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MOLYCOMEX BUDGET AND PLAN GRANIZO -,MADERO PROJECTS Juan Carlos Escalante M. Chief of Geology October 20 14 Cuatro Cienegas, Coahuila, Mexico CONFIDENTIAL.

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Presentation on theme: "MOLYCOMEX BUDGET AND PLAN GRANIZO -,MADERO PROJECTS Juan Carlos Escalante M. Chief of Geology October 20 14 Cuatro Cienegas, Coahuila, Mexico CONFIDENTIAL."— Presentation transcript:

1 MOLYCOMEX BUDGET AND PLAN GRANIZO -,MADERO PROJECTS Juan Carlos Escalante M. Chief of Geology October Cuatro Cienegas, Coahuila, Mexico CONFIDENTIAL

2 OUR OBJECTIVES 1.A start-up plan for a pilot mining operation on the Granizo-Madero mining concessions 1.A plan for intensive exploration aimed at the identification of a resource base to scale the pilot output of mineralized rock feed from 500 to 2000 tpd (The above is based on non compliant estimated resources from Molycomex’s* previous exploration programs on the outcropping Cu-Ag manto deposits, together with investigations and tests on the treatment of the raw materials by a heap-leach process) *Moly comex S.A. De C.V. Is a registered Private Limited Corporation in Mexico

3 BACKGROUND Molycomex learned of the Copper-Silver deposits of this area in 2009 during regional exploration and decided to acquire the El Madero (Apache) (southeast sector) property, as well as inner plots of land In 2011, an intensive exploration was initiated by 1:20:000-scale geological mapping and semi-detailed geological mapping of 4 richer Cu-Ag manto zones >3000 heavy equipment machine hours used to construct and restore access roads and excavate 139 trenches along the Cu-Ag mantos 449 channel samples sent to ALS Chemex (Canada) for full assay Thirty DDHs planned and 4 were drilled at San Antonio, with excellent results Using the 2011 exploration data, NI Technical Report was issued by Dahrouge Geological Consulting (Prof. Roger D Morton P.Geol and Janine C Brown P.Geo)

4 The El Granizo-El Madero Projects The El Granizo-El Madero mining exploration projects are located in the Cuatro Ciénegas Municipality, in the ejidos (communal agricultural sectors) of Santa Teresa, Tanque Nuevo, Cuates de Australia, and Estanque Palomas in the portion known as Rancho El Jabalí. The El Granizo area was explored at different times, most recently by an exploration and drilling program performed by BHP in 1995 During a Noranda/Outokumpu JV explored the Cu-Ag mantos of the San Marcos and Pinos Sierras and the El Granizo Sierra. The program included regional mapping and detailed work on the El Granizo, Adrianas, and Don Indio areas The current property consists of 11 mining concessions covering 18,267 hectares These concessions cover a Cu-Ag manto belt >50-km long with more than 35 potential mining sites (with old shafts and recent trenching); see NI The mantos are 1.5 to 9.6 meters thick. Copper grades vary from 0.5% to 2.4 % (grades that could be feasible to support low- cost mining and extractive operations)

5 Manto outcrops are as long as 250m. The principal ones being: Granizo (Manto Negro), Las Nieves, Ojitos, San Antonio, and Buena Suerte (but also including Las Emes, Juanitas, El Pilón, Tajo Zanja, and Don Indio) The mineralized host-rocks are sandstones and dolomites of the Lower Cretaceous San Marcos Formation. Mineralized zones are also found in dolomites of the Cupid Formation The fundamental objective of this presentation is to illustrate the benefits of an early start- up of pilot mining operations on the major mineralized zones of Granizo (Manto Negro), Ojitos (Feeder Vein), the San Antonio manto and the Buena Suerte manto The initial plan is to make lateral open-pit excavations along the strike of the strata/mantos, up to the limits defined by overburden thickness vs. ore cost-benefits From experience gathered from trenching and general excavations on the Ojitos, San Antonio, and Buena Suerte sectors, it was found that these stratiform manto zones can be strip-mined using a simple excavator and jack hammer to provide a good yield of mill feed per day

