used tonnes ball mill for small scale mining for sale

mining business plan

The following document outlines a mining business proposal to design and construct a free standing toll plant facility, known in this document as Peru Toll Treatment (PTT), in southern Peru to accommodate the needs of a growing quantity of small scale miners who produce up to 14 percent of the countrys annual gold production. The plan includes the basic design criteria on which the plant will be built, the model for generating revenue and a detailed annual cash flow forecast for the proposed operation for a period of ten years.

The proposed 7.5 tonne per hour plant will cost approximately $2.9 million to design (including $473,000 in VAT taxes which will be reimbursed from revenues), construct and startup and will generate revenues by providing a custom milling facility for small producers who sell their production to the plant. This business opportunity does not include any involvement in mining or the production of mineral. It only involves the purchase and treatment of gold minerals. While the market for such a plant can easily accommodate a 350 tonne per day operation the business plan is based on processing 150 tonnes per day only with the ability to later expand to multiple plants of 350 tonnes per day each.

The plan calls for raising the $2.9 million from public equity financings. Once in operation, the operating company will retain $250,000 for working capital and all subsequent profits will be paid to the shareholders every 3 months as a dividend. The cash flow model is for a single plant of 150 tonnes per day, calculated on an after tax (Peruvian fiscal regime) basis for a 10 year project life. On a project basis using a $1500 per ounce gold price and a discount rate of 10 percent the project will generate a net present value of almost $22.0 million. The payout of the capital investment on a project basis is 1.1 years and the calculated rate of return is over 200%. Testing the project economics against changes in the primary input variables (capital cost, operating cost and gold price) indicates that the project is very robust and even with significant increases in costs or reductions in revenue sources the project has a positive rate of return.

Appendix 5 of this Business Plan includes expressions of interest from two formal miners who are 100% owners of their concessions and can offer 450 tonnes per day of production. PTT has visited one of the mines and confirms the potential for a 350 tonne per day operation. In order to facilitate the commencement of mining production PTT intends to rent $100,000 of mining equipment to these owners as part of a preferred mineral provider position. This cost has been included in the project economics.

This Business Plan is based on the construction and operation of 1 plant to demonstrate the profitability of the toll treatment plant concept. During this first year of operation the management will be evaluating expansion opportunities in other areas of the country as well as at the current site. PTT intends to build and operate 4 350 tonne per day gold plants in Peru within 5 years and the company will generate an estimated after tax, net cash flow of $40 million per annum.

PTT believes that health, environmental and social improvements will accrue to the informal miners in those areas of Peru in which the Company operates and these are important aspects of the expansion phase of the project. Current informal mining practice involves the uncontrolled use of the toxic substances mercury and sodium cyanide to obtain the gold at very low recovery rates. Many of the informal miners are, in effect, stealing the gold from the government or legitimate concession holders causing significant social disruption in the affected areas of the country. It is, therefore, an important aspect of this business plan to reduce the negative health and environmental aspects of informal mining activity by offering an advanced technology which safely removes up to 90% of the gold from the ores resulting in a much higher payback to the people who mine the ore. Purchasing gold ores from informal miners who do not own their concessions is illegal in Peru and rightfully so. It is the intention of PTT to work with informal miners to ensure that they legitimize their activities by entering into registered contracts with the owners of the mineral resources.

There are risks to the project but most can be mitigated by doing appropriate engineering prior to plant design and construction. The plant will use standard gold processing technology and country/political risk is the greatest threat to the project. Peru has signed free trade agreements with both Canada and the United States which is normalizing its business activities.

From the days of the Spanish conquest, foreigners have come in search of theproducts of Perus mines and the mining sector has been a core part of the economy up until the modern era. Operations at the historic zinc-mining center of Cerro de Pasco began in 1905 and the Metallurgical Complex at La Oroya started production in 1922. Much of Perus rail network was created to serve the needs of the mining industry. Nevertheless, relatively little exploration was carried out in the 1960s and 1970s and development of the mining sector came to a halt. Perus favorable geology has been under-exploited and while reserves have been exploited intensively in the US, Canada and Chile, to date only about 12 per cent of Perus mineral resources have been identified.Peril has the capacity to double or triple current levels of output, especially in base metals. In all, Peru holds about 16 per cent of the worlds known mineral reserves, including 15 per cent of copper and 7 per cent of zinc reserves.

Mining activity contributes 45% of foreign currency to the national economy which implies investment commitments, promotion of a modern managerial philosophy, increased responsibility towards safety and care of the environment as well as improved rural social development.

While mining provides relatively few jobs, it is vital to Perus economy in other ways. Thanks both to high mineral prices and rising output, mineral exports were up by almost half last year, and accounted for 55% of total exports. Mining brings in 29% of total tax revenues. Of this money, the government last year returned $138m as a local royalty to mining areas, most of which are otherwise poor and remote.

As a result of its favourable geology and improving economy Peru is taking a dominant position in the production and sale of many base and precious metals. It occupies first place in Latin America in zinc, tin, lead and gold; second place in silver and copper; fifth in iron. In the context of world mining production, Peru is in fifth place in gold, second place in silver, third place in tin, fourth place in zinc and lead, fifth place in copper and twenty-fifth place in iron as shown on Table 1 below.

Since the constitutional and business/economic reforms of the early 1990s Peru has enjoyed a robust economy with strong economic growth tied closely to the business cycles of its primary metals production. The country allows any person or company to create and own a Peruvian entity and all profits can be repatriated to another jurisdiction free of additional levies.

The tax code is relatively simple and taxes are calculated as 30% of net profits after depreciation. Machinery and equipment are all subject to depreciation on a straight line basis and the majority of items are considered to have a 10 year life. A recently introduced royalty provision requires an additional payment to the government depending upon mine production level the higher the production level, the higher the royalty to a maximum of 3% of sales. Currently small producers (less than 350 tonnes per day) are exempt from this royalty.

Labour laws are not restrictive and employee burden is approximately 30% of base salary. Unskilled labour is relatively inexpensive and university trained and skilled trades labour are paid commensurate with the level of training. Skilled and professional talent exists in abundance and is of a high quality.

