-
PRELIMINARY ECONOMIC
ASSESSMENT Tujuh Bukit Oxide Project
EAST JAVA, INDONESIA
Prepared for Intrepid Mines by
Kappes, Cassiday & Associates
Daniel Kappes, PEng, Kappes Cassiday and Assoc
Phillip Hellman, PGeo, Hellman & Schofield
Peter Allen, MAusIMM, Australian Mine Design and Development
EFFECTIVE DATE : 1 JUNE 2011
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TUJUH BUKIT PRELIMINARY ECONOMIC ASSESSMENT (PEA)
KAPPES, CASSIDAY & ASSOCIATES | JUNE 2011
Contents Contents
..................................................................................................................................................................
2 List of Figures
.........................................................................................................................................................
4 List of Tables
...........................................................................................................................................................
5 1.0 SUMMARY
..............................................................................................................................................
1
1.1 Project Overview
......................................................................................................................................
1 1.2 Property Description, Ownership & Location
...........................................................................................
2 1.3 Geology
...................................................................................................................................................
3 1.4 Resource Estimate
..................................................................................................................................
6 1.5 Mining and Optimized Mine Plan from Inferred Resource
.......................................................................
7 1.6 Metallurgy
................................................................................................................................................
8 1.7 Process Description
.................................................................................................................................
8 1.8 Infrastructure
............................................................................................................................................
9 1.9 Environmental and Permitting
..................................................................................................................
9 1.10 Reclamation and Closure
......................................................................................................................
10 1.11 Capital Costs
.........................................................................................................................................
10 1.12 Operating Costs
.....................................................................................................................................
12 1.13 Financial Analysis
..................................................................................................................................
12 1.14 Project Development Schedule
.............................................................................................................
12 1.15 Recommendations, Risks and Opportunities
.........................................................................................
13
2.0 INTRODUCTION
...................................................................................................................................
15 2.1 Qualified Persons
..................................................................................................................................
15 2.2 Effective Dates
.......................................................................................................................................
15 2.3 Units and Abbreviations
.........................................................................................................................
16 2.4 Project Background
...............................................................................................................................
17 2.5 Scope of Work
.......................................................................................................................................
18
3.0 RELIANCE ON OTHER EXPERTS AND CAUTIONARY NOTES
........................................................ 19 3.1
Reliance on Other Experts
.....................................................................................................................
19 3.2 Cautionary Notes
...................................................................................................................................
20
4.0 PROPERTY DESCRIPTION AND LOCATION
.....................................................................................
21 5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, AND PHYSIOGRAPHY
.................................... 21 6.0 HISTORY
...............................................................................................................................................
21 7.0 GEOLOGICAL SETTING
......................................................................................................................
21 8.0 DEPOSIT TYPES
..................................................................................................................................
21 9.0 MINERALIZATION
................................................................................................................................
21 10.0 EXPLORATION
.....................................................................................................................................
22
10.1 Historical Exploration
.............................................................................................................................
22 10.2 Recent Exploration (2006-2010)
............................................................................................................
23
11.0 DRILLING
..............................................................................................................................................
26 11.1 Downhole Surveys
.................................................................................................................................
27 11.2 Drill Hole Collar Survey and Topographic Survey
..................................................................................
27 11.3 Summary Results of
Drilling...................................................................................................................
27
12.0 SAMPLING METHOD AND APPROACH
.............................................................................................
28 12.1 Descriptions of Method and Approach
...................................................................................................
28 12.2 Core Processing Protocol
......................................................................................................................
29 12.3 Specific Gravity Measurements
.............................................................................................................
30 12.4 Sampling Intervals
.................................................................................................................................
30 12.5 Core Recovery Data
..............................................................................................................................
31 12.6 Comparison of Sludge Samples versus Core Samples
.........................................................................
31
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13.0 SAMPLE PREPARATION AND SECURITY
.........................................................................................
33 13.1 Description of Sample Preparation
........................................................................................................
33 13.2 Procedures Employed to Ensure Sample Integrity
................................................................................
33 13.3 Sample Security and Transport
.............................................................................................................
34 13.4 Analytical Laboratories
..........................................................................................................................
34 13.5 Analytical Methods
.................................................................................................................................
34 13.6 QA/QC Procedures Employed
...............................................................................................................
35
14.0 DATA VERIFICATION
..........................................................................................................................
37 15.0 ADJACENT PROPERTIES
...................................................................................................................
39 16.0 METALLURGY
......................................................................................................................................
40
16.1 Summary
...............................................................................................................................................
40 16.3 Metcon Metallurgical Program
...............................................................................................................
45 16.4 KCA Metallurgical Test Program
............................................................................................................
49 16.5 Ore and Waste Acid Neutralization Potential
.........................................................................................
61 16.6 Future Work
...........................................................................................................................................
61 16.7 Ore Processing
......................................................................................................................................
62
17.0 MINERAL RESOURCE
.........................................................................................................................
82 17.1 Description of the Database
..................................................................................................................
82 17.2 Spatial Distribution of Mineralization
......................................................................................................
83 17.3 Mineralized Zones
.................................................................................................................................
84 17.4 Hellman & Schofield Block Model
..........................................................................................................
85 17.5 Hellman & Schofield Model Results
.......................................................................................................
85 17.6 Mineral Reserves
...................................................................................................................................
86
18.0 OTHER RELEVANT DATA AND INFORMATION
...............................................................................
88 18.1 Mining Information
.................................................................................................................................
88 18.2 Mining Operations
..................................................................................................................................
91 18.3 Pit Design
..............................................................................................................................................
91 18.4 Mining Infrastructure
..............................................................................................................................
94 18.5 Mine Operating Costs
..........................................................................................................................
106 18.6 Site Infrastructure
................................................................................................................................
107 18.7 Environmental Considerations
.............................................................................................................
115 18.8 Reclamation and Closure
....................................................................................................................
119 18.9 Capital Costs
.......................................................................................................................................
124 18.10 Operating Costs
...................................................................................................................................
133 18.11 Financial Analysis
................................................................................................................................
146
19.0 Interpretations, Conclusions and Recommendations
....................................................................
156 19.1 Interpretations and Conclusion
............................................................................................................
156 19.2 Recommendations
...............................................................................................................................
156 19.3 Risks
....................................................................................................................................................
161 19.4 Opportunities
.......................................................................................................................................
162
20.0 References
.........................................................................................................................................
163 21.0 Date and Signature Page
..................................................................................................................
165
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TUJUH BUKIT PRELIMINARY ECONOMIC ASSESSMENT (PEA)
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List of Figures Figure 1 : Location of the Tujuh Bukit Project,
Banyuwangi, East Java, Indonesia.
....................................................................
1Figure 2 : IUP Production Operation outlined in red. Green areas
are representations of areas of Protection Forest ................
2Figure 3 : IUP Exploration outlined in red. Green areas are
generalised representations of areas of Protection Forest.
........... 2Figure 4: Lithology of the Tumpangpitu Prospect
........................................................................................................................
4Figure 5: Lithology Section 11040mN at Tumpangpitu
................................................................................................................
6Figure 6 : Soil Anomalies at Tumpangpitu
.................................................................................................................................
24Figure 7 : Aeromagnetic Survey Data
........................................................................................................................................
25Figure 8 : Location of Collars of completed drill holes at
Tumpangpitu (20th April 2011)
...........................................................
26Figure 9 : Plot of Sludge versus Core Assays
...........................................................................................................................
32Figure 10 : Gold Extraction Based on Carbon Assays Versus Days of
Leach
..........................................................................
57Figure 11 : Silver Extraction Based on Carbon Assays Versus Days
of Leach
.........................................................................
58Figure 12 : Cumulative Percent Gold Recovery Versus Cumulative
Tonnes of Solution per Tonne of Ore ..............................
59Figure 13 : Cumulative Percent Silver Recovery Versus Cumulative
Tonnes of Solution per Tonne of Ore .............................
60Figure 14 : Heap Leaching Flowsheet
.......................................................................................................................................
