PAAS Pan American Silver Corp

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

 

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT of 1934

 

August 16, 2023

 

 

Pan American Silver Corp.

(Exact name of registrant as specified in its charter)

 

1500-625 HOWE STREET

 

VANCOUVER BC CANADA V6C 2T6

(Address of principal executive offices)

 

001-41683

(Commission File Number)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F

¨

Form 40-F

x

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1). ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

 

 

EXHIBIT LIST

 

Exhibit		Description
99.1		Technical Report for the El Peñon Gold-Silver Mine, Antofagasta Region, Chile dated effective December 31, 2020
99.2		Consent of Sergio Castro, Registered Member Chilean Mining Commission
99.3		Consent of Carlos Iturralde, P.Eng.
99.4		Consent of Henry Marsden, P.Geo.
99.5		Consent of Marco Velásquez Corrales, Registered Member Chilean Mining Commission

 

Cautionary Note to U.S. Investors Concerning Estimates of

Measured, Indicated and Inferred Resources

 

The Technical Report for the El Peñon Gold-Silver Mine, Antofagasta Region, Chile, with an effective date of December 31, 2020, included as Exhibit 99.1 hereto (the “Technical Report”), has been prepared and disclosed in accordance with Canadian National Instrument 43-101 — Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum classification system. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects.

 

Canadian public disclosure standards, including NI 43-101, differ significantly from the requirements of the United States Securities and Exchange Commission (the “SEC”), and mineral reserve and mineral resource information included in the Technical Report may not be comparable to similar information disclosed by U.S. companies. In particular, and without limiting the generality of the foregoing, the Technical Report uses the terms “measured mineral resources,” “indicated mineral resources” and “inferred mineral resources” as defined under Canadian regulations. The requirements of NI 43-101 for the identification of “mineral reserves” are also not the same as those of the SEC, and reserves reported by the Registrant in compliance with NI 43-101 may not qualify as “reserves” under SEC standards. While the SEC has adopted amendments to its disclosure rules to modernize the mineral property disclosure requirements for issuers whose securities are registered with the SEC under the U.S. Securities Exchange Act of 1934, as amended, including amendments to certain definitions to be substantially similar to the corresponding standards under NI 43-101, there are still differences in these standards and definitions. U.S. investors are cautioned not to assume that any part of a “measured mineral resource” or “indicated mineral resource” will ever be converted into a “mineral reserve”. U.S. investors should also understand that “inferred mineral resources” have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of “inferred mineral resources” exist, are economically or legally mineable or will ever be upgraded to a higher category. Under Canadian rules, estimated “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies except in rare cases. In addition, disclosure of “contained ounces” in a mineral resource is permitted disclosure under Canadian regulations. However, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in place tonnage and grade, without reference to unit measures. Accordingly, information concerning mineral deposits set forth in the Technical Report may not be comparable with information made public by companies that report in accordance with U.S. standards.

 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Pan American Silver Corp.
	(Registrant)
Date: August 16, 2023	By:	/s/ “Delaney Fisher”
		Delaney Fisher
		SVP Associate General Counsel & Corporate Secretary

 

 

Exhibit 99.1

 

	NI 43-101 TECHNICAL REPORT   El Peñón gold-silver MINE   Antofagasta Region, Chile
	Qualified Persons:   Sergio Castro, Registered Member CMC   Marco Velásquez Corrales, Registered Member CMC   Henry Marsden, P.Geo.   Carlos Iturralde, P.Eng.
Royal Bank Plaza, North Tower   200 Bay Street, Suite 2200   Toronto, Ontario M5J 2J3	Effective Date: December 31, 2020   Signature Date: March 25, 2021

Yamana Gold Inc. Royal Bank Plaza, North Tower 200 Bay Street, Suite 2200 Toronto, ON, Canada M5J 2J3				NI 43-101 TECHNICAL REPORT   El Peñón gold-silver MINE   Antofagasta Region, Chile
Effective Date:		December 31, 2020
Signature Date:		March 25, 2021
Authors:	[Signature]						[Signature]
	Sergio Castro Registered Member CMC Technical Services Manager, El Peñón Yamana Gold Inc.						Marco Velásquez Corrales, Registered Member CMC Chief Resource Geologist, El Peñón Yamana Gold Inc.
	[Signature]						[Signature]
	Henry Marsden, P.Geo. Senior Vice President, Exploration Yamana Gold Inc.						Carlos Iturralde, P.Eng. Director, Tailings, Health, Safety & Sustainable Development Yamana Gold Inc.
Reviewer	[Signature]
	Sébastien Bernier, P.Geo. Senior Director, Geology & Mineral Resources, Yamana Gold Inc.

 

Technical Report El Peñón Mine, Chile

 

TABLE OF CONTENTS

Signature Page						I
TABLE OF CONTENTS						II
Cautionary Note Regarding Forward-Looking Statements						VIII
List of Abbreviations						X
1		Summary				1
	1.1		Property Description			1
	1.2		Geology and Mineralization			2
	1.3		Exploration Status			2
	1.4		Mineral Resource and Mineral Reserve Estimates			3
	1.5		Mining and Processing Methods			6
	1.6		Environmental Studies, Permitting, and Social or Community Impact			7
	1.7		Conclusions and Recommendations			8
2		Introduction				11
	2.1		Sources of Information			12
3		Reliance on Other Experts				13
4		Property Description and Location				14
	4.1		Mineral and Surface Tenure			15
	4.2		Underlying Agreements			23
	4.3		Permits and Authorizations			23
	4.4		Environmental Considerations			23
5		Accessibility, Climate, Local Resources, Infrastructure, and Physiography				24
	5.1		Accessibility			24
	5.2		Climate			24
	5.3		Local Resources			24
	5.4		Infrastructure			24
	5.5		Physiography			25
6		History				26
	6.1		Historical Mineral Resource and Mineral Reserve Estimates			26
	6.2		Past Production			27
7		Geological Setting and Mineralization				28
	7.1		Regional Geology			28
	7.2		Local Geology			29
	7.3		Property Geology			32

 

Signature Date: March 25, 2021

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Technical Report El Peñón Mine, Chile

 

		7.3.1		Structure		32
	7.4		Mineralization			34
8		Deposit Types				36
9		Exploration				37
	9.1		Exploration Potential			37
10		Drilling				39
11		Sample Preparation, Analyses, and Security				43
	11.1		Sample Preparation and Analysis			43
		11.1.1		Sampling of Drill Core		43
		11.1.2		Underground Channel Sampling		44
		11.1.3		Preparation and Analytical Procedures		45
	11.2		Quality Assurance/ Quality Control			48
		11.2.1		Certified Reference Materials		50
		11.2.2		Blank Samples		51
		11.2.3		Umpire Laboratory Check Assays		54
	11.3		Sample Security			55
12		Data Verification				57
13		Mineral Processing and Metallurgical Testing				58
	13.1		Processing Plant			58
	13.2		Metallurgical Testing			58
14		Mineral Resource Estimates				61
	14.1		Mineral Resource Summary			61
	14.2		Resource Database and Validation			63
	14.3		Definition and Interpretation of Estimation Domains			63
	14.4		Compositing Methods			65
	14.5		Basic Statistics			65
	14.6		Specific Gravity			67
	14.7		Variography			67
	14.8		Block Models			70
	14.9		Block Model Validation			72
	14.10		Resource Classification			76
	14.11		Resource Estimation of Stockpiles and Tailings			76
	14.12		Mineral Resource Estimate			76
15		Mineral Reserve Estimates				80
	15.1		Mineral Reserve Summary			80
	15.2		Conversion Methodology			81
	15.3		NSR Cut-Off Value			81
	15.4		Design, Dilution, and Mining Recovery Parameters			82

 

Signature Date: March 25, 2021

iii

 

Technical Report El Peñón Mine, Chile

 

	15.5		Reconciliation			83
	15.6		Mineral Reserve Estimate			83
16		Mining Methods				86
	16.1		Underground Mining Methods			86
	16.2		Underground Mine Design			87
	16.3		Mining Sequence			88
	16.4		Geomechanics and Ground Support			89
	16.5		Mine Equipment			90
	16.6		Mine Services			91
		16.6.1		Dewatering		91
		16.6.2		Ventilation		92
		16.6.3		Electrical		93
		16.6.4		Compressed Air		93
		16.6.5		Communications		94
	16.7		Life of Mine Plan			94
17		Recovery Methods				96
	17.1		Primary Crushing			96
	17.2		Grinding and Pre-Leach Thickening			98
	17.3		Clarification			98
	17.4		Leaching			98
	17.5		CCD Concentrate Solution Recovery			99
	17.6		Pregnant Solution Precipitation			99
	17.7		Refining			100
	17.8		Tailings Filtering and Disposal			100
	17.9		Metallurgical Reporting			101
	17.10		Plant Consumption			101
	17.11		Optimization Opportunities			102
18		Project Infrastructure				103
	18.1		Filtered Tailings Stack Design and Construction			105
19		MARKET STUDIES AND CONTRACTS				107
	19.1		Market Studies			107
	19.2		Contracts			107
20		Environmental Studies, Permitting, and Social or Community Impact				108
	20.1		Project Permitting and Authorizations			108
	20.2		Environmental Management			110
		20.2.1		Environmental Management System		110
		20.2.2		Tailings Management		111
		20.2.3		Water Management		112
	20.3		Community Relations			114

 

Signature Date: March 25, 2021

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Technical Report El Peñón Mine, Chile

 

		20.3.1		General Social Context		114
		20.3.2		Social and Environmental Assessment and Management Systems		114
		20.3.3		Workplace Health and Safety		115
		20.3.4		Support for Community Priorities		116
		20.3.5		Cultural Heritage		117
	20.4		Mine Closure			117
21		Capital and Operating Costs				119
	21.1		Capital Costs			119
	21.2		Operating Costs			120
22		Economic Analysis				121
23		Adjacent Properties				122
24		Other Relevant Data and Information				123
25		Interpretation and Conclusions				124
26		Recommendations				126
27		References				127
28		Certificates of Qualified Persons				130

Signature Date: March 25, 2021

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Technical Report El Peñón Mine, Chile

 

LIST OF FIGURES

 

