Index of the document
РИ-ИСУ-06.02.01.00.00/3-1

Asarel-Medet JSC, town of Panagyurishte

Registration Number93-00 –7700/ 18.11.2009

APPROVED BY:

EXECUTIVE DIRECTOR:

/Dr. eng. L.Tsotsorkov/

REQUESTFORQUOTATION

REGARDING:„PreparationofaworkingplanfordevelopmentoftheAssarelmineandtheWestSectionalongoutline “Stage 1” foroverallminingoftheremainingcost-effectivereserveswithalternativestoproceedingtoalargeroutline(Stage 2) or a smaller outline (Stage 6)”.

1.CURRENTSTATE

TheAssarelcopperoredepositislocatedintheSashtinskaSrednaGoraMountainintheCentralpartofBulgaria, districtofPazardzhikto 20 kmawaysouthfromthetownofZlatitzaandto 10 kmawaytonorthwestofthe town of Panagyurishte. The region of the deposit is an average mountainous and it altitude varies from 800 to 1,080 km.

The geographical boundaries of the deposit are as follows:

- tothenorth - thesaddletothenorthfromthepeaksRazslatitzaandKoychovKamak;

- to the east – the Assarelska River;

- tothesouth – thesaddlebetweenthepeaksRazslatitzaandLisaMogila;

- to the north – the Panova River.

Thedepositwasstudiedduringtheperiodfrom 1969 to 1977andasaresultasmallopenpitwascommissionedwith an annual throughput of 1 mln. tonnesofcopperore. TheorewasprocessedattheMedetConcentratorPlantlocatedat 12 kmtothenortheastfromtheAssareldeposit.

Theconstructionofanopenpitandaconcentratorplantwithplannedannualthroughputof 15 mlnofcopperore started in the early 1982. The first stage of the complex was commissioned in 1989 and its annual throughput was 7.5 mln tonnes ore.

A decision was made to limit the annual throughput to 10 mln. tonnes of ore as a result from the new economic situation in 1991.

The planned production capacity of 10 mln. tonnes of ore was achieved in 1997 as the current throughput is 13 mln. tonnes of ore.

1.1 MineralizationoftheAssareldeposit

TheAssarelstructureisorientatedtothenorth—westanditisbuiltmainlyofPaleozoicgranites, UpperCretaceouseffusivevulcanites (andesites, lavobrecciaandtuffs), sub-vulcanicrocks (diorite, quartz-dioriteandquartz-sienodioriteporphyrites). The Assarel deposit ore body which has a copper cut-off grade of 0.10% has an irregular column-like shape. The long axis of the horizontal ellipse-like sections is orientated to the north-northwest and their short axis is orientated to the east-northeast. The vertical scope of industrial mineralization has not been defined yet but industrial mineralization down to level 510 has been reached which was a subject of previous planning. However, mineralization has been found down to level 405 using a small number of drill holes.

The ore bodyhas a complex internal structure, which was predetermined by various tectonic disturbances, litological and mineralogical varieties, the nature and special location of the rock type bodies.

More than 33 ore minerals have been found in it. The copper and gold bearing minerals are of industrial importance.

Two endogenetic (pre-ore and ore) and one supergenetic stages with a total number of 10 parageneses were distinguished in the ore-formation process(Bogdanov, 1975 , 1987 .), Kr. Angelkov distinguished four spatially differentiated mineral associations in 1973 and 1988:

- quartz-alunite-pyriteassociationwithasmallquantityofchalcopyritedistributedonlyineffusiverocks;

- quartz-feldspar-chalcopyriteassociation, localizedwithinthedeeplevelsofthedeposit;

- quartz-sericite-chalcopyrite-borniteassociation, embeddedinthesericitequarzites;

- caolinite-chalcozineassociation – intheargillitesandsericitequarcitesintheupperpartsofthedeposit;

- copper-carbonate-oxide associationcorrespondingwiththeoxidizedzone.

TheindustrialmineralogicalclassificationoftheoresfromtheAsareldepositisrepresentedbythreemineralassociations:

- chalcopyriteassociation(zoneofprimary-sulphidemineralization)

- chalcozine-bornite-covelline association (zone of secondary-sulphide mineralization)

- copper-oxide-carbonite (oxidation zone).

