Cobre Las Cruces Operation Andalucía, Spain

123 Pages·2016·6.15 MB·English

Cobre Las Cruces Operation Technical Report June 2015

Cobre Las Cruces Operation
Andalucía, Spain
NI 43-101 Technical Report

30th June 2015

David Gray (QP) BSc(Hons, Geology), MAusIMM, PrSciNat (SACNASP), Group Mine and Resource Geologist, FQM
(Australia) Pty Ltd
Anthony Cameron (QP) BEng(Min), Grad Dip Bus, M Comm Law, FAusIMM, Consultant Mining Engineer, Cameron Mining
Consultants Ltd
Robert Stone (QP) BSc(Hons), CEng, ACSM, Technical Manager, FQM (Australia) Pty Ltd

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Cobre Las Cruces Operation Technical Report June 2015

TABLE OF CONTENTS
ITEM 1 SUMMARY ........................................................................................................ 9
1.1 Project Background ............................................................................................... 9
1.2 Property Location, Ownership and Approvals ...................................................... 9
1.3 Geology and Mineralisation ................................................................................ 10
1.4 Exploration Status ............................................................................................... 10
1.5 Operations Status ................................................................................................ 10
1.6 Mineral Resource Estimate ................................................................................. 10
1.7 Mineral Reserve Estimate ................................................................................... 13
1.8 Production Schedule ........................................................................................... 13
1.9 Processing ............................................................................................................ 14
1.10 Project Infrastructure .......................................................................................... 14
1.11 Environmental Status .......................................................................................... 14
1.12 Capital and Operating Cost Estimates ................................................................. 14
1.13 Economic Evaluation ........................................................................................... 15
1.14 Conclusions and Recommendations ................................................................... 15
ITEM 2 INTRODUCTION ............................................................................................... 18
2.1 Purpose of the report .......................................................................................... 18
2.2 Terms of Reference ............................................................................................. 18
2.3 Qualified Persons and Authors ............................................................................ 18
2.4 Sources of Information ........................................................................................ 19
2.5 Personal Inspections ............................................................................................ 19
ITEM 3 RELIANCE ON OTHER EXPERTS ......................................................................... 20
ITEM 4 PROPERTY LOCATION, DESCRIPTION AND TENURE ........................................... 21
4.1 Purpose of this report ......................................................................................... 21
4.2 Tenure ................................................................................................................. 22
4.3 Rights and Surface Land Ownership .................................................................... 22
4.4 Royalties, Payments, Agreements ....................................................................... 23
4.5 Environmental Liabilities and Permitting ............................................................ 23
4.6 Archaeological ..................................................................................................... 23
4.7 Potential Access and Exploitation Risks .............................................................. 23
ITEM 5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE & PHYSIOGRAPHY 24
5.1 Accessibility ......................................................................................................... 24
5.2 Climate ................................................................................................................. 24
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5.3 Physiography ....................................................................................................... 24
5.4 Vegetation ........................................................................................................... 24
5.5 Local Resources ................................................................................................... 24
5.6 Infrastructure ...................................................................................................... 25
ITEM 6 HISTORY .......................................................................................................... 26
6.1 Prior Ownership................................................................................................... 26
6.2 Production History ............................................................................................... 27
6.3 Previous Mineral Resource and Mineral Reserve Estimates ............................... 27
6.4 Production ........................................................................................................... 28
ITEM 7 GEOLOGICAL SETTING AND MINERALISATION .................................................. 30
7.1 Regional Geology ................................................................................................. 30
7.2 Local geology ....................................................................................................... 30
7.3 Mineralisation ..................................................................................................... 31
ITEM 8 DEPOSIT TYPE ................................................................................................. 33
ITEM 9 EXPLORATION ................................................................................................. 34
9.1 Introduction ......................................................................................................... 34
9.2 Exploration in the Cobre Las Cruces Mining Concession .................................... 34
9.3 Acquisition of new investigation grants .............................................................. 37
ITEM 10 DRILLING ......................................................................................................... 39
10.1 Diamond core drilling .......................................................................................... 39
10.2 Reverse circulation drilling .................................................................................. 41
10.3 Blast hole drilling ................................................................................................. 41
10.4 Exploration target drilling .................................................................................... 43
ITEM 11 SAMPLE PREPARATION, ANALYSES AND SECURITY ........................................... 44
11.1 Sample preparation ............................................................................................. 44
11.2 Sample analysis ................................................................................................... 45
11.3 Quality Assurance and Quality Control ............................................................... 46
ITEM 12 DATA VERIFICATION ........................................................................................ 51
ITEM 13 MINERAL PROCESSING AND METALLURGICAL TESTING .................................... 52
13.1 Metallurgical Testing Programs ........................................................................... 52
13.2 Metallurgical Samples ......................................................................................... 52