Figure 4-1: General location map	14
Figure 4-2: Map of mineral tenure	16
Figure 4-3: Detailed map of mineral tenure	22
Figure 5-1: Infrastructure and typical landscape	25
Figure 7-1: Regional geological setting	29
Figure 7-2: Local and property geology	31
Figure 7-3: Schematic geological plan and cross-sections of the El Peñón deposit	33
Figure 7-4: Photographs of mineralization in underground exposures and in drill core	35
Figure 8-1: Generalized gold deposit types and environments	36
Figure 10-1: Plan view of drill holes in El Peñón core mine area	40
Figure 11-1: Time-series plots: gold assays of select CRMs by laboratory (2018–2020)	51
Figure 11-2: Time-series plots: gold assays of select blanks by type and laboratory (2018–2020)	53
Figure 11-3: Comparison between SGS and Geoassay umpire gold assays (2019-2020)	55
Figure 14-1: Plan view of estimation domains in El Peñón core mine area	64
Figure 14-2: Experimental gold and silver correlograms and fitted correlograms models for the 505 and Magenta veins	69
Figure 14-3: Gold swath plots for 505 Vein	74
Figure 14-4: Gold swath plots for Magenta Vein	75
Figure 16-1: Schematic cross-section of drift and vein showing extent of split-blasting technique	87
Figure 16-2: Schematic example of bench-and-fill mining method	88
Figure 16-3: Ventilation circuit of the Pampa Augusta Victoria underground mine	93
Figure 17-1: Mineral processing flowsheet	97
Figure 18-1: Plan map of main infrastructure at El Peñón	104
Figure 18-2: Schematic cross-section of western face of filtered tailings stack	105

 

Signature Date: March 25, 2021

vi

 

Technical Report El Peñón Mine, Chile

 

LIST OF TABLES

 

Table 1-1: El Peñón Mineral Resource Statement as of December 31, 2020	3
Table 1-2: El Peñón Mineral Reserve Statement as of December 31, 2020	5
Table 4-1: Mineral tenure list	17
Table 6-1: Commercial production at El Peñón, January 2000 to December 31, 2020	27
Table 7-1: Description of main lithologies	30
Table 10-1: Exploration and infill drilling by year and type, 1993 to December 31, 2020	39
Table 11-1: Sample preparation and analytical standard operating procedures	43
Table 11-2: Summary of analytical quality control data produced between 2018 and 2020	49
Table 11-3: Lower detection limits and acceptance limits for blanks	52
Table 13-1: Gold recovery by zone, ore type, and grade category	59
Table 13-2: Silver recovery by zone, ore type, and grade category	59
Table 13-3: Processing plant production for 2019	60
Table 13-4: Processing plant production for 2020	60
Table 14-1: El Peñón Mineral Resource Statement as of December 31, 2020	62
Table 14-2: Summary of gold and silver capping values by zone	65
Table 14-3: Specific gravity density values assigned to each zone	67
Table 14-4: Typical calculation parameters for experimental correlograms	68
Table 14-5: Correlogram model parameters for 505 and Magenta veins	68
Table 14-6: Generalized block model variables	70
Table 14-7: Block models per veins and per mining zones	71
Table 14-8: Summary of the typical estimation search parameters	72
Table 14-9: Statistical validation of the estimated block model – 505 Vein	73
Table 14-10: Statistical validation of the estimated block model – Magenta Vein	73
Table 14-11: Resource NSR cut-off value calculation parameters	77
Table 14-12: Summary of El Peñón mineral resources by zone, as of December 31, 2020	78
Table 15-1: El Peñón Mineral Reserve Statement as of December 31, 2020	80
Table 15-2: NSR cut-off value calculation parameters for mineral reserves	82
Table 15-3: Stope SMU design parameters by zone	82
Table 15-4: Drift (split blasting) SMU design parameters	82
Table 15-5: Reconciliation	83
Table 15-6: Summary of El Peñón mineral reserves by zone, as of December 31, 2020	84
Table 16-1: Underground mobile equipment for development & production	90
Table 16-2: Support mobile equipment	91
Table 16-3: Life of mine plan (LOM)	95
Table 17-1: Consumption of reagents for 2020	101
Table 17-2: Consumption of processing supplies for 2020	102
Table 20-1: Summary of environmental resolutions since 1998	109
Table 20-2: Social risk management element of Yamana’s HSEC Framework (2016)	114
Table 20-3: Health and safety management elements of Yamana’s HSEC Framework (2016)	115
Table 20-4: Mine closure costs	118
Table 21-1: Life of mine capital costs	119
Table 21-2: LOM average unit operating costs	120

 

Signature Date: March 25, 2021

vii

 

Technical Report El Peñón Mine, Chile

 

 

Cautionary Note Regarding Forward-Looking Statements

 

This report contains or incorporates by reference “forward-looking statements” and “forward-looking information” under applicable Canadian securities legislation within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking information includes, but is not limited to: cash flow forecasts, projected capital, operating and exploration expenditures, targeted cost reductions, mine life and production rates, grades, infrastructure, capital, operating and sustaining costs, the future price of gold, potential mineralization and metal or mineral recoveries, estimates of mineral resources and mineral reserves and the realization of such mineral resources and mineral reserves, information pertaining to potential improvements to financial and operating performance and mine life at El Peñón (as defined herein) that may result from expansion projects or other initiatives, maintenance and renewal of permits or mineral tenure, estimates of mine closure obligations, leverage ratios and information with respect to the Company’s (as defined herein) strategy, plans or future financial or operating performance. Forward-looking statements are characterized by words such as “plan,” “expect”, “budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur, including the negative connotations of such terms. Forward-looking statements are statements that are not historical facts and are based on the opinions, assumptions and estimates of Qualified Persons (as defined herein) considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include, but are not limited to: the impact of general domestic and foreign business; economic and political conditions; global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions; fluctuating metal and commodity prices (such as gold, silver, diesel fuel, natural gas and electricity); currency exchange rates (such as the Chilean Peso and the Canadian dollar versus the United States dollar); changes in interest rates; possible variations in ore grade or recovery rates; the speculative nature of mineral exploration and development; changes in mineral production performance, exploitation and exploration successes; diminishing quantities or grades of reserves; increased costs, delays, suspensions, and technical challenges associated with the construction of capital projects; operating or technical difficulties in connection with mining or development activities, including disruptions in the maintenance or provision of required infrastructure and information technology systems; damage to the Company’s or El Peñón’s reputation due to the actual or perceived occurrence of any number of events, including negative publicity with respect to the handling of environmental matters or dealings with community groups, whether true or not; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; risks associated with infectious diseases, including COVID-19; risks associated with nature and climatic conditions; uncertainty regarding whether El Peñón will meet the Company’s capital allocation objectives; the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; the impact of inflation; fluctuations in the currency markets; changes in national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices, expropriation or nationalization of property and political or economic developments in Chile; failure to comply with environmental and health and safety laws and regulations; timing of receipt of, or failure to comply with, necessary permits and approvals; changes in project parameters as plans continue to be refined; changes in project development, construction, production and commissioning time frames; contests over title to properties or over access to water, power, and other required infrastructure; increased costs and physical risks including extreme weather events and resource shortages related to climate change; availability and increased costs associated with mining inputs and labor; the possibility of project cost overruns or unanticipated costs and expenses, potential impairment charges, higher prices for fuel, steel, power, labour, and other consumables contributing to higher costs; unexpected changes in mine life; final pricing for concentrate sales; unanticipated results of future studies; seasonality and unanticipated weather changes; costs and timing of the development of new deposits; success of exploration activities; risks related to relying on local advisors and consultants in foreign jurisdictions; unanticipated reclamation expenses; limitations on insurance coverage; timing and possible outcome of pending and outstanding litigation and labour disputes; risks related to enforcing legal rights in foreign jurisdictions, vulnerability of information systems and risks related to global financial conditions. In addition, there are risks and hazards associated with the business of mineral exploration, development, and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding, failure of plant, equipment, or processes to operate as anticipated (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks), as well as those risk factors discussed or referred to herein and in the Company's Annual Information Form filed with the securities regulatory authorities in all of the provinces and territories of Canada and available under the Company’s profile at www.sedar.com, and the Company’s Annual Report on Form 40-F filed with the United States Securities and Exchange Commission at www.edgar.com. Although the Company has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events, or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates, assumptions, or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding the Company’s expected financial and operational performance and results as at and for the periods ended on the dates presented in the Company’s plans and objectives and may not be appropriate for other purposes.

 

Signature Date: March 25, 2021

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Technical Report El Peñón Mine, Chile

 

Cautionary Note to United States Investors Concerning Estimates of Mineral Reserves and Mineral Resources

 

This report has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ in certain material respects from the disclosure requirements promulgated by the Securities and Exchange Commission (SEC). For example, the terms “Mineral Reserve”, “Proven Mineral Reserve”, “Probable Mineral Reserve”, “Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource” and “Inferred Mineral Resource” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects and the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards on Mineral Resources and Mineral Reserves (May 2014), adopted by the CIM Council, as amended. These definitions differ from the definitions in the disclosure requirements promulgated by the SEC. Accordingly, information contained in this report may not be comparable to similar information made public by U.S. companies reporting pursuant to SEC disclosure requirements.

 

Non-GAAP Measures

 

The Company has included certain non-GAAP financial measures and additional line items or subtotals, which the Company believes that, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP financial measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The non-GAAP financial measures included in this report include: free cash flow, cash costs per gold-equivalent ounce sold, and all-in sustaining costs per gold-equivalent ounce sold. Please refer to section 11 of the Company’s current annual Management’s Discussion and Analysis, which is filed under the Company’s profile on SEDAR at www.sedar.com and which includes a detailed discussion of the usefulness of the non-GAAP measures. The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use this information to evaluate the Company’s performance. In particular, management uses these measures for internal valuation for the period and to assist with planning and forecasting of future operations.

 

Signature Date: March 25, 2021

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Technical Report El Peñón Mine, Chile

 

List of Abbreviations

 

Units of measurement used in this report conform to the metric system. All currency in this report is listed in US dollars (US$) unless noted otherwise

 

°	degrees		HDPE	high-density polyethylene		NSR	net smelter return
>	greater than		hp	horsepower		NPV	net present value
<	less than		HSEC	Health, Safety, Environment, and Community		NTU	nephelometric turbidity units
%	percent		ID3	inverse distance cubed		oz	troy ounce (31.1035 g)
a	annum		k	kilo (thousand)		PFS	pre-feasibility study
A	ampere or amp		kg	kilogram		ppm	parts per million
AAS	atomic absorption spectrometry		km	kilometre		QA/QC	quality assurance/quality control
Ag	silver		km2	square kilometre		RAR	return air raise
ARD	acid rock drainage		kV	kilovolt		RC	reverse circulation
Au	gold		kVA	kilovolt-amperes		RCA	Environmental Qualification Resolutions
C&F	cut and fill mining method		kW	kilowatt		RMR89	rock mass rating
°C	degree Celsius		kWh	kilowatt-hour		s	second
CRM	certified reference material		L	litre		SD	Standard deviation
cm	centimetre		LHD	load-haul-dump truck		SMU	selective mining units
cm2	square centimetre		LOM	life of mine		SOP	standard operating procedures
cog	cut-off grade		L/s	litres per second		t	metric tonne
d	day		m	metre		tpa	metric tonnes per year
DL	detection limit		M	Mega, million		tpd	metric tonnes per day
DIA	Declaration of Environmental Impacts		m2	square metre		tph	metric tonnes per hour
dmt	dry metric tonne		m3	cubic metre		tpm	metric tonnes per month
EDA	exploratory data analysis		masl	metres above sea level		US$	United States dollar
EIA	environmental impact assessment		μg	microgram		TFS	tailings storage facility
Fm	formation		m3/h	cubic metres per hour		V	volt
g	gram		min	minute		VFD	variable frequency drive
g	peak ground acceleration		ML	metal leaching		VSO	Vulcan Stope Optimizer
G	giga (billion)		mm	micrometre, micron		W	watt
GDMS	geological data management system		mm	millimetre		wt %	weight percent
g/L	grams per litre		Mtpa	million tonnes per year
g/t	grams per metric tonne		MVA	megavolt-amperes
ha	hectare		MW	megawatt
			MWh	megawatt-hour
			NN	nearest neighbour

 

Signature Date: March 25, 2021

x

 

Technical Report El Peñón Mine, Chile

 

1

Summary

 

This report documents the El Peñón mine (El Peñón), an underground and open-pit gold-silver mine located in northern Chile in the Atacama Desert. Yamana Gold Inc. (Yamana) holds a 100% interest in El Peñón through its subsidiary, Minera Meridian Limitada (Minera Meridian).

