 km of induced polarization (IP) and 36.4 km of magnetics) were carried out in 2011. These surveys identified structural domains and areas in which sulphides are present and therefore were useful in designing the subsequent drill program.

9.4

SICERA SUR ZONE

A surface rock-geochemical sampling program was completed at Sicera Sur in late 2009 and indicated the presence of a zone of surface copper enrichment: of the 223 samples that were collected, primarily along existing exploration access roads, 50% contained more than 300 ppm copper and 14% more than 0.1% copper. These results, together with surface indications of a phyllic alteration zone measuring 3 km by 1.8 km as well as a leached cap, suggested the potential for the presence of significant mineralization at depth.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

9-1

1295840100-REP-R0001-05

The survey work carried out on all four zones was conventional in nature and is not considered by Tetra Tech to have introduced any biases into the results obtained.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

9-2

1295840100-REP-R0001-05

10.0 DRILLING
10.1 ZAFRANAL MAIN ZONE
As of November 2011, AQM had tested the Zafranal Main Zone with 188 core holes with an aggregate length of 66,126 m and 41 RC holes with an aggregate length of 13,328 m. Of these, 10 core holes and 10 RC holes are located outside the volume for which the following resource estimate was made. AQM incorporated into their database results from four core holes (1,556 aggregate metres) and 32 RC holes (9,625 aggregate metres) that had been drilled by Teck in 2004 and 2005. Descriptive statistics for assays from both core and RC holes are presented in Table 10.1.
Table 10.1 Zafranal Main Zone Assay Descriptive Statistics
Length (m) DDH Statistics Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count RC Statistics Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis 1.46 0.00 1.00 1.00 0.50 0.25 -1.97 0.02 0.00 0.02 0.00 0.60 0.36 217.09 0.19 0.00 0.08 0.00 0.31 0.10 39.81 2.00 0.00 2.00 2.00 0.22 0.05 96.71 2.07 10.80 0.20 11.00 67,677.70 33,860.00 0.06 0.00 0.04 0.00 0.12 0.01 1,052.75 23.21 8.34 0.00 8.34 2,120.68 33,860.00 0.24 0.00 0.14 0.11 0.38 0.14 1,719.98 23.39 32.80 0.00 32.80 8,007.36 33,860.00 Cu (%) Au (g/t)

table continues
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 10-1 1295840100-REP-R0001-05

Length (m) Skewness Range Minimum Maximum Sum Count 0.18 1.00 1.00 2.00 22,760.00 15,636.00

Cu (%) -14.05 17.59 -9.00 8.59 267.50 15,636.00

Au (g/t) 4.28 7.85 0.00 7.85 3008.69 15,636.00

10.2

VICTORIA ZONE
During 2011, AQM drilled 31 core holes (10,765 aggregate metres) and seven RC holes (2,103 aggregate metres) to test the Victoria Zone. The assay dataset used for the Victoria resource estimate includes two holes that were drilled by Teck but excludes four holes (three RC and one DDH) that fall outside the geological model of the zone. Descriptive statistics of the assay dataset are presented in Table 10.2.
Table 10.2 Victoria Zone Assay Descriptive Statistics
Length (m) DDH Statistics Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count RC Statistics Mean Standard Error Median Mode Standard Deviation Sample Variance 1.64 0.01 2.00 2.00 0.48 0.23 0.06 0.00 0.03 0.00 0.10 0.01 0.02 0.00 0.01 0.00 0.10 0.01 2.00 0.00 2.00 2.00 0.24 0.06 10.45 0.56 3.55 0.45 4.00 10,765.40 5,379.00 0.16 0.00 0.11 0.12 0.19 0.03 27.68 3.69 2.91 0.00 2.91 861.40 5,379.00 0.03 0.00 0.02 0.00 0.07 0.01 2,551.34 43.50 4.37 0.00 4.37 141.35 5,379.00 Cu (%) Au (g/t)

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

10-2

1295840100-REP-R0001-05

Length (m) Kurtosis Skewness Range Minimum Maximum Sum Count -1.66 -0.59 1.00 1.00 2.00 2,727.00 1,662.00

Cu (%) 68.25 6.71 1.68 0.00 1.68 99.21 1,662.00

Au (g/t) 1,490.04 37.66 3.98 0.00 3.98 27.65 1,662.00

10.3

SICERA NORTE ZONE

During 2010 and 2011, AQM drilled 47 core holes (14,503 aggregate metres) and 11 RC holes (3,232 aggregate metres) to assess the Sicera Norte Zone. Descriptive statistics of the assay dataset are presented in Table 10.3.
Table 10.3 Sicera Norte Zone Assay Descriptive Statistics
Length (m) DDH Assays Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count RC Assays Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis 1.13 0.01 1.00 1.00 0.35 0.12 29.79 0.08 0.00 0.04 0.01 0.12 0.01 19.97 0.03 0.00 0.01 0.01 0.07 0.01 483.51 2.02 0.00 2.00 2.00 0.26 0.07 8.08 0.92 3.60 0.40 4.00 14,917.10 7,381.00 0.10 0.00 0.06 0.01 0.12 0.01 12.70 2.54 1.62 0.00 1.62 742.19 7,381.00 0.01 0.00 0.01 0.00 0.03 0.00 2,503.66 44.05 1.83 0.00 1.83 81.64 7,381.00 Cu (%) Au (g/t)

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

10-3

1295840100-REP-R0001-05

Length (m) Skewness Range Minimum Maximum Sum Count 3.59 6.00 1.00 7.00 3,219.00 2,861.00

Cu (%) 3.33 1.62 0.00 1.62 237.92 2,861.00

Au (g/t) 17.73 2.51 0.00 2.51 74.05 2,861.00

10.4

SICERA SUR ZONE

In 2011, AQM tested the Sicera Sur Zone with three core holes (1,018 aggregate metres) and 34 RC holes (11,456 aggregate metres). Descriptive statistics of the assay dataset are presented in Table 10.4.
Table 10.4 Sicera Sur Zone Assay Descriptive Statistics
Length (m) DDH Assays Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count RC Assays Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness 1.08 0.00 1.00 1.00 0.28 0.08 7.11 3.02 0.11 0.00 0.07 0.02 0.16 0.03 83.84 6.64 0.01 0.00 0.01 0.00 0.04 0.00 3,718.09 50.00 2.01 0.26 2.00 2.00 5.50 30.28 447.27 21.13 117.50 1.00 3.50 899.30 448.00 0.15 0.01 0.07 0.07 0.16 0.02 0.76 1.22 0.70 0.00 0.70 67.03 448.00 0.01 0.00 0.01 0.00 0.02 0.00 20.79 3.61 0.17 0.00 0.17 5.81 448.00 Cu (%) Au (g/t)

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

10-4

1295840100-REP-R0001-05

Length (m) Range Minimum Maximum Sum Count 1.00 1.00 2.00 11,456.00 10,575.00

Cu (%) 3.38 0.00 3.38 1,194.44 10,575.00

Au (g/t) 2.86 0.00 2.86 124.20 10,575.00

The drillholes intersected mineralization at a range of angles relative to true thickness; therefore it is not possible to generalize with respect to the relationship between true and intersected thickness. Drill plans and representative sections through the four mineral zones of interest are presented in Section 14.0. The collar location and elevation of all drillholes were surveyed by professional surveyors and locations are referenced to the PSAD56 datum and later converted to WGS84 datum. Downhole surveys were run with a variety of instruments, both optical and gyroscopic. Deviflex and Gyroscope tools are non-magnetic and collected readings from the bottom of the drill hole to surface at two-second intervals. The FlexIT instrument is magnetic and was used to take readings at 50 m intervals down the hole. Core was transported by AQM personnel from the drill site to camp several times each day. Core was photographed then logged for recovery and rock quality designation (RQD) prior to being logged for lithology, alteration, mineralization and structure. The core was then marked for sampling. Tetra Tech does not believe that there are any drilling, sampling or recovery factors that could materially affect the accuracy and reliability of the results. Because both core and RC drilling were used, the possibility exists that the drilling methodologies resulted in real differences between the assays for the two populations, particularly as the average gold and copper grades of the RC sample population are, in all four zones, lower than those of the drill core samples. The existence of meaningful differences between the two datasets was assessed using a T-test and the assumption that the variances of the populations were the same. In all four cases the differences between means were indicated to be not significant. On the basis of this result, the RC and drill core sample populations were aggregated.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

10-5

1295840100-REP-R0001-05

11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY

11.1 REVERSE CIRCULATION SAMPLING
RC chips were collected during drilling in 1 m intervals. Samples were weighed then put though a sample splitter and a one-third split (approximately 7 kg on average) was placed into a laboratory mesh sack and the remainder of the sample was placed into a rice bag. Samples were then transported to camp where blanks of granodiorite (five per 100 samples), duplicates (five per 100 samples) and six standards per 100 samples (two each of three different standards), were added to the sample stream at random intervals. Samples were shipped to the ALS Chemex laboratory in Arequipa for crushing and splitting. Shipping took place in entire-hole lots that were transported from the Property to Arequipa by an AQM representative. Following preparation in Arequipa, pulps were sent to the ALS Chemex laboratory in Lima for analyses.

11.2

DRILL CORE SAMPLING

Core samples were transported to the camp where, as detailed in the previous section, blanks, duplicates and standards were added to the sample stream at random intervals. Drill core was then sampled at the core processing facility located in the camp. Core was sawn in half and one half was placed in a numbered plastic sample bag and the other half was returned to the core box for archival purposes. Most samples were collected in two-metre lengths. Individual sample bags were collected into rice bags that were then sealed with numbered zap straps. Samples were transported to the ALS Chemex laboratory in Arequipa for processing and subsequently to Lima for analysis. The ALS Chemex laboratory in Lima is International Organization for Standardization (ISO) 17025 certified. All samples were analyzed for 32 elements by inductively coupled plasma (ICP) (MEICP41). Gold was analyzed by atomic absorption (AA) (AA23) using a 30 g sample.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

11-1

1295840100-REP-R0001-05

Samples with ICP copper assays greater than 0.2% were subjected to a series of analyses to establish sequential solubility. The values obtained from these analyses were used to model the mineral zones that form the basis of the following resource estimate. Total copper content was determined by aqua regia digestion followed by an atomic absorption spectrophotometer (AAS) (AA46 for mineralized material-grade copper between 0.01% and 40% copper). Samples were then dissolved by weak sulphuric acid (AA06) to establish the proportion of total copper belonging to the secondary oxide phase. Sulphuric acid digestion was followed by cyanide digestion (AA16s) to determine the remaining portion of the total copper belonging to other secondary phases. The cyanide digestion was followed by hydrochloric and nitric acid digestion (AA62S) to determine the residual copper content which is equated to primary or hypogene mineralization. The rationale for the assignment of copper to various secondary mineral zones is explained in Section 14.0.

11.3

QUALITY ASSURANCE/QUALITY CONTROL PROCEDURES

AQM employed standards, blanks and duplicate samples in their quality assurance/ quality control (QA/QC) program. Table 11.1 enumerates the number of control samples used for each zone and the percentage of the sample population represented by each type of control sample. The responses obtained from the control program are discussed below.
Table 11.1 Zafranal Property Control Samples
Standards (%) 8.53 6.23 6.82 4.71 7.31 Blanks (%) 7.89 5.37 5.79 4.04 6.58 Duplicates (%) 7.85 5.38 5.74 4.15 6.57 Total (%) 24.28 16.99 18.36 12.89 20.46

Zone Zafranal Main Victoria Sicera Norte Sicera Sur Total/Average

Samples 33,860 7,041 10,242 11,023 62,166

Standards 2,889 439 699 519 4,546

Blanks 2,673 378 593 445 4,089

Duplicates 2,658 379 588 457 4,082

11.4

STANDARDS
AQM had standards prepared by SGS in Lima from coarse drill core sample rejects. The samples were prepared in a conventional manner and were subjected to independent round-robin analyses, the results of which were used to determine the expected mean and standard deviation of each standard. Table 11.2 is a list of the standards used to date, mean, plus/minus two standard deviation limits as well as the number of each that have been used.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

11-2

1295840100-REP-R0001-05

Table 11.2

Zafranal Property Standards

No. Used 251 45 291 48 279 44 345 344 308 707 45 622 41 540 35 211 204 186 4,546

Standard 101 111 201 222 301 333 444 555 666 700 777 800 888 900 999 1000 2000 3000

Mean 1.047 1.500 0.620 2.260 0.306 6.870 1.290 0.639 0.313 0.347 0.344 0.666 0.742 1.166 1.550 0.257 0.529 0.865

X-2SD 0.983 1.390 0.589 2.140 0.287 6.710 1.210 0.586 0.291 0.366 0.294 0.678 0.672 1.189 1.350 0.235 0.494 0.821

X+2SD 1.111 1.610 0.650 2.380 0.324 7.030 1.370 0.692 0.335 0.328 0.394 0.655 0.812 1.143 1.750 0.279 0.565 0.907 Total

Analyses of standards were reviewed to determine the number that exceeded the expected mean plus/minus two standard deviations. Those that exceeded those limits are listed in Table 11.3. It is probable that some of these outliers are due to the errors in documentation of standards at the time they were entered into the sample stream i.e. they were assigned the wrong standard identification. Also, the high failure rate of Standard 333 (6 out of 44 samples) suggests the possibility that the standard is inhomogeneous. However, it is notable that 29 of the 43 analyses that exceeded the two standard deviation limits occur as pairs or higher multiples from the same analytical batch. This may indicate that the fault lies with the analytical procedure. AQM did not request that any of the samples be re-analyzed so that it is not possible to determine the cause.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

11-3

1295840100-REP-R0001-05

Table 11.3
Batch No. AR10025706 AR10033503 AR10034751 AR10035337 AR10035337 AR10040822 AR10040822 AR10073212 AR10073213 AR10086588 AR10086588 AR10110580 AR10110580 AR10110580 AR10125538 AR10127969 AR10133802 AR10142905 AR10142905 AR10147935 AR11096696 AR11096697 AR11107062 AR11107062

Zafranal Property Over-Limit Standards

Standard 101 333 333 333 333 333 333 555 555 666 555 666 555 555 900 900 900 900 900 900 900 900 900 900 Location Victoria Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Sicera Norte Sicera Norte Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Sicera Norte Zafranal Sicera Norte Sicera Norte Hole ID ZFRC10-058 ZFDDH10-025 ZFDDH10-034 ZFDDH10-027 ZFDDH10-027 ZFRC10-066 ZFRC10-066 SNRC10-003 SNRC10-004 ZFDDH10-077 ZFDDH10-077 ZFDDH10-097 ZFDDH10-097 ZFDDH10-097 ZFDDH10-102 ZFDDH10-114 ZFDDH10-122 ZFDDH10-125 ZFDDH10-125 ZFDDH10-136 SNDDH11-025 ZFDDH11-157 SNDDH11-029 SNDDH11-029 Sample 162434 158159 165478 166614 166752 170250 170314 203175 203435 176418 176433 185883 185965 187023 182407 187980 190239 192568 192810 205803 216303 218294 221694 221734 Cu (%) 0.319 7.240 7.210 7.430 7.350 7.200 7.220 0.101 0.024 0.624 0.312 1.510 1.500 0.753 1.120 1.215 1.120 1.075 1.000 1.120 1.115 1.120 1.115 1.115 Standard Mean 1.047 6.870 6.870 6.870 6.870 6.870 6.870 0.639 0.639 0.313 0.639 0.313 0.639 0.639 1.166 1.166 1.166 1.166 1.166 1.166 1.166 1.166 1.166 1.166 Two Standard Deviations 0.128 0.320 0.320 0.320 0.320 0.320 0.320 0.106 0.106 0.106 0.106 0.106 0.106 0.106 0.046 0.046 0.046 0.046 0.046 0.046 0.046 0.046 0.046 0.046 Absolute Difference 0.728 0.370 0.340 0.560 0.480 0.330 0.350 0.538 0.615 0.311 0.327 1.197 0.861 0.114 0.046 0.049 0.046 0.091 0.166 0.046 0.051 0.046 0.051 0.051 table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

11-4

1295840100-REP-R0001-05

Batch No. AR11107063 AR11117323 AR11118573 AR11122810 AR11122810 AR11125030 AR11129154 AR11129154 AR11160762 AR11160762 OCT0014.R11 OCT0014.R11 OCT0014.R11 SEP0348.R11 SEP0348.R11 SEP0348.R11 SEP0348.R11 SEP0402.R11 SEP0402.R11 SEP0402.R11

Standard 900 900 900 900 900 900 700 700 900 900 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000

Location Zafranal Sicera Norte Sicera Norte Sicera Norte Sicera Norte Sicera Norte Zafranal Zafranal Zafranal Zafranal Victoria Victoria Victoria Zafranal Zafranal Zafranal Zafranal Victoria Victoria Victoria

Hole ID ZFDDH11-167 SNRC11-011 SNRC11-014 SNRC11-013 SNRC11-013 SNRC11-015 ZFDDH11-177 ZFDDH11-177 ZFDDH11-191 ZFDDH11-191 ZFDDH11-212 ZFDDH11-212 ZFDDH11-212 ZFDDH11-208 ZFDDH11-208 ZFDDH11-208 ZFDDH11-208 ZFDDH11-210 ZFDDH11-210 ZFDDH11-210

Sample 225494 231421 232234 231973 231993 232713 226334 226361 227203 227334 246303 246343 246543 227994 252034 252061 252194 244561 244603 244694

Cu (%) 1.120 1.220 1.115 1.100 1.105 1.120 1.170 1.180 1.120 1.090 0.777 0.752 0.765 0.777 0.768 0.767 0.768 0.767 0.773 0.766

Standard Mean 1.166 1.166 1.166 1.166 1.166 1.166 0.347 0.347 1.166 1.166 0.865 0.865 0.865 0.865 0.865 0.865 0.865 0.865 0.865 0.865

Two Standard Deviations 0.046 0.046 0.046 0.046 0.046 0.046 0.106 0.106 0.046 0.046 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086 0.086

Absolute Difference 0.046 0.054 0.051 0.066 0.061 0.046 0.823 0.833 0.046 0.076 0.088 0.113 0.100 0.088 0.097 0.098 0.097 0.098 0.092 0.099

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

11-5

1295840100-REP-R0001-05

11.5

BLANKS
AQM used locally-obtained, unaltered granodiorite as blank material on the assumption that it is unmineralized. The average copper content for all blanks (4,088) is 0.003% and the standard deviation is also 0.003%. Therefore the anomalous threshold was taken as 0.009% (Table 11.4). Table 11.5 is a list of those samples that exceeded this limit. As with the standards, a large percentage of the samples (55%) occur in pairs or higher multiples from the same analytical batch suggesting the possibility of cross-sample contamination or analytical error. However, given the fact that the source material may contain trace quantities of copper it cannot be determined with certainty whether the over-limit values arose because of contamination or analytical error. AQM did not take any remedial action on the basis of over-limit blanks.
Table 11.4
Blanks: Copper % Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count

Zafranal Property Blank Descriptive Statistics

Sicera Norte 0.002 0.000 0.002 0.002 0.001 0.000 53.267 5.175 0.017 0.001 0.018 1.355 593 Sicera Sur 0.004 0.001 0.003 0.002 0.013 0.000 416.082 20.105 0.263 0.001 0.264 1.659 445

Zafranal 0.0024 0.0000 0.0019 0.0014 0.0021 0.0000 272.7601 11.7419 0.0623 0.0005 0.0628 6.4972 2673

Victoria 0.002 0.000 0.002 0.002 0.003 0.000 117.158 9.945 0.038 0.000 0.039 0.766 377

Average 0.003 0.003 4,088

Table 11.5
Batch AR09146061 AR09146061 AR10000401 AR10000401 AR10003799 AR10003799 AR10003799

Zafranal Property Over-limit Blanks

Hole ID ZFRC09-033 ZFRC09-033 ZFRC09-034 ZFRC09-034 ZFRC10-039 ZFRC10-039 ZFRC10-039 Location Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Sample 150184 150253 151004 151008 152476 152507 152532 Cu (%) 0.009 0.011 0.010 0.010 0.011 0.010 0.011

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

11-6

1295840100-REP-R0001-05

Batch AR10004119 AR10004992 AR10005620 AR10006266 AR10006267 AR10006267 AR10006268 AR10008915 AR10008915 AR10008915 AR10008915 AR10010814 AR10011319 AR10011319 AR10017022 AR10017022 AR10019220 AR10019224 AR10023984 AR10027330 AR10027335 AR10027335 AR10027335 AR10028952 AR10028952 AR10028956 AR10031730 AR10031730 AR10042849 AR10047312 AR10050837 AR10064892 AR10066018 AR10098444 AR10151585 AR11078859 AR11096698 AR11117381 AR11156831 SEP0402.R11 SEP0402.R11

Hole ID ZFRC10-042 ZFRC10-041 ZFRC10-043 ZFDDH10-008 ZFRC10-045 ZFRC10-045 ZFRC10-044 ZFRC10-050 ZFRC10-050 ZFRC10-050 ZFRC10-050 ZFRC10-047 ZFRC10-048 ZFRC10-048 ZFRC10-053 ZFRC10-053 ZFDDH10-013 ZFRC10-054 ZFDDH10-017 ZFRC10-060 ZFDDH10-018 ZFDDH10-018 ZFDDH10-018 ZFDDH10-019 ZFDDH10-019 ZFRC10-062 ZFRC10-064 ZFRC10-064 ZFDDH10-030 ZFDDH10-042 ZFDDH10-043 SNRC10-002 SSRC10-009 ZFDDH10-088 ZFDDH10-134 SNDDH11-013 SSRC11-013 ZFDDH11-171 ZFDDH11-189 ZFDDH11-210 ZFDDH11-210

Location Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Zafranal Sicera Norte Sicera Sur Zafranal Zafranal Sicera Norte Sicera Sur Victoria Zafranal Victoria Victoria

Sample 153576 153176 154454 154253 155137 155141 154866 159878 159882 159907 159978 155782 159047 159116 161023 161107 156925 161380 168409 162725 166109 166125 166184 168784 168825 163253 163851 163882 158497 169921 158668 179784 202408 188418 190745 215609 228016 217209 213909 244553 244625

Cu (%) 0.013 0.012 0.009 0.012 0.012 0.019 0.011 0.011 0.010 0.010 0.010 0.012 0.009 0.011 0.024 0.012 0.036 0.013 0.009 0.008 0.009 0.011 0.010 0.015 0.015 0.010 0.010 0.012 0.010 0.010 0.013 0.018 0.264 0.010 0.063 0.012 0.036 0.039 0.009 0.019 0.030

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

11-7

1295840100-REP-R0001-05

11.6

DUPLICATES
Copper assays from duplicate samples show a very high degree of correlation for all four mineral zones. Descriptive statistics for duplicate samples are shown below in Table 11.6.
Table 11.6
Copper Duplicates (%) Statistic Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count Correlation

Zafranal Property Duplicate Sample Descriptive Statistics

Zafranal Original 0.221 0.006 0.126 0.131 0.325 0.106 102.205 6.571 7.471 0.000 7.470 587.931 2658 Duplicate 0.224 0.006 0.126 0.111 0.335 0.112 78.471 6.070 6.980 0.000 6.980 594.935 2658 0.97

Victoria Original 0.14 0.01 0.09 0.17 0.19 0.04 51.11 5.16 2.37 0.00 2.37 54.86 379 Duplicate 0.14 0.01 0.08 0.14 0.20 0.04 84.11 6.91 2.79 0.00 2.79 53.81 379 0.98

Sicera Norte Original 0.100 0.005 0.060 0.064 0.111 0.012 5.927 2.056 0.791 0.000 0.791 58.671 588 Duplicate 0.101 0.005 0.059 0.104 0.118 0.014 9.894 2.537 0.973 0.000 0.973 59.353 588 0.94

Sicera Sur Original 0.111 0.006 0.073 0.112 0.131 0.017 32.658 4.210 1.505 0.000 1.505 50.744 457 Duplicate 0.111 0.006 0.074 0.119 0.129 0.017 28.217 3.882 1.445 0.000 1.445 50.927 457 0.99

The difference between means of only 40 pairs of duplicates exceeded the mean value by two standard deviations and it is probable that the difference is attributable to natural variance in mineral distribution between samples. No samples were reassayed on the basis of differences between duplicates. Tetra Tech considers that the sample preparation, security and analytical procedures meet industry standards.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

11-8

1295840100-REP-R0001-05

12.0 DATA VERIFICATION

Tetra Tech inspected the Zafranal Main and Sicera Norte and Sicera Sur Zones. The Victoria Zone was not examined. Drillhole and surface sample locations were observed as well as surface manifestations of copper mineralization, lithology and alteration. The core-logging and processing procedures were reviewed at the core processing facility located in the main camp. Drill core is also stored at this location and core from several holes that demonstrated the principal rock types and styles of alteration and mineralization were examined. Data capture and processing procedures were also observed in the field geology office where an explanation was also provided, by the geologists involved, of the geological interpretation of the four mineral zones. Copies of laboratory certificates (in .pdf format) together with the corresponding Microsoft Excel spreadsheets were obtained for five separate shipments of (1,003) samples submitted by AQM to ALS Chemex. The assay values for copper and gold on the certificates were compared to the corresponding values on the spreadsheets as well as against the values contained in the AQM database. No discrepancies were found. Tetra Tech did not collect any verification samples for three reasons: 1) to date over 62,000 samples from the Property have been assayed for copper and gold, all by a highly reputable commercial laboratory; 2) chalcopyrite and secondary copper minerals are clearly visible in core and outcrop so that the presence of copper is not in question; 3) informal miners are or have been mining gold within the Property for an extended period and, in Sicera Norte are actively mining within the area that has been tested by drilling. This was considered sufficient evidence of the presence of gold. Tetra Tech considers the data to be of adequate quality for the purposes of the resource estimate that follows.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

12-1

1295840100-REP-R0001-05

13.0 MINERAL PROCESSING AND METALLURGICAL TESTING

13.1 INTRODUCTION
In June 2012, Transmin prepared a comprehensive report encompassing the most recent metallurgical test programs which had been developed and monitored by Transmin. The report was provided to Tetra Tech and forms the basis of this section. The testing occurred concurrently at Plenge Laboratories (Plenge) in Lima, Peru and G&T Metallurgical Services Ltd. (G&T) in Kamloops, BC, Canada. Both laboratories are accredited metallurgical facilities. Transmins report also discusses test work from 2010 with special reference to the grinding programs that were completed at that time and which will be used as a basis for the plant design in this study.

13.2

CHRONOLOGY

OF

METALLURGICAL TEST WORK

Earlier metallurgical test work programs are listed in Table 13.1. The June 2012 report reviewed some of the earlier test work; however not all of the earlier test work was included in the Transmin report. There have been three phases of test work and reporting; the latest is Phase III, which forms the basis for the majority of this analysis. Phases I and II were carried out under supervision by AMEC Minproc, Amdel Mineral Laboratories (Amdel), JKTech, SGS (in Santiago, Chile) and Philips Enterprises. Phase I included comminution testing, leaching, mineralogical identification, flotation optimization of three composites and some variability flotation testing. A final report incorporating all the results was written by Amdel at the end of the Phase I test work. The Phase II test program included locked cycle flotation testing, further comminution testing and leach tests. A report of the flotation test work was issued in October 2011 with inconsistencies and errors, and was re-issued in June 2012. The test work program was poorly monitored and reported with unclear objectives. The write-up was unclear and data was incorrectly reported rendering the test results unusable. Of all the Phase I and II test work which was completed, only the comminution testing was used for the final process design.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-1

1295840100-REP-R0001-05

Table 13.1

Test Work Programs and Reports

Author or Laboratory Teck Amdel JK Tech SGS Philips Enterprises Amdel SGS AMEC Minproc JK Tech AMEC Minproc Ref. No. 1 2 3 4 5 6 7 8 9 10

Document or Test Program Mineralized material characterization study Phase I flotation optimization, flotation variability testing, leaching, mineralogical identification, sizing analysis SMC test on 15 samples Abrasion tests Impact tests Phase II comminution tests, locked cycle and variability flotation tests, leach amenability tests Bond, abrasion and SAG Mill Comminution tests Comminution test update SAG Mill Comminution test report on 42 samples from the Project Zafranal Copper Project Technical Report December 2010 Resource Estimate Document No. 60246-00000-23-002-001 Zafranal Copper Project Stage 2 Flotation Testwork Document No. 60246-00000-21-002-003 Zafranal Copper Project Dewatered Tailings Testwork Document No. 60246-00000-21-002-004 Zafranal Copper Project Leaching Test Work Document No. 60246-00000-21-002-005 Phase III test TM 621 Zafranal, Metallurgical Test Work Report for AQM Report on Phase III Test Work

Date 2005 May to August 2010 April 2010 2010 May 2010 March to December 2011 January 2011 August 2010 January 2011 February 2011

AMEC Minproc AMEC Minproc AMEC Minproc, Amdel G&T Plenge Transmin

May 2012 May 2012 May 2012 November 2011 to June 2012 June 2012

11 12 13 14 15

Section 13.0 will build on the results and premises of the results obtained and explain the parameters chosen for the process design as required.

13.3

MINERALOGY
A mineralized material characterization study was performed by Teck in 2005 and reported in a resource estimate. The following mineralogical details were documented within that report:

The chip samples were dominated by quartz, plagioclase feldspar and muscovite/sericite. Biotite, chlorite, kaolinite, iron-titanium oxides and apatite occurred in minor to trace amounts. Sulphide minerals consisted mainly of pyrite, with lesser amounts of chalcopyrite, chalcocite and covellite.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-2

1295840100-REP-R0001-05

Secondary copper minerals, such as chalcocite and covellite, hosted 78% of the total copper in the samples studied. A calculated 94.5% of these minerals exhibited surface exposures of 10% or greater, suggesting good heap leaching potential at a relatively coarse particle size. Copper distribution by mineral species showed a predominance of secondary copper minerals near the surface of the deposit and an increasing amount of chalcopyrite downhole. Chalcocite and chalcopyrite were similar in grain size with a mean P80 size value of 38 m and 39 m, respectively. Covellite was found to be finergrained with a mean P80 of 17 m. No deleterious minerals were identified at the detection limit of the study. No carbonate minerals were identified, indicating that tailings and waste rock may be acid generating in the presence of water. No gold-related mineralogy was reported.

G&T performed mineralogical analysis on the three composite samples which were received for testing in Phase III. G&T conducted a mineralogical evaluation to identify the percent liberation by size and distribution by association class, metal content and mineral content. Table 13.2 provides a summary of the findings as presented in July 2012 by G&T.
Table 13.2 Mineral Composition of Phase III Composite Samples
Mineral Content Percent Mineral Chalcopyrite Bornite Chalcocite Covellite Pyrite Non-sulphide Gangue ZFC-MC01 1.3 <0.1 <0.1 <0.1 4.5 94.2 ZFC-MC02 0.6 <0.1 0.3 0.1 4.5 94.4 ZFC-MC03 0.7 <0.1 0.1 0.1 4.8 94.3

The copper oxide mineral identified was turquoise, a hydrous aluminium and copper phosphate. Mineral distribution by class of association at a particular grind size was also presented for the three composite samples. The mineral liberation in two dimensions (2D) is shown in Table 13.3.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-3

1295840100-REP-R0001-05

Table 13.3

Mineral Liberation of Phase III Composite Samples

Mineral Distribution by Class of Association (%)

Sample ID ZFC-MC01 P80 = 146 m

Mineral Status Liberated Binary - Cp Binary - Ch Binary - Py Binary - Gn Multiphase Total

Cp 59.2 1.3 6.4 31.7 1.4 100.0 44.7 6.2 12.9 34.1 2.2 100.0 43.7 5.6 17.6 28.8 4.2 100.0

Ch 25.3 46.2 2.2 20.8 5.6 100.0 51.1 14.5 0.5 29.7 4.2 100.0 33.0 24.3 6.5 23.1 13.2 100.0

Py 78.4 5.8 0.0 15.5 0.3 100.0 77.2 4.7 0.5 16.1 1.5 100.0 67.9 10.9 0.2 17.2 3.8 100.0

Gn 98.5 0.8 0.0 0.7 0.0 100.0 98.6 0.5 0.2 0.7 0.1 100.0 98.7 0.4 0.0 0.7 0.1 100.0

ZFC-MC02 P80 = 138 m

Liberated Binary - Cp Binary - Ch Binary - Py Binary - Gn Multiphase Total

ZFC-MC03 P80 = 149 m

Liberated Binary - Cp Binary - Ch Binary - Py Binary - Gn Multiphase Total

Notes:

Cp = chalocopyrite, Ch = chalcocite, Py = pyrite, Gn = gangue Numbers are rounded however the totals equal 100.0.

Chalcopyrite appears to be reasonably well-liberated for flotation purposes at the indicated grind sizes for composite sample ZFC-MC01 (about 60%), although the extent of liberation is borderline for samples ZFC-MC02 and ZFC-MC03 (about 45%). The data also indicates that the pyrite is fairly well-liberated from the copper minerals in composite ZFC-MC01, slightly less in composite sample ZFC-MC02, while composite ZFC-MC03 indicates that there is a higher extent of association of copper with the pyrite of about 11% at this grind size. There is no indication as to where or how the gold is mineralogically associated. The primary grind P80 of 150 m was selected for purposes of the design of the comminution section.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-4

1295840100-REP-R0001-05

13.4

FEED GRADE
For metallurgical testing, a number of the variability samples were used as a feed source by Plenge. Three composite samples were prepared with a portion of each sent to G&T for their test program. The composite samples which were prepared for testing were as follows:

ZFC-MC01 hypogene material ZFC-MC02 supergene material ZFC-MC03 mixed material (sulphide with oxide material)

The assays of the samples tested, together with the head values used in the design, are provided in Table 13.4
Table 13.4 Head Values Composite Samples
Assays Laboratory Plenge Composite ZFC-MC01 ZFC-MC02 ZFC-MC03 G&T ZFC-MC01 ZFC-MC02 ZFC-MC03 Design Mill Feed Cu (%) 0.45 0.49 0.41 0.46 0.52 0.44 0.54 to 0.84 CuSS (%) 0.020 0.070 0.090 0.010 0.030 0.050 CuCN (%) 0.070 0.26 0.12 0.020 0.25 0.12 CuRes (%) 0.35 0.15 0.19 0.42 0.24 0.27 Ag (g/t) 1.20 0.60 0.60 <1 <1 <1 Au (g/t) 0.15 0.13 0.13 0.084 0.069 0.10 to 0.13 Fe (%) 3.70 3.60 4.10 3.50 3.40 3.80 -

Samples were prepared at Plenge for testing locally and sub-samples were shipped to G&T for the parallel variability test program. Chemical characterization was performed at both facilities with slight differences in the results obtained for the actual head grade values for each sample. For example the copper feed ranges for the samples were 0.20 to 0.99% copper for Plenge and 0.22 to 0.88% copper for G&T as shown in Table 13.5. Note that the average values from both Plenge and G&T are lower than the nominal design feed grade value of 0.54% copper.
Table 13.5 Head Values Variability Samples
Assays Laboratory Plenge Variability Samples (35 samples tested) Composite Identification Minimum Maximum Average Cu (%) 0.20 0.99 0.44 Au (g/t) 0.02 0.37 0.13 Fe (%) 2.25 7.10 4.04 S (%) 0.09 7.64 2.52

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-5

1295840100-REP-R0001-05

Assays Laboratory G&T Variability Samples (30 samples tested) Composite Identification Minimum Maximum Average Cu (%) 0.22 0.88 0.49 Au (g/t) 0.03 0.26 0.11 Fe (%) 2.00 8.50 2.73 S (%) 0.08 8.73 2.73

The gold feed assay value range for Plenge and G&T are similar, and the average values are similar to the design feed grade value in the process design criteria (PDC). Also of note is that the sequential copper classification assay values also differ for the two laboratories. All the assay results are available in the master documents.

13.5

MINERALIZED MATERIAL CHARACTERISTICS

Specific gravity (SG) determinations were conducted for samples in both Phase I and II test programs. The SG values obtained ranged from 2.29 to 2.81 with an average SG value of 2.58, and a 75th percentile value of 2.65. SG values of the samples grouped by copper rock type classification are shown in Table 13.6.
Table 13.6 Specific Gravity Results by Rock Type Classification
Rock Type Classification Statistical Outcome Minimum Maximum Average 75 Percentile No. of Samples Tested
th

Hypogene 2.36 2.73 2.60 2.67 36

Supergene 2.36 2.81 2.59 2.63 25

Oxide 2.29 2.57 2.47 2.54 4

The average value of the non-oxide rock types is 2.59 with a corresponding average 75th percentile SG of 2.65. An SG value of 2.70 was given in the Transmin report and used in the PDC. The Phase III test program was made up of samples representing two zones, namely Zafranal Main and Victoria Zones. These samples had copper head grades of higher than 0.2% copper with similar geological parameters and were samples taken from the applicable diamond drill cores.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-6

1295840100-REP-R0001-05

13.6

GRINDABILITY
Variability samples for comminution tests were sourced from diamond drill core material and tested at the SGS laboratories in Santiago, Chile. Phase I testing included 21 samples and the Phase II program tested 51 samples. Samples were classified by copper rock type namely, supergene, hypogene and oxide. Comminution tests included crusher work index (CWi), abrasion index (Ai), Bond ball mill work index (BWi) and SAG Mill Comminution (SMC) tests. The detailed results have been documented in the original reports and were summarized in the Transmin report which also records the sample location. The results from these comminution tests have been used as a basis for the design of the crushing and grinding circuit.