64Figure 15 : Average Daily Water Balance Schematic
................................................................................................................
74Figure 16 : Gold Grades in the Oxide Zones
.............................................................................................................................
83Figure 17 : Silver Grades in the Oxide Zones
............................................................................................................................
84Figure 18 : Pit Design Layout - Plan View
................................................................................................................................
92Figure 19 : Waste Disposal
........................................................................................................................................................
94Figure 20 : Pre-Production Haul Roads and Access Roads
......................................................................................................
95Figure 21 : Production Haul Roads and Access Roads
.............................................................................................................
96Figure 22 : End of Year 1 Pit Progress
......................................................................................................................................
98Figure 23 : End of Year 2 Pit Progress
......................................................................................................................................
99Figure 24 : End of Year 3 Pit Progress
....................................................................................................................................
100Figure 25 : End of Year 4 Pit Progress
....................................................................................................................................
101Figure 26 : End of Year 5 Pit Progress
....................................................................................................................................
102Figure 27 : End of Year 6 Pit Progress
....................................................................................................................................
103Figure 28 : End of Year 7 Pit Progress
....................................................................................................................................
104Figure 29 : End of Year 8 Pit Progress
....................................................................................................................................
105Figure 30 : Tujuh Bukit Project Location and Access
..............................................................................................................
107Figure 31 : Existing East Java Transmission Lines (blue: 500 kV;
red: 150 kV; green: 70 kV)
.............................................. 108Figure 32 :
Project Development Schedule
.............................................................................................................................
148Figure 33 : Gold Price Sensitivity
.............................................................................................................................................
154Figure 34 : irr vs. Operating cost, capital cost, and recovery
based on bulk recovery
..........................................................
154Figure 35 : npv @ 0% vs. Operating cost, capital cost, and
recovery based on bulk recovery
............................................ 155
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List of Tables Table 1: Total Inferred Resources
...............................................................................................................................................
7Table 2: Production Statistics
......................................................................................................................................................
8Table 3: Summary of Pre-Production Capital Costs
..................................................................................................................
11Table 4 : Operating Costs
..........................................................................................................................................................
12Table 5 : Summary of Financial Results
....................................................................................................................................
12Table 6 : Units and abbreviations
..............................................................................................................................................
16Table 7 : Responsible Parties
....................................................................................................................................................
19Table 8 : Tujuh Bukit Drilling Summary
......................................................................................................................................
23Table 9 : Core Recovery Data
...................................................................................................................................................
31Table 10 : Laboratory Methods used for Tumpangpitu Drill Core
Samples
...............................................................................
35Table 11 : Performance Statistics for Internal Standards for Au
................................................................................................
37Table 12 : Internal Blanks
..........................................................................................................................................................
38Table 13 : Field Duplicates Core and Sludge Samples
......................................................................................................
38Table 14 : Laboratory Repeatability Summary Report (Lab Intertek)
........................................................................................
38Table 15 : Summary Results of Metcon Test Program
..............................................................................................................
40Table 16 : Tujuh Bukit Project Composite Description and Weights
..........................................................................................
41Table 17 : Summary of KCA Test Work
.....................................................................................................................................
42Table 18 : Summary of KCA Column and Projected Field Recoveries
......................................................................................
43Table 19 : KCA Core Photograph Category Summary
..............................................................................................................
44Table 20 : Metcon Composite Samples
.....................................................................................................................................
45Table 21 : Head Assays
.............................................................................................................................................................
46Table 22 : Comparison of Expected, Assayed, & Average
Calculated Head Grades
................................................................
46Table 23 : Metcon Baseline Cyanidation Test Summary
...........................................................................................................
47Table 24 : Effect of Higher Cyanide Concentration on Residue
Grades
....................................................................................
47Table 25 : Metcon Comminution Test Summary
........................................................................................................................
48Table 26 : Metcon Analyses of Final Leach Solutions
...............................................................................................................
48Table 27 : Head Analyses Gold and Silver
.............................................................................................................................
49Table 28 : Head Screen Analyses Gold and Silver
.................................................................................................................
50Table 29 : Summary of Bottle Roll Leach Tests Gold
.............................................................................................................
51Table 30 : Summary of Bottle Roll Leach Tests Silver
............................................................................................................
52Table 31 : Summary of Agglomeration Test Work
.....................................................................................................................
54Table 32: Summary of Compacted Permeability Test Work
......................................................................................................
55Table 33 : Column Leach Test Parameters
...............................................................................................................................
56Table 34 : Column Leach Test and Expected Field Recoveries
................................................................................................
56Table 35 : Cyanide Consumption
...............................................................................................................................................
61Table 36 : Crushing Circuit Set Points
.......................................................................................................................................
66Table 37 : Rainfall Data
.............................................................................................................................................................
70Table 38 : Water Balance Average Banyuwangi Rainfall
..........................................................................................................
71Table 39 : Water Balance Wet Year Banyuwangi
......................................................................................................................
72Table 40 : Indonesia Discharge Standards
................................................................................................................................
73Table 41 : Projected Annual Reagents and Consumables
........................................................................................................
76Table 42 : Raw Assay - Sorted in Decreasing Oxidation
...........................................................................................................
82Table 43 : Summary of Mineralized Domains
............................................................................................................................
85Table 44 : Summary of Inferred Resource Estimates by Hellman
& Schofield
..........................................................................
86Table 45 : Block Model Field Codes
..........................................................................................................................................
89Table 46 : Project Assumptions
.................................................................................................................................................
90Table 47 : Conceptual Mining Fleet
...........................................................................................................................................
91Table 48 : Mine Design Criteria
.................................................................................................................................................
92Table 49 : Pit Characterization
...................................................................................................................................................
94Table 50 : Annual Mine Production Schedule
............................................................................................................................
97Table 51 : Annual Mining Costs
...............................................................................................................................................
106Table 52 : Heap Leach Power Demand Based on 24 hr/d and 75%
utilization
.......................................................................
110Table 53 : Summary of Rainfall and Wind Simulation Wet Season
......................................................................................
116Table 54 : Summary of Rainfall and Wind Simulation Dry Season
.......................................................................................
116Table 55 : Contaminant Concentrations (mg/wet kg) in Selected
Coral Samples
...................................................................
117Table 56 : Concentrations of Dissolved Trace Elements in the
Fresh Water and Sea Water Samples
.................................. 118Table 57 : Concentrations of
Trace Elements in the Sediment Samples
.................................................................................
118
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TUJUH BUKIT PRELIMINARY ECONOMIC ASSESSMENT (PEA)
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Table 58 : Summary of Initial Capital Costs
.............................................................................................................................
125Table 59 : Earthwork Unit Rates
..............................................................................................................................................
127Table 60 : Buildings
.................................................................................................................................................................
128Table 61 : Field Indirect Costs
.................................................................................................................................................
130Table 62 : Summary of Capital Costs by Discipline
.................................................................................................................
132Table 63 : Estimate of Initial Fills
.............................................................................................................................................
132Table 64 : Average Unit Operating Costs Life of Mine
..........................................................................................................
134Table 65 : Tujuh Bukit Operating Cost Summary (US$/t)
........................................................................................................
135Table 66 : Tujuh Bukit Project Staffing Levels & Salary
Schedules
.........................................................................................
137Table 67 : Summary of Mine Operating Costs US$/tonne mined
.........................................................................................
139Table 68 : Processing Power and Consumption
......................................................................................................................
140Table 69 : G&A Power Load and Consumption
.......................................................................................................................
140Table 70 : Process Consumable Items
....................................................................................................................................
141Table 71 : Support Equipment Operating Costs
......................................................................................................................
143Table 72 : Maintenance Supplies Process Area Cost Basis
.................................................................................................
143Table 73 : Tujuh Bukit Power Consumption
.............................................................................................................................
145Table 74 : Capital Cost to Completion
.....................................................................................................................................
146Table 75 : Life-of-Mine Summary
.............................................................................................................................................
147Table 76 : General Assumptions
..............................................................................................................................................
149Table 77 : Cash Flow Analysis
.................................................................................................................................................
