The high-grade gold/silver El Peñón mine is located in the Atacama Desert in Region II of northern Chile. El Peñón is expected to produce 460,000 to 470,000 gold equivalent ounces for 2008, with a planned production run rate of 500,000 gold equivalent ounces by year end. The mine began commercial production in January 2000 and has replaced reserves every year since.
Overview
Location
El Peñón is located In the Atacama Desert in Region II of northern Chile. It is approximately 160 km southeast of the port city of Antofagasta at an elevation of 1,800 meters above sea level. The climate is ideal for year round operations, the setting ideal for mining infrastructure and the operation has had limited impact on the extremely arid environment of the area.
Type of operation
Operations are currently 100% underground vein mining using the bench and fill method. By 2007 mine and plant production is expected to be at 2800 tonnes per day. Processing includes single stage crushing and grinding, followed by tank leaching followed by a Merrill Crowe circuit with on-site dore production. Tailings are filtered and final deposition through a patented dry process.
Proven and probable reserves
(at December 31, 2007)
9.0M tonnes at 6.64 grams per tonne gold = 1,931,000 ounces gold
9.0M tonnes at 280 grams per tonne silver = 81M ounces silver
Measured and Indicated Resources
(excluding reserves)
3.4M tonnes at 8.71 grams per tonne gold = 949,000 ounces gold
3.4M tonnes at 225 grams per tonne silver = 24M ounces of silver
Inferred Resources
4.4M tonnes at 10.63 grams per tonne gold = 1.5M ounces of gold
4.4M tonnes at 291 silver = 41M ounces of silver
Expected Annual Metal Production
460,000 to 470,000 gold equivalent ounces for 2008 and approximately 500,000 gold equivalent ounces annually thereafter
Project History
El Peñón was a grassroots discovery by Meridian geologists in an area that had no previously recorded precious metal occurrences. The discovery resulted from a regional exploration program that concentrated initially on volcanic-hosted targets in the Paleocene-Eocene and Miocene-Pliocene belts in northern Chile. The initial reconnaissance visit to the El Peñón area was in November 1992. The area was acquired in June 1993.
A trenching program in September 1993 was followed by a 13-hole drill program in November of the same year. Six of these drill holes encountered greater than 3.0 grams/tonne gold. The true discovery hole, however, was the first hole of the second drill program, which began in February of 1994. The hole hit the major ore shoot of the Quebrada Orito deposit, encountering 100 meters of 10.9 grams/tonne gold and 123.4 grams/tonne silver from 110 to 210 meters in depth. This ore zone eventually extended over three kilometers along a continuous vein zone referred to as Quebrada Orito and Orito Sur.
On July 9, 1998, Meridian Gold's Board of Directors approved the development and construction of the El Peñón mine, based on the positive results of a final feasibility study for the Quebrada Orito and Cerro Martillo deposits and early estimates of Quebrada Colorada.
This El Peñón mine was projected to produce 130,000 ounces of gold and 1.9 million ounces of silver annually from a 2000 tonne per day processing facility employing a crushing circuit, a Semi-Autogenous Grinding (SAG) mill, a gravity circuit , and a Merrill Crowe circuit . Construction of the processing facilities began in the fourth quarter of 1998, start up in September 1999 and commercial production commencing January 2000. It was planned that contract mining would initially be employed for both the open pit and underground mines.
The mine life in the feasibility study was projected at approximately 8 ½ years. At a constant gold price of $300 per ounce and a constant silver price of $5.00 per ounce, the project generated a double-digit internal rate of return.
Value Enhancing Initivaties
Recent new discoveries at El Penon include Bonanza, Esperanza, and Al Este. Operational excellence initiatives are underway in all areas through Six-Sigma. Yamana has developed a mine plan which would see ore processing increase to 3,500 tonnes per day by the third quarter of 2008, increasing production to 500,000 gold equivalent ounces per year, and approximately 5,000 tonnes per day by the end of 2009 as a result of improvements in mine development and processing. It is expected that production can then be increased futher to 600,000 gold equivalent ounces per year for a sustainable period of ten years.