13.6.1

C R U SH E R W OR K I N D E X
The CWi was only determined on the Phase I samples. Table 13.7 lists the results obtained. Relevant graphs of the data are documented in the Transmin report.
Table 13.7
Sample ID SGS-01 SGS-02 SGS-03 SGS-04 SGS-05 SGS-06 SGS-07 SGS-08 SGS-09 SGS-10 SGS-11 SGS-12 SGS-13A SGS-13B SGS-14 Average 75 Percentile
th

Crusher Bond Work Index Results Phase I

Rock Type Classification Supergene Supergene Hypogene Supergene Supergene Supergene Supergene Supergene Supergene Hypogene Hypogene Supergene Oxide Oxide Hypogene CWi (Average) (kWh/t) 3.15 3.73 4.27 5.31 7.43 5.71 8.07 6.54 8.05 9.51 8.31 7.65 5.60 4.47 6.44 6.28 7.85

The 75th percentile CWi value for the samples tested is 7.85 kWh/t which is the value used in the design and shown in the PDC.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-7

1295840100-REP-R0001-05

A further breakdown of results into copper rock type classification yields the results as shown in Table 13.8.
Table 13.8 Crusher Bond Work Index Results by Rock Type Classification
Rock Type Classification Hypogene 4.27 9.51 7.13 8.61 4 Supergene 3.15 8.07 6.18 7.65 9 Oxide 4.47 5.60 5.04 5.32 2

Statistical Outcome (kWh/t) Minimum Maximum Average 75 Percentile No. of Samples Tested
th

From a crushing perspective, the hypogene material is classified as hard, the supergene as moderately hard, and the oxide as moderately soft. The average value of the two hardest mineral types is 6.67 kWh/t with a corresponding 75th percentile hardness of 8.13 kWh/t, which is slightly higher than the value used in the PDC.

13.6.2

A BR A SI O N I N D E X
The Ai values were determined for samples in both Phase I and II test programs. The Ai values obtained ranged from 0.014 to 0.630 g with an average of 0.213 g. The 75th percentile value was 0.279 g which is used in the design and shown in the PDC. AMEC Minproc hypothesized that the wide distribution obtained for the abrasion results appear to indicate that factors other than mineral type contribute to the abrasion properties of the materials. The factors considered included sample depth below ground level, lithology, and mineralogical alteration characteristics. The Ai values of the samples grouped by copper rock type classification are shown in Table 13.9.
Table 13.9 Abrasion Index Results by Rock Type Classification
Rock Type Classification Hypogene 0.034 0.598 0.243 0.330 38 Supergene 0.014 0.630 0.198 0.257 28 Oxide 0.015 0.172 0.098 0.137 6

Statistical Outcome (g) Minimum Maximum Average 75 Percentile No. of Samples Tested
th

The hypogene material is the most abrasive from a crushing and grinding perspective, although the most abrasive sample tested was that from the supergene mineralization, namely 0.630 g.
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 13-8 1295840100-REP-R0001-05

The average value of the two most abrasive rock types average values is 0.221 g with a corresponding 75th percentile Ai of 0.294 g. The detailed results are presented in the Transmin report.

13.6.3

B ON D B A L L M I L L W O R K I N D E X
The BWi was conducted on both Phase I and II samples and generated a total of 72 results. The BWi values obtained ranged from 5.3 to 15.8 kWh/t, with an arithmetic average of 11.2 kWh/t and a 75th percentile value of 12.2 kWh/t. The 75th percentile value of 12.2 kWh/t is used in the design. The BWi values obtained for the samples as grouped by copper rock type classification are shown in Table 13.10.
Table 13.10 Bond Ball Mill Index Results by Rock Type Classification
Rock Type Classification Hypogene 7.04 14.24 11.38 12.56 38 Supergene 5.30 15.82 11.28 12.05 28 Oxide 8.39 10.49 9.31 9.46 6

Statistical Outcome (kWh/t) Minimum Maximum Average 75 Percentile No. of Samples Tested
th

The hypogene and supergene materials were determined to be quite similar from a crushing and grinding perspective. The average value of the hypogene and supergene rock types is 11.3 kWh/t with a corresponding 75th percentile BWi value of 12.3 kWh/t, although 12.1 kWh/t was selected for purposes of the design criteria. However, for purposes of the design of the grinding circuit, the equivalent Bond Rod Mill Work Index (RWi) of 13.0 kWh/t was selected.

13.6.4

JK SAG M I L L C OM M I N U T I ON T E ST R E SU L T S
SMC tests in which the drop weight index (DWi) and the JK breakage parameters A and b were determined, were completed on samples from the Phase I and Phase II test programs. The results obtained were reviewed by JKTech Australia. The complete results were reported in the respective comminution test reports. DWi values obtained ranged from 1.23 to 12.55 kWh/m3 and the 75th percentile value was reported as 8.61 kWh/m3. DWi values were also grouped by copper rock type classification and the summary of the results obtained is shown in Table 13.11.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-9

1295840100-REP-R0001-05

Table 13.11

Drop Weight Index Results by Rock Type Classification

Rock Type Classification Hypogene 2.44 12.20 7.38 8.69 38 Supergene 1.23 12.55 6.43 8.61 28 Oxide 1.84 5.24 3.32 4.11 6

Statistical Outcome (kWh/t) Minimum Maximum Average 75 Percentile No. of Samples Tested
th

The Transmin report indicated that the Axb values ranged from 21.02 to 184.09. The Axb value indicates the power required but it is the inverse of the BWi values in that a lower Axb value indicates a harder type of material. The highest values of Axb were for supergene material tested in Phase I. These high values for Axb could be partially attributed to the location of these samples which were selected from the transition zone of the deposit. The calculated values were reported, categorized and ranked according to the JKTech database. A total of 21 samples were tested but the results of only 15 samples were fully documented in the SMC report. These 15 Axb results reported for the Phase I test work ranged from 27.4 to 184.2 with an average value of 67.6. This average value of 67.6 would categorize the material tested as moderately soft and only two of the samples tested were categorized as hard. The 51 Phase II sample results obtained indicated that material tested was much harder. These samples had considerably more samples at depth in the deposit, with the Axb values ranging from 21.0 to 124.4 with an average of 39.8. This average Axb value of 39.8 corresponds to a moderately hard ranking. Also, 13 results were ranked as very hard, 21 as moderately hard to hard, 8 as medium, and 5 as moderately soft to very soft according to the JKTech database. These results are consistent with other comminution results and have been included in the PDC, although these values were not required as a basis for design at this time.

13.7

FLOTATION TESTS
The main and most recent flotation test programs were carried out in parallel at the two laboratories, Plenge and G&T, during 2012. The results were summarized and reported in the 2012 Transmin report as individual laboratory reports were not available at the time this report was compiled. The sequencing of test work evaluation differed at both laboratories. Therefore, in order to compare the results, the tests will not be evaluated in sequence but rather by flotation parameter.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-10

1295840100-REP-R0001-05

13.7.1

B U L K S U L PH I D E F L OT AT I ON
Initial bulk sulphide flotation tests of 35 individual samples along with the three composite samples were carried out at the Plenge laboratory only. Potassium amyl xanthate (PAX) as the collector and methyl isobutyl carbinol (MIBC) as the frother, were used in order to generate bulk sulphide concentrates. The samples were ground to a primary size P80 of 250 m, conditioned with the collector and floated for 10 minutes. Portions of each of the samples were assayed and material balances were developed with the remaining concentrate samples stored for future mineralogical work. Copper concentrate grades obtained ranged from 0.34 to 7.71% copper with recoveries ranging from 7.22 to 94.4% copper. The mass generated in the rougher concentrate ranged from 4.65 to 18.04%. Various graphs were generated using these results. The poorest performing samples were classified as oxide or mixed samples. All samples of hypogene or supergene had copper recoveries in excess of 70%. Figure 13.1 gives the results of copper head grade versus recovery by rock type classification. There is no apparent correlation between recovery and feed grade, or the feed material type with the exception of oxide and mixed mineral types.
Figure 13.1 Copper Head Grade versus Recovery for Rock Type

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-11

1295840100-REP-R0001-05

Analyses for gold, sulphur and iron were also conducted and recorded. Although this test work program was conducted as a form of variablity testing, intermediate assays do not appear to have been done and therefore flotation kinetics cannot be determined.

13.7.2

F L OT AT I ON P R O GR AM S
In order to define the flotation circuit design, initial tests were performed on the three composite samples, followed by variability testing of the individual samples and this was followed by locked cycle tests (LCTs) using the composite samples. There was some variation in the number of samples tested at each laboratory. Each facility tested the three master composite samples, while Plenge tested 35 variability samples, and G&T tested 30 samples for the variability tests. As mentioned previously, the sequence of flotation parameter testing varied at the two laboratories with grind size evaluation occurring at the G&T facility only.

13.7.3

F L OT AT I ON T E ST I N G G R I N D S I Z E E V A L U AT I ON
The characterization of this parameter was only carried out at the G&T laboratory. The grind tests were conducted on the composite samples using PAX as a collector and MIBC as a frother. A pH value of 10 was chosen for this initial evaluation. Flotation time was taken to be eight minutes. The three targeted grind sizes were P80 sizes of 210, 150, and 105 m. In this methodology, the PAX was used as a collector and therefore a larger mass is anticipated due to the relatively unselective nature of this bulk sulphide collector. Collector addition rates were low and seemingly close to starvation levels. However, some inconsistency in the test work procedure was obtained during the testing since the amount of PAX reagent added varied per test. Composite ZFC-MC01 showed very fast flotation rates for copper at all grind sizes while the overall gold recovery was highest at the finest grind size. Mass recoveries to the concentrate were inconsistent. The data analysis does not clearly indicate if the gold is following the pyrite or the chalcopyrite, and this observation also holds for other aspects of the test work. The graph of flotation time versus copper rougher recovery indicates that flotation is not complete after eight minutes, particularly at the coarser grinds. Composite ZFC-MC02 shows slightly slower flotation kinetics although the PAX addition is higher than that in ZFC-MC01 making direct comparison of the results obtained difficult. A lower overall copper recovery was obtained on the ZFC-MC02 sample. The effect of grind size was shown to have the most effect on the sample ZFCMC03.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-12

1295840100-REP-R0001-05

The Transmin selection of 147 m as the primary P80 grind size value obtained is based on the decreased iron (pyrite) recovery, increased gold recovery and similar copper recovery as compared with the coarser grind of about 210 m. Although this conclusion is not completely incorrect, it is not shown that the gold necessarily follows the copper and may in fact follow the iron (pyrite). The gold also displays a slower flotation kinetic rate. The grind size P80 of 147 m indicated is a good general choice since it was shown that the initial flotation kinetics varied only slightly based on grind size in the size range selected for testing. There would be little advantage to grinding to a finer P80 of 100 m as the grinding costs would become prohibitive particularly since the apparent advantage is not significant. Further analysis of the test work may indicate that a slightly coarser grind could also achieve the same results as apparently indicated in the bulk mineral flotation tests by Plenge. For purposes of the process design, a P80 value of 150 m was used in the design criteria.

13.7.4

F L OT AT I ON C OL L E C T O R R EA G EN T E V AL U AT I ON
Based on the initial test results obtained, Transmin concluded that the gold did not follow the iron (pyrite), and therefore it would be advantageous to reduce the amount of pyrite floated in the rougher stages prior to cleaning. A collector evaluation test program to reduce the amount of pyrite floating in the rougher concentrate was carried out independently at both laboratories with a variety of collector combinations. All the evaluation tests were based on copper and iron recoveries to rougher flotation. However, it does not appear that collector dosage was a variable that was evaluated and this should be added to a future level of study. G&T evaluated four reagent schemes with a rougher flotation time of eight minutes. G&T used very small quantities of reagent and obtained over 90% recovery of copper to the rougher concentrate for ZFC-MC01, 89% copper recovery for ZFC-MC02 and approximately 75% copper recovery for ZFC-MC03 with all reagent choices. In choosing the reagent to continue with in the test program, other elements were analyzed for recovery and grade. The copper recovery versus mass recovery graphs indicate that the mass recovery to the rougher concentrate for ZFC-MC01 had the most significant impact on the overall recovery. The collector reagent 3418A appeared to enhance the amount of the gold reporting to the concentrate. The collector reagent 3418A was chosen on the basis of giving the best results for composite ZFC-MC03, even though this is the transition/oxide sample. The best gold recovery is shown with this material. As demonstrated for the sample ZFC-MC01, the mass recovered to the concentrate appears to be limiting the amount of copper recovered. Although the reagent type 3418A was selected, the reagent dosage used in the variability test work was increased in order to ensure that the highest attainable copper and gold recoveries were obtained in the variability testing.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-13

1295840100-REP-R0001-05

Plenge evaluated eight different collector reagent schemes and used an overall rougher flotation time of 18 minutes. Because of the much longer flotation times used for these tests, the mass recoveries to the rougher concentrates and the resulting recoveries were significantly higher. The Plenge tests all showed very fast rougher kinetics with the majority of the recovery occurring within the first two minutes for all three composite samples and all the reagent schemes selected. The final choice of collector reagent was a combination of 15 g/t A3302 and 15 g/t 3418A. This was not necessarily the optimum choice for all the composite samples tested but the choice was made in order to have commonality for the reagents and dosage rate. The overall choice appears to be based on the apparently low iron (pyrite) recovery to the concentrate. On review, it would appear that other reagent schemes may be better suited to achieving equivalent or better copper and gold recovery in the rougher stage of flotation, and the reduction of iron (pyrite) could be better targeted in the cleaner circuit. The reagent PAX at 40 g/t should not be ruled out as a primary collector as in some cases it appears that the gold is following the iron (pyrite) despite the initial interpretation of results that the pyrite did not contain gold. This aspect remains inconclusive and warrants further investigation. Kerosene collector addition was also evaluated but only at Plenge. The kerosene addition had various effects of the recoveries of the copper, iron and gold depending on the sample tested. There was an increase in copper and iron recovery in each instance with a corresponding increase in mass recovery to the concentrate. Based on the apparent non-selectivity of the reagent, Plenge decided not to select kerosene as a collector reagent.

13.7.5

F L OT AT I ON P H E VA L U A T I ON
The pH value in the rougher flotation was evaluated at both laboratories with the stated objective of reducing the iron (pyrite) recovery. During reagent testing at G&T, the reagent scheme was not fixed. The iron (pyrite) was depressed with the increased pH, but gold recovery also appeared to be affected to some extent. However, no correlation was attempted. The Plenge test results have a more consistent mass pull and results would indicate that a pH of 10.5 for two of the samples tested gave the best results, with a pH of 9.5 for the ZFC-MC03 sample. According to the report from Transmin, the pH value of 10 was chosen based on the combined results from G&T and Plenge. The conclusion is that the pH value of 10 gives the best recovery results for copper, and gold with the least recovery for iron (pyrite). However, this comment from Transmin is surprising since the LCT program at G&T used a pH value of 10 and gave very poor results, and a pH value of 11 was used in a repeat LCT series of work. The reason(s) for the discrepancy in the results

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-14

1295840100-REP-R0001-05

obtained by G&T for the pH 10 results were not discussed, and it may have been a procedural problem. This pH value of 10 is included in the design criteria, and although it is subject to confirmation, it appears to be the optimal value.

13.7.6

F L OT AT I ON R OU GH ER F L OT AT I ON T I M E
Rougher flotation times prior to the variability and locked cycle testing were determined based on copper recovery results. The optimal flotation time was taken at the point where the copper partial grade of the rougher concentrate was calculated to be the same as the feed grade. The initial G&T test work had a rougher flotation time of eight minutes, and it is possible that further copper flotation could occur with extended flotation time. The Plenge kinetic test work had flotation times of 18 minutes allowing for a clear graphical analysis. A conservative flotation time of 10 minutes was selected, although an analysis of the results indicates that eight minutes may suffice in certain instances. However the additional time up to 10 minutes will allow for the apparently slower floating gold to be recovered and will also accommodate any variability in the mineralized material types. The ten minute rougher flotation time parameter was included in the design criteria.

13.7.7

F L OT AT I ON R E GR I N D
Concentrate regrind size was determined using a three-stage cleaning test procedure. Regrind sizes of 40 m and 20 m were targeted during testing. Transmin interpreted the test work to indicate that a 40 m regrind is suitable for this application with acceptable copper grades and recoveries being achieved. Transmin also gave the additional statement that a finer regrind size would also work, although this option would be more costly. The evaluation does not include grade recovery curves which may also indicate that fewer cleaner stages may be required. Recoveries at the same common grade as the various grind sizes were not shown in the graphs. Gold recoveries were not evaluated. The acceptable copper grade was not defined and would be required to determine the necessary number of cleaner stages and regrind size. Grinding of the concentrates to the finer size appears to enhance gold recovery for some of the samples. Further laboratory flotation testing used a regrind P80 size of 40 m. The design criteria initially indicated that a regrind size P80 of 20 m was required. However, a subsequent review of the test work data presented by Transmin indicates that a P80 regrind size of 40 m may not be conclusive, but might suffice for purposes of the

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-15

1295840100-REP-R0001-05

study, although the detailed testing across a wider spread of regrind sizes is required for the next phase of the Project.

13.7.8

F L OT AT I ON C L E AN ER P H E VA L U AT I ON
The cleaner flotation pH testing was done at G&T with a defined procedure of cleaner flotation conditions. A pH value of 10 was chosen in order to obtain acceptable copper concentrate grades. An evaluation of the results appears to indicate that gold recovery follows the iron (pyrite) recovery in composite samples ZFC-MC02 and ZFC-MC03. However, since the target mineral is copper, any enhancements or use of conditions favouring the recovery of gold should only be undertaken when there is no detrimental effect to the copper grade or recovery, and when additional processing costs are not incurred.

13.7.9

F L OT AT I ON L O C K ED C YC L E T E ST I N G
LCT conditions were defined from the preliminary rougher and cleaner testing discussed in earlier sections and as outlined in the Transmin report. The initial parameters include a primary grind P80 of 150 m, rougher flotation time of 10 minutes at pH 10, a regrind size P80 of 40 m, cleaner flotation times of the first cleaner 5 minutes, the second cleaner 4 minutes, the third cleaner 3 minutes, and the cleaner scavenger 4 minutes. All the cleaner stages were conducted at a pH value of 10. However, the test procedures and the reagent schemes differed at both laboratories. The LCT procedures differed between G&T and Plenge with the recycle streams being recycled and returned to different areas of the flotation circuit within the two test programs as presented in Figure 13.2 and Figure 13.3. Plenge had six cycles of flotation for each LCT whereas G&T had five cycles. Plenge used 15 g/t A3302 and 15 g/t 3418A collector reagent combination for the LCT work, while G&T used variable amounts of only the 3418A collector reagent. The initial LCT program completed at G&T used a pH value of 10 and had very poor copper concentrate grade. The test was repeated at the higher cleaner pH value of 11.0. However, other parameters in the test procedure should also have been analyzed. Also, the LCTs were unstable and the recycle streams could be causing problems in this regard. A significant amount of gold was rejected in the first cleaner scavenger tails. This may be related to regrind size, or alternatively, an indication that the iron (pyrite) and gold contents are related.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-16

1295840100-REP-R0001-05

Figure 13.2
Feed

LCT Procedure Plenge

Grinding

Rougher Tail Rougher

Regrinding

Cleaner Scavenger Tail Cleaner 01 Cleaner Scavenger

Cleaner 02

Cleaner 03

Cleaner 03 Concentrate

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-17

1295840100-REP-R0001-05

Figure 13.3
Feed

LCT Procedure G&T

Grinding

Rougher Tail Rougher

Regrinding

Cleaner 01

Cleaner Scavenger

Cleaner Scavenger Tail

Cleaner 02

Cleaner 03

Cleaner 03 Concentrate

The G&T LCTs conducted at a pH value of 11.0 were found to give reasonable concentrate grade and recovery values, as shown in Table 13.12. However, these test results from G&T still resulted in an unstable flotation procedure with the copper concentrate grade objective values not attained in one instance, and questionable in another. The LCTs conducted at Plenge were more stable and the target grade was made in each case using a pH value of 10 in the cleaner circuit. Statistical analyses of the results were presented by Transmin for grade and recovery values at a 95% confidence level. A summary of the findings are shown in Table 13.12.
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 13-18 1295840100-REP-R0001-05

Table 13.12

Locked Cycle Concentrate Summary

Element Recovery to Final Concentrate Au, (g/t) 4.28 2.07 4.94 2.03 3.13 0.38 2.88 0.47 3.88 2.65 4.16 7.61 Cu (%) 85.6 2.2 81.3 0.6 67.3 1.7 91.0 8.0 85.1 2.7 68.7 4.4 Fe (%) 11.2 4.8 6.68 1.06 6.10 0.40 15.2 0.3 9.08 6.45 7.11 3.51 S (%) 17.3 7.5 15.7 2.23 13.9 0.6 23.8 4.3 18.1 8.1 13.7 5.1 Au (%) 40.8 9.7 37.7 10.8 26.6 2.9 51.3 18.0 45.9 15.0 36.0 22.1

Concentrate Grade Laboratory Plenge (Cycle D-F) Cleaner pH 10 G&T (Cycle IV-V) Cleaner pH 11 Composite ZFC-01 ZFC-02 ZFC-03 ZFC-01 ZFC-02 ZFC-03 Cu (%) 29.8 4.2 38.5 3.9 31.8 1.5 24.2 5.6 33.8 16.2 29.4 12.9 Fe (%) 32.8 2.9 22.7 1.5 29.3 1.4 30.2 2.8 23.9 8.8 28.9 5.7 S (%) 34.9 2.5 33.2 1.5 35.6 1.1 36.2 0.9 34.9 6.0 36.9 5.7

The results obtained from Plenge along with the test procedure used, gives a much more stable operating flowsheet. It was indicated that the commercial concentrate grade objective was 28% copper and it is apparent that this grade is easily achieved within the test program. Further data analysis could potentially enable a higher recovery of copper and gold at an acceptable copper concentrate grade to be achieved through process parameter changes and optimization of the procedure. The LCT procedure as given for Plenge was used in the design of the flotation plant. Clearly the Plenge procedure is a more logical method, although in addition to the Plenge procedure, the regrinding of the cleaner scavenger concentrate and the second cleaner tailings is also advocated.

13.7.10 F L OT AT I ON F I N A L C O N C EN T R AT E E L EM EN T AL A N AL Y SI S
No deleterious elements in any significant concentration were found in the copper concentrate produced, and all the impurity elements were found to be below penalty limits.

13.7.11 F L OT AT I ON V AR I A BI L I T Y T E ST S (R OU GH ER )
Two sets of variability testing were done on similar samples using the rougher flotation parameters from the LCT procedures. G&T completed 30 variability tests of which approximately half of the number of tests had rougher flotation times of 8 minutes and the remaining tests had 10 minutes. Copper recoveries ranged from 9.63 to 97.5%, and rougher concentrate grades

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-19

1295840100-REP-R0001-05

ranged from 0.34 to 10.1% copper. The results of the feed grade versus recovery based on rock type are given in Figure 13.4.
Figure 13.4 Rougher Recovery versus Copper Feed Grade G&T Variability Tests

Three of the lowest recoveries were on samples with low feed grades of a rock type associated with the leach cap and are possibly oxidized material. These samples were not considered to belong to the sulphide deposit and were not used in further comparisons in the report. No correlation is seen to exist between the rougher concentrate copper recovery and the copper feed grade. Further analysis by Transmin showed no correlation for gold, iron (pyrite) or sulphur. Variability tests were also completed by Plenge on 11 of the same samples as G&T had used, together with some additional variability samples included which allows for a side-by-side comparison of the results obtained by the two testing facilities. The rougher flotation tests were done for a period of 18 minutes with correspondingly higher metal and mass recoveries. Plenge completed 35 tests and the overall results for copper are shown in Figure 13.5. Copper recoveries ranged from 21.3 to 96.6% and rougher concentrate grades ranged from 0.33 to 8.5% copper. The results were grouped by zone, alteration type and rock type. Again, no correlation was found between the copper feed grade and the copper recovery.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-20

1295840100-REP-R0001-05

Figure 13.5

Rougher Recovery versus Copper Feed Grade Plenge Variability Tests

A comparison of a portion of the results obtained from the variability tests from both laboratories, G&T and Plenge, was reported and is shown in Table 13.13. The rougher concentrate recovery was taken at a flotation time of 10 minutes for both laboratories (shown as t ~ 10 minutes in Table 13.13). One significant difference between the test programs was that the collector used for the variability tests by G&T was 3418A at a dosage rate of 15 g/t, while Plenge used a mixture of A3302 and 3418A, each at a dosage rate of 15 g/t.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-21

1295840100-REP-R0001-05

Table 13.13

Variability Tests Comparison of Results

Calculated Head Grade Rougher Recovery at t ~ 10 minutes Au (g/t) Plenge 0.17 0.06 0.12 0.17 0.05 0.12 0.10 0.26 0.17 0.12 0.33 0.15 G&T 0.18 0.07 0.09 0.14 0.04 0.07 0.11 0.25 0.04 0.08 0.29 0.12 Cu (%) Plenge 88.1 91.3 79.4 92.6 90.3 15.1 90.6 93.7 94.2 44.9 75.1 77.8 G&T 92.6 93.9 73.6 96.3 94.5 21.7 96.5 96.6 96.7 38.8 74.8 79.6 Fe (%) Plenge 42.7 41.9 36.8 49.5 41.0 13.6 74.5 47.5 73.8 19.3 28.5 42.6 G&T 65.5 81.0 27.6 55.2 89.2 19.4 75.0 54.4 71.1 14.4 32.7 53.2 Au (%) Plenge 60.2 68.9 51.6 63.5 64.1 26.0 65.1 80.9 76.8 39.7 54.9 59.2 G&T 75.6 72.9 69.8 81.2 80.0 65.4 82.7 89.1 57.5 51.9 60.4 71.5

Sample ID ZF-02 ZF-03 ZF-10 ZF-11 ZF-14 ZF-16 ZF-19 ZF-26 ZF-39 ZF-41 ZF-55 Average

Cu (%) Plenge 0.35 0.73 0.72 0.48 0.79 0.29 0.40 0.39 0.32 0.55 0.54 0.51 G&T 0.31 0.68 0.58 0.42 0.70 0.26 0.42 0.37 0.27 0.57 0.54 0.47

Fe (%) Plenge 4.54 3.49 3.18 4.38 2.32 5.97 2.42 3.23 5.47 3.44 4.71 3.92 G&T 3.77 3.17 2.65 4.09 1.92 5.07 2.29 2.84 3.36 3.16 4.69 3.36

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-22

1295840100-REP-R0001-05

A comparison of the results obtained indicates the following:

Mass recoveries after ten minutes of flotation time were not reported and would be interesting for comparison purposes. Feed grades for copper, iron (pyrite) and gold were typically reported higher by Plenge, as shown in Figure 13.6, for copper by way of example. In the case of iron, the assay differences between Plenge and G&T is significant. Copper recovery averaged slightly higher in the G&T tests. Iron recovery was lower at Plenge with a correspondingly lower gold recovery. As mentioned previously, the possible association of gold with iron (pyrite) needs confirmation. Further detailed analyses of the test work conducted, or additional test work, is required if gold recovery is to be targeted.
Assay Comparison, Copper Head Grade

Figure 13.6

It is apparent that some coordination characterization of testing at specific slurry pH values, and assaying methodologies, will be required between the Plenge and G&T laboratories in order to standardize procedures.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-23

1295840100-REP-R0001-05

13.8

SETTLING TEST WORK (TAILINGS)

G&T carried out settling test work using tailings samples produced from open circuit flotation tests for each of the three composite samples. Three flocculants were tested on each sample at various dosage rates. Composite sample ZFC-MC03 was found to require slightly more flocculant probably as a result of the oxidized nature of the sample. Either the anionic or high anionic flocculants would be acceptable choices base on the limited test work done.

13.9

ENVIRONMENTAL TESTING
Acid based accounting (ABA) test work was done on specific samples. Over 50% of the samples tested were determined to be acid producers while 30% of the samples tested remain as uncertain.

13.10

SOLVENT EXTRACTION FACILITY

AND

ELECTROWINNING PROCESSING

A limited amount of test work to recover copper from oxide samples from the Zafranal deposit, was conducted under the direction of Transmin. The recovery of the copper was based on the heap leach process using acid leaching on pads, and SX-EW.

13.11

CONCLUSIONS
Within the section titled Conclusions, Transmin reported the process parameters that were to be chosen for plant design, a summary of which appears in Section 17.0.

13.12

RECOMMENDED ADDITIONAL TEST WORK

No recommendations for further test work were identified by Transmin in the report that was issued. However, Transmin and Tetra Tech recommends the following additional test work and evaluations:

Material handling characterization including specific gravity, bulk density/particle size, etc. A more detailed grinding evaluation of the Zafranal rock types. Confirmation of the regrind P80 size is required; test work should be conducted to highlight the sensitive ranges of the parameters selected.
13-24 1295840100-REP-R0001-05

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

The Plenge flotation procedure used for LCT work requires some modification, particularly with regard to the cleaner scavenger concentrate collected. Confirmatory testing should include confirmation of the revised regrind size, the collector reagent suite and the slurry pH. The G&T flotation circuit has been shown to be unstable and should therefore not be considered in any future test work program. The disparity in the results obtained between Plenge and G&T at different pH values requires qualification. Although the primary grind P80 particle size has been determined to be 150 m, the P80 of the rougher concentrate produced has not been determined to date and is required for the sizing of the regrind circuit. The potential of using a coarser primary grind also requires additional test work. Test work is required to finalize the collector reagent suite to be used for Zafranal material. Plenge used a mixture of A3302 and 3418A, while G&T used PAX and then switched to the reagent 3418A only but for reasons which were not disclosed. In order to facilitate comparison of results, the suggested test work should include:
A3302 only 3418A only PAX only A3302 and 3418A PAX and 3418A.

The potential for using a relatively inexpensive basic collector type augmented by a more costly specific reagent such as 3418A at a lower dosage rate potentially has significant operating cost implications. A consistent grind, pH and dosage rate above starvation levels is required.

Although gold is not a major financial contributor to the value of the concentrate (estimated value about 6% of the total value of the concentrate), it is vital to understand its behaviour in the flotation circuit, and at which stage of the process the gold is lost to tailings. Copper concentrate needs to be generated for settling and filtration characterization. Flotation tailings testing for settling and filtration characterization should also be conducted. A more detailed revision of the primary grinding circuit is recommended. A brief review of the grinding circuit has indicated that the plant feed treatment rate of 80,000 t/d could be exceeded with the present design. Since the available grinding test data is suitable only for this PEA level report, a more detailed assessment is not possible, although a cursory review indicates that the grinding circuit throughput could be increased to about 100,000 t/d based on the present design parameters. A more detailed review using more specific grinding data based on pit depth, and varying the grinding
13-25 1295840100-REP-R0001-05

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

circuit parameters such as transfer size, grinding media addition, and the use of a pebble crushing circuit, could result in a substantial increase in the daily throughput rate. It must be noted however, that a detailed review of the downstream processing facilities will also be required.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

13-26

1295840100-REP-R0001-05

14.0 MINERAL RESOURCE ESTIMATES

In February 2011, AMEC-Minproc completed a resource estimate (AMEC-Minproc, 2011) for the Zafranal Main Zone. AMEC-Minproc used a 0.2% copper grade shell to constrain their mineral zone model and stated their resource at a lower threshold of 0.2% copper. Their estimate is summarized in Table 14.1.
Table 14.1 AMEC-Minproc 2011 Zafranal Main Zone Resource Estimate at 0.2% Copper Cut-off
Tonnes (t) 17,000,000 284,000,000 51,000,000 Cu (%) 0.93 0.44 0.32 Au (g/t) 0.09 0.08 0.06

Class Measured Indicated Inferred

The basis of the following estimate differs from the AMEC-Minproc estimate in two significant respects: 1) grade shells were not used; the estimate is based upon values for the entire modeled mineralized envelope, and 2) the current estimate pertains not only to the Zafranal Main Zone but also includes a first-time estimate for the Victoria, Sicera Norte and Sicera Sur Zones.

14.1
14.1.1

EXPLORATORY DATA ANALYSIS

A SS A YS
Tetra Tech received location, survey and assay data for the Zafranal Main, Victoria, Sicera Norte and Sicera Sur mineral zones in Microsoft Access database format. Table 14.2 summarizes the number of drillholes and samples for each zone.
Table 14.2 Zafranal Property Drillhole and Sample Quantities
No. of Core Holes 192 31 47 3 273 Metres (m) 67,682 10,765 14,504 1,018 93,969 No. of Samples 33,860 5,379 7,381 448 47,068 No. of RC Holes 73 9 10 34 126 Metres (m) 22,953 2,729 3,232 11,456 40,370 No. of Samples 15,637 1,662 2,861 10,575 30,735

Zone Main Zone Victoria Sicera Norte Sicera Sur Total

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-1

1295840100-REP-R0001-05

The data was imported into Gemcom GEMS 6.3 and checked for integrity (logical errors). No errors were found. As the data are comprised of both drill core and RC assays it was considered possible that there were statistically meaningful differences between the two populations so the data were separated and T-tests (assuming equal variances) were performed. No statistically-meaningful differences were found between the two populations so they were combined for the purpose of the resource estimate that follows.

14.1.2

C A PP I N G
Capping is the process of reducing high values within a sample population that are regarded as statistically anomalous with respect to the population as a whole to avoid the influence these values would have on the statistical characteristics of the population if left at their full value. The risk in including statistically high values in a resource estimate is that their contribution to the estimated grade will be disproportionate to their contribution to the tonnage and therefore the grade of the resource as a whole will be overstated. Cumulative frequency curves for gold and copper assay values for all four mineral zones were constructed and examined for the presence of outliers. No unequivocal evidence of outliers was found so no capping of either copper or gold values was carried out.

14.1.3

C O M P O SI T E S
Compositing of samples is done to overcome the influence of sample length on the contribution of sample grade. About 95% (47,281) of all samples, both drill core and reverse-circulation, from the Zafranal Main Zone are equal to 2 m or less in length; therefore all Zafranal Main samples were composited to 2 m. The Zafranal Main sample population represents about 64% of the entire sample population and, as most of the samples from the other three zones were collected in 2 m or shorter lengths (Victoria = 94%; Sicera Norte = 93%; Sicera Sur = 99.8% (88% of the Sicera Sur samples were from RC drilling and all were 1 m in length)) all samples for all zones were composited to a length of 2 m.