151
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1.0 SUMMARY Intrepid Mines (Intrepid) commissioned Kappes,
Cassiday & Associates (KCA) to prepare a Preliminary Economic
Assessment (PEA) study for the Tujuh Bukit Oxide Project, located
in the East Java Province, along the south coast of the island of
Java, Indonesia. This project contemplates only the mining and
processing of oxide and minor transition material by heap leaching.
Mentions are made of ongoing exploration of the deeper sulfide
material but processing of sulfide material is not considered in
this report.
In addition to KCA, major contributors to the report include:
Hellman and Schofield Pty Ltd., who prepared the mineral resource
estimate (as detailed in the previous NI 43-101 Report on 27
January 2011); Australian Mine Design & Development Pty Ltd,
who prepared the mine designs, mine costs and mine schedule; Golder
Associates Pty Ltd. (Golder) who prepared several environmental
baseline studies for the project; and in addition to metallurgical
work by KCA, Metcon, who conducted some previous grinding based
metallurgical tests.
1.1 Project Overview
This report is a study of the Tujuh Bukit Oxide Project, of
which Intrepid Mines holds an 80% economic interest. Tujuh Bukit is
located approximately 90 kilometers due west of the island of Bali,
and 200 kilometres southeast of the city of Suyabaya, East Java,
Indonesia.
Figure 1 : Location of the Tujuh Bukit Project, Banyuwangi, East
Java, Indonesia.
The PEA study contemplates Life of Mine production in the order
of 1.29 million ounces of gold and 10.5 million ounces of silver in
57 million tonnes of heap feed material. The 63 million tonnes of
waste to be mined results in a heap feed to waste ratio of 1:1.1.
Metallurgical testing has demonstrated the project is amenable to
cyanidation using heap leaching with projected field recoveries of
86% for gold and 17% for silver for the oxide zones and 72% of the
gold and 31% of the silver for the transition Zone A.
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1.2 Property Description, Ownership & Location
The Tujuh Bukit Project comprises two adjoining IUPs (Izin Usaha
Pentambangan, or Business License) an IUP Exploration of 6,623.45
hectares and an IUP Production Operation of 4,998 hectares. These
IUPs were granted to PT. Indo Multi Niaga (IMN) on 25 January 2010
under decree number 185/05/KP/429.012/2007. Intrepid Mines and PT
IMN have signed a joint venture agreement enabling Intrepid to hold
an 80% economic interest in the Tujuh Bukit Project.
Figure 2 : IUP Production Operation outlined in red. Green areas
are representations of areas of Protection Forest
Figure 3 : IUP Exploration outlined in red. Green areas are
generalised representations of areas of Protection Forest.
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The property is located approximately 205 kilometers southeast
of Surabaya, the capital of the province of East Java, Indonesia
and 60 kilometers southwest of the regional center of Banyuwangi.
The property is centered near 8 35 20.6 S and 114 01 08 N and is
bound within UTM co-ordinates 163,000-179,000 E and 9042000-9055000
N.
Surface rights in the area are held by the Department of
Forestry and include farmland, production forests, protected forest
areas, and some villages. The villages are located within the IUP
area but not in any of the areas identified for exploration at this
point. The IUPs require annual rent payments and submissions of
quarterly reports regarding the companys activities on the tenement
to the regional government. The tenement boundaries were located
with GPS coordinates and the boundary of the tenements has
subsequently been surveyed and marked with concrete pegs.
The main mineralized prospect, Tumpangpitu, is located in the
southeast corner of the tenement and covers an area of about 3 by 2
kilometers and is now referred to as Tujuh Bukit, the subject of
this study.
1.3 Geology
The Tujuh Bukit project lies on the south coast of East Java,
within the central portion of the Sunda-Banda magmatic arc which
trends southeast from northern Sumatra to west Java then eastward
through east Java, Bali, Lombok, Sumbawa and Flores. The
Sunda-Banda arc comprises both Miocene to Quaternary volcanics.
The Tujuh Bukit project is located near the southeast margin of
a ~50-km wide annular zone interpreted to represent the relics of a
former andesitic stratovolcanic center.
1.3.2 Local Geology
A lithology map identifies a dominantly diorite and microdiorite
substrate intruded by extensive granodiorite bodies east of the
project area and by smaller quartz-diorite bodies in and around
Tumpangpitu. The figure below shows the lithology of the
Tumpangpitu prospect region These mapped sequences comprise
volcanic breccias of the Batuampar Formation and more abundant
Batuan Intrusives.
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Figure 4: Lithology of the Tumpangpitu Prospect
1.3.3 Deposit Geology
The Tumpangpitu deposit comprises a high-sulfidation Cu-Au-Ag
epithermal system that is telescoped onto a large underlying and
Au-rich porphyry Cu-Au-Mo system.
In general terms, the overall mineralizing system broadly
comprises a deep, magnetic tonalite intrusion into an older and
more extensive feldspar-hornblende diorite stock. This older
diorite intrusion has in turn intruded a cover sequence of lithic
and crystal-lithic volcanic breccias at shallow levels of the
deposit. These volcaniclastic tuffs and breccias conformably
overlie a sequence of sediments that are partly constrained to dip
inward towards the tonalitic intrusive center.
The interface between the tonalite stock, interpreted to be the
progenitor of porphyry ore, and the overlying intrusive and
extrusive country rocks is characterized by the presence of one or
more extensive diatreme breccias bodies and numerous smaller
hydrothermal breccias bodies.
The high-sulfidation epithermal component of the Tumpangpitu
mineralizing system can be divided into four sub-types based on
oxidation intensity, metal grade and metal suite.
Completely oxidized high-sulfidation ore (Au-Ag strongly
enriched; Cu severely leached). Partially oxidized high-sulfidation
mineralization (Au-Ag +/- Cu; Cu is strongly leached).
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Unoxidized but low-grade high-sulfidation mineralization
(Au-Ag-Cu). Au-Ag grade is significantly lower than the overlying
oxide component.
Unoxidized but higher-grade high-sulfidation mineralization
(Au-Ag-Cu) in deeper structural conduits and proximal to inferred
upflow zones.
Porphyry Cu-Au-Mo mineralization occurs within a carapace or
shell of magnetite, quartzmagnetite and quartz vein stockwork that
occurs within and around the periphery of the tonalite intrusion,
overprinting both the outer margins of the intrusion as well as the
proximal country rock.
This mineralization occurs dominantly within areas characterized
byphyllic overprint of potassic alteration and lesser areas of
potassic alteration within the tonalite intrusion.
1.3.3.1 High-Sulfidation Oxide Mineralization
The oxide mineralization at Tumpangpitu occurs on topographic
ridges, in close association with Au and Ag soil anomalies. This
oxide mineralization occurs in a series of pods or pockets that are
labelled as Zones A through F. These pods of oxide mineralization
have two gross forms:
1. As tabular dipping shelves or ledges of mineralized and
advanced argillic altered lithic tuff and hydrothermal breccia
(Zones C and A). At Zone A these mineralized zones dip moderately
to the southwest. At Zone C these mineralized zones dip moderately
to the northwest.
2. As steep structurally controlled loads that are best defined
in the Zone B area. At Zone B these mineralized zones strike
north-south and dip steeply to the east.
Two surfaces are defined from logging of oxidation through the
upper high-sulfidation portion of the deposit, Base of Complete
Oxidation (BOCO) and Base of Semi-Oxidation (BOSO).
At Zones A and C, for the most part, these surfaces are
relatively smooth and plunge deeply but smoothly beneath the ridge
tops to depths of between 50 and 300m below surface. The
mineralized dipping silica ledges described above are highly
fractured and sulfide-rich, so oxidation appears to extend
pervasively down into these ledges.
In contrast, at Zone B where the mineralized structures are
narrower and very steep, the BOCO and BOSO surfaces have complex
and high relief morphologies, yielding very complex oxidation
surfaces, with islands of transitional material lying above BOCO
and islands of oxidized material lying below BOCO.