The chalcopyrite association (ores of I type) contains less than 50% of secondary sulphide copper. Chalcopyrite is the main ore mineral, chalcosine, coveline and bornite are secondary minerals. This association is distributed from level 930 down to level 510.

The chaclosine association (ores of II type) contains more than 50% of secondary sulphide copper. The main ore minerals are chalcosine, coveline, bornite, copper sulphosalts, chalcopyrite. The association is located in the upper part of the ore body from level 1085 down to level 945. A column is formed in the central part of the ore body down to level 805.

Thecarbonate-oxideassociationcorrespondswiththeoxidationzone. Themainoremineralsarechalcosine, coveline, malachite, azuriteandrarelycuprite, native copper. It is distributed in the south part of the ore body and it makes a smooth transition to the areas of chalcosine and chalcopyrite associations.

Therocksarehydrothermallyaltered and they have been converted into metasomatites built up exclusively of secondary minerals: quartz, sericite, montmorillonite, other clay minerals, chorite, epidote, alunite, diaspore, ore minerals. Dependingonthequantitativeratiosbetweentherockformingminerals, the metasomatites are distributed into three groups: propylites, argillites and secondary quarzites. Thelasttwovarietiesarealunite-diasporeandsericite.

The ore bodies which build up the Assarel deposit are represented by the following rock varieties:

Propylitesformamonolithicbodyintheeasthalfofthedepositandintheperipheralnorth-westandsouth-north parts. Separate elongated bodies of irregular shape are preserved in the central part of the deposit. They are mainly subvulcanic dykes and apophyses here.

Argillitesoccupy the west half of the deposit. They are located down to the studied depth but they are more widely spread at the deposit higher levels. Argillites are supergenetic in the oxidation zone.

Alunite-diasporequarzitesformeightlayer-likeandlens-likebodiesinthewesthalfofthedepositasallofthemareembeddedinargillites. They are distributed mainly at the higher levels of the deposit down to the depth of 250 m.

Sericitequarzitesformeightlens-likebodiesinthecentralpartofthedeposit. They differ by size and they are arranged in an array of beads orientated to the southeast-northeast. Bodies 1 and 2 are developed on the earth surface. The rest of the bodies are located by the geological exploration drill holes. Their vertical scope is longer than the studied one by the drill holes. The sericite quarzites are the main ore-embedding rocks in the deposit. Having a cut-off grade of 0.10 % Сu they contain 31 % of the copper reserves in the deposit at an average grade of 0.55 % Сu. Duetothisreasonthesericitequarzitesarereferredtoaseightgeological, morphologicallydifferentiatedorebodies, embeddedinmineralizedminematerialwith a lower copper grade.

1.2 Engineeringandgeologicalconditions

TheAsareldepositandtheorefieldwhichpertainstoitareconsideredasasmallgraben-synclinalelocatedbetweentheanticlynoriunoftheCentralSrednaGoraMountainandthePanagyurishtegraben-synclinoriuminthescopeofthePanagyurishtedepthfaultwithasub- meridinionalorientation. This predetermines the strong tectonic alteration of the rocks. Ground zones are formed as their depth varies from several to several tensof meters.

The exploration works carried out in 1978 showed that the Asarel deposit is limited to the northeast by the Mial fault with a northwest-southwest orientation (130º-150º) and by the Petich upthrust with the same orientation to the southwest. The structure is significantly complicated by a number of secondary faults parallel to the Mial fault and also by such which have a northeast andsub-equatorial orientation. Such are the Panovski fault and the Razslatitza fault which together with the Mial and Petrich faults for several structural blocks. Those blocks are cracked by sub-meridional faults like the Dabravski, Hadgimitov faults, etc.

ThemostclearlyexpressedfaultsintheareaofthepitaretheMial, Razsaltitza, RazlozhkovsiandDabravski faults. All of them are observed through the entire kettle.

