Prepared For Minera Triton Argentina, SA

204 Pages·2006·6.05 MB·English

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Author:
Michael Steinmann, P.Geo. (Designated Author)
March 2006
M3-PN05185
MINERA TRITON ARGENTINA, S.A.
TECHNICAL REPORT FOR MANANTIAL-ESPEJO

TABLE OF CONTENTS
SECTION PAGE
NI 43-101 TECHNICAL REPORT

1 Title Page.....................................................................................................................................1
2 Table Of Contents........................................................................................................................1
3 Summary......................................................................................................................................1
3.1 Background......................................................................................................................1
3.2 Property Ownership, Location and Description.............................................................1
3.3 Geology and Mineralization...........................................................................................2
3.4 Exploration and Development........................................................................................2
3.5 Mineral Resource and Reserve Estimates as at December 31, 2005............................3
3.6 Mining..............................................................................................................................4
3.7 Designated Author’s Conclusions..................................................................................4
3.8 Designated Author’s Recommendations........................................................................4
4 Introduction..................................................................................................................................5
5 RELIANCE ON OTHER EXPERTS....................................................................................................8
6 Property Description & Location................................................................................................9
7 Accessibility, Climate, Local Resources, Infrastructure And Physiography..........................12
8 History........................................................................................................................................16
9 Geological Setting......................................................................................................................18
9.1 Regional Geological Setting.........................................................................................18
9.2 Local & Property Geological Setting...........................................................................19
10 Deposit Types............................................................................................................................19
11 Mineralization............................................................................................................................20
12 EXPLORATION.............................................................................................................................24
13 DRILLING....................................................................................................................................27
13.1 Diamond Core Drilling.................................................................................................28
13.2 Reverse Circulation Drilling.........................................................................................30
13.3 Wagon Drill Holes.........................................................................................................30
14 Sampling Method And Approach.............................................................................................31
15 Sample Preparation, Analyses And Security............................................................................32
16 Data Verification........................................................................................................................36
17 Adjacent Properties....................................................................................................................39
18 Mineral Processing And Metallurgical Testing........................................................................39
18.1 General Overview..........................................................................................................39
18.2 Types of Testing............................................................................................................40
18.3 Analysis.........................................................................................................................40
19 Mineral Resource And Mineral Reserve Estimates.................................................................42
20 Other Relevant Data And Information......................................................................................48
21 Interpretation And Conclusions................................................................................................48
22 Recommendations......................................................................................................................48
23 REFERENCES...............................................................................................................................49
24 DATE...........................................................................................................................................50
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25 Additional Requirements For Technical Reports On Development Properties And
Production Properties................................................................................................................51
25.1 Mine Operations............................................................................................................51
25.2 Underground Mine Operations.....................................................................................60
25.3 Processing Methods.......................................................................................................67
25.4 Processing Flowsheet....................................................................................................67
25.5 Infrastructure & Ancillaries..........................................................................................75
25.6 Markets..........................................................................................................................79
25.7 Environmental and Permitting Considerations............................................................80
25.8 Employment...................................................................................................................85
25.9 Taxes and Royalties......................................................................................................86
25.10 Capital Cost Estimates..................................................................................................88
25.11 Operating Costs.............................................................................................................89
25.12 Economic Analysis........................................................................................................91
26 ILLUSTRATIONS...........................................................................................................................93