Peru has a long history of political instability. In 1993 Alberto Fujimori enacted several far-reaching legal and constitutional reforms which have stabilized the political situation. Although he left the country under a cloud of suspicion in 2001, his legacy is a well performing economy and a gradually improving jurisprudence and governing infrastructure. As the government bureaucracy becomes more stable and professional the incidence of corruption is diminishing. Corruption remains an unfortunate fact of life in Peru but it has noticeably declined in the past 10 years.

The governments of Alejandro Toledo and Alan Garcia have been much maligned but the outgoing president has turned over to the new president (on July 28, 2011) an enviable economic record and a strong financial position.

There is a confidence in the Peruvian economy as it moves forward buoyed by continued high commodity prices and a wider spreading wealth across all social classes. Many of functionaries have made considerable personal advances on thebasis of the resurging mining economy so it is expected that the new government will be friendly to the mining industry and investment.

A significant benefit of this business plan, apart from the very robust economics, is the opportunity to advance the indigenous mining industry through improving the health and environmental impacts as well as obtaining a higher recovery of gold from the mined rock returning a greater economic benefit to the mineral owners the people of Peru. PTT has commitment letters for 450 tonnes per day of mineral production from two legitimate, small scale miners and as it expands production beyond this, its policies will have beneficial impacts as follows;

Informal and small miners in Peru currently do not have the financial capacity to install modern, large capacity plants. As a result, the mine producers crush the ore in stone grinding mills called quimbaletes and then agglomerate the gold in the crushed material with natural mercury. Not only is the process very labour intensive with low productivity, it also leads to significant health problems. In order to release the gold from the mercury amalgam, the material is heated on open fires to boil off the mercury creating a mercury poisoning risk for anyone nearby including children. The mercury vapour eventually cools and condenses on the ground to create an ongoing health hazard.

As described above the uncontrolled use of mercury and sodium cyanide often lead to issues of significant environmental degradation. The gold mining regions of Peru are noted for the deep blue staining in areas where ore is leached in cyanide baths that are developed without due regard for the environment. The baths are rarely lined with geomembrane to prevent the liquid toxins from moving out into the rock and eventually into the nearby water courses. To argue that many of these areas are in arid zones with no natural vegetation or water courses does not obviate the fact that environmental destruction occurs when toxic materials are allowed to accumulate in surface soils.

All subsurface materials are owned by the people of Peru under the trusteeship of the Peruvian government and any practices which do not optimize the recovery of wealth from these subsurface materials denies thepeople of Peru their rightful share of this wealth. The antiquated processing methods described above rarely recover more than 35% to 40% of the gold from the ore material. Modern plant recovery techniques can often recover more than 90% of this same gold returning a higher value to the people of Peru.

The current state of informal mining in Peru is somewhat chaotic and in many cases, informals are, in effect, stealing ore from the concession owners who are powerless to stop them. PTT will not purchase ore from informal miners who do not have a rightful claim to the ore they are selling and will go further in attempting to bring some order to the regions in which it works by;

Thus PTT will permit informal and small scale miners to earn much greater returns on their labour (through higher recoveries of gold) with much less effort. Modern plants, built to the exacting environmental standards of the Peruvian Ministry of Energy and Mines using state of the art gold processing technologies will result in an improved environment and fewer health risks to the miners. Perhaps as important, the social chaos which characterizes many gold mining areas of Peru will become more orderly as concession owners are paid a return (royalty) on the gold mined from their concessions.

The Nazca-Ocona Gold Belt is 350 km long and 40 km wide covering portions of three Departments; Ayacucho, Ica and Arequipa. It is typified by narrow, gold bearing quartz veins, which are formed in hypothermal to mesothermal environments. The mineralized structures are found in andesitic volcanic rocks and in the intrusives of the Andean Batholith. Veins found to crosscut granodiorite and diorite, tonalite or andesite often contain higher gold grades in the diorite, tonalite or andesite than in granodiorite. The mineralization is known locally as rosario formations due to the fact that the veins tend to narrow and widen in a regular pattern much like the beads on a rosary.

The mining activity that has developed in the Nasca-Ocona belt has largely been by artesanal methods although there are some more modern mines in the area. There exist also mining formal activities of iron and copper.

Artesanal mining is characterized by its labor intensity and lack of modern mining equipment. As a result, the miners develop lodes or veins of narrow thickness but high grade Au. The veins range in width from 30 centimeters to 1.5 meters. In some exceptional circumstances they reach up to 2 m wide. The concentrations of Au range from 15 to 150 grams per tonne (gpt).

The artesanal miners selectively extract from the lode and veins using a technique called the circado. This is essentially a resuing method whereby an opening large enough for a person to work is made alongside the vein and the ore is then slashed off the wall. This reduces dilution and the ore is removed from the opening in small canister with as much as 1.6 grams of gold per 45 kilogram canister (35 grams per tonne). The treatment of the mineral begins with the pallaqueo, or hand sorting to selectively upgrade the ore before being processed or sold.

The mineral extracted from high grade (> 2 grams gold (Au) / canister), is crushed and processed directly in a quimbaletes or manually operated, wetted grinding stones at a rhythm of 30 minutes per canister. While no formal reporting is done it is believed that the gold production in lca and Arequipa is 9 tonnes of dore annually.

Cyanide is sometimes used to extract the gold and the dissolved gold is recovered using activated charcoal. Typically the tails of the quimbaletes process contains important quantities of gold that can be recovered only by cyanide. The grade of the tailings ranges between 12.8 and 25.6 gpt and contains considerable quantities of mercury (introduced from mercury amalgam processes) which end up in the cyanidation tails.

The map shown above comes from information taken from the Ministry of Energy and Mines (MEM) and includes 68 artesanal mining locations. The MEM database includes a total of 270 locations and even this is known to understate the actual number of small mining operations.

It is believed that less than one third of the mines are registered, or included in the reports of MEM. Therefore, the total material that is mined and treated is unknown. It is known, however, that the amount of informal mining activity has increased with the increasing gold price. This increases the mining potential of the zone.

Small mining in Peru is divided by MEM into two categories: traditional and artesanal. Not only is artesanal mining labour intensive with only rudimentary equipment, it is, also in general, an informal activity. Traditional mining makes use of mechanical technologies and is formally registered with the government following norms of labor relations, safety and mining hygiene, environmental requirements, the payment of taxes and reporting to the MEM. According to the statistics of the MEM, the artesanal mining contributes 14 % of the entire gold production of Peru. Half of the national exports come from the mining and from 1998 the gold is the principal product of national exportation.