14.2

BULK DENSITY
AQM provided 878 bulk density measurements of samples of drill core collected at 40 m intervals downhole. These samples were correlated with the corresponding copper solubility zones that form the basis of the resource estimate and a mean bulk density was established for each zone; these are presented below in Table 14.3. Note the values for Sicera Norte were adopted from measurements made at Sicera Sur.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-2

1295840100-REP-R0001-05

Table 14.3

Zafranal Mineral Zone Bulk Density Measurements

Density 3 (g/cm ) 2.66 2.36 2.39 2.48 2.69 2.36 2.63 2.31 2.73 2.67 2.58 2.40 2.44 2.67 2.36 2.58 2.39 2.40 2.44

Mineral Zone Zafranal Main Hypogene Zafranal Main Leached Zafranal Main Oxide Zafranal Main Supergene Victoria Hypogene Victoria Leached Victoria Mixed Victoria Supergene Victoria Transitional Sicera Norte Hypogene Sicera Norte Mixed Sicera Norte Supergene Sicera Norte Transitional Sicera Sur Hypogene Sicera Sur Leached Sicera Sur Mixed Sicera Sur Oxide Sicera Sur Supergene Sicera Sur Transitional

14.3

GEOLOGICAL INTERPRETATION
AQM supplied geological solids representing lithology, alteration, and copper solubility zones. As AQM requested that the resource estimate be based upon copper solubility and as copper solubility appears to be more important than lithology or alteration with respect to the distribution of mineralization, only the solubility solids were used for the resource estimate. Copper solubility was determined for all samples containing more than 0.2% copper and is based upon the percent of total copper (CuT) that was liberated in three sequential digestions: 1) sulphuric acid (CuS); 2) cyanide (CuCN); and 3) nitric and hydrochloric acid (CuNH). Solubility was categorized as (in idealized order from bottom to top): hypogene, transitional, supergene, mixed, oxide and leached. The Hypogene Zone contains less than 20% of total copper that is soluble in sulphuric acid and cyanide, i.e. 80% or more of total copper is soluble only in nitric and hydrochloric acid. The Transitional Zone contains more than 20% total copper that is soluble in sulphuric acid and cyanide but less than 50% that is cyanide soluble alone, and the cyanide solution component is also higher than the sulphuric acid soluble component. The Supergene Zone contains more than 50% of total copper that is cyanide soluble. The Oxide Zone contains more than 30% of total copper that is

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-3

1295840100-REP-R0001-05

soluble in sulphuric acid but where the sulphuric acid soluble component is higher than the cyanide soluble component. The base of the Leached Zone represents the threshold at which the ratio between sulphur content and iron content is 20% or less. This ratio is supplemented where possible by the cyanide solubility limit for defining the supergene zone. An additional category, Mixed, contains copper oxides and secondary copper sulphides that are between 20% and 70% cyanide-soluble but where the sulphuric acid soluble component is greater than 20%. Metallurgical test work of the various rock types indicated that the geometallurgical characteristics of the hypogene and transitional zones were very similar in the Main Zone deposit and as a result these two zones were combined for the resource calculation. Similarly, the geometallurgical characteristics of the oxide and mixed zones were very similar in the Main Zone deposit and were also combined for the resource calculation. As little or no metallurgical test work was carried out on the other deposits, all rock types were reported separately for each deposit. Only the Sicera Sur Zone reports the full set of solubility zones; the Victoria Zone is comprised of leached, mixed, supergene, transitional, and hypogene; and Sicera Norte contains only mixed, supergene, transitional and hypogene. Perspective views of the copper solubility zones in each of the four mineral occurrences are shown in Figure 14.1 to Figure 14.3.
Figure 14.1 Perspective View of the Zafranal and Victoria Mineral Zones

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-4

1295840100-REP-R0001-05

Figure 14.2

Perspective View of the Sicera Norte Mineral Zones

Figure 14.3

Perspective View of the Sicera Sur Mineral Zones

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-5

1295840100-REP-R0001-05

14.4

SPATIAL ANALYSIS
Variograms were modelled using Sage2001 software on the basis of copper composites. Separate variograms were estimated for the hypogene and nonhypogene portions of the Zafranal Main and Victoria Zones. However, the Sicera Norte and Sicera Sur Zones were modelled as single variograms for the entire dataset because each of the zones contains relatively little data and it was considered improbable that meaningful variograms could be obtained if the approach used was the same as for Zafranal Main and Victoria Zones. Table 14.4 is a compilation of the parameters for the various variograms and respective search ellipses. The same parameters were used for the interpolation of both copper and gold.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-6

1295840100-REP-R0001-05

Table 14.4
Model

Zafranal Property Variograms and Search Ellipse Parameters

Uncapped Composites

Zafranal Main Hypogene Structure Weight C1 Axis C0 C1 C2 0.238 0.362 0.391 Z Y Z Axis Z Y Z Zafranal Main Non-Hypogene Structure Weight C1 Axis C0 C1 C2 0.259 0.392 0.349 Z Y Z Axis Z Y Z C1 Rotation -115 7 35 Rotation 7 -87 76 C1 Axis X Y Z Axis X Y Z C1 Range 10 10 105 Range 150 160 395 table continues C2 Axis Z Y Z C2 Rotation 7 -87 76 C2 Axis X Y Z C2 Range 150 160 400 C1 Rotation 3 27 87 Rotation 39 -24 56 C1 Axis X Y Z Axis X Y Z C1 Range 70 113 60 Range 130 740 440 C2 Axis Z Y Z C2 Rotation 39 -24 56 C2 Axis X Y Z C2 Range 440 740 127

ZMH Search Ellipse

ZMNH Search Ellipse

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-7

1295840100-REP-R0001-05

Model Victoria Hypogene Structure Weight C1 Axis C0 C1 C2 VH Search Ellipse 0.291 0.228 0.481 Z Y Z Axis Z Y Z Victoria Non-Hypogene Structure Weight C1 Axis C0 C1 C2 0.209 0.547 0.217 Z Y Z Axis Z Y Z C1 Rotation -10 45 0 Rotation -58 -73 87 C1 Rotation -7 9 -83 Rotation 59 24 -38

Uncapped Composites

C1 Axis X Y Z Axis X Y Z

C1 Range 75 50 15 Range 200 115 500

C2 Axis Z Y Z

C2 Rotation 59 24 -38

C2 Axis X Y Z

C2 Range 200 115 500

C1 Axis X Y Z Axis X Y Z

C1 Range 50 115 40 Range 345 500 165

C2 Axis Z Y Z

C2 Rotation -58 -73 87

C2 Axis X Y Z

C2 Range 350 500 165

VNH Search Ellipse

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-8

1295840100-REP-R0001-05

Model Sicera Norte All Zones Structure Weight C1 Axis C0 C1 C2 VH Search Ellipse 0.368 0.478 0.154 Z Y Z Axis Z Y Z Sicera Sur All Zones Structure Weight C1 Axis C0 C1 C2 0.287 0.454 0.259 Z Y Z Axis Z Y Z C1 Rotation 54 -19 -36 Rotation -52 61 25 C1 Rotation 19 38 -2 Rotation -45 13 39

Uncapped Composites

C1 Axis X Y Z Axis X Y Z

C1 Range 330 40 105 Range 125 100 200

C2 Axis Z Y Z

C2 Rotation -45 13 39

C2 Axis X Y Z

C2 Range 125 500 400

C1 Axis X Y Z Axis X Y Z

C1 Range 245 40 45 Range 370 150 107

C2 Axis Z Y Z

C2 Rotation -52 61 25

C2 Axis X Y Z

C2 Range 370 150 110

VNH Search Ellipse

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-9

1295840100-REP-R0001-05

14.5

RESOURCE BLOCK MODEL

The resource block model was developed in the PSAD 56 datum as shown in this section, and subsequently transformed into WGS84 for the design of the mine plan. Because of their wide geographic separation, separate block models were constructed for each mineral deposit although all models were constructed with the same block size (x = 15, y = 15, z = 15 m). The block size approximates one selective mining unit (SMU). Table 14.5 below lists the various parameters of each block model.
Table 14.5
Origin

Zafranal Property Block Model Parameters

Dimensions Number Size (m) Rotation ()

Coordinates ()

Zafranal Main Block Model Parameters X Y Z X Y Z X Y Z X Y Z 792750 8223800 2930 795200 8223880 2930 785200 8227960 2140 786600 8224800 2330 Columns Rows Levels Columns Rows Levels Columns Rows Levels Columns Rows Levels 190 70 75 65 70 60 60 45 40 65 70 45 15 15 15 15 15 15 15 15 15 15 15 15 0 0 0 0 -

Victoria Block Model Parameters

Sicera Norte Block Model Parameters

Sicera Sur Block Model Parameters

14.6

INTERPOLATION PLAN
Each model was interpolated in a single pass using the search ellipses described in Table 14.4. The interpolation process was constrained by the number of samples per block (minimum 8, maximum 40) and the maximum number of samples per hole (8) which at a minimum allowed a grade to be interpolated into a block on the basis of one hole. For all the models the interpolation process was restricted to using only samples from the zone for which values were being estimated. Interpolations were carried out using ordinary kriging (OK).

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-10

1295840100-REP-R0001-05

14.7

MINERAL RESOURCE CLASSIFICATION

Resources within the Zafranal Main and Victoria Zones were classified as Measured, Indicated, and Inferred. Resources within the Sicera Norte and Sicera Sur zones were classified as Indicated or Inferred. The Measured category is commonly used with the implicit meaning that no greater understanding of these resources could be obtained by additional drilling and is usually applied to resources defined by blast hole sampling or data of similar density; as applied to the Zafranal Main and Victoria Zones that have been defined to date only by exploration drilling, this term refers to that portion of those deposits for which a) there is abundant data and b) for which the grade is considered unlikely to change meaningfully from that already estimated if additional data is acquired. Resource blocks classified as Measured required that the interpolated grade was based upon a minimum of six drillholes with a maximum mean sample-to-block distance of 100 m. Resource blocks classified as Indicated required that the interpolated grade was based upon a minimum of four and a maximum of five drillholes and a maximum mean sample-to-block distance of 200 m. Resource blocks classified as Inferred include all blocks for which a grade was interpolated but did not qualify as either Measured or Indicated and which are located within a mean sample-to-block distance of 300 m.

14.8

MINERAL RESOURCE TABULATION

The resources for each of the four mineral zones are tabulated below for a cut-off grade of 0.2% copper. Table 14.6 is a synopsis of the kriged estimates for all four zones. Summaries of the kriged estimates for each zone are given in Table 14.7 to Table 14.9.
Table 14.6 Zafranal Property Kriged Resource Synopsis at 0.2% Copper Cut-off
Tonnes (t) Kriged: All Zones Measured Zafranal Main Zone Measured Total Victoria Zone Measured Total Kriged: Total Measured Kriged: All Zones Indicated Zafranal Main Zone Indicated Total Victoria Zone Indicated Total Sicera Norte Zone Indicated Total 319,042,000 54,731,000 34,005,000 0.38 0.25 0.26 0.08 0.04 0.02 107,907,000 13,184,000 121,091,000 0.43 0.31 0.42 0.08 0.03 0.08 Cu (%) Au (g/t)

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-11

1295840100-REP-R0001-05

Tonnes (t) Sicera Sur Zone Indicated Total Kriged: Total Indicated Kriged: Total Measured + Indicated Kriged: All Zones Inferred Zafranal Main Zone Inferred Total Victoria Zone Inferred Total Sicera Norte Zone Inferred Total Sicera Sur Zone Inferred Total Kriged: Total Inferred 12,665,000 31,470,000 6,170,000 3,432,000 53,738,000 28,322,000 436,100,000 557,191,000

Cu (%) 0.30 0.35 0.36 0.29 0.25 0.25 0.31 0.27

Au (g/t) 0.03 0.06 0.07 0.04 0.03 0.02 0.03 0.03

Note: Totals may not agree because of rounding.

Table 14.7

Zafranal Main Zone Kriged Resource Estimate at 0.2% Copper Cutoff

Tonnes (t) Cu (%) Au (g/t)

Zafranal Main Measured Hypogene Leached Oxidized Supergene Measured Total Hypogene Leached Oxidized Supergene Indicated Total Hypogene Leached Oxidized Supergene Inferred Total 48,638,892 5,056,850 2,073,769 52,137,860 107,907,371 212,892,550 12,755,709 2,711,902 90,682,265 319,042,425 12,314,893 70,953 0 279,370 12,665,216 0.29 0.28 0.27 0.58 0.43 0.28 0.34 0.28 0.62 0.38 0.29 0.38 0.00 0.31 0.29 0.08 0.13 0.14 0.08 0.08 0.07 0.10 0.14 0.08 0.08 0.04 0.05 0.00 0.03 0.04

Zafranal Main Indicated

Zafranal Main Inferred

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-12

1295840100-REP-R0001-05

Table 14.8

Victoria Zone Kriged Resource Estimate at 0.2% Copper Cut-off

Tonnes (t) Cu (%) Au (g/t)

Victoria Measured Hypogene Leached Mixed Oxide Supergene Transitional Measured Total Victoria Indicated Hypogene Leached Mixed Oxide Supergene Transitional Indicated Total Victoria Inferred Hypogene Leached Mixed Oxide Supergene Transitional Inferred Total 23,718,937 0 31,563 499,481 0 7,220,212 31,470,193 0.27 0.00 0.24 0.26 0.00 0.23 0.25 0.03 0.00 0.02 0.03 0.00 0.03 0.03 33,608,361 180,928 2,665,596 0 152,649 18,123,360 54,730,893 0.26 0.24 0.25 0.00 0.61 0.25 0.25 0.04 0.04 0.02 0.00 0.03 0.03 0.04 1,530,959 90,037 3,564,329 0 3,070,399 4,928,300 13,184,024 0.27 0.24 0.33 0.00 0.40 0.26 0.31 0.04 0.06 0.03 0.00 0.02 0.04 0.03

Table 14.9

Sicera Norte and Sicera Sur Zones Kriged Resource Estimates at 0.2% Copper Cut-off
Tonnes (t) Cu (%) Au (g/t)

Sicera Norte Indicated Hypogene Mixed Supergene Transitional Indicated Total Hypogene Mixed Supergene 31,815,134 0 0 2,189,701 34,004,835 5,422,871 134,174 531,834 0.25 0.00 0.00 0.29 0.26 0.25 0.24 0.27 0.02 0.00 0.00 0.01 0.02 0.02 0.01 0.01

Sicera Norte Inferred

table continues
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 14-13 1295840100-REP-R0001-05

Tonnes (t) Transitional Inferred Total Hypogene Leached Mixed Oxide Supergene Transitional Indicated Total Hypogene Leached Mixed Oxide Supergene Transitional Inferred Total Sicera Sur Indicated 17,447,158 3,284,467 1,622,293 3,698,234 100 2,269,853 28,322,106 779,943 656,215 58,573 1,457,521 211,122 268,911 3,432,285 81,288 6,170,168

Cu (%) 0.36 0.25 0.30 0.30 0.25 0.32 0.56 0.27 0.30 0.31 0.30 0.25 0.26 0.79 0.25 0.31

Au (g/t) 0.02 0.02 0.02 0.03 0.03 0.04 0.04 0.02 0.03 0.03 0.02 0.02 0.03 0.04 0.01 0.03

Sicera Sur Inferred

14.9

BLOCK MODEL VALIDATION

The block models were validated visually by comparing the fit of the model to the enclosing solids.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

14-14

1295840100-REP-R0001-05

15.0 MINERAL RESERVE ESTIMATES

A mineral reserve has not been estimated for the Project as part of this PEA. A mineral reserve is the economically mineable part of a Measured or Indicated Mineral Resource.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

15-1

1295840100-REP-R0001-05

16.0 MINING METHODS

16.1 INTRODUCTION
AQM commissioned NCL to prepare the mining study for the PEA of the Project, which contains four mineral zones of interest: Main Zone, Victoria, Sicera Norte and Sicera Sur, all containing similar porphyry-style copper mineralization.

16.2

INITIAL INFORMATION
The following information was provided for the development of the study:

Surface Topography: Digital topographical drawings in WGS84 coordinate system with the UTM 18S horizontal projection, for all of the interest area including the Main Zone, Victoria, Sicera Norte and Sicera Sur, were provided by AQM. Block Models: The resource block models used for the pit designs were prepared by Gregory Mosher, P.Geo. of Tetra Tech in March 2012, as four independent models, in the PASAD56 coordinate system which was later transformed to the WGS84 coordinate system by Aspi-System.

NCL received the block model information, in WGS84 coordinate system, as ASCII files and loaded them into Gemcom software, as four independent models.

B L O C K M OD EL G R A D E - T ON N A G E T A B L ES
The grade-tonnage tables for the four deposits currently under study are provided in Table 16.1 to Table 16.4.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-1

1295840100-REP-R0001-05

Table 16.1

Grade-tonnage Table for Zafranal Main

Measured Indicated Au (g/t) 0.124 0.106 0.099 0.092 0.080 0.075 0.070 0.058 Tonnage ('000 t) 23,233 57,779 84,291 147,183 320,517 571,147 1,038,231 1,778,235 Cu (%) 1.064 0.803 0.690 0.541 0.378 0.287 0.214 0.149 Au (g/t) 0.118 0.104 0.098 0.091 0.076 0.066 0.055 0.042 Measured+Indicated Tonnage ('000 t) 34,063 86,892 125,514 210,707 428,568 727,256 1,256,688 2,086,365 Cu (%) 1.061 0.797 0.689 0.549 0.392 0.301 0.227 0.159 Au (g/t) 0.120 0.105 0.098 0.091 0.077 0.068 0.058 0.044 Inferred Tonnage ('000 t) 628 1,637 4,411 12,712 42,898 196,239 496,366 Cu (%) 0.000 0.562 0.486 0.396 0.292 0.206 0.139 0.089 Au (g/t) 0.000 0.034 0.035 0.037 0.038 0.040 0.041 0.031

Cut-off Grade (%) 0.80 0.50 0.40 0.30 0.20 0.15 0.10 0.00

Tonnage ('000 t) 10,830 29,113 41,223 63,523 108,051 156,110 218,457 308,130

Cu (%) 1.056 0.786 0.686 0.566 0.433 0.353 0.288 0.219

Table 16.2

Grade-tonnage Table for Victoria

Measured Indicated Au (g/t) 0.052 0.045 0.040 0.034 0.032 0.030 0.029 0.027 Tonnage ('000 t) 40 251 1,030 7,030 55,075 105,973 177,905 371,850 Cu (%) 0.900 0.639 0.484 0.353 0.253 0.214 0.177 0.113 Au (g/t) 0.080 0.084 0.071 0.051 0.035 0.030 0.026 0.020 Measured+Indicated Tonnage ('000 t) 129 1,193 3,155 12,159 68,330 124,432 203,894 405,611 Cu (%) 0.898 0.621 0.507 0.379 0.264 0.223 0.184 0.120 Au (g/t) 0.061 0.053 0.050 0.044 0.034 0.030 0.026 0.021 Inferred Tonnage ('000 t) 219 613 5,665 31,700 59,099 106,966 339,613 Cu (%) 0.000 0.539 0.475 0.346 0.257 0.218 0.175 0.087 Au (g/t) 0.000 0.088 0.074 0.044 0.031 0.027 0.023 0.015

Cut-off Grade (%) 0.80 0.50 0.40 0.30 0.20 0.15 0.10 0.00

Tonnage ('000 t) 89 942 2,124 5,129 13,255 18,459 25,988 33,761

Cu (%) 0.897 0.616 0.518 0.415 0.311 0.272 0.229 0.192

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-2

1295840100-REP-R0001-05

Table 16.3

Grade-tonnage Table for Sicera Sur

Measured Indicated Cu (%) Au (g/t) Tonnage ('000 t) 37 519 1,917 9,993 24,294 24,962 25,009 25,009 Cu (%) 0.948 0.606 0.481 0.363 0.300 0.297 0.296 0.296 Au (g/t) 0.068 0.041 0.041 0.031 0.025 0.025 0.025 0.025 Inferred Tonnage ('000 t) 55 213 303 650 2,565 2,978 2,999 2,999 Cu (%) 1.532 0.805 0.698 0.501 0.316 0.295 0.294 0.294 Au (g/t) 0.057 0.049 0.046 0.036 0.031 0.029 0.029 0.029

Cut-off Grade (%) 0.80 0.50 0.40 0.30 0.20 0.15 0.10 0.00

Tonnage ('000 t) -

Table 16.4

Grade-tonnage Table for Sicera Norte

Measured Indicated Cu (%) Au (g/t) Tonnage ('000 t) 252 5,825 23,346 27,415 35,064 35,556 Cu (%) 0.000 0.000 0.434 0.333 0.251 0.236 0.214 0.212 Au (g/t) 0.000 0.000 0.018 0.021 0.017 0.016 0.015 0.015 Inferred Tonnage ('000 t) 13 36 824 4,339 5,240 6,494 7,047 Cu (%) 0.000 0.526 0.490 0.333 0.246 0.230 0.211 0.199 Au (g/t) 0.000 0.013 0.013 0.018 0.018 0.017 0.016 0.015

Cut-off Grade (%) 0.80 0.50 0.40 0.30 0.20 0.15 0.10 0.00

Tonnage ('000 t) -

P I T S L OP E A N GL ES
Pit slope configurations were developed based on the results of stability analysis test work undertaken on the Main Zone Pit area. This analysis was provided in the report entitled Zafranal Pit Slope Design, Conceptual Study (Slope Design) dated May 30, 2011 and prepared by Knight Pisold. This report contains recommendations for the different pit domains, as detailed in Table 16.5 and Figure 16.1.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-3

1295840100-REP-R0001-05

Table 16.5

Inter-ramp and Overall Slopes Recommended for Zafranal Main Pit

Bench

Design Sector SD1 SD2 SD3 SD4 SD5 SD6

Total Pit Height (m) 417 500 482 270 226 307

Inter-ramp Slope () 47 45 45 43 40 45

Slope () 65 to 70 60 to 65 65 to 70 60 to 65 60 to 65 65 to 70

Height (m) 10.20 10.20 10.20 10.20 10.20 10.20

Minimum Berm Width (m) 8.6 8.6 8,6 8.6 8.6 8.6

Overall Slope () 43 42 42 41 38 43

Figure 16.1

Inter-ramp and Overall Slope Angle by Domain

Given the irregular presence of weak rock mass in the deposit area, the maximum inter-ramp slope heights are limited to 200 m. It was assumed that 35 m wide haul ramps and/or step-outs will be incorporated into the pit walls to flatten the overall slopes.

16.3

PIT OPTIMIZATION
The optimized pit outlines for the four deposits were derived using Whittle Four-X optimization software. This analysis was carried out using the March 2012 resource block model, as well as technical and economic data recommended for the pit optimization by the QP and provided by AQM.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-4

1295840100-REP-R0001-05

The metallurgical analyis used in the Whittle evaluation takes into account two lines of processing; milling and flotation for sulphide-mineralized material including hypogene, supergene, and transitional and ROM leaching for all types of mineralized material, with the exception of hypogene, including oxide, leached, mixed, supergene, and transitional. Economic evaluation by block during the optimization process was modelled using the sulphide-mineralized material and oxide, leached and mixed materials were evaluated considering only the ROM leach process. Blocks with negative values were classified as waste. The pit optimization runs considered the resource classification categories of Measured, Indicated, and Inferred.

16.3.1

T EC H N I C AL

AN D

E C ON O M I C P AR A M ET ER S

The following base data and parameters were used in the pit optimization process.

M I N I N G C O ST S
The mining costs were estimated by NCL according to a preliminary study conducted in 2011. The costs of various unit operations are indicated in Table 16.6. The cost of $0.948/t moved was assigned to waste blocks located at the reference elevation of the mine exit to which was added $0.041/t for each uphill bench and $0.015/t for each downhill bench. For mineralized blocks, $0.337/t was added to the mining cost to represent the incremental cost of haulage to the primary crusher.
Table 16.6 Mining Costs
Cost/t ($) Drilling Blasting Loading Hauling Ancillary Support Total 0.093 0.146 0.205 0.291 0.185 0.028 0.948

Comments Waste block at reference elevation Plus bench increment

S L O PE A N GL ES
Global pit slope angles used for the Zafranal Main Zone correspond to those shown previously in Table 16.5. For the Victoria, Sicera Norte and Sicera Sur Zones, an average overall slope angle of 41.5 was used.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-5

1295840100-REP-R0001-05

M I L L I N G /F L OT A T I O N P R OC ES S

Metallurgical Recovery:
Copper recovery: 87% Gold recovery: 60% hypogene, 50% supergene, and 50% transitional

Process Cost:
$6.33/t including transport

Selling Cost:
Copper $0.36/lb Gold $6.0/oz.

ROM L EA C H P R OC ES S

Metallurgical Recovery:
Copper recovery: 55% oxide, 55% leached, 55% mixed, 70%

supergene, 50% transitional

Process Cost:
$5.3/t including solvent extraction-electrowinning cost and transport.

M ET A L P R I C E S

copper $2.70/lb gold $1,100/oz.

R O YA L T Y

1.65% of the revenue.

16.3.2

P I T O PT I M I Z AT I ON O U T P U T
Based on the technical and economic data parameters described previously, a pit optimization run was performed independently for each block model using a series of metal prices. Table 16.7 to Table 16.10 lists the results, by respective mineralized zone.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-6

1295840100-REP-R0001-05

Table 16.7
Design Price ($/lb) 0.54 0.70 0.92 1.24 1.46 1.57 1.84 2.00 2.21 2.43 2.59 2.65 2.70 2.86 2.92 3.02 3.19 3.24 3.40

Whittle Run Results Zafranal Main Zone

Mineralized Material ('000 t) 8,088 16,783 39,383 105,074 144,723 165,214 216,887 260,582 324,227 389,920 438,676 454,435 472,707 528,616 549,081 587,517 650,515 669,734 730,407 Cu Grade (%) 1.289 1.121 0.927 0.722 0.634 0.598 0.528 0.485 0.437 0.400 0.377 0.371 0.363 0.343 0.337 0.325 0.309 0.304 0.291 Au Grade (g/t) 0.124 0.124 0.124 0.093 0.093 0.093 0.093 0.093 0.093 0.093 0.075 0.075 0.075 0.075 0.075 0.075 0.075 0.075 0.075

Rock ('000 t) 34,538 60,194 130,421 330,084 395,050 425,507 500,238 574,980 678,683 785,655 854,989 879,800 904,470 978,726 1,008,763 1,059,684 1,142,883 1,163,517 1,236,922

Strip Ratio 3.27 2.59 2.31 2.14 1.73 1.58 1.31 1.21 1.09 1.01 0.95 0.94 0.91 0.85 0.84 0.8 0.76 0.74 0.69

Table 16.8
Design Price ($/lb) 1.57 1.73 1.89 2.00 2.16 2.21 2.38 2.48 2.54 2.65 2.70 2.81 2.97 3.02

Whittle Run Results - Victoria Zone

Mineralized Material ('000 t) 994.0 1,522.0 2,558.0 3,452.0 5,375.0 6,640.0 10,885.0 13,952.0 16,656.0 20,826.0 22,104.0 26,879.0 35,749.0 36,481.0 Cu Grade (%) 0.548 0.510 0.453 0.420 0.373 0.356 0.325 0.308 0.297 0.283 0.279 0.266 0.250 0.248 Au Grade (g/t) 0.044 0.040 0.037 0.037 0.037 0.034 0.031 0.031 0.031 0.031 0.031 0.031 0.031 0.031

Rock ('000 t) 4,693 6,356 9,349 11,589 16,126 19,702 32,214 39,578 46,384 57,546 60,093 71,863 98,223 98,499

Strip Ratio 3.72 3.18 2.65 2.36 2.00 1.97 1.96 1.84 1.78 1.76 1.72 1.67 1.75 1.70

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-7

1295840100-REP-R0001-05

Design Price ($/lb) 3.08 3.19 3.24 3.35 3.40

Rock ('000 t) 120,405 135,388 152,251 166,146 172,045

Mineralized Material ('000 t) 42,609.0 47,672.0 52,539.0 57,670.0 59,743.0

Strip Ratio 1.83 1.84 1.90 1.88 1.88

Cu Grade (%) 0.241 0.236 0.232 0.227 0.225

Au Grade (g/t) 0.031 0.031 0.031 0.031 0.031

Table 16.9
Design Price ($/lb) 1.51 1.73 1.89 1.94 2.00 2.21 2.38 2.59 2.65 2.70 2.75 2.86 2.97 3.02 3.19 3.40

Whittle Run Results Sicera Norte Zone

Mineralized Material ('000 t) 2 140 970 1,805 1,896 5,685 9,846 12,634 13,240 13,654 18,689 20,925 22,315 23,270 25,956 28,766 Cu Grade (%) 0.366 0.332 0.310 0.305 0.303 0.286 0.282 0.273 0.271 0.270 0.259 0.255 0.253 0.251 0.247 0.243 Au Grade (g/t) 0.025 0.025 0.022 0.022 0.022 0.019 0.019 0.019 0.019 0.019 0.019 0.019 0.019 0.019 0.019 0.016

Rock ('000 t) 2 219 1,808 3,535 3,708 12,293 25,847 33,783 35,590 36,949 54,206 61,433 66,537 70,316 80,885 93,143

Strip Ratio 0 0.56 0.86 0.96 0.96 1.16 1.63 1.67 1.69 1.71 1.9 1.94 1.98 2.02 2.12 2.24

Table 16.10
Design Price ($/lb) 1.30 1.51 1.73 1.94 2.00 2.16 2.21

Whittle Run Results Sicera Sur Zone

Mineralized Material ('000 t) 7 474 1,027 1,450 1,771 2,535 3,873 Cu Grade (%) 0.473 0.508 0.454 0.417 0.398 0.379 0.352 Au Grade (g/t) 0.072 0.047 0.044 0.040 0.040 0.037 0.034

Rock ('000 t) 7 1,592 2,887 3,403 3,918 6,134 9,871

Strip Ratio 0.00 2.36 1.81 1.35 1.21 1.42 1.55

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-8

1295840100-REP-R0001-05

Design Price ($/lb) 2.38 2.48 2.59 2.70 2.81 2.86 3.02 3.08 3.19 3.29 3.46

Rock ('000 t) 13,595 15,802 19,517 23,965 27,108 28,865 30,890 34,363 38,393 39,306 41,435

Mineralized Material ('000 t) 4,673 5,131 5,877 7,052 7,764 8,060 8,447 8,866 9,473 9,667 9,958

Strip Ratio 1.91 2.08 2.32 2.40 2.49 2.58 2.66 2.88 3.05 3.07 3.16

Cu Grade (%) 0.350 0.348 0.343 0.329 0.324 0.323 0.320 0.320 0.317 0.316 0.314

Au Grade (g/t) 0.034 0.034 0.031 0.031 0.031 0.031 0.031 0.031 0.031 0.031 0.028

16.3.3

M I N I N G I N V EN T OR Y
Pit outlines corresponding to copper design price of $2.70/lb were selected for the design of the open pits. Table 16.11 to Table 16.14 shows the resource inventory by mineralization type and category for the selected pit outlines.
Table 16.11 Zafranal Main Zone Whittle Pit Mineral Resource
Tonnage ('000 t) Measured Hypogene Leached Oxidized Supergene Measured Total Indicated Hypogene Leached Oxidized Supergene Indicated Total Measured + Indicated Hypogene Leached Oxidized Supergene Measured + Indicated Total 289,592 22,535 5,587 154,382 472,096 0.258 0.292 0.265 0.576 0.363 0.071 0.109 0.140 0.075 0.075 228,694 15,742 3,144 98,014 345,594 0.256 0.309 0.268 0.589 0.353 0.072 0.100 0.137 0.075 0.074 60,898 6,793 2,443 56,368 126,502 0.265 0.254 0.260 0.553 0.392 0.068 0.130 0.144 0.074 0.076 Cu (%) Au (g/t)

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-9

1295840100-REP-R0001-05

Tonnage ('000 t) Inferred Hypogene Leached Oxidized Supergene Inferred Total 362 74 0 175 611

Cu (%)

Au (g/t)

0.167 0.202 0.000 0.288 0.206

0.230 0.019 0.000 0.026 0.146

Table 16.12

Victoria Zone Whittle Pit Mineral Resource

Tonnage ('000 t) Cu (%) Au (g/t)

Measured Hypogene Leached Mixed Oxide Supergene Transitional Measured Total Indicated Hypogene Leached Mixed Oxide Supergene Transitional Indicated Total Measured + Indicated Hypogene Leached Mixed Oxide Supergene Transitional Measured + Indicated Total Inferred Hypogene Leached Mixed Oxide Supergene Transitional Inferred Total
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

347 161 3,821 0 2,972 4,380 11,681 3,684 146 877 0 93 4,994 9,794 4,301 307 4,698 0 3,065 9,374 21,475 499 130 629
16-10

0.261 0.220 0.318 0.000 0.400 0.248 0.309 0.235 0.214 0.247 0.000 0.734 0.242 0.244 0.237 0.217 0.305 0.000 0.410 0.245 0.280 0.257 0.216 0.248

0.041 0.056 0.029 0.000 0.025 0.034 0.030 0.037 0.053 0.022 0.000 0.044 0.031 0.033 0.038 0.055 0.027 0.000 0.026 0.033 0.032 0.034 0.019 0.031
1295840100-REP-R0001-05

Table 16.13

Sicera Norte Zone Whittle Pit Mineral Resource

Tonnage ('000 t) Cu (%) Au (g/t)

Indicated Hypogene Mixed Supergene Transitional Indicated Total Inferred Hypogene Mixed Supergene Transitional Inferred Total 1,397 0 440 77 1,914 0.252 0.000 0.276 0.355 0.262 0.016 0.000 0.015 0.015 0.016 10,102 0 0 1,638 11,740 0.266 0.000 0.000 0.305 0.271 0.019 0.000 0.000 0.012 0.018

Table 16.14

Sicera Sur Zone Whittle Pit Mineral Resource

Tonnage ('000 t) Cu (%) Au (g/t)

Indicated Hypogene Leached Mixed Oxide Supergene Transitional Indicated Total Inferred Hypogene Leached Mixed Oxide Supergene Transitional Inferred Total 98 1,158 55 400 1,711 0.452 0.259 1.532 0.173 0.291 0.056 0.031 0.056 0.016 0.030 2,083 205 2,750 303 5,341 0.372 0.295 0.331 0.262 0.342 0.028 0.022 0.037 0.016 0.032

Table 16.15 shows the total mining inventory for the Project.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-11

1295840100-REP-R0001-05

Table 16.15

Total Mineral Inventory from Whittle Pits

Tonnage (t) 138,183,000 372,469,000 510,652,000 4,865,000 509,960,000 1,025,477,000 Cu (%) 0.385 0.347 0.358 0.260 Au (g/t) 0.07 0.07 0.07 0.04 -

Total In-pit Resources Measured Indicated Measured + Indicated Inferred Waste Total

16.4

MINING PHASES
The optimized Whittle Pits at metal prices of $2.70/lb copper and $1,100/oz gold were selected as the ultimate pit outlines for the four deposits, but only the Main Zone and Victoria Zone were considered for the PEA. The Main Zone pit development considered six operative mining phases based on the sequence of Whittle Four-X nested pit shells, while only a single operative phase was designed for the Victoria pit. Sicera Norte and Sicera Sur deposits were not considered in the development scenario given the level of exploration and distance from the Main Zone. The optimized Whittle Pits for the Main Zone and Victoria were modified to incorporate pit access roads, safety berms and ensure adequate working areas. The mine design resulted in the configuration of pits and dumps as shown in Figure 16.2.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-12

1295840100-REP-R0001-05

Figure 16.2

General Mine Configuration

16.5

MINING SCHEDULE
The mining schedule was designed to reflect a concentrator feed rate of 80,000 t/d for 365 d/a.

16.5.1

P L AN N I N G C R I T ER I A
The mine schedule was prepared according to the plant ramp-up projection, as listed below:

Month 1: 36% throughput design Month 2: 57% throughput design Month 3: 63% throughput design Month 4: 70% throughput design Month 5: 80% throughput design Month 6: 83% throughput design Month 7: 87% throughput design Month 8: 92% throughput design

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-13

1295840100-REP-R0001-05

Month 9: 96% throughput design Month 10: 96% throughput design Month 11: 97% throughput design Month 12: 100% throughput design.

The sulphide-mineralized material with grade greater than the copper cut-off grade (COG) was sent to the flotation plant. In-pit marginal hypogene, with a copper grade greater than 0.15% and lower than the COG, was sent to a low-grade stockpile located near the crusher and reprocessed in the flotation plant at the end of the mine life. Oxide, leached, and marginal supergene, transitional and mixed mineralized material (copper grade greater than 0.15% and lower than the COG) were sent to a ROM leach pad. Planning periods considered were as follows:

start: January Year -2 pre-stripping and production, Year -2: quarterly (Q3 Year -2 through Q4 Year 2) from Year 3 to the end of mine life: yearly.

All available classified resources (Measured, Indicated and Inferred), were considered as plant feed material.

16.5.2

P R OD U C T I ON P L AN
A mine production schedule was developed showing mineralized material tonnages, metal grades, and waste material by period, throughout the mine life. The distribution of mineralized material and waste contained in each of the mining phases was used to develop the schedule, thereby assuring that criteria for adequate mineral exposure, mining accessibility, and consistent material movement were maintained throughout the planning period. Table 16.16 shows the 80,000 t/d mining plan summary for flotation feed by planning period and Table 16.17 shows the 80,000 t/d mining plan summary for leach feed and low grade flotation feed to stockpile by planning period. The outputs of the proposed mining plans are shown in Figure 16.3 to Figure 16.5.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-14

1295840100-REP-R0001-05

Table 16.16

80,000 t/d Mining Plan Summary By Planning Period

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-15

1295840100-REP-R0001-05

Table 16.17

80,000 t/d Mining Plan Summary By Planning Period

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-16

1295840100-REP-R0001-05

Figure 16.3

Total Tonnage Mining Plan

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-17

1295840100-REP-R0001-05

Figure 16.4

Concentrator Feed

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-18

1295840100-REP-R0001-05

Figure 16.5

Leach Facility Feed

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-19

1295840100-REP-R0001-05

16.6

MINE EQUIPMENT FLEET

The mine equipment fleet was selected on the basis of the schedule of material movement, the geometry of the planned open pits and the compatibility of individual equipment within the overall fleet. The following units were selected:

main equipment
electric drill diesel drill (311 mm diameter) rope shovel front end loader (FEL) (17 m ) trucks (300 t)
3

ancillary equipment
bulldozer 500 hp wheeldozer 500 hp grader 16 m water truck 85 m .
3

The following mine operation characteristics were assumed for the fleet estimation process:

363 working days per year 2 shifts per day 12 hours total per shift

16.7

SCHEDULE

OF

MINE EQUIPMENT

Table 16.18 summarizes the total mine fleet requirements for the defined production plan.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-20

1295840100-REP-R0001-05

Table 16.18

Mining Equipment Requirements

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

16-21

1295840100-REP-R0001-05

17.0 RECOVERY METHODS

17.1 INTRODUCTION
The Zafranal concentrator has been designed to process a nominal 80,000 t/d, of copper-gold porphyry plant feed material from an open pit operation. The concentrator has been designed to produce a marketable copper concentrate of 28% copper containing about 3 g/t gold. An SX-EW facility to recover copper from the dump leaching of low-grade oxide and sulphide material from the open pit will also be part of the overall processing plant.

17.2

SUMMARY
The metallurgical processing procedures selected for Zafranal were based on the results of metallurgical testing performed at G&T in Kamloops, BC, Canada and Plenge in Lima, Per, along with the mining resources set out by NCL. The processing procedures selected for the design will produce a saleable, high-grade copper concentrate containing gold as a by-product. The treatment plant will consist of a primary stage that includes crushing, SAG and ball mill grinding circuit, which is then followed by a flotation process to recover and upgrade copper from the feed material. As shown in the simplified flowsheet (Figure 17.1), the flotation concentrate will be thickened and filtered and sent to the concentrate stockpile for subsequent trucking and shipping to smelters. The final flotation tailings will be disposed of using high density thickened slurry deposited into a TMF. This will allow for greater control of water management through recovery and re-use of water prior to tailings deposition. Process water will be recycled from the tailings thickener overflow and will be supplemented with process water recovered from the overflow of the concentrate thickener. Fresh water will primarily be used for gland service and reagent preparation. The process plant will consist of the following unit operations and facilities:

ROM plant feed material receiving and primary crushing coarse feed material stockpile and reclaim a SAG and ball mill grinding circuit incorporating cyclones for classification SAG mill with potential for adding a pebble crushing circuit copper rougher flotation

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-1

1295840100-REP-R0001-05

flotation concentrate regrinding three-stage cleaner flotation copper concentrate thickening, filtration, and dispatch tailings thickening and disposal to a tailings storage.