The orientation of high-sulfidation mineralization (oxide +
sulfide) at Zones E and F await further drilling to improve
cross-section resolution.
The character of oxide mineralization was described in detail in
the reports by H&S (2008 & 2009). Au and Ag is enriched in
intervals of core that exhibit increased degrees of oxidation as
well as increased intensity of sulfide fracture networks, to the
degree that visual inspection of the core can provide a qualitative
estimate of likely Au grade (low, medium, high).
Mineralization in the oxide zone mimics the form and
distribution of mineralization in the underlying HS-sulfide zone
except that it has an oxidation overprint which has upgraded Au and
Ag grades.
Mineralized intervals of core tend to be tens to locally
hundreds of meters thick. The intersected thickness is believed to
be close to true thickness at Zone C since drilling was
perpendicular to the NE-dipping ledge. At Zone A, mineralization is
thought to dip in the same direction as the larger fraction of the
holes (i.e. towards the southwest), however because of the
continuity of mineralization between holes and the style of
mineralization
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KAPPES, CASSIDAY & ASSOCIATES | JUNE 2011 SECTION ONE
(widely dispersed fracture networks within a deep and extensive
oxidation zone), the intersected widths are likely to be close to
the true widths. Detailed resolution of the dip and geometry of
these wide fracture networks, both in the oxide and sulfide HS
zones, awaits further infill drilling.
1.3.3.2 High-Sulfidation Sulfide Mineralization
As described above for the oxide zone, advanced argillic
alteration at Zones A and C forms extensive and thick silica ledges
which dip to the SW and NE respectively, and appear to emanate or
flare upward, away from the deep porphyry tonalite core that is
centered at depth below Zones A and C. These ledges are zoned
perpendicular to their dip, with cores of silica and silica-alunite
that zone outward to silica-alunite-clay, silica-clay, clay-silica,
clay-chlorite and finally in distal areas to propylitic alteration,
typical of high-sulfidation systems where neutralization of acid
fluids is the dominant control on alteration patterns.
The figure below shows the strongly mineralized porphyry
stockwork shell is about 800 meters wide on section and about 200
meter in vertical width around the carapace of the tonalite
intrusion. The green outline is the estimated 0.1% Cu grade
boundary, the upper half of which comprises high-sulfi dation
sulfide mineralization.
Figure 5: Lithology Section 11040mN at Tumpangpitu
1.4 Resource Estimate
Interpreted alteration zones were used in conjunction with
distribution of grades to define ten mineralized domains. A block
model was constructed. The block model extents were chosen to cover
the mineralized domains. As drilling is currently inadequate to
define indicated or measured resources, an Inferred Resource
Estimate at various gold grades is presented below.
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KAPPES, CASSIDAY & ASSOCIATES | JUNE 2011 SECTION ONE
Table 1: Total Inferred Resources
Total Inferred Resource Cut-Off
(Au) Tonnage
(Mt) Au
(g/t) Ag
(g/t) M Oz
Au M Oz
Ag 0.2 130 0.55 18 2.4 80 0.3 85 0.74 21 2 55 0.4 60 91 23 1.7
45 0.5 45 1.06 24 1.5 35
0.75 25 1.39 27 1.1 20 1 15 1.69 29 0.9 15
Oxide Zone Inferred Resource Cut-Off
(Au) Tonnage
(Mt) Au
(g/t) Ag
(g/t) M Oz
Au M Oz
Au 0.2 95 0.61 17 1.9 50 0.3 65 0.79 20 1.6 40 0.4 45 0.95 22
1.4 35 0.5 35 1.09 24 1.3 30
0.75 20 1.42 27 1 20 1 15 1.71 30 0.8 15
Transition Zone Inferred Resource Cut-Off
(Au) Tonnage
(Mt) Au
(g/t) Ag
(g/t) M Oz
Au M Oz
Au 0.20 40 0.42 20 0.5 25 0.30 20 0.57 33 0.4 15 0.40 10 0.74 27
0.3 10 0.50 7 0.91 28 0.2 10 0.75 4 1.24 27 0.1 5 1.00 2 1.53 27
0.1 0
Notes :
1. Rounding as required by reporting guidelines may result in
apparent differences between tonnes, grade and contained metal
content.
2. Tonnage and grade measurements are in metric units. Ounces
are reported as troy ounes.
1.5 Mining and Optimized Mine Plan from Inferred Resource
The Tujuh Bukit Heap Leach Project is planned as an open-pit
gold operation processing 20,000 t/d of oxide material. A total of
up to 17.4 million tonnes of material (heap feed and waste) are
scheduled to be mined per year with an average strip ratio of
1:1.1. Use of industry-proven mining practices and equipment are
planned. The capital costs are developed assuming contractor mining
with all new equipment maintained under maintenance and repair
contracts (MARC) with the vendors. It is assumed that management of
explosives will be performed by a sub contractor.
The overall mineral resource, as described by Hellman and
Schofield, is the basis for the pit optimization, mine design and
production schedule developed by Australian Mine Design &
Development Pty Ltd, which is discussed in detail in the mining
chapters of Section 18.
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Mining costs include management, supervisory and mining
technical staff salaries and overheads and the costs of drilling,
blasting, loading, hauling, ancillary and support activities.
Contractor mining is assumed, where the cost estimation for the
contractor mining has been derived by AMDAD using the following
methodology:
Mining equipment costs include ownership costs and hourly
operating costs. Ownership costs are modelled by assuming rolling
leases for each item, with the capital cost repaid quarterly, plus
a lease rate of 10%. An additional margin of 20% is applied to the
total operating and ownership costs to arrive at an estimate of
total contract mining costs.
1.6 Metallurgy
Metallurgical testing of the potentially economic material from
the Tujuh Bukit project has been conducted by Metcon and KCA.
Testing has demonstrated that metallurgical recovery is amenable to
heap leach recovery techniques with gold estimated field recovery
of 86% on oxide material and 72% on transition material. Silver
recovery is lower, with estimated field recovery of 17% on the
oxide and 31% on transition material.
Table 2: Production Statistics
Item Recovery Recoverable Ounces Metal Oxide Heap Feed (Mt) 52
Mt Oxide Gold Grade 0.84 g/t 86% 1.2 M oz Au Oxide Silver Grade
22.8 g/t 17% 7.2 M oz Ag Transition Heap Feed (Mt) 5 Mt Transition
Gold Grade 0.70 g/t 72% 0.1 M oz Au Transition Silver Grade 28.1
g/t 31% 1.4 M oz Ag
Total Heap Feed Tonnes 57 Mt Total Gold Grade 0.83 g/t 84% 1.3 M
oz Au Total Silver Grade 23.5 g/t 18% 8.6 M oz Ag
Cyanide consumption is estimated to be 0.49 kg/t, and cement for
agglomeration is estimated to be 4.5 kg/t. The cement is
conservatively estimated as many tests show little or no cement
required depending on clay content. Metallurgy is discussed in
detail in Section 16.
1.7 Process Description
Mining will take place at a rate of 20,000 heap feed tonnes per
day. Material for processing will be delivered and direct dumped to
a modular-style 3-stage crushing plant nearby the pit. The targeted
product size will be 100% passing 20 mm. The crushed material will
be transported three kilometers via an overland conveying system to
the two agglomeration drums. Cement and barren solution will be
added to the material at the drums. The agglomeration drums
discharge to a mobile stacking system (grass-hopper field conveyors
and a mobile radial stacker). The material will be stacked on the
leach pad in 10 meter lifts and irrigated for 90 days with dilute
cyanide solution using sprinklers on top and dripper tubes on the
side-slopes. A total of ten 10 meter lifts are planned for a
maximum heap height of 100 meters in the deepest part of the heap.
After percolation through the
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material, gold and silver bearing solutions collect on an HDPE
plastic liner and are channeled to a pregnant solution collection
pond and pumped to a Merrill Crowe plant. Zinc dust is used to
precipitate the gold and silver as precious metals sludge. The
precipitate is dried and smelted into dore bars onsite. The reader
is referred to Section 16 for additional process details.