The geography of Peru is such that the coastal plain is entirely desert except in those areas in which rivers run westward out of the Andean highlands. The entire coast then is truncated every 100 kilometers or so by irrigated arid lands stretching a kilometer or two on either side of the river. The mining activities which are of interest to this report take place within the mountain barrier and usually at elevations below 3500 meters above sea level (masl). While the straight line distances from these mines to the coast are not large (less than 100 km) the steep nature of the terrain makes transportation of the mineral quite difficult and expensive.

This business plan proposes to locate the plant approximately 30 kilometers south of the city of Nazca at a distance of 500 meters along the PanAmerican Highway. The next step in development will be to apply for additional mining leases, purchase the mineral and surface rights to the plant site location and convert the lease underlying the plant to a beneficiation plant lease.

Infrastructure for the plant is excellent with water available from either a well on-site (50 meters) or via pipeline approximately 5 kilometers away. Construction to bring electrical power to within 2 kilometers of the site is underway and is currently 7 kilometers from the plant location.

A local metallurgical laboratory has completed 3 cyanidation tests to determine the optimum dosage of cyanide to recover the gold in ore from the Nazca-Ocona gold belt. The composite ore sample used had a head grade of 19 grams per tonne and the ore was leached for 48 hours with intermediate samples taken to determine the rate of gold dissolution. The results of this work are shown on Figure 4 below.

It is important to note that PTT intends to use the latest gold processing technology to ensure that all Peruvian regulatory requirements are met or exceeded. None of the technology to be used is experimental and all of the equipment required can be readily manufactured in a number of fabrication shops in Peru.

This test work forms the basis for the operating cost estimate and a preliminary flowsheet as discussed below. Based on other plant experience with this material and the preliminary bench scale testing that was done it was determined that a simple cyanidation plant would recover between 92 and 95 percent of the gold from the ore.

PTT obtained a 50 kilogram sample of ores from the Nazca-Ocona area and retained the private laboratory of TECSUP to undertake 3 cyanidation leach tests at different cyanide dosages. The report from this laboratory work is included in Appendix 1 to this document.

The grade of the 50 kilogram sample was 18.7 gpt of gold and the sample was pulverized to an 80 percent passing 200 mesh size consist for the testing. The three cyanide dosages used 0.5, 1.0 and 2.0 grams per liter and the consumption of cyanide after 48 hours was 3.06, 3.58 and 3.61 kilograms per tonne. If the material is leached for only 24 hours the recovery is essentially complete and the

consumption of sodium cyanide drops to 2.5 kilograms per tonne. The three samples were placed in a glass container and agitated for 48 hours. Twenty milliliter samples of the liquid phase were extracted periodically as shown to determine the rate of extraction and identify the optimal concentration of sodium cyanide. The results of the analysis are shown on the graph in Figure 4 below.

The standard process for this plant is shown on the preliminary flowsheet on Figure 5. The list of equipment is shown on Table 3. Ore will be brought by the miners to the plant in small trucks with an average size of 10 tonne lots and the material will be dumped on a compacted patio in a segregated bay. The material will be sampled and analyzed for gold grade, impurities and moisture allowing a fair assessment to be made of its value. The owner of the material will be paid on the basis of the analytical results. The method of payment is discussed below.

From the patio, the ore will be fed by small loader over a scalping grizzly and into a 60 tonne feed bin which discharges onto a screen. The screen oversize passes into a jaw crusher and the undersize passes by conveyor to a second screen. The discharge from the jaw crusher passes onto the same conveyor and also across the second screen. The oversize from the second screen goes to a cone crusher and the undersize passes by conveyor to a 150 tonne fine ore bin. Based on the granulometry of the material tested, less than 25 percent of the ore will need to be crushed.

The fine ore is taken from the bin via conveyor and discharged into a 7 foot by 7 foot ball mill. Water, lime and cyanide are added at this point. The ball mill discharge is pumped to a hydrocyclone with the underflow going back to the ball mill and the overflow feeding a 5 foot by 5 foot ball mill. The discharge from this ball mill is also sent to a hydrocyclone with the underflow going back to the ball mill and the overflow going to the first of four, agitated leach tanks.

The leach tanks work in series and by the time the solids pass through the fourth tank the gold has been leached from the fine solids. The slurry then passes into the first of three carbon-in-pulp tanks where fine carbon particles move in counter current with the slurry to absorb the gold laden cyanide solution. The slurry is pumped from the bottom of the third tank and sent to a standard tailings facility and the liquid phase is sent to the first of three desorption tanks.

The gold laden carbon is washed with stripping solution to remove the gold from the carbon and this solution is then sent to a small electrolytic cell where the gold particles are plated onto a gold cathode. The cathodes are periodically taken to a furnace and melted to make ingots of dore bullion. The carbon is washed with hydrochloric acid to regenerate its adsorption qualities and then sent to a rotary kiln to be reactivated and reused in the process. The sintered carbon is passed across a double deck screen to remove fine particles generated in the process. The fine

carbon which is removed will be stored for subsequent burning to capture any residual gold particles. The first step in the project process following financing will be to do more extensive metallurgical testing to finalize the process flowsheet and estimate an accurate mass balance. It is anticipated that several cost savings will be made at this point. For example the gold ore from the Nazca area is very highlyoxidized and is delivered to the area plants with few rocks larger than 6 inches in size. It is not considered likely that much crushing will be required. Also the sizing of the ball mills will be more accurate and it is likely that smaller equipment will be used. The rapid reaction kinetics may allow for fewer tanks to be used. It is considered that the flowsheet presented in this business plan is conservative. The detailed design to be done post-financing will result in a target cost estimate and construction drawings.

The net result is a capital estimate accurate to within plus or minus 15 percent. Added to the installed equipment capital cost will be working capital to maintain an owners team during design and construction and to pre-purchase a one week supply of ore. The capital cost estimate quotation is included in Appendix 2 to this Business Plan.

Discussions have been held with a reputable Peruvian engineering company with extensive experience in building this size and type of plant. Basic contract terms have been agreed upon pending financing. Their preliminary cost estimate to build the plant on a turnkey basis was less than this constructors estimate.