 

Yamana is a Canadian-based precious metals producer with significant gold and silver production- and development-stage properties, exploration properties, and land positions throughout the Americas, including Canada, Brazil, Chile, and Argentina. Yamana plans to continue to build on this base through expansion and optimization initiatives at existing operating mines, development of new mines, advancement of its exploration properties and, at times, by targeting other consolidation opportunities, with a primary focus on the Americas.

 

This technical report prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) documents the current mining operation as well as the mineral resource and mineral reserve estimate of El Peñón as of December 31, 2020.

 

1.1	Property Description

 

El Peñón is located approximately 165 km southeast of the city of Antofagasta. The mine site, situated approximately midway between the Pacific Coast and the border with Argentina, is in the Atacama Desert, a desert plateau with one of the driest climates on earth. The mine has been in operation since 1999 and it operates on a year-round basis.

 

Yamana acquired the property in late 2007 with the purchase of Meridian Gold Inc. (Meridian Gold). The mineral rights consist of 443 individual mining exploitation claims that comprise an area measuring 92,387 ha. It covers the El Peñón core mine area, the Fortuna area, the Laguna area, the Pampa Augusta Vitoria (PAV) area, and the surrounding exploration lands.

 

Minera Meridian is subject to a royalty tax between 5% and 14% based on the mining gross profit margin and currently pays approximately a 5% to 7% royalty tax on taxable mining income. In addition, El Peñón is also subject to First Category Tax (income tax) in Chile at a rate of 27%.

 

Minera Meridian has all required permits to continue carrying out mining and processing operations on the El Peñón property.

 

A 2% Net Smelter Return (NSR) royalty is payable to Maverix Metals Inc. as agreed as part of the purchase of the Nado claims covering the Fortuna area and a further 2% NSR is payable to Soquimich Comercial SA for claims Providencia 1, 2, 3, 4, and 5 and claims Dominador 1, 2, and 4. These claims are also located in the Fortuna area.

 

1 –Summary	1
Signature Date: March 25, 2021

 

Technical Report El Peñón Mine, Chile

 

1.2	Geology and Mineralization

 

The discovery of the El Peñón gold-silver deposit was the result of successful grassroots exploration throughout the early 1990s. El Peñón is classified as a low- to intermediate-sulphidation epithermal gold-silver deposit associated with steeply dipping fault-controlled veins emplaced following rhyolite dome emplacement.

 

The gold-silver mineralization is hosted in near-horizontal to gently dipping Paleocene to Eocene basaltic to rhyolitic volcanic rocks. The deposit comprises many individual tabular and steeply dipping zones that are amenable to mining by both underground and surface methods. Vein thickness range from decimetre-scale to more than 20 metres. The strike length of individual mineralized zones ranges from less than 1 km to 4 km and the down-dip extent reaches up to 350 m.

 

1.3	Exploration Status

 

Yamana has been successful in expanding the footprint of mineralization through geological mapping, geochemical characterization, geophysics, and abundant surface and underground drilling within the northeast trend, first starting at the El Peñón area, with Quebrada Orito in the southwest and ending at Angosta in the northeast.

 

The significant exploration results were obtained by surface and underground core drilling. As of the end of December 2020, over three million metres have been drilled at El Peñón. Yamana continually conducts exploration work to develop drill targets to replenish mineral reserves. Drilling is carried out on a 60 × 60 m grid with infill drill holes on a 30 × 30 m grid pattern.

 

Drilling activities have been successful in defining and expanding known mineralized zones and have led to the discovery of new mineralized zones. Based on these exploration successes and the production history of El Peñón, good potential exists for the discovery of new mineralized zones in the proximity of the current mine infrastructure and in the strike and dip extents of known mineralized horizons.

 

Analytical samples include both drill core and channel samples. The drill core samples are generated from exploration and infill drilling programs that are conducted on surface and underground; analytical results are used for target generation and estimation of mineral resources and reserves. The sample preparation, sample security, and analytical procedures at El Peñón are adequate and consistent with industry standards. The verification of the sampling data by Yamana and external consultants, including the analytical quality control data produced by Yamana for samples submitted to various laboratories, suggests that the analytical results delivered by the laboratories are sufficiently reliable for the purpose of mineral resource and mineral reserve estimation.

 

1 –Summary	2
Signature Date: March 25, 2021

 

Technical Report El Peñón Mine, Chile

 

1.4	Mineral Resource and Mineral Reserve Estimates

 

Interpreted geological wireframes were constructed based on a three-dimensional and sectional interpretation of geological continuity, assay results, lithological information and structural data. Assays were composited to one-metre lengths, then interpolated using capping and a high-yield restriction for anomalously high grades. Gold and silver grades were interpolated into a sub-blocked model with minimum block size of 0.5 × 0.5 × 0.5 m and a parent block size of 20 × 20 × 20 m. Estimated grades were interpolated into blocks using Inverse Distance Cubed (ID3) and checked using Nearest Neighbor (NN) methods. Block estimates were validated using industry standard validation techniques. Classification of blocks was completed following distance-based criteria.

 

El Peñón mineral resources have been estimated in conformity with generally accepted standards set out in Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Mineral Resource and Mineral Reserves Estimation Best Practices Guidelines (November 2019) and were classified according to CIM Definition Standards for Mineral Resources and Mineral Reserves (May 2014) (CIM (2014) Standards). Mineral resources are not mineral reserves and have not demonstrated economic viability. Underground mineral resources are estimated within conceptual underground mining shapes at a cut-off value of US$95.31/t, which corresponds to 75% of the break-even cut-off value used to estimate the mineral reserves. A minimum mining width of 0.60 m as well as 0.30 m of hanging-wall and 0.30 m of footwall overbreak dilution are used to construct the conceptual mining shapes. Mineral resources are reported fully diluted.

 

Table 1-1: El Peñón Mineral Resource Statement as of December 31, 2020

 

Mineral Resources		Category		Tonnage		Grade				Contained Metal
				(kt)		Au (g/t)		Ag (g/t)		Au (koz)		Ag (koz)
Underground		Measured		667		4.81		143.0		103		3,063
		Indicated		6,355		3.06		105.4		625		21,535
		Total Measured + Indicated		7,022		3.22		109.0		728		24,599
		Inferred		5,208		3.61		118.0		605		19,758
Tailings		Measured		–		–		–		–		–
		Indicated		–		–		–		–		–
		Total Measured + Indicated		–		–		–		–		–
		Inferred		13,767		0.55		18.9		245		8,380
Stockpiles		Measured		–		–		–		–		–
		Indicated		1,019		1.13		28.8		37		942
		Total Measured + Indicated		1,019		1.13		28.8		37		942
		Inferred		–		–		–		–		–
Combined		Measured		667		4.81		143.0		103		3,063
		Indicated		7,374		2.79		94.8		662		22,478
		Total Measured + Indicated		8,041		2.96		98.8		765		25,541
		Inferred		18,975		1.39		46.1		850		28,138

 

1 –Summary	3
Signature Date: March 25, 2021

 

Technical Report El Peñón Mine, Chile

 

1.

Mineral resources have been estimated by the El Peñón resource geology team under the supervision of Marco Velásquez Corrales, Registered Member of the Chilean Mining Commission, a full-time employee of Minera Meridian Limitada, and a qualified person as defined by NI 43-101. The estimate conforms to the CIM (2014) Standards. Mineral resources are reported exclusive of mineral reserves. Mineral resources were evaluated using an inverse distance weighting algorithm informed by capped composites and constrained by three-dimensional mineralization wireframes. Mineral resources are not mineral reserves and have not demonstrated economic viability. Metal price assumptions of US$1,250/oz for gold and US$18.00/oz for silver were used.

 

2.

Underground mineral resources are estimated at a cut-off NSR of US$95.31/t, which corresponds to 75% of the mineral reserves cut-off value. Processing recoveries assumptions range from 84.13% to 97.38% for gold and from 56.47% to 92.33% for silver. The estimation considered the following cost assumptions: mine operating cost of US$80.10/t; processing cost of US$29.42/t; sustaining capital cost of US$4.10/t; and G&A costs of US$13.46/t. A royalty of 2% was also considered for mineral resources contained in the Fortuna zone. Mineral resources are reported fully diluted; they consider a minimum mining width of 0.60 m and hanging wall and footwall overbreak dilutions of 0.30 m each to determine reasonable prospects of economic extraction. Bulk densities ranging from 2.36 g/cm3 to 2.57 g/cm3 were used to convert volume to tonnage.

 

3.

Mineral resources contained in tailings are reported at a cut-off grade of 0.50 g/t gold-equivalent, using recoveries of 60% for gold and 30% for silver, operating cost of US$2.39/t, and processing cost of US$29.42/t. A bulk density value of 1.75 g/cm3 was used to convert tailings volume to tonnage.

 

4.

Mineral resources contained in stockpiles are reported at a cut-off grade of 0.79 g/t gold-equivalent, using recoveries of 88.0% for gold and 80.8% for silver, operating cost of US$2.39/t, and processing cost of US$29.42/t. A bulk density value of 1.60 g/cm3 was used to convert the stockpile volume to tonnage.

 

5.	Mineral resources are reported as of December 31, 2020.

 

6.	All figures are rounded to reflect the relative accuracy of the estimate.

 

7.	Numbers may not add up due to rounding.

 

The methodology used at El Peñón to convert mineral resources to mineral reserves is summarized as follows:

 

•

Drift and bench (stope) selective mining units (SMUs) are designed using Vulcan Stope Optimiser; design parameters calibrated with actual operational results.