13.3 Batch Metallurgical Testing ................................................................................. 55
13.4 Pilot Leaching and Solvent Extraction Testing ..................................................... 55
13.5 Pilot Effluent Testing ........................................................................................... 56
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13.6 Ore Variability ...................................................................................................... 56
13.7 OTG Additional Testing ........................................................................................ 57
13.8 Copper Recovery Predictions .............................................................................. 58
ITEM 14 MINERAL RESOURCE ESTIMATES ...................................................................... 60
14.1 Introduction ......................................................................................................... 60
14.2 Geological and Mineralisation model ................................................................. 60
14.3 Available Data ...................................................................................................... 61
14.4 Sample Compositing ............................................................................................ 63
14.5 Statistical Analysis ............................................................................................... 63
14.6 Boundary Analysis ............................................................................................... 64
14.7 Density Data ........................................................................................................ 66
14.8 Top Cutting .......................................................................................................... 67
14.9 Variography ......................................................................................................... 67
14.10 Kriging Neighbourhood Analysis ......................................................................... 68
14.11 Block Model Setup and Limits ............................................................................. 69
14.12 Interpolation Parameters .................................................................................... 69
14.13 Density estimates ................................................................................................ 70
14.14 Post-processing by Localized Uniform Conditioning ........................................... 70
14.15 Validation of Block Model Estimates ................................................................... 71
14.16 Mineral Resource Classification and reporting ................................................... 75
14.17 Mineral Resource Estimate Comparisons ........................................................... 78
ITEM 15 MINERAL RESERVE ESTIMATE .......................................................................... 79
15.1 Pit Optimisation ................................................................................................... 79
15.2 Mine Design ......................................................................................................... 81
15.3 Stockpile Inventories ........................................................................................... 84
15.4 Life of Mine Schedule .......................................................................................... 84
15.5 Mineral Reserve Tabulation ................................................................................ 84
ITEM 16 MINING METHODS .......................................................................................... 86
16.1 Mining Details ...................................................................................................... 86
16.2 Mining Sequence ................................................................................................. 88
16.3 Mine Planning Considerations ............................................................................. 89
16.4 Mining and Processing Schedules ....................................................................... 91
ITEM 17 RECOVERY METHODS ...................................................................................... 96
17.1 Current Processing Facility .................................................................................. 96
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17.2 Tailings Facility ..................................................................................................... 98
17.3 Process Water...................................................................................................... 98
17.4 Power................................................................................................................... 99
ITEM 18 PROJECT INFRASTRUCTURE ........................................................................... 100
ITEM 19 MARKET STUDIES AND CONTRACTS ............................................................... 101
19.1 Markets and Pricing ........................................................................................... 101
19.2 Contracts ........................................................................................................... 101
ITEM 20 ENVIRONMENTAL STUDIES, PERMITTING, SOCIAL AND COMMUNITY IMPACT 102
20.1 Environmental Setting ....................................................................................... 102
20.2 Status of Environmental Approvals ................................................................... 102
20.3 Environmental Monitoring ................................................................................ 103
20.4 Environmental Issues ........................................................................................ 103
20.5 Safety Performance ........................................................................................... 104
20.6 Social and Community Related Requirements .................................................. 104
20.7 Mine Closure Provisions .................................................................................... 105
ITEM 21 CAPITAL AND OPERATING COSTS ................................................................... 109
21.1 Capital Costs ...................................................................................................... 109
21.2 Operating Costs ................................................................................................. 109
ITEM 22 ECONOMIC ANALYSIS .................................................................................... 110
ITEM 23 ADJACENT PROPERTIES ................................................................................. 112
ITEM 24 OTHER RELEVANT DATA AND INFORMATION ................................................. 113
ITEM 25 INTERPRETATIONS AND CONCLUSIONS .......................................................... 114
25.1 Mineral Resource Modelling and Estimation .................................................... 114
25.2 Mineral Reserve Estimation .............................................................................. 114
ITEM 26 RECOMMENDATIONS .................................................................................... 117
26.1 Geology and Mineral Resource estimation recommendations......................... 117
26.2 Mineral Reserve Estimation and Mining ........................................................... 117
26.3 Processing .......................................................................................................... 117
26.4 Environment ...................................................................................................... 118
26.5 Project Enhancement Studies ........................................................................... 118
ITEM 27 REFERENCES .................................................................................................. 119
ITEM 28 CERTIFICATES ................................................................................................ 120