Security is an issue whenever there exists a small object of high value such as a brick of dore bullion. Security will be built into the plant design by surrounding the facility with a fence or wall and putting the final processing equipment into securedbuilding. Workers will be required to wear company clothing and change and shower on site. Special traps will be built into all effluent discharges and private security will protect the plant.

The removal of gold bricks will be done under contract with one of the international, bonded security companies that operate in Peru and they will take custody of the gold at the plant site. There is a small asphalt airstrip at Nazca and flying the gold from this nearby town will be investigated. Plant security will be fully addressed in the detailed design stage following financing.

The plant operating cost estimate is developed from the power cost and reagent costs which are the largest cost items. Power requirement is determined by the horsepower requirements of the plant equipment and it is assumed that all power will be from the national power grid at a cost of US$0.10 per kwhr. A backup generator will be available in the event of power outages which are frequent in this part of the country. The plant operating cost estimate is shown on Table 5 below;

This manpower schedule assumes two, 12 hour shifts per day for 365 days per year requiring 3 shifts of personnel. The plant availability is assumed to be 95 percent resulting in 346 effective operating days per year. The labour cost shown in the operating cost estimate is based on this labour schedule assuming that qualified labour is paid $600 per month and tradespeople are paid $630 per month. The payroll burden is assumed to be 30 percent additional to the payment of 15 salaries in every 12 month period. Additionally a 6 percent profit sharing bonus is paid. The manpower complement at the plant is 21 operators, 8 technician/tradesmen, 3 shift supervisors, the plant metallurgist and the Operations Manager.

The Peruvian fiscal regime is well understood and has been in place for the past 12 years. The recent election assures another 5 years of political peace and the ruling Aprista party is pro-mining and is not considering significant changes to this tax regime. It is emphasized that PTT will follow all Peruvian laws with respect to the paying of all tributes and taxes including payroll taxes and profit sharing and this is reflected in the cash flow model used in this Business Plan.

Income taxes are a flat 30 percent of resource revenue and most capital expenses are amortized straight line over a 10 year useful life. The lack of accelerated write-offs has been a topic of conversation between the mining industry and the government for some time but with commodity prices at high levels it is not considered likely that any changes will be instituted at this time.

The development schedule is shown on Figure 6 below. When the project has been financed there will be a one month design phase to confirm that the flowsheet is appropriate for the project. Fifty kilograms of ore will be obtained from the operations which have signed letters of intent for this purpose.

Discussions have already taken place with a local engineering company which has the competency for this project and they have expressed, in writing, their interest in providing a lump sum bid to engineer, purchase and construct the plant. Engineering of the plant will commence as soon as the design of the flowsheet is known in sufficient detail to start sizing the equipment. As previously stated, as much as possible, the plant will be built in modules which can be easily transported to the site and quickly interconnected. Plant engineering and purchasing is anticipated to take only 2 months as many of the contractors already have construction drawings for the equipment to be installed.

As soon as the equipment list is ready, orders will be placed for the components which will all be available locally. As each plant module is designed fabrication will commence. It is anticipated that construction of the plant will require 4 months.

All necessary permits will be applied for immediately following financing. These will include construction permits, water licenses and operating permits. A local consultant with specialized skills will be hired to write the necessary permitting documents and that the whole process will take from 3 to 5 months.

The cash flow results are shown in Appendix 4 to this report and summarize the costs and revenues for a 10 year project life. The table shown assumes a gold price of US$1500 per ounce and a gradually increasing gold feed grade.

The revenue formula for the plant is based on two items; 1. A plant charge per tonne of throughput based on gold price. 2. A recovered gold payable equal to 90% of the total plant recovery. The company retains any gold recovery above 90%. 3. A marketing fee of US$20 per tonne.

When the gold ore is brought to the plant it will be evaluated and a purchase price assessed based on the average gold price of the previous 7 trading days, the ore grade and moisture content and the plant revenue factors identified above.

The processing charge was calculated from an understanding of the process charges for the major competitor to PTT. While not wanting to upset the current pricing regime, PTT will be at or below the competition at any given gold price. Note that this calculation is based on pricing at a time when the gold price was $450 per ounce. It has moved up since this time and the economics presented are based on an increase of $20 in the process charges shown below. The deviation from our competition widens as the gold price increases as shown in Figure 7 below. For clarity, this figure shows the amount paid to the sellers of the ore and is not the amount paid to the plant.

The processing fee floor value was determined from a supply cost analysis at a gold price of US$300 per ounce and a grade of 10 grams per tonne. It was determined that a charge of US$54 per tonne of ore is required to obtain a 25% rate of return on the project (at a gold price of US$300 per ounce). Based on this analysis, the processing charge is calculated according the following formula;

The operating cost has been described above and the cash flow analysis uses this cost with an additional 4% for marketing and head office administration. As gold prices have topped $1500 per ounce and additional $20 per tonne was added to this processing charge.

Two written expressions of interest have been received from concession owners who have mines currently not operating. PTT have visited the Erika mine and confirm that it is capable of producing 350 tonnes per day of gold mineralization. The total production being offered by the two formal mining companies is 450 tonnes per day.

Taxes and royalties are as described above. The capital cost allowance for all capital requirements is assumed to be a 10 percent, straight line deduction for 10 years (the assumed life of this project).

The net cash flows are then calculated as shown in the Appendix and, for this base case production scenario, the project net present value at a 10 percent discount rate is $22,000,000, the rate of return is over 200% and the payback period is 1.1 years. Figure 8 indicates the expected net present values at varying discount rates for the base case cost and revenue assumptions.

A sensitivity analysis for the project has been undertaken as shown on the spider diagram in Figure 9. The input values of gold price, operating cost and capital cost have been varied in 25% increments from 25% of base case to 175% of base case values. The slope of the criterion lines indicates how sensitive the project economics are to changes in these criterion the steeper the line the more sensitive the project economics are to that variable.

It can be seen from this sensitivity analysis that the project is extremely robust and is largely indifferent to capital cost nor very sensitive to gold price as most of the plant revenue comes from the processing charge.

The technology for winning gold from these types of ores is well understood and there are other much older and quite dilapidated plants operating successfully in the area. It can be seen from the economic sensitivity analysis that the project remains economic even with significant changes in capital and operating costs. When capital and operating costs are at 175% of the base case ($4,200,000 and $58.00 per tonne) and the ore grade and gold price are at 50% of the base case values (10 grams per tonne and $325 per ounce) the project will have an NPV10 of $3,682,000.