 

•

Long-term metal price assumptions for gold and silver of US$1,250/oz and US$18/oz, respectively, as well as processing recoveries and average operating costs obtained respectively from geometallurgical tests and last year’s life of mine (LOM) plan are used to determine an economic score for each SMU. Only measured and indicated mineral resources are considered for conversion to mineral reserves

 

•

SMUs with positive scores are analyzed for inclusion into the mineral reserve inventory. This is done by analyzing development costs, considering the capital and auxiliary development required to enable mining of the designed SMUs.

 

1 –Summary	4
Signature Date: March 25, 2021

 

Technical Report El Peñón Mine, Chile

 

•

Before including SMUs with positive scores in the mineral reserves inventory, geomechanical considerations are revised. Design is adjusted where required.

 

•

SMUs containing a majority portion of measured or indicated blocks are converted to proven or probable mineral reserves, respectively.

 

Table 1-2: El Peñón Mineral Reserve Statement as of December 31, 2020

 

Mineral Reserves		Category		Tonnage		Grade				Contained Metal
				(kt)		Au (g/t)		Ag (g/t)		Au (koz)		Ag (koz)
Open Pit		Proven		–		–		–		–		–
		Probable		53		0.34		316.2		1		543
		Total Open Pit		53		0.34		316.2		1		543
Underground		Proven		368		5.73		213.4		68		2,526
		Probable		5,068		5.07		158.6		826		25,835
		Total Underground		5,436		5.12		162.3		894		28,361
Stockpile		Proven		9		1.40		54.1		0		16
		Probable		651		1.26		14.1		26		294
		Total Stockpile		660		1.26		14.6		27		310
Combined		Proven		377		5.63		209.5		68		2,542
		Probable		5,772		4.60		143.7		853		26,672
		Grand Total		6,149		4.66		147.8		921		29,214

 

1.

Mineral reserves have been estimated by the El Peñón long-term mine planning team under the supervision of Sergio Castro, Registered Member of the Chilean Mining Commission, a full-time employee of Minera Meridian Limitada, and a qualified person as defined by NI 43-101. The estimate conforms to the CIM (2014) Standards. Mineral reserves are stated at a mill feed reference point and allow for dilution and mining losses. Metal price assumptions of US$1,250/oz for gold and US$18.00/oz for silver were used.

 

2.

Open-pit mineral reserves are reported at a cut-off NSR of US$ 49.14/t. Processing recoveries assumptions range from 84.13% to 89.22% for gold and from 79.71% to 81.67% for silver. Mine operating (including transport), processing, and G&A costs assumptions of US$6.27/t and US$29.42/t and US$13.46/t were considered, respectively.

 

3.

Underground mineral reserves are reported at an NSR cut-off of US$127.08/t. Processing recoveries assumptions range from 84.13% to 97.38% for gold and from 56.47% to 92.33% for silver. The following cost assumptions were considered: mine operating cost: US$80.10/t; processing cost: US$29.42/t; sustaining capital cost: US$4.10/t, and G&A cost: US$13.46/t. A royalty of 2% was considered for reserves planned to be mined in the Fortuna zone.

 

4.

Mineral reserves contained in low-grade stockpiles are reported at a cut-off grade of 0.90 g/t gold-equivalent. Processing recoveries assumptions of 95.2% for gold and 83.0% for silver were used. Operating and processing costs assumptions of US$2.02/t and US$29.42/t, respectively, were considered.

 

5.

Mineral reserves are reported as of December 31, 2020.

 

6.

All figures are rounded to reflect the relative accuracy of the estimate.

 

7.

Numbers may not add up due to rounding

 

1 –Summary	5
Signature Date: March 25, 2021

 

Technical Report El Peñón Mine, Chile

 

1.5

Mining and Processing Methods

 

Ore from underground mines have recently been—and will continue to be—the main source of feed for the El Peñón mill.

 

The various underground mining zones are accessed by ramps; this type of access is suitable for this mine in light of its shallow depth. The underground workings of the core mine extend approximately ten kilometers along strike and span a vertical extent of approximately 500 m, measured from the highest portal collar elevation to the bottom-most mine workings. The ramps provide flexibility for rapid adjustments for changes in direction and elevation and allow access to the veins at appropriate elevations.

 

Mining at El Peñón utilizes mainly the bench-and-fill mining method, which is a narrow longhole-stoping method that uses a combination of rockfill and cemented rockfill; a small percentage of cut-and-fill mining is also applied where required, depending on the characteristics of vein geometry and ground conditions. Due to the narrow vein widths, a “split-blasting” technique is used in many areas of the mine to reduce dilution in secondary development in ore zones.

 

The major assets and facilities associated with El Peñón are: the mining and processing infrastructure, which include office buildings, shops, and equipment; a processing plant which produces gold doré by crushing, grinding, leaching, counter-current decantation (CCD) concentrate solution recovery, zinc precipitation and refining; concrete and cemented backfill plants, and a filtered tailings stack storage facility.

 

El Peñón is connected to the National Electric Grid through a 66 kV transmission line connected to the Palestina substation.

 

The tailings produced at the El Peñón mill are stored in a filtered tailings stack storage facility, located 1.5 km southeast of the mineral processing plant. The current filter stack stores 25.4 Mt of tailings. The final design considers an additional storage capacity of 24.5 Mt.

 

The El Peñón mineral processing plant and associated facilities process run-of-mine as well as stockpiled ore. Comminution comprises a single stage of crushing followed by wet grinding in a SAG mill operating in series with a ball mill; these feed a battery of hydrocyclones. Leaching starts at the SAG mill, where sodium cyanide is added as a leaching agent. The hydrocyclones overflow is subsequently clarified and leached in reactors with mechanical agitators. The leached pulp is finally transported by gravity to a CCD thickener circuit to wash the pulp and recover the pregnant solution for gold and silver by zinc precipitation and refining to doré.

 

1 –Summary	6
Signature Date: March 25, 2021

 

Technical Report El Peñón Mine, Chile

 

1.6

Environmental Studies, Permitting, and Social or Community Impact

 

The El Peñón operation submitted its first Environmental Impact Assessment (EIA) in 1997 to the Chilean Environmental Impact Assessment System (SEIA). The Environmental Commission of the Region of Antofagasta (Comision Regional de Medio Ambiente de Antofagasta) approved the application with Exempt Resolution Nr. 043 in 1998.

 

The El Peñón operation has undergone a series of modifications since its original EIA submission. Required Environmental Qualification Resolutions (RCAs) were granted through a series of Declaration of Environmental Impacts (DIAs). A DIA was approved in 2019. Based on the increase in mineral reserves over the past three years, a new DIA was submitted in February 2021 for a life of mine plan extension; approval is expected in 2021.

 

El Peñón consists of historical open pits, underground mining operations, a process plant, and other support infrastructure, including waste dumps and a filtered tailings facility with a total storage capacity of 49.8 Mt. The approved plant capacity is 4,800 tpd.

 

Yamana has implemented an integrated management system covering health, safety, environment, and community through internationally accredited systems that include the ISO 14001 Environment Management System and the OSHAS 18001 Occupational Health and Safety Management System. A risk assessment matrix has been developed for the El Peñón mine operation that integrates risk matrices for ISO 14001:2015 and OHSAS 18001:2007.

 

Beginning in 2020, El Peñón also began the implementation of the Mining Association of Canada’s Towards Sustainable Mining framework, as well as the World Gold Council’s Responsible Gold Mining Principles, each of which included internal assessments and will require external audits within a 3-year timeframe.

 

Water conservation is a primary focus at El Peñón. The water management system at El Peñón has been designed as a closed circuit. Process water from the mill is recovered in the tailings filter plant and recirculated back to the processing plant.

 

Even though no communities are located near El Peñón, Yamana has made a number of commitments to the well-being, health, and safety of the communities in the area. As such, the social and community activities conducted by Yamana are concentrated in the Taltal District and are of philanthropic orientation.

 

El Peñón has developed a closure plan covering all current and approved facilities; this plan is in accordance with applicable legal requirements. The closure plan addresses progressive and final closure actions, post-closure inspections, and monitoring.

 

1 –Summary	7
Signature Date: March 25, 2021

 

Technical Report El Peñón Mine, Chile

 

1.7

Conclusions and Recommendations

 

More than 5.3 Moz of gold and 134 Moz of silver have been produced from El Peñón since commercial production commenced in 2000. The mine’s current production rate, the result of the rightsizing of the operation initiated in late 2016, increased free cash flow generation and reduced capital expenditures while ensuring the long-term sustainability of the mine, matching production rate with replacement of mineral reserves and mineral resources.

 

Exploration results at El Peñón continue to highlight the expansion potential of the mine and Yamana’s ability to replenish mineral reserves and mineral resources so as to extend the life of mine past its current mineral reserve base. Drilling is effective at adding mineral resources and mineral reserves at El Peñón. Similar to drilling results from the previous two years, the 2020 drilling successfully replenished the 2020 depletion of gold mineral reserves. Based on this successful track record, a drilling program totalling 384,000 m is planned from 2021 to 2023.

 

El Peñón mineral resources and mineral reserves have been estimated in conformity with generally accepted CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines (November 2019) and were classified in accordance with CIM (2014) Standards.

 

The total proven and probable mineral reserve at El Peñón as of December 31, 2020, is 6.1 Mt averaging 4.66 g/t gold and 147.8 g/t silver, for approximately 0.921 Moz of contained gold and 29.21 Moz of silver. In addition, measured and indicated mineral resources are estimated at 8.0 Mt grading 2.96 g/t gold (0.765 Moz gold) and 98.8 g/t silver (25.5 Moz silver), and inferred mineral resources are estimated at 18.98 Mt grading 1.39 g/t gold (0.850 Moz gold) and 46.1 g/t silver (28.1 Moz silver).

 

The mineral reserves supporting the life of mine (LOM) plan consists of an integrated operation, mining mainly underground ore and small amounts of ore from the Chiquilla Chica open pit. The ore produced by the mining operations and reclaimed from stockpiles is fed to the mill to sustain a six-year mine life. LOM production is estimated at 866 koz gold and 25,591 koz silver.

 

Yamana is confident that, based on required infill drilling, the future conversion of mineral resources to mineral reserves will continue to show positive results. In recent years, mineral resources converted to mineral reserves have more than offset the depletion of mineral reserves; this indicates the significant potential of extending the mine life beyond the current LOM and sustaining a strategic mine life of 10 years or more.

 

The capital and operating cost estimates are based on mine budget data and operating experience, and are appropriate for the known mining methods and production schedule. Under the assumptions in this technical report, El Peñón has positive project economics until the end of mine life, which supports the mineral reserve estimate. Capital costs over the LOM period are estimated at US$167M, consisting mainly of sustaining underground mine development (83%) and capital required for equipment replacement (14%). An additional budget of US$37M is estimated for mine closure purposes.