LIST OF TABLES

Table No. and Description Page

Table 1 Total Resource...................................................................................................................3
Table 2 All Areas Reserves Proven and Probable..........................................................................3
Table 3 Remaining Resources........................................................................................................4
Table 4 Qualified Persons...............................................................................................................7
Table 5 Triton Mineral Concessions (All Claim Types are “MINA”).........................................10
Table 6 Permit Matrix...................................................................................................................12
Table 7 Drill Holes by Type and Operator, Property Wide..........................................................27
Table 8 Drill Holes by Resource Area and Type..........................................................................28
Table 9 Diamond Drill Hole Survey Type....................................................................................30
Table 10 Primary Lab Standard Assays, January-July 2005........................................................37
Table 11 Ore Recoveries...............................................................................................................42
Table 12 Measured, Indicated and Inferred Resource..................................................................43
(Inclusive of All Reserves) Summary by Deposit........................................................................43
Table 13 Open Pit Cutoff Parameters for Mine Plan and Reserve...............................................44
Table 14 Maria Reserves by Area.................................................................................................45
Table 15 Melissa Reserves...........................................................................................................46
Table 16 Karina-Unión Reserves..................................................................................................46
Table 17 Concepción Reserves.....................................................................................................46
Table 18 All Area Reserves..........................................................................................................46
Table 19 Manantial-Espejo Remaining Resource........................................................................47
Table 20 Open Pit Optimization Assumptions.............................................................................54
Table 21 Pit Wall Design Criteria.................................................................................................55
Table 22 Open Pit Ramp Design Criteria.....................................................................................56
Table 23 Open Pit Mining Production Plan Bench Advance.......................................................59
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Table 24 Typical Geometry and Mining Method by Deposit.......................................................60
Table 25 Underground Mobile Equipment Purchase Schedule....................................................62
Table 26 Open Pit Mining Production Plan..................................................................................64
Table 27 Underground Mining Production Plan...........................................................................65
Table 28 Stockpiling and Mill Feed Plan.....................................................................................66
Table 29 Building Ancillaries.......................................................................................................76
Table 30 Electrical Load Analysis................................................................................................78
Table 31 Status of Major Permits.................................................................................................81
Table 32 Initial Capital Cost.........................................................................................................89
Table 33 Life-of-Mine Average Unit Operating Costs.................................................................91
Table 34 Annual Silver and Gold Production Schedule...............................................................91
Table 35 Doré Refining................................................................................................................91
Table 36 Annual Metal Sales Revenues.......................................................................................91

LIST OF ILLUSTRATIONS

Figure Description
1 Project Location in Argentina
2 Project Location in Santa Cruz Province
3 Property Plan Map
4 Facilities Site Plan
5 Facilities Process Plan
6 Manantial-Espejo – End of Schedule Year 7
7 Maria Main Structure – Longhole Stoping
8 Typical Section Showing Longhole Mining + Access in Maria
9 Typical Sub-Level Development Requirements – Shrinkage
10 Longitudinal Projection of Concepción Mining Area
11 Karina-Unión Cross Section
12 Concepción Cross Section
13 Melissa Cross Section
14 Maria Central Cross Section
15 Karina-Unión Vein System Plan View, Drill Holes Used for Estimation
16 Concepción Vein System Plan View, Drill Holes Used for Estimation
17 Melissa Vein System Plan View, Drill Holes Used for Estimation
18 Project Schedule Summary
19 Exploration Areas
20 Maria Vein System Plan View
21 Process Flowsheet
22 Geological Map of Central Vein Zone in the Manantial Espejo District
22A Title Block page for Figure 22

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LIST OF APPENDICES

Appendix Description

A Qualified Persons
(cid:190) Certificates of Qualified Persons and Consents of Authors
(cid:190) Resumés of Principal Authors

Responsibility Qualified Person Registration
Resource Modeling Dr. Michael Steinmann, PAS Ph. D., P. Geo.
Reserves Martin Wafforn, PAS P.Eng.
Geology Dr. Michael Steinmann, PAS Ph. D., P.Geo.
Metallurgical Testing Tom Drielick, M3 P.Eng.
Pit Geotechnical Dr. Luiz Castro, Golder P. Eng., Ph.D.
Process Plant Dr. Conrad Huss, M3 Ph.D., P.Eng.
Tailings Facility David Ritchie, Golder P. Eng
Geohydrology Todd Hamilton, GWI P. Geo
Mine Planning–Underground Allan Polk, Snowden P.Eng.
Mine Planning–Open Pit Michael Lawlor, Snowden CP. Eng.

