43-101 2008 Technical Report On The La Fortuna Project, Durango ...

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Howe 2008 Reserve Estimate Following the completion of the revised resource estimation, Howe completed a revised mineral reserve estimate for the El Castillo gold deposit. The overall procedure that was used to revise the mineral reserve estimate follows that used previously in the preceding 2006 Howe report (Report #897). Material changes including the use of revised unit costs and predicted gold price in the open pit mine planning process, and revision of the project’s capital and operating costs. The gold price is based primarily on the previous three years gold price, while the operating costs are based on Castle Gold’s current operating experience. Projected capital costs are not large as El Castillo is now in production, and while an expansion to a production rate of 5 million tonnes of ore per year is forecast, most of the capital costs will be borne by outside contractors. The revised Measured and Indicated Mineral Resources for the El Castillo gold deposit are inclusive of those Mineral Resources modified to produce the revised Mineral Reserves. Inferred Mineral Resources are not included in the revised Mineral Reserves. Readers are reminded that mineral resources that are not mineral reserves do not have demonstrated economic viability. The revised mineral reserves have yet to be mined and remain in place as of October 2007. This study only addresses the excavation of the revised Measured and Indicated Mineral Resources. In accordance with NI 43-101, Inferred Resources are included as waste when they occur within the open pit limits. The Howe 2008 geological block model described above was used for the pit optimization process with the Lerchs-Grossman optimization function within Microlynx mine planning software was used to determine the optimum pit shells for the following cost, revenue and mining parameters. Proven and Probable Mineral Reserves at the base case of $625 ($US per troy ounce – 3 year average) gold price totaled 46.8 million tonnes with an average gold grade of 0.50g/tonne Au (750,000 ounces). Inferred mineral resources occurring within the optimum pit outline totaled 100,000 tonnes with an average gold grade of 0.32g/tonne Au (1,000 ounces). This material would have to be mined and would be processed if the block grade was above the operating cut-off grade. However, this material is not considered to be a mineral reserve. Mineral reserves for this study were reported using a 0.15g/tonne Au operating cut-off grade. During the pit design process when one is determining whether a block will be mined and processed, an operational cut-off grade is used. This is the grade at which revenue exceeds mining and processing costs. For the base case, $625 gold price scenario, the operational cut-off grade was 0.22 grams Au per tonne. Once the pit limit has been decided, it follows that everything within the pit must be mined. In other words, mining costs are sunk and the decision shifts to whether a mined block will be sent to the mill or to the waste pile. The processing cut-off grade is the grade at which revenue exceeds only the processing costs. For the base case, $625 gold price scenario, the processing cut-off grade was 0.15 grams per tonne. Blocks within the optimum pit with grades less than 0.15g/tonne Au would have to be mined, but would be considered as waste. The following tables are the undiluted reserves results of the pit optimization based on various gold prices from US$550, US$625 and US$700 per ounce While Howe has selected $625 as the “best estimate”” long term gold price, it was considered necessary to follow industry practice and produce pits $75 above and below the base price to make sure that there were no impediments to lower or higher production pits should the forecast price scenario change. iv
