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Salares Norte, Chile

Salares Norte project – 100% attributable to Gold Fields

High-grade, open pit, gold-silver project in Chile discovered by Gold Fields in 2011, now with completed FS.

  • Definitive FS (DFS) completed in 2018 and maiden Mineral Reserve reported
  • Mineral Resource: 3.9Moz and Mineral Reserve: 3.5Moz gold only; and 4.5Moz and 4.1Moz including silver as gold equivalents

LOCATION

The Salares Norte project includes the Brecha Principal and Agua Amarga deposits – for which a Mineral Resource and Mineral Reserve are declared. The project also includes several early-stage district exploration targets.

A DFS was completed in 2018 based on developing Salares Norte as an open pit mine with combined counter-current decantation (CCD), Merrill-Crowe and CIP processing at an average 2Mtpa plant throughput. The Mineral Reserve is defined as the ore reporting from the mining schedule, with Probable material derived from the Indicated Resource.

Project history and ownership

Gold Fields discovered the Salares Norte deposit in 2011 through a systematic greenfields exploration programme. This programme focused on the northern end of the Maricunga metallogenic belt beyond the extent of the known Miocene precious metal deposits. Gold Fields selected the district based on a combination of conceptual models and metallogenic criteria. The identification of favourable spectral targets, surface geochemical anomalies, and geophysics followed by RC and diamond drilling all contributed to the discovery. Gold Fields continued drilling the deposit and in 2013 published a maiden Mineral Resource for the Brecha Principal deposit. Gold Fields published updated Mineral Resources in 2015, 2016, and 2017 based on additional infill and exploration drilling. The most recent Resource model was completed in May 2018 and is used for the current Mineral Resource declaration. A DFS was completed in December 2018 and supports declaration of the maiden Mineral Reserve.

Geology and mineralisation

The Salares Norte project is located in the Atacama region of northern Chile. The nearest town is Diego de Almagro, about 190km by road to the west of the project. The project is at 26°01’S, 68°53’W, with elevations between 4,200m and 4,900m amsl.

Level of study, processing methodology, sustainability and permits

An interim scoping study was completed on the project in 2014, which showed positive results. The scoping study was updated in 2015 after additional drilling, metallurgical testing and cost analysis. The environmental impact declaration that was approved in January 2014 was amended in 2016 to permit continued exploration drilling.

A positive pre-feasibility study was completed for the Brecha Principal deposit in March 2017. Following additional drilling in 2017 mainly at Agua Amarga, Salares Norte reflects a significant improvement in Resource model resolution and confidence and is now at 95% indicated (SAMREC) for gold metal. An interim phase feasibility study for Brecha Principal and Agua Amarga using advanced mining study modifying factors will be completed in Q1 2018, to be followed by EIA submission. The project will advance toward an extended feasibility in 2018. The December 2017 Mineral Resource estimate for Salares Norte is supported by positive external audits from Santiago Gigola (geology consultant) and Optiro (resource estimation consultant).

As at all the Gold Fields operations and projects, a comprehensive sampling and assay QA/QC protocol is in place for Salares Norte using leading industry practice in data acquisition, reputable certified laboratories, and analytical controls.

Key development and material issues

  • An interim scoping study was completed in 2014, which showed positive results. The scoping study was updated in 2015 after additional drilling, metallurgical testing and cost analysis
  • The environmental impact statement that was approved in January 2014 was amended in 2016 to permit continued exploration drilling
  • A positive PFS was completed for the Brecha Principal deposit in March 2017. Following additional drilling in 2017 and Q1 2018 mainly at Agua Amarga, Salares Norte reflects a significant improvement in Resource model resolution and confidence with 97% of the Resource now in the Indicated category for gold metal
  • Improved confidence in the estimate has been achieved through Agua Amarga infill drilling and grade control-spaced test drilling at Agua Amarga and Brecha Principal to test local geology and grade domains defining higher grade zones
  • An interim FS for Brecha Principal and Agua Amarga was completed in Q1 2018 and a DFS was completed in Q4 2018
  • A comprehensive sampling and assay QA/QC protocol is in place for Salares Norte using leading industry practice in data acquisition, reputable certified laboratories, and analytical controls. In addition, the project database, geological models, resource models and the LoM plan have been successfully audited by external consultants and the Mineral Resource and Mineral Reserve confirmed as SAMREC-compliant
  • See permitting section below for chinchilla relocation programme
  • Limited amounts of mercury are a product of the metallurgical process and will be managed within the regulatory framework administered in country, however, further more rigorous solutions for product retirement are being assessed by Gold Fields
  • The water balance model indicates very minor fluctuations to the Salares water table over the life of the project, with negligible anticipated impact to flora and fauna, which will be closely monitored

The DFS has been completed with engineering and design input from several consulting groups in Chile, including Fluor (processing and infrastructure), NCL (mining), and SRK (geotechnical, waste, and TSFs. The DFS included further optimisation which reduced the pre-strip requirements and also reduced the peak mining rate.