The simplified flowsheet is shown in Figure 17.1.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-2

1295840100-REP-R0001-05

Figure 17.1

Simplified Process Flowsheet Zafranal Project

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-3

1295840100-REP-R0001-05

17.3
17.3.1

PLANT DESIGN
M A J OR D ES I GN C R I T ER I A
The major criteria used in the design of the concentrator are outlined in Table 17.1.
Table 17.1 Major Design Criteria
Criteria Overall Plant Feed Operating Year Crushing Utilization Grinding and Flotation Utilization Bond Crushing Work Index, design Bond Rod Mill Work Index, design Bond Ball Mill Work Index, design Bond Abrasion Index, design Specific Gravity of Plant Feed Material Moisture Content of Plant Feed Material Primary Crushing Circuit Throughput Rate SAG Mill Feed Size, 80% Passing Pebble Crushing Circulating Load Ball Mill Feed Size, 80% Passing Ball Mill Product Size, 80% Passing Ball Mill Circulating Load Milling and Flotation Process Rate Pebble Crushing Rate Regrind Mill Product Size, 80% Passing Head Grade, Design Head Grade, Design Copper Concentrate Grade Gold Grade in Copper Concentrate Anticipated Recovery, Design (Copper) Anticipated Recovery, Design (Gold) Unit t/d d % % kWh/t kWh/t kWh/t g % t/h m % m m % t/h t/h m % Cu Au, g/t % g/t Cu, % Au, % Value 80,000 365 55 92 7.85 13.0 12.1 0.280 2.70 2.0 6061 165,000 25.0 2,000 150 250 3,623 906 40 0.837 0.130 28.0 3 87.7 49.0

The design parameters are based on test work results obtained by G&T and Plenge from the test programs performed 2012. Data from the SGS Lakefield Research Ltd. (SGS Lakefield) test work completed during 2010 was also incorporated, as was information provided by Transmin. The grinding mills were sized based on the Bond Work Index data obtained from the test work. The regrind mill was sized in consultation with the vendor.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-4

1295840100-REP-R0001-05

The flotation cells were sized based on the optimum flotation times as determined during the laboratory test work. Typical flotation cell design parameters have been used in the design of the flotation circuit.

17.3.2

O PE R AT I N G S C H ED U L E

AND

A V AI L AB I L I T Y

The crushing and processing plants will be designed to operate on the basis of two 12-hour shifts per day, for 365 d/a. The primary crusher availability will be 75% and utilization will be 55%. The grinding, and flotation circuit availabilities and running times will be 92%. This will allow for a potential increase in crushing rate, and will allow sufficient downtime for the scheduled and unscheduled maintenance of the crushing and process plant equipment.

17.4
17.4.1

PROCESS PLANT DESCRIPTION

P R I M AR Y C R U S H I N G
A single 1,524 mm by 2,870 mm gyratory crusher will be located in proximity to the open pit, approximately 700 m from the main pit exit. The crushing circuit will reduce the ROM plant feed material from a nominal top size of 1,000 mm to a crushed product size P80 of 165 mm in preparation for the grinding process. The primary crushing circuit will contain the following main items of equipment:

ROM feed hopper/surge bin coarse rock breaker gyratory crusher apron feeder conveyor belts belt scale dust ventilation system.

Haulage trucks with nominal 300 t capacity will bring ROM material to the dry crushing plant. The material will be dumped directly from the trucks into the feed hopper for the crushing stage. The feed hopper will have an equivalent surge capacity of just over one truck-load. The area will be equipped with a coarse rock breaker in the event that oversize material makes its way into the feed hopper. The ROM material will exit the feed hopper and will feed the primary gyratory crusher. The gyratory crusher will operate at a utilization factor of 55% and will process 6,060 t/h of material. The gyratory crusher will reduce the plant feed material rock size from minus 1,000 mm to a product size P80 of about 165 mm, with the option of crushing finer to 125 mm. The crushed material will be deposited onto conveyor

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-5

1295840100-REP-R0001-05

belts feeding the coarse material stockpile, located 250 m above and 1,125 m from the primary crusher. The primary crushing and conveyor drop points will be equipped with dust ventilation systems to control fugitive dust that will be generated during crushing and conveyor loading, and the transportation of the crushed material.

17.4.2

C O AR SE M AT ER I AL S T OC KP I L E

AN D

R EC L AI M

The coarse material stockpile will be a production surge facility which will allow for a steady feed of material to the milling circuit. The major equipment and facilities in this area includes:

coarse material stockpile reclaim apron feeders a conveyor belt belt scale.

The primary crusher will have reduced the ROM material to a P80 size of 165 mm, and this material will be conveyed to the coarse material stockpile. The coarse material stockpile will have a live capacity of 54,000 t. The material will be reclaimed from this stockpile by three apron feeders with a combined nominal rate of 3,623 t/h. The apron feeders will feed a conveyor belt which will in turn will feed the SAG mill. The conveyor belt will be equipped with a belt scale.

17.4.3

GRINDING

AN D

C L A SS I F I C AT I ON

The concentrator will have a single grinding circuit comprised of a 40 diameter wrap around SAG mill and two 28 diameter wrap around ball mills. This will be designed as a two-stage operation with the SAG mill in closed circuit with a pebble crusher, and the two ball mills in closed circuit with the classifying cyclones. The SAG mill will be equipped with pebble ports to remove pebbles finer than 65 mm. The SAG mill circuit will not have pebble crushers installed initially. However, a pebble crushing circuit could be installed at later date. The grinding will be conducted as a wet process at a nominal rate of 3,623 t/h of material. The grinding circuit will include:

a SAG mill two ball mills two pebble crushers (potentially added in the future) a cyclone feed pumpbox two sets of cyclone feed slurry pumps two cyclone clusters
17-6 1295840100-REP-R0001-05

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

mass flow meter cyclone overflow product particle size analyzer sampler system.

The material from the coarse material stockpile will be reclaimed under controlled feed rate conditions using apron feeders. These feeders will discharge the material onto a conveyor belt feeding the SAG mill. A belt scale will control the feed to the SAG mill. Water will be added to the SAG mill feed material to assist the grinding process. The SAG mill will operate at a critical speed of 75%. Should future grinding needs require pebble crushers, the SAG mill discharge end will be equipped with 65 mm pebble ports to remove the critical size material. The mill discharge will be screened by the mill trommel and the SAG mill discharge screen. The trommel and screen underflow will be discharged into the cyclone feed pumpbox. Each ball mill will be fed from an independent cyclone cluster and will be in closed circuit with the cyclone feed pumpbox. The product from each ball mill will be discharged into the cyclone feed pumpbox combining with the SAG mill discharge to become the cyclone feed. The slurry in the cyclone feed pumpbox will be split and the slurry will be pumped in two portions and will report separately to two cyclone clusters for classification. The cut size for the cyclones will be a P80 of 150 m, and the circulating load to the ball mill circuits will be 250% with the cyclone underflow returning to the ball mills as feed material. The new feed to each ball mill will be 1,812 t/h and the combined total of the two mills (3,623 t/h) will constitute the feed rate to the copper flotation circuit. The ball mills will operate at a critical speed of 75%. Dilution water will be added to the grinding circuit as required. The cyclone overflow from both classification circuits will be discharged into the first copper rougher flotation cell in each rougher flotation line. The pulp density of the cyclone overflow slurry will be approximately 36% solids. Provision will be made for the addition of lime to the cyclone feed pumpbox for the adjustment of the pH of the slurry in the grinding circuit prior to the flotation process. Grinding media will be added to the mills in order to maintain the grinding efficiency. Steel balls will be periodically added to each mill using a ball charging kibble.

17.4.4

F L OT AT I ON

AN D

R E GR I N D C I R C U I T S

The milled pulp will be subjected to flotation to recover the targeted minerals into a high-grade copper concentrate containing gold as a by-product. Tank style flotation cells will be used throughout the majority of the flotation circuit with final cleaning and upgrading of the concentrate occurring in column cells. The flotation circuit will include the following equipment:

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-7

1295840100-REP-R0001-05

rougher flotation collection box flotation reagent addition facilities rougher flotation tank cells one concentrate regrind mill, Isamill type one classification cyclone cluster for the regrind mill cleaner flotation collection box first cleaner flotation tank cells first cleaner scavenger flotation tank cells second cleaner flotation tank cells third cleaner flotation column cells pumpboxes and standpipes slurry and concentrate pumps sump pumps particle-size analyzer for the regrind mill sampling system.

The two cyclone overflow streams from the grinding circuit will feed the rougher flotation circuit collection box by gravity flow from each of the ball mill grinding circuit classification cyclone clusters. The slurry will be monitored for P80 particle size, and flotation feed samples will be taken periodically for process control and metallurgical accounting. The collection box will mix the two product streams in preparation for sampling at the design feed rate of 3,623 t/h. Flotation reagents will be added to the collection box as defined through testing. The flotation reagents added will be the collectors, PAX, the xanthate allyl ester Aero 3302 (A3302), and the dithiophosphinate Aerophine 3418A (3418A) together with the frother, MIBC. Provision will be made for the addition of collector reagents to the grinding circuit, as well as the staged addition of the reagents in the rougher circuit and in the cleaner stages of the flotation circuit. The rougher flotation circuit will consist of two flotation trains which will operate in the following manner. The two cyclone overflow slurry streams will flow into the collection box; the combined slurry stream will be sampled and will then be split into two streams in the distribution box with each stream feeding one of the rougher flotation tank cell lines. Air injection will facilitate the flotation process. The copper minerals will be selectively floated into a rougher concentrate away from the other minerals and the gangue present in the slurry. The rougher concentrate will constitute approximately 11.0% mass of the plant feed. Each rougher tailings stream will be sampled automatically prior to discharge into the rougher tailings pumpbox for

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-8

1295840100-REP-R0001-05

process control and metallurgical accounting purposes. These streams will be discharged to the tailings thickener. The rougher concentrate streams will be combined and form a single feed which will continue to the regrind and cleaner flotation sections of the flotation circuit for further processing. To completely liberate the fine-sized grains of the copper minerals from the gangue constituents and to enhance upgrading of the copper concentrate, regrinding and staged cleaning will be incorporated in the cleaner flotation circuit. A single stage of regrinding and three stages of flotation cleaning have been chosen so that a final product of acceptable grade and recovery will be achieved. The rougher concentrate will be pumped to the regrind densification cyclone cluster. The regrind cyclone cluster will operate as densification cyclones and will deliver the feed to the regrind Isamill at the required density of 50% solids. The Isamill product will discharge the finely milled material into the cleaner collection box where it will be recombined with the regrind densification cyclone overflow, other product streams and reagents, prior to being fed into to the head of the first cleaner flotation cells. The rougher concentrate regrind Isamill will have a design treatment rate of about 200 t/h, and will have a circulating load of approximately 10% as specified by the vendor. The regrind circuit discharge will be combined with the second cleaner tailings and the first cleaner scavenger concentrate and this will constitute the feed to the first cleaner flotation stage. This first cleaner stage will be directly followed by the first cleaner scavenger flotation stage. Tailings from the first cleaner scavenger flotation stage will be directed to the tailings thickener. The first cleaner concentrate will be combined with the third cleaner tailings as the feed to the second cleaner flotation stage. The second cleaner concentrate will report to the third cleaner flotation stage as flotation feed. The concentrate from the third cleaner flotation stage will be the final copper concentrate with a design copper grade of 28% copper. The third cleaner copper concentrate product will feed directly to the copper concentrate thickener for dewatering. The second cleaner tailings will be returned to the cleaner collection box. The third cleaner tailings will be the feed to the second cleaner stage together with the first cleaner concentrate. Provision will be made for the copper concentrate thickener overflow water to be re-used in the grinding and flotation circuit as process water providing this does not have a deleterious effect on the flotation of the copper and gold minerals as a result of residual reagents.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-9

1295840100-REP-R0001-05

17.4.5

C O N C E N T R AT E H AN D L I N G
The cleaner flotation concentrate will be thickened, filtered, and stored prior to shipment to the smelter. The concentrate handling circuit will have the following equipment:

concentrate thickener concentrate thickener underflow slurry pump concentrate filter feed tanks concentrate filter press feed pumps concentrate filter press filter press washing and filtrate handling equipment dewatered concentrate storage and dispatch facility.

The concentrate produced will be pumped from the final cleaner flotation stage to the concentrate thickener. Flocculant will be added to the thickener feed well to aid the settling process. The thickened concentrate will be pumped to the concentrate filter feed tanks using the thickener underflow slurry pump. The underflow density will be 60% solids. The concentrate filter feed tanks will be agitated tanks that will serve as the feed surge for the two concentrate filters. The concentrate filters will be pressurized filter press units. Since filtration will be a batch process, the concentrate filter feed tanks will also act as surge tanks for the filtration operation. The filter presses will dewater the concentrate to produce a final concentrate with a moisture content of about 9%. The filtrate will be returned to the concentrate thickener. The filter press solids will be discharged directly onto the concentrate stockpile. The dewatered concentrate will be stored in a designated storage facility and will periodically be loaded into trucks for dispatch off the property. The thickener overflow solution from the concentrate thickener will be collected in the process water tank for recycling within the mill circuit.

17.4.6

T AI L I N G S T H I C K EN ER
The plant tailings will be thickened to maximize the recovery of water prior to final deposition. The tailings circuit will include the following equipment:

tailings thickener feed tank thickener unit final tailings sampler.

The rougher flotation tailings, combined with the first cleaner scavenger tailings, will be the final plant tailings.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-10

1295840100-REP-R0001-05

Flocculant reagent will be added to aid the settling of the tailings in the thickener. The flocculant will be added as a dilute solution at an addition rate which will be determined during future testing. The thickener overflow solution will be directed to the process water tank for re-use in the plant as general process water. The solids will be thickened to a pulp density of 65% solids and will then be gravity fed to a tailings pond facility for final deposition.

17.4.7

R E A GEN T H AN D L I N G

AN D

S T OR A G E

The various chemical reagents will be added to the process slurry streams to facilitate the recovery of copper during the flotation process. The preparation of the various reagents will require:

a bulk handling system mix and holding tanks metering pumps a flocculant preparation facility a lime slaking and distribution facility eye-wash and safety showers applicable safety equipment.

Various chemical reagents will be added to the grinding and flotation circuit to modify the mineral particle surfaces and enhance the flotability of the valuable mineral particles into the copper-gold concentrate product. The reagents will be prepared reasonably close to the point of usage. The reagent preparation section will be under a roof to protect the reagents and equipment from the environment. Most reagents will be received in bulk in palletized bags, chemtainers, drums or bulk bags. The reagent preparation section will contain strategically located safety showers and eyewash stations. Each reagent preparation area will be bunded to contain any spillage which may arise during the preparation stage with each bunded area served by a sump pump for the cleaning up and control of any spillage arising. Fresh water will be used in the making up or the dilution of the various reagents that will be supplied in powder/solids form, or which require dilution prior to the addition to the slurry. These solutions will be added to the addition points of the various flotation circuits and streams using metering pumps. At present, test work is ongoing in order to specifically identify the collector reagents which will be used in the flotation plant. The three flotation collector reagents which have been tested are PAX, A3302, and 3418A. All three of these reagents will be mentioned in the report, although it is probable that only two of these will be used operationally at any time.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-11

1295840100-REP-R0001-05

LIME
The design is based on using hydrated lime as the pH modifier for the various unit processes. Hydrated lime will be delivered in 40 t trucks, and will be added to the grinding and flotation circuits. The hydrated lime will be off-loaded into a storage silo. A screw conveyor will add the required amount of hydrated lime to the hydrated lime tank. The hydrated lime slurry strength will be 20%. The hydrated lime will then be distributed to the addition points via a closed loop piping system.

P OT A SS I U M A M YL X A N T H A T E
PAX will be used in the flotation circuit as the collector reagent for the flotation of copper and gold minerals. The PAX will arrive at the plant in bags. The reagent will be made up in a mixing tank to the required solution strength of 20%, and then transferred to the holding tank, from where the solution will be pumped to the addition points in the circuit using metering pumps.

A ER O 3302
The A3302 will be used in the flotation circuit as the collector reagent for the copper minerals and the gold. The A3302 will arrive in drums and will be pumped to points of addition as a 100% solution strength. Since this reagent is not soluble in water, the A3302 will likely be added to the grinding circuit. The A3302 reagent belongs to the xanthate family of reagents, and is a xanthate allyl ester.

A ER O PH I N E 3418A
The 3418A will be used in the flotation circuit as the collector reagent for the flotation of copper and gold minerals. The 3418A will arrive in drums and will be transferred to a holding tank prior to distribution within the plant. The 3418A will be pumped directly to the flotation circuit as a 100% concentration strength solution using metering pumps. The 3418A reagent is a dithiophosphinate-type collector.

M ET H YL I S OB U T YL C A R B I N OL
The reagent MIBC will be used in the flotation circuit to provide the froth phase of the flotation process. MIBC will arrive in bulk containers and will be transferred to a holding tank prior to distribution within the plant. MIBC will be pumped directly to the flotation circuit as a 100% concentration strength solution using metering pumps.

F L OC C U L A N T
Flocculant will be used in the flotation concentrate thickener and tailings thickener as an aid in the settling process. The flocculant will be prepared at the required concentration in a proprietary vendor-supplied flocculant preparation facility. Flocculant will be delivered in bulk bags. A screw conveyor will deliver the correct amount of dry flocculant powder to be mixed with water prior to delivery into the flocculant mix tank. The flocculant will be allowed to hydrate in the mix tank before
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 17-12 1295840100-REP-R0001-05

being transferred to the holding tank where it will be made up to the required dosing strength. A metering pump will transfer the required amount of flocculant from the holding tank to the points of addition at the flotation concentrate thickener and the tailings thickener where final dilution will occur. Flocculant will be prepared in the standard manner as a dilute solution with 0.20% solution strength. This will be further diluted in the thickener feed well prior to mixing with the slurry.

17.4.8

A SS A Y

AN D

M ET A L L U R G I C AL L A B OR AT O R Y

The assay laboratory will be equipped with the necessary analytical instruments to provide all routine assays for the mine, the concentrator, and the environment departments. The most important of these instruments includes:

an AAS an inductively coupled plasma-spectrometer (ICP-MS) a Leco furnace, or equivalent.

The metallurgical laboratory will undertake all the necessary test work to monitor metallurgical performance and, more importantly, to improve process flowsheet unit operations and efficiencies. The laboratory will be equipped with laboratory crushers, ball and stirred mills, particle size analysis sieves, flotation cells, filtering devices, balances, and pH meters.

17.4.9

W AT ER S U P PL Y
Two separate water supply systems, one for fresh water and one for process water, will be provided to support the process operations.

F R E SH W A T ER S U P PL Y S YST EM
Fresh and potable water will be supplied to a fresh/fire water storage tank which will be delivered by pipeline as desalinated water from a desalination plant situated on the coast. Fresh water will be used primarily for the following:

fire water for emergency use cooling water for mill motors and mill lubrication systems gland service for the slurry pumps reagent make-up potable water supply.

The potable water from the fresh water source will be treated and stored in the potable water storage tank prior to delivery to the various service points.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-13

1295840100-REP-R0001-05

P R OC E SS W A T ER S U PPL Y S YST EM
Some process water generated in the flotation circuit as concentrate thickener overflow solution will be re-used in the process circuit via the process water tank. Reclaimed water will also be pumped from the tailings thickener overflow to the process water tank for distribution to the points of usage.

17.4.10 A I R S U PP L Y
Separate air service systems will supply air to the following areas:

low-pressure air for flotation cells will be provided by air blowers high-pressure air for the concentrate filter press operation will be provided by dedicated air compressors instrument air will come from the plant air compressors and will be dried and stored in a dedicated air receiver.

17.4.11 O N - L I N E S AM PL E A N AL Y SI S
The plant will rely on the on-stream, or in-stream, analyzer for process control. The analyzer will determine the metal content in the various flotation streams in the circuit. A sufficient number of samples will be taken so that the circuit can be balanced by analytical resultant and calculation as required. Specific samples that will also be taken for metallurgical accounting purposes will be the flotation feed to the circuit, the final tailings, and the final concentrate produced. These samples will be collected on a shift-basis and will be assayed in the assay laboratory. On-stream particle size monitors will determine the P80 particle size of the primary cyclone overflow and the regrind circuit products.

17.5
17.5.1

SOLVENT EXTRACTION-ELECTROWINNING PROCESSING FACILITY

I N T R O D U C T I ON
The heap leach SX-EW plant has been designed to produce a nominal 10,000 t/a of high quality copper cathodes from oxide and secondary sulphide plant feed material with copper grade in the range of 0.15 to 0.5%, with an average grade of 0.23% total copper. The plant feed material will be processed using acid solution dump leaching and SX, and the copper will be recovered using an EW operations process.

17.5.2

S U M M AR Y
The treatment plant will consist of the initial curing by acid impregnation of the leach piles which will be followed by the dump leaching stage consisting of 94 modules, with the resulting pregnant leach solution (PLS) being pumped to the SX circuit for copper recovery. The high concentration copper-rich electrolyte will be processed in the EW circuit. Two rows of cells will produce high quality copper cathodes. The

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-14

1295840100-REP-R0001-05

low-cost ROM dump leach process will not require any crushing; rather the dump piles will be formed by the direct dumping of the ROM material from trucks on the leach pads. The process plant will consist of the following unit operations and facilities:

dump leaching pad solution ponds SX circuit EW circuit water supply facilities, reverse osmosis (RO) plant.

17.5.3

P L AN T D ES I GN M A J OR D ES I GN C R I T ER I A
The leach SX-EW plant has been design to produce 10,000 t/a of high quality copper cathodes. The major plant design criteria are included in Table 17.2.
Table 17.2 Major Design Criteria for the Leach SX-EW Plant
Criteria Monthly Production Capacity Operating Year Oversize Factor Plant Availability Average Plant Feed to Leach Pads Head Grade, Design Particle Size of Plant Feed to Leach Pads Bulk Density of Plant Feed Dumping/Lift Height Copper Recovery Instantaneous Irrigation Rate Total Leaching Period PLS to SX Concentration Raffinate from SX Concentration PLS to SX Flow Rate Raffinate from SX Flow Rate Organic Flow Rate Charged Electrolyte Flow Rate Number of O/A Rate Extraction Stages Number of O/A Rate Re-extraction Stages Extractant Concentration % t/d % Cu mm t/m m % L/h/m d g/L Cu g/L Cu m/h m/h m/h m/h % v/v
2 3

Unit t copper d/a

Value 840 360 1.09 95.0 19,853 0.15 to 0.50 100% < 13 1.60 6.00 60 14.8 541 2.76 0.28 431 433 431 97.8 1.00 4.41 11.7

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-15

1295840100-REP-R0001-05

Criteria Efficiencies of SX Stages Number of Extraction Stages Number of Re-extraction Stages Number of Cells for EW Current Efficiency Number of Rectifiers Design Current Discharged Electrolyte from EW Concentration Note:

Unit % % A g/L Cu

Value 94.0 2.00 1.00 62.0 92.0 2.00 17,601 95.5

O/A = organic/aqueous, v/v = volume to volume

17.6
17.6.1

PROCESS PLANT DESCRIPTION

D U M P L EA C H I N G
Fresh leach feed material from the mine will be delivered to the leach pads by dump trucks. The total leaching period is 541 days, with an intermediate leach solution (ILS) spray period of 506 days and a raffinate and water spray period of 34.5 days. The surface of the heap will be ripped between the lifts to re-establish porosity. The plant feed will be piled up to a height of 6 m and will be irrigated by modules. Each module will hold 94,159 t with a surface area of 9,808 m2. A total of 94 modules will be in operation. In the first step, namely the curing stage, the leach plant feed will be covered with a dilute sulphuric acid solution (10 kg/t strength) as a pre-treatment. It will then be sprayed with previously re-acidified raffinate ILS from the PLS recirculation pond at a flow rate of 6,981 m3/h, and will then be sprayed with previously re-acidified raffinate at a flow rate of 3,855 m3/h. The leached tailings heap will then be washed with water from the water treatment facility at the flow rate of 91 m3/h. The dump leaching facility consists of the following units:

a curing solution pond which will receive raffinate solutions (raffinate and discharged electrolyte) and mix these solutions a PLS recirculation pond consisting of two chambers to have independent acid dosage in each pond in order to allow irrigation of leach pads with different acid strengths a PLS to SX pond consisting of two chambers of sufficient capacity for the inlet chamber to ensure a guaranteed minimum final sedimentation time for the solids a raffinate pond with a truncated pyramid pond coated with plastic sheet where raffinate will be collected and re-acidified

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-16

1295840100-REP-R0001-05

an emergency pond sized for the worst case scenario, namely the coincidence of maximum rainfall, an intermediate dump level with the plant feed undergoing treatment, and with abandoned leached tailings.

17.6.2

S OL V EN T E XT R AC T I ON
A two-stage PLS pond has been incorporated into the process design to assist with the settling of any fine colloidal particles before these reach the SX facility. The solvent extraction circuit will consist of four stages of mixer-settlers with a highly flexible hydraulic system to accommodate the necessary configurations and to achieve high overall system availability. It consists of a pond of loaded organic solution and a loaded organic washing stage. The net efficiency of the mixing stage will be 94% and will operate 24 h/d. The mixer-settlers will be arranged in a multi-stage arrangement with process pipelines lying beneath the passageways and at base level of the mixers. The settling tanks will be uncovered, and each settling tank will be provided with a distribution board and picket fences to coalesce the primary streams, a system to refill the organic and aqueous phases, piping to facilitate recirculation of organic and aqueous phases in the extraction stage and the aqueous phase in the re-extraction. The instrumentation and means of operational adjustment of the recirculation and the thickness of the organic layer, together with a system for removal of the sediments, will also be provided. The basic design consists of four mixer-settler equipment units for all the corresponding streams for an overall feed rate of 431 m3/h at a concentration of 2.76 g/L copper. In its basic configuration, each train consists of two extraction stages with a O/A rate of 1, and one organic washing stage and one re-extraction stage with a O/A rate of 4.41; however, these trains can be switched to alternative configurations in order to meet fault conditions and maintenance that require replacement or removal of some of the service equipment and re-configuration of hydraulic lines. A loaded organic tank and post-settlers for all aqueous phases as well as a retention filter for organic in the rich electrolyte are included to ensure low organic consumption. The organic used in extraction will be a mixture of extractant and diluent. The extractant will be a Ceto-oxima reagent used at 11.7% v/v in a high grade kerosene diluent. The purpose of the diluent will be to reduce the viscosity of the mixture with the extractant to practical levels. The SX plant facilities will have a sediment treatment plant to maintain the circulating organic within specifications in order to prevent the formation of crud. The same installation allows the treatment and removal of crud should it form in the organic. The operation of this plant is completely manual and directly controlled by the operators.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-17

1295840100-REP-R0001-05

A raffinate pond has been included with a design flow rate of 433 m3/h. Raffinate will be pumped from the pond to the dump leaching facility. The plants design envisages the installation of an electrolyte post-settler and a filter system to recover the organic entrained by the re-extraction of charged electrolyte. The separator will be installed immediately downstream of the stage R-1 settlers (also connected to L-1 stages in alternative configurations), thus minimizing the difference in elevation and the distance between the spillway of aqueous phase and the post-settler. The Terral filter system recovers the organic through high-density activated carbon beds, from which the retained organic is removed by flotation in low-pressure inducted air. It is fed by gravity from the post-settler then discharged to the retention tank for delivery to the EW tank house.

17.6.3

E L EC T R O WI N N I N G C I R C U I T
The copper EW tankhouse includes two rows of electrolytic cells fed with rich and circulating electrolyte. Only one of the lines includes cleaning cells that are fed with a high concentration rich electrolyte while the balance of the cells in the other row are fed with circulating electrolyte. The copper deposition is accomplished by passing current through the cells via an arrangement of installed anodes and cathodes. This current is controlled by an external rectifier which provides the necessary voltage for current to flow in series through the cell arrangement. The current is transferred from one cell to another by intermediate walls in contact, which simultaneously connect the anodes of one cell and with the cathodes of the next cell. Each electrode will have a submerged area of 1 m2. An average current density of 275 A/m2 (maximum 300 A/m2) is employed, which should be achievable in the designed operating environment. This current density results in a requirement for 64 cells of 33 cathodes each, 12 of which are cleaning cells. A design current efficiency of 92%, yields a design current of 17,600 A divided between two rectifier units. The total design cathode copper production is 10,080 t/a, based on 28,000 t/d and an operating rate of 360 d/a. The discharged electrolyte is sent to the SX plant for upgrading to rich electrolyte after passing through a reductive column, or section of the electrolyte tank filled with copper scrap to reduce the high redox potential of the discharged electrolyte, which left untreated could eventually degrade the organic in contact at stage R-1.

17.7

WATER SUPPLY REVERSE OSMOSIS PLANT

Industrial water will be pumped to the RO plant. The reject water will be used to feed the raffinate ponds and to wash the leached tailings. The clean water will be used in processes including the washing of organic and cathodes. Water purification equipment will also convert some of the clean water into potable water for human consumption.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

17-18

1295840100-REP-R0001-05

18.0 PROJECT INFRASTRUCTURE

18.1 INTRODUCTION
As a comprehensive greenfield project, the Project will require the development of supporting infrastructure. These items include:

a process plant or concentrator that will include crushing, grinding, flotation, regrinding, concentrate filtration, concentrate thickener, tailings thickener facilities and assay laboratory a warehouse, maintenance shop, administration offices, and supporting infrastructure a permanent operations camp a geomembrane-lined TMF, and two structural earth dams, two waste rock dumps and a low grade sulphide stockpile a SX-EW facility and heap leach pads a network of access and on-site roads a fresh water supply and distribution system, including the option of a seawater desalination plant power supply and distribution, including a 220 kV power transmission line from Arequipa, a 220 kV substation at the plant site, and 66 kV and 25 kV power distribution lines other infrastructure including truck shop, temporary construction camp, and laydown areas.

The overall site layout is presented in Figure 18.1. The detailed site layout is presented in Figure 18.2.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

18-1

1295840100-REP-R0001-05

Figure 18.1

Overall Site Layout

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

18-2

1295840100-REP-R0001-05

Figure 18.2

Site Layout

Note:

Coordinate Reference System WGS-84, UTM Zone 18

As shown in Figure 18.3, the Project is located in rugged and mountainous terrain, surrounded by ridges, relatively steep slopes, gullies, and canyons. There are two large, terraced alluvial plains on the Property. The locations of the alluvial plains are controlled by narrow, steep walled canyons.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

18-3

1295840100-REP-R0001-05

Figure 18.3

Site View from Concentrator Location

Site elevation ranges from about 1,400 m at the base of the tailings embankments on the alluvial plains to about 2,800 m near the Main Zone pit. The process plant, the dump leach pad, the truck shop, the concentrator/administration/maintenance shop facility, and the waste dumps will be located adjacent to the open pit. The TMF and associated infrastructure will be located approximately 10 km due south in a natural basin, as shown in Figure 18.2. Mineralized material will be crushed and processed at the process plant in order to produce a final concentrate. Tailings will be delivered via pipeline to the TMF from the process plant. The desalination plant will be located on the Pacific Coast, approximately 115 km from the process plant, and pipelines and pumping stations will be used to bring the water to site.

18.2

PROCESS PLANT

AND

ANCILLARY FACILITIES

The overall process plant facility will be 230 m long by 90 m wide and house the crushing, grinding, flotation, regrinding, filtration and concentrate thickener areas. Equipment will be supported by concrete foundations and structural steel and accessed with ladders or stairs with access/maintenance platforms where required. Heavy or large equipment will be serviced by overhead cranes. Figure 18.4 illustrates the plant site layout.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

18-4

1295840100-REP-R0001-05

Figure 18.4

Plant Site Layout

18.2.1

F AC I L I T I E S D ESC R I PT I ON S C R U SH I N G F A C I L I T Y
The crushing building will be made of concrete construction, with multiple levels, housing the primary crusher and apron feeder. The structure will utilize mechanically stabilized earth (MSE) walls on three sides, stick-built steel framing, and will be enclosed up to the dump pocket. ROM material will be reduced in size, then discharged into the dump pocket on the upper level of the facility for transport to the grinding process. Interior steel platforms will be provided to support equipment for ongoing operations and maintenance. The area will also be equipped with a dust control system, to collect the fugitive dust.

C O A R S E M A T ER I A L S T O C K PI L E

AND

R EC L A I M

This coarse material stockpile will be a production surge facility that will have a live capacity of 54,000 t. Feed will be reclaimed form the stockpile by three apron feeders.
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 18-5 1295840100-REP-R0001-05

GRINDING FACILITY
The grinding facility will consist of a SAG/ball mill combination circuit in a two-stage operation. The 40 ft by 22 ft SAG mill will be designed to operate in close-circuit with two pebble crushers but will initially operate without the crushers and in open-circuit with two 28 ft by 42 ft ball mills. The SAG mill will be equipped with pebble ports. The grinding will be conducted as a wet process. This facility will be housed in an open-air structure and serviced by an overhead crane, with the equipment installed in a bunded area with sloped concrete floor feeding to a sump pump.

F L OT A T I ON F A C I L I T Y
The flotation plant will include 12 rougher flotation cells having a cell size of 300 m3 with 300 kW each of installed power that will be used to recover the targeted minerals into a high-grade copper concentrate containing by-product gold. The cells will be equipped with particle-size analyzers. They will be mounted on a bunded, sloped concrete floor feeding to a sump pump for recovery, in case of spillage. The building will be open-air and serviced by a 100 ft tower crane. The regrind facility will consist of a single IsaMill, combined with a hydrocyclone package which will also be mounted upon a bunded, sloped concrete floor feeding to a sump pump in an open-air setting and serviced by an overhead crane.

C O N C E N T R A T E T H I C K EN ER
The concentrate thickener will have a diameter of 27 m (88.6 ft). The thickener will be set upon a bunded, sloped concrete floor to sump pump. This facility will be open to atmosphere and will contain a dry chemical makedown system required for the production of flocculant used in the thickening process.

C O N C E N T R A T E F I L T R A T I ON F A C I L I T Y
Two plate-and-frame filter presses will be mounted on an elevated steel structure that will also consist of a concentrate load-out facility.

T A I L I N G S T H I C K E N ER
The single high-rate tailings thickener will have a diameter of approximately 80 m and will be supported on a 86 m diameter mat foundation and steel support as required. The thickener will be installed upon a open-air, bunded and sloped concrete pad to sump pump

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

18-6

1295840100-REP-R0001-05

A S SA Y L A B OR A T OR Y
An assay laboratory will be equipped with the necessary analytical instruments to provide all routine assays for the mine, the concentrator, and the environment departments. The most important of these instruments includes:

an AAS an ICP-MS a Leco furnace, or equivalent fire assay furnaces.

The laboratory will be equipped with laboratory crushers, ball and stirred mills, particle size analysis sieves, flotation cells, filtering devices, balances, and pH meters.

18.3
18.3.1

WAREHOUSE, MAINTENANCE, FACILITIES

M A I N T E N AN C E S H OP
AND

AND

CONCENTRATE OPERATIONS

W AR EH OU S E

The maintenance shop and warehouse will be a 40 m long by 25 m wide enclosed steel structure complete with concrete foundations. An overhead crane is required to service the maintenance area. This building will house a parts warehouse and some offices for maintenance staff. It will also have a 25 m by 25 m fenced storage compound adjacent.

18.3.2

C O N C E N T R AT OR O PER AT I N G F AC I L I T Y
The concentrator operating facility will be a 30 m long by 25 m wide enclosed steel structure complete with concrete foundations. This facility will house offices for 30 people, and include a reception area, a mill dry for 100 people and all required amenities.

18.3.3

F U E L S T OR A GE

AN D

D I S T R I BU T I ON

Diesel fuel for the mining equipment and ancillary facilities will be supplied from storage tanks, located near the haul road to the crusher. The diesel fuel storage tanks will have a capacity sufficient for approximately three days of operations. Diesel storage will consist of aboveground tanks and a containment pad, complete with loading and dispensing equipment conforming to regulations.

18.4

TAILINGS MANAGEMENT FACILITY

The TMF will consist of a tailings delivery pipeline that will route thickened slurry by pump and high-density polyethylene (HDPE) pipelines for storage behind two

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

18-7

1295840100-REP-R0001-05

structural earth dams. The starter embankments will be lined with geomembrane. Conceptual level design for the tailings and water management components are based on an estimated total of 425 Mt of processed mineralized material. The TMF will be located approximately 10 km south of the plant site and a total of 17 Mm3 of borrow material will be required for embankment construction. Seepage recovery will include toe and embankment drains to allow the capture and collection of seepage in seepage collection pond. It is anticipated that some process water and runoff will be impounded, but much of this water will be absorbed into the beaches and lost to evaporation. Given the low levels of rainfall and high evaporation rates in the region of the Project, water reclamation was not considered for the Project. The conceptual level study developed by Knight Pisold for tailings and water management includes the following components:

development of the design basis and operating criteria for the TMF, including confirmation of the hazard potential classification seismic risk assessment to determine the extreme seismic events that could occur in the region review of available climate and hydrology data to determine appropriate storm runoff events for input into the design of the various facilities TMF volumetric (depth-area-capacity) calculations, embankment design and construction staging construction material descriptions from local borrow sources seepage control and collection measures, including grout curtains and geomembrane liners tailings delivery layouts and assessments of pumping requirements and tailings distribution methods seepage recovery assessments and development of a water balance for the TMF conceptual (scoping) level cost estimates for the TMF (capital and operating cost estimates).

The geotechnical conditions at the TMF are based on general knowledge of the area and no specific geotechnical investigations were completed.

