Sossego Mine The Mining Operations Start Up

Adriano Espeschit
Companhia Vale do Rio Doce
Parauapebas PA Brasil
adriano.espeschit@cvrd.com.br


ABSTRACT


The mining operation of the Sossego Project, property of the Company Vale do
Rio Doce CVRD, began on the August 30, 2003. Sossego will use sulphur minerals
for production of copper concentrate. This is the first copper operation of CVRD, the
biggest iron producer and exporter in the world. CVRD also has activities in logistics
and electrical energy.

In the first phase of process, the mining activities are focused on exposing the
mineral by pre-stripping for the start of extraction in the concentrator, planned for the
middle of 2004.

Sossego will operate with: 1 electric shovel P&H 4100 XPB, 1 electric shovel
P&H 2300 XPA, 1 frontal loader Maratn L-1400, 6 trucks Caterpillar CAT 793-C, 5
crawler tractors CAT D11N, 3 rubber-tired tractors Tiger 690, 2 motor graders CAT 16
G/H, 2 drills Gardner Denver GD-120, 2 drills Reedril SKS, 1 drill Ingersol Rand ECM
660.

The project will consider two open pits: Sequeirinho and Sossego. Storage areas
for sulphur minerals, oxide minerals and waste rock stock are designed as well. Oxide
mineral extraction is planned in the second stage, together with the Project 118
exploitation, located 5 km apart from Sossego installations.

INTRODUCTION


The Sossego Copper Mine is situated in the Carajs Mineral District, located in
the Southeastern portion of the Par State, Brazil. The mine is being developed by
CVRD and includes an open pit mine, primary crushing and conveying, SAG/ball
milling, copper concentrate flotation, tailings disposal, concentrate thickening, filtration
and load out. The concentrate will be trucked to Parauapebas and then transported via
railroad to the port city of So Lus, situated about 890 km from Carajs.


GEOLOGY


Presently the mine contains two distinct areas of copper-gold mineralization
identified as Sequeirinho and Sossego Hill. Both outcrop as a series of copper oxide-
bearing hills along a strike length of three kilometers. The focus of the feasibility study
was on the sulfide ore.

Sequeirinho is the most important with regard to size and mineable reserves
consisting of a continuous zone of mineralization with a strike length of approximately
2,000 meters with a weaker mineralized extension of about 1,000 meter to the west.
The deposit trends east-west dipping about 70
o
to the south and is situated about 700
m to the west-southwest of Sossego Hill.

The Sossego Hill deposit consists of a 600 m broad circular feature with a relief of
approximately 60 meters. Mineralization within the area occurs in three zones: the
circular shaped, 200 m diameter Sossego breccia pipe in the north, the elongate 80m x
400m Curral breccia pipe to the south, and the vein zone between the Sossego and
Curral breccias. The Sossego and Curral breccia pipes are near vertical.

The high-grade mineralization (>1% Cu) occurs in breccias that are usually richer
in copper and gold near the footwall and the hanging wall contacts of the orebody as
well as in cross cutting zones. The breccias have a chalcopyrite matrix and clasts of
magnetite, amphibole and other lithic fragments. Stockwork and disseminated
mineralization is also common


GEOLOGICAL DATABASE


CVRDs database was built up based on:

Drilling

The mineral resources of Sossego Hill and Sequeirinho were evaluated by means
of angle diamond drill holes for sulfide ore and reverse circulation for oxide ore. A total
of 432 diamond drill holes, HQ (2.5 ) and NQ (1.875) diameter holes, making
148,500 meters have been completed by four drill contractors from 1997 through 2004.

Logging Practices

Core logging was completed by an in-house CVRD team made of experienced
geologists, and audited independently by MRDI, Kvaerner, Amec and Snowden .
Information available on the logs includes: lithological, alteration, mineralogy,
weathering, structure and geological data, including rock quality designation (RQD).

Core Logging, Recovery and Sampling

Core was delivered by the drilling contractor to the log site / storage area. At the
logging facility, core recovery and physical properties were measured and recorded.
Geological logs were prepared and sampled at defined intervals, honoring geological
contacts. Sample intervals average one meter in the mineralized zones and two to four
meters in the barren zones.