 

1 –Summary	8
Signature Date: March 25, 2021

 

Technical Report El Peñón Mine, Chile

 

No environmental or social issues were identified that could materially impact the ability to extract the mineral resources and mineral reserves. El Peñón has all the operational licences required for operation according to the national legislation. The approved licences address the authority’s requirements for mining extraction and operation activities. The results of this technical report are subject to variations in operational conditions including, but not limited to the following:

 

•

Assumptions related to commodity and foreign exchange (in particular, the relative movement of gold and the Chilean peso/US dollar exchange rate)

 

•

Unanticipated inflation of capital or operating costs

 

•

Significant changes in equipment productivities

 

•

Geological continuity of the mineralized structures

 

•

Geotechnical assumptions in pit and underground designs

 

•

Ore dilution or loss

 

•

Throughput and recovery rate assumptions

 

•

Changes in political and regulatory requirements that may affect the operation or future closure plans

 

•

Changes in closure plan costs

 

•

Availability of financing and changes in modelled taxes

 

In the opinion of the qualified persons, there are no reasonably foreseen inputs from risks and uncertainties identified in the technical report that could affect the project’s continued economic viability.

 

Over the past 20 years, El Peñón has established an exploration strategy to continually replace depletion of mineral reserves and extend mine life. The strategy involves maintaining a pipeline of mineral resources and exploration potential to maintain a rolling mine life visibility of at least 10 years. To continue this trend, drilling programs should continue to be carried out with the following objectives:

 

•

Infill drilling to replace production by upgrading and extending known mineral resources.

 

•

Expansion exploration drilling to upgrade inferred mineral resources to measured or indicated categories, or to transform zones of geological potential into inferred mineral resources.

 

•

District exploration to test the extension of little-known areas of mineralization or to discover new primary structures by testing targets identified in mapping, geochemistry, geophysics, or machine learning programs.

 

1 –Summary	9
Signature Date: March 25, 2021

 

Technical Report El Peñón Mine, Chile

 

Ongoing exploration success could also unlock the opportunity to leverage the available processing capacity which could increase annual gold and silver production and reduce unit costs.

 

Yamana instituted an Operational Excellence program to improve productivity and control costs. An assessment of the processing plant performed in the first quarter of 2021 has identified several opportunities to improve gold and silver recoveries and/or reduce operating costs. Opportunities include leach solution management, additional filblast in the leaching circuit, optimized automated reagent dosing, thickener Advanced Process Control, and Viper filtration technology. These opportunities could be quickly implemented with minimal capital investment. The El Peñón team should continue to evaluate and prioritize these opportunities and develop an action plan for their implementation.

 

In the underground mine, El Peñón should continue the implementation of Operational Excellence initiatives with an objective to increase productivity minimize dilution, and control operating costs. Mining initiatives include testing of smaller drift profiles for specific sectors, optimized stoping and development face drill patterns, and opportunities to reduce specific consumption of consumables.

 

In 2021, El Peñón should initiate the process of certification for ISO 45001 (replacing OSHAS 18001) and recertification of the ISO 14001 Environment Management System; it should also continue the implementation of the Mining Association of Canada’s Towards Sustainable Mining framework as well as the World Gold Council’s Responsible Gold Mining Principles.

 

1 –Summary	10
Signature Date: March 25, 2021

 

Technical Report El Peñón Mine, Chile

 

2

Introduction

 

The El Peñón mine (El Peñón) is an underground and open-pit gold-silver mine located in the Atacama Region of Chile, approximately 165 km southeast of the city of Antofagasta. Yamana Gold Inc. (Yamana) holds a 100% interest in El Peñón through its subsidiary, Minera Meridian Limitada (Minera Meridian).

 

Yamana is a Canadian-based precious metals producer with significant gold and silver production- and development-stage properties, exploration properties, and land positions throughout the Americas, including Canada, Brazil, Chile, and Argentina. Yamana plans to continue to build on this base through the expansion and optimization initiatives at existing operating mines, the development of new mines, advancement of its exploration properties and, at times, by targeting other consolidation opportunities, with a primary focus on the Americas.

 

Yamana acquired El Peñón when it completed the purchase of Meridian Gold Inc. (Meridian Gold) in 2007.

 

Yamana’s other operations include:

 

•

100% ownership of the Jacobina underground gold mine located in the state of Bahia in eastern Brazil

 

•

50% ownership in the Canadian Malartic open-pit gold mine located in Malartic, Québec, Canada

 

•

100% ownership of the Minera Florida underground gold-silver mine located southwest of Santiago, Chile

 

•

100% ownership in the Cerro Moro underground and open-pit gold-silver mine located in Santa Cruz province, Argentina

 

This technical report, prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) and Form 43-101F1, documents the mineral resource estimate for El Peñón as of December 31, 2020, the mineral reserve estimate for El Peñón as of December 31, 2020, and also summarizes the current mining operation at El Peñón as of December 31, 2020.

 

The mineral resource and mineral reserve estimates reported herein were prepared in conformity with generally accepted standards set out in the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Mineral Resource and Mineral Reserves Estimation Best Practices Guidelines (November 2019) and were classified according to CIM Definition Standards for Mineral Resources and Mineral Reserves (May 2014) (CIM (2014) Standards).

 

2–Introduction	11
Signature Date: March 25, 2021

 

Technical Report El Peñón Mine, Chile

 

2.1

Sources of Information

 

The qualified persons for this technical report are Sergio Castro, Registered Member of the Chilean Mining Commission; Marco Velásquez Corrales, Registered Member of the Chilean Mining Commission; Henry Marsden, P.Geo.; and Carlos Iturralde, P.Eng.; all are full-time employees of Yamana.

 

Mr. Castro is the Technical Services Manager of El Peñón for Yamana. Mr. Velásquez is Chief Resource Geologist at El Peñón for Yamana. Mr. Castro and Mr. Velásquez are both local employees and work full time at the mine. Mr. Marsden, Senior Vice President, Exploration for Yamana visited the project on many occasions since January 2016 and most recently between March 11 and 13, 2020. Mr. Iturralde, Director, Tailings, Health, Safety & Sustainable Development at Yamana, has not visited the project due to travel restrictions related to the global COVID-19 pandemic.

 

Sergio Castro is responsible for Sections 13, 15 to 19 (excluding sub-section 18.1), 21 to 22, and 24; he also shares responsibility for related disclosure in Sections 1, 25, 26, and 27 of the technical report. Marco Velásquez Corrales is responsible for Section 11, 12, and 14, and shares responsibility for related disclosure in Sections 1, 25, 26, and 27 of the technical report. Henry Marsden is responsible for Sections 2 to 10, 23, and shares responsibility for related disclosure in Sections 1, 25, 26, and 27 of the technical report. Carlos Iturralde is responsible for Sections 18.1 and 20, and shares responsibility for related disclosure in Sections 1, 25, 26, and 27 of the technical report.

 

In preparation of this technical report, the qualified persons reviewed technical documents and reports on El Peñón supplied by on-site personnel. The documentation reviewed and other sources of information are listed at the end of this technical report in Section 27 - References.

 

The prior technical report on El Peñón was compiled by RPA Inc. (RPA) with an effective date and signature date of March 2, 2018 (RPA, 2018). The RPA report served as the foundation for this current technical report, which updates the information as of an effective date of December 31, 2020.

 

1 –Introduction	12
Signature Date: March 25, 2021

 

Technical Report El Peñón Mine, Chile

 

3

Reliance on Other Experts

 

The information, conclusions, opinions, and estimates contained herein in this technical report are based on the following parameters:

 

•

Information available to Yamana at the time of preparation of this technical report

 

•

Assumptions, conditions, and qualifications as set forth in this technical report

 

The qualified persons have not performed an independent verification of the land title and tenure information, as summarized in Section 4 of this technical report, nor have they verified the legality of any underlying agreement(s) that may exist concerning the permits or other agreement(s) between third parties, as summarized in Section 4 of this technical report. For this topic, the qualified persons of this report have relied on information provided by the legal department of Yamana.

 

The qualified persons have not performed an independent verification of the permitting and environmental monitoring information and have relied on documents and information provided by Yamana’s Health, Safety, Environment, and Community (HSEC) teams.

 

The qualified persons have relied on various Yamana departments for guidance on applicable taxes, royalties, and other government levies or interests, applicable to revenue or income from the El Peñón mine.

 

Except for the purposes legislated under applicable securities laws, any use of this technical report by any third party is at that party’s sole risk.

 

3 –Reliance on Other Experts	13
Signature Date: March 25, 2021

Technical Report El Peñón Mine, Chile

  

4

Property Description and Location

 

El Peñón is located in north-central Chile, at latitude 24°40′ S and longitude 69°50′ W, approximately 165 km southeast of the city of Antofagasta (Figure 4-1). The mine site, situated approximately midway between the Pacific Coast and the border with Argentina, is in the Atacama Desert, a desert plateau with one of the driest climates on earth. The mine operates on a year-round basis.

 

 

Figure 4-1: General location map

 

4 –Property Description and Location	14
Signature Date: March 25, 2021

Technical Report El Peñón Mine, Chile

 

4.1	Mineral and Surface Tenure

 

The El Peñón property consists of 443 individual mining exploitation claims owned by Minera Meridian Limitada (Minera Meridian), a wholly-owned subsidiary of Yamana. The claims comprise an area measuring 92,387 ha that covers the El Peñón core mine area, the Fortuna area, the Laguna area, the Pampa Augusta Vitoria (PAV) area, and the surrounding exploration lands (Figure 4-2, Figure 4-3, and Table 4-1). Canons are paid annually to maintain the active claim status. The boundaries of the mining exploitation concessions are legally surveyed and are covered by an additional layer of claims for increased legal protection.

 

El Peñón has been in operation since 1999 and the existing surface rights are deemed sufficient for mining and processing operations. As well, El Peñón has sufficient water, power, and labour supplies and sufficient areas for tailings and waste disposal.

 

Minera Meridian is subject to a royalty tax between 5% and 14% based on the mining gross profit margin and currently pays approximately a 5% to 7% royalty tax on taxable mining income.

 

In addition, El Peñón is also subject to First Category Tax (income tax) in Chile at a rate of 27%.

 

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Figure 4-2: Map of mineral tenure

 

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Table 4-1: Mineral tenure list

 

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Figure 4-3: Detailed map of mineral tenure

 

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4.2	Underlying Agreements

 

A 2% Net Smelter Return (NSR) royalty is payable to Maverix Metals Inc. as agreed as part of the purchase of the Nado claims covering the Fortuna area and a further 2% NSR is payable to Soquimich Comercial SA for claims Providencia 1, 2, 3, 4, and 5 and claims Dominador 1, 2, and 4. These claims are also located in the Fortuna area.

 

4.3	Permits and Authorizations

 

Minera Meridian has all required permits to continue carrying out mining and processing operations at El Peñón. Further details of these permits can be found in Section 20 of this technical report.

