How does Corani stack up against the competition?

Chacaconiza, Peru — In terms of grade and potential size, how does Bear Creek Mining’s (bcm-v, bcekf-o) Corani discovery stack up to other development-stage silver projects?

Statements like: “It’s Navidad, without the lawsuit,” have been whispered in the back rooms of the mining community.

Navidad

Navidad is a grassroots silver-lead discovery made by IMA Exploration (IMR-V, IMR-X) in southern Argentina.

Since its discovery in 2003, more than 150 holes have been completed on the property. To date, IMA has defined indicated resources of 301 million oz. silver and 1.2 million tonnes lead contained in a near-surface 92.8 million tonnes grading 101 grams silver, 1.36% lead and 0.19% zinc, based on a cutoff grade of 50 grams silver-equivalent. Inferred resources stand at 15.2 million tonnes grading 78 grams silver, 0.45% lead and 0.11% zinc, for an additional 38.4 million oz. silver.

Ongoing drilling has continued to define mineralization beyond the resource boundaries, and a new prospect, known as Loma de la Plata, returned significant intercepts including 31.5 metres of 684 grams silver (20 oz.) silver and 0.76% lead, starting from surface.

Metallurgically, Navidad appears complex. Preliminary work on nine composite samples indicates much more comprehensive testing is required.

Navidad is currently the focus of a lawsuit launched by Aquiline Resources (AQI-T, AQLNF-O) that alleges the discovery was made using confidential data. The case was heard by the Supreme Court of British Columbia in October; a decision is expected sometime in 2006.

San Cristobal

Apex Silver Mines (SIL-X) began construction and development of its wholly owned San Cristobal project in Bolivia following board approval in December 2004. After several years of waiting for a turnaround in metal prices, Apex Silver is spending US$600 million to build an open pit and 40,000-tonne-per-day mill. San Cristobal was discovered in 1995 by a team led by Apex’s chief geologist Larry Buchanan and its original Bolivian partners, Mintec, which Apex subsequently acquired in 1997.

The mine will have a life of at least 16 years based on a development plan containing 229 million tonnes of proven and probable reserves grading 63.3 grams (1.8 oz.) silver, 1.6% zinc and 0.59% lead, at a strip ratio of 1.56:1. This is equivalent to an in situ 466 million oz. silver, 3.6 million tonnes zinc and 1.3 million tonnes lead, using prices of US$5.75 per oz. silver, US50 per lb. zinc and US30 per lb. lead.

More than 95% of the ore consists of sulphides, with recovery rates averaging 91.9% for zinc, 75.5% for silver and 85.6% for lead. Payable metals will total 275 million oz. silver, 3 million tonnes zinc and 1.1 million tonnes lead.

The mill will produce three clean concentrate products using a conventional grinding/flotation system, including zinc and silver-rich lead concentrates, with about 5% of the concentrate winding up in an off-specification bulk concentrate.

Due to higher grades at surface, production will average 182,500 tonnes zinc, 22.3 million oz. silver and 85,000 tonnes lead annually in the first five years, versus 167,500 tonnes zinc, 17 million oz. silver and 63,500 tonnes lead per year spread over the life-of-mine. With zinc and silver treated as co-products, life-of-mine cash operating costs are projected to average US41 per lb. zinc and US$1.43 per oz. silver, taking a byproduct credit of lead to the silver cost.

For the first five years, cash operating costs are pegged at US39 per lb. zinc and US$1.31 per oz. silver, assuming a price of US30 per lb. lead. At today’s lead price, just north of US45 per lb, the silver cost is negative.

“We are going to be a large silver mine, but we shouldn’t lose sight of the fact that, on a revenue basis, it’s a larger zinc mine than it is a silver mine,” Apex Silver president Jeffrey Clevenger told delegates at Scotia Capital’s recent Precious and Base Metals Conference in Toronto. “We’re not going to be the largest silver mine, but we’re certainly not the smallest either, so we are a significant player.”

The project remains on budget and on time.

“We don’t see any train wrecks ahead and 90% of the value of purchased equipment, supplies and that type of thing has been committed,” Clevenger said. “We will turn the crank on the mill in April of 2007.” The mill is scheduled to be in full production by the fourth quarter of 2007.

Alamo Dorado

The Alamo Dorado project in Mexico’s Sonora state is the only economic primary silver discovery made in the last decade. Pan American Silver (PAA-T, PAAS-Q) acquired the project through the takeover of Corner Bay Silver in early 2003 in a deal worth US$64.2 million. Discovered by grassroots exploration in 1997, the project was thought to contain a near-surface resource of 117.5 million oz. silver and 447,700 oz. gold (or 142.8 million oz. silver-equivalent) in 79.6 million tonnes grading 45.9 grams (1.3 oz.) silver and 0.18 gram gold.

A bankable feasibility study prepared by AMEC Engineers in July 2002 concluded an open-pit, heap-leach operation could yield 6 million oz. silver and 29,000 oz. gold annually over a life of eight years, based on proven and probable reserves of 35.5 million tonnes grading 68 grams (2 oz.) silver and 0.26 gram gold (equal to 77 million oz. silver and 297,000 oz. gold). Metallurgical results had shown that the Alamo Dorado mineralization was amenable to heap leaching, with recovery rates averaging 65% for silver, and 75% for gold. However, further test work indicated the initial metal extraction rates were likely optimistic.

In 2003, Pan American hired SRK Engineers to perform a structural evaluation of the deposit. The study concluded that the mineralization was structurally controlled rather than disseminated, as previously interpreted. A new resource model reduced the overall silver resource by about 40%, primarily due to the loss of half of the gold ounces. An infill drilling program was conducted to confirm the revised geological model.

“We ended up with about the same amount of recoverable silver, but we lost about 115,000 ounces of gold resources,” said Ross Beaty, Pan American’s chairman, during a 2004 year-end conference call.

Additional scoping studies determined that the project would be better suited to conventional milling than heap leaching. In February 2005, Pan American Silver announced approval for the construction of a new open-pit mine and 4,000-tonne-per-day milling operation, based on revised proven and probable reserves containing 44 million oz. silver and 123,000 oz. gold in 11.6 million tonnes of ore grading 118 grams (3.4 oz.) silver and 0.33 gram gold. The stripping ratio is 1.7:1, and recovery rates for both silver and gold are expected to be over 90%.

“This is a happy event for any company, but I will say the projected financial results are not as good as we had expected when we acquired the project in early 2003 from Corner Bay Silver,” said Beaty after making the go-ahead announcement.

The updated 2005 feasibility study expects Alamo Dorado to produce 5 million oz. silver and 12,000 oz. gold annually at a cash cost of US$3.35 per oz. silver, net of gold byproduct credits, over a mine life of eight years. The capital cost estimate for building the mine totals US$76.6 million. The project generates a 16% return on investment and undiscounted net cash of US$68.5 million over the project life, based on a US$7-per-oz. silver price. Using a long-term price assumption of US$5.50-per-oz. silver, the project generates US$22.6 million in undiscounted cash flow for a return of 5.7%. Production is scheduled to begin in late 2006.

To see more pictures of Rob Robertson’s trip to Chacaconiza, Peru, please visit www.northernminer.com/gallery