6 We estimate that strip mining using heavy-duty machinery can be effective up to 35m behind the current outcrops with a strip ratio of 7:1 Subsequently, room and pillar mining would be implemented as is shown on the following figure:

7 Estimated Mineral Inventory: In 2011, Molycomex estimated the mineral inventories at the major sampling sites and drill sites in the Madero Area to be as follows: 10 drills are planned on the Madero Concession (see Fig 26-1 technical report Madero Property) throughout 1 km of outcrops. These drillholes, above and beyond checking for mineralization continuity, are targeted to expand mineral inventories by >1 million tonnes at the above-mentioned Cu grades. A similar operation was performed by BHP at the Granizo Manto Negro sector using data from trenching and RC drilling. The average content was calculated using a density of 2.4 for sandstone. A 200m-long mineralized block was calculated, with an estimated width of 50 meters and 7 meters thickness, for an estimated total of 150,000 tonnes with 1.1% copper. Thus we conclude an Current Estimated Mineralized Rock Inventory: 240,000 tonnes

8 Manto Negro, Granizo open pit - Mineralization width 8m

9 11.1% Granizo Open pit 150, % Cu inventory AERIAL VIEW OF OPEN PIT

10 Mining plan and heap leach Part 1: The initial estimate of the mineral inventory is 240,000 tonnes (NI Non Compliant), but this only takes into account the 4 sites where exploration is most advanced, namely: Manto Negro, San Antonio, Buena Suerte, and Ojitos. This provides sufficient ore to feed a start-up plant to process 500 average 1% Copper. The targets of the additional proposed exploration program would ideally be discovery of: Year million tonnes of ore with % copper Year million tonnes of ore with % copper Year million tonnes of ore with % copper The growth of the mineral inventory resulting from exploration could provide and increment the daily processing of the plant from 500 to 1000 tonnes/day and then by year 3 ideally double that to % Copper. Molycomex’s Column leaching tests (see technical report Madero Property, fig & 13-2) showed a recovery of 90% after grinding down to -1/4”. Thus with a production of 1000 tonnes/day with a 1% Cu head grade at a recovery rate of 90%, the projected output in copper cement would be 9 tonnes of copper per day, at a selling price of US$3/lb this infers a gross yield of US$59,400.00/day or US$1,782,000.00/month.

11 Mining plan and heap leach Part 2: Given the results of the original metallurgical test, it is advisable to perform other tests on - 1/2” and -1” grain sizes, also varying the sites of samples to be checked. This will optimize the grinding size and the eventual recovery ratio; thus, primary (jaw) and secondary (cone) crushing is planned, using portable power equipment In the already approved Environmental Impact Assessment study of the Granizo area the first stage contemplated involves building a 2.5 hectare heap pad, with a 1.5-hectare (15,000 m 2 ) heap leach operation. This leach pad will have a projected capacity of 500,000 tonnes, which at a throughput rate of 1000 tonnes/day will have a life of 1.5 years in the first stage Storage tanks are required for the Pregnant Leach Solution (PLS), depleted solution (DS) tanks, and a fresh water (FW) tank. Also required are a storage facility, drying area (press filter), workshop, fuel tank, a sulphuric acid (H 2 SO 4 ) reservoir and a few minor civil works In addition to the leaching heap, precipitation or cementation zones will be built, consisting of ramps in the shape of shallow pools at -6° to -9° angles. These ramps are made of reinforced concrete with epoxy coating to protect against low pH solutions that contain copper

12 General plan for mining and location of a heap leach plant by the Manto Negro zone EIA-Approved El Granizo Plan for Minera Coronado S.A. de C.V.