1.8 Infrastructure
Power for the project will be supplied via a new installation of
a 31 km long, 20 kV powerline. This line connects to an existing
150 kV line to the North. It is assumed that sufficient capacity
will continue to exist to support the project as the project
progresses. Back-up generators will provide power to only the
solution circuits in the event of power outages.
Process water will be supplied with a combination of stored
rainfall, groundwater wells, and seawater as required. Dedicated
fire water will be stored in reserve for emergencies. Waste water
treatment facilities, diesel fuel, and gasoline storage facilities
will be constructed. External voice and data communications will be
supplied through a dedicated satellite system.
Site buildings will include:
Administration Building Mine Shop Refinery Process Warehouse and
Workshop Process Offices Locker Rooms Crusher Maintenance Workshop
Merrill-Crowe Shed roof only Reagent Storage Area Shed roof
only
A man camp is also included, for first use as a construction
camp, and later portions of it can be maintained as a permanent
camp.
Further details of the infrastructure are described in Section
18.
1.9 Environmental and Permitting The operation is designed to
comply with Indonesian environmental requirements, Intrepid Mines
corporate environmental policy, and industry best practice
standards. Golder and URS have documented most environmental
conditions and permit requirements for the project. Section 18
contains commentary on studies to date regarding environmental
baselines. In general, regarding mining and large heap leach
projects, there are four negative environmental aspects that have a
high relevance to public perception:
1. The use of cyanide and the perceived potential to contaminate
water resources. 2. The overall impact on the landscape created by
the mine and leach facilities. 3. The generation of dust from the
mine and process.
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4. The potential for acid generation from the pits, waste dumps,
and leach pad capable of contaminating surface or groundwater.
Conversely, there are three potentially positive aspects to
perception, which are:
1. The generation of employment. 2. The generation of improved
services to the communities. 3. The overall economic benefits to
the communities.
With due care in the design, construction, operation,
monitoring, and closure of the project, as well as judicious
management of community expectations it is believed that all of the
identified environmental and social risks can be mitigated.
Environmental and reclamation requirements are discussed in detail
in Section 18.
1.10 Reclamation and Closure Reclamation and closure will
include removing the buildings, power lines, pipe lines and process
components, securing the pit and waste dumps, assuring the spent
leach pad and tailings storage facility are chemically and
structurally stabilized, and returning the area to its previous
land use. Portions of the reclamation and closure work will be
completed concurrently with operations.
1.11 Capital Costs
Pre-production capital cost details are presented in Section 18
and are summarized below. All costs are in fourth quarter 2010 US
dollars. Capital costs based on the design outlined in this report
are considered to have accuracy of +/- 30%.
The capital costs include a contingency of 20%.
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Table 3: Summary of Pre-Production Capital Costs
Plant Totals Direct Costs Total Supply Cost ($M) Install
($M)
Grand Total ($M)
Area 00 - Site & Utilities General 1.2 1.2 2.4
Area 03 Camp 1.9 0.2 2.1
Area 05 - Water Supply & Distribution 0.7 0.1 0.8
Area 06 - Process Area General 0.2 0.1 0.3
Area 08 - Mobile Equipment 1.5 0.1 1.5
Area 10 - Crushing 13.9 2.8 16.6
Area 15 Heap Feed Reclaim and Stacking 23.4 1.9 25.3
Area 20 - Heap Leach and Solution Handling 3.5 28.2 31.6Area 25
- Merrill Crowe 5.4 1.0 6.4
Area 35 - Refining 1.4 0.1 1.6
Area 45 - Detoxification 0.7 0.1 0.8
Area 50 - Electrical 1.7 0.2 1.9
Area 70 - Reagents 0.5 0.1 0.5
Area 75 - Laboratory 1.2 0.1 1.4
Area 80 - Ancillaries 6.3 1.0 7.3
Plant Total Direct Costs 63.5 44.9 100.5
Spare Parts 2.5 2.5
Contingency 21.7 21.7
Plant Total Direct Costs with Contingency 124.8
Indirect Field Costs 3.5
Indirect Field Costs Contingency 0.7
Plant Total Indirect Costs 4.2
Initial Fills 1.0
Owners Costs 20.0
EPCM 16.4
Sub Total Plant Cost 166.4
Working Capital 60 Days 13.0
Pre-Production Mining Provision 6.5
Contractor Mobilization Provision 1.0
Total Pre-Production Capital Costs 186.9
VAT (Pre-Production Capital Costs) 16.7
Total (Pre-Production Capital Costs inc VAT) 203.6
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1.12 Operating Costs
Operating costs details are provided in Section 18. The table
below summarizes the estimated project operating costs. Operating
costs are estimated to have an accuracy of +/- 30%.
Table 4 : Operating Costs
Area Unit Cost ($/heap feed tonne) Labor 0.499 Crushing and
Stacking 1.237 Leaching 0.165 Merrill-Crowe Plant 0.177 Refinery
0.075 Reagents 1.938 Water Distribution 0.028 Laboratory 0.088
Support 0.072 Total Processing 4.279 G&A 0.800 Mining Cost
(Contractor Mining) 5.76 Total 10.84
1.13 Financial Analysis
The Table below is a summary of financial results. The complete
financial analysis is presented in Section 18.
Table 5 : Summary of Financial Results
Financial Summary Long-term gold price per ounce $1,050 $1,450
Long-term silver price per ounce $16.50 $38.00 NPV - after tax @ 0%
(Million) $445 $942 NPV - after tax @ 10% (Million) $180 $446
Payback (years) 3.03 2.70 Mine Life (years) 9 9
1.14 Project Development Schedule
Project development is expected to require 17 months for
engineering and construction. During the construction period,
modular tent-style housing will be provided for the estimated 456
construction workers.
A jetty/receiving port will be constructed to receive equipment
and construction components. The power line will be constructed.
Pioneering work on the pits and pre-production haul roads will be
constructed. The administration, mine shop and other ancillary
buildings will be constructed. The first phase of the leach pad and
process ponds will be built. The crushing and recovery plant will
be installed. It is estimated that once the mining operation begins
delivering material to the operating crusher, dore metal production
could be within four months.
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1.15 Recommendations, Risks and Opportunities
No fatal flaws have been discovered in the project evaluation to
date. Recommendations primarily involve additional detail with
respect to resources, operations, permitting and Indonesian
business protocols and regulations.
A number of opportunities have been identified for further
evaluation during the next stage of feasibility.
The recommendations, risks and opportunities are more fully
discussed in Section 19, and are summarized below.
1.15.1 Recommendations
After completing this PEA and the associated technical and
economic review of the project, recommendations are made for
additional review of the following topics:
Complete drilling sufficient to convert inferred resources to
measured and indicated resources; Column testing on materials that
are near average mine grades; Metallurgical testing and process
testing using seawater; The need for agglomeration; Determine the
crushing index; Testing for mercury in the heap feed material;
Collect additional site information for the water balance; Design a
solution neutralization system; Full review of permit requirements;
Tsunami studies; Detailed closure plan; Review and augmentation of
baseline environmental studies; Continued exploration for
groundwater; Additional geotechnical drilling; Earthwork contractor
costs; Cyanide delivery systems; Project consumables specifics;
Seaport scale and timing of construction review.
1.15.2 Risks
At the present stage of evaluation of the Tujuh Bukit Project a
number of risks have been identified. It is believed that most of
these can be mitigated through additional metallurgical testing,
further design work and advancing negotiations regarding power,
water and permits. The primary risks include:
Power availability and cost; Water balance;
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Tsunami design; Solution containment; Acid rock drainage;
Permitting risks; Community relations.
1.15.3 Opportunities
The Tujuh Bukit Project has numerous opportunities to evaluate.
These include:
Potential to increase overall processing rate and refinement of
operating costs; Earthworks optimizations, considering mine
scheduling and owner vs. contractor mining costs; Value engineering
of facilities, and consideration of regenerative motors on the
downhill conveyors.