 

Government regulations require that a full closure plan be submitted when mine life is less than five years. The latest closure plan was approved through Exempt Resolution Nº 2658/2019. Updates to the closure plan are required whenever the life of mine is extended.

 

4.4	Environmental Considerations

 

The primary environmental considerations and potential liabilities for El Peñón are related to the operations of the tailings storage facility (TSF) and the management of seepage water and mine water. Yamana prioritizes the management of tailings and is in the process of aligning the company’s tailings management system with best practices developed by the Mining Association of Canada (MAC), Canadian Dam Association (CDA) guidelines, and other international standards.

 

Additional details on tailings infrastructure and management at El Peñón are provided in Sections 17.11 and 20 of this technical report.

 

The qualified person responsible for this section is not aware of any other significant factors and risks that may affect access, title, or the right or ability to perform mining and exploration work on the property.

 

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5	Accessibility, Climate, Local Resources, Infrastructure, and Physiography

 

5.1	Accessibility

 

El Peñón is located approximately 165 km southeast of Antofagasta. It is accessible by paved roads, a trip taking approximately 2.5 hours. Antofagasta, the principal source of supplies for the mine, is linked to Santiago (the capital) by daily air service. Minera Meridian has surface rights deemed sufficient for mining and processing operations.

 

5.2

Climate

 

The climate in the Atacama Desert is renowned as among the most arid in the world, with a mean annual precipitation between 0 and 15 mm per year, with some areas with no precipitation whatsoever. Temperatures in the area close to the mine can range from -5°C to +30°C. Climatic conditions do not hinder mining operations, which can be carried out throughout the whole year.

 

5.3	Local Resources

 

There are no significant population centres or infrastructure in the immediate vicinity of El Peñón. Antofagasta, a port city with a population of 380,000, is the main supply source for the mine. It hosts a variety of commercial establishments, hotels, restaurants, retailers, service suppliers, high schools, and universities as well as hospitals and health clinics. The city also hosts a large number of manufacturing companies and suppliers who serve the mining industry.

 

Skilled personnel can be easily sourced from Antofagasta or from other cities of the region and country, where mining is the main economic activity.

 

5.4	Infrastructure

 

The current major assets and facilities associated with the mining operations at El Peñón are listed as follows:

 

•

Mine and mill infrastructure including office buildings, shops, laboratories, stockpiles, tailing storage facility, and equipment.

 

•

Campsite/housing facilities

 

•

Facilities providing basic infrastructure to the mine, such as access roads, electric power distribution systems connected to national power grid, water treatment and supply and sewage treatment.

 

•

Underground infrastructure including portals, access ramps, ventilation raises, maintenance shops, and mobile fleet equipment.

 

•

The open-pit infrastructure including haulage roads, ramps, and mobile fleet equipment.

 

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5.5	Physiography

 

The mine is located in the Atacama Desert region of Chile at an elevation of approximately 1,800 masl. Relief in the area is modest, with widely spaced hills and peaks separated by broad open valleys. There is little to no vegetation or wildlife in the area around the mine, and the principal land use is mining.

 

 

Figure 5-1: Infrastructure and typical landscape

 

A.

Atacama Desert and mineral processing plant

B.

Orito portal

C.

Mine site overview at surface and Atacama Desert

 

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6

History

 

The history of El Peñón has been described in Pearson and Rennie (2008) and Collins, Moore and Scott (2010). Information from both reports is summarized below.

 

The El Peñón gold-silver deposit was discovered by Meridian Gold in the early 1990s and went into production in 1998. Meridian Gold was acquired by Yamana in late 2007.

 

Regional exploration throughout the 1990s focussed on Early to Mid-Eocene volcanic belts in northern Chile and led to the acquisition of the El Peñón property in 1993. Trenching carried out that year was followed by a 13-hole drilling program which led to the discovery of significant gold-silver mineralization. The next year, the first hole of a follow-up program intersected 100 m grading 10.9 g/t Au and 123.4 g/t Ag in what eventually became the Quebrada Orito deposit.

 

Various geological, petrographic, and mineralogical studies occurred during the exploration and operation stages of the project. These include Pérez (1999), Robbins (2000), Warren et al. (2004), Zuluaga (2004), Warren (2005), and Cornejo et al. (2006). Various geophysical surveys were performed on the property including transient electromagnetic (TEM) surveys in 2001, a magnetotelluric (CSAMT) survey in 2002, a gravity survey in the El Peñón area in 2003, a very low frequency (VLF) electromagnetic (EM) survey in 2004, and an aeromagnetic and radiometric survey in the El Peñón and Amancaya areas in 2005. Geochemical soil sampling was also undertaken in targeted areas of the deposit. The geophysical and geochemical surveys provided key data to map the lithology, alteration, and structures on the El Peñón property.

 

Between 1993 and 2007, 1,052,996 metres of exploration drilling and 649,639 metres of infill drilling were carried out for a total of 1,702,635 metres drilled. Additional details on drilling at El Peñón are provided in Section 10 of this technical report

 

In July 1998, it was decided to advance the property into production, and construction on a 2,000 tpd mine and mill facility commenced later that year. Production began in September 1999, ramping up to full capacity by January 2000. Production has continued uninterrupted to the present day.

 

6.1	Historical Mineral Resource and Mineral Reserve Estimates

 

Although a number of historical mineral resource estimates and mineral reserve estimates have been prepared for El Peñón throughout its life, none of these estimates are currently regarded as significant.

 

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6.2	Past Production

 

Since September 1999, the operation has run continually at design and increased capacity, treating both open-pit and underground ore. As of December 31, 2020, the mine had processed approximately 23.7 million tonnes (Mt) of ore grading 7.46 g/t gold and 202.7 g/t silver, producing 5.4 million ounces (Moz) of gold and 134.0 Moz of silver, as shown in Table 6-1. In late 2016, Yamana decided to rightsize the El Peñón operation at a production rate of approximately 150 to 160 koz gold and 4,000 to 4,500 koz silver per year, to promote cash flow generation rather than maximizing production.

 

Table 6-1: Commercial production at El Peñón, January 2000 to December 31, 2020

 

Year			Processed Tonnes				Au Feed Grade (g/t)				Ag Feed Grade (g/t)				Au Recovery (%)				Ag Recovery (%)				Au Production (oz)				Ag Production (oz)
2000				739,450				13.18				194.4				93.6				89.1				282,718				4,018,397
2001				715,413				14.87				234.4				94.5				89.0				318,012				4,751,758
2002				688,876				15.33				249.5				95.3				90.8				328,061				5,077,188
2003				703,775				14.62				204.5				96.6				92.4				320,998				4,283,436
2004				837,111				11.96				192.7				96.5				92.2				314,080				4,812,152
2005				880,229				11.13				211.1				96.4				92.8				303,508				5,537,589
2006				935,105				8.10				234.6				95.5				92.8				230,145				6,428,905
20071				998,252				7.64				274.6				94.2				91.8				234,598				8,186,718
2008				1,124,567				6.73				305.4				92.0				89.2				224,990				9,864,275
2009				1,271,596				5.79				276.3				91.2				86.9				215,846				9,820,474
2010				1,522,366				5.74				228.5				91.1				84.1				256,530				9,427,207
2011				1,452,090				7.05				215.9				93.0				84.0				306,184				8,470,112
2012				1,415,292				7.47				199.2				93.4				80.0				317,508				7,249,430
2013				1,422,055				7.94				187.2				93.0				75.6				338,231				6,464,623
2014				1,475,857				6.36				212.0				93.3				83.9				282,617				8,475,133
2015				1,418,132				5.32				194.0				93.6				86.9				227,228				7,692,811
2016				1,421,243				5.11				153.9				94.3				85.7				220,209				6,020,758
2017				1,041,199				5.05				148.3				95.1				86.4				160,510				4,282,339
2018				1,103,835				4.53				131.3				94.1				83.6				151,893				3,903,961
2019				1,290,239				4.09				120.6				94.0				86.2				159,515				4,317,292
2020				1,266,829				4.22				138.9				93.7				86.7				160,824				4,917,101
Total				23,723,511				7.46				202.7				93.8				86.3				5,354,205				134,001,658

 

1.	Acquisition by Yamana in late 2007

 

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7	Geological Setting and Mineralization

 

The geological setting and mineralization of El Peñón are described in Robbins (2000) and in former technical reports on El Peñón (Pearson and Rennie (2008); Collins, Moore, and Scott (2010)). The most recent update to the regional and district geology is outlined in the Aguas Blancas (Ferrando et al., 2013) and Augusta Victoria (Astudillo et al., 2017) geological maps by SERNAGEOMIN, the Chilean National Geology and Mining Service. This section is based on these reports and maps.

 

7.1	Regional Geology

 

El Peñón is located in the Central Depression (also known as the Central or Longitudinal Valley), that extends for 650 km from the Chile-Peru border in the north to south-central Chile in the south. In the Atacama Desert, this valley corresponds in part to a Late Cretaceous to Paleogene volcanic belt that separates the Mesozoic magmatic arc, exposed in the Coast Mountains located to the west, from the Paleozoic and Triassic volcanic and sedimentary assemblages of the Domeyko Cordillera to the east.

 

The Late Cretaceous to Eocene volcanic and intrusive rocks within the Central Depression consist of an alkali-enriched calk-alkaline bimodal suite. Rocks consist of basaltic andesite to rhyolitic lavas and tuffs, subvolcanic porphyritic intrusions, and granitoid stocks. This belt is host to many epithermal deposits and subvolcanic porphyry systems.

 

Late Cretaceous volcanic and volcaniclastic rocks were deposited in narrow fault-bounded extensional basins (84 Ma to 65 Ma). The margins of the basins were intruded by dioritic to monzonitic plutons. Compressive tectonism, active from 65 Ma to 62 Ma, resulted in the inversion of the Late Cretaceous basins, uplift and erosion of Late Cretaceous plutonic rocks to the west of the basin, and syn-tectonic magmatism along the basin-bounding faults.

 

Volcanism continued through the Paleocene and into the Middle Eocene, with mafic to felsic magmatism depositing flows, volcaniclastic, epiclastic, and subvolcanic rocks. A sequence of late Paleocene felsic domes, tuffs, and subvolcanic rocks is associated with the hydrothermal veining and brecciation responsible mineralization at El Peñón. These rocks are overlain by Eocene volcanic and subvolcanic rocks (rhyolitic dome complexes, andesites and basalts) that host significant areas of acid sulphate or high-sulphidation alteration.

 

Deformation occurred in the Middle to Late Eocene with uplift of the pre-Cordillera, triggering copper porphyry emplacement further to the east. Low-angle offset of the El Peñón vein system occurred during this period.