18.5

LEACH FACILITY
The leach facility is comprised of lined leach pads, collection ponds and tanks, solvent extraction building, electrowinning building, water treatment building, a small maintenance shop and an operations control centre adjacent to the electrowinning building. The leach facility will be separate from the concentrator and most of its industrial buildings will be constructed of engineered post-and-beam steel structure with a steel roof and no walls. The foundations will consist of concrete spread

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

18-8

1295840100-REP-R0001-05

footings, grade walls along the structure perimeters, a slab-on-grade floor, and containment curbing. The floor surfaces will be acid protected, and will have localized areas that are sloped toward sump pumps for cleanup operations. The storage ponds for curing solutions, enriched solutions for irrigation recirculation, enriched feed solution for the solvent extraction plant, raffinate, and emergency ponds will be constructed in the form of truncated pyramids and lined with polymer concrete or with welded plastic sheets. These ponds will provide regulation capacity between the leaching and solvent extraction operations. The emergency pond accommodates overflows from the leach pads generated mainly by pumping suspension due to power failure and rainwater catchment. Suitable material will be transported to the leach pad in large mining trucks that unload directly onto the permanent lined pad. Mineralized material is continuously heaped for irrigation in modules whose areas are defined by the planned irrigation system although only sufficient area is irrigated at any one time to ensure the production of a nominal 10,000 t/a of cathode. The leach pad will eventually cover an area approximately 1,500 m by 500 m, and reach 100 m in height for a final capacity of 87 Mt.

18.6
18.6.1

ROADS
O VE R V I E W
Approximately 372 km of roads will need to be constructed or upgraded, including:

65 km from the plant site to Pedregal de Majes (main access road) 1 km access road to the explosives preparation plant 38 km from Corire to the plant site 6 km from the Corire road to the TMF 8 km from the TMF to connect with the road to Pedregal de Majes 6 km maintenance road for TMF piping and embankments 13 km of external pit haul roads 115 km maintenance road for water supply power line and pipeline from the coast 120 km maintenance road for the main power line from Socabaya Substation near Arequipa.

The main access road will be paved and connect the plant site with the Pan American Highway and will be used for transporting personnel, supplies and product to the Matarani Port. The Corire road will be gravel/clay-topped and primarily used

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

18-9

1295840100-REP-R0001-05

for transporting employees that reside in the area to the mine site, as well as supplying locally grown produce to the camps. The tailings line will follow the Corire road for approximately 4 km from the plant site, then branch off on a 6 km gravel road to the TMF. An 8 km gravel road will connect the TMF to the main access road. A 1 km gravel branch road off the main access road will access the explosives plant. Additionally, approximately 13 km of external pit haul roads will be constructed during the LOM. A total of 6 km of maintenance roads will service the TMF and another 241 km of maintenance roads will be constructed on- and off-site to service the water supply pipeline and power line and the power line from the Socabaya Substation.

18.6.2

E XI ST I N G A C C ES S R OAD S
Existing gravel-topped access roads join the Project site with the nearby communities of Pedregal de Majes and Corire. Approximately 39 km of the proposed main access road to Pedregal de Majes exists and 5 km has been paved by the government. The 34 km unpaved portion will require upgrading of its structural base and paved with a chip seal topping. A road from Corire to CMZs second exploration camp at Ganchos exists but the Project contemplates constructing a new gravel/claytopped road in an alternative river canyon that will connect Corire with the proposed plant site.

18.6.3

N E W A C C E SS R O AD S
A total of 26 km of the proposed main access road will need to be constructed and paved with chip seal topping. The Corire road will also require 38 km of new construction and topping with gravel/clay material. The 6 km branch road to the TMF as well as the 8 km connection to the main access road will also be constructed and topped with gravel.

18.6.4

S I T E R OA D S
The 13 km external pit haul roads will be developed over the mine life, with surface treatment for dust suppression. A total of 241 km of new gravel roads will be developed for maintenance on and off site including:

6 km around the TMF for piping and embankments 115 km for power lines and water pump stations. 120 km for main power line from Socabaya Substation.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

18-10

1295840100-REP-R0001-05

18.7

FRESH WATER SUPPLY

AND

DISTRIBUTION

AQM is actively talking with authorities and local communities to find alternative sources of water that would provide benefits to some local communities in exchange for the use of local water sources by the Project. For this PEA, the fresh water supply for the Project is assumed to come from a desalination plant on the Pacific Coast, approximately 115 km from the proposed plant site. The water will be produced, as required, for drinking and industrial water respectively, based on the following parameters:

desalination plant:
reverse osmosis (RO) 8 MW power demand production: 586 L/s or 18.5 Mm /a.
3

water pipeline:
24 MW power demand 115 km, 2,660 m pressure head 5 pump stations, 3 in-line (2 operating and 1 stand-by) 4 h tank reservoir each station.

potable water plant:

15 kW power demand. 5 L/s or 158,000 m /a located at the process plant with distribution piping to mine facilities and
3

the SX-EW facility.

18.7.1

S EA W AT ER D E SA L I N AT I O N P L AN
The desalination plant is designed for a capacity of 51.137 m3/d. Assuming a conversion rate of 45%, the seawater flow rate required to achieve the desired output is 5.110 m3/h. An open intake solution has been adopted for seawater intake. The intake works include construction of a buried pumping chamber and the installation of vertical, axially split-casing centrifugal pumps, variable frequency drive equipped, that will supply the flow rate required to feed the plant at the required pressure, thus optimizing energy consumption. For pre-treatment, a double filtration system is envisaged, consisting of coarse screening by a 40 mm intake screen, and filtering by Beaudrey-type rotating filter screens with a 6 mm slot size. An ultrafiltration system will use pressurized hollow-fiber membranes to screen out solids suspended in the seawater flow prior to entry into the desalination process. The desalination system has been designed on the basis of RO technology using

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

18-11

1295840100-REP-R0001-05

spiral wound membranes. Membranes are made of polyvinyl-pyrollidone (PVP)/polyethersulfone (PES). Water produced by the desalting plant will be stored in a closed tank in amounts sufficient to meet at least four hours worth of supply requirements. The tank will be made of carbon steel with a capacity of 9,000 m3. Overall power consumption of the desalination plant will be approximately 8 MW.

18.7.2

PUMPING

AN D

C ON VE YI N G

THE

W AT E R

TO THE

MINE

The impulsion system consists of a ND 700 mm steel and glass reinforced plastic (GRP) pipeline, 114.7 km long, running from the desalination plant to the Projects processing plant. The water delivery point is at an elevation of 2,660 masl. The flow rate will be 586 L/s, carried by 5 pumping stations. The pumping system will be 3+1R (in standby mode), using horizontal multi-stage pumps. The total power demand of the pumping system will be approximately 24 MW.

18.7.3

D R I N KI N G W AT ER P L A N T
The Project includes a drinking water plant to be located near the Zafranal Mine, which will produce drinking water at a flow rate of 5 L/s. In order to meet the quality standards for drinking water, the design considers a plant sized to treat 18 m3/h flow of water taken directly from a desalinated water tank and pumped to the drinking water plant installed within a maritime container. The modular drinking water plant will consist of a cartridge filter (as a pre-RO safety system), an RO skid and a remineralization system. The estimated power consumption of the drinking water plant is estimated at 15 kW.

18.8

POWER SUPPLY

AND

DISTRIBUTION

Knight Pisold completed a conceptual level study update for the power delivery and site power distribution systems, based on a total connected power of 140 MW and 135 MW of peak power demand broken down as follows:

8 MW for the desalination plant at the coast 24 MW for the five pump stations along the approximately 114.5 km long desalinated water pipeline from the coast to the plant site 80 MW for the plant site, including 2 MW to supply power to the TMF 15 MW for sulphide extraction/electrowinning at the heap leach facility 11 MW for the mine 2 MW for contingency.

Power delivery to site will require transmission lines to be installed linking the Project site to the local electrical supply grid. It is estimated that main line power supply will be required at the mine site six months after the start of pre-production stripping
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 18-12 1295840100-REP-R0001-05

activities. It is estimated that construction of the main power line and substation will take a year. Power supply will be delivered from the 220 kV Socabaya Substation located in Arequipa and will require the installation of an approximately 120 km long circuit to a new 220 kV substation at the Project site from which power would be redistributed throughout the plant site as required. Distribution lines include:

115 km, 66 kV for the fresh water supply system 45 km, 25 kV for the TMF.

Power during construction of the main project components will be provided by the various contractors via portable, diesel powered generators. The installation of the power delivery and site power distribution systems will be completed in time to support mine operations.

18.9

OTHER INFRASTRUCTURE
Examples of other infrastructure include:

A waste rock dump will cover an area approximately 1,500 m by 1,000 m and will have a capacity of 490 Mt. A permanent, 233-person camp will be constructed to house some on site contractor personnel and mine operator staff during the pre-mine period and as well as in the production phase of the Project. A temporary 900-person construction camp during the peak of construction. Laydown areas including:
construction materials warehousing permanent warehousing low grade mineral stockpile.

Fuel stations including:

communication towers, server room and related IT service facilities on-site network of service roads main gate access facility buildings for administration, laboratory and emergency services.

A truck shop which will include vehicle washing and repairing facilities for all types of site vehicles. This facility will cover an area of 400 m long by 200 m wide and consist of a series of concrete pads and prepared gravel surfaces, steel structures will support overhead cranes required in the maintenance areas and will be a steel building with roof and walls. The building will be supported by concrete spread footings with concrete grade walls along its perimeters. Sumps and trenches will be constructed to collect waste water

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

18-13

1295840100-REP-R0001-05

and waste oils in the maintenance bays. The building will consist of an exterior wash bay, repair bays, warehouse area, welding area, machine shop, emergency vehicle parking, first aid room, electrical room, compressor room and a lubricants storage room. The mine dry and a dining facility will also be located in the truck shop area.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

18-14

1295840100-REP-R0001-05

19.0 MARKET STUDIES AND CONTRACTS

The final products to be produced by the Project are copper concentrate and copper cathode. Copper concentrate will likely be transported to Asian smelters located in Japan, China or India, while copper cathode will likely be transported to Europe. A more precise marketing plan and terms of sale of final products will be prepared during the next phase of the Project. Smelting, refining and transportation terms for copper concentrate as well as copper cathode were prepared by Ayrmin Consultorias y Representacions Ltda (Ayrmin) located in Santiago, Chile. A summary of their recommendations is presented in Table 19.1.
Table 19.1 Commercial Terms for Sale of Products
Parameter Realization Charges Smelter Copper Deduction Payable Gold in Copper Concentrates Minimum Gold Content in Copper Concentrates Concentrate Selling Cost Marketing Costs Concentrates Transport Concentrates Truck to Port Port and Insurance Charges Concentrate Transport Losses (Plant to Loading Port) Shipping Concentrate Smelting Charges Concentrate (Dry) Refining Charges Payable Copper Price Participation Trigger Refining Charges Payable Gold Cathode Selling Costs Marketing Costs Transport Cathodes via Truck to Port Port and Insurance Costs Shipping Costs to Rotterdam Annual Cathode Premium (Grade A LME) $/t cathode $/ton per 10 km $/t cathode $/t cathode $/t cathode 5.00 1.00 10.00 67.00 90.00 Equivalent to $15.00/t considering 150 km to port $/t concentrates $/t (wet) concentrates $/t (wet) concentrates % of wet tonnes of concentrates $/t (wet) concentrates $/t concentrates $/lb Cu $/lb Cu $/oz Au 12.00 1.00 20.00 0.3 65.00 63.50 0.0635 0.00 4.00 Includes representation fee Equivalent to $15.00/t considering 150 km to port If content below 1 g/t no refining charges applicable % % Au g/t in Cu concentrate 3.40 90 1 Minimum deduction 1% unit If content below 1 g/t min deduction 0.4 g/t, no refining charges Unit Estimate Remarks

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

19-1

1295840100-REP-R0001-05

20.0 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT

20.1 ENVIRONMENTAL STUDIES
Environmental and social baseline studies for the Project have been conducted in order to obtain environmental certifications and permits for the exploration programs of the Project. These baseline studies covered physical, biological, and socioeconomic assessments of the areas to be explored, as per the Ley del Sistema Nacional de Evaluacin de Impacto Ambiental (Ley del SEIA) or National Environmental Impact Assessment System Law. All the environmental certifications and permits for the exploration activities of the Project required the support of local inhabitants in defined areas of direct influence (ADI). This support was accomplished through informative workshops and meetings with local authorities and community representatives, guided visits to the Project area, participatory environmental monitoring programs and an ongoing formalization program of the miners working in some of the mining concessions of the Project. AQM has an EMP up and running as a result of the potential impacts identified in the EIAsd and the conditions set forth in the drilling permits granted by the Ministry of Energy and Mines. The drilling permit currently in place is valid until August 1, 2013 and allows for drilling from up to 226 platforms on the Zafranal Main, Victoria, Sicera Norte and Sicera Sur Zones. A modification to the EIAsd drilling permit to allow drilling additional areas on the Property is in progress at the time this report was prepared by Tetra Tech. The formal environmental baseline studies leading to an EIA for the development and the operation of the mine itself will be carried out in parallel with the prefeasibility study for the Project. A more detailed environmental management and closure plan for the Project will be developed in the prefeasibility study. However, a cost estimate for an EMP has been included as part of the capital and operating costs.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-1

1295840100-REP-R0001-05

20.2

ENVIRONMENTAL PERMITTING
Aside from reconnaissance and prospecting activities, all other mining activities in Per must comply with the Sistema de Concesin Minera or Mining Concessions System, governed by the Ley General de Minera or General Mining Law. This system establishes that mining exploration and exploitation can only be legally carried out by means of a valid mining concession title issued by the Instituto Geolgico Minero Metalrgico (INGEMMET) or the Metallurgical Mining Geological Institute. Mining concessions are granted for specific areas (established by UTM coordinates) and for either metallic or non-metallic minerals. Titleholders of mining concessions acquire ownership of all minerals extracted within the concession area, considering the type of mineral concession granted.

20.2.1

E N VI R ON M EN T A L I M P AC T A S SE S SM EN T S
Estudios de Impacto Ambiental or EIAs are required prior to carry out mineral exploration and exploitation in Per, including project components that are not mining related (electrical transmission and port installation facilities, for example). The national authority that evaluates the EIA is the Ministerio de Energa y Minas (MINEM) or Ministry of Energy and Mines through the Direccin General de Asuntos Ambientales Mineros (DGAAM) or the General Directorate for Environmental Mining Matters. In addition, the evaluation of the EIA takes into account the opinion of the Autoridad Nacional de Agua (ANA) or the National Water Authority. The preparation of the EIA must follow Articles 47, 48, 49 and 68 of the Ley del SEIA regulations. These articles explain that the content of the EIA needs to include a feasibility design for the Project, mandatory public hearings and documented community participation prior to presenting the EIA, and comply with all requirements from the MINEM. The approval process takes at least eight months.

20.2.2

O T H ER P ER M I T S
In addition to the EIA, other permits are required throughout the stages of the life of the mine including exploration, development, production, and closure. These stages are listed below with the main permits required for each stage:

Exploration:
mining concession surface rights surface water/groundwater use license sanitary authorization approving waste water treatment system and

discharge
archeological evaluation registration as a direct consumer of liquid fuels (fixed or mobile facilities)

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-2

1295840100-REP-R0001-05

Development and Construction: mining concession surface rights

EIA (modifications during the life of the mine may apply) mine closure plan approval (modifications during the life of the mine may

apply)
Certificate of Non Existence of Archaeological Remains (CIRA) surface water/groundwater use license authorization for water constructions authorization for water studies sanitary authorization, approving wastewater treatment system and

discharge
sanitary authorization for drinking water treatment system registration as a direct consumer of liquid fuels (fixed or mobile facilities) bi-annual authorization for explosives use (global authorization) license to operate explosives shack users certificate for controlled chemical substances and products operation license for radioactive equipment authorization for the exploitation of construction materials quarries

Production: the above mentioned permits

beneficiation concession authorization to initiate mining exploitation posting of financial assurance for closure

Closure:
final closure plan (due two years before final closure).

20.2.3

M I N E C L O SU R E P L AN
The Mine Closure Plan must be submitted within one year after EIA approval. Posting of the corresponding financial assurance for closure must also be completed before the start of production and within the first 12 business days of the following year in which the closure plan is approved, as stated by the Regulaciones para el Cierre de Minas or Mine Closure Regulations. The final closure plan shall be submitted two years prior to closure of operations.

20.2.4

E N VI R ON M EN T A L L E GI SL AT I ON
The main Peruvian environmental laws and regulations that apply to new mineral activities are listed below:

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-3

1295840100-REP-R0001-05

Supreme Decree No 014-92-EM General Mining Law Law No 28611 General Environmental Law Law No 28245 National Environmental Management System Law Supreme Decree No 008-2005-PCM Regulations on National Environmental Management System Law Law No 27446 National Environmental Impact Assessment System Law Supreme Decree No 019-2009-MINAM Regulations on the National Environmental Impact Assessment System Law Law No 29325 National Environmental Enforcement System Law Law No 28090 Mine Closure Law Supreme Decree No 033-2005-EM Regulations on Mine Closure Law Supreme Decree No 016-93-EM Environmental Protection Regulations for Mining-Metallurgical Activities and Amendments (Supreme Decree No 05993-EM, Supreme Decree No 058-99-EM, Supreme Decree No 022-2002EM, Supreme Decree No 078-2009-EM) Supreme Decree No 020-2008-EM Environmental Regulations for Mineral Exploration Law No 29338 - Water Resources Law Supreme Decree No 001-2010 AG Water Resources Law Regulations Supreme Decree No 002-2008-MINAM National Environmental Standards for Water Quality Supreme Decree No. 010-2010-MINAM Maximum Permissible Levels for Liquid Effluents in Mining-Metallurgical Activities Supreme Decree No. 003-2010-MINAM Maximum Permissible Levels for Effluents in Domestic and Municipal Waste Water Treatment Plants Supreme Decree No. 003-2008-MINAM Environmental Standards for Air Quality Ministerial Resolution No, 315-96-EM Maximum Permissible Levels of Elements and Compounds Present in Gaseous Emissions Resulting from Mining-Metallurgical Units Supreme Decree No. 085-2003-PCM Regulations of National Environmental Standards for Noise Quality Law No 27314 General Solid Waste Law Supreme Decree 057-2004-PCM Solid Waste Regulations Law No 28296 National Cultural Heritage and Archaeological Investigations Law No 26834 Protested Natural Area Law

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-4

1295840100-REP-R0001-05

Supreme Decree N 038-2001-AG Regulations on Law of Protected Natural Areas and amendments Law No 29785 Indigenous People Public Consultation Law Supreme Decree No 001-2012-MC Regulations on Indigenous People Public Consultation Law Supreme Decree 028-2008-EM Regulation on Citizen Participation in the Mining Subsector Ministerial Resolution No 304-2008-MEM/DM Provisions on the Citizen Participation Process in the Mining Sector

20.2.5

P ER U VI AN E N VI R ON M EN T AL G U I D EL I N ES
Peruvian mining environmental guidelines provided by the MEM covers monitoring protocols for air and water quality, water management, acid mine drainage management, evaluation of impacts resulting from mining-metallurgical activities, mine closure and others.

20.2.6

A PP L I C A BL E I N T ER N AT I O N AL S T AN D A R D S
A number of Canadian and international sources provide guidance to the design, operation and closure of TMFs. The design will be compliant with the Mining Association of Canadas 2011 Guide to the Management of Tailings Facilities, and with the tailings management strategies outlined in the International Finance Corporation (IFC) and World Banks Environmental, Health and Safety Guidelines for Mining (IFC and World Bank 2007). The recommended tailings management strategies include:

consideration of zero discharge tailings facilities. independent (third-party) assessment of risks to surface water and groundwater and users of those resources downstream of the facility together with mitigation of impacts, including lining of the facility. monitoring of the tailings facility, including the physical structure and water quality in surrounding areas. on-land disposal in a system that can isolate material from oxidation or percolating water, such as a tailings impoundment with dams and subsequent dewatering and capping. on-land disposal alternatives will be designed, constructed and operated according to internationally recognized geotechnical safety standards. design specification should take into consideration the probable maximum flood event and the required freeboard to safely contain it (depending on site specific risks) over the planned life of the TMF, including the post-closure phase

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-5

1295840100-REP-R0001-05

Given the TMFs location upstream of the community of Corire, AQM may wish to consider engaging an external expert during the detailed design stage to review the TMF design, as recommended by IFC Guidance Note 5, which accompanies the IFC Performance Standard 5 for Community Health and Safety and states the following (IFC 2012): When structural elements or components, such as dams, tailings dams or ash ponds are situated in high-risk locations, and their failure or malfunction may threaten the safety of communities, the client will engage one or more external experts with relevant and recognized experience in similar projects, separate from those responsible for the design and construction, to conduct a review as early as possible in project development and throughout the stages of project design, construction, operation and decommissioning.

20.3

ENVIRONMENTAL MANAGEMENT PLAN

The EMP for the mine should be administrated by a manager and include a team of environmental technicians to perform all monitoring activities at the mine, including the TMF. Quarterly and annual groundwater seepage reporting is required.

20.3.1

P OT EN T I AL E N V I R ON M EN T AL I M PAC T S
The Project will be subject to an environmental assessment in the future. Based on the work to prepare this conceptual level PEA, the following potential impacts have been identified regarding the Zafranal TMF:

Risk of an unplanned breach of an embankment causing release of tailings to the environment. Seepage of groundwater:
Tailings pore water has the potential to seep through the embankment

and from the base of the TMF into the groundwater. Containment of the tailings pore water within the TMF will be necessary given the absence of low permeability materials in the foundation. However, the tailings will provide an effective barrier against seepage into the foundation as the tailings blankets the impoundment and consolidates to a less permeable state. The process plant will recycle water to the greatest extent possible, prior to discharging tailings to the TMF. The TMF will be designed as a zero-discharge facility due to the catchment size and high evaporation rate. The facility will also accommodate extreme rainfall conditions.

Dust and noise:

There are no communities or activities near the TMF that are expected

to be affected by dust or noise emissions from the TMF operations. Nevertheless, standard dust and noise suppression measures will be implemented during operations to provide for a safe and healthy
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 20-6 1295840100-REP-R0001-05

workplace. Tailings will be discharged into the TMF from off-takes in the tailings distribution pipeline along the crest of the embankments and at selected locations around the tailings basin. Discharge will be rotated around much of the TMF and managed in order to ensure efficient filling and pond development. These processes will help minimize dust generation during operations. At closure, the TMF will be capped so as to minimize the long-term impact of dusting from the TMF.

Storm containment and unplanned embankment failure:

The TMF will be designed as a zero-discharge facility under all

conditions during operations, and therefore discharge of surface water to the downstream environment is not a concern. Embankment stability will be monitored using geotechnical instrumentation (piezometers, etc.), settlement monuments and traditional surveying methods. Additional safeguards that may be employed, if necessary, include buttressing and re-grading of slopes.

20.4

TAILINGS MANAGEMENT
The TMF alternative discussed in this report is situated approximately 26 km upstream from the community of Corire, which is the nearest community to the TMF. The location of this community influenced the hazard potential classification for the design of the TMF embankments and its potential for seepage. There are no communities or activities close to the Project that are sensitive to dust and noise. With regards to tailings water management, free water from discharged tailings and seasonal runoff will collect in a small pond in the south end of the tailings impoundment, from which the water will evaporate. No operational spillway will be required for the impoundment during operations; however, a spillway will be constructed at closure. Sufficient freeboard to contain extreme precipitation events will be maintained during mine operations. The Project is designed to recycle as much water as practical. The TMF will be a zero-discharge facility; the tailings embankments will incorporate a geomembrane liner and grout curtains to minimize seepage to the environment.

20.4.1

T AI L I N G S D R AI N A GE
The TMF embankments will be provided with drainage measures; including internal drains which will be provided to collect internal seepage and consolidation water. An upstream toe drain will be constructed underneath the starter embankments to ensure adequate drainage. Seepage through the impoundment will be directed to this drain and be discharged into seepage collection ponds downstream of the embankments. An embankment drain will be installed during the first embankment raise to assist in the consolidation of the tailings mass. The collected seepage will be directed to the seepage collection ponds. Collected seepage will be pumped back into the impoundment while a portion of the collected seepage will evaporate from the collection pond. Seepage estimates for the tailings impoundment will be

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-7

1295840100-REP-R0001-05

carried out with finite element modelling using appropriate computer programs. Water is critical for operations, and there may be a small amount of excess of water in the tailings impoundment from time to time.

20.4.2

T AI L I N G S M ON I T OR I N G
An operation, maintenance and surveillance manual (OMS) will be developed prior to operation of the TMF. The OMS will consider the above measures and apply the guidance provided by the Mining Association of Canadas Developing an Operation, Maintenance and Surveillance Manual for Tailings and Water Management Facilities, 2003. The environmental monitoring components will consist of the following elements:

Monitoring of water levels and collection of seepage (if any) from the downstream groundwater monitoring wells on a quarterly basis during operations. Groundwater samples will be analyzed for general chemistry and metals (total and dissolved). Groundwater quality results will be compared against Pers Maximum Permissible Levels (MPLs) for Liquid Effluents in Mining-Metallurgical Activities. Sampling frequency will be adjusted depending upon the presence of groundwater seepage in the wells and the groundwater chemistry results. Exceedance of the MPLs will be flagged and reviewed in detail, and corrective actions will be undertaken. Sampling of tailings supernatant on a quarterly basis and testing for general chemistry and metals, for comparison purposes with groundwater seepage. Visual inspection by site environmental staff regarding unusual seepage or excessive dust emissions. Visual inspections by TMF operators; with any unusual conditions regarding environmental concerns reported.

Monthly geotechnical inspections will be undertaken and monthly reports shall be submitted to the General Manager or Mine Manager. Reporting shall include:

a summary of activities undertaken during the reporting period any material deviations or non-compliances to this Plan de Administracin Ambiental planned activities during the next reporting period any other issues of concern

Annual geotechnical inspections will be carried out by a qualified geotechnical engineer. A summary of TMF performance, including the results of geotechnical inspections and water quality results will be presented in an annual report. A decision will be made regarding the required monitoring post-closure as the Project approaches closure.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-8

1295840100-REP-R0001-05

20.4.3

T AI L I N G S F A C I L I T Y C L OS U R E
Free water in the tailings impoundment at closure will be allowed to evaporate. The tailings surface will be covered to promote shedding of water and to reduce infiltration at closure. The embankment drains will continue to operate for a period of time, and the water quality will be monitored. The seepage will be evaporated in specially designed evaporation ponds. A spillway will be constructed at closure to ensure long-term stability. A conceptual level closure plan for the TMF has been prepared by Knight Pisold. Three principal objectives for the TMF closure have been considered:

long-term physical and chemical stability of the Project area needs to be secured in order to protect community health and safety natural recovery of disturbed areas must be optimized to a landscape and habitat consistent with adjacent land use long-term maintenance and monitoring requirements need to be minimized.

20.5

SULPHIDE TAILINGS MANAGEMENT

Preliminary geochemical characterization of the Zafranal mineralized material body was carried out by pHase Geochemistry Inc. (2012), with the following conclusions:

Sulphur content in the drill core assay database (mineralized material and waste) averaged 2.5%, which is typical of porphyry deposits. Acid rock drainage (ARD) and metal leaching (ML) are important issues for these types of deposits. Based on ABA results, 70% of the samples are classified as potentially acid generating (PAG) with 6% classified as uncertain, 10% as low potential and 14% as non-acid generating (NAG). Low paste pH values indicated that a number of samples were already acidic. There is no definitive correlation between rock type or mineral zone and ARD potential. Elevated copper was reported over a wide distribution of sulphur contents, reflective of copper grades with the various mineral zones (oxide, supergene, hypogene). Bismith, selenium and occasionally cobalt, chromium, molydbdenum, silver, arsenic, cadmium and magnesium were elevated relative to crustal abundances.

Ongoing testing is underway to further define the potential for ARD and ML. On the basis of the testing completed to date, it is conservatively assumed that any seepage generated will exceed the Peruvian MPLs. Most of this seepage will be collected during operation and recycled to process, but groundwater wells will be installed downgradient of the seepage collection ponds to detect any seepage that bypasses

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-9

1295840100-REP-R0001-05

the ponds. The wells will also have the capacity to pump this seepage into the seepage collection ponds. It will be necessary to monitor the chemical composition of the tailings supernatant, seepage accumulating in the seepage collection pond and groundwater further down gradient to ensure that concentrations are maintained at or below MPLs. Exceedance of the MPLs in the groundwater monitoring wells located downstream of the seepage collection pond will trigger adaptive management measures, such as additional seepage interception/collection.

20.6

MINE CLOSURE

AND

RECLAMATION

An updated mine closure plan and reclamation will be required for the Project. The mine closure plan should include information; such as:

justification for the closure plan considering technical, environmental and legal aspects objectives and how they will be met photo evidence and details of the environmental situation prior to commencing closure activities schedule of activities the progressive reclamation of the site during the life of the operation the design of tailings disposal areas the reclamation and re-vegetation of the surface disturbances wherever practicable a cost estimate of the work required to close and reclaim the mine a plan for ongoing and post-closure monitoring and reporting at the site.

20.6.1

P R O GR ES SI V E R EC L A M A T I ON
Opportunities to progressively reclaim the TMF should be undertaken wherever practically possible. This will allow selected closure activities to be completed during operations, rather than at the end of the mine life. The tailings embankments will be designed for long-term stability, but may require buttressing and slope re-grading prior to closure. It may also be possible to progressively apply the closure cover (cap) over portions of the tailings beach to minimize the amount of dusting before closure.

20.6.2

F I N AL C L O SU R E
Long-term physical and geochemical stability, protection of the downstream environment and management of surface water are requirements for the TMF at closure. The following sections describe the measures that will be undertaken for

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-10

1295840100-REP-R0001-05

final closure of the Project based on the conceptual design for tailings and water management.

G E OT EC H N I C A L S T A B I L I T Y

OF

TMF E M B A N K M E N T S

The North and South Embankments are expected to remain stable at the constructed 2H:1V slopes. The embankments will be subject to annual geotechnical inspections throughout the life of the Project, and at closure will be assessed by a geotechnical engineer to evaluate stability and the need for any remedial measures at closure.

C L O SU R E S PI L L WA Y
A closure spillway will be constructed to discharge flows from the TMF catchment to the environment downstream of the South Embankment. The spillway will pass the appropriate event to protect the embankments from overtopping and breaching. A preliminary location for a closure spillway has been identified and will involve drilling and blasting of an approximate 120 m long channel in bedrock. The excavated section will connect to an existing gully which will convey flows to the valley downstream of the South Embankment, seepage collection pond and groundwater monitoring wells. A portion of the bedrock excavated to construct the spillway will be used as riprap to line the runoff channels that will be excavated across the tailings impoundment to direct flows off the TMF to the spillway. The remaining excavated bedrock will be used for armouring where required and will otherwise be disposed of nearby.

T A I L I N G S C OV ER
Runoff channels will be constructed across the impoundment surface to direct runoff from the catchment areas upstream of the TMF, across the TMF surface to the closure spillway. Three runoff channels have been envisaged to convey 45%, 45% and 10% of the TMF catchment area runoff, respectively. The channels will be constructed by excavating into the tailings and using the excavated tails to contour the impoundment to encourage runoff to the channels. The channels will then be lined with geosynthetics, sand and gravel and riprap. The impoundment will be capped with a 300 mm thick layer of a local NAG sand and gravel (or other suitable material) cover material to prevent surface exposure, reduce infiltration, manage runoff and prevent dusting. It is expected that minor settlement will occur during the first few years of the closure period due to the consolidation of the tailings. The tailings will be tested and modelled during future studies to estimate potential seepage rates and consolidation characteristics during operations and postclosure. It is expected that the 300 mm thick cover will wick water upward due to the large amount of evaporation at the site. This will prevent seepage from entering the

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-11

1295840100-REP-R0001-05

tailings mass following closure. The tailings cover will be modelled during future studies to confirm this.

S EE PA G E C O N T R OL
A number of aspects of the TMF design will reduce the amount of seepage reporting downstream of the South Embankment. Tailings will be deposited to the TMF at 65% solids, the TMF will be designed as a zero-discharge facility and runoff will be ponded and allowed to evaporate during operations. The presence of a supernatant pond during operations is not expected until the very end of operations due to the high solids content of the tailings and the high evaporation rate. The embankments will be lined with a geomembrane and the foundation and abutments will be grouted (as required), so no significant seepage downstream of the embankments is expected. During operations, any seepage that does occur will be collected in the toe and embankment drains and conveyed to the seepage collection ponds for recycling back into the impoundment. Any seepage that bypasses the collection systems will be intercepted in the groundwater monitoring wells and pumped back into the seepage collection ponds. At closure, consolidation of tailings will continue and some seepage is expected for a period of time post-closure. The post-closure seepage is expected to reduce over time because the discharge of tailings will cease, water in the tailings pond will be consumed and the cover material will be applied to shed water and prevent infiltration. Since the mine is located in an arid zone, rainfall is minimal and occurs infrequently. This conceptual closure plan has conservatively assumed that a small volume of seepage will occur for years after closure, as the tailings continue to consolidate. Depending upon the estimated rate/volume of seepage expected (estimated from consolidation modelling), the seepage collection pond located downstream of the South Embankment will be used as an evaporation pond, or a larger evaporation pond will be constructed to evaporate any remaining seepage. Shallow dykes will be constructed around the evaporation pond to divert runoff from entering the evaporation pond. It is possible, based on geochemical characterization conducted on the ore to date, that the seepage from the TMF may be of poor quality, exceeding the MPLs for liquid effluent. The volume of seepage, however, is expected to be minimal and will reduce to zero over time. More detailed study is required of both the volume and quality of seepage. Additional measures may be required to neutralize the poor quality seepage if the volume of seepage is estimated to be high. Any seepage into the evaporation pond, as well as downstream groundwater monitoring wells, will be monitored for the presence and quality of seepage for up to five years post closure.

R E M O VA L

OF

A N C I L L A R Y I N F R A ST R U C T U R E

Ancillary infrastructure associated with the TMF includes access roads, tailings and water pipelines, pump stations and a landfill. The tailings and water pipelines will be
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 20-12 1295840100-REP-R0001-05

drained and removed. The flow control box/pump station will be demolished and removed from site. The areas will be re-graded to restore the natural drainage. The access roads associated with the TMF will remain in place at closure to facilitate monitoring. It is assumed that a closure landfill will be located elsewhere on the mine site. This landfill will be capped and contoured to promote drainage and prevent erosion.

M ON I T OR I N G
Closure and post-closure monitoring will consist of inspections for physical stability and groundwater (seepage) monitoring. The site will be subject to annual geotechnical inspections for a number of years post-closure to visually inspect the embankments and the success of closure measures to achieve long-term physical stability.

20.7

SOCIAL

AND

COMMUNITY CONSIDERATIONS

The socio-economic baseline studies will:

identify communities that may potentially be affected by the development of the Project identify potential positive and adverse effects of the Project on local communities advise on further study requirements.
AN D

20.7.1

P R O J EC T L OC AT I ON

A R EA

OF

D I R EC T I N F L U E N C E

The Project is located in southern Per, about 150 km by road (90 km straight-line distance) northwest of the city of Arequipa, east of the Majes River basin on the border between the District of Huancarqui in the Province of Castilla and the District of Lluta in the Province of Caylloma at an altitude ranging from 2300 to 2800 masl. Principal access to the Property originates in Pedregal de Majes near the Pan American Highway and extends 5 km via paved road and 51 km of gravel road in direction of the town of Lluta, then 12 km westward on a gravel road to the principal exploration camp adjacent to the Main Zone, approximately 68 km from Pedregal de Majes. Access to the Property is also possible via a gravel road from Corire to the satellite exploration camp at Ganchos and ultimately the principal exploration camp adjacent to the Main Zone, approximately 20 km from Corire. Because of the steep topography of the Project area, its desertic climate and scarcity of water, there are no populated towns or communities close to the Project area.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-13

1295840100-REP-R0001-05

The ADI as established for the Projects exploration stage corresponds to the districts of Huancarqui, Uraca, Aplao (in the province of Castilla) and Lluta (in the province of Caylloma) and the towns of Corire, El Pedregal, Cantas and Pitis in the department of Arequipa. The ADI includes the Project concessions that are located in the Huancarqui district and to a lesser extent in the Lluta district as well as other local geographical features listed as follows:

Majes River basin: Aplao, Huancarqui and Uraca Access road: Corire Punta Colorada bridge El Pedregal Pitis Cantas Ganchos Camp Zafranal Camp.

One major interest group includes the members of the Board of Majes Valley and its committees (specifically Aplao, Huancarqui, Uraca, Cantas, Pitis, Pedregal), as well as associations of shrimp fishermen. Another important interest group is the Virgen de la Asunta which has incorporated most of the informal miners working in some of the Project mining concessions. AQM has been working with the Virgen de la Asunta to formalize the mining activities of its members in response to the recent enforcement of legislation outlawing informal mining in Per. The Projects ADI could be modified according to the final location of its onsite and offsite infrastructure.

20.7.2

C O N SU L T AT I ON

WI T H

C O M M U N I T I ES

The implementation of an effective community engagement program is fundamental to the successful permitting of mining projects. As part of a comprehensive community engagement program, consultation should be initiated at an early stage of the Project. Consultation will include addressing concerns on the environmental and social-economic impacts of the Project activities during its different stages. AQM has initiated an early dialogue with the public and local authorities as part of stakeholder engagement process which involved handling communications and disclosing project information. Three liaison offices were set up near the Project area in order to receive feedback and provide information to the public in a proper and timely manner. Consultation and the development of a working relationship with local communities typically involve the development of a series of agreements that lay the groundwork for ongoing discussion. These include:

memorandums of understanding protocol agreements community consultation/participation agreements.