The global drill core recovery is very high, averaging 98% for the Sossego Hill
deposit and 96% for the Sequeirinho.

Drill Hole Location and Down Hole Survey

The drill hole location is based on the control points brought in from a high
precision survey from the Carajs iron operations. A total station and level survey was
used to establish a detailed map of the site at a one-meter control interval. The location
of the drill hole grid, roads and historical workings were captured during this survey.

Down hole survey has been carried out using DDI Fotobor, Maxibor and
gyroscope. Holes were surveyed twice, once during insertion and the second time
during the recovery stage.

Drill Hole Data Density and Distribution

The holes are oriented perpendicular to the mineralized structures and are
completed on a series of equally spaced sections along the strike of the mineralization.
The Sequeirinho deposit was investigated by 320 holes (108,293 m) along 38 sections
at a grid of 40 by 80 m in its central portion and 80 by 80 m in the rest of the deposit.
The deepest hole in Sequeirinho intersected mineralization at 1,000 m below surface.
The Sossego Hill deposit is investigated by 112 holes (39,871 m) along 19 sections at
a grid of 20 by 80 m in the central portion of the deposit and 40 by 80 m in the rest of
the deposit. The deepest hole was 968 m and intersected mineralization.

Analytical Work

Copper and gold analyses of the samples have been completed by two
laboratories, Nomos (Independent lab) and GAMIK (CVRD). Blanks, standards and
duplicates were made to maintain the quality control.

QA (Quality Assurance) and QC (Quality Control)

Comprehensive analysis of the existing assay database was completed and
presented in a document entitled Analytical Quality Control for the Sossego Project.
The statistical analysis to support the database is extensive and professionally
collected.

Inventory of Information

All core, rejects and sample pulps are inventoried on site. The facilities are well
organized and fully documented. The exploration data is stored in one secure location
on site. This includes original drill logs, assay certificates that are organized to permit
rapid access.
BLOCK MODEL


Using the geological solids a geological block model was constructed accounting
for structure, alteration, lithology and chalcopyrite content. Zones of saprolite and oxide
mineralization were specifically identified.

The mineralized zones were modeled using 0.20% and 1.0% copper boundaries
oriented according with the geology and structure to restrain grade smearing.

Copper and gold assay for the Nomus and GAMIK labs have been adjusted to
account for assay bias identified in the assay quality control program.

Statistical analyses of the composited (two-meter intervals) data set were
undertaken to establish the character and distribution of the copper and gold
mineralization by lithology and mineral zone.

The block size (SMU) is 10 by 10 by 8 meters. The SMU was selected based on
the MRDI analysis completed prior to the final feasibility drilling, using 192 holes. The
block model is comprehensive and is maintained in GEMCOM software.

Correlograms were generated to establish the continuity of the copper and gold
mineralization as well as the specific gravity data. These were calculated along the
strike , dip, and perpendicular to the orientation of the mineralization. Results from the
correlograms were modeled and used to establish the final range for composite
selection for the grade (Cu and Au) and specific gravity estimates.

Grade and specific gravity estimation was performed using both kriging and
inverse distance. To generate the values for the block model a series of passes were
used to fill the block model mineralized envelopes.

Resources and Reserves

Several resource estimates were carried out during the life of the project
reflecting different degrees of drilling, as showed in the graphic below.

0
100
200
300
400
500
600
700
DNPM REPORT SCOPING STUDY RESOURCE UPDATE PRE-FEASIBILITY MRDI FEASIBILITY
Holes Meas.+Indic. Resources (Mt) Total Resources (Mt)

A resource of 569 million tonnes @ 0.80 % copper and 0.22 g/t gold was
established within the two main pits of Sequeirinho and Sossego. The mineralization
remains open to the west and at depth in both pits.

There are additional resources within CVRD claims in satellite targets with
potential resources of 200 million tonnes @ 0.80 % copper that are not included in the
feasibility study with exploration data that has not advanced to a feasibility level
standard but that may extend mine life in the future.

The open pit mineable reserves were defined by NCL S.A. NCL is a Chilean
company that specializes in mine planning services including large Chilean copper
mines such as Escondida, Chuquicamata, Los Pelambres, Collahuasi and others.

