Unkur Copper Deposit — 2021 Technical Report

This report presents the processing options considered for the Unkur copper deposit, incorporating 2021 testwork results and comparing proposed design parameters with historical estimates.

Report context

This Technical Report for the Unkur Copper Deposit was prepared in August 2021 as a Preliminary Economic Assessment (PEA). The report incorporates oxide ore testwork results presented by VNIItsvetmet in Q2 2021, which post-date the earlier Tetra Tech PEA published in August 2018. The project considers both open pit and underground mining operations, with oxide ore predominantly from open pit sources and sulphide ore equally split between underground and open pit production. Current resources are reported as 35Mt of sulphide ore at 0.58% Cu and 38g/t Ag, and 16.1Mt of oxide ore at 0.61% Cu and 43g/t Ag.

Processing route

Oxide Ore Processing

The processing of oxide ore presents the greatest challenge at Unkur due to the carbonate content, which results in very high acid consumptions from conventional acid leaching, whether by agitated or heap leaching. The focus has therefore been on process routes employing cyanide leaching for silver and copper dissolution, with two options studied for agitated and heap leaching, followed by processing of the leach solutions with SART technology.

Four process options were originally studied by Tetra Tech in 2018. Option 1, selected as the base case, involves conventional crushing, grinding and agitated cyanide leaching of the copper and silver, followed by CCD washing and processing of the solution using the SART process. This recovers a saleable synthetic copper/silver concentrate and recycles the cyanide solution back for heap leaching. The Tetra Tech estimate for silver recovery was considered reasonable, but the copper recovery was significantly over-estimated as cyanide leaching results for copper were not available at that time.

For the updated evaluation, only two options were selected: cyanide heap leaching followed by SART (Tetra Tech Option 3) and agitated cyanide leaching followed by SART (Tetra Tech Option 1). Sequential acid leaching followed by cyanide leaching was not considered viable due to higher capital costs, excessive acid consumption and greater complexity. The SX/EW options were also generally more expensive than the equivalent SART options.

AZR indicated that capital costs for oxide ore processing should ideally not exceed approximately US$50 million. Cyanide heap leaching followed by SART was the only option with a capital cost near that objective. However, agitated cyanide leaching followed by SART was still considered due to better overall recoveries.

A SART recovery of 95% has been applied to both selected oxide options for both copper and silver recoveries obtained from testwork. This is based on a reported copper recovery from SART of 80-95%, used as the basis for design at Kinross's Maricunga operation, and assumed to apply for silver recovery also. The maximum recovery of 95% was selected for scoping level purposes. A copper concentrate grade of at least 65% Cu was assumed, based on benchmarking data from current operating SART plants.

Tailings Management

The proposed processing rate for oxide ore is up to 3.5Mtpa for open pit mining and 2.0Mtpa for underground mining. A downstream raised cross valley TMF is proposed for the 22Mt tailings, assuming a maximum production rate of 3.5Mtpa and a total Life of Mine of 12-14 years, with sulphide processing for 6-9 years. The tailings will be a thickened slurry with approximately 65% w/w solid content, deposited subaerially within the facility in a closed system with no water discharge to the environment.

The facility will be located 2.4km southwest of the process site, entirely within the mining licence area. The embankment will be zoned with a low permeability upstream zone formed from site won silts and clays, a filter zone of graded sand and coarse material, and a downstream toe formed from mine waste rock. A HDPE liner will be placed on the upstream slope, and a cut off trench will be keyed into the upstream toe excavated down to the permanent permafrost zone.

The site is within an area of continuous permafrost with thickness typically ranging between 200m and 400m. The seasonal thaw of the upper permafrost layer is reported not to exceed 2-3m within the site area. Winter freezing temperatures will require the tailing pipeline to be lagged and heated to allow year-round tailings deposition. The facility will be designed to withstand an Operating Basis Earthquake typically of 1 in 500 year (based on Canadian Dam Association) or 1 in 10,000 year (Global Industry Standard on Tailings Management) and a Maximum Design Earthquake of 1 in 2500 years or 1 in 10,000 years respectively at closure.

Sulphide Ore Processing

For sulphide ore, a conventional copper flotation processing plant is indicated, producing a single copper concentrate product for sale to market containing significant silver credits. The processing rate for sulphide ore has been selected as 3.5Mtpa for open pit mining and 3.0Mtpa for underground mining. The copper recovery is estimated at 89.1% and silver recovery at 82.7%, producing a concentrate grading 25.8% Cu containing 1,634g/t Ag.

