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Peru - Shahuindo Gold Project

Latest Developments

  • EIA Approved: EIA (Environmental Impact Assessment) for the Shahuindo Project approved by the Peruvian Ministry of Energy & Mines on September 11, 2013.
          - See press release HERE
          - See photos of the Final Public Audience held on March 13, 2013 HERE

  • Construction of Electrical Substation Underway: Environmental approval and construction permit for the switchyard and electrical facilities obtained from the Peruvian Ministry of Energy & Mines on April 16, 2013.
          - See press release HERE
          - See construction update photos HERE

Project Overview
  • The Shahuindo Gold and Silver Project is Sulliden's flagship project
  • Shahuindo is located in a prolific gold producing belt in northern Peru
  • The project is currently in advanced stages of permitting
  • A Feasibility Study completed in September 2012 features:
          - Shallow open-pit heap leach mine
          - Initial 10k tpd mine scenario (Phase 1) producing +/- 90,000 oz AuEq annually
          - Cash costs of $552/oz; CAPEX of $131.8M
          - Pre-Tax IRR of 52.2%; After-tax IRR of 37.8%
          - LOM average gold grade of 0.84 g/t and average silver grade of 9.50 g/t
          - This Phase 1 mine scenario considers only 40% of gold ounces from the oxide mineral resource. The intention is for this initial project to act as a foundation for future mine expansion and production growth.
  • Results from a mineral resource estimate completed in September 2012:
          - M&I oxide gold mineral resources increase to 2,438,000 oz
          - Inferred gold mineral resources increase to 1,628,000 oz
          - M&I silver mineral resources increase to 33,370,000 oz
          - Inferred silver mineral resources increase to 46,560,000 oz
  • Tremendous potential to continue expanding mineral resources

Location & Infrastructure

The Shahuindo Project is located in one of the world’s most prospective gold belts, neighbouring several low cash, low capital, heap leach gold mines including Barrick Gold’s Lagunas Norte Mine, 30 km to the south, and the Yanacocha Mine operated by Newmont Mining Company 80 km to the north.

The 100%-owned Shahuindo Project covers approximately 9,200 ha (35 mi²) and 10,800 ha (41 mi²) in the Cajabamba Province in northern Peru. It is located in a historically known mining region, 80 kilometers south of Cajamarca, the region’s capital city, and 15 kilometers west of Cajabamba city.

Feasibility Study Results

The mining scenario presented in the Feasibility Study considers only approximately 40% of the gold ounces from the total oxide mineral resource (see Mineral Resource press release from September 5, 2012).  Although the mineral resources currently outlined on the property could support a significantly higher mining rate and production profile, it is the Company’s preference to build a low capital cost and smaller footprint operation.  This initial mining scenario will act as a foundation for future production growth and will also provide the Company with the opportunity to fund future expansions from internally generated cash flow.

The full report can be found on SEDAR or in the Technical Reports section of Sulliden's website.

Base Case Operating Highlights and Project Performance of Feasibility Study

Financial Analysis
Internal Rate of Return (IRR), Pre-Tax
52.2 %
Internal Rate of Return (IRR), After-Tax 37.8 %
Average Annual Cash Flow, Pre-Tax
$ 70.1M
Net Present Value @ 5%, Pre-Tax $ 382.9M
Average Annual Cash Flow, After-tax $ 52.1M
Net Present Value @ 5%, After-Tax $ 248.6M
Gold Price Assumption ($/Ounce) $ 1,415
Silver Price Assumption ($/Ounce)
$ 27
After-tax Pay Back Period 2.2 years
Capital Costs
Pre-Production Capital $ 131.8M
Working Capital and initial fills $ 8.5M
Sustaining Capital (life of mine) $ 47.8M
Operating Costs (Average life of mine)
$ 5.66/Tonne Processed
$ 4.51/Tonne Processed
 G&A $ 1.77/Tonne Processed 
 Total Operating Cost/Tonne Ore  $ 11.94/Tonne Processed
 Total Cash Operating Costs (per oz of gold)  $ 552/Ounce
 Cash Operating Costs before royalty  $ 523/Ounce
Production Data
Life of Mine 10.4 Years
Mine Throughput (Ore) 3.65 M TPY / 10,000 TPD
 Metallurgical Recovery Au  85.8%
 Average Annual Gold Production  84,500 Ounces
 Metallurgical Recovery Ag  15%
 Average Annual Silver Production 167,200 Ounces 
Total Gold Produced (AuEq) 909,500 Ounces
Average LOM Strip Ratio (waste:ore) 1.91:1

*All monetary values are in U.S. dollars

Additional Technical Information Related to the Feasibility Study

Financial Analysis

Projected prices of $1,415 per ounce of gold and $27 per ounce of silver were used as the base case in the Feasibility Study.  These figures are three-year trailing average prices at August 31, 2012.  The financial analysis for the base case indicates a project with a pre-tax IRR of 52.2% generating $ 52.1 million average annual after-tax cash flow with a payback period of 2.2 years.  The table below outlines metal price sensitivities for the Shahuindo Project.

Gold Price
Silver Price
IRR Pre-Tax
IRR After-Tax
Cash Costs
per oz Au**
 $17 19.0%  13.5%
 $509 4.8 yrs
 $21  33.2% 23.9%
 $524 3.2 yrs
 $25  45.6% 33.0%
 $541 2.5 yrs
 $29  56.9% 41.3%
$559 2.0 yrs
(Feasibility Study Base Case)
(Feasibility Study Base Case)
 52.2% 37.8%
 $552 2.2 yrs

*Silver prices in first four cases are based on gold to silver price ratio of 52.4
**Cash operating costs per ounce represent the mine site operating costs such as mining, processing, metal transport, refining, administration, government imposed royalties and government imposed 8% worker’s profit sharing, net of silver by-product sales revenue and are exclusive of amortization, reclamation, capital, and exploration and development costs. Due to the inclusion of royalties and the 8% workers profit sharing in cash costs per ounce, cash costs increase or decrease as the price of gold fluctuates up or down.