The Mial fault is open in the northeast part of the pit. In this part it is a beam of several parallel faults as it subsides to the south at a gradient of 50º-60º. Thefaultplaneitselfslightlyshiftsitsorientationfrom210/80 in the west parts through 215/70and reaches 195/70. Stripswithorientationof175/75and 215/65arelocateduponit. Theverysmoothplanesreachingalengthof 30-40 metersandaheightof15 meters are typical for the fault. The macro- and mesostructures allow this disturbance to be defined as a fault – fault-shift. The block located to the north (the recumbent wing), in which Sivata gramada peak falls, is relatively elevated. The granitodiorites in proximity to the fault and the contact with the Smilovenski granite (represented as a separate strip) are cataclised and slated which makes them look like gneisses.

TheRazslatitzafault has opened in the south and southwest part of the pit. The entire fault zone is filled with black tectonic clay. Its thickness increases from the bottom to the top – from 20-30 cm to 1,5-2 meters. It subsides to the north-northeast (20-30º) at an angle of 60º and it separates granites and granitodiorites to the north from microdiorites to the south. A multitude of dykes with microdiorite composition occurs parallel to the fault which follow its propagation direction. Mesoscopic criteria allow it to be defined as an upthrust. It merges with the microdiorites in the south-southeast part while in the southeast part it serves as a boundary between the Smilovenski granite and the microdiorites.

The Panovski fault within the deposit is observed between the Razslatitza and Mial fault which is also a fault beam which subsides to the south. It is orientated to 130º and its gradient varies from 60º to almost vertical position (beneath the DispatchBuilding). A contact is observed between the granites from the Smilovenski plutonic body and the granitodiorides under the Panovski fault in the east part of the deposit. A 10-meter thick zone, built up of parallel veins filled with quartz, pyrite and chalcopyrite is located parallel to the fault surface. The availability of this zone confirms its sinnore nature. The Macroscopic criteria allow it to be defined as an upthrust.

TheRazlozhkovskifault is observed in the southwest part of the mine. So far it has been developed only in its upper levels. Its orientation is to 150º, as it subdues to the east-northeast at an average gradient of 60º. Itiseasytofollowitontheterrainbecauseofitsthicklayeroftectonicclay (reachingupto 4 mofthickness) andbecause of the sub-parallel strongly mineralized dyke with microdiorite composition. No absolute criteria have been established for its nature of movement.

Inconclusionwecansaythatthestructureswithorientationbetween130º-150º are predominant for the entire pit which are typical for this part of the SrednaGoraMountain. Structureswithorientationto70º, 90º and 110ºcanbeconsideredsecondaryones.

Basedonaconjunctionofindicationsandtakingintoaccountthemajorconsiderationsoftheengineeringandgeologicalsystematizationfrom 1977, thecompressionstrengthfromthereportfrom 1995 andtheinformationfortheexactnamesanddistributionofmetasomatitesthe rocks were differentiated into four major groups:

Firstgroup – verystrongandstrongrocks(notalteredorslightlyaltered), with an average compression strength of 84 МРа which includes mainly propylites and more rarely quarzites. Indeed, these are the densest and strongest rocks.

Secondgroup – strongrocks(significantlyalteres)with a compression strength of 60 МРа including mostly propylites. Those are cracked rocks, the strength of which refers to separate strong pieces and does not correcpond to the compression strong of the predominant rocks in situ.

Thirdgroup – rocksofaveragestrength(stronglyaltered)withaveragecompressionstrengthabout36 МРа, whichincludesthethreetypesofmetasomatites: propylties, quarzites, argillites. Their low compression strength is due to a number of cracks which explain their behavior in situ as intensively cracked.

Fourthgroup – weak(verystronglyaltered)rockswhichincludesmainlyargillitesandweakquarzitesaspropylitesmakeanexclusion. They are not water-resistant – if they get wet and stay in the open air, they fall apart completely and this is due to the significant contents of clay in them. The tectonic clays, found in the Razslatitza fault in the southwest part in the mine also belong to this group.

1.3 Hydrogeologyofthepit

Thehydrogeologicalevaluationofthemassivewasinitiallybasedondatafromthestudiesfrom1977 and two visual checks made in 1995.

Amapwaspreparedbaseddataofthestudiespriorto1977inwhichsomehydrogeologicalpeculiaritiesofthesitewerereflected.