 

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Figure 7-1: Regional geological setting

 

7.2	Local Geology

 

The local area is underlain by a fault-bounded north-south trending panel of Paleocene to Eocene volcanic rocks. This panel is bounded to the east and west by rocks of Permian to Cretaceous age. Formation names and ages as reported below are from updated extensive recent work by the Servicio Nacional de Geología y Minería (SERNAGEOMIN), which resulted in significant changes from stratigraphic divisions reported in earlier reports (Robbins, 2000). The Cretaceous sequence (95-90 Ma) dominates and consists of volcanic and minor sedimentary rocks of the Paradero del Desierto Strata Formation and continental sedimentary and volcanic rocks Quebrada Mala Formation. The Paradero del Desierto Strata outcrops northwest of the deposit area. The Upper Cretaceous Quebrada Mala Formation is present to the west, north, and northeast of El Peñón; it consists of volcanic rocks varying in composition from basaltic andesite to high-silica rhyolite; textures vary from flows to ignimbrites (Astudillo et al, 2017; Ferrando et al., 2013). Ignimbrites and other rock types formerly assigned to the Augusta Vitoria Formation are now included in the Quebrada Mala Formation. Away from the deposit, these rocks are intruded by large granitic to dioritic stocks dated at between 40 and 50 Ma.

 

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The geology of the El Peñón deposit area is characterized by the emplacement of a Paleocene to Lower Eocene dacite/rhyolite dome complex into volcanic and tuffaceous rocks of the Chile Alemania Formation (Figure 7-2).

 

The kilometre-scale Paleocene to Lower Eocene dome consists of several layers or sill-like masses of rhyolite, up to 200 m-thick, intercalated with units of pyroclastic rocks, volcaniclastic rocks, and volcanic flows or intermediate composition assigned to the Chile Alemania Formation (Ferrando et al., 2013; Figure 7-3); these are interpreted to provide important lithological controls for development of vein mineralization.

 

Extensive colluvium, alluvial gravel, and saline crust deposits cover the bedrock.

 

The main rock types in the area are described in Table 7-1. The local and property-scale geology of the El Peñón property is illustrated in Figure 7-2.

 

Table 7-1: Description of main lithologies

 

Age		Formation		Description
Cretaceous to Eocene				Diorite and monzonite intrusions
Paleocene to Lower Eocene		Chile Alemania Formation		Basalt, andesite, dacite, and rhyolite volcanic rocks. Flow breccia, pyroclastic rocks, and minor epiclastic volcanic sandstone and conglomerate. Prominent rhyolite to dacite domes and highly welded ignimbrites that host mineralization.
Upper Cretaceous		Quebrada Mala Formation		Andesitic lavas, breccia volcaniclastic and epiclastic sandstone, rhyolite and dacite with characteristic quartz phenocrysts.
Lower Cretaceous		Estratos de Paradero del Desierto		Fluvial sandstone, volcanic breccia, andesitic lava, with some dacitic tuff.

 

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Figure 7-2: Local and property geology

 

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7.3	Property Geology

 

Surface exposures at El Peñón are not common, and much of the mapping for the area is based on float. The property is mostly underlain by Late Cretaceous to Early Eocene pyroclastic flows and lavas, volcaniclastic breccias, and tuffs of basaltic to rhyolitic composition. Several thin Early Cretaceous rhyolite tuff and dacite to andesite flow layers occur in the northern part of the property. These rocks are intruded by Late Cretaceous diorite and monzodiorite stocks and dacite domes.

 

The rocks hosting gold-silver mineralization at El Peñón are near-horizontal to gently dipping Paleocene to Eocene basaltic to rhyolitic volcanic rocks. The stratigraphy consists of a lower sequence of volcanic breccias and andesitic to basaltic flows overlain by rhyolitic to dacitic pyroclastic rocks, dacitic to andesitic flows, and volcanic breccias. Rhyolitic intrusions, domes, and associated flows are intercalated with earlier volcanic units.

 

7.3.1

Structure

 

The distribution of Cretaceous and Eocene volcanic rocks is controlled by graben structures bounded by north–northeast-trending faults. These are steeply dipping regional-scale structures with displacements in the order of hundreds of metres. The dominant orientation of late dykes and many of the highest-grade mineralized faults is parallel to the bounding faults. Mineralized faults dip steeply eastward on the east side of the property and westward on the west side, in a distribution interpreted as a horst/graben extensional structure (Figure 7-3).

 

Most of the mining takes place along north-trending veins (dipping 75°–85° W or 55°–80° E). A relatively minor amount of production has also taken place along northeast-striking structures dipping 65°NW. Locally, northeast-trending shallow-dipping faults dipping 20°SE displace the veins.

 

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Figure 7-3: Schematic geological plan and cross-sections of the El Peñón deposit

 

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7.4	Mineralization

 

The gold-silver mineralization at El Peñón is hosted in near-horizontal to gently dipping Paleocene to Eocene basaltic to rhyolitic volcanic rocks. The El Peñón deposit comprises many individual tabular and steeply dipping zones that are amenable to mining by both underground and surface methods. Vein thickness range from decimetre-scale to more than 20 metres. The strike length of individual mineralized zones ranges from less than 1 km to 4 km and the down-dip extent reaches up to 350 m. Photographs depicting examples of the gold-silver mineralization at El Peñón are presented in Figure 7-4.

 

The known deposit consists of 19 main vein zones and many subsidiary veins. They are grouped in vein systems that have previously supported, currently support, or are planned to support surface and underground mining operations. The 19 principal mineralized veins are listed as follows:

 

The veins strike predominantly north-south and dip steeply to the east and west. A small proportion of the deposit is also hosted in fault zones striking north–northeast to northeast.

 

Vein textures often display crustiform textures, although the highest-grade gold and silver mineralization are associated with massive banded quartz-adularia. Gangue minerals occur as open space filling as well as replacements of primary host rock mineral phases.

 

Gold and silver mineralization occurs as disseminated electrum, acanthite, native gold, native silver, silver sulphosalts, and silver halides; these minerals are hosted in a gangue dominated by quartz, adularia, carbonate, and clay. Precious metals occur mainly as micron- to millimetre-size subrounded and irregular grains of electrum. Two phases of electrum are present: a primary phase, which contains approximately 55 to 65% gold, and a secondary phase where the gold content is usually greater than 95%, due to the supergene remobilization of silver.

 

Sulphide minerals are relatively rare, except at the northeastern portion of the El Peñón mine area. This paucity of sulphides may be due to oxidation, or to an initial overall low abundance of sulphides as would be expected in a low-sulphidation environment. Iron- and manganese-oxyhydroxides are common, with only trace occurrences of relict sulphides. In order of abundance, trace amounts of pyrite, galena, sphalerite, chalcocite and covellite occur locally.

 

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Age-dating of adularia from the veins at El Peñón suggests that mineralization took place at around 52 Ma to 53 Ma (Early Eocene). Two mineralization and alteration events have been defined from fluid inclusion studies. The principal mineralization event resulted from circulation of neutral reduced fluids that replaced host-rock phenocrysts and groundmass by quartz, adularia, albite, carbonate, clays, calcite, and chlorite. It also produced quartz-adularia flooding and breccia-filling in the vicinity of the veins. Another, more widespread, alteration process was derived from acidic oxidized hydrothermal solutions. This event resulted in the formation of lithocaps of quartz-alunite alteration, quartz-alunite breccia-filling, with minor copper and silver and little or no gold.

 

 

Figure 7-4: Photographs of mineralization in underground exposures and in drill core

 

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8	Deposit Types

 

El Peñón is classified as a low- to intermediate-sulphidation epithermal gold-silver deposit associated with steeply dipping fault-controlled veins emplaced following rhyolite dome emplacement. Gold and silver mineralization consists of disseminations of electrum, native gold and silver, acanthite, silver sulphosalts, halides, and accessory pyrite occurring with quartz, adularia, carbonates, and clay minerals (Pearson and Rennie, 2008). Epithermal deposits represent shallow parts of larger, mainly subaerial, hydrothermal systems (Figure 8-1) formed at temperatures as high as about 300°C and at depths from about 50 to as much as 1,500 m below the water table (John et al., 2010).

 

Analogous epithermal gold-silver deposits set in an extensional-transtensional continental-margin arc are the Comstock Lode in Nevada, Martha Hill in New Zealand, Peñasquito in Mexico, and Hishikari in Japan (John et al., 2010).

 

 

Figure 8-1: Generalized gold deposit types and environments

 

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9	Exploration

 

Initial regional exploration focused on Early to Mid-Eocene volcanic belts in northern Chile and led to their acquisition of the El Peñón property in 1993. Trenching carried out that year, followed by a 13-hole drilling program, discovered significant gold-silver mineralization. The next year, the first drill hole of a follow-up program intersected 100 m grading 10.9 g/t gold and 123.4 g/t silver in what eventually became the Quebrada Orito deposit.

 

Since 2007 Yamana has been successful in expanding the footprint of mineralization through geological mapping, geochemical characterization, geophysics, and abundant surface and underground drilling within the northeast trend, first starting at the El Peñón area, with Quebrada Orito in the southwest and ending to Angosta in the northeast.

 

Exploration has also been successful at the Fortuna and Pampa Augusta Vitoria (PAV) areas located to the southwest and to the north of El Peñón, respectively. Geophysical anomalies and positive drill intersections remain to be followed up in all areas. GoldSpot Discoveries Corp. (GoldSpot) was contracted in 2019 to apply machine learning to target unknown mineralization.

 

Exploration work completed to date has defined 40 main mineralized zones and subsidiary veins, within ten geological trends.

 

The significant exploration results at El Peñón that are material to this technical report were obtained by surface and underground core drilling. This work and resulting interpretations are summarized in Sections 10, 14, and 15 of this technical report.

 

9.1	Exploration Potential

 

Exploration conducted between 2018 and 2020 can be divided into three categories: infill, expansion, and district.

 

•

Infill drilling is designed to replace production by upgrading and extending known mineral resources with a combination of reverse circulation (RC) and core drilling methodology (ratio of approximately 70% RC to 30% core drilling).

 

•

Expansion (or step-out) exploration drilling aims to upgrade inferred mineral resources to measured or indicated categories, or to transform zones of geological potential into inferred mineral resources.

 

•

District exploration is meant to test the extension of little-known areas of mineralization or to discover new primary structures by testing targets identified in mapping, geochemistry, geophysics, or machine learning programs.

 

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A total of 384,000 m of drilling has been planned for 2021 through 2023 at a budgeted cost of US$54M. The amount of proposed drilling is based on the past success rate of adding resources at El Peñón.

 

Infill targets in 2020 included Martillo Flat, Pampa Campamento, El Valle, Dorada, Cerro Martillo and La Paloma. Expansion targets tested in 2020 included Colorada Sur, El Valle-Sorpresa extension, deeper portions of Martillo Flat, Pampa Campamento and La Paloma Profundo. District targets tested in 2020 included Angosta, Augusta Victoria, Chiquilla Chica, Laguna-Fortuna, and Cerro Seco-Estanque de Agua.