The Shahuindo property is located in the regional flexure of a thrust and fold belt that contains a large-scale epithermal gold and silver system that extends over an area of 8 km by 4 km and vertically to a depth of at least 400 metres.  The current oxide mineral resource outcrops on surface and extends to an average depth of 150 metres along a 3.8 km strike length of one of these fault systems named the “Central Corridor”.  The oxide mineralization in the Central Corridor is followed by a thin transition layer with non-oxidized material continuing below it at depth.


Oxide ore is forecasted to be mined in a shallow open pit with an owner operated mining fleet.  Mining bench height will be 8 meters.  The life of mine stripping ratio is 1.91:1.  Ore will be trucked to a crushing and agglomeration facility near the mine where it will be crushed to 100% passing 32mm; agglomerated with cement; and conveyed to the leach pad.  Waste from the mine will be sent to a single dump located adjacent to the mine.

Metallurgy and Processing

Gold mineralization at the Shahuindo property occurs as very fine particles dispersed in iron oxides that are typically associated with structural features such as breccias and contact points between sediments and porphyries.  The ore at Shahuindo exhibits very good gold recovery with conventional heap leach cyanidation.  Gold and silver are recovered from a heap leach solution with a carbon adsorption facility (ADR plant).  Column leach tests returned average gold recoveries of 89% and demonstrated rapid leach characteristics, with 85% of gold recovered in first 20 days.  Metal recovery values used in the Feasibility Study were calculated using test work results that were adjusted to compensate for actual heap performance with gold recovery set at 86% and silver recovery at 15% for oxide ore.  In order to ensure and maintain consistent precious metal recoveries, the treatment circuit incorporates primary and secondary stage crushing circuits as well as agglomeration with cement.  

Mineral Resource Summary, September 2012

Measured & Indicated Mineral Resources

Gold (Oz) Gold (g/t) Silver (Oz) Silver (g/t) Tonnes Gold Grade Eq. (g/t)
Measured Mineral Resources
 Oxide (Reported at 0.2 g/t cut-off) 766,000
0.59 10,530,000 8.1 40,500,000  0.62
 Mixed* (Reported at 0.35 g/t cut-off)  19,000 0.75  850,000   33.7  780,000  0.96
Indicated Mineral Resources            
 Oxide (Reported at 0.2 g/t cut-off) 1,624,000  0.48   21,080,000 6.3   104,840,000 0.51 
 Mixed* (Reported at 0.35 g/t cut-off) 29,000 0.77 910,000 23.8 1,190,000 0.92
Total 2,438,000 0.52 33,370,000 7.1 147,310,000 0.54 

Inferred Mineral Resources

Gold (Oz) Gold (g/t) Silver (Oz) Silver (g/t) Tonnes  Gold Grade Eq. (g/t)
Oxide (Reported at 0.2 g/t cut-off) 124,000 0.40 1,330,000 4.3 9,570,000 0.42
Mixed* (Reported at 0.35 g/t cut-off) - -
0.68 10,000 12.2 20,000 0.76 
Sulphide (Reported at 0.5 g/t cut-off) 1,504,000 0.76 45,220,000 22.9 61,410,000 1.20 
Total 1,628,000 0.71 46,560,000 20.4 71,000,000  1.20

The Mineral Resource calculations were completed by Mine Development Associates of Reno, Nevada under the direction of Paul Tietz C.P.G., an independent Qualified Person (“Q.P.”) pursuant to NI 43-101.

*The Mixed material is classified as a transition zone that contains both oxide and sulphide material.  The cut-off grade was increased for the Mixed material to reflect the lower metallurgical recoveries that have been observed in the metallurgical test results of the transitional material. Mixed ore will be processed as oxides.

Mineral Reserve Summary, September 2012

Proven & Probable Mineral Reserves

Gold (Oz) Gold (g/t) Silver (Oz) Silver (g/t) Tonnes Gold Grade Eq. (g/t) AuEq Ounces
Total Proven Mineral Reserves
437,000   0.90 5,102,000   10.5  15,159,000  0.91  441,000
 Oxide 434,000
 Mixed* 4,000
Total Probable Mineral Reserves 584,000
 Oxide 582,000
 Mixed* 3,000
Total Proven and Probable Mineral Reserves
1,022,000 0.84 11,561,000 9.5 37,847,000 0.85  1,032,000 
Oxide  1,015,000 0.84
 11,404,000  9.4 37,589,000   0.85 1,026,000 
 Mixed 6,000  0.76  157,000 18.9
 258,000  0.78  6,000
Notes related to the Mineral Reserve Table:

Mineral reserves are reported based on open pit mining within designed pits based on variable gold g/t cutoff grades where Oxide:  0.35, 0.35, 0.30, 0.35, 0.30, 0.30 for Phases 1, 1B, 2, 3, 4, and 5 respectively; and Mixed: 0.35, 0.35, 0.33, 0.35, 0.33, 0.33 for Phases 1, 1B, 2, 3, 4, and 5 respectively.  These phases represent the sequential operational phases of the mine.  The mineral reserves incorporate estimates of dilution and mining losses.  The cut-off grade and pit designs are considered appropriate for long term metal prices of US$1,340/oz gold and US$25/oz silver.  Rounding of the numbers in the mineral reserves listed above may cause apparent inconsistencies.