Regardlessthefissurenatureofundergroundwater, a single filtration flow used to exist in the massif. It can be characterized as radial, convergent and non-pressure. Two elongated zones with increased pressure and orientation west-south are outlined on the backgrounds of this flow. The first zone is located in the west part of the pit. The levels reach elevation 1030 here. The second zone is located in the center of the pit about elevation 1000. Those zones can be attributed to the availability of ascending circulation of underground waters in the massif (concealed discharge of pressure fissure waters). As a whole the massif is anisotropic with high conductivity of some tectonic disturbances at a predominantly low filtering capacity.

It is presumed that the water contents of the slopes in the southwest part of the pit can be attributed to the first zone with increased pressure and those in the north part – to the second zone.

Thevisualcheckscarriedoutin 1995 andtheroughhydrogeologicalcalculationsmadeforthepurposesoforientation give us a reason to suppose that the constructed drainage gallery at level 710 does not dewater the mine efficiently.

AcomprehensiveanalysisoftheinformationcollectedasofthatmomentaboutthehydrofeologicalandengineeringandgeologicalpeculiaritiesofthedepositwasassignedtotheAmericancompanyVector Colorado, LLC. Hydrogeological models prior to the start and after stopping its operation, forecast models of the underground waters according to several scenarios (with and without using the drainage gallery) ways for observance of underground waters and their testing, geotechnical analysis of the pit slopes were made.

The summarization of the gathered information enabled us to obtain a clearer idea about the specific hydrogeological conditions in the region of the Assarel pit. The underground waters in the pit region and the adjacent territories are non-pressure and at separate places in the massive they are weakly pressurized up to pressurized. The levels are established at different depths of the terrain – from several meters to 100 m in proximity to the cup of the open pit. The general orientation of the underground flow is from north-northeast to south-southwest. Based on the above-said, taking into consideration the conditional terminology four zones were distinguished with different permeability: zone 1, zone2, zone3, zone 4. Each of the so determined low rank hydrogeological units (zones) has a very complex spatial shape, predetermined by the geometry of the natural relief f the terrain, the lateral boundaries between adjacent zones and of the pit cup (at different levels of it operation).

The first zone (zone 1) is formed in the weathering zone of the rock massif (the so called oxidation zone). It occupies the upper parts of the section and varies within the boundaries for several tens of meters to 100-150 m. In these parts the rocks are weathered and crack to different extents which is a prerequisite for the relatively high permeability of the media. The filtration factor varies within wide rangesfrom 1х10-3to 1х10-1 m/d but most often it is about 5х10-2 m/d. The other 3 zones are established in different metasomatite rocks: zone 2 is built up of secondary quarzites,zone 3 – of argillites and zone 4 – of propylites.

Thedifferentrockvarietiesaredistinguishedalsobythefactthattheyarecrackedtovariousextentsbutingeneralthey are weakly cracked which predetermines they relatively low filtration characteristics. The filtration factor in the three zones varies within a relatively small scope– from 1х10-3to 2х10-2 m/d as the low values are more representative for zone 3 and the high ones for zone 4.

Undernaturalconditions(beforeconstructingthepit) theaveragepressuregradientwashigh– about 0.075 which is typical for the mountainous regions. After staring the mining activities, the structure of the underground flow was strongly disturbed as a result from the drainage of part of the flow in the built drainage gallery or directly along the slopes in the lower parts of the pit. A large-scale depression was formed in the central parts of the considered territory of the accumulated underground waters in the rock massif.

The feeding of the underground waters within the modeled area is done from various sources: natural underground flow along the northwest boundary, infiltration of the rainfalls and draining waters along the slope, a river with constant run-off. Under natural conditions the major drainage of the rock massif is made predominantly to the southwest. When mining activities are carried out, the larger part of the underground flow is drained along the drainage gallery (the flow is about 25 l/s).

1.4 Reservesofthedeposit

Theindustrialevaluation ofthedepositreserveswasmadein 1977, anevaluationbasedontheconditionswasmadein1973 at a cut-off grade of 0.15% Cu for a 15-meter section.

The reserves were calculated based on two natural types of ore – primary sulphide ore and secondary sulphide ores.

IntheapprovedbytheStateReservesCommittee “ReportfortheresultsfromthegeologicalstudiesoftheAssaarelcopperdeposit”, thereservesdowntolevel 510 asofJuly 1, 1977 areacceptedasfollows:

- category В + С - 377.3 mln. tonnes of ore 0.38 % Сu

-category С2 - 41.2 mln. tonnes of ore0.26 % Сu

In compliance with the extent to which the reserves were studied and proven the reserves were additionally divided into the following groups: proven reserves, probable reserves and preliminarily evaluated reserves.