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TABLE OF FIGURES
Figure 4-1 Location of Cobre Las Cruces Operation, Sevilla, Spain 21
Figure 4-2 Location of the Cobre Las Cruces Mining Concession 22
Figure 7-1 Regional geology map highlighting the position of Cobre Las Cruces in relation to the
prevailing Iberian Pyrite Belt (IPB) geology. 30
Figure 7-2 A north south vertical cross section along the 757100 Easting across the Cobre Las
Cruces deposit illustrating the local geology sequence and mineralisation. 31
Figure 9-1 The 88 infill gravimetric measures highlighting the Bouger anomaly target 35
Figure 9-2 The location of Electromagnetic survey profiles (time domain) relative to the
gravimetric data. 35
Figure 9-3 Electromagnetic resistivity data confirms the gravimetric anomaly at a depth of 100 m
below surface. 36
Figure 9-4 Location of the La Fabrica exploration target within the Cobre Las Cruces mining
concession. 36
Figure 9-5 Results of the electromagnetic survey and drilled hole positions. 37
Figure 9-6 A surface geology plan demarcating the relative position of the applied for investigation
grants and the current Cobre Las Cruces Mining Concession. 38
Figure 10-1 A plan view of the diamond drillhole collars per year as relevant to the Cobre Las Cruces
deposit. 39
Figure 10-2 A log probability plot of diamond core recovery. 75% of drilled core has a recovery
greater than 80%. 40
Figure 10-3 A Quantile Quantile (QQ) plot of twinned HQ half core versus PQ full core illustrating
some evidence for bias. 41
Figure 10-4 Plan of the Las Cruces pit area, illustrating the distribution of blast hole grade control
drilling. 42
Figure 10-5 A QQ plot between blast hole (CU2) and diamond (CU1) sample copper grades
highlighting a systematic bias in favour of diamond sample grades. 43
Figure 11-1 Control charts of the percentage sample passing, with most samples well above the
minimum requirement. 47
Figure 11-2 A HARD plot of coarse crush (89) and pulp (104) duplicates for the 2014 diamond core
sampling, highlighting more than 90% of duplicates with HARD value below 10%. 48
Figure 11-3 Analysed copper results for CRM standards during the 2014 diamond core sampling.
Results highlight limited to no sample number mixing or swaps. 49
Figure 11-4 Performance of the OREAS CRM standards during 2014 drilling. 49
Figure 11-5 A HARD plot of coarse crush (336) duplicates for the 2014 blast hole sampling,
highlighting more than 80% of duplicates with HARD value below 10%. 50
Figure 11-6 Analytical results for the cut-off grade mixed matrix material standard submitted during
the 2014 blast hole sampling program. Results demonstrate accurate grade analysis for
samples have grade around the cut-off value. 50
Figure 13-1 Plan Map Showing the Location of Metallurgical Samples 54
Figure 13-2 Cross-Section Showing Metallurgical Samples 54
Figure 13-3 Copper Extraction Versus Copper Grade for Different Ore Types 59
Figure 14-1 A 3D view (an oblique northwest view) of the prevailing surveyed topography used for
reporting the unmined Mineral Resources. 61
Figure 14-2 A box a whisker plot of copper assay values per geological domain. 64
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Cobre Las Cruces Operation Technical Report June 2015

Figure 14-3 Copper grade profiles with increasing distance from the contact between respective
domains. 65
Figure 14-4 Kriging neighbourhood analysis highlighting optimal kriging efficiency for the selected
block size 69
Figure 14-5 Vertical cross sections looking east and at an X easting of 757155 m, 757100 m and
757320 m. 72
Figure 14-6 Grade and tonnage distribution of LUC and OK copper block estimates for the HC and
HC4 domains. 73
Figure 14-7 Validation slices comparing HC zones copper estimates and input data for easting,
northing and vertical directions. 74
Figure 14-8 A 3D plan view of the Mineral Resource classification of the dominant HC domain of
mineralisation. 76
Figure 15-1 2015 - Base Case Pit Optimisation Results 80
Figure 15-2 Optimisation Shells 4 (Red) and 31 (Blue) 81
Figure 15-3 Phase 4 Pit Design 82
Figure 15-4 Phase 5 Pit Design 82
Figure 15-5 Phase 6 (Ultimate) Pit Design 83
Figure 15-6 Sequence of Phases 4 through 6 83
Figure 16-1 Plan view of the Cobre Las Cruces mine site, illustrating the pits, dumps and tailings
facilities. 86
Figure 16-2 2015 – Phase 3 Exhausted. Phase 5 starts. Ore from Phases 3 and 4. 92
Figure 16-3 2016 - Phase 6 starts. Ore from Phase 4. 93
Figure 16-4 2017 – Ore from Phases 4 and 5. 93
Figure 16-5 2018 – Ore from Phases 4, 5 and 6. Phase 4 Exhausted. 94
Figure 16-6 2019 – Ore from Phases 5 and 6 94
Figure 16-7 2020 – Ore from Phases 5 and 6. Mining Operations Completed. 95
Figure 17-1 Current Las Cruces Process Flowsheet 97
Figure 20-1 2020 Pit closure and commencement of backfill 107
Figure 20-2 2021 Continuation of backfill 107