As project exploration and development proceeds, other agreements will become necessary, including:

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-14

1295840100-REP-R0001-05

socio-economic benefits agreements environmental monitoring agreements training agreements accommodation and impact benefit agreements.

20.7.3

C O M M U N I T Y R E L AT I O N S P L AN
Since the beginning of the Project exploration activities, AQM has been able to establish and maintain an effective relationship with communities in the area of influence of the Project by keeping them informed about project activities, having them participate in environmental monitoring programs, hiring temporary local labour and supporting social development initiatives to improve educational infrastructure and programs, local infrastructure and to promote small businesses. The Project has been widely accepted by the public. The Community Relations Plan (CRP) for the Project addresses the actions necessary to establish and maintain relations with the key authorities, institutions and local organizations to keep them informed about the Project activities, mitigate exploration impacts, and support community development programs. The main CRP is designed to reinforce local capacity building and promote active participation of local and provincial authorities and engage leaders and representatives from Majes Valley organizations in activities aimed at improving transparency of AQMs activities related to the Project. These actions are being carried out according to the program structure of the CRP, which integrates community development, community relations, public relations and communications. The main activities selected for the CRP supported by AQM include the following:

consultation and disclosure education, health and nutrition environmental management local employment and local economy participatory monitoring program infrastructure development and capacity building of local institutions promotion of local culture and customs.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

20-15

1295840100-REP-R0001-05

21.0 CAPITAL AND OPERATING COSTS

21.1
21.1.1

CAPITAL COST ESTIMATES

I N T R O D U C T I ON
The initial capital cost for the Project was estimated at US$1,520 million with an expected accuracy range of 35%. All dollar figures presented in this section are stated in US dollars, unless otherwise specified. The estimate was developed by Tetra Tech, with input from the following consultants:

CESEL material take-offs for concrete, structural steel, platework, electrical and instrumentation Knight Pisold TMF, water management and power supply NCL mine development ABEIMA desalination plant and fresh water supply SociedadTerral S.A. (Terral) SX-EW plant and leach area AQM Owners costs.

The capital cost estimate consists of four main parts:

direct costs indirect costs Owners costs contingency.

The capital cost summary and its distribution by area is shown in Table 21.1.
Table 21.1 Capital Cost Summary
Labour Cost ($) Construction Equipment ($)

Hours Direct Costs Open Pit Mining Process Plant 3,264,828 2,265,690

Material ($)

Equipment ($)

Total ($)

33,853,935 19,575,564

89,652,778 57,581,043

34,082,832 16,054,396

210,099,771 147,783,856

367,689,316 240,994,860

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-1

1295840100-REP-R0001-05

Hours Leach Area Tailings and Water Management Infrastructure Fresh Water Supply Power Supply and Distribution Indirect Costs Project Indirects Owner's Costs Owner's Costs Project Contingency Contingencies Total 6,543,262 41,760 182,393 25,932 606,387 147,294 8,978

Labour Cost ($) 1,575,876 224,049 5,239,184 1,272,619 77,566 4,066,099 65,884,892

Material ($) 13,239,939 49,318,009 58,021,637 61,360,570 49,675,910 173,894,873 67,777,915 202,912,212 823,434,886

Construction Equipment ($) 3,705,163 164,128 41,971,267 20,453,523 60,725 116,492,035

Equipment ($) 18,578,436 5,402,184 10,107,649 121,448,522 441,000 513,861,418

Total ($) 37,099,415 55,108,370 115,339,737 204,535,234 50,255,201 177,960,973 67,777,915 202,912,212 1,519,673,233

21.1.2

E ST I M AT E B AS E D AT E

AND

V A L I D I T Y P ER I OD E X C H AN G E R AT E

Tetra Tech prepared this preliminary assessment estimate with a base date of Q3 2012. No escalation beyond Q3 2012 is applied to the estimate. The estimate was prepared in Canadian dollars and converted into US dollars using a currency exchange rate of Cdn$1.00 to US$0.977.

21.1.3

E ST I M AT E A PP R O AC H
The capital cost estimate was developed based on the following:

in-house databases; reference works were used for the equipment preliminary material quantity estimates was provided by CESEL for civil, concrete, steel, architectural, platework and pipelines Knight Pisold provided the material quantities for the construction of the tailings facilities inputs for the site preparation components was provided by AQM/CESEL, with labour included in the cost inputs for the mining components were provided by NCL power supply and distribution costs were developed by Knight Pisold and Tetra Tech electrics, instrumentation, piping, and heating, ventilation, and airconditioning (HVAC) were provided by CESEL
21-2 1295840100-REP-R0001-05

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

estimated installation hours was based on in-house experience and cost book references project development schedule.

All equipment and material costs are based on FCA manufacturer plant (Incoterms 2010) and will be exclusive of spare parts, taxes, duties, freight, and packaging. The freight costs and spares costs are covered in the indirect section of the estimate as an allowance, based on information provided by AQM. Tetra Tech assumed the construction man-hours/work week to be 10 h/d with a 3week-on/1-week-off rotation, with a land accessible construction camp. Owner estimated and provided the Owners costs and customs and importation duties payable on goods shipped to Per.

21.1.4

C O ST B A SI S

BY

P R O JEC T
AND

A R E A B U L K E A R T H W OR K S I N C L U D I N G S I T E P R E PA R A T I O N , A C C ES S , ROADS

HAUL

Bulk earthwork quantities were generated from preliminary layout designs. Excavation of top soil and allowance for rock excavation was based on assumptions made at the time of the estimate preparation. Structural fill pricing was based on aggregates being produced at site utilizing a portable crushing and screening plant. The mobilization and set-up costs of the aggregate plant are included in the unit rates. The actual cost of aggregate production is included in the earthwork unit rates. Earthwork quantities do not include any allowance for bulking or compaction of materials; these allowances are included in the unit prices. Inputs for all of the above were provided by CESEL to Tetra Tech. Tetra Tech has made the following assumptions:

Topsoil, 300 mm average, is to be stripped and stockpiled on-site. A total of 5% of excavated material is deemed to be unsuitable. An average of 50% of the excavated material is deemed to be excavation in rock, of which 50% is rippable rock and the balance requires drilling and blasting. Surplus excavated material is stockpiled at a location within 5 km of the site. Allowable ground bearing pressure is assumed to be minimum 400 kPa at the plant site location. Equipment foundations may require greater ground bearing capacity (to be confirmed by selected vendors and a geotechnical engineer in the next phase of the Project).

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-3

1295840100-REP-R0001-05

The mine site primary crusher is assumed to be located adjacent to the pit, on rock. Rock slope is assumed to be cut at a 1:1 slope. Allowable ground bearing pressure for structures located at the mine site is assumed to be a minimum of 600 kPa. The borrow pit for the construction of the tailings dam was assumed to be 10 km from site. The possible need for soil remediation, or special sub-surface measures, or the need for piling is excluded.

Access roads are based on 6 m width with chip sealor dust suppressant surfacing material or gravel.

C O N C R ET E
Concrete quantities were provided by CESEL. Typically all concrete is based on a 28-day compressive strength of 30 MPa. Tetra Tech used a concrete price of $641/m3, to supply and deliver to the point of placement at site. Concrete unit rates include for formwork, reinforcing steel, placement, and finishing of concrete.

S T R U C T U R A L S T E EL
Structural steel quantities are based on quantities developed and provided by CESEL. Craneage is included for all tonnages at a rate of $250/t.

P L A T EW OR K

AND

L I N ER S

Preliminary quantities for platework and metal liners for tanks, launders, pumpboxes, and chutes were estimated by CESEL.

M EC H A N I C A L
The equipment estimate was prepared based on the project process flow diagrams and equipment list. The mechanical pricing is based on information provided by CESEL, or the in-house database or reference books.

D U ST C OL L EC T I ON

AND

F I R E P R OT EC T I ON

Fire protection is included as a percentage of the equipment costs, based on recent project history

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-4

1295840100-REP-R0001-05

P I PI N G

AND

V A L VE S

Piping and valve costs were estimated by CESEL.

E L EC T R I C A L
The power supply, distribution and sub-stations costs were provided by Knight Pisold. The other electrical costs were provide by CESEL.

I N ST R U M E N T A T I ON
Instrumentation was estimated by CESEL. Plant control system costs are based on recent similar projects., including taxes will be supplied.

B U I L D I N GS
The estimate for the engineered steel framed, pre-engineered, and modular buildings is based on information provided by CESEL, or based on recent similar projects. An in-house data base and experience with similar recent projects was used as a base for the cost estimate. The major structures and buildings are identified from general arrangement drawings. These structures and buildings include:

crushing building grinding flotation and regrind reagents maintenance building truck shop and mine dry administration assay and metallurgical laboratory warehouse temporary construction and permanent operations camps emergency response building, including medical clinic gatehouses.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-5

1295840100-REP-R0001-05

P L A N T M OB I L E E QU I PM E N T
The estimate for plant mobile equipment was based on information from comparable operations.

P ER M A N EN T A C C OM M OD A T I O N

AND

C O N ST R U C T I ON C A M P S

There is a construction camp included in the estimate.

TAXES

AND

D U T I ES

The estimate was prepared with the inclusion of Peruvian taxes and duties as provided by AQM.

C O N ST R U C T I ON I N D I R EC T S
Allowances have been included for construction indirects, based on a percentage of the direct costs, except for the power supply. Tailings and leaching were included as a fixed amount.

S PA R ES
An allowance for commissioning and capital spares was included based on the value of the process equipment.

INITIAL FILLS
An allowance for initial fills was included.

F R E I GH T

AND

L O G I ST I C S

The amounts used in the estimate were provided by AQM and include taxes. The mining mobile equipment costs include freight and commissioning.

C O M M I S SI ON I N G

AND

START-UP

An allowance for commissioning has been included in the indirect costs.

EPCM
Engineering, procurement and construction management (EPCM) was included, based on a percentage of the relevant works or as provided by the consultants

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-6

1295840100-REP-R0001-05

V EN D OR S
An allowance for vendor representatives has been included in the Indirect costs.

O WN ER S C O ST S

AND

P ER M I T A L L O WA N C E S

Owner has provided a schedule of costs which are included in that section.

E XC L U SI ON S
The following will not be included in the capital cost estimate:

force majeure schedule delays such as those caused by:

major scope changes unidentified ground conditions labour disputes abnormally adverse weather conditions

receipt of information beyond the control of the EPCM contractors cost of financing (including interests incurred during construction) schedule acceleration costs working capital cost of this study sunk costs.

A S SU M PT I ON S
The following assumptions have been made in the preparation of this estimate:

All material and installation subcontracts will be competitively tendered on an open shop, lump sum basis. Site work is continuous and is not constrained by the owner or others. Skilled tradespersons, supervisors, and contractors are readily available. The geotechnical nature of the site is assumed to be sound, uniform, and able to support the intended structures and activities. Adverse or unusual geotechnical conditions requiring piles or soil densification have not been allowed for in this estimate.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-7

1295840100-REP-R0001-05

C O N T I N G EN C Y
The contingency allowance included in the estimate amounts to $202,912,212 based on an overall average 18% of direct costs.

21.1.5

O WN ER S C OST S
The Owner has provided an allowance for Owners costs, which is $67,777,915 plus 20% contingency as shown in Table 21.2, and included in the capital cost estimate for the Project. The Owners cost estimate was developed to cover the costs associated with the pre-production operating activities as well as recruitment, training, transportation, accommodation, and catering of the workforce and contractors where appropriate. For example, concentrator and leach facility employees will be hired six months in advance of the start-up of their respective installations to ensure adequate training.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-8

1295840100-REP-R0001-05

Table 21.2

Details of Owners Costs

Mine Costs ($) 672,300 1,844,195 1,423,823 2,420,000 6,360,318 4,280,000 1,000,000 11,640,318 2,328,100 13,968,418 Mill Costs ($) 475,606 2,920,733 196,433 193,438 1,640,000 78,750 5,504,960 2,080,000 1,000,000 8,584,960 1,717,000 10,301,960 SX-EW Costs ($) 136,077 767,510 88,487 86,242 640,000 1,718,316 520,000 500,000 2,738,316 547,700 3,286,016 G&A Costs ($) 136,469 2,697,994 407,507 261,050 390,000 3,893,021 1,240,000 2,418,500 1,660,100 4,390,426 9,239,000 500,000 23,341,047 4,668,200 28,009,247 Construction ($) 17,025,900 17,025,900 760,000 750,000 964,500 19,500,400 3,900,100 23,400,500 Security ($) 1,142,874 1,142,874 390,000 440,000 1,972,874 391,600 2,367,474 Total ($) 1,420,453 6,386,237 2,536,622 1,964,553 5,090,000 17,025,900 78,750 1,142,874 35,645,389 390,000 9,320,000 2,418,500 750,000 2,624,600 4,390,426 9,239,000 3,000,000 67,777,915 13,555,700 81,333,615

Description Employee Recruitment Employee Pre-operations Wages (Training) Employee Catering Costs Employee Transportation Employee Housing Allowance Construction Management Costs Mine Contractor Costs Security Subtotal Security Operations Camp Construction Costs Project Permitting Costs Owners Water Supply Costs Owners Power Supply Costs Social Responsibility Management Project Insurance Costs External Consultants Subtotal Contingency 20% Total

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-9

1295840100-REP-R0001-05

21.1.6

S U ST A I N I N G C A PI T AL
Any costs associated with work and investments that are scheduled to start after Year 1 are included in the sustaining capital costs and are not in the initial capital cost estimate. A detailed sustaining capital cost and schedule was developed for the Project and was applied to the Projects financial model for inclusion in the Project economic evaluation.

21.1.7

E L E M EN T S

OF

C O ST S
AND

L A B OU R R A T ES

P R OD U C T I V I T Y

The labour rate was developed with consideration to the following:

vacation and statutory holiday pay fringe benefits and payroll burdens overtime and shift premiums small tools consumables personal protection equipment contractors overhead and profit.

Based on available information, Tetra Tech has assumed that the labour source is as follows:

50% locally 25% regionally 25% out of town.

A productivity factor of 1.35 was to be applied to the labour portion of the estimate to allow for the inefficiency of long work hours, climatic conditions, and due to the 3week-in/1-week-out rotation. This was based on in-house data supplied by contractors on previous similar projects in Per.

21.1.8

M I N I N G C A PI T AL C O ST E ST I M AT E
The mining capital cost estimate includes investment and operating costs associated with the construction period and considers the following items:

pre-production costs initial investment, replacement spare components and contingencies associated with the mine equipment fleet
21-10 1295840100-REP-R0001-05

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

other investment such as dispatch, training sets, etc haul road development.

A summary of pre-production mining costs is presented in Table 21.3.

Table 21.3 Summary of Mining Costs
Costs ($ million) 151.7 210.1 5.9 367.7 5.8 38.0 411.5

Pre-production Mining Operations Mining Equipment Other Investments Subtotal of Direct Costs Indirect Costs (Spares) Contingency Total Pre-production

P R E - PR OD U C T I ON C O ST
Pre-production cost includes the mine cost associated with the removal of all the material before the startup of the processing plants. The estimated pre-production tonnage is 117 Mt and it is expected to take approximately two years to remove this material and expose sufficient mineral to initiate production. Details of the preproduction costs are shown in Table 21.4.
Table 21.4 Mining Pre-production Unit Costs
Costs (US$ million) 18.6 69.8 9.2 17.3 20.9 2.7 13.2 151.7 30.3 182.0 Costs (US$/t mined) 0.16 0.60 0.08 0.15 0.18 0.02 0.11 1.30 0.26 1.56

Pre-production Loading Hauling Drilling Blasting (Contract Service) Ancillary Support Indirects Subtotal Contingency (20%) Total Unit Costs

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-11

1295840100-REP-R0001-05

M I N I N G F L E ET I N V EST M E N T
The mining fleet investment has been developed in accordance with the mine development schedule and considered the useful life of each type of equipment. The full purchase prices of the mining equipment were obtained from estimations prepared by NCL, based on quotations received in 2011 for similar projects located in Per and reference prices supplied by providers in 2012. The prices included freight to the site and commissioning. A factor of 5% of the total cost of initial major equipment was added to the overall cost of equipment to fund the purchase of additional minor equipment. The following main components are included in the initial investment: one shovel bucket, one loader bucket, two truck bodies, and five truck tires, plus 6% of total initial mining equipment first period cost for spare parts. In addition, 5% contingency was added to the total mining equipment cost to account for omissions. Table 21.5 outlines these details.
Table 21.5 Initial Mining Equipment Fleet
Description Main Equipment Electric Drill (311 mm diameter) Diesel Drill (311 mm diameter) FEL (17 m ) Electric Rope Shovel (56 m ) Total Hauling Units (300 t) Ancillary Equipment Bulldozer 1 500 hp Wheeldozer 1 500 hp Motorgrader 1 300 hp Water Truck HD 150 hp Support Equipment Support Drill Titon Backhoe Lube Truck Support Truck Mobile Crane Lowboy Truck 110 t Tires Handler Lightning Plant Cable Reeler Motivator Forklift 7 t 1 1 1 1 1 1 1 10 1 1 1 1.5 0.2 0.4 0.4 1.3 4.1 0.6 0.1 0.5 1.5 0.1 5 3 3 3 6.8 3.3 2.7 4.3
3 3

Units

Costs US$ million

3 1 2 2 17

14.2 3.1 9.2 53.3 101.8

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-12

1295840100-REP-R0001-05

Description Rock Breaker Hammer Soil Compactor Other Minor Equipment (5%) Subtotal Equipment Fleet Extra Bucket for Electric Shovel Extra Bucket for FEL Tires Truck Truck Extra Body Components (6% Major Equipment) Subtotal Spares Contingency (5%) Total Equipment Fleet and Spares

Units 1 1 61 1 1 5 2 9 -

Costs US$ million 0.2 0.2 0.4 210.2 1.9 0.1 0.2 0.6 3.1 5.8 10.8 232.7

O T H ER M I N I N G I N VE ST M EN T S
Other mining investments were required to support the mining operation including a dispatch control system, an anti-collision system for haul trucks, a operator training system, a truck fuelling station and an explosives preparation plant. These investments are detailed in Table 21.6.
Table 21.6 Other Mining Investments
Units 1 1 1 1 1 1 Costs US$ million 1.6 1.2 2.2 0.5 0.5 5.9 0.9 6.8

Description Anti-collision System Training System Dispatch Equipment Control Pit Fuelling Station Explosives Plant Subtotal of Other Investments Contingency (15%) Total of Other Investments

NCL designed the main external haul roads around the pit and platforms for the crushing station and truck maintenance shop, at an estimated cost of $34.7 million. These investments were not included in the mining capital cost however they are included under site preparation costs.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-13

1295840100-REP-R0001-05

21.1.9

P R OC E SS P L AN T C A PI T A L C O ST E ST I M AT E
The process plant will consist of a primary stage that includes crushing and a SAG and ball mill grinding circuit, which is then followed by a flotation process to recover and upgrade copper and gold from the feed material. The capital cost of this facility is detailed in Table 21.7.
Table 21.7 Process Plant Capital Cost
Costs (US$ million) 49.2 135.1 42.1 9.4 2.4 2.9 241.1 62.9 48.2 352.2

Description Crushing and Stockpile Grinding Flotation and Regrind Thickening and Filtration Reagents Process Building Subtotal Direct Costs Indirect Costs Contingency Total Pre-production

Indirect costs include construction indirects, spares, first fills, freight, logistics and customs duties, commissioning, EPCM, and vendor assistance. A 20% contingency has been applied to total direct costs.

21.1.10 T AI L I N G S M AN A G EM EN T F AC I L I T Y C AP I T A L C O ST E ST IM AT E
Conceptual level design and cost estimates for the Project tailings and water management components are based on a total of 425 Mt of processed mineral, including 74 Mt of low grade mineral that will be processed at the end of the mine milling life. Unit rates used in the cost estimates were based on typical recent and relevant rates for similar projects. The costs for Phase 1 construction include allowances for mobilization and demobilization at 4% and 2% of the total construction costs, respectively. Engineering costs have been included and are estimated to be 10% of the total capital costs. A 25% contingency is included in the initial and sustaining capital cost estimates. Table 21.8 details the capital cost estimate for the TMF.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-14

1295840100-REP-R0001-05

Table 21.8

Tailings Management Facility Capital Costs

Costs (US$ million) 3.1 29.2 1.3 20.7 0.1 54.4 6.0 14.0 74.4

Description Mobilization and Demobilization South Embankment Construction Water Management System Tailings Transport Miscellaneous Subtotal Engineering (10%) Contingency (25%) Total Capital Cost

Knight Pisold has estimated the cost of closure for the TMF at $33.5 million and this estimate has been included in the Projects sustaining capital.

21.1.11 L EAC H F AC I L I T Y
Terral, in collaboration with Transmin, produced a conceptual study for the proposed leach facility at an estimated total capital cost of $61.85 million. Table 21.9 outlines the capital costs for the leach facility.
Table 21.9 Leach Facility Capital Cost
Area Agglomeration Leaching Solvent Extraction Electrowinning Ponds Services Inventories Subtotal Direct Costs Insurance and Freight Commissioning and Start-up EPCM Overhead Profit Subtotal Indirect Costs Direct Costs Indirect Costs Contingencies Total Capital Cost
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

Costs (US$ million 23.54 1.73 6.97 0.76 2.26 1.84 37.10 1.86 1.11 5.57 5.48 5.11 19.13 37.10 19.13 5.62 61.85
21-15 1295840100-REP-R0001-05

The costs for the Project include the areas of leaching, solvent extraction, electrowinning, ponds, general facilities and services and initial inventory, with a 30% margin of error. Investment amounts have been determined on the basis of prices prevailing under market conditions in Chile, which may vary from those in Per.

C A L C U L A T I ON C R I T ER I A
The initial investment includes costs for process equipment, assembly works, civil work, piping, electric power and instrumentation, initial inventory, detailed engineering, insurance and freight, general facilities and services, and utilities in the various area of the proposed leach facility.

E QU I P M EN T
The equipment considered in the project has been estimated on the basis of the quotes complied in Terrals database for equipment featuring similar characteristics, which were then scaled using factor-based estimation methodologies, such as Williams and Langs methods.

E R EC T I ON W O R K
Erection work for the various processes was estimated at 30% of the total value of each item. This factor considered the quality of human resources and their average performance levels from Terrals experience for this type of the Project.

C I VI L W OR K S
For this item, volumes were estimated on the basis of average earthmoving data for projects of this type. The same applied to structures and concrete. The unit prices set forth reflect the values available in Terrals databases. Additionally, suppliers were asked for quotes regarding for pools liners and the tank house.

P I PI N G

AND

P ON D S

The volumes considered were for piping in the various areas for this size of the Project, and the unit prices were those available on Terrals database. This approach was taken with regard to HDPE and carbon steel pipes and fittings in general. The volumes determined by the Project and the base prices of domestic suppliers were used to size and price the ponds. In parallel, factorial methods were used to confirm the relevant cost estimates.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-16

1295840100-REP-R0001-05

I N ST R U M E N T A T I ON

AND

E L EC T R I C A L P O WER

A medium level of instrumentation was selected, which was estimated at a conservative 12% of the Projects total direct costs. In addition, for the purposes of estimating the instrumentation equipment, Terral relied on past experience to assigned appropriate factors. These varied between 5 and 40% of the equipment costs for each individual process stage. With regard to electric power consumption and cost estimation, experience with similar plants enabled the identification of all wiring, switchboards, panels and electrical rooms that should be required for the Project.

I N I T I A L I N VEN T OR Y
Initial inventories were based on the mass balance, the preliminary dimensioning of the equipment, and process needs. Terral assumed a minimum three months stock, and used the following factors for calculation purposes: For extractant, stock is a function of equipment (mixer-decanters, organic pond and 8% for lines) and losses due to effluent generation. For solvent, stock is a function of equipment (mixer-decanters, organic pond and 8% for lines) and evaporation For guar and cobalt sulphate, stock is a function of output.

I N D I R EC T C OST S
To calculate investment associated to indirect costs, we applied a percentage to direct costs on the basis of Chilean standards, which are:

insurance and freight: 5% of direct costs commissioning and start-up: 3% of direct costs EPCM: 15% of direct costs general facilities and services: 12% of direct costs utilities: 10% of direct costs, insurance and freight, commissioning and startup, EPCM, and general facilities and services.
A N D I N C I D EN T A L S

C O N T I N G EN C I E S

The total investment cost includes as contingencies and incidentals the equivalent of 10% of investment associated to direct and indirect costs.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-17

1295840100-REP-R0001-05

21.1.12 P OW ER S U PP L Y
Knight Pisold was retained by AQM to complete a conceptual level study update for the power delivery and site power distribution systems, based on a total connected power of 140 MW with a peak load requirements of 135 MW. As shown in Table 21.10, the estimated capital cost of the power supply and distribution is $59.2 million.
Table 21.10 Power Supply and Distribution Capital Cost
Costs (US$ million) 5.12 28.33 2.96 13.10 49.51 4.95 4.74 59.20

Description Mine Substation 220 kV Transmission Line 25 kV Distribution Lines Diesel Plant and Pump Station Subtotal of Direct Costs Indirect Costs Contingencies Total Capital Cost

The preferred option was a connection to the Socabaya 220 kV substation, near the city of Arequipa and approximately 120 km from the Project site. Knight Pisold developed a conceptual level study cost estimate for the power delivery and site power distribution systems. Power during construction of the main project components will be provided by the various contractors via portable, diesel-powered generators.

21.1.13 W AT ER S U P PL Y
ABEIMA completed a preliminary conceptual design and an indicative cost estimate for the Projects water supply system that will provide seawater intake and treatment by a desalination plant, storage of product water, brine discharge into the sea, pumping 586 L/s of treated water up to the mine, and water treatment plant for drinking purposes. Table 21.11 outlines the total capital cost of the Project water supply.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-18

1295840100-REP-R0001-05

Table 21.11

Water Supply Capital Costs

Costs (US$ million) 57.5 143.6 0.8 2.5 204.4 42.9 27.5 274.8

Description Desalination Plant Pipeline and Pumping Potable Water Distribution Subtotal Indirects Contingencies Total Capital Cost

21.2
21.2.1

OPERATING COST ESTIMATES

S U M M AR Y
The total operating cost for the Project is estimated to be US$8.29/t of plant feed material processed including mining, processing, leaching, G&A, and plant services. The unit costs, as summarized in Table 21.12, are based on an annual treatment rate of 29,200,000 t/a, or a production rate of 80,000 t/d and 365 days of operation. All dollar figures presented in this section are stated in US dollars, unless otherwise specified.
Table 21.12 Operating Cost Summary
Unit Cost ($/t processed) 2.56 4.23 0.07 0.49 0.94 8.29

Area Mining Milling Tailings and Water Management G&A Leaching Total Operating Cost

The total operating unit cost for the Project per pound of copper produced is estimated to be US$1.26, as shown in Table 21.13.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-19

1295840100-REP-R0001-05

Table 21.13

Mine Unit Operating Cost Summary

Unit Cost ($) 1.40 3.08 5.10 0.08 0.60 8.86 5.54 8.29 1.21 1.82 1.26

Cost Item Mining Milling Tailings Management G&A Subtotal Flotation Subtotal Leach Total Flotation and Leach Subtotal Flotation Subtotal Leach Total Flotation and Leach

Unit $/t mined $/t milled $/t milled $/t milled $/t milled $/t milled $/t leached $/t processed $/lb Cu Produced $/lb Cu Produced $/lb Cu Produced

21.2.2

M I N I N G O PE R AT I N G C O S T E ST I M AT E
The operating cost estimate is based on price information for consumables, maintenance and labour costs gathered by NCL from other similar projects in the area.

R EL EV A N T C ON S U M A B L E P R I C ES
Table 21.14 shows consumable pricing used in the calculation of equipment operating costs.
Table 21.14
Description Fuel Power Lube Grease ANFO Tires FEL Truck Wheeldozer Grader Water Truck Drill Steel Bit Main Rod $/ea $/ea 3,500 6,400 $/ea $/ea $/ea $/ea $/ea 61,785 35189 10,291 59,83 14,630

Relevant Consumables Prices

Unit $/L $/kWh $/L $/kg $/kg Price 0.994 0.070 1.725 3.93 0.5744

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-20

1295840100-REP-R0001-05

Description Adapter Bit Rod Adapter Guide Starter Road Shock Absorber Note:

Unit $/ea $/ea $/ea $/ea $/ea

Price 1,200 2,800 2,000 6,100 22,000

ANFO = ammonium nitrate/fuel oil

M A I N T EN A N C E
A full maintenance and repair contract (MARC) was considered for the operating cost estimates. Costs were estimated from recent quotations for similar projects.

L A B OU R
An absenteeism factor of 12% was used in the calculation of the workforce required in the mine. This factor yielded a total of 4.48 operators per effective equipment (discounting mechanical availability and utilization), which is applied to the truck, support and ancillary fleets. For drill rigs and loading equipment the 4.48 operators factor is applied to the total fleet. The mine indirect manpower includes personnel allocated to mine management, mine operations, maintenance services, technical services and mine geology. The cost of personnel for direct maintenance was considered as it is part of the MARC cost option. Labour costs were calculated using the yearly cost per labour category equal to an average of salaries from two comparatively similar Peruvian mining operations. Workers profit sharing was not incorporated into the wage structure but was included in the economic evaluation of the Project.

G EN ER A L

AND

A D M I N I ST R A T I V E E X PE N S ES

Indirect expenses related to the mine site include:

office supplies safety equipment rental of light vehicles diesel for light vehicles software training consultants
21-21 1295840100-REP-R0001-05

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

infill drilling tools mineralized material control other minor expenses.

Mine drainage has not been included in the indirect figures, due to the dry weather in the mine area. However, this exclusion must be analyzed in more detail in future evaluations as some sporadic rains occur in the region which could require channels to divert rain water.

B L A ST I N G S ER VI C E
The mine will contract out this service including the supply of mix trucks and 18 trained personnel who will carry out the delivery of the explosive mix to the drillhole and the blasting operation. The fixed annual cost of this service is estimated from a reference quote at $1,275,000 not including consumables. The minimal quantities of water detected in the exploration diamond drillholes supports the conclusion that blasting will be performed using 100% ANFO. An allowance for the explosive plant infrastructure has been added to the capital cost estimate.

M I N I N G O PE R A T I N G C O S T S U M M A R Y
The operating cost of the total mine movement was calculated based on all information described in this section, including the cost of plant feed re-handle. Table 21.15 summarizes the mining operating costs per activity for the production period and displays those same costs as unit costs in US$/t mined.
Table 21.15
Production Loading Hauling Drilling Blasting (Contract) Ancillary Support Indirects Subtotal Contingency Total Unit Costs

Mining Operating Cost Summary

US$ million 187.8 636.3 85.8 131.6 155.3 18.0 79.3 1,294.1 18.6 1,312.7 US$/t mined 0.20 0.68 0.09 0.14 0.17 0.02 0.08 1.38 0.02 1.40

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-22

1295840100-REP-R0001-05

21.2.3

P R OC E SS P L AN T O P ER A T I N G C O ST E ST I M AT E
The process operating costs for the Zafranal concentrator includes crushing, grinding, flotation, concentrate thickening and filtration to produce a saleable copper concentrate.

O PE R A T I N G C O ST S U M M A R Y
Table 21.16 gives the overall estimated cost summary for the processing facility and the G&A costs, and is based on 80,000 t/d with a mill availability of 92% and 365 operating days per year. The operating costs have been determined using the operating plant complement required to run and maintain the plant facilities. The manpower complement has been estimated on the basis of having four crews under equal rotation time and two 12-hour shifts per day. The annual operating costs for the process facilities and tailings handling sections is estimated to be $148.9 million, or $5.10/t of plant feed material treated at the processing rate of 80,000 t/d.
Table 21.16 Concentrator Annual Operating Cost Summary
Cost ($)

Manpower Labour Costs Operations Staff Operations Labour Maintenance Labour Metallurgical Laboratory Subtotal Labour Costs Power Costs Crushing Grinding Flotation & Regrind Air and Water Supply Tailings Miscellaneous Auxilary Plant Utilities Subtotal Power Costs Supplies and Contractors Plant Supplies Maintenance Supplies Reagents 4 76 67 17 164

$/t milled

341,785 2,220,466 2,570,636 698,614 5,831,501 2,398,299 28,542,055 4,348,176 1,582,061 160,589 305,638 1,164,232 38,501,050 41,129,024 14,000,000 28,155,017

0.012 0.076 0.088 0.024 0.200 0.082 0.977 0.149 0.054 0.005 0.010 0.040 1.319 1.409 0.479 0.964

table continues

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-23

1295840100-REP-R0001-05

Manpower Desalinated and Potable Water Miscellaneous Contract Services Assays Subtotal Supplies and Contractors Costs Total Operating Costs 18 18 182

Cost ($) 18,900,000 1,471,000 957,828 104,612,869 148,945,420

$/t milled 0.647 0.050 0.033 3.583 5.101

The annual operating cost estimate includes the following:

the staffing and maintenance manpower base salaries, including a burden of 71%, is based on information as supplied by Transmin power consumption is based on the estimated power usage with the cost of power provided by Transmin reagent consumption values, and the cost of reagents has been based on prices as supplied by Transmin, and from suppliers estimated maintenance costs the staffing and manpower complement based on information originally provided by Transmin and revised by Tetra Tech.

21.2.4

T AI L I N G S M AN A G EM EN T F AC I L I T Y O P ER AT I N G C O ST E ST I M AT E
The tailings delivery pipeline is approximately 9 km long and will be 26 Schedule 40 steel pipe for the 80,000 t/d case. The emergency discharge pipeline is about 400 m long and is selected as 30 DR9 HDPE pipe for the 80,000 t/d case. This pipeline will operate by gravity. The cost of operating the tailings management system has been detailed in Table 21.17 along with the schedule for sustaining capital expenditures.
Table 21.17 Tailings Management Facility Sustaining and Operating Costs
Total (US$ million) 5.47 90.39 0.43 0.30 96.58 9.66 24.15 130.39

Description Mobilization and Demobilization Embankment Construction Water Management System Miscellaneous Subtotal Sustaining Capital Engineering (10%) Contingency (25%) Total Sustaining Capital

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-24

1295840100-REP-R0001-05

Operating Cost Labour Water Management Tailings Transport Miscellaneous Total Operating

Cost (US$ million) 16.80 3.99 11.21 1.44 33.44

Cost US$/t milled 0.08

21.2.5

G EN ER A L

AN D

A D M I N I ST R AT I VE C O ST S

Table 21.18 outlines the G&A cost estimate.

Table 21.18 G&A Cost Estimate
Arequipa Office ($) 237,500 118,750 62,500 415,625 5,021,250 300,000 200,000 285,000 475,000 380,000 1,425,000 190,000 170,000 70,000 70,000 120,000 60,000 106,875 285,000 80,000 2,060,000 200,000 450,000 178,125 12,960,625
21-25

G&A Cost Estimate Office Expenses (all locations) Office Supplies (all locations) Professional Associations Consultants Insurance Legal Services Regulatory Compliance/Audit Travel and Expenses Communications: Tel/ Fax/ Internet Computer and IT Services and Supplies Community Public Relations and Donations Recruitment Training Safety and Training Supplies Safety Incentives Medical Service/First Aid Security Supplies Environmental Management Janitorial Power Security Wages and Salaries Crew Transportation Transportation of Supplies Road Maintenance Camp Cost Miscellaneous Annual G&A Expenses
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

Zafranal Site ($) 12,500 6,250 21,875 128,750 15,000 25,000 20,000 75,000 10,000 30,000 30,000 30,000 80,000 90,000 500,000 5,625 15,000 320,000 515,000 800,000 300,000 467,881 1,000,000 9,375 4,507,256

Total ($) 250,000 125,000 62,500 437,500 5,150,000 300,000 200,000 300,000 500,000 400,000 1,500,000 200,000 200,000 100,000 100,000 200,000 150,000 500,000 112,500 300,000 400,000 2,575,000 1,000,000 750,000 467,881 1,000,000 187,500 17,467,881

$/t milled 0.009 0.004 0.002 0.015 0.176 0.010 0.007 0.010 0.017 0.014 0.051 0.007 0.007 0.003 0.003 0.007 0.005 0.017 0.004 0.010 0.014 0.088 0.034 0.026 0.016 0.034 0.006 0.600

1295840100-REP-R0001-05

General Discussion

The annual maintenance supplies requirement for the plant has been estimated to be $14.0 million, or $0.48/t of material treated. The total cost of operating supplies for the main plant has been determined to be $89.7 million, or $3.070/t of material processed.

Assumptions Used i n Power and Supplies Requi rements

The power value records the anticipated annual operating power usage and not the installed power for the equipment. The unit electrical cost of $0.070/kWh was provided by AQM. The costs of the plant operating supplies costs include the reagent costs for the consumption value as given in the process design criteria. The grinding media costs are based on the calculated consumption values, and vendor estimates. The maintenance supplies costs are estimated values and are reflected as an allowance as based on a percentage of the capital cost estimate. First Fills costs are estimates only based on the yearly consumption values used in the operating cost estimate. The reagent and steel allotment is an allowance for a two month supply to cater for possible delivery interruptions due to the location of the mill site.