Balanceores (flotationoresandleachores) areincludedinthegroupoftheproven reserves.

The overbalanced ores within the pit outline are included in the group of the evaluated in details resources.

The ores outside the pit outline with balance grade refer to the group of the probable reserves and those with overbalance grade – to the preliminarily evaluated reserves.

Inaddition, theoresfromthepitwerefurtherrecalculatedandgroupedbasedontherequirementsfor “ConditionsforcalculatingthereservesintheAssarelcopper-porphyrydepositwhenminedfromanopenpit” approvedin1993 by the Executive Director of Assarel-Medet. Dr. eng. Lachezar Tsotsorkov. There are two natural types and seven technological sorts:

І type - primary sulphide ores(chalcopyrite) are the ores in which the relative grade of primary sulphide copper exceeds the grade of the secondary sulphide ores.

ІІ type - secondary sulphide ores(chalcosine) are the ores in which the relative grade of secondary sulphide copper exceeds the grade of the primary sulphide ores.

- sort 1 - primary sulphide ores with oxide copper to 5 relative %;

- sort2 - primary sulphide ores with oxide copper from 5 to 10 relative%;

- sort3 - secondary sulphide ores with oxide copper to 5 relative%;

- сорт 4 - secondary sulphide ores with oxide copper from 5 to 10 relative%;

- sort5 - secondary sulphide ores with oxide copper from10 to 15 relative%;

- sort6 - secondary sulphide ores with oxide copper from15 to 20 relative%;

- окисни руди with oxide copper to 20 relative%.

Theleachoresaresecondarysulphide(7th sort)withoxidecopperexcceding 20 relative%andsecondarysulphide(8thsort), limited between cut0off grade 0.10 % copper(the boundary with the waste)and the cut-off grade for the respective sort.

1.5 Waysofminingthedeposit

TheminingactivitiesondevelopingtheAssareldepositisdividedintotwostages:

А. Experimental mining works from 1976 to1981;

B. Miningworksfrom 1982.

TheexperimentalminingworkswereperformedbytheMedetMiningandProecessingComplexaccording to a plan prepared by Niproruda JSC, Sofia.

A total amount of 2.4 mln. tonnes of ores with average copper grade of 1.237 % were mined containing29,989 tonnes of copper. They were processed n the Medet concentrator plant mixed with the ores from the Medet pit.

The regular mining activities started in 1982 and were performed accordint to a plan prepared by Niproruda JSCa and Giprotzvet, Moscow. The plan was approved by the Council of Ministers aith Oreder No. 44 from March 20, 1981 as the outline of the pit was narrowed and its bottom was made higher with three benches from level 510 to level 555 fro the purposes of achieving better financial results. Thus 61..5 mln tonnes of ores from category В + С1 with average copper grade of 0.35% were excluded from the approved balance reserves at the amount of 377.3 mln. tonnes.

AspecializedcouncilofexpertsattheMinistryofIndustrywithreportfromOctober 10, 1997 decidedtoacceptoutlineBwithreservesof 272 mln. tonnesoforeandpitbottonatlevel 555 asofJanuary 1, 1996 undertheconditionsforminingoftheAsareldeposit.

Arecalculationofthereserveswasmadein1998–99usingthemethodofpolygonsalongoutlineBanfthestateofthemineasofJanuary 1, 1998 byGeotechmineKI, Sofia. The new geological plan was approved by the Ministry of Environment and Waters in 2000.

The recalculated balance reserves include flotation ores and leach ores.

Theprocessoresareprimaryandsecondarysuplphideandcontainlessthan 20% oxidecopperataconditionalcuy-offgradeof0.22 %copper and cut-off gradesaccording the the conditions from1993 stated above.

We should note that under the conditions of market economy the conditions are a variable depending on the copper prices at the London Metal Exchange and the costs for ore mining and processing.

The mining activities in the Asarel pit are carried out in the co called outline B for which also the mining concession was granted. Currently, the pit is mined from level 1095 to level 720, as the levels beneath 915 fall within the deep part of the mine.