B Manantial Espejo Resource Estimate Composites

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1 TITLE PAGE
This Technical Report has been prepared in accordance with the National Instrument 43-
101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the contents herein
are organized and in compliance with Form 43-101F1 Contents of the Technical Report
(“43-101F1”). The first two items are the Title Page and Table of Contents that are
presented previously in this report and are simply mentioned herein to maintain the
specific report outline numbering contained in Form 43-101F1 Contents of the Technical
Report.
2 TABLE OF CONTENTS
See discussion in Section 1.
3 SUMMARY
3.1 Background
This Technical Report has been prepared following the completion of a multi-
volume feasibility study prepared by an international team of professionals and
consultants for the Manantial-Espejo Project. M3 Engineering & Technology
Corporation (“M3”) of Tucson, Arizona, USA has compiled the results from the
feasibility study and Dr. Michael Steinmann, P. Geo. Senior Vice President of
Exploration and Geology of Pan American Silver Corp. (“PAS”), a Qualified
Person (as defined in NI 43-101), is the author of this Technical Report.
3.2 Property Ownership, Location and Description
The Manantial-Espejo Project is a silver and gold mine development project that
belongs to Minera Triton Argentina S.A. (“Triton”) and Compañía Minera Alto
Valle S.A. (“Alto Valle”). The Project is operated and controlled by Triton and
the mineral concessions are held either by Triton or by Alto Valle. Triton is
controlled 50% by PAS and 50% by Silver Standard Resources Inc. (“SSR”). Alto
Valle is controlled 80% by Triton, 10% by PAS, and 10% by SSR. Therefore, all
assets and the Manantial-Espejo Project are controlled 50% by PAS and 50% by
SSR. PAS became the operator of the Triton joint venture on January 1, 2004
when a decision was made to advance the Manantial-Espejo Project to a
feasibility study stage.
Triton is currently advancing the Manantial-Espejo Mine Project with the
assistance of M3 which is providing Feasibility Study Engineering Services.
The Manantial-Espejo Project is situated in Santa Cruz Province, 160 km west of
San Julian on Route 25 and 50 km west of Gobernador Gregores, in southern
Argentina (Patagonia).
The Manantial-Espejo property consists of 17 mineral concessions covering a
total of 25,533 hectares, and extending roughly 36 kilometers east-west and 19
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kilometers north-south. The property also includes ownership of 3 surface
properties purchased by Triton to facilitate support and improve the performance
of its mining and exploration activities. These surface rights cover an area of
43,207 hectares and sufficiently cover the current area of the reported mineral
resources and planned facilities described herein.
3.3 Geology and Mineralization
The Manantial-Espejo deposit is hosted in Jurassic flat lying rhyolite volcanic
units of the Chon Aike Formation lying within a broad 20 km wide zone of west-
northwest striking structures. Mineralization is interpreted as occurring at the
intersection of west-northwest trending fault zones and semi-circular structures
that could be related to a possible volcanic center. Gold occurs mainly as electrum
in pyrite while the silver occurs in a number of forms including native silver,
argentiferous galena and silver sulphosalts. Sulfides account for up to 3 to 5% of
the rock mass as veinlets and disseminations.
Styles of mineralization include massive quartz veins, vein breccias, sheeted and
stockwork veining, and minor dissemination. Quartz is the main infill mineral,
displaying distinctive textures indicating the overprinting of hydrothermal events
which occurred in the area.
Primary ore minerals present in the quartz veins include argentite/acanthite, silver
sulfosalts, electrum, native gold and silver, proustite, freibergite, uytenbogaardita,
iodargirite, galena, sphalerite (mainly Fe-poor), pyrite, marcasite and chalcopyrite
(Espinosa Neupert and Núñez, 1996). The gangue minerals include quartz
(dominant), adularia, bladed calcite (replaced by quartz and adularia), and platy
barite (replaced by quartz and adularia). Primary mineralization is mainly related
to crustiform gray and white banded quartz, late breccias, replacements, and open
space infillings (particularly vugs). There are six hydrothermal stages defined by
cross cutting relations of vein textures in the Maria and Concepción Veins.
Secondary mineralization and enrichment includes limonites (jarosite, goethite),
cerussite, pyrolusite, psilomelane and hematitic oxides. The oxidation zone is
very variable ranging from the surface down to about 200 m locally due to
fracture control.
3.4 Exploration and Development
The exploration concept for the Manantial-Espejo Project followed conventional
geological mapping, target definition, and drill sampling to define zones of
potentially economic mineralization. To date, three types of drilling have been
used on the Manantial-Espejo Project: diamond core, reverse circulation and
wagon drilling. The drilling data were used for metals exploration, resource
modeling, geotechnical studies, metallurgical studies, and hydrological
exploration/studies.
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The status of the Manantial-Espejo Project exploration is to continue mapping,
targeting, and drill testing the vast areas of untested potential economic
mineralization on the property. This will be done at a reduced intensity as the
Manantial-Espejo Project focuses on mine development.
3.5 Mineral Resource and Reserve Estimates as at December 31, 2005
A mineral resource estimate for the Manantial-Espejo Project as of December 31,
2005 is summarized in Table 1 below. This mineral resource estimate was
prepared under the supervision of and reviewed by Dr. Michael Steinmann, P.
Geo., Senior Vice President Geology & Exploration at PAS, who is a Qualified
Person as that term is defined in NI 43-101.
Table 1 Total Resource
Ag
Domain Class Tonnes Au (g/mt)
(g/mt)
Measured 5,041,202 176 2.47
All Indicated 3,684,610 159 2.20
Areas M+I 8,725,812 169 2.35
Inferred 1,328,180 142 1.50