Mineral Resources

All relevant geological and evaluation models have been updated for the DFS and reflect the latest available data sets as at December 2018.

The Mineral Resources are reported at an average NSR cut-off of US$43.00/t processed. Mineral Reserves are reported at an average NSR cut-off of US$43.16/t. Actual NSR cut-offs for Resources and Reserves are variable because the process recoveries and cost are dependent on the head grade. Resources are constrained within an optimised pit shell and Reserves are based on the DFS designed ultimate pit and production schedule. Both are based on the relevant realistic economic parameters and modifiers.

Mineral Resources

The Mineral Resource estimates are classified as Indicated and Inferred as described in the SAMREC Code. Mineral Resource categories are assigned with consideration given to geological complexity, grade variance and sensitivity and drill hole spacing, and are reported as in situ within a pit shell. The geological model is based on lithology, mineralisation, alteration, and structure using information from exploratory and infill drill holes.

MINERAL RESOURCE CLASSIFICATION

Gold Tonnes (kt)   Grade (g/t)   Au (koz)  
Classification Dec
2018
Dec
2017
Dec
2016
  Dec
2018
Dec
2017
Dec
2016
  Dec
2018
Dec
2017
Dec
2016
 
Open Pit                        
Measured                        
Indicated 23,700 20,955 12,100   4.99 5.18 5.05   3,800 3,491 1,963  
Inferred 1,860 2,343 13,526   1.84 2.28 4.22   110 172 1,831  
Total open pit 25,560 23,298 25,626   4.76 4.89 4.61   3,910 3,663 3,794  
Silver Tonnes (kt)   Grade (g/t)   Au (koz)  
Classification Dec
2018
Dec
2017
Dec
2016
  Dec
2018
Dec
2017
Dec
2016
  Dec
2018
Dec
2017
Dec
2016
 
Open pit                        
Measured                        
Indicated 23,700 20,955 12,100   56.31 72.10 69.60   42,910 48,573 27,075  
Inferred 1,860 2,343 13,526   12.62 11.75 38.37   754 885 16,686  
Total open pit 25,560 23,298 25,626   53.13 66.03 53.11   43,664 49,458 43,761  
Deposit Classification Tonnes
(kt)
Au
(g/t)
Ag
(g/t)
Au
(koz)
Ag
(koz)
 
Brecha Principal Indicated 15,883 5.27 68.64 2,690 35,051  
  Inferred 1,081 1.86 17.01 65 591  
  Sub-total 16,964 5.05 65.35 2,755 35,642  
Agua Amarga Indicated 7,831 4.43 31.23 1,114 7,864  
  Inferred 761 1.80 6.39 44 156  
  Sub-total 8,592 4.19 29.03 1,158 8,020  
  Total 25,560 4.76 53.13 3,910 43,664  
Mineral Resources are reported according to the SAMREC Code
Confidence classification assumes annual production-scale and open pit mining
These Mineral Resources are classified as Indicated and Inferred. The Competent Person has reasonable confidence in the Resources, but future drilling may materially change the Resource evaluation
Commodity prices used for reporting Resources are US$1,400/oz gold and US$20.00/oz silver
Mineral Resources are constrained within a Whittle optimised pit shell, which considered mining, processing and administrative costs, process recovery and sustaining capital
Mineral Resources are reported in situ for material within a pit shell having positive value after process recovery and costs for processing, refining, royalties, and administrative costs have been applied. A variable cut-off is applied since the process recoveries and cost are dependent on head grade. This resulted in an average revenue cut-off grade of US$43/t processed based on 1% royalty; average process recoveries of 92.4% for gold and 67.2% for silver; refining costs of US$2.78/oz for gold and US$1.21/oz for silver; average ore and tailings handling cost of US$5.10/t-processed; average processing cost of US$28.61/t processed; sustaining capital costs of US$1.60/t processed; administrative costs of US$19.5M per year; and average mining costs of US$2.94/t mined
Mineral Resources are reported without mining dilution and loss. Mining dilution and loss were accounted for in pit shell generation
Mineral Resources are reported inclusive of Mineral Reserves
Figures are rounded to reflect confidence. Some figures may not sum or average exactly due to rounding. The Competent Person deems these small discrepancies to be immaterial
Modifying factors
  • The Measured and Indicated Mineral Resources are inclusive of Mineral Reserves
  • Mineral Resources and Mineral Reserves are quoted as at December 2018
  • Mineral Reserves are stated in terms of RoM grades and tonnages as delivered to the metallurgical processing facility and are therefore fully diluted
  • This Mineral Reserve statement includes only Indicated Mineral Resources, modified to produce Probable Mineral Reserves and contained within the LoM plan
  • Mineral Resources and Mineral Reserves undergo internal audits during the year and any issues identified are rectified at the earliest opportunity – usually during the current reporting cycle
      December  
  Units   2018   2017 2016  
Mineral Resource parameters              
Mineral Resource Au price US$/oz   1,400   1,400 1,400  
Mineral Resource Ag price US$/oz   20.0   20.0 20.0  
NSR1 for mill feed US$/t   43.00        
Mineral Reserve parameters              
Mineral Reserve Au price US$/oz   1,200        
Mineral Reserve Ag price US$/oz   17.5        
NSR for mill feed US$/t   43.16        
Strip ratio (waste:ore) ratio   14.70        
Dilution open pit %   3.12        
MCF %   100        
Mining recovery factor (open pit) %   100        
Plant recovery factor (Au) %   92.7        
Plant recovery factor (Ag) %   67.5        
Processing capacity Mtpa   2.0        
1 NSR is defined as the return from sales of concentrates, expressed in US$/t, i.e., NSR = (Au price – Au selling cost) x Au grade x Au recovery + (Ag price – Ag selling cost) x Ag grade x Ag recovery. A variable NSR is applied to the LoM plan to optimise the NPV and FCF
Mineral Reserves