The results of the PEA indicate that at a gold price of $1,050
per ounce the Tujuh Bukit heap leach concept is a robust project
worthy of investment and warrants continued studies to a
feasibility level.
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2.0 INTRODUCTION Kappes Cassiday and Associates (KCA) was
commissioned by Intrepid Mines Ltd (Intrepid) to provide an
independent Qualified Persons Technical Report for the Tujuh Bukit
Oxide Project located in East Java, Indonesia.
The report has been prepared in compliance with National
Instrument NI 43-101, Standards of Disclosure for Mineral Projects
and documents the results of a Preliminary Economic Assessment on
the project in 2010 and early 2011.
The purpose of the preliminary economic assessment and this
report was to determine the viability of progressing the Tujuh
Bukit Oxide Project to the pre-feasibility study stage. The results
of the preliminary economic assessment of the Project are
encouraging and warrant the progression of the Tujuh Bukit Project
to the pre-feasibility study stage. The assessment has met its
original objective.
2.1 Qualified Persons
The Qualified Persons (QPs), as defined in NI 43-101 and in
compliance with Form 43-101F1 (the Technical Report), responsible
for the preparation of the technical report include:
Daniel Kappes, PEng, Kappes Cassiday and Associates, President
of KCA and Project Manager Tujuh Bukit Oxide Preliminary Economic
Assessment
Dr Phillip Hellman, FAIG, Hellman and Schofield, Director of
H&S, Mineral Resources Peter Allen, MAusIMM, Australian Mine
Design and Development Pty Ltd., Senior Geologist, Mine
Planning, Mine Costs, Mine Scheduling
Daniel Kappes visited the property in December 2010, and
inspected drill core, orebody location, possible infrastructure
locations, conditions of local access and met with project staff
and other consultants.
Phillip Hellman has visited the property on several occasions
since November 2007. The latest visit was in December 2010 where Dr
Hellman observed drilling activities, drill core and participated
with on-site discussions with staff.
Peter Allen visited the property in December 2010, and inspected
drill core, orebody location, possible infrastructure locations,
conditions of local access and met with project staff and other
consultants.
2.2 Effective Dates
Two effective dates are appropriate for this report, as shown
below;
Effective Date of the Mineral Resources 27 January 2011;
Effective Date of the Preliminary Economic Assessment 1 June
2011.
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2.3 Units and Abbreviations
All costs are in United States dollars. Units of measurement are
metric. Only common and standard abbreviations were used wherever
possible. A list of abbreviations used is as follows:
Table 6 : Units and abbreviations Measurement Description
Distances: mm millimeter cm centimeter m meter km kilometer Areas:
m2 or sqm square meter ha hectare km2 square kilometer Weights: oz
troy ounces Koz 1,000 troy ounces g grams; kg kilograms T or t
tonne (1000 kg) Kt 1,000 tonnes Mt 1,000,000 tonnes Time: min
minute h or hr hour op hr operating hour d day yr - year
Volume/Flow: m3 or cu m cubic meter m3/h cubic meters per hour
Assay/Grade: gpt or g/t grams per tonne ppm parts per million; ppb
- parts per billion Other: TPD or tpd tonnes per day m3/h/m2 cubic
meters per hour per square meter kWh kilowatt hour Au gold Ag
silver Cu copper AuEq gold equivalent US$ or $ - United States
dollar ASL Above Sea Level
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2.4 Project Background
The project area was first explored by PT. Hakman Platina
Metalindo and its JV partner, Golden Valley Mines of Australia.
Golden Valley Mines identified the potential of the area as a
prospective target for porphyry copper type mineralization
following a regional drainage and rock-chip geochemical sampling
program conducted during 1997 and 1998.
Subsequently, a rapid detailed surface geochemical sampling
program was conducted resulting in seven targets being identified
for drilling. An initial drilling program of 5 diamond drill holes
was conducted during 1999.
In February 2000 Placer Dome Inc. (Placer) entered into a Joint
Venture with Golden Valley Mines (GVM) to earn 51% of the project
and assumed operational control of the exploration program. A total
of 32.75 kilometers geochemical and IP grids were completed during
2000.
Strong correlation between the near-surface resistivity
anomalies and outcropping vuggy silica zones was observed in the IP
results. Deeper chargeability anomalies (>200-400 m below
surface) were recorded in the northern portion of the grid. Placer
targeted the shallow resistivity anomalies with a further 10
diamond drill holes.
There is no report or record of further work being conducted on
the project by Placer-GVM and the area became vacant by the time PT
IMN applied for a KP General Survey in 2006 over the project
area.
During 2006 Hellman and Schofield Pty assisted a previous Joint
Venture of PT IMN with an Australian company in assembling
exploration data and designing a drilling program aimed at
advancing the prospect in order to report resource estimates
according to the JORC Code and Guidelines.
During 2007 a Term Sheet was signed between Emperor Mines Ltd.
(later to become Intrepid Mines Ltd. through the merger of Emperor
Mines and Intrepid Mines) and PT IMN and IndoAust Pty. Ltd., which
was followed by an Alliance Agreement between Emperor Mines Ltd,
and PT IMN in April 2008. Drilling on the project by PT IMN and
Intrepid Mines commenced in September 2007.
Additional historical drill hole assays became available during
2007 enabling a slightly more objective view of the geological
potential. The September 2007 Hellman & Schofield study of
Geological Potential used ordinary block kriging of 2m composited
AuEq data within polygon extrusions.
At the present time the project comprises:
An undeveloped oxide gold/ silver deposit An undeveloped deep
sulfide Copper/Gold/Molybdenum deposit An exploration camp with
little other permanent infrastructure
Intrepid has carried out five phases of diamond drilling at the
Tujuh Bukit property, from September 2007 and is continuing to
drill as at the date of this report.
Intrepid has advanced study of the oxide portion of the project
with metallurgical testing by Metcon (milling extraction testwork),
and later at KCA for detailed heap leaching testwork.
Due to the relatively small incremental gold recoveries seen
between the heap leach testwork and milling extraction testwork,
this PEA does not examine a grinding scenario, and only evaluates a
7.1 Mtpa crushing / agglomeration and heap leaching project.
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2.5 Scope of Work
Intrepid Mines Ltd. commissioned KCA to evaluate the heap leach
process for the Tujuh Bukit project to Preliminary Economic
Assessment (PEA) standards. In this PEA the processing details are
refined sufficiently to be used as the basis for preparation of a
Prefeasibility Study (PFS). The PEA is led by KCA and incorporates
work from other groups including major contributors Australian Mine
Design and Development (AMDAD) and Hellman and Schofield Pty Ltd
(H&S).
The PEA presents:
Information from others to give a complete review of all parts
of the project; Project design criteria; Preliminary site plans,
showing all roads, buildings, facilities, access road; Preliminary
drawings including flow sheets and GAs; Preliminary estimate of
overall site power requirements based on similar operations; List
of major equipment; Cost estimate within a 30% cost range subject
to further study to resolve unknowns which will be
identified in the PEA, for: Capital costs; including Owners
costs and working capital; Operating costs.
It should be noted that quotes have been obtained for most of
the major equipment and infrastructure items and other major
capital such as earthworks. The PEA is intended to provide a view
of potential project economics and to give guidance for future
metallurgical testing, project design and feasibility.
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3.0 RELIANCE ON OTHER EXPERTS AND CAUTIONARY NOTES
3.1 Reliance on Other Experts
This report was prepared by Kappes, Cassiday & Associates
(KCA) as a preliminary economic assessment (PEA) for Intrepid Mines
Ltd. (Intrepid Mines). The information, conclusions, and estimates
contained in this report are consistent with the level of effort
and quality involved in KCA services, based on the information
available at the time of preparation, the data supplied by outside
sources, and the assumptions, conditions, and qualifications set
forth in this report.
This report is intended for use by Intrepid Mines subject to the
terms and conditions of its contract with KCA. Any other uses of
this report by any third party are at that partys sole risk.
KCA has taken all reasonable care in producing the information
contained in this report. No inferences or conclusions should be
drawn from reading any one section or part of this report.