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Cobre Las Cruces Operation Technical Report June 2015

TABLE OF TABLES
Table 1-1 Cobre Las Cruces Mineral Resource statement depleted as at end of May 2015. Mineral
Resources are inclusive of Mineral Reserves. Mineral Resources that are not Mineral
Reserves do not have demonstrated economic viability. .................................................... 12
Table 1-2 Cobre Las Cruces Operation Mineral Reserve Estimate depleted as at end May 2015. ..... 13
Table 1-3 Cobre Las Cruces – Life of Mine Schedule updated to end of May 2015 ............................ 13
Table 6-1 The February 2011 Mineral Resource estimate statement ................................................. 27
Table 6-2 Processing Operations Summary 2014/15 .......................................................................... 29
Table 14-1 Table of drillhole statistics pre element of interest ......................................................... 62
Table 14-2 Summary of domain names used for block grade estimation ......................................... 66
Table 14-3 Summary of density measurement statistics per domain ............................................... 66
Table 14-4 Summary table of top cut values and samples affected. ................................................. 67
Table 14-5 Variogram parameters per domain for copper................................................................ 68
Table 14-6 Block model parameters – limits and dimensions ........................................................... 69
Table 14-7 Copper estimate sample selection parameters per domain. The second pass is 1.5 times
the first search range and the third pass is six times the first search range. .................. 70
Table 14-8 Validation of Parent block estimate with input composite data ..................................... 75
Table 14-9 Cobre Las Cruces Mineral Resource statement as at end May 2015. Mineral Resources
are inclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do
not have demonstrated economic viability. .................................................................... 77
Table 15-1 Input Parameters for Las Cruces Open Pit Optimisation 2015 ........................................ 79
Table 15-2 Updated Slope Design Guidelines (Source – Subterra) .................................................... 81
Table 15-3 Las Cruces Life-of-Mine Production Schedule ................................................................. 84
Table 15-4 Cobre Las Cruces Ore Reserve statement as at end May 2015 and using a 1.0% Cu cut-
off grade ........................................................................................................................... 85
Table 15-5 Comparison of In Pit Reserves as at December 31, 2014 ................................................ 85
Table 16-1 Cobre las Cruces Pit Design Parameters - 2015 ............................................................... 90
Table 16-2 CLC Life of Mine Schedule – updated June 1 2015 .......................................................... 92
Table 21-1 Summary of Operating Costs by Cost Area for 2015 ..................................................... 109
Table 22-1 CLC LOM Cashflow Summary – June 2015 ..................................................................... 110
Table 25-1 Cobre Las Cruces Operation Reserve Estimate .............................................................. 115

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Cobre Las Cruces Operation Technical Report June 2015