The Mineral Reserve estimate for Salares Norte is based on a suitably detailed and engineered FS and subsequent LoM plan. All design and scheduling work is undertaken to an appropriate level of detail by experienced engineers using specialised mine planning software. The planning process incorporates relevant modifying factors and realistic production and processing rates supported by an NSR cut-off and other techno-economic investigations, including pit staging, geotechnical domain modelling and hydrogeological studies. Appropriate LoM sustaining capital is incorporated in the cash-flow model to underpin the Mineral Reserve. Low-grade stockpile material that is value accretive is scheduled for treatment at the end of the LoM.

MINERAL RESERVE CLASSIFICATION

Gold Tonnes (kt)   Grade (g/t)   Au (koz)  
Classification Dec
2018
Dec
2017
Dec
2016
  Dec
2018
Dec
2017
Dec
2016
  Dec
2018
Dec
2017
Dec
2016
 
Open pit                        
Proved                        
Probable 21,079       5.13       3,476      
Total open pit 21,079   5.13   3,476  
Silver Tonnes (kt)   Grade (g/t)   Ag (koz)  
Classification Dec
2018
Dec
2017
Dec
2016
  Dec
2018
Dec
2017
Dec
2016
  Dec
2018
Dec
2017
Dec
2016
 
Open pit                        
Proved                        
Probable 21,079       57.94       39,263      
Total open pit 21,079   57.94   39,263  

MINERAL RESERVE BY DEPOSIT

Deposit Class Tonnes
(kt)
Au
(g/t)
Ag
(g/t)
Au
(koz)
Ag
(koz)
 
Brecha Principal Probable 15,373 5.23 69.20 2,587 34,205  
Agua Amarga Probable 5,706 4.84 27.57 889 5,058  
Total Probable 21,079 5.13 57.94 3,476 39,263  
Mineral Reserves are reported according to the SAMREC Code
Confidence classification assumes annual production-scale and open pit mining
Mineral Reserves are classified as Probable and are based on Indicated Mineral Resources. The Competent Person has reasonable confidence in the Reserves, but future drilling may materially change the Reserve evaluation
Commodity prices used for reporting Reserves are US$1,200/oz gold and US$17.50/oz silver
Mineral Reserves are based on the 2018 DFS production schedule which was constrained by a designed open pit. Modifying factors including mining, processing, and administrative costs, process recovery and sustaining capital cost are at an FS level
Mineral Reserves are reported using RoM tonnes and grades as delivered to the mill and are therefore fully diluted
A variable revenue cut-off was applied in the estimation of Mineral Reserves because the process recoveries and cost are dependent on the head grade. This resulted in an average revenue cut-off grade of US$43.16/t processed based on 1% royalty, average process recoveries of 92.7% for gold and 67.5% for silver, refining costs of US$2.53/oz for gold and US$1.21/oz for silver, average process costs of US$35.47/t processed, and administrative costs of US$19.5M per year. Average mining costs were US$2.39/t mined
Mineral Reserves include marginal ore valuated at an average revenue cut-off of US$34.16/t processed, considering a reduction on costs during the re-handling period at the end of life of the processing facility
Mineral Reserves are included in the Mineral Resource estimate
Figures are rounded to reflect confidence. Some figures may not sum or average exactly due to rounding. The CP deems these small discrepancies to be immaterial

MINERAL RESOURCE AND MINERAL RESERVE RECONCILIATION YEAR ON YEAR

Factors that affected Mineral Resource reconciliation   Factors that affected Mineral Reserve reconciliation
Decrease in estimated processing costs based on new analysis with nominal impact on the NSR cut-off value   No reconciliation due to maiden Mineral Reserve declaration as at December 2018
Discovery of additional high-grade gold mineralisation at Agua Amaga from circa 14km of definition drilling    
Improved confidence in the estimate through Agua Amarga infill drilling and grade control-spaced test drilling at Agua Amarga and Brecha Principal    
Change in gold Mineral Resources
Mineral Resource reconciliation
Mineral Reserve sensitivity (gold – Moz; silver – Moz)
Mineral Reserve sensitivity
 

Project site infrastructure layout

Salares norte chile