The information in this report is not a substitute for
independent professional advice before making any investment
decisions.
Furthermore, any information contained in this report may not be
modified without permission from Kappes, Cassiday and Associates.
General information and data in this report were derived from many
sources including qualified person/consultants and non- QP sources
including the Intrepid Mines staff and the authors of and
contributors to previous reports prepared on their behalf.
The following list outlines the various contributors to this
report that assisted KCA and their respective responsibilities. The
list also includes other groups that provided support studies that
are referenced within the report and included within the
appendices.
Table 7 : Responsible Parties
Metcon Metallurgy with respect to mill and CIL leaching
testwork, Section 16, particularly with regards to pre-KCA
testwork.
Hellman & Schofield Pty Ltd. Property location, history,
geology, mineralization, exploration, resources and reserves.
Sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, and 18 were
taken from previous H&S reports on the project.
Australian Mine Design and Development Pty Ltd
Mining capital and operating costs Mining Section 18
PT Intertech Utama Services Preliminary Flora and Fauna
Environmental Section
Golder Associates Aquatic baseline, environmental baseline
Dr Phillip Hellman is the Qualified Person for sections 4, 5, 6,
7, 8, 9, 10, 11, 12, 13, 14, 15 and 17 of this report is an
Independent Qualified Person and has relied on various datasets and
reports that were provided by Intrepid Mines, and project
consultants to support the interpretation of exploration results
discussed in this report on mineral resources. The data that was
provided to Dr Hellman was deemed to be in good stead, and is
considered to be reliable. Dr Hellman is not aware of any critical
data that has been omitted so as to be detrimental to the
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objectives of this report. There was sufficient data provided to
enable credible and well constrained interpretations to be made in
respect of data. Assay data is handled by an independent database
bureau that receives electronic results directly from the
laboratory. The data is then directly transferred to Dr
Hellman.
Intrepid advises that there is no knowledge of any environmental
liabilities associated with the project. A permit is required to
conduct exploration activities within areas of protected and
production forest and these have been issued by the Department of
Forestry for work on this project.
Statements regarding tenement status, legal right to mine and
explore, environmental liability have been accepted in good faith
from Intrepid and are outside the expertise of Hellman &
Schofield Pty Ltd or Kappes Cassiday and Associates.
The Indonesian Forestry Law restricts non forestry activities
within protected forests and prohibits mining using an open pit
method in protected forest areas. The area of the Zone A, Zone B
and Zone C oxide resource estimate areas and the mining areas
contemplated by the Preliminary Economic Assessment fall within a
protected forest area. Intrepids Alliance partner, PT IMN, is
working with relevant Indonesian authorities regarding a potential
review of forest land status. There is no assurance that the
forestry reclassification will take place in this instance.
3.2 Cautionary Notes
This preliminary economic assessment is preliminary in nature
and includes inferred mineral resources that are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral
reserves, and there is no certainty that the preliminary assessment
will be realized. Actual results may differ significantly.
Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability.
Due to the uncertainty that may be attached to Inferred Mineral
Resources, it cannot be assumed that all or any part of an Inferred
Mineral Resource will be upgraded to an Indicated or Measured
Mineral Resource as a result of continued exploration. Confidence
in the estimate is insufficient to allow meaningful application of
the technical and economic parameters to enable an evaluation of
economic viability worthy of public disclosure, except in the case
of the preliminary economic assessment. Inferred Mineral Resources
are excluded from estimates forming the basis of a feasibility
study.
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NINE
4.0 PROPERTY DESCRIPTION AND LOCATION The property description
and location of the Tujuh Bukit project is as stated in the Report
on Mineral Resources by Phillip L. Hellman, BSC (Hons 1), Dip Ed,
PhD, MGSA, MAEG, FAIG, dated January 27 2011, which is filed on
SEDAR.
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, AND PHYSIOGRAPHY
The accessibility, climate, local resources and physiography of the
Tujuh Bukit project is as stated in the Report on Mineral Resources
by Phillip L. Hellman, BSC (Hons 1), Dip Ed, PhD, MGSA, MAEG, FAIG,
dated January 27 2011, which is filed on SEDAR.
6.0 HISTORY The history of exploration at the Tujuh Bukit
project is as stated in the Report on Mineral Resources by Phillip
L. Hellman, BSC (Hons 1), Dip Ed, PhD, MGSA, MAEG, FAIG, dated
January 27 2011, which is filed on SEDAR.
7.0 GEOLOGICAL SETTING The geological setting of the Tujuh Bukit
project remains as stated in the Report on Mineral Resources by
Phillip L. Hellman, BSC (Hons 1), Dip Ed, PhD, MGSA, MAEG, FAIG,
dated January 27 2011, which is filed on SEDAR.
8.0 DEPOSIT TYPES The deposit type of the Tujuh Bukit project
remains as stated in the Report on Mineral Resources by Phillip L.
Hellman, BSC (Hons 1), Dip Ed, PhD, MGSA, MAEG, FAIG, dated January
27 2011, which is filed on SEDAR.
9.0 MINERALIZATION The mineralization of the Tujuh Bukit project
remains as stated in the Report on Mineral Resources by Phillip L.
Hellman, BSC (Hons 1), Dip Ed, PhD, MGSA, MAEG, FAIG, dated January
27 2011, which is filed on SEDAR.
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10.0 EXPLORATION This section is a summary of the same NI 43-101
item from the Report on Mineral Resources by Phillip L. Hellman,
BSC (Hons 1), Dip Ed, PhD, MGSA, MAEG, FAIG, dated January 27 2011,
which is filed on SEDAR.
10.1 Historical Exploration
The project area was first explored by PT Hakman Platina
Metalindo and its JV partner, Golden Valley Mines of Australia.
Golden Valley Mines identified the potential of the Tumpangpitu and
Salakan areas as prospective targets for porphyry copper type
mineralization following a regional (1:50,000) drainage and
rock-chip geochemical sampling program conducted during December
1997 to May 1998. Subsequently, a rapid detailed surface
geochemical sampling program was conducted over Gunung Tumpangpitu
resulting in seven targets being identified for drilling. An
initial drilling program of 5 diamond drill holes GT-001 to GT-005
was conducted during March to June 1999.
In February 2000 Placer Dome Inc. (Placer) entered into a Joint
Venture with Golden Valley Mines to earn 51% of the project and
assumed operational control of the exploration program. In order to
better define targets for follow-up drilling on Tumpangpitu 32.75
kilometers of grid-based geochemical and IP surveys were completed
between April and May 2000. Anomalous bedrock geochemistry
demonstrated marked consistency with prominent ridges or
topographic highs, trending to the northwest, consisting dominantly
of vuggy silica altered breccia.
The results of the IP survey demonstrated strong correlation
between the near-surface resistivity anomalies and the outcropping
vuggy silica zones. Deeper chargeability anomalies (>200-400 m
below surface) were recorded in the northern portion of the grid.
Placer targeted the shallow resistivity anomalies for high
sulfidation style Au-Ag mineralization with a further 10 diamond
drill holes GT-006 to GT-014.
On the basis of the results from the second drilling program a
further 14 holes were designed (2,700m). However, Placer withdrew
from the project possibly due to the combined influences of the
relatively low metal prices at the time (i.e., the project did not
appear to meet corporate thresholds of size and grade) together
with an unstable economic and political climate across much of
south-east Asia (the Asian Financial Crisis). There is no report or
record of further work being conducted on the project by Placer-GVM
and the area became vacant by the time PT IMN applied for a KP
General Survey in 2006 over the project area.
In June 2006 Hellman and Schofield Pty Ltd assisted a previous
Joint Venture of PT IMN with an Australian company in assembling
exploration data and designing a drilling program aimed at
advancing the Tumpangpitu prospect in order to report resource
estimates according to the JORC Code and Guidelines.
H&S were able to provide an indication of Potential
Mineralization within the variably oxidized gold-silver enriched
zone above the deeper copper mineralization by using the limited
available drilling data along with soil sample geochemical results.