Inclusive of appropriate dilution depending on deposit geometry and mining method.

A mineral reserve estimate for the Manantial-Espejo Project as of December 31,
2005 is summarized in Table 2 below. This mineral reserve estimate was
prepared under the supervision of and reviewed by Martin G. Wafforn, P.Eng.,
Director of Mine Engineering at PAS, who is a Qualified Person as that term is
defined in NI 43-101.
Table 2 All Areas Reserves Proven and Probable
Area Category DMT Ag g/mt Au g/mt
All Proven 2,743,111 176.0 2.47
Open Pit Probable 1,133,693 152.6 2.60
Total Reserves 3,876,804 169.1 2.51

All Proven 0 - -
Underground Probable 1,713,825 248.8 3.56
Total Reserves 1,713,825 248.8 3.56

Proven 2,743,111 176.0 2.47
Total Probable 2,847,518 210.5 3.18
Total Reserves 5,590,630 193.6 2.83

Not all of the 8.73 million tonnes of the overall measured and indicated resources
are mined by current plans. Table 3 summarizes the remaining 2.89 million
tonnes of measured and indicates resources. The remaining measured and
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indicated resource is less than the total resource minus the proven and probable
reserve due to estimated losses of resource associated with mining (pillars etc.).
Table 3 Remaining Resources
Domain Class Tonnes Ag (gpt) Au (gpt)
Measured 1,223,989 108 1.22
All Indicated 1,669,641 118 1.22
Areas M+I 2,893,630 114 1.22
Inferred 1,042,230 133 1.2