As stated previously, 14% of all the reported gold produced in Peru comes from small scale and informal miners. With high gold prices there are literally thousands of small miners operating in the area of interest and there is not enough plant capacity for them. Currently, a miners cooperative is being created to subsequently sign an agreement with the writers of this Business Plan.

The plant will not compete on the basis of pricing but rather on the honesty of its operation. The small miners will be given full value for their ore as determined by a third party, internationally recognized laboratory which is not currently the case. As well the plant site is located within 1 kilometer of the main Peruvian highway while the competitors plant is located approximately 2 hours from the highway along a difficult, narrow gravel road. The plant location will guarantee a continuous supply of feed stock.

Plant management has been chosen with great care and special attention will be taken to hire only qualified and reputable people. The company will also contract the services of a reputable firm to periodically audit the operations for shrinkage.

The new regime in Peru has announced that it is committed to maintaining a pro-mining position while directing additional social development funds to the outlying regions of the country. Recently the government announced that informal miners must follow the same environmental guidelines of formalized mining companies. The best insurance against fall-out from such political instability is to maintain a very lowbusiness and community profile. This area of Peru is also known for being relatively peaceful and stable thanks to the self-organizing activities of the informal miners. While they do not operate under the aegis of Peruvian mining codes and laws they do an excellent job of protecting their own interests. The World Bank has specific programs to reduce the use of mercury in artesanal gold operations and will be supportive of this plant.

The signing of free trade agreements with Canada and the United States will do a great deal to normalize Peruvian business conditions in order that they are aligned with North American practices thus stabilizing the business climate.

blanket gold mine - caledonia mining corporation plc

The current Blanket mining area has eight ore shoots in the producing section of the mine. The majority of the mine production is sourced at present from the AR Main and AR South ore bodies with a lesser contribution from the Blanket, Eroica and Lima reefs.

Significant early production milestones were: in 1965 Falconbridge acquired the property and increased gold production to an average of approximately 45 kg per month; in 1993 Kinross took over the property and built an enlarged Carbon-in-Leach (CIL) plant with capacity of approximately 3,800 tonnes per day (tpd) to treat an old tailings dump together with the run-of-mine ore.

On April 1, 2006 a wholly-owned subsidiary of Caledonia Mining Corporation completed the purchase of the Blanket Mine from Kinross. Caledonia has allowed Blanket to make considerable capital investments in its underground, surface and township facilities. These investments culminated in the commissioning of the No 4 Shaft Expansion Project at the end of September 2010 whichincreased Blankets hoisting capacity from the No. 4 Shaft from 500 tonnes per day to 3,000 tonnes per day.

The current Blanket mining area has eight ore shoots in the producing section of the mine. The majority of the mine production is sourced at present from the AR Main and AR South ore bodies with a lesser contribution from the Blanket, Eroica and Lima reefs. AR Main and AR South are massive ore bodies up to 30 m wide and are ideally suited to the long-hole open stope mining method, while the remainder of the Blanket ore bodies are tabular and better suited to underhand stoping methods.

Following the successful commissioning of the No. 4 Shaft Expansion Project in September 2010, the underground workings have increased production to approximately 1,200tonnes of ore per day using both long-hole open stoping and underhand stoping methods. Broken ore is trammed along the 22 Level rail system by battery locomotives and the ore cars trains are self-tipped onto one of three grizzlys above the ore bins which are located between 22 Level and the 765m level crushing station. The minus 300 mm rock held in three underground storage bins, Payable ore and waste ore are held in separate storage bins and handled accordingly. Ore is gravity fed from these ore bins onto the 765m Level crushing station conveyor which discharges the ore onto a vibrating grizzly feeder which discharges the oversize into a 30 x 20 Telsmith jaw crusher.

The underground crushing station ensures that all the run-of-mine ore is reduced to minus 150 mm in size as this provides for the optimisation and greater efficiency of the automated skip loading and hoisting operations. This allows mining and hoisting activity to continue without interruption.

Blanket No. 4 Shaft has been equipped with the first automated loading system in Zimbabwe which sequentially fills the two six tonne ore skips which are hoisted from the 789m level to surface. The use of this state of the art automation reduces the risk of ore loading accidents and injuries, reduces manpower costs, minimises spillage, reduces skip loading times, increases hoisting capacity, ensures precise ore tonnage accountability, and enhances winder efficiency while lowering loading and hoisting costs.

The double compartment No. 4 Shaft is Blankets main shaft for hoisting ore to surface from the loading stations at 510m and 789m below surface, and it has a proven hoisting capacity of 110 tonnes per hour from 789m. The Jethro and Eroica Shafts and the No.5 and No.6 Winzes are used for transporting personnel and materials underground, and the No.2 and Lima Shafts are also used for hoisting ore to surface.

The entire underground and surface operations of the Blanket mine, except for the Lima Shaft, including the surface compressors and the No 4 Shaft Winder can be operated by the 10,000kVA standby diesel powered generating sets which were installed and commissioned in May 2011.

This standby generating station ensures that all mining and metallurgical operations continue notwithstanding any interruptions to the electrical power supply from the grid. The level of interruptions to Blankets power supply has diminished considerably following the agreement of an un-interrupted power a supply agreement between Blanket and ZESA. In the year to 31 December 2012, the standby generators were used for a total of 108 hours (2011, 121 hours).

The Blanket Mine is situated in the Gwanda Greenstone Belt, a typical Archaean greenstone-hosted gold deposit. The deposit is situated on the northwest limb of the Gwanda Greenstone Belt along strike from several other prominent gold deposits. Blanket is the largest producing mine in a belt which at one time had 268 operating mines.

The Gwanda Greenstone Belt extends 80 km in an east-west direction and consists predominantly of basaltic rocks (greenstones) with minor felsic and ultramafic units. The belt has been intensely sheared and intruded by granites resulting in complex deformation structures and vertically dipping strata. The shape of the gold ore bodies is controlled by these structures, resulting in their near vertical orientation.