ITEM 1 SUMMARY
1.1 Project Background
This Technical Report on the Cobre Las Cruces Operation (the Operation) has been prepared by Mr
Tony Cameron of Cameron Mining Consulting Ltd (CMC), and Messrs David Gray and Rob Stone of First
Quantum Minerals Ltd (the issuer or FQM or the Company) as Qualified Persons (QP’s) on behalf of
FQM. The QP’s have prepared this Technical Report to document updated Mineral Resource and
Mineral Reserve estimates, economic evaluations and supporting ancillary documentation associated
with FQM’s Cobre Las Cruces Operation in the south-west of Spain.
This report and the resource/reserve estimates discussed therein represent the culmination of results
of a series of reviews and updates undertaken by FQM (the issuer) since acquiring the project from
Inmet in 2013.
This report supersedes the NI 43-101 Technical Report issued by Inmet and dated June 2012. Updates
to this previous Technical Report are noted throughout.
1.2 Property Location, Ownership and Approvals
Cobre Las Cruces S.A. (CLC) is the owner and operator of the Las Cruces mine located in southern
Spain, about 20 kilometres northwest of the city of Seville in the autonomous region known as
Andalucía. CLC is an indirect wholly-owned subsidiary of FQM and is incorporated under the laws of
Spain. The Las Cruces deposit was originally discovered by a subsidiary of Rio Tinto plc in 1994. It
carried on exploration activity until 1999 and sold the project in that year to MK Resources Company
(MK Resources), which established CLC as its local Spanish subsidiary. CLC completed two feasibility
studies and carried out environmental studies and permitting work prior to becoming an affiliate of
Inmet. The Mining Concession was granted in August 2003, after a positive Declaration of
Environmental Impact was issued by the Andalucían Regional Ministry of the Environment in May
2002.
On August 22, 2005, Inmet acquired a 70% indirect interest in CLC from MK Resources. At that time
Leucadia National Corporation, through MK Resources, retained the other 30% interest in CLC.
CLC completed a revised feasibility study and basic engineering and commenced construction of the
project in 2006. Construction of the mine was completed in 2008 and the process plant was completed
in February, 2009. On December 15, 2010 Inmet purchased the remaining 30% interest in CLC from
Leucadia National Corporation, to bring Inmet’s ownership to a 100% indirect interest. FQM indirectly
acquired 100% of CLC as a result of its acquisition of Inmet in March, 2013.
CLC was granted mining rights for subsurface minerals for an area of 1006 hectares, through Mining
Concession No. 7532 on August 6, 2003, by the Regional Ministry for Employment and Technological
Development of the Province of Andalucía. Under this concession, CLC owns and operates the Las
Cruces mine and processing facilities. The project has all permits and approvals necessary to operate
and is subject to a royalty of 1.5% if the LME copper price is greater than or equal to US $0.80 per
pound of copper.
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Cobre Las Cruces Operation Technical Report June 2015

1.3 Geology and Mineralisation
The Cobre Las Cruces deposit occurs in the eastern end of the Iberian Pyrite Belt, a 300 kilometre long
and 80 kilometre wide geologic belt that extends eastward from southern Portugal into southern
Spain. The belt is host to more than 100 mineral deposits, some of which were exploited for metals as
long ago as the Bronze Age. Mineralisation consists of syngenetic massive sulphides containing
polymetallic mineralisation, similar to most other Iberian Pyrite Belt deposits.
Cobre Las Cruces is a blind deposit with no outcrop because of the 100 to 150 metres of sedimentary
marls overlying the deposit. No other deposits have been found in the immediate area but exploration
is difficult because of the thickness of the overburden. The nearest deposits are Aznalcollar and Los
Frailes, both approximately 10 kilometres to the west in the area where the host rock assemblage
outcrops at the surface. The Aznalcollar and Los Frailes deposits consist of lead and zinc massive
sulphides that were in production over the last 10 to 20 years.
The massive sulphide mineralisation on the property is hosted by late Devonian to early Carboniferous
Period volcanic and sedimentary rocks deposited in a submarine setting within a narrow and relatively
shallow intra-continental sea and characterized by bimodal volcanism and sedimentation.
Post depositional secondary copper enrichment occurred in the upper part of the massive sulphide
deposit, forming the secondary mineralisation of interest. The deposit was subsequently buried under
100 to 150 metres of sandstone and calcareous mudstone, called marl.
1.4 Exploration Status
Diamond drilling has continued across the CLC mining concession since its discovery in 1994 by Riomin
Exploraciones, S.A. (Rio Tinto). Drilling has focussed on defining the extents of the Las Cruces deposit
mineralisation as well as for infill detail to support more accurate estimates. Exploration was re-
initiated by CLC in 2013 with a comprehensive review of all historical work and data. This review
initiated further exploration of two targets within the mining concession, namely; El Esparragal and La
Fabrica. The two targets were investigated with gravity and electromagnetic surveys to more
accurately define their location for targeted drilling. El Esparragal geophysical surveys have identified
targets for drilling. In contrast, La Fabrica geophysics and drilling have confirmed the absence of
anomalous massive or semi-massive sulphide deposits.
1.5 Operations Status
The Cobre Las Cruces operation has been mining and processing ore since early 2009. It is now in its
seventh year of operation and Phase 3 (out of a total of six phases) of the open pit has almost been
completed. Based on current estimates, mining and processing are due to be completed in 2020.
1.6 Mineral Resource Estimate
The CLC Mineral Resource estimate (Table 1-1) was updated in October 2014 using the available
updated drillhole database, which includes all diamond drill hole sample assay results, a selection of
quality blast hole sample results and an updated interpretation of the geological model relevant to the
spatial distribution of copper mineralisation. Interpolation parameters were based upon the geology,
styles of mineralisation, drill hole spacing and geostatistical analysis of the data. Mineral Resource
estimates were classified according to geological continuity, QAQC, density data, drillhole grid spacing,
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