13 HEAP LEACH PAD 1.5 Hectare Capacity: 0.5 Mt 1.5 Year life EMERGENCY 5000 m 3 PLS 5000 m 3 PRECIPITATION/ CEMENTATION PLANT CONSTRUCTION OF 2 RAMPS, 500 m 2 each BARREN SOLUTION 5000 m 3 FRESH WATER 5000 m 3 SULPHURIC ACID TANK MINE ROCK ACID CONGLOMERATION PLANT Basic operation parameters: 1000 tpd 1% Cu ore crushing to -1/4” 3m-high beds Barren solution: 250 ppm Cu Area 1-hectare (10,000 m 2 ) Cementation efficiency 75% Irrigation rate 20 L/hr/m 2 Cement production 9 tonnes/day 75% Cu PLS Output 200m 3 /hr (4800m 3 /day) PLS 2 g Cu/L SEDIMENTATION 1000 m 3 OPERATIONAL FLOW CHART Finished Product Cement Cu 75% CRUSHER CRUSHED ROCK

14 Plant Construction and Mine Preparation Cost Estimates Salvage of plants land and mine yards (plant nursery) and EIA Madero area 40, Clearing for roads and/or construction of access to ore extraction sites50, Plant expansion area clearing 2.5 hectares (storage of ground cover) 25, Preparation of pad and topsoil in mining areas (Granizo-San Antonio) 25, Topography - leveling and compacting heap area 1.5 hectares 40, Install Geomembrane liner for heap leach zone 1.5 has. (150,000 tonnes) 150, Construction of PLS drains and sumps and PLS reservoirs for Barren and Fresh Water 40, Instalation of liner drains for PLS (400 m) and PLS, Barren y Fresh Water (2000 m 2 c/u) 120, Cementation plant construction (1000 m 2 of ramps) two 20 m X 40 m ramps (US$180/m 2 ) 180, Water supply installations (pipes, coupling, valves, 6”) 30, Irrigation installation for Oremax Heap (1 ha) 14, Electric installation 20, Construction of drying area and finished product storage facility 450m 2 90, Construction of general warehouse 40, Construction of sulphuric acid storage room 20, Construction of industrial waste storage facility 20, Fuel storage room 10, Portable offices for General Mgmt., Mine, Plant, Geology, Accounting 15, Air Conditioned Camp 60, Construction of dormitories, showers and restaurant 40, Construction permits and explosives warehouse 30, Mine plots property and taxes , Rent of common properties Ejidos Cuates in Australia and Palomas (+500 hrs.-machine support) 80, Contingencies 10% 150, US$ 1,579, Blue: contractors black: staff Company Green: tax and contract

15 EXPLORATION

16 BUDGET SUMMARY Plant Construction and Mine Groundwork 1,579, Exploration of Madero, Granizo - Don Indio 600, Total US $ 2,179, We propose implementation of this plan in stages and estimate it can be completed in months

17

18 Trenching in Buena Suerte zone, Madero Project August 2011

19 Conclusion - High Potentials 18,267 hectares under concession >50 km long very accessible Belt of Cu-Ag mantos >35 sites with exposed mineralization of acceptable widths and grades Favorable metallurgy with average acid consumption (low processing costs) Our process can produce a very “clean” copper averaging 95% Cu content Production can start as soon as the plant is built Manto deposits are generally high-grade, profitable and produce 25% of global copper Major companies mine this type of deposit in Africa, South America, USA and Asia Analogous Copper Belt in Zambia has produced more than 87 million tonnes of copper during its long history of operation The 200-km long Coahuila Copper belt has experienced limited exploration to date

20 THE END Thank you for your interest

21 Cautionary Note regarding Forward-Looking Information herein: Certain information in this presentation constitutes “forward-looking information under Canadian and U.S. securities legislation. This forward-looking information includes, but is not limited to, statements regarding the potentials of the Company’s mineral properties, the future prices of copper and silver, the success of exploration activities, the costs and timing of future exploration and developments, the estimation of mineral resources, economic evaluations, capital requirements and statements relating to the financial and business prospects of the companies. Generally forward-looking information can be identified by use of terminology such as “plans, “budget”, “estimates” or variations on such words or phrases. Forward-looking information is based upon reasonable assumptions, estimates, analysis and opinions of the management, made in light of their experience and perception of trends, current conditions and expected developments. Forward-looking information is inherently subject to known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements to be materially different from those implied in forward-looking information. There can be no assurance that forward-looking statements will prove to be accurate. Accordingly readers should not place undue reliance on forward-looking information. The forward-looking information is presented for the purpose of assisting potential investors in understanding the expected financial and operating performance of the ventures and may not be appropriate for other purposes


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