Near vertical shear zones are developed throughout the belt and are the loci of most of the small mines that have been discovered in the area. Most of Blankets prospects are of this type. Many of these now defunct small mines were shallow, had historically high recovered gold grades and closed towards the end of the 1960s when the gold price was low and the mining and metallurgical techniques available at that time were such that the mines became un-economic. The area has a long history of gold production and remains highly prospective and must therefore be regarded as an attractive exploration area as it has never been subjected to modern exploration techniques.

Active mining at the Blanket mine takes place over a 3 km strike that includes 8 discrete ore shoots. Fig NN provides a north-south vertical projection of the various Blanket ore shoots. Mineralisation occurs in near vertical shoots aligned along an approximately north-south axis. The ore shoots vary in shape from the tabular to lensoidal quartz reefs to the massive to pipe-like disseminated sulphide reefs (DSR).

Gold mineralisation occurred as a result of the reaction between rising hot fluids and the iron rich minerals in the shear zones. The reaction involved the formation of sulphide minerals, predominantly arsenopyrite, as the sulphur in solution reacted with iron in the rocks. Gold, which was also transported by the fluids, became attached to the arsenopyrite to form the gold ore. These reaction zones are located within the more ductile tensional high strain areas of the shear zone.

Blanket Mine is part of the group of mines that make up the North Western Mining Camp otherwise also called the Sabiwa group of mines. What is today referred to as Blanket Mine is a cluster of mines extending from Jethro in the south, through Blanket itself, Feudal, AR South, AR Main, Sheet, Eroica and Lima in the north. These ore shoots occur in the Blanket shear zone, a low angle transgressive shear characterised by the presence of biotite relative to the massive amphibolites forming the country rocks.

A regional sub horizontal dolerite sill intruded the above sequence and is emplaced about 500 meters below surface. The sill does not cause a significant displacement and although it truncates all the ore shoots, the mineralised shoots continue undisturbed below the sill.

Since the rock units of the Gwanda Greenstone Belt are tilted on their side and strike north-south in the vicinity of Blanket Mine, the stratigraphic sequence is exposed from the oldest in the east to the youngest in the west. The Felsic unit consisting of quartzite and sericite-quartz schists forms the base of the stratigraphy. No gold deposits have been recorded in this unit. Overlying this unit to the west is the Ultramafic-Mafic unit interlayered with banded iron formations. Gold occurs in this unit at Vubachikwe mine, which is adjacent to Blanket, where the deposits are confined to steeply dipping folds in the banded iron formation layers. The Ultramafic-Mafic unit is in turn overlain to the west by the Mafic unit, a thick sequence of tholeiitic and pillow basalts. Within the Mafic unit a prominent shear zone up to 50 meterswide runs the length of the property and is the locus of all ore bodies on the Blanket property. The sequence is completed by an Andesitic unit which caps the stratigraphic sequence.

The first type is the disseminated sulphide replacement type which comprises the bulk of the ore shoots. Typically these zones have a silicified core with fine sprays of disseminated arsenopyrite hosting the best grades. Disseminated sulphide replacement ore bodies range up to 50m in width with a strike between 60m and 90m. Free-milling gold constitutes up to 50% of the total metal content with the remainder occluded within the arsenopyrite.

Quartz-filled shear zones form the second type of mineralisation. Two quartz shears are mined at Blanket Mine, the Blanket Quartz Reef and the Eroica Reef. These reefs tend to have long strikes but are not uniformly mineralized although continuous pay shoots of over 100 m on strike are not uncommon. The Quartz Reef at Blanket has a surface strike of some 500 m, but economic mineralisation is restricted to three 90 m shoots which were defined on surface by the early workers. Grade fluctuations are more extreme in the quartz reefs than in the disseminated type reefs but on average these shears have higher grades and are used as a sweetener of ore to the mill.

Caledonias Board and Management have completed a review of alternative expansion and diversification plans for Caledonia. Both the Board and Management have also addressed the revised production projections for the Blanket Mine and the possible benefits of diversifying Caledonias production base. Caledonia has concluded the best returns on investment remain at the Blanket Mine in Zimbabwe, which continues to be cash generative in the current adverse market conditions and also offers significant investment returns that exceed alternative investment opportunities.

The objectives of the Revised Plan are to improve the underground infrastructure and logistics and allow an efficient and sustainable production build-up. The infrastructure improvements will include the continuation of the No. 6 Winze, the development of a Tramming Loop and the sinking of a new 6-meter diameter Central Shaft from surface to 1,080 meters.

The increased investment pursuant to the Revised Plan is expected to give rise to production from inferred resources of approximately 70-75,000 ounces in 2021, this being in addition to projected production in 2021 from proven and probable mineral reserves of approximately 6,000 ounces. The Revised Plan is also expected to improve Blankets long term operational efficiency, flexibility and sustainability.

The skips automatically tip ore hoisted to surface into the Shaft Bins on the No4 Shaft headgear. Ore is gravity fed from the Shaft Bins onto the No1 belt which conveys the ore over the automated belt scale and to vibrating screens and 1424 Telsmith jaw crushers. This crushing circuit reduces the ore to minus 50 mm and it is then deposited by the No 2 belt stockpile conveyor onto the coarse ore stockpile which has a live capacity of approximately 2,000 tonnes of material. Ore from the coarse ore stockpile is then fed onto the triple-deck vibrating screen with the oversize being crushed to minus 12 mm by one of two 38H Telsmith Gyrasphere crushers. The 12mm ore is then fed into the 600 tonne Mill Bin which feeds the two (of the three installed) 1.8 x 3.6 m rod mills where it is milled down to approximately 70% passing 75 microns, before being passed through two 30 inch continuous Knelson Concentrators where approximately 49% of total gold production is recovered. The Knelson Concentrator tails are pumped through cyclones and into a 3.66 x 4.9 m x 750kW (1,000 HP) regrind ball mill. As part of the No.4 Shaft Expansion Project, the capacity of the secondary crushers was increased to over 2,000 tpd and the capacity of the rod mills was increased to 1,800 tpd. The slurry from the regrind mill is pumped into a carbon in leach (CIL) plant consisting of eight, 600 cubic meter leach tanks equipped with 45 kW agitators where leaching at 50% solids and simultaneous adsorption of dissolved gold onto activated carbon takes place. The CIL plant has a nameplate capacity of 3,800 tonnes of milled ore per day. Elution of the gold from the loaded carbon and electro winning is done on site. Gold is deposited onto steel wool cathodes, the loaded cathodes are acid-digested and the resultant gold solids are smelted in an induction furnace to produce gold bullion of approximately 90% purity, after which the bullion is sold as required by Zimbabwean law to Fidelity Printers and Refiners (Fidelity) in Harare which undertakes final refining and sale. The proceeds of sale (i.e. 98.5% of the value of the gold contained before payment of any royalty) are paid directly into Blankets foreign currency account with its commercial bank in Zimbabwe within 7 days of receipt of the gold by Fidelity.