This study suggested that approximately 3m oz Au Equivalent (AuEq
was based on $650/Oz Au and $10/Oz Ag) was a reasonable amalgamated
target size in oxide Zones A, B & C. This oxidized gold-silver
enriched zone is the subject of this PEA.
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KAPPES, CASSIDAY & ASSOCIATES | JUNE 2011 SECTION TEN
10.2 Recent Exploration (2006-2010)
Since involvement of PT IMN in the Tujuh Bukit project
(2006-2010) and the involvement of Intrepid Mines (formerly Emperor
Mines Ltd) in 2007-2010, the following exploration programs have
been undertaken over the Tumpangpitu prospect:
Re-establishment of the Tumpangpitu grid (initially established
by Placer); Completion of 475 soil grid samples at a density of
200m x 25m over the Tumpangpitu prospect. The soil
samples were acquired along 17 cross-lines oriented at 050-230
magnetic. Soil samples were analyzed for Au, Cu, Pb, Zn, Ag, As,
Sb, Mo and Ba;
Regional rock-chip sampling: A total of 1137 rockchip samples
were collected by IMN or Intrepid Mines during the period 2006 to
2010 from the Tujuh Bukit project. These includes suites of
rockchip samples collected at Tumpangpitu, Salakan, Katak, Gunung
Manis and other regional areas in between these main prospects;
Preparation for and completion of five main phases of diamond
drilling at Tumpangpitu that extended from September 2007 to
September 2010.
The Table below summarizes recent drilling at Tujuh Bukit since
September 2007
Table 8 : Tujuh Bukit Drilling Summary
Target # of Drill Holes Meters Dates
Zone A Oxide 30 9,928.87 2007-2011
Zone B Oxide 56 13,047.05 2008-2011
Zone C Oxide 33 8,702.1 2007-2011
Zone E Oxide & Zone F Oxide 28 4,483.55 2010-2011
Regional Oxide Holes 5 788.85 2009
Porphyry Holes 34 28,418.85 2008-2011
Extensive regional -80 mesh soil sampling was conducted in 2009
to 2010 at Tumpangpitu and east of Tumpangpitu. Soil samples were
collected by both hand-operated auger and petrol-driven mechanical
auger for the Tumpangpitu program. Soil samples were taken from the
C-horizon in most cases, though in areas of deep saprolite clay
development samples were taken from the B soil horizon. Soil
samples were analyzed for Au, Cu, Pb, Zn, Ag, As, Sb, Mo and Ba at
the Intertek Laboratory in Jakarta. Two types of duplicate soil
samples were routinely acquired, a within hole duplicate and a
duplicate located ~1 meter from the auger hole as part of the
procedure to assess anomaly reproducibility. Several orientation
surveys were also done whereby some auger holes were sampled at
20cm intervals from surface to ~1.4m depth to assess the behavior
of metal depletion or enrichment through the soil profile. The
figure below shows the Distribution of Au anomalies in -80 mesh
soil samples at Tumpangpitu (southern gridded area). The principal
prospects at Tumpangpitu and east of Tumpangpitu are shown by the
black dotted outlines. Labels A-F refers to the naming of
mineralized oxide zones at Tumpangpitu. The Au-Ag mineralized oxide
zones at Tumpangpitu are clearly delineated by Au soil
anomalism.
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KAPPES, CASSIDAY & ASSOCIATES | JUNE 2011 SECTION TEN
Figure 6 : Soil Anomalies at Tumpangpitu
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KAPPES, CASSIDAY & ASSOCIATES | JUNE 2011 SECTION TEN
In September 2009, Intrepid Mines Ltd and their partner PT Indo
Multi Niaga conducted a heliborne aeromagnetic survey to cover the
entire Tujuh Bukit property. The aerial survey was flown by GPX
Surveys Pty Ltd (Perth). The survey was flown along 100m-spaced
north-south flight lines (2530 line kilometers). Radiometric and
DTM data were also acquired together with the magnetic data. The
magnetic data were processed by Moore Geophysics, the data
processing yielding Raw TMI, 1st-Vertical Derivative, Analytical
Signal and Reduced-to-Pole imagery as well as U-count, Th-count,
K-count and Total Count images for the radiometric data. The
helimagnetic survey yields far more detailed magnetic data that
will allow more definitive 3D modeling of magnetic anomalies and
more robust interpretation of regional structure as well as
confident definition of the loci of intrusive centers within the
district. Ongoing soil sampling programs are progressively being
undertaken to screen these new regional targets.
Figure 7 : Aeromagnetic Survey Data
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KAPPES, CASSIDAY & ASSOCIATES | JUNE 2011 SECTION ELEVEN
11.0 DRILLING This section is a summary of the same NI 43-101
item from the Report on Mineral Resources by Phillip L. Hellman,
BSC (Hons 1), Dip Ed, PhD, MGSA, MAEG, FAIG, dated January 27 2011,
which is filed on SEDAR.
Intrepid and their Joint Venture partner PT Indo Multi Niaga
(IMN) have conducted an ongoing diamond drilling program at the
Tumpangpitu prospect since September 2007. Drilling has
progressively expanded from one drill-rig to the current six
operating drill rigs on this prospect.
A total of 186 diamond drill holes were completed by
Intrepid-IMN on the Tumpangpitu prospect between September 2007 and
18th April 2011. The total drill meterage by Intrepid-IMN on the
Tumpangpitu prospect during this period was 65,369.27m. The
location of these drill holes is shown below. This drilling at
Tumpangpitu covers an area of approximately 2.3 km2. In positioning
the drill holes, Intrepid-IMN reviewed all existing data, including
surface alteration data from prior mapping by Placer, previous
drilling results of Golden Valley Mines and Placer.
Figure 8 : Location of Collars of completed drill holes at
Tumpangpitu (20th April 2011)
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KAPPES, CASSIDAY & ASSOCIATES | JUNE 2011 SECTION ELEVEN
11.1 Downhole Surveys A total of 1479 down-hole surveys points
(that include set-up collar positions at the surface) were acquired
from drill holes GT-001A through to GTD-11-202 (excluding holes
GTD-11-194 and GTD-11-201). Down-hole survey data existed for the
historical holes GT001A through to GT014 although it is not known
what type of survey tool was used for these old GVM and Placer
holes (it is assumed that the survey data were recorded using the
widely used Eastman single-shot system). All drill holes drilled by
Intrepid Mines Ltd from 2007 to 2011 were surveyed using a REFLEX
EZ-ShotTM down-hole survey instrument which recorded azimuth,
inclination, roll-face angle, magnetic field strength and bore-hole
temperature.
11.2 Drill Hole Collar Survey and Topographic Survey The collar
positions of drill holes at Tumpangpitu were picked up by two
separate survey companies, PT GEOINDO GIRI JAYA and PT SURTECH
UTAMA INDONESIA. All drill holes used in this current resource
estimation were surveyed by ground-based geodetic surveying.
Surface topographic data were also surveyed on the ground during a
series of ongoing survey campaigns contracted initially to PT
Geoindo and subsequently to PT Surtech. These data were used to
construct a digital elevation model for resource estimates.
11.3 Summary Results of Drilling The results of drilling to date
have defined two preliminary shallow Au-Ag oxide resources that
have been reported previously (Hellman 2008 and 2009) and a third
global oxide resource that encompasses oxide zones A, B, C, E, F
and intervening areas (Hellman, Jan 2011).
Typical intersections for the oxide drilling were reported by
Hellman (2008) as accumulated intercepts exceeding 0.3 g/t Au and
accumulated intercepts exceeding 0.3 % Cu, and again by Hellman
(2009) as accumulated intercepts exceeding 0.3 g/t Au, accumulated
intercepts exceeding 20 g/t Ag and selections of higher grade Au
intercepts from Zone A. The reader is encouraged to view these
results in those reports.
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KAPPES, CASSIDAY & ASSOCIATES | MJUNE2011 SECTION TWELVE
12.0 SAMPLING METHOD AND APPROACH This section is a summary of
the same NI 43-101 item from the Report on Mineral