Residual resource considers permanent loses from the global resource due to mining
pillar loses necessary to extract the reserve.
3.6 Mining
The optimum mine plan approach for the Manantial-Espejo Project consists of a
combination of open pit surface and underground mining methods. The surface
mining method proposed for Manantial-Espejo ore is conventional open pit
mining. In some areas, the open pits will also be used for underground access via
in-pit portals. Open pits will be constructed for portions of the Maria, Karina-
Unión, and Concepción deposits. Maria will be sub-divided into three (3) sub-
pits.
The considerable variation in dip and thickness of the various mineralized zones
throughout the property requires a number of different underground mining
methods to be utilized to maximize the profitability and recovery of the mineral
resources. The underground mining operations consist of either long-hole, cut and
fill, or shrinkage methods to accommodate the geometry and accessibility.
3.7 Designated Author’s Conclusions
The results of the feasibility study for the Manantial-Espejo Project indicate the
project is technically feasible and economically viable at conservative silver and
gold prices. It will create jobs and economic stimulus to an area that is
economically depressed, and can be constructed and operated in an
environmentally sound manner. Support from the government would likely ensure
this project going forward. To date, the discussions with government agencies
have been constructive.
3.8 Designated Author’s Recommendations
It is the author’s recommendation that the Manantial-Espejo Project should be
developed pending availability of financing according to the Project Schedule
illustrated in Figure 18 while focusing on cost control and schedule opportunities
to allow early start-up taking full advantage of current favorable metal prices
utilizing qualified construction contractors.
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The anticipated tentative overall Project Schedule is provided in Figure 18 and
highlights a 21 month schedule from authorization of project development
through design and construction and first production. The SAG and Ball mill
equipment delivery necessary for the processing plant is the critical path for the
Manantial-Espejo Project. The project design is based on using ductile iron ring
gear for the milling equipment in order to obtain a favorable delivery time and
maintain the Figure 18 Project schedule.
The next steps for the project are to initiate the basic engineering and arrange for
the project financing.
4 INTRODUCTION
This Technical Report has been prepared in accordance with National Instrument 43-101
Standards of Disclosure for Mineral Projects (“NI 43-101”) and the contents herein are
organized an in compliance with Form 43-101 F1 Contents of the Technical Report. This
Technical Report has been prepared for Triton for the purpose of (1) reporting and
summarizing the results of the feasibility studies completed in 2005, (2) providing a
support document to pursue project financing, and (3) updating the reserve and resource
estimate for the Manantial-Espejo Project.
Dr. Michael Steinmann, P.Geo., PAS’s Senior Vice President Geology & Exploration
serves as the Qualified Person with respect to the mineral resources statements described
herein in sections 2, 9, 10, 11, 12, 13, 14, 15, 16, 19, 20, 21, 22, 23, 24 and the
illustrations of this Technical Report. In addition, Dr. Steinmann is the author of this
Technical Report and serves as the primary Qualified Person with respect to the contents
of this Technical Report that is a consolidation of work from several other professionals
indicated herein in this section 4. Dr. Steinmann visited the site on May 26 to 28, 2004
and again on May 16 to 18, 2005.
PAS’s Mr. Martin Wafforn, P.Eng, Director of Mine Engineering, serves as a Qualified
Person with respect to the mineral reserve statements contained herein this Technical
Report described herein in sections 2, 19, and 25 of this Technical Report. Mr. Wafforn
visited the site May 26 to 28, 2004 and again April 16 to the 18, 2005.
PAS retained Qualified Persons from M3 to provide assistance in preparing the
Manantial-Espejo feasibility study, performing Qualified Person reviews, and preparing
this Technical Report for the Manantial-Espejo Project. M3’s work included a review of
numerous project development reports referenced in section 23 of this Technical Report
and to summarize the various reports as necessary to complete the requirements of this
Technical Report. M3’s work included development of a design and capital and
operating cost estimate for the project’s plant and site infrastructure requirements
described herein in section 25 of this Technical Report. Dr. Conrad Huss, P.Eng. with
M3, is the Qualified Person responsible for preparation of this capital estimate and Mr.
Thomas Drielick, P.Eng. and Dr. Huss provided Qualified Person assistance for
metallurgical testing, plant design, infrastructure design and capital and operating cost
estimations described herein in sections 18 and 25 of this Technical Report. Neither Dr.
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