Overall gold recovery rates have been increased from 85% at the time of acquisition by Caledonia to over 94% as a result of the re-design of more efficient CIL agitators and the installation of an automated liquid sodium cyanide facility which allows for multiple stage cyanide dosing and monitoring of the CIL. The PSA (Pressure Swing Adsorption) Oxygen Generator has been re-commissioned and the controlled sparging of oxygen into the CIL has resulted in an increase in leach recoveries to approximately 94%.

No. 1 Conveyor feeding the two Primary Jaw Crushers. Tailings from the CIL circuit contain less than 30 ppm of cyanide, and are pumped to one of two tailings dams which are operated and maintained by Fraser Alexander, and are inspected and monitored daily by Blanket.

Historical operating statistics for the Blanket Mine are available in Caledonias MD&A, which can be found in the Investor section of Caledonias website. Blankets historic financial performance up to February 2009 was accounted for in Zimbabwean dollars until 2009. Due to the extreme hyper-inflationary environment which prevailed in Zimbabwe until early 2009 and the resultant devaluation of the Zimbabwean dollar, Blankets stated historic financial statements are unhelpful for the purposes of evaluating Blankets historic financial performance. The Zimbabwean dollar was abolished in February 2009 and all financial transactions in Zimbabwe now take place using other currencies, including the US Dollar, the South African Rand and the Botswana Pula. With effect from 1 January 2009, Blanket has prepared its accounts in US Dollars.

The proposed Central Shaft will be a 3,000 tonne per day, 6-meter diameter, 4-compartment shaft that will transport men, equipment and material from surface to 1,080 meters below surface. The shaft will be located between the AR Main and AR South ore bodies, in the middle of Blankets mining area. Construction on the shaft is expected to commence in July 2015, following completion of the Tramming Loop. The capital cost of the Central Shaft is expected to be approximately US$23 million. The shaft will be sunk in two simultaneous phases: from surface from 750m below surface and is expected to be completed in July 2017. Once complete, the Central Shaft will provide access for horizontal development in two directions on two levels below 750m.

The increased investment pursuant to the Revised Plan is expected to give rise to production from inferred resources of approximately 70-75,000 ounces in 2021, this being in addition to projected production in 2021 from proven and probable mineral reserves of approximately 6,000 ounces. The Revised Plan is also expected to improve Blankets long term operational efficiency, flexibility and sustainability.

The Revised Plan includes a revised life of mine plan for the Blanket Mine (the LOM Plan) in terms of which it is anticipated that the approximate production from existing proven and probable mineral reserves above 750 m level will be as set out below.

Central Shaft and the associated capacity improvements in the Blanket Processing Plant are expected to enable an increase in gold production at Blanket to 75,000 ounces by 2021 and 80,000 ounces from 2022 onwards. Improved access to Inferred Mineral Resources at depth is expected to enable the maintenance of this 80,000 ounce per year production rate until approximately 2034.

The new Central Shaft and the deepening of No 6 winze will provide access to the current inferred mineral resources below 750 meters and allow for further exploration, development and mining in these sections along the known Blanket strike, which is approximately 3 kilometers in length. The PEA has been prepared in respect of the inferred mineral resources below 750 meters. Based on the PEA, additional approximate production from current inferred mineral resources (excluding the projected production set out above) may be achieved in the following indicative ranges:

The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the PEA will be realised. Diamond drilling and development will continue with the objective of increasing confidence in order to upgrade the categorization of the resources.

The LOM Plan and the PEA have been reviewed by Minxcon Consulting, an independent mining consulting company. A technical report prepared in compliance with National Instrument 43-101 which summarizes the revised LOM Plan and the PEA will be filed on SEDAR before December 17, 2014. The most important assumptions on which the PEA is based include, a gold price of US$1,200 per ounce, achievement of the targeted production set out above and the accuracy of the projected capital costs.

It is also intended to continue exploration at two of Blankets satellite projects, Mascot and GG. No production forecasts are attributed to mining activity at either GG or Mascot at this stage as neither of these currently have defined NI43-101 mineral reserves or resources.

equipment | classifieds | icmj prospecting & mining journal

New and used gold mining equipment, including shaker tables, washplants, mills, crushers, motors, dredges, drills, concentrators, drywashers, flotation cells, pumps, jigs, furnaces, ore bins, conveyors, detectors, screens, sluices, highbankers, trommels, gold pans, augers, hoppers, cranes, amalgamators, and more

BRAND NEW HARD ROCK MINING equipment available for immediate order, from Mt. Baker Mining and Metals. We are a USA manufacturer located in Bellingham, WA. Call us today at (360)595-4445 for more information.

3x6 Ball Mill (1TPH), complete with drive, 20hp motor, balls, frame -- $37,000 1 Ton/hr Turn-key Ore Processor, ready-to-run -- $99,500 6x10 Jaw Crusher (1-3TPH), 7.5hp 3-phase -- $8,600 10x16 Jaw Crusher (5-20TPH), 20hp 3-phase -- $16,700 Mini Mobile Gold Processor 1 Ton/hr, Honda 22hp gas -- $16,000 16x12 Hammer Mill (1TPH), 15hp, 3-phase -- $12,325 24x16 Hammer Mill (2TPH), 30hp, 3-phase -- $22,900 4x8 Shaker Table (1TPH), single phase -- $14,900

2x4 w/ 1/2 ton extra balls. In barely used condition Used briefly for gold mine research & design at the shop only, never seen production work at the mine Portable, trailer-mounted. Comes with: 15x30 long stacking conveyor 6x10 Hopper & stand frame mounted Stationary single-deck grizzly screen Lots of pictures. All the info about everything from specs to production to what uses from an expert engineer, call for details, inspection, close up pictures, shipping etc.