SART Process Details

The SART process includes sulphidisation-acidification-recycling-thickening. Copper sulphide is precipitated and thickened to produce a filtered Cu2S concentrate by treating the leach solution with sodium hydrogen sulphide (NaSH) at low pH (4-5) using sulphuric acid. A portion of the thickened concentrate is recycled back to the reactor tank to act as seeding for precipitation. Sufficient NaSH must be added to prevent any oxidation of the copper sulphides. Flocculant is added for the thickening process.

An identical arrangement can be included for silver sulphide (Ag2S) precipitation by treating the Cu2S thickener overflow solution by adding further NaSH and sodium hydroxide (NaOH) to increase the pH in the range of 5-10. This two-stage SART process has been assumed, producing sequential copper and silver sulphide concentrates, but combined for filtering into one concentrate product for sale to market.

The Ag2S thickener overflow solution is neutralised with lime to produce gypsum for disposal as tailings, with the cyanide solution recycled back to the heaps. Vented air from the reactors and thickeners containing hydrogen cyanide and hydrogen sulphide gas is scrubbed with lime, with the scrubbed air exhausted to atmosphere.

Key reported parameters

Technical qualifications

The following limitations and risks are identified in the report:

• The Tetra Tech PEA report did not include the later VNIItsvetmet testwork, in particular copper recovery from cyanide leaching. The copper recovery for Option 1 was significantly over-estimated as cyanide leaching results for copper were not available at that time.

• For Option 3, the copper and silver recoveries were previously over-estimated and under-estimated respectively as no coarse ore bottle roll test results were available at the time of the Tetra Tech report.

• No testwork has been conducted on SART processing at this stage of study. Benchmarking data has been used for the capital and operating cost estimates and for the estimate of 95% copper and silver recovery.

• The SART recovery assumption of 95% is based on a reported range of 80-95% from Kinross's Maricunga operation, with the maximum selected for scoping level purposes.

• No geochemical tests of the tailings are available. The assumption that tailings can be considered non-hazardous and non-acid generating will have to be confirmed at the next study stage.

• The volumetric capacity of the tailings storage facility will have to be confirmed at the next design stage when topographical data is available.

• A comprehensive testwork programme is required on representative oxide ore samples to confirm expected copper and silver recoveries through heap leaching, including optimisation of crush size, requirement for agglomeration, cyanide consumption and copper and silver recoveries prior to SART processing.

• A comprehensive testwork programme is also required for the SART process to define expected copper and silver recoveries, grade of concentrate produced and recycling of recovered cyanide back for heap leaching.

• For sulphide ore, a comprehensive testwork programme on representative samples is required to confirm metallurgical performance, develop grindability data and conduct variability sampling.

• Future SART testwork will determine whether a single or two-stage SART process is required.

• The storage capacity of the facility will have to be confirmed at the next design stage. A trade-off study including disposal method and site selection should be undertaken at the next stage considering paste, dry stack and co-disposal options.

• The TMF design must consider appropriate seismic and permafrost conditions to ensure stability both during operations and after closure.

• The tailings facility design should be subject to a trade-off study at the next stage to confirm the optimum deposition method and site selection. A detailed ground investigation should then be undertaken of the preferred site to establish geotechnical, hydrogeological and permafrost characteristics and all geo hazards.

• SART performance has often been less than expected in practice, particularly in terms of higher NaSH consumption, attributed to oxidation of the copper sulphides through longer residence times within the reactors and thickeners than in laboratory/pilot scale set-ups.

• Tonnes of ore captured in the pit are sensitive to recoveries. Rigorous assessment of SART needs to be carried out at a higher level of study to ensure commercial viability on representative samples on the scale of several tonnes.

• Attention needs to be given to defining ore type boundaries based on recoveries, namely oxide-transition-sulphide boundaries. Composites representing other major ore types, such as high secondary sulphides, high penalty element concentrations or high concentrations of harder material, require more targeted testwork.

• The TMF design will require mitigation for thawing of the permafrost and subsequent settlement of the natural strata, typically including removal of the permafrost from within the upper few metres beneath the embankment footprint by over excavation and recompaction of the superficial material.

Source: Unkur Copper Deposit, NI 43-101 Technical Report, Preliminary Economic Assessment, August 2021.