O U T S OU R C ED C ON T R A C T S
Table 21.19 summarizes the costs for the analytical analysis requirements for the processing facility. This portion of the Project has been outsourced to a commercial laboratory. The overall costs include the manpower, equipment cost and reporting system. The manpower estimate is based on the analytical staff working 12-hour shifts.
Table 21.19 Assay Laboratory Costs
Total Cost ($/a) 957,828 957,828 Unit Cost ($/t treated) 0.033 0.033

Area Assay Laboratory Total

Estimate Basis 18 Technical Personnel and Equipment -

The contract estimate does not include transportation to site, food or lodging for the personnel as these costs are covered in the G&A cost summary.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-26

1295840100-REP-R0001-05

21.2.6

L EAC H F AC I L I T Y O P ER AT I N G C O ST E ST I M AT E
The leach facility operating cost estimate considered the consumption supplies resulting from the material balance; power consumption requirements of the installations, calculated on the basis of the installed capacities of the plants process equipment, and the associated dedicated manpower costs. Terral also considered the additional cost to transport the mineral to the leach pads as opposed to the mine waste dump, and third-party acid supply. Power outputs of each piece of equipment were used to calculation electrical consumption. Under these conditions, the operating cost of the Project leach facility is $1.48/lb copper, equivalent to $5.58/t of plant feed.

S U PPL Y C O ST S
Table 21.20 details the basic supply costs that have been used for the calculation of operating costs.
Table 21.20 Leach Facility Supply Costs
Description Sulphuric acid Fuel Materials movement during work Electric power Extractant Solvent Anode Permanent cathode Colbat sulphate Guar Freight from plant to port Distance from plant to port Replacement water Cost to the mine of plant feed in leach pad Unit $/t $/m $/t $/kWh $/kg $/m
3 3

Value 80.00 1,211.04 0.20 0.07 15.00 1,200.00 570.00 510.00 12.00 5.00 0.10 150.00 1.11 0.27

$/unit $/unit $/kg $/kg $/total copper/km km $/m $/t

3

L A B OU R
The leach facility labour costs include direct manpower, outsourced support services and internal administrative support.

Direct Manpower
A total staff of 64 is considered, distributed among administrative and operational shifts. A plant superintendent was also considered in the organization.
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 21-27 1295840100-REP-R0001-05

Outsourcing
The services supporting the plants operation are outsourced or covered AQM personnel in other areas. The outsourced services considered were:

accounting/payment of wages plant protection plant support for leach pad handling and cathode harvesting personnel transport.

A total of 24 on-site contractor personnel were considered for the leach facility. Table 21.21 summarizes the total unit operating costs for the leach facility.
Table 21.21 Leach Facility Operating Cost 10,000 t/a Cathode
Daily Consumption Cost ($/d) Cost ($/lb Cu) $/t mineral

Cost Item Plant General Costs Plant general industrial water cost Plant general area power consumption Contingencies estimate per area Work camp, administration and sales Supervision/manpower cost Area outsourcing cost Total Plant General Costs Mine Cost Cost of MINERAL in leach pads Total Mineral Cost Leaching Costs Cost of transport from agglomeration to leach pads Cost of loading plant feed in leach pads Power cost: agglomeration Power cost: leaching Curing water cost Leaching water replacement cost Cost of sulphuric acid onsumed Contingencies estimate per area Work camp, administration and sales Maintenance costs Supervision/manpower cost Area outsourcing cost Site preparation: Year 2 onwards Coatings and drains; Year 2 onwards

Unit
3

m /d kWh/d $/d lb Cu/d $/mo $/mo t/d t*km/d t/d kWh/d kWh/d m /d m /d t acid/d $/d lb Cu/d $/a $/mo $/mo $/a $/a
3 3

37.56 269.99 64,977.68 14,495,916 13,950,000 16,374.27 0.00 16,374.27 0.00 46,709.39 0.00 1,996.68 391.69 64,977.68 177,951.34 30,666.66 3,060 2,783 5,860.39

22.30 18.90 2.06 138.78 956.16 920.15 2,058.35 4,486.55 4,486.55 0.00 4,912.28 0.00 3,269.66 0.00 1,185.33 31,335.56 2,035.14 293.60 494.31 2,022.80 201.84 7,729.56 16,278.85

0.0003 0.0003 0.0000 0.0021 0.0147 0.0142 0.0317 0.0690 0.0690 0.0000 0.0756 0.0000 0.0503 0.0000 0.0182 0.4823 0.0313 0.0045 0.0076 0.0311 0.0031 0.1190 0.2505

0.00 0.00 0.00 0.01 0.06 0.06 0.13 0.274* 0.27 0.00 0.00 0.00 0.20 0.00 0.07 1.91 0.12 0.02 0.03 0.12 0.01 0.47 0.99

table continues
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 21-28 1295840100-REP-R0001-05

Cost Item Irrigation materials: adding/replacement Total Cost of Placing Copper in Solution Cost of Extraction by Solvents SX Reagents: Extractant SX Reagents: Solvent Power cost in SX Washing water cost in plant Contingencies estimate per area Work camp, administration and sales Maintenance costs Supervision/manpower cost Total Cost of Placing Copper in Electrolyte Electrowinning Cost Power cost in electrowinning Electrolyte acid replacement Treated water replacement Guar consumption Cobalt consumption Fuel consumption Contingencies estimate per area Work camp, administration and sales Maintenance costs Supervision/manpower cost Cathode consumption Anode consumption Total Cost of Cathodes in Plant Total Unit Cost Cathode Production Note: *Additional transport cost starts in Year 2.

Unit $/a kg/d m /d kWh/d m /d $/d lb Cu/d $/a $/mo kWh/d t acid/d m /d kg/d kg/d t/d $/d lb Cu/d $/a $/mo units/d units/d 3 3 3

Daily Consumption 910.36 35.98 0.65 2,628.34 37.56 64,977.68 41,394.35 22,282,487 62,341.48 9.26 65.13 7.37 18.25 3.88 64,977.68 229,146.88 26,566,481 0.00 1.19 -

Cost ($/d) 2,528.78 72,287.71 539.77 780.39 183.98 22.30 76.32 213.33 114.98 1,469.77 3,324.17 4,456.11 740.80 0.62 36.84 219.05 4,723.08 508.83 254.34 636.52 1,752.35 29.47 679.25 14,037.26 96,194.04

Cost ($/lb Cu) 0.0389 1.1125 0.0083 0.0120 0.0028 0.0003 0.0012 0.0033 0.0018 0.0226 0.0523 0.0686 0.0114 0.0000 0.0006 0.0034 0.0727 0.0078 0.0039 0.0098 0.0270 0.0005 0.0105 0.2160 1.4816

$/t mineral 0.15 4.11 0.03 0.05 0.01 0.00 0.00 0.01 0.01 0.09 0.21 0.27 0.05 0.00 0.00 0.01 0.29 0.03 0.02 0.04 0.11 0.00 0.04 0.86 5.58

21.2.7

W AT ER S U P PL Y O P ER AT I N G C OST E ST I M AT E
The annual cost of operating the the water supply system is detailed in Table 21.22.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-29

1295840100-REP-R0001-05

Table 21.22

Water Supply Operating Cost Estimate

Rate L/s 586 3

Description Production Electrical Consumption Ratio Operating Cost Without Power Electrical Consumption Total Operating Cost Estimate Unit Cost Concentrator Consumption (0.58 m /t) Leach Consumption (0.133 m /t) Dust Suppression (allowance) Total
3 3

Unit m
3

Water Output 18,480,096 63,690,101 3.45 2,883,050 4,458,307 7,341,357 0.40 -

Pumping 18,480,096 185,409,962 10.03 12,978,697 12,978,697 0.70 -

Potable 150,500 125,216 0.83 132,185 8,765 140,950 0.94 -

Total 18,480,096 249,225,279 13.49 3,015,235 17,445,770 20,461,005 1.11 18,939,910 1,069,778 451,316 20,461,005

kWh kWh/m $ $ $ $/m

3

$ $ $ $ 542 31 13 586

L/s L/s L/s L/s

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

21-30

1295840100-REP-R0001-05

22.0 ECONOMIC ANALYSIS

22.1 INTRODUCTION
The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is no certainty that the financial results in the PEA will be realized. Tetra Tech prepared an economic evaluation of the Project based on a pre-tax financial model. All costs in this section are expressed in US dollars. The pre-tax financial results are:

26.7% IRR 1.9-year payback from the start of mill operations on the $1,520 million of initial capital $1,332 million NPV at an 8% discount rate.

AQM commissioned Ernst & Young, Per to prepare a tax model for the a post-tax economic evaluation of the Project with the inclusion of applicable taxes and the Peruvian governments mining royalty. The following post-tax financial parameters were calculated:

17.4% IRR 2.6-year payback from the start of mill operations on $1,520 million of initial capital $588 million NPV at an 8% discount rate.

The base case metal prices used for this study are as follows:

copper $3.00/lb gold $1,274/oz.

Each of the metal prices used is calculated as the mean of the long-term (2018 to 2022 average) forecasts from 24 international financial institutions. Institutions include Bank of America, Australia and New Zealand Banking Group Limited (ANZ), Citigroup Inc., Credit Suisse Group AG, Morgan Stanley, Royal Bank of Canada (RBC), UBS, Barclays Bank PLC, and Deutsche Bank AG.
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 22-1 1295840100-REP-R0001-05

Analyses were conducted to assess the sensitivity of the pre-tax Project merit measures (NPV, IRR and payback periods) to the main inputs.

22.2
22.2.1

PRE-TAX MODEL
M I N E /M ET AL P R OD U C T I O N
IN

F I N AN C I AL M OD EL

The life-of-project average material tonnages, grades and metal production are shown in Table 22.1 and Figure 22.1.
Table 22.1 Metal Production from the Zafranal Project
Description Mine Life (Years) Material Milled/Leached Total Tonnes to Mill (000) Average Annual Tonnes to Mill (000) Total Tonnes to Leaching (000) Average Annual Tonnes to Leaching (000) Average Grade Copper (%) Mill Gold (g/t) Mill Copper (%) Leaching Gold (g/t) Leaching Total Production Copper (000 lb) Mill Gold (000 oz) Mill Copper (000 lb) Leaching Average Annual Production Copper (000 lb) Mill Gold (000 oz) Mill Copper (000 lb) Leaching Note:
1

Value 15
1

425,310 28,354 87,256 6,712 0.378 0.071 0.230 0.085 3,105,452 479 265,863 207,030 32 20,451

Leaching is active for 13 years.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

22-2

1295840100-REP-R0001-05

Figure 22.1

Total Metal Production

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

22-3

1295840100-REP-R0001-05

22.2.2

B AS I S

OF

F I N AN C I AL E V A L U AT I ON S

The production schedule has been incorporated into the 100% equity pre-tax financial model to develop annual recovered metal production from the relationships of tonnage processed, head grades, and recoveries. Metal payable values were calculated based on base case metal prices. Net invoice value was calculated each year by subtracting the applicable refining and smelting charges from the payable metal value. At-mine revenues are then estimated by subtracting transportation and insurance costs. Unit operating costs for mining, processing, power, fuel, and G&A were applied to annual mined/milled/leached tonnages to determine the overall operating cost which was deducted from the revenues to derive annual operating cash flow. Initial capital costs as well as working capital have been incorporated on a year-byyear basis over the mine life. Salvage value and mine reclamation costs are applied to the capital expenditure in the last production year. Capital expenditures are then deducted from the operating cash flow to determine the net cash flow before taxes and mining royalty. Initial capital expenditures include costs accumulated prior to first production of concentrate; sustaining capital includes expenditures for mining and processing additions, replacement of equipment, and tailings embankment construction. Based on the mining schedule, first mill production will occur approximately three years following project approval. Working capital is assumed to be three months of the annual operating cost and fluctuates from year to year based on the annual cost. The working capital is recovered at the end of the mine life. The salvage value is assumed to be equal to the reclamation cost and both will occur at the end of mine life. The undiscounted annual net cash flow (NCF) and cumulative net cash flow (CNCF) are illustrated in Figure 22.2.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

22-4

1295840100-REP-R0001-05

Figure 22.2
1,000 800
Annual Net Cash Flow (US$M)

Pre-tax Undiscounted Annual and Cumulative Net Cash Flows

4,000 3,000 2,000 1,000 0
Cumulative Net Cash Flow (US$M)

600 400 200 0 (200) (400) (600) (800) (1,000) NCF CNCF (3) (2) (1) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Production year

(1,000) (2,000) (3,000) (4,000)

22.3

SUMMARY

OF

FINANCIAL RESULTS

Tetra Tech evaluated the base case using long-term forecast copper and gold prices of $3.00/lb and $1,274/oz, respectively. The pre-tax financial model was established on a 100% equity basis, excluding debt financing, and loan interest charges. The financial results for the base case and for alternative cases are presented in Table 22.2.
Table 22.2 Summary of Pre-tax Financial Results
Base Case 3.00 1,274.00 10,724 1,557 4,242 4,936 1,520 1,745 3,192 1,852 1,332 1,062 1.9 26.7 Alternate Case 1 2.70 1,274.00 9,713 1,521 4,242 3,961 1,520 1,745 2,216 1,206 814 611 2.3 20.4 2 3.30 1,274.00 11,735 1,593 4,242 5,912 1,520 1,745 4,167 2,498 1,849 1,512 1.6 32.5

Description Copper Price ($/lb) Gold Price ($/oz) Recovered Metal Value ($ million) Off-site Costs & Deductions ($ million) Operating Costs ($ million) Operating Cash Flow ($ million) Initial Capital Expenditure ($ million) Total Capital Expenditure ($ million) Net Cash Flow ($ million) Discounted Cash Flow NPV ($ million) at 5% Discounted Cash Flow NPV ($ million) at 8% Discounted Cash Flow NPV ($ million) at 10% Payback (years) IRR (%)

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

22-5

1295840100-REP-R0001-05

22.4

SENSITIVITY ANALYSIS
Sensitivity of the projects pre-tax NPV, IRR to the Project key variables was investigated. Using the base case as a reference, each of the key variables was changed between 30% at 10% intervals while holding the other variables constant. The following are the key variables investigated:

copper price gold capital costs operating costs.

As shown in Figure 22.3, the Project NPV, calculated at an 8% discount, is most sensitive to the copper price and, in decreasing order, operating costs, capital costs, and gold price.
Figure 22.3 Pre-tax NPV Sensitivity Analysis

3,500

NPV@8% Discount Rate (US$M)

3,000 2,500 2,000 1,500 1,000 500 0 -30% -500 -20% -10% 0% 10% 20% 30% Copper price Gold price Capital costs Operating costs

% Change from Base Case

As shown in Figure 22.4, the Project IRR is most sensitive to the copper price followed by the capital costs, operating costs and gold price.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

22-6

1295840100-REP-R0001-05

Figure 22.4

Pre-tax IRR Sensitivity Analysis

45%
Internal Rate of Return (%)

40% 35% 30% 25% 20% 15% 10% 5% 0% -30% -20% -10% 0% 10% 20% 30% Copper price Gold price Capital costs Operating costs

% Change from Base Case

As shown in Figure 22.5, the payback period is most sensitive to the copper price and less sensitive to the rest of parameters.
Figure 22.5 Pre-tax Payback Sensitivity Analysis

6.0
Payback Period (years)

5.0 4.0 3.0 2.0 1.0 0.0 -30% -20% -10% 0% 10% 20% 30% Copper price Gold price Capital costs Operating costs

% Change from Base Case

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

22-7

1295840100-REP-R0001-05

22.5

POST-TAX FINANCIAL ANALYSIS

AQM commissioned Ernst & Young, Per to prepare a tax model for the a post-tax economic evaluation of the Project with the inclusion of applicable taxes and the Peruvian governments mining royalty.

B A C K GR OU N D
The Project is owned by CMZ, a Peruvian company formed by AQM Per and Teck Resources, each with a 50% shareholding.

P ER U VI A N T A X R EG I M E
CMZ is taxed with a 30% income tax rate determined over the net income which is the result of deducing from the gross income all the necessary expenses to produce taxable income or to maintain the source. Every month, the taxpayer has to make advanced payments of the income tax of the corresponding fiscal year, applying for such effect a coefficient over the income obtained during the month. Those advanced payments are deemed credits that can be used against the payment of the income tax that will be determined at the end of the fiscal year (approximately March of the next fiscal year). The Temporal Net Assets Tax (ITAN) is a Peruvian tax imposed on companies, agencies, branches and permanent establishments of foreign entities, over the value of its net assets. The tax base equals the value of the net assets of the taxpayer as of December 31 of the preceding year that exceeds S/.1 million (approximately US$390,000). From January 1, 2009, the tax rate is 0.4%, which is applied over the value of the net assets that exceeds S/.1 million. The ITANs payments may be used to offset the advance payments required under the general Income Tax regime or may be claimed as a credit against the income tax payable for the taxable year. A refund may be requested for any balance of tax payment that is not used in the current year. It is important to consider that the ITAN is payable at the beginning of the year following the first year of productive activities. Depreciation rates for buildings and construction are at 5%, and mining machinery or equipment is up to 20%. With the exception of buildings and construction, tax depreciation must be the same as financial reporting depreciation. It is expected that CMZ will enter into a tax stabilization agreement with the Peruvian government that will entitle CMZ guaranteed stability concerning the tax regime, currency exchange regime, availability of foreign currency and entitlement to a depreciation rate of 20% of movable assets and 5% for buildings and construction. Notice that if the Tax Stabilization Agreement is signed by virtue of the General Mining Law, the corporate tax rate applicable would rise to 32%.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

22-8

1295840100-REP-R0001-05

In October 2011, a special mining tax was imposed, which is applied on operating profit derived from sales of metallic mineral resources (regardless of whether the mineral producer owns or leases the mining concession) based on a sliding scale with progressive marginal rates ranging from 2 to 8.4%. The tax liability arises and becomes payable on a quarterly basis. Recently modified mining royalties will also be applied to AQMs operating income. The royalty is payable on a quarterly basis with marginal rates ranging from 1 to 12%. This new system has been designed to provide both a minimum royalty of an additional amount based on the profitability of each project. AQM will pay at least the minimum royalty rate of 1% of sales, regardless of its profitability. Tax losses can be utilized in one of the following ways to get some relief for losses: 1) be carried forward for four consecutive years, beginning with the first subsequent year in which the losses arise or, 2) be carried forward indefinitely, but with an annual limit equivalent to 50% of the taxpayers taxable income of each subsequent year. A 4.1% withholding income tax rate is applied to the dividends agreed to be remitted only if the shareholders are individuals or non-resident entities, which is not the case of CMZ. An 18% Value Added Tax (IGV) rate is applied to purchases of capital, goods and services used in operations subject to IGV. It is assumed that the IGV paid by CMZ is to be recovered by means of the recovery regimes established under Peruvian legislation. Mining companies are obliged to pay a workers profit sharing of 8% on the net profits of the company, taking into account that CMZ will have more than 20 workers. The total sum received by the worker cannot exceed an amount up to 18 times the monthly salary, after which the balance will be paid to a special educational, social and recreational fund. The amount paid is allowed as a tax deduction for corporate tax purposes. At the long-term metal prices that we have used for this study, total estimated unescalated taxes and royalties payable on Zafranal profits are $1,377.8 million over the 15-year mine life. The components of the various taxes that will be payable are shown in Table 22.3.
Table 22.3 Components of the Various Taxes
LOM Amount ($ million) 869.8 252.1 255.9 1,377.8

Tax Component Income Taxes Workers Profit Sharing Taxes Royalty and Special Tax Total Taxes

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

22-9

1295840100-REP-R0001-05

Base case post-tax financial results for Zafranal are summarized in Table 22.4.
Table 22.4 Summary of Post-tax Financial Results
Description Copper Price ($/lb) Gold Price ($/oz) Net Cash Flow (US$ million) Discounted Cash Flow NPV ($ million) at 5% Discounted Cash Flow NPV ($ million) at 8% Discounted Cash Flow NPV ($ million) at 10% Payback (years) IRR (%) Value 3.00 1,274 1,814 927 588 414 2.6 17.4

22.6

ROYALTIES
No royalties were applied in the pre-tax financial analysis. Royalties applied in the post-tax analysis are listed in Section 22.5.

22.7

SMELTER TERMS
The following smelting terms for copper concentrate were applied in the financial analysis based on the marketing study by Ayrmin:

Copper pay 100% of content less 1.0 unit at the London Metal Exchange (LME) price for Grade A copper less a refining charge of $0.0635/accountable pound. The refining charge is not subject to price participation. Treatment Charge $63.50/dmt of concentrate delivered. By-product Credit (gold) pay 90% with a refining charge of $4.00/oz for gold content of 1 to 5 g/t. Penalty Charge none.

22.8

TRANSPORTATION LOGISTICS
Transportation costs for the copper concentrate are listed below based on the marketing study by Ayrmin.

trucking $1.00/wmt per each 10 km port storage and handling $17.00/wmt ocean transport to Asian port $65.00/wmt
22-10 1295840100-REP-R0001-05

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

moisture content 9% marketing $12.00/dmt of concentrate.

Transportation costs for the copper cathode are listed below:

trucking $1.00/t cathode per each 10 km port and insurance $10.00/t cathode ocean transport to Rotterdam port $67.00/t cathode marketing $5.00/t cathode.

22.8.1

I N SU R AN C E
Insurance is included in the port cost.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

22-11

1295840100-REP-R0001-05

23.0 ADJACENT PROPERTIES

There are no material properties adjacent to the Property.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

23-1

1295840100-REP-R0001-05

24.0 OTHER RELEVANT DATA AND INFORMATION

24.1
24.1.1

PROJECT EXECUTION PLAN

I N T R O D U C T I ON
Reference to the term the Company or AQM in this section refers to the mine operator during the period of construction. The Project Execution Plan (PEP) presents how the Company will successfully complete the Project. The PEP specifies the Project approach, tasks, and schedule. As well, it identifies and addresses any unique challenges facing the Project. The Project will be designed and constructed to industry and regulatory standards, with emphasis on addressing all environmental and safety issues. Adherence to the PEP will ensure timely and cost effective completion while maintaining construction quality.

24.1.2

P R O J EC T A PP R O AC H
To achieve successful project execution, AQM will hire and contract a project management team (PMT). The PMT will comprise personnel with appropriate skills, knowledge, and experience and will carry out their duties with the support of multidiscipline consultants and contractors. The PMT will ensure the implementation of procedural checks and balances, progress monitoring, regulatory guidance, and quality assurance and control. Strategies for the EPCM will be based on the following segregation of responsibilities:

contracted specialized EPCM for water supply contracted specialized EPCM for power supply mining
contracted engineer PMT in charge of CM, mine equipment procurement and pre-mining

operations

process, TMF and related infrastructure:

contracted engineering and procurement PMT in charge of CM.

The project management organization chart is shown in Figure 24.1.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

24-1

1295840100-REP-R0001-05

Figure 24.1

Project Management Organization Chart

Note:

Start-up & Commissioning Manager role will transfer to site for construction.
24-2 1295840100-REP-R0001-05

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

P R O J EC T M A N A GE M E N T S YST EM
A proven and integrated PMS will be utilized by the Contractor to provide precise and accurate information to the Contractor and AQM, enabling them to make decisions and implement actions for the successful execution of the Project. The PMS and project cost control system will provide reports on the status and progress of the Project, ensure there is documentation of scope changes, track the schedule, and monitor actual costs to budgets and forecasts. The PMS will also compare actual performance with planned activities and report the effect of anticipated changes on the final date and cost.

P R O J EC T C ON T R OL S P E R S ON N EL
An integral part of the PMS is the project controls function. The personnel assigned to this function will plan and control the schedule and costs of the Project by use of an integrated project control system, which will encompass the functions of scheduling, cost control, estimating, change control, monitoring and reporting for the engineering, procurement, construction, and pre-operational testing of the Project.

24.1.3

P R O J EC T E XE C U T I ON S U M M A R Y
A well-managed plan will be initiated from the date that project execution begins. An effective PMS will be implemented to assist in managing project costs and scheduling. The team will ensure that:

the critical path schedule of construction is met or improved upon engineering and procurement activities are completed to support construction requirements scope changes are reflected in the PMS on a timely basis costs are monitored, controlled, and reported to the Company on a regular basis.

Within six months from the Project go-ahead, the following will be completed:

award of the project management contract project control structure including budget, schedule, procedures, and work plans bidders lists completed flowsheets and material balances project procedures manual (PPM) process design final site layout

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

24-3

1295840100-REP-R0001-05

all design criteria including, but not limited to, environmental, applicable codes, materials of construction, and control philosophy process equipment list with request for proposal (RFP) packages the assignment of package contract numbers modularizing, pre-assembly, and purchasing strategies finalized contracting strategy approved training program contracts for early construction activities tendered, received, and evaluated health and safety management plan (HSMP) QA/QC EMP construction plan all project management systems in place all geotechnical and site survey data completed.

24.1.4

E N GI N E ER I N G
The detailed design engineering program will include all disciplines from geotechnical to computerized controls. Each discipline will utilize both recent technological advances and proven techniques as are appropriate for the Project. Once the Company has authorized the Project to proceed, the Contractors will establish the engineering organization and assemble the necessary resources required to meet the Project requirements.

24.1.5

P R OC U R E M E N T
Procurement of goods and services will adhere to the highest ethical standards and will be performed in a transparent manner. The procurement group will develop and implement procurement policies that:

comply with project technical requirements comply with the Health, Safety, and Environmental (HSE) policy comply with legal and regulatory requirements deliver goods and services to satisfy project schedule requirements source materials and equipment within South America, where quality, price, and availability are competitive.

The procurement group will prepare procurement procedures and a procurement plan for the execution of the Project, including procedures for purchasing, inspection,
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 24-4 1295840100-REP-R0001-05

progress monitoring, material control, expediting, batch crating and packaging, transshipping, consolidating, and transportation.

24.1.6

C O N ST R U C T I ON M AN A GE M EN T
The CM group will be responsible for the management of all field operations. Reporting to the Company, the construction manager will plan, organize, and manage construction quality, safety, budget, and schedule objectives. The key CM objectives are:

Conduct HSE policy training and enforcement for all site and contractor staff. Site hazard management tools and programs will be employed to achieve the no harm/zero accident objective. Apply contracting and construction infrastructure strategies to support the Project execution requirements. Develop and implement a construction-sensitive and cost-effective master project schedule. Establish a project cost control system to ensure effective cost reporting, monitoring, and forecasting as well as schedule reporting and control. A cost trending programme will be instigated whereby the Contractor will be responsible for evaluating costs on an ongoing basis for comparison to budget and forecasting for the cost report on a monthly basis. Establish a field contract administration system to effectively manage, control, and coordinate the work performed by the contractors. Apply an effective field constructability program, as a continuation of the constructability reviews performed in the design office. Develop a detailed field logistics and material control plan to maintain the necessary flow and control of material and equipment to support construction operations. Meet the schedule for handover of the construction plan to the commissioning team. Develop a QA/QC plan to set guidelines in terms of plant operability, safety of operation and adherence to all regulatory requirements.

The CM organization chart (Figure 24.2) shows the CM team for the Project.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

24-5

1295840100-REP-R0001-05

Figure 24.2

CM Organization Chart

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

24-6

1295840100-REP-R0001-05

24.1.7

C O N ST R U C T I ON S C H ED U L E S C H ED U L E
OF

D EV EL O P M EN T

The first construction schedule will outline the activities that comprise the sequence of project development steps. The construction schedule will then be expanded to include sub-schedules addressing specific activities and contracts. A preliminary schedule is presented in Figure 24.3.

C O N ST R U C T I ON C ON T R A C T I N G
The contracting strategy will be designed to maximize utilization of the local labour force, create a responsible and sustainable relationship with the nearby communities, and provide the senior management and specialists to support the safety, quality, schedule, and cost objectives of the Project. In addition, contracts will be designed to combine timing, scope, battery limits, and contract value into manageable packages. AQM will provide contractors and CM staff with:

on-site, project-wide first aid services project-wide security locations for construction offices and equipment/material laydown local electrical panels and temporary generator sets water sources diesel fuel storage for construction equipment sources for all concrete and structural aggregates permanent bulk materials and all capital equipment QA/QC audits vendor-representative assistance.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

24-7

1295840100-REP-R0001-05

Figure 24.3

Preliminary Project Development Schedule Summary

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

24-8

1295840100-REP-R0001-05

T EM P OR A R Y F A C I L I T I E S

AND

C O N ST R U C T I ON S I T E I N F R A ST R U C T U R E

Construction Accommodation
Development of a full-service camp for construction contractors will begin immediately following the receipt of construction permits. The construction camp will be leased for the Project development period. The camp of modular design, will accommodate up to 900 workers on-site. Accommodation types will include double and single occupancy rooms. The off-site EPCM Contractors will provide accommodation for their workforces as required. Transportation, potable water, waste management and other support services will be scaled to support the various development stages. The CM team will ensure that the catering contractor meets all facilities, staffing, hygiene, food handling, storage, and meal regulations and expectations.

Communication
AQM systems manager will determine the appropriate telecommunications technologies for the Project. Requirements include voice and data link technologies adequate to support construction phase and plant operation requirements.

Construction Power
Permanent power will supply all mine equipment and construction power loads for the duration of the construction phase. Some initial temporary power for construction activities will be required during the construction and energizing of the site power distribution network.

First Aid and Site Securi ty

AQM will provide a fully-equipped first aid facility and ambulance for project-wide use. The facility will normally be staffed 12 h/d, with on-call services ensuring continuous coverage. The first aid staff will live at the camp. Contractors will be expected to provide basic first aid stations at the site. AQM will supply a 24-hour staffed site security program during the initial field mobilization. Access to the site will be controlled at the principal road entrances and will be limited to personnel who have attended induction training, as well as approved visitors.

Warehousing
Construction warehousing will evolve with the Project. All freight delivered will be received at a temporary warehouse and stored there or in designated laydown areas.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

24-9

1295840100-REP-R0001-05

Laydown Areas
Rapid development of the laydown areas at the site is absolutely essential to tie-in with the arriving loads. All laydown areas will be clearly marked with sign posts and will be laid out in a grid system.

Concrete Batch Plant

The concrete batch plant will be managed by the General Contractor as a service to the Project and will be operated by the General or Site Services Contractor.

Water Supply and Treatment Plant

Water for construction purposes will likely be sourced from the Majes River which has also been permitted to supply water for the site drilling activities. The construction project will require fresh water for the following:

potable drinking water (bottled water) truck washing concrete batching road dust control fire water building cleaning washroom and cleaning purposes.

Sewage Treatment Plant

A modular, portable temporary sewage treatment plant (STP) will be among the first items shipped to the Project.

24.1.8

P R E - O P ER AT I ON A L T E ST I N G P R OC E SS P L A N T

AN D

START-UP

When construction is complete on any process unit, the Contractor will turn over responsibility to the Commissioning Manager for pre-operational testing and turnover of the facility to AQM prior to introducing mineralized material into the plant for commissioning and start-up. AQMs operating personnel will be involved in the pre-operational testing phase to the extent that they will progressively accept responsibility for sections of the plant as they are checked and handed over.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

24-10

1295840100-REP-R0001-05

Pre-operations testing of equipment will begin once the equipment items have been delivered to site, erected, and tested by the vendors engineers. The pre-operational testing phase for the process facilities will include all aspects of dry mechanical and electrical testing of equipment and water testing of process equipment, including pressure testing of pipework and wet pre-operational testing to the extent practicable. Visual inspection and pre-operational testing (yellow tag) will occur upon completion of installation of plant and equipment where the construction contractor will submit one copy of the appropriate pre-operational check forms, which will notify AQM that the plant and equipment are ready for inspection and the following have been put into effect and/or completed. The following procedure and tagging system will be adopted in the execution of assignments as work is being completed.

Visual Inspection
Visual inspection is the non-operational examination of an installation to check that it is in accordance with the engineers and the manufacturers drawings, specifications, and manuals.

Pre-operational Test
A pre-operational test is the initial no-load test of a piece of equipment with test media such as water or air where required.

Checkout and Acceptanc e (Green Tag)

This procedure allows for the transfer of responsibility from the Contractor to AQM. This procedure establishes that the installation of the equipment and ancillaries has been completed in accordance with the Contractors drawings, specifications, and codes and the equipment has been energized to prove its readiness for the process commissioning and start-up. On acceptance, AQM assumes responsibility for operation and maintenance.

START-UP
Start-up (introduction of mineralized material) is performed under the direction of AQMs Start-up Manager, and involves a select staff from pre-operations, process specialists, and AQMs operating personnel. This will be the beginning of operations under load conditions and the systematic increase in capacity until process throughput and recovery requirements are met and sustained.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

24-11

1295840100-REP-R0001-05

25.0 INTERPRETATION AND CONCLUSIONS

25.1 RISK ANALYSIS
I N T R O D U C T I ON
Since the inception of the Project planning process, AQM has developed a comprehensive risk management plan and has been actively working to address and mitigate key areas of potential risk identified for the Project.

R I SK C O N T R OL P L A N
A number of factors have been identified by AQM as potential risk factors, and each is being dealt with through the application of a holistic project planning philosophy designed to mitigate, and where possible, successfully resolve potential risk factors as the Project moves towards development.

I D EN T I F I ED R I SK S
Social/Political
Current social unrest presents a significant risk for any major mining project in Per, especially when that development affects a water source previously utilized for agricultural purposes. In response to these concerns, AQM has undertaken an extensive community and stakeholder relations program at local and regional levels, in an effort to fully communicate with local communities and authorities, and to reduce and mitigate the potential political and social risks that could affect the Project. Based on the results of the ongoing programs, dialogue at this level has been very positive. The inability to obtain property access or to purchase or lease the lands on which the project would be developed also poses a significant risk for the mine development. Right of ways are secured through negotiations with the land owners, which in the case of the Property is a single regional government agency, Autodema. Recently, AQM was able to renew and expand the surface access agreement with Autodema that was originally signed in 2009. This annual renewable agreement allows for continued exploration activities within the Property and may, under certain conditions, be modified to allow for future development of the Project.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

25-1

1295840100-REP-R0001-05

Environmental and Permitting

Water in the region is scarce and primarily used for agriculture and human consumption. For a PEA level of study, AQM has incorporated and costed the use of desalinated seawater as the water supply option for the Project; however, the Project team is actively talking to authorities and local communities to find alternative arrangements that would result in benefits for local communities in exchange for the use of local water sources by the Project. There are potential environmental impacts associated with the Project, including:

risk of an unplanned breach of an embankment causing release of tailings to the environment seepage of groundwater dust and noise storm containment and unplanned TMF embankment failure acid rock generation in waste dumps, abandoned leach pads and tailings disposal area.

These potential impacts should be studied in greater detail in the future and contingency plans put in place to reduce risk. In Per, the mining industry is expected to engage in thorough project due diligence prior to being granted permits and the necessary license-to-operate. AQM has undertaken the appropriate steps with respect to the environmental studies required to develop the plans necessary to reduce risk, and satisfy government requirements. AQM intends to ensure that all environmental management aspects are looked after proactively and maintain that attitude throughout the operation of the mine. Tetra Tech recommends that AQM carefully and proactively manage all environmental impacts associated with the Project, to minimize environmental risks and costs. Permitting timelines that become longer than originally scheduled and more stringent environmental, safety and government regulations present high risk potential for the Project. CMZ has based its general manager in the regional capital, Arequipa, to ensure frequent and productive contact with regional authorities, as well as maintain a presence in Lima. This will enable the management team to detect difficulties or new requirements for obtaining permits early enough to be able to adjust the Project activities before incurring additional costs and delays.

Business
The risks associated with escalating capital and operating costs due to changing local and global economic conditions are potential high risk factors for the Project.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

25-2

1295840100-REP-R0001-05

Appropriate levels of engineering and project execution planning will allow the Project to adequately mitigate these cost risks.

Technical
The proposed Project does not pose any major challenging technical risks for its development. If constructed, the desalination plant and pipeline from the Peruvian coast will require specialized expertise for construction and operation, and AQM has planned for these tasks to be performed by an EPCM contractor knowledgeable in these types of projects, who could also be retained to operate the system during production. Adequate metallurgical test work and engineering will be required to ensure the proper sizing of process equipment. The logistics of moving personnel and materials during the construction phase will require careful planning and early road construction to ensure the project stays on schedule. The movement of copper concentrate during production to the selected port site will be challenged by road congestion and further studies will be required in the next phase of project design to better mitigate this risk.

25.2

GEOLOGY
The Property contains several porphyry-type copper occurrences, of which four have been explored by surface sampling, geophysics and drilling: Zafranal Main, Victoria, Sicera Norte and Sicera Sur. Geological work to date on the Property has confirmed that the occurrence of mineralized porphyries is structurally controlled by a northwest trending series of strike-slip faults belonging to the Incapuquio fault system, and regional east-west trending structures. The intersections of these two fault systems appears to be the main mineralization control on the Property. Mineralization is hosted in several lithologies, particularly in the Zafranal Diorite and the Microdiorite, with lesser supergene mineralization hosted in volcanic rocks and younger cross-cutting intrusives. Additional exploration targets have been explored along both main structural trends, with geophysical and geochemical anomalies found on some of them. Drilling is required on these targets to confirm the presence of additional mineralization.