Pit shell were generated using a12% discount rate to define the mineable
reserves. The base case open pit mineable reserves for the Sossego Project are 191
million tonnes @ 1% copper and 0.29 g/t gold), contemplates a 13 year mine life.


MINING

The objective of the Mine Planning carried out for the Sossego is to develop a
practical mine design and production schedule for open pit exploitation of the mineral
reserves to maximize the NPV.

The definition of the economic ultimate pit limits and mineable reserves was done
based on the geological resources model and on the geotechnical design parameters
provided by Golder Associates.

The best economic mining sequence was defined using the Whittle program with
a variable cut off grade strategy, applied on operational mining phases and final pit.
The definition of the optimum cut-off grade strategy was done to ensure that the yearly
ore production rate (15 million tonnes) was achieved. The design of operational phases
was done to ensure the safe operation of large size equipment with industry standard
productivity.

The mine production schedule was designed for a mill feed rate of 15 million
tonnes of ore per year, including calculation of the volume of pre-stripping required to
expose sufficient ore for the continuous operation of the mill.

The mining will be carried out in 16m height benches, except for a portion of the
ore benches (about 30% of the ore tonnage) that will require mining at 8m benches to
reduce dilution in the boundaries of the mineralized zones and in the oxides area.

The waste dump location and stacking sequence, including low grade stockpile
and oxide ore produced in the initial years of the mine was scheduled according to the
technical design parameters provided by Golder.

The open pit operation includes the standard unit operations of drilling, blasting,
loading and truck hauling, plus all the auxiliary work required to maintain the work
faces, roads and waste dumps.

EQUIPMENT SELECTION

The size and selection of the mining equipment was made to fulfill the yearly
material movement required for ore and waste (45 to 83 million tones) during the mine
life with periods of simultaneous mining in two different pits. Consequently, the drilling
and loading equipment has been selected to combine high productivity low cost units
with high mobility flexible units. The large units will consist of electric rotary drills for
12 inches diameter holes and rope shovels with 73 yd
3
of bucket capacity , while the
mobile units will include diesel drills for 9 7/8 holes and rope shovels of 28 yd
3

capacity.

The diesel drills and front end loaders will be used mainly for the exploitation of
the ore, that requires a higher mobility, and the electric drill and rope shovel for the
waste. Almost all the mining at Sossego Hill pit will be carried out with the diesel
equipment (drills and front-end loaders), with some support of the bigger electric units
only when the rate of production is too high in years 7 and 8. The front end loader of 24
yd
3
capacity has been considered for the loading fleet, to support the work of the bigger
units in narrow areas, opening of new accesses, etc.

240 ton trucks have been selected for the transport of all material types in the pit,
this size of trucks has a good matching with the rope shovel in 3 passes and an
acceptable matching with the smaller units in 5 passes.

The ancillary units will include two sizes of track dozers; big units of 870 hp (type
Cat D11) and smaller 405 hp units (type Cat D9). These equipment will be used mainly
to maintain the working faces and the waste dumps, and to clean spillage from the
berms. Wheeldozers (type Cat 834), motorgraders (type 16H) and water trucks will
complete the ancillary equipment fleet.

CVRD conducts all mining operations (except blasting) and CVRD contracted
SOTREQ (CAT dealer) and P&H Minepro Service (P&H dealer) for the maintenance
services. The following table shows the mining equipment requirement:

01 Electrical Shovel P&H 4100 XPB
01 Electrical Shovel P&H 2300 XPA used
01 Front and Loader CAT 994 D
01 Front and Loader L1400 used
06 Trucks CAT 793 C
02 Electrical Drillers GD 120 used
02 Diesel Drillers Reedrill SKS
01 Diesel Driller IR ECM 660
05 Dozers D11N
03 Wheeldozers Tigre 690D
02 Motorgraders CAT 16G/H


Start up

We started up the mining operations in Sossego Mine at last August 30
th
with a
fleet of 03 CAT 793 C trucks and 01 L 1400 front and loader. The ancillary equipment
started up during the following days. More 03 trucks, another front and loader and more
ancillary equipment started up in January and February.

Now, in March, we are preparing the start up of the first big electrical shovel
P&H 4100 XPB. We are working for have the full capacity able in April.