B-70 and B-701 Mc Englevan (MIFCO) metal melting pot furnaces with high pressure blowers. -- $9,500, each Exhaust and pouring system for B-70 MIFCO furnace consists of a 5X9 hood and 20-foot-tall chimney with 1hp fan, trolly with cantilever crucible extractor, crucible tongs and pouring table. -- $10,000 Bullion molds for silver, 50 to 500 ounce plus conical mold to separate metal and slag. -- $5,000 Chemical fume hood on stand, 4-foot-wide, with 3/16 thick safety glass front sash and exhaust fan. Excellent conditionno rust, Alberine stone working surface. We have 2. -- $2,500 each Chemical Scrubber for hood, 1,000 CFM with 50-gallon sump, circulating pump and exhaust fan. -- $2,000 Thum cell electrolytic silver refining system: 500+ ounce per day with power supply and cables. Shown in October 2018 ICMJ. Comes with electrolyte silver dissolver, crystal cleaning station, silver crystal drying oven. We have enough spare parts to make 3 cells. -- $25,000 each Olympus binocular stereo microscope Model SF-20, 30X magnification with fluorescent ring light. -- $195. OMYNO binocular boom microscope on 11-inch pole, 10-65x magnification with wide field eyepieces. Excellent for looking at large specimens. -- $395 Fiber optic illuminator for microscope -- $125 Micro sample splitter with pans, excellent for splitting gold placer. 2 each in stock. -- $95 each Laboratory Scale, Mettler AE160, capacity 75 grams, accuracy, 1/10 mg, reads 4 places to right of decimal. Professionally calibrated in May 2021. -- $1,500 Chain-o-matic Ainsworth double pan balance with set of weights. -- $1,200 12x12x12 lab drying oven. -- $500 Sweco, 4- foot diameter 3-deck sieve with 6 spare sieve. -- s$9,500 Lightnin mixers, air operated with 4 shafts and 3diameter props. -- $1,000 each

EQUIPMENT IN GOOD WORKING condition: Knelson MD30 Concentrator$18,000. 24 ga Gardner Denver mucker$6,000. (2) 24 ga 1-1/2 ton rocker dump and 1 end dump mine cars$2,000 ea. Stutenroth impact mill w/50 HP motor$6,000. GD 63 Jackleg drill$1,500. (970)560-0685 or send email.

25mm OD core drill comes with backpack, Shaw gas-powered engine drill, coupling, diamond drill bit, loose materials bit, core cutter, 2 compression tanks, core breaker, knockout rod, barrel adapter, T-handle, aluminum gas can and 20 feet of drill steel. Excellent condition. Asking $2,800, includes delivery in the USA. UNION GULF RESOURCES, CORP. Send email or call (619)609-0234.

FOR SALE15 TON GIBSON ROD MILL, w/roll. Mint. Jaw, conveyor, feeder, classifier (2) table. Send $8. 14 pages, pictures, W.W. Gibson instructions. OREGON MINE SERVICE, PO Box 205, Sumpter, OR 97877. $15,000 Firm.

ORO INDUSTRIES TROMMEL and Centrifuge. Trommel is 24 diameter by 20 long, 10HP electric drive with Browning gearbox. 25 - 30 YPH. Centrifuge is 20 diameter with 3HP electric motor with 15 YPH production rate. Call (307)922-4754, MATT.

DENVER 5x4 SRL PUMP, 25 HP; Galigher 2 rubber-lined sump pump; 48 Sweco screen; Denver #12 drives/ 48 Dorr Oliver thickener mechanism; (2) 100 amp SS shut off boxes. MILLER EQUIPMENT, Tel: (865)475-7977, or send email.

Powered by JCB200 Excavator with 400 Link Belt Undercarriage. 100YPH Gold Watch Project washplant. 5 cylinder Duetz water pump. 24x8 container included with extra parts & supplies. Setup to work on land or ocean. Located in Nome, AK. Ready to work. Pictures available. $139,000 $79,000. Call ARNE BELSBY, send email or call(509)979-8265.

WANTED: WET DRUM MAGNETIC SEPARATORS in operating condition with feed tanksCASH BUYER FOR SALE: Deister 999 triple table in 40 trailer with sand screw & controls, very good condition for sale. LARRY (602)377-3774 Call or send email.

FOR SALE: 4x3 Denver SRL pump, 7.5 HP; 5x4 Denver SRL pump, 25 HP; 2 Galigher rubber-lined pump 5HP; 48 Sweco SD screen, Denver #12 drives, 48 Dorr Oliver thickener mechanism; (2) 100 amp SS shut off boxes. MILLER EQUIPMENT, Tel: (865)475-7977or send email.

EQUIP. SETUP FOR REMOTE MINE-MOUTH, NO POWER, OPS. Complete Assembly consisting of: M35A2 multi-fuel Army truck w/ mounted 10x16 rebuilt Austin-Western crusher (driven by new 50 HP Kohler gas motor). Crusher discharges to new vibratory overs/unders classifier. Unders supplies used Kamflex elevator discharging to new Stutenroth 2 tph impact mill w/ new 18 hp clutched Honda gas motor. Mill discharges to new vibratory variable speed classifier. All equip. has approx. 12 hrs. use. $34,000 OBO. If not sold by 10/31/21, equipment will be parted out & sold separately. (208)521-3649, leave a message or send email.

COMPLETE PLACER PLANT OPERATION in Arizona. Buy Any or All. Very Low Hours: Rock Systems feeder/hopper/grizzly/conveyer$30,000. Goldlands 50 YPH trommel$35,000. 6 Pump$5,000. Yukon Sluice$3,000. Goldlands sizing separator$9,000. MSI Water Clarification Unit$175,000. MSI Exit Conveyor $7,000. U-Tech Finishing Table$1,900. 4 Honda Pumps$4,000 ea. Power Panel$10,000. 75KW Generator$22,000. Cargo Trailer with tools etc.$8,000. Goldlands Spiral Separator$2,500. Much more: tools, generators, water tank, diesel tank, welding etc. Send email.

NOME 10-inch suction dredge Dola Mae 50-foot catamaran, (2) new 115 HP Yamaha 4-stroke engs. 5.9 Cummins diesel, 6X8 Berkeley water pump, new 6212 Garmin GPS. 16-wheel trailer. Sleeping quarters. $155K Send email or call WES (928)710-8404.