Undiluted Reserves at $550 per Ounce Gold Overburden Tonnes 12,100,000 Oxide Below 0.15 g/tonne* 11,100,000 Subtotal, Waste Rock 23,200,000 In-Pit Proven and Probable Reserves In-Pit Inferred Resources Cut-off Tonnes Average Cut-off Tonnes Average Grade Above Grade Grade Above Grade (g/tonne) Cut-off (g/tonne) Ounces (g/tonne) Cut-off (g/tonne) Ounces 0.15 40,000,000 0.53 680,000 0.15 35,000 0.32 400 Undiluted Reserves at $625 per Ounce Gold Overburden Tonnes 14,900,000 Oxide Below 0.15 g/tonne* 13,300,000 Subtotal, Waste Rock 28,200,000 In-Pit Proven and Probable Reserves In-Pit Inferred Resources Cut-off Tonnes Average Cut-off Tonnes Average Grade Above Grade Grade Above Grade (g/tonne) Cut-off (g/tonne) Ounces (g/tonne) Cut-off (g/tonne) Ounces 0.15 46,800,000 0.50 752,000 0.15 101,000 0.32 1,000 Undiluted Reserves at $700 per Ounce Gold Overburden Tonnes 23,700,000 Oxide Below 0.15 g/tonne* 19,600,000 Subtotal, Waste Rock 43,300,000 In-Pit Proven and Probable Reserves In-Pit Inferred Resources Cut-off Tonnes Average Cut-off Tonnes Average Grade Above Grade Grade Above Grade (g/tonne) Cut-off (g/tonne) Ounces (g/tonne) Cut-off (g/tonne) Ounces 0.15 58,400,000 0.46 870,000 0.15 131,000 0.30 1,300 * This material must be mined but does not meet the processing cut-off. Mineral Processing and Metallurgical Testing Several metallurgical tests on mineralized oxidized material from the Property have been completed, both by Castle Gold and by independent groups between 2004 and 2006. The tests were designed to determine the leaching characteristics of the oxidized material and consisted of: • Bottle roll leach tests in 2004 and later column leach tests in 2006 by Kappes, Cassiday and Associates (“KCA”); • Two onsite bulk heap leach tests conducted by Castle Gold in 2005, followed by a residual analysis of the heaps conducted by Metcon Research (“Metcon”) in 2006. The data from the various tests have been reviewed and vetted by, D. Koningen, P.Eng, acting in the capacity of Castle Gold’s internal Qualified Person in matters of process engineering and metallurgy. Mr. Koningen is also a Director of Castle Gold. Presently Castle Gold is in the process of completing v
Page 1 and 2: TECHNICAL REPORT ON THE EL CASTILLO
Page 3 and 4: SUMMARY Introduction At the request
Page 5: Castillo Remaining Mineral Resource
Page 9 and 10: epresent an incremental increase in
Page 11 and 12: TABLE OF CONTENTS 1.0 INTRODUCTION
Page 13 and 14: Table 4. Driving distances from Dur
Page 15 and 16: Castle Gold has accepted that the q
Page 17 and 18: 2.0 PROPERTY DESCRIPTION, LOCATION,
Page 19 and 20: Figure 2. Map showing mining conces
Page 21 and 22: 2.1.2.3 Property Taxes The property
Page 23 and 24: Table 5. Maximum precipitation in a
Page 25 and 26: 3.0 HISTORY The El Castillo Project
Page 27 and 28: commonly reach elevations of 2,500
Page 29 and 30: Figure 4. Cross-section through the
Page 31 and 32: At El Castillo, the presence of cha
Page 33 and 34: Toward the center of the mineralize
Page 35 and 36: 7.0 EXPLORATION In 2006, Castle Gol
Page 37 and 38: 9.0 SAMPLING METHOD AND APPROACH Th
Page 39 and 40: 11.0 DATA VERIFICATION 11.1 INTRODU
Page 41 and 42: Morgain Minerals Inc. El Cairo Gold
Page 43 and 44: 13.0 MINERAL PROCESSING AND METALLU
Page 45 and 46: Table 9. Castle Gold test heap leac
Page 47 and 48: material is relatively consistent a
Page 49 and 50: Plate 6. View of the El Castillo si
Page 51 and 52: 14.2.1 Methods A shift of -500,000
Page 53 and 54: 14.2.4 Pit Optimization Parameters
Page 55 and 56: Undiluted Reserves at $600 per Ounc
Page 57 and 58:
Table 13. Comparison of Howe 2003 a
Page 59 and 60:
15.2.2 Change of Land Use The Compa
Page 61 and 62:
16.2.1 Capital and Operating Cost E
Page 63 and 64:
Table 15. Operating Cost Summary (U
Page 65 and 66:
will be operating the mine indirect
Page 67:
Table 17. Sensitivity Analysis - Gr
Page 70 and 71:
16.2.2 Economic Evaluation The Base
Page 72 and 73:
Table 23. US$ - Mexican Peso Exchan
Page 74 and 75:
• Castle Gold should complete geo
Page 76 and 77:
Panteleyev, A., 1996, Epithermal Au
Page 78 and 79:
9. To the best of my knowledge, inf
Page 80 and 81:
CERTIFICATE OF AUTHOR dated July 31
Page 82 and 83:
Appendix A Pit Optimization Level P
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