25.3

MINING
The summary of the mining plan is provided in Table 25.1.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

25-3

1295840100-REP-R0001-05

Table 25.1

Mining Plan
Flotation ROM Leach Cu Grade (%) 0.626 0.291 0.261 0.178 0.378 Au Grade (g/t) 0.081 0.075 0.034 0.048 0.071 Mineralization Types Oxide Leached Mixed Supergene Cu Grade (%) 0.221 0.227 0.271 0.238 0.230 Au Grade (g/t) 0.134 0.109 0.025 0.032 0.085

Mineralization Types Supergene Hypogene Transition Hypogene Low Grade Total

'000 t 135,762 206,764 8,081 74,704 425,311

'000 t 10,699 46,947 6,336 20,663 87,256

The Company (the mine operator) may elect to use its own workforce to carry out all mining activities with the exception of the MARC for all mining equipment and a contract blasting service. The mine operator proposes to use mining equipment to construct all external pit haul roads, to rough grade crusher and mine shop areas and to supply the fill required to construct the canyon crossing to access the crusher dump pocket. The use of an earthmoving contractor should be considered for some of this work if this can be accomplished cost effectively as this would improve the probability of successfully meeting the pit stripping requirements. The mine design takes full advantage of the local topography for the development of waste dumps and primary crusher location, and this is reflected in the mine operating costs. Over 84% of the mine haulage will be flat or downhill over the LOM. The mining costs in Table 25.2 appear in line with costs of other mining operations in the area of the Project.
Table 25.2 Mining Pre-production and Production Costs
$ million 18.6 69.8 9.2 17.3 20.9 2.7 13.2 151.7 30.3 182.0 $/t mined 0.16 0.60 0.08 0.15 0.18 0.02 0.11 1.30 0.26 1.56

Pre-production Loading Hauling Drilling Blasting (Contract Service) Ancillary Support Indirects Subtotal Contingency 20% Total Unit Costs

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

25-4

1295840100-REP-R0001-05

Production Mining Operation Sustaining Capital

$ million 1,312.2 61.1

Unit $/t mined $/t moved -

15-Year LOM $1.40 $1.29 -

25.4

CONCENTRATOR
It was generally concluded that the proposed concentrator feed did not present any significant technical difficulties for beneficiation and that the concentrator would resemble similar concentrators processing copper porphyry mineralization of average characteristics. The current grinding configuration considers wrap-around drives on a single 40 ft diameter SAG mill and two 25 diameter ball mills, which maximizes concentrator flexibility and operational performance. An alternative circuit with two smaller piniondrive SAG mills with four smaller pinion-drive ball mills may be a cheaper investment option and should be studied in the next phase of engineering. The current concentrator is an open-air structure with overhead cranes over the grinding circuit and primary crusher. An alternative arrangement with the overhead cranes being replaced with mobile cranes servicing the grinding and crushing areas may be a cheaper investment option and should be studied in the next phase of engineering.

25.5

LEACH FACILITY
The leachable material must be removed as part of the pre-production stripping in preparation for the concentrator start-up. As a result, the cost of transporting the leachable material to the leach pad is the incremental cost above the cost of sending the material to the waste dump. This incremental cost has been determined to be $0.274/t sent to the leach pad or $24 million over the LOM. This incremental cost could be reduced or eliminated if a suitable alternative could be found with a favourable haul profile. Such a location is available but will require that the canyon crossover to access the crusher dump pocket be converted into a dam that would capture any water from a significant storm event. This potential alternative leach facility location should be studied in the next phase of engineering. Additional leach metallurgical test work will also be required to determine the appropriate copper recoveries for the various mineral types.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

25-5

1295840100-REP-R0001-05

25.6

TAILINGS

AND

WATER MANAGEMENT

Knight Pisold completed the design and cost estimates for the tailings and water management components of the Zafranal conceptual level study. The TMF design is based on the site characteristics, tailings properties, certain design standards and parameters, the geological and geotechnical conditions at the site, and the appropriate engineering analyses. The geological and geotechnical conditions at the TMF are based on general knowledge of the area and no specific geotechnical investigations have been completed. The current disposal density for the tailings is estimated to be 65% solids (by weight) with no water reclaim. Dam construction will be with borrowed material as insufficient water will be available to cyclone tailings. Relocating the TMF closer to the plant would save capital and operating costs and open the possibility for further thickening of the tailings prior to disposal. These possibilities should be studied in the next level of engineering study.

25.7

OWNERS COSTS
The Owners cost estimate was developed to cover the costs associated with the pre-production operating activities as well as the recruitment, training, transportation, accommodation, and catering for the employee and contractor workforce where appropriate. The production phase of the Project will require an estimated 509 employees and 328 contractors for a total of 837 personnel. It is envisaged that the bulk of the workforce will reside in the communities closest to the Project. Administrative staff and management will be based in Arequipa and reside on site during their weekly shift in a 233-man permanent camp. The study contemplates shift schedules of 7-days-on, 7-days-off for hourly employees and 4-days-on, 3-daysoff for administrative staff and management. Peruvian law provides for alternative shift systems which significantly reduce manning requirements and these should be studied in the next phase of engineering.

25.8

ENVIRONMENTAL
In Per, the mining industry is expected to engage in thorough project due diligence prior to being granted permits and the necessary license-to-operate. AQM has undertaken the appropriate steps with respect to the environmental studies required to develop the plans necessary to reduce risk and satisfy government requirements. Tetra Tech recommends that AQM carefully and proactively manage all environmental impacts associated with the Project, to minimize environmental risks and costs.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

25-6

1295840100-REP-R0001-05

26.0 RECOMMENDATIONS
26.1 SUMMARY
Based on the results of the work presented in this report, Tetra Tech recommends that AQM proceed with the next phase of work to identify potential cost saving and additional opportunities in order to assess the viability of the Project. As listed in Table 26.1, the recommendations described in this section have been estimated to require an expenditure of $9.5 million, if implemented.
Table 26.1 Recommended Future Work
US$ 500,000 50,000 50,000 115,000 115,000 200,000 200,000 300,000 2,000,000 360,000 1,620,000 100,000 100,000 138,000 300,000 1,500,000 300,000 288,000 8,236,000 1,235,400 9,471,400

PEA Recommendations Expanded CRP Surface Right of Ways Social Studies Update Environmental Management Plan Closure Plan Archeological Site Investigation Acid Rock Drainage Mine Plan Review Exploration Drilling (7,000 m HQ) Concentrator Design Metallurgical Test Work (Flotation and Leach) Overall Site Design Concentrate Handling Product Transportation Leach Plant Design TMFs Desalination Water Supply Studies Power Supply and Distribution Subtotal Contingency (15%) Total

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

26-1

1295840100-REP-R0001-05

26.2
26.2.1

RISK ANALYSIS
S OC I A L /P OL I T I C AL
Risk management activities should continue in the next phase of project development. The CRP should be expanded to include stakeholders potentially impacted by the construction and operation of the desalination plant and pipeline, and the construction of the main power line from Arequipa. The estimated cost of this expanded CRP will be $500,000/a and a follow-up survey and report will cost $50,000. As soon as marine test work can confirm the suitability of the proposed location for the desalination plant and pipeline, AQM will need to secure the surface rights required for these facilities, which is estimated to cost $50,000. This amount refers only to the cost of the due diligence and valuation of the land property.

26.2.2

E N VI R ON M EN T A L
Given the TMFs location upstream of the community of Corire, AQM may wish to consider engaging an external expert during the detailed design stage to review the TMF design, as recommended by IFC Guidance Note 5. An updated mine closure plan and reclamation will be required for the Project. Long-term physical and geochemical stability, protection of the downstream environment and management of surface water are requirements for the TMF at closure. There are various pieces of legislation that need to be adhered to for mining activities in Per, such as environmental and tailings management, mine closure, and environmental guidelines. The preparation of the EIA must follow Articles 47, 48, 49 and 68 of the Ley del SEIA regulations. Aside from reconnaissance and prospecting activities that do not involve environmental impacts, all other exploration and mining activities in Per must comply with the Sistema de Concesin Minera or Mining Concessions System, governed by the General Mining Law. The owner holding title to a mining concession has to first obtain the necessary permits and approvals in order to perform any exploration or mining activities. An Autorizacin para Comenzar la Explotacin Minera or Authorization to Begin Mining Exploitation is required in order to start mining operations. The Plan de Minado or Blasting Plan must be reviewed prior to commencing mining exploitation activities as per the Reglamento Interno de Seguridad e Higiene Minera or Internal Regulations for Mining Health and Safety.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

26-2

1295840100-REP-R0001-05

The Plan de Manejo Ambiental or Environmental Management Plan for the mine should include a manager and environmental technicians to perform all monitoring activities at the mine, including the tailings facility. Quarterly groundwater seepage reporting is required as well as annual reporting. The recommended environmental work includes:

Environmental Management Plan: $115,000 Closure Plan: $115,000 Archeological Site Investigation: $200,000 Acid Rock Drainage: $200,000.

26.3

MINING
Values used to determine the mining portion of the project investment were referenced from quotations obtained for recent mining projects developed by NCL. In the next stage of the engineering, site specific quotations for the proposed mining equipment and supplies are recommended for better definition of capital and operating costs. A more refined strategy for equipment maintenance is recommended in the next phase of engineering to determine the equipment packages that will be maintained by contractors (the MARCs) or by the owners workforce. Formal quotations should be obtained for the MARCs. Furthermore, the truck manufactures should be required to provide detailed haulage simulations for the proposed profiles including truck speeds and fuel consumption. The cost of executing these recommendations will be equivalent to the cost of an engineer required to manage the requests and report on the data collection, which is estimated to be $50,000. Tetra Tech recommends that AQM also develop mining plan scenarios focusing on the higher-grade supergene mineralization present in the upper reaches of the Main Zone deposit, with a view to increasing the average feed grade to the concentrator and lowering the overall capital investment for the Project. The estimated cost of this mining plan exercise is $250,000.

26.4

GEOLOGY
It is recommended that exploration drilling (7,000 m) focus on areas to the north of the Main Zone, where recent exploration has shown anomalous surface values. Exploration drilling should also focus on those areas to the south of the Main Zone, where geophysical and geochemical surveys have detected anomalous areas.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

26-3

1295840100-REP-R0001-05

The QA/QC protocols that have been established for the Project should be monitored as results are received and any analyses of control samples that exceed acceptable bounds should be investigated and if necessary, samples associated with the out-ofbounds control samples should be re-analyzed. The budget for the drilling is estimated at an all-in cost of US$2 million.

26.5

CONCENTRATOR
Although the process design as described is relatively detailed in many respects, the following recommendations, estimated to cost $360,000, should be considered for the next phase of the Project.

26.5.1

W AT ER M AN A GE M EN T
A conceptual layout of the process plant has been completed and is presented in the report. However, a final layout arrangement was not confirmed given the early status of the Project. The final layout arrangement will ultimately affect the design of the water management system, including the fire water distribution which has not been defined in detail, nor the thickener overflow solutions and their destinations regarding whether pumpboxes and pumps are required, or whether gravity flow only can be utilized. Similarly, the details regarding the fresh water sytem, including the desalinated water system, have also not been finalized to date.

26.5.2

C L EAN ER F L OT AT I ON C I R C U I T C ON F I GU R AT I O N
The cleaner flotation circuit configuration and the regrinding of the rougher concentrate should be regarded as conceptual only at this stage of this PEA report. The cleaner flotation circuit has not been optimized and will certainly be changed for the next phase of the Project. It is anticipated that more laboratory test work results will then be available regarding the behaviour and characteristics of the cleaner scavenger circuit configuration, and, in particular, the regrind product particle size, and the number and/or types of cleaner stages and flotation cells used. If confirmed by test work, a coarser regrind size will affect the selection of the type and size of regrind mill which will be used in the design.

26.5.3

C YC L ON E O VER F L OW /R O U GH ER F L OT AT I ON F EE D
The two primary cyclone overflow products are shown as being delivered to the rougher flotation circuit and combined in a collection box for sampling purposes. The flotation feed is then split into two streams again with each stream feeding a rougher flotation line of cells by gravity flow. This configuration is also layout-related and depends on the available elevation. It will also require confirmation in the next stage of the Project regarding the gravity flow concept, and possibly whether the two

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

26-4

1295840100-REP-R0001-05

streams should be kept separate from the cyclone overflow to its respective rougher flotation line.

26.5.4

W AT ER T R EAT M EN T P L A N T
A water treatment plant has been included on the flowsheet, but no design details have been shown. However, at this stage of the Project, the water treatment plant is conceptual only and no details regarding the flowrates and objectives of the water treatment plant are known.

26.5.5

P R I M AR Y G R I N D I N G C I R C U I T
The primary grinding circuit has been conservatively designed for this phase of the Project, particularly with regard to the SAG mill size and power requirements. It is anticipated that the results of additional grinding test work being planned at present will be available for the next phase of the Project which will enable the grinding circuit to be defined to a geater degree of accuracy. The grinding circuit also requires a review of the maximum possible treatment rate, and its impact on the rest of the plant design. This may afford an opportunity to treat in excess of 80,000 t/d with concomitant financial benefits.

26.5.6

C O P PER R EC O VE R Y
During the next phase of the Project, and subject to confirmation of the design copper recovery, it is possible that the overall copper recovery will be reduced by up to 1.5% to accommodate the effect of plant scale-up, as well as the effect of commissioning.

26.6

FUTURE METALLURGICAL TEST WORK

The following minimum additional test work will be required to assist with the design of both the concentrator and leach facility for the next phase of the Project:

a detailed grinding investigation crushability index and abrasion index tests variability test results flotation reagent types to be defined size distribution of rougher flotation concentrate products versus primary grind size to be established optimal regrind particle size to be established the effect of chalcocite on the copper concentrate grade to be quantified
26-5 1295840100-REP-R0001-05

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

the impurity elements and the respective concentrations present in the copper concentrate settling data for copper concentrate to be defined filtration data for copper concentrate to be established settling data for tailings material to be quantified bottle roll and column leaching of mineral types variability testing for leach recoveries solvent extraction testing acid consumption.

The estimated cost of this program total $1,620,000.

26.7

CONCENTRATE HANDLING TRADE-OFF

At the next level of study, the use of a concentrate transfer pipeline will be explored to determine the viability of transporting slurry downhill from the mill to the load out area. This will be conducted in a trade-off study that will compare this option to transporting the concentrate from the mill via truck to a loading area. Possible optimization may include a reduction in road development costs. The study is estimated to cost $100,000.

26.8

PRODUCT TRANSPORTATION
Road congestion will impact product transportation to the port of Matarani and alternatives should be studied to mitigate this impact. One option that appears attractive is a combination truck and rail haulage, similar to the system employeed by Cerro Verde which ships via the same port. The transport study and rail loadout design is estimated to cost $138,000.

26.9

LEACH FACILITY
As mentioned in the previous section, an effort should be made to relocate the leach facility to minimize additional haulage costs and improve the space available for facilities. An alternative has been identified to carry out this trade-off study and confirm the new location, at an estimated cost of $300,000.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

26-6

1295840100-REP-R0001-05

26.10

SITE LAYOUT
Although the site layout is currently very strong from an engineering perspective, the design will likely receive further refinement and optimization at the next level of study. An allowance of $100,000 has been set aside for this work.

26.11

TAILINGS MANAGEMENT FACILITY

Recommendations for the next phase of engineering for the TMF area of the Project are summarized as follows:

Limited meteorologic data was available for this study. It is recommended that site specific hydrometeorology, research and regional stream monitoring data be collected to better estimate the hydrological characteristics of the site. Consolidation and strength testing on the tailings should be completed to provide essential inputs for large strain consolidation modelling. Tailings rheology testing should be completed to determine the fluid flow characteristics of the tailings. This is required to more accurately determine the pumping and pipeline designs. A tailings disposal options assessment should be completed during future studies to confirm the most suitable method for tailings disposal. Environmental testing of the tailings products should be completed and assessed to confirm if any design modifications are required. Site investigations should be conducted to confirm the characteristics of the basin and embankment foundations. The starter embankments will be constructed from materials removed from within the basin and detailed material properties are required to confirm the suitability and availability of the materials. Detailed engineering analyses should be completed incorporating the new or updated information. The cost estimates should be reviewed and confirmed because prices are fluctuating significantly at the current time. In addition, there may be opportunities to refine costs for certain items with additional knowledge, possibly by conducting trade-off studies as appropriate.

This work is estimated to cost $1.5 million.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

26-7

1295840100-REP-R0001-05

26.12

WATER SUPPLY
The desalinated water supply option has significant capital and operating cost implications and AQM is encouraged to explore other potential water sources through discussions with local farming communities. Any arrangement would require a trade-off study which should be completed during the prefeasibility study stage to definitively determine the optimum water delivery methodology for the Project. If the decision is to proceed with the desalinated water supply, then marine studies will need to be undertaken to confirm the suitability of the proposed location for the desalination plant, and detailed design of the pipeline route will also be required in the next phase of engineering. The estimated cost of this work is $300,000.

26.13

POWER SUPPLY

AND

DISTRIBUTION

Extending grid electrical power to the site is on the critical path for achieving the preproduction stripping schedule of 117 Mt. Knight Pisold recommends that additional engineering is undertaken during the next phase of the Project to ensure that the necessary environmental permitting is completed on schedule so as to permit an early start of the power line construction. The cost of this early engineering work is estimated to be $288,000.

26.14

ENVIRONMENTAL
There are various pieces of legislation that need to be followed for mining activities in Per, such as environmental and tailings management, mine closure, environmental guidelines. The preparation of the EIA must follow articles 10, 47, 48 and 49 of the National Environmental Impact Assessment System Law Regulation. Aside from reconnaissance and prospecting activities, all other mining activities in Per must comply with the Sistema de Concesin Minera or Mining Concessions System, governed by the General Mining Law. An Autorizacin para Comenzar la Explotacin Minera or Authorization to Begin Mining Exploitation is required in order to start mining operations. The Plan de Minado or Blasting Plan must be reviewed prior to commencing mining exploitation activities as per the Reglamento Interno de Seguridad e Higiene Minera or Internal Regulations for Mining Health and Safety. The Plan de Manejo Ambiental or Environmental Management Plan for the mine should include a manager and environmental technicians to perform all monitoring activities at the mine, including the tailings facility. Quarterly groundwater seepage reporting is required as well as annual reporting.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

26-8

1295840100-REP-R0001-05

Given the TMFs location upstream of the community of Corire, AQM may wish to consider engaging an external expert during the detailed design stage to review the TMF design, as recommended by IFC Guidance Note 5. An updated mine closure plan and reclamation will be required for the Project. Long-term physical and geochemical stability, protection of the downstream environment and management of surface water are requirements for the TMF at closure.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

26-9

1295840100-REP-R0001-05

27.0 REFERENCES
G E OL OG Y
Alvn, Aldo; Acosta, Harmuth, (2008). The Proterozoic Basement of the Arequipa Massif, Southern Peru: Lithologic Domains and Tectonics 7th International Symposium on Andean Geodynamics (ISAG 2008, Nice), Extended Abstracts: 549-552. AMEC Minproc (February 25, 2011). Zafranal Copper Project, Peru, Technical Report December 2010 Resource Estimate. Cox, Dennis P. and Singer, Donald A., editors, (1985). Mineral Deposit Models United States Geological Survey Bulletin 1963, pages 76-79. Panteleyev, A. (1995): Porphyry Cu-Au: Alkalic, in Selected British Columbia Mineral Deposit Profiles, Volume 1 - Metallics and Coal, Lefebure, D.V. and Ray, G.E., Editors, British Columbia Ministry of Energy of Employment and Investment, Open File 1995-20, pages 83-86. Rivera, Fernando; Len, Jorge; Cano, Oscar y Huamn, Moiss, (2010). Controles de Mineralizacion en el prfido de Cu Zafranal, en el sur del Per Minera AQM Copper Per SAC.

T A I L I N G S M A N A GE M EN T F A C I L I T Y
Canadian Dam Association (CDA) Dam Safety Guidelines, 2007. Earthquake Spectra (2008), Special Issue on the Next Generation Attenuation Project, Vol. 24, No. 1. ICOLD - International Commission on Large Dams, (1995), Tailings Dams and Seismicity: Review and Recommendations, Bulletin 98. International Commission on Large Dams (ICOLD), Tailings Dams and Seismicity: Review and Recommendations, Bulletin 98, 1995. Machare, J., Fenton, C.H., Machette, M.N., Lavenu, A., Costa, C. and Dart, R.L., (2003), Database and Map of Quaternary Faults and Folds in Peru and its Offshore Region, USGS Open-File Report 03-451. Saragoni, G.R., Astroza, M. And Ruiz, S., (2004), Comparative Study of Subduction Earthquake Ground Motion of North, Central and South America, Proceedings of
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 27-1 1295840100-REP-R0001-05

the 13th World Conference on Earthquake Engineering, Vancouver, B.C., Canada. Schlumberger Water Services, Zafranal Water Supply Technical Memorandum, July 19, 2011 (Ref. No. 50555) Tanner, J.G. and Shedlock, K.M., (2004) Seismic Hazard Maps of Mexico, the Caribbean, and Central and South America, Tectonophysics 390, p. 159-175. The Mining Association of Canada (MAC) Guide to the Management of Tailings Facilities, 1998. Youngs, R.R., Chiou, S.-J., Silva, W.J. and Humphrey, J.R. (1997) Strong Ground Motion Attenuation Relationships for Subduction Zone Earthquakes, Seismological Society of America, Seismological Research Letters, Vol. 68, No.1, p.58-73.

E N VI R ON M EN T A L
Apoquindo Minerals. Proyecto Zafranal. Trminos de Referencia Lnea Base Ambiental y Social. Marzo 2010 CESEL Ingenieros. Informe Tcnico CSL-111500-11-IT-01. Estudio de la Lnea Base Ambiental y Socioeconmica para el Proyecto Minero Zafranal, Minera AQM Copper Per S.A.C. Plan de Trabajo y Seleccin de Puntos de Monitoreos para la elaboracin de la Lnea Base Ambiental y Socioeconmica para el Proyecto Minero Zafranal. Abril 2011 CESEL Ingenieros. Primer Informe Semestral. Lnea Base Ambiental y Socioeconmica para el Proyecto Minero Zafranal, Minera AQM Copper Per S.A.C. Noviembre 2011 CSA Consultores. Social Management Report Enero-Abril 2012 Delapuente Abogados. AQM EIA Proyecto Zafranal. Documentacin Legal y Tcnica Requerida. Octubre 2011 Knight Pisold Consulting. Conceptual Level Environmental Management Design Tailings Management Facility Zafranal Project. May 2012 Knight Pisold Consulting. Conceptual Level Closure Plan Tailings Management Facility Zafranal Project. May 2012

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

27-2

1295840100-REP-R0001-05

M I N ER A L P R OC ES SI N G
Teck, 2005. Mineralized Material Characterization Study. Amdel Mineral Laboratories, 2010. Phase I Flotation Optimization, Flotation Variability Testing, Leaching, Mineralogical Identification, Sizing Analysis. May to August 2010. JKTech Pty Ltd, 2010. SMC Test on 15 Samples. April 2010. SGS, 2010. Abrasion Tests. Philips Enterprises, 2010. Impact Tests. May 2010. Amdel Mineral Laboratories, 2011. Phase II Communition Tests, Locked Cycle and Variability Flotation Tests, Leach Amenability Tests. March to April 2011. SGS, 2011. Bond, Abrasion and SAG Mill Comminution Tests. January 2011. AMEC Minproc Limited, 2010. Communition Test Update. August 2010. JKTech Pty Ltd, 2011. SAG Mill Comminution Test Report on 42 Samples from the Project. January 2011. AMEC Minproc Limited, 2011. Technical Report December 2010 Resource Estimate. Document No. 60246-00000-23-002-001. February 2011. AMEC Minproc Limited, 2012. Zafranal Copper Project Stage 2 Flotation Testwork. Document No. 60246-00000-21-002-003. May 2012. AMEC Minproc Limited, 2012. Zafranal Copper Project Dewatered Tailings Testwork. Document No. 60246-00000-21-002-004. May 2012. AMEC Minproc Limited and Amdel Mineral Laboratories, 2012. Zafranal Copper Project Leaching Test Work. Document No. 60246-00000-21-002-005. May 2012. G&T Metallurgical Testing Services Ltd. and Plenge Laboratories, 2011 and 2012. Phase III Test. Individual laboratory reports not issued at the time of this report. Transmin Metallurgical Consultants, 2012. TM 621 Zafranal Metallurgical Testwork Report for AQM Copper Inc. June 12, 2012.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

27-3

1295840100-REP-R0001-05

28.0 CERTIFICATES OF QUALIFIED PERSON

M A R I N U S A N D R E D E R U I J T ER , P.E N G .
I, Marinus Andre De Ruijter, P.Eng., of Delta, British Columbia, do hereby certify:

I am a Principal Metallurgical Engineer with Tetra Tech WEI Inc. with a business address at 800-555 West Hastings Street, Vancouver, British Columbia, V6B 1M1. This certificate applies to the technical report entitled Technical Report and Preliminary Assessment of the Zafranal Project, Peru, dated January 16, 2013 (the Technical Report). I am a graduate of the University of Witwatersrand, Johannesburg, South Africa (M.Eng., 1979). I am a member in good standing of the Association of Professional Engineers and Geoscientists of British Columbia (#31031). My relevant experience with respect to this project includes copper and polymetallic base metal sulphide mineral flotation projects and their development, and plant audits. I am a Qualified Person for the purposes of National Instrument 43-101 (the Instrument). My most recent personal inspection of the Property was November 29, 2011 for one day. I am responsible for Sections 1.6, 1.10.2, 13.0, 17.0, 21.2.1, 21.2.3, 21.2.5, 21.2.6, 21.2.7, 25.4, 26.5, 26.6, 26.7, 26.9, 27.0 (mineral processing section only) and 28.0 of the Technical Report. I am independent of AQM Copper Inc. as defined by Section 1.5 of the Instrument. I have no prior involvement with the Property that is the subject of the Technical Report. I have read the Instrument and the sections of the Technical Report that I am responsible for has been prepared in compliance with the Instrument. As of the date of this certificate, to the best of my knowledge, information and belief, the sections of the Technical Report that I am responsible for contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Signed and dated this 16th day of January, 2013 at Vancouver, British Columbia
Original document signed and sealed by Marinus Andre De Ruijter, P.Eng.

Marinus Andre De Ruijter, P.Eng. Principal Metallurgical Engineer Tetra Tech WEI Inc.
AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per 28-1 1295840100-REP-R0001-05

G R E G OR Y Z. M O SH ER , P.G E O .
I, Gregory Z. Mosher, P.Geo., of North Vancouver, British Columbia, do hereby certify:

I am a Senior Geologist with Tetra Tech WEI Inc. with a business address at 800-555 West Hastings Street, Vancouver, British Columbia, V6B 1M1. This certificate applies to the technical report entitled Technical Report and Preliminary Assessment of the Zafranal Project, Peru, dated January 16, 2013 (the Technical Report). I am a graduate of Dalhousie University, (B.Sc. Hons., 1970) and McGill University (M.Sc. Applied, 1973). I am a member in good standing of the Association of Professional Engineers and Geoscientists of British Columbia (#19267). My relevant experience with respect to porphyry deposits includes over 20 years of exploration for and evaluation of such deposits in a wide variety of geological settings. Additionally I have conducted several resource estimates of porphyry (copper, copper-gold, molybdenum) deposits over the past six years. I am a Qualified Person for the purposes of National Instrument 43-101 (the Instrument). My most recent personal inspection of the Property was October 11 and 12, 2011 for two days. I am responsible for Sections 1.2, 1.3, 1.4, 1.5, 4.0, 5.0, 6.0, 7.0, 8.0, 9.0, 10.0, 11.0, 12.0, 14.0, 23.0, 25.2, 26.4, 27.0 (geology section only), and 28.0 of the Technical Report. I am independent of AQM Copper Inc. as defined by Section 1.5 of the Instrument. I have no prior involvement with the Property that is the subject of the Technical Report. I have read the Instrument and the sections of the Technical Report that I am responsible for has been prepared in compliance with the Instrument. As of the date of this certificate, to the best of my knowledge, information and belief, the sections of the Technical Report that I am responsible for contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Signed and dated this 16th day of January, 2013 at Vancouver, British Columbia
Original document signed and sealed by Gregory Z. Mosher, P.Geo.

Gregory Z. Mosher, P.Geo. Senior Geologist Tetra Tech WEI Inc.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

28-2

1295840100-REP-R0001-05

H A S SA N G H A F F A R I , P.E N G .
I, Hassan Ghaffari, P.Eng., of Vancouver, British Columbia, do hereby certify:

I am a Manager of Metallurgy with Tetra Tech WEI Inc. with a business address at 800-555 West Hastings Street, Vancouver, British Columbia, V6B 1M1. This certificate applies to the technical report entitled Technical Report and Preliminary Assessment of the Zafranal Project, Peru, dated January 16, 2013 (the Technical Report). I am a graduate of the University of Tehran (M.A.Sc., Mining Engineering, 1998) and the University of British Columbia (M.A.Sc., Mineral Process Engineering, 2004). I am a member in good standing of the Association of Professional Engineers and Geoscientists of British Columbia (#30408). My relevant experience with respect to mineral process engineering includes 22 years of experience in mining and plant operation, project studies, management, and engineering. I am a Qualified Person for the purposes of National Instrument 43-101 (the Instrument). My most recent personal inspection of the Property was November 29, 2011 for one day. I am responsible for Sections 1.1, 1.8, 1.10.1, 1.12, 1.13, 2.0, 3.0, 18.1, 18.2, 18.3, 18.5, 18.6, 18.7, 18.9, 21.1.1, 21.1.2, 21.1.3, 21.1.4, 21.1.5, 21.1.6, 21.1.7, 21.1.9, 21.1.11, 21.1.13, 24.0, 25.1, 25.5, 25.7, 26.1, 26.8, 26.10, 26.12, and 28.0 of the Technical Report. I am independent of AQM Copper Inc. as defined by Section 1.5 of the Instrument. I have no prior involvement with the Property that is the subject of the Technical Report. I have read the Instrument and the sections of the Technical Report that I am responsible for has been prepared in compliance with the Instrument. As of the date of this certificate, to the best of my knowledge, information and belief, the sections of the Technical Report that I am responsible for contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Signed and dated this 16th day of January, 2013 at Vancouver, British Columbia
Original document signed and sealed by Hassan Ghaffari, P.Eng.

Hassan Ghaffari, P.Eng. Manager of Metallurgy Tetra Tech WEI Inc.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

28-3

1295840100-REP-R0001-05

M ON I C A D A N ON -S C H A F F ER , P H .D., P.E N G .
I, Monica Danon-Schaffer, Ph.D., P.Eng., of Vancouver, British Columbia, do hereby certify:

I am a Manager, Environment and Sustainable Development with Tetra Tech WEI Inc. with a business address at 800-555 West Hastings Street, Vancouver, British Columbia, V6B 1M1. This certificate applies to the technical report entitled Technical Report and Preliminary Assessment of the Zafranal Project, Peru, dated January 16, 2013 (the Technical Report). I am a graduate of the University of British Columbia (Ph.D, Chemical and Biological Engineering, 2010), University of British Columbia (M.Eng. Civil Engineering, 1993), and the Universidad Iberoamericana (B.Sc. Chemical Engineering, 1988). I am a member in good standing of the Association of Professional Engineers and Geoscientists of British Columbia (#22768), Ontario (#100045213), Saskatchewan (#20307), Yukon (#1655), Northwest Territories/Nunavut (#L2018). My relevant experience includes preparation of environmental risk assessments, evaluation of Equator Principles, environmental health and safety compliance audits and due diligence at mines, mine waste and management. I am a Qualified Person for the purposes of National Instrument 43-101 (the Instrument). I did not complete a personal inspection of the Property. I am responsible for Sections 1.9, 20.0, 25.8, 26.2, 26.14, 27.0 (environmental section only), and 28.0 of the Technical Report. I am independent of AQM Copper Inc. as defined by Section 1.5 of the Instrument. I have no prior involvement with the Property that is the subject of the Technical Report. I have read the Instrument and the sections of the Technical Report that I am responsible for has been prepared in compliance with the Instrument. As of the date of this certificate, to the best of my knowledge, information and belief, the sections of the Technical Report that I am responsible for contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Signed and dated this 16th day of January, 2013 at Vancouver, British Columbia
Original document signed and sealed by Monica Danon-Schaffer, Ph.D., P.Eng.

Monica Danon-Schaffer, Ph.D., P.Eng. Manager, Environment and Sustainable Development Tetra Tech WEI Inc.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

28-4

1295840100-REP-R0001-05

S A B R Y A B D EL H A F EZ , P H .D., P.E N G .
I, Sabry Abdel Hafez, Ph.D., P.Eng., of Vancouver, British Columbia, do hereby certify:

I am a Senior Mining Engineer with Tetra Tech WEI Inc. with a business address at 800-555 West Hastings Street, Vancouver, British Columbia, V6B 1M1. This certificate applies to the technical report entitled Technical Report and Preliminary Assessment of the Zafranal Project, Peru, dated January 16, 2013 (the Technical Report). I am a graduate of Assiut University, (B.Sc Mining Engineering, 1991; M.Sc. in Mining Engineering, 1996; Ph.D. in Mineral Economics, 2000). I am a member in good standing of the Association of Professional Engineers and Geoscientists of British Columbia (License #34975). My relevant experience is in mine evaluation. I have more than 19 years of experience in the evaluation of mining projects, advanced financial analysis, and mine planning and optimization. My capabilities range from the conventional mine planning and evaluation to the advanced simulation-based techniques that incorporate both market and geological uncertainties. I have been involved in the technical studies of several base metals, gold, coal, and aggregate mining projects in Canada and abroad. I am a Qualified Person for the purposes of National Instrument 43-101 (the Instrument). I did not complete a personal inspection of the Property. I am responsible for Sections 1.11, 19.0, 22.0, and 28.0 of the Technical Report. I am independent of AQM Copper Inc. as defined by Section 1.5 of the Instrument. I have no prior involvement with the Property that is the subject of the Technical Report. I have read the Instrument and the sections of the Technical Report that I am responsible for has been prepared in compliance with the Instrument. As of the date of this certificate, to the best of my knowledge, information and belief, the sections of the Technical Report that I am responsible for contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Signed and dated this 16th day of January, 2013 at Vancouver, British Columbia
Original document signed and sealed by Sabry Abdel Hafez, Ph.D., P.Eng.

Sabry Abdel Hafez, Ph.D., P.Eng. Senior Mining Engineer Tetra Tech WEI Inc.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

28-5

1295840100-REP-R0001-05

C A R L OS G U Z M N
I, Carlos Guzmn, of Santiago, Chile, do hereby certify:

I am a Mining Engineer with NCL Ingeniera y Construccin Ltd with a business address at General del Canto 235, Providencia, Santiago, 7500588, Chile. This certificate applies to the technical report entitled Technical Report and Preliminary Assessment of the Zafranal Project, Peru, dated January 16, 2013 (the Technical Report). I am a graduate of Universidad de Chile, (Mining Engineer, 1995). I am a Registered Member in good standing of Comisin Calificadora de Competencias en Recursos y Reservas Mineras (Chilean Mining Commission). I am a member of the Australasian Institute of Mining and Metallurgy (AusIMM 229036). I have practiced my profession continuously since 1995. Currently I am Principal and Project Director with the firm NCL Ingeniera y Construccin Ltd, Santiago, Chile. I am a Qualified Person for the purposes of National Instrument 43-101 (the Instrument). I conducted a personal inspection of the Zafranal Property in November 29, 2011 for a period of one day. I am responsible for Sections 1.7, 15.0, 16.0, 21.1.8, 21.2.2, 25.3, 26.3, and 28.0 of the Technical Report. I am independent of AQM Copper Inc. as defined by Section 1.5 of the Instrument. I have no prior involvement with the Property that is the subject of the Technical Report. I have read the Instrument and the sections of the Technical Report that I am responsible for has been prepared in compliance with the Instrument. As of the date of this certificate, to the best of my knowledge, information and belief, the sections of the Technical Report that I am responsible for contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Signed and dated this 16th day of January, 2013 at Santiago, Chile
Original document signed and sealed by Carlos Guzmn

Carlos Guzmn Mining Engineer NCL Ingeniera y Construccin Ltd

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

28-6

1295840100-REP-R0001-05

W I L S ON M U I R , P.E N G .
I, Wilson Muir, P.Eng., of North Bay, Ontario, do hereby certify:

I am a Senior Engineer with Knight Pisold Ltd. with a business address at 1650 Main Street West, North Bay, Ontario, P1B 8G5. This certificate applies to the technical report entitled Technical Report and Preliminary Assessment of the Zafranal Project, Peru, dated January 16, 2013 (the Technical Report). I am a graduate of the University of British Columbia, (Bachelor of Applied Science, Geological Engineering, 1994). I am a member in good standing of the Association of Professional Engineers and Geoscientists of British Columbia (#24345) and Professional Engineers Ontario (#100060272). My relevant experience includes tailings and water management planning and design. I am a Qualified Person for the purposes of National Instrument 43-101 (the Instrument). My most recent personal inspection of the Property was July 6 and 7, 2011 for two days. I am responsible for Sections 18.4, 18.8, 21.1.10, 21.1.12, 21.2.4, 25.6, 26.11, 26.13, 27.0 (tailings management facility section only), and 28.0 of the Technical Report. I am independent of AQM Copper Inc. as defined by Section 1.5 of the Instrument. I have no prior involvement with the Property that is the subject of the Technical Report. I have read the Instrument and the sections of the Technical Report that I am responsible for has been prepared in compliance with the Instrument. As of the date of this certificate, to the best of my knowledge, information and belief, the sections of the Technical Report that I am responsible for contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Signed and dated this 16th day of January, 2013 at North Bay, Ontario
Original document signed and sealed by Wilson Muir, P.Eng.

Wilson Muir, P.Eng. Senior Engineer Knight Pisold Ltd.

AQM Copper Inc. Technical Report and Preliminary Assessment of the Zafranal Project, Per

28-7

1295840100-REP-R0001-05