 

Exploration results at El Peñón continue to highlight the expansion potential of the mine and Yamana’s ability to replenish mineral reserves and mineral resources so as to extend the life of mine past its current mineral reserve base.

 

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10

Drilling

 

Systematic testing of the gold-silver-bearing zones was started by Meridian Gold in 1993 and continued until 2007. Yamana has drilled continuously on the property since 2007 to expand the mineral resources and replace depletion of mineral reserves. To the end of December 2020, over three million metres have been drilled at El Peñón in the Fortuna, El Peñón, and Pampa Augusta Vitoria (PAV) areas (Table 10-1). This includes 130,298 m completed in 2020 (71,263 m exploration and 59,035 m infill drilling), with intersections at Colorada Sur, El Valle, Pampa Campamento, Sorpresa, La Paloma and Dorada veins.

 

Figure 10-1 illustrates the location of drilling in the El Peñón area. Significant exploration results and interpretations obtained from surface and underground drilling are summarized in Sections 14 and 15 of this technical report.

 

Table 10-1: Exploration and infill drilling by year and type, 1993 to December 31, 2020

 

Year		Exploration (m)		Infill (m)		Total (m)		Year		Exploration (m)		Infill (m)		Total (m)
1993		2,507		0		2,507		20071		113,507		70,534		184,041
1994		16,606		0		16,606		2008		66,917		65,911		132,828
1995		51,451		0		51,451		2009		93,690		22,592		116,282
1996		48,370		0		48,370		2010		69,470		77,724		147,194
1997		85,248		0		85,248		2011		78,746		49,919		128,665
1998		73,941		0		73,941		2012		65,401		57,937		123,338
1999		58,561		48,325		106,886		2013		70,323		26,440		96,763
2000		49,388		134,994		184,382		2014		68,582		57,262		125,844
2001		101,440		80,905		182,345		2015		40,950		105,807		146,757
2002		84,753		56,573		141,326		2016		95,701		70,397		166,098
2003		87,581		39,072		126,653		2017		29,240		82,875		112,115
2004		99,674		58,498		158,172		2018		31,179		66,630		97,809
2005		107,443		52,851		160,294		2019		45,325		69,885		115,210
2006		72,526		107,887		180,413		2020		71,263		59,035		130,298
								TOTAL		1,879,783		1,462,053		3,341,836

 

1.	Acquisition by Yamana in late 2007

 

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Technical Report El Peñón Mine, Chile

 

 

 

 

Figure 10-1: Plan view of drill holes in El Peñón core mine area

 

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Yamana continually conducts exploration work to develop drill targets to replenish mineral reserves. Drilling is carried out on a 60 × 60 m grid; infill drill holes are based on a 30 × 30 m grid pattern. Preliminary mineral resource estimates are made using the drill information. Later, the mineral resource models are refined using chip sample assays collected from the underground development. Underground definition core drilling is completed on a 30 × 30 m spacing where required, and short test drill holes are drilled from underground to locate veins and parallel structures and to assist with mining and grade control.

 

Surface drilling is mostly collared with reverse circulation (RC) and converted to core drilling prior to intersecting the mineralized zone. At least one hole per 30 m section is drilled as a core drill hole for its entire length. Core size is HQ (63.5 mm core diameter), sometimes reduced to NQ (47.6 mm core diameter). RC holes are drilled with 146 mm-diameter equipment, which produces a hole approximately 152 mm in diameter. Drilling on the mine property from 2018 to 2020 was performed by AK Drilling International.

 

The procedures used during drilling programs are as follows:

 

•

The collar locations of all drill holes are surveyed and marked by El Peñón crews.

 

•

Directional deviation (for both azimuth and inclination) is surveyed in each drill hole using a REFLEX multi-shot survey instrument by IMDEX Ltd for underground drill holes and using a gyroscope survey instrument by Axis Mining Technology for drill holes drilled from the surface.

 

•

Lithological logging is done on drill core and RC chips. Geotechnical observations are made by company geologists and technicians. All information is recorded on digital tablets using commercial software and depicts all downhole data. This includes recording the following items as appropriate for the drilling method:

 

○

Drill type

 

○

Collar coordinates

 

○

Core diameter

 

○

Downhole inclination

 

○

Percent core recovery record

 

○

Rock Quality Designation (RQD) measurements

 

○

Lithologic contacts

 

○

Descriptive geology

 

○

Core angles

 

○

Intensity of various alteration types

 

○

Structural features, such as foliation, fractures, and brecciated zones

 

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○

Recording of mineralization, such as quartz type, sulphide type and content

 

○

A photographic record of the core taken with a digital camera

 

Drill core recoveries are generally good (>95%) but are moderately lower at the Quebrada Orito and El Valle veins (>85%). The lower core recovery in those veins, however, does not have significant impact on the quality of the samples.

 

Collars of surface drill holes are preserved by a PVC casing. A wooden stake is placed close to each collar; it is affixed with metal plates, on which the code, azimuth, dip, and other relevant drill hole information is recorded

 

The qualified person responsible for this section of the technical report is of the opinion that the logging and recording procedures are comparable to industry standards. There are no other known drilling, sampling, or recovery factors that could materially impact the accuracy and reliability of results.

 

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11

Sample Preparation, Analyses, and Security

 

Analytical samples include both drill core and channel samples. The drill core samples are generated from exploration and infill drilling programs that are conducted on surface and underground; they are used for target generation and estimation of mineral resources and mineral reserves. The channel samples come from underground grade-control channels in development drifts; they are used for short-term forecasting and grade control as well as for estimation of mineral resources and reserves.

 

11.1

Sample Preparation and Analysis

 

Sample preparation and analysis of drill core and underground channel samples at El Peñón are carried out according to a series of standard operating procedures (SOPs) listed in Table 11-1 and are described below.

 

Table 11-1: Sample preparation and analytical standard operating procedures

 

Procedure Number	Description
GE-P06_R02	Sampling of drill core
GE-P11_R02	Validation of results
GE-P14_R01	Quality control of exploration samples
GE-P37_R02	Quality control of Production samples
GE-P03_R02	Sampling and splitting samples in RC drill holes
GE-I02_R02	Creation of dispatch forms
GE-P04_R03	Underground sampling
GE-P07_R02	QA/QC monthly report
GE-P08_R02	CRM control
GE-P09_R02	Sample shipment, storage, and disposal
GE-P36_R02	Procedure for quality control failures

 

11.1.1

Sampling of Drill Core

 

Drill core is received in the logging area by technicians who first verify depth markers and reassemble the core so that pieces connect with each other; they then apply depth marks to the core verifying with the wooden block markers placed by the drillers.

 

Before geological logging, all drill holes are logged for geotechnical parameters; these include core recovery, rock quality designation (RQD), number of fractures, and if core intervals include major structures such as faults. Drill holes are not oriented.

 

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The geological description is then made by an on-site geologist who enters the data directly into the geological data management system (GDMS). In this step, lithology, alteration, structures, mineralization and percentage of quartz vein/veinlets are recorded. The limits of each sample interval are marked with an indelible marker on the core and on the box by the logging geologist. The core boxes are photographed with a digital camera prior to sampling.

 

Sampling of Exploration Drill Holes

For exploration drill holes, the complete length of the drill hole is sampled and sent for analysis. The sample lengths are determined by the presence or absence of quartz veins or veinlets.

 

In mineralized zones of Hydrothermal Breccia (unit HyB) or Massive Quartz Vein (MQV) with abundant sulphides, the minimum sample length is 0.35 m and the maximum samples length is 0.5 m. For drill core without veins or sulphides and in exploration areas, the maximum sample length is 2 m.

 

The exploration drill cores are cut in half along the longitudinal axis, using a hydraulic core splitter. Half of the core is placed in previously labelled plastic bags; the other half is left in the core box as a reference.

 

Sampling of Infill Drill Holes

For infill drill holes, the minimum and maximum sample lengths in mineralized zones are 0.2 and 0.5 m, respectively. For each interval, the full drill core is sampled; it is broken with a hammer and placed in a previously labelled plastic bag.

 

Sample shipments

The bagged samples are placed in plastic bins to be sent to the primary laboratory along with the submittal form (Dispatch Order).

 

In the opinion of the qualified person responsible for this section of the technical report, the sampling methodologies at El Peñón conform to industry standards and are adequate for use in mineral resource estimation.

 

11.1.2

Underground Channel Sampling

 

The sampling of underground faces is carried out systematically by production geologists and technicians in the advance galleries after each advance. After the face is washed and secured, the sample is taken from left to right along a line of constant elevation, generally 1.5 m above the floor. The sample location is determined by measuring the distance and azimuth from the nearest bolt left by the surveying team.

 

Geological contacts (lithology, alteration, mineralization, structures, etc.) are identified and sampling intervals respect these contacts. Once the limit of the samples has been defined, they are marked with red spray paint. The area to be sampled is then delimited by a rectangle. In mineralized zones mapped as MQV or HyB, the maximum sample length is 1 m, whereas in host rocks the maximum sample length is 2.0 m.

 

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Sampling is done with a rock hammer or with a mallet and wedge. The rock fragments that are detached from the wall are collected in a bag on the ground and then placed in plastic bags properly identified with correlative numbering tags. The samples are then transported to the El Peñón mine laboratory for preparation and assaying.

 

The results of the underground channel samples are used for short-term forecasting and grade control as well as in the grade estimation process for mineral resource models.

 

In the opinion of the qualified person responsible for this section of the technical report, the sampling methodologies at El Peñón conform to industry standards and are adequate for use in mineral resource estimation.

 

11.1.3

Preparation and Analytical Procedures

 

Primary Exploration and Infill Drilling Analytical Laboratories 2018 to 2020

As of January 2018, the Geoassay Group Ltda. (Geoassay) laboratory in Antofagasta, Chile, was the primary laboratory for exploration and infill drilling samples, but only for one final month as the contract terminated at the end of January 2018. Geossay is independent of Yamana and was not certified at the time.

 

Starting in February 2018, samples from exploration and infill drilling were prepared and analyzed at SGS Minerals S.A. (SGS) laboratories in Antofagasta and Santiago, Chile. The SGS laboratories are independent of Yamana and hold ISO/IEC 17025 certification. SGS moved its headquarters from Antofagasta to Santiago in September 2019 and transferring the El Peñón samples from Antofagasta to Santiago created significant delays and problems with accuracy. The samples from exploration drilling were processed at SGS in Antofagasta from February 2018 to September 2019, after which they were processed at the Santiago laboratory until March 2020. Samples from infill drilling were processed at SGS in Antofagasta from February 2018 to September 2019, after which they were processed in the Santiago laboratory until May 2020.

 

For a short period in late 2018, Intertek Caleb Brett Chile S.A. (Intertek) laboratory in Copiapo was also used as a primary laboratory, in parallel with SGS, to help provide analytical results in time for year-end reporting. Intertek is independent of Yamana and was certified to ISO9001:2015 standards by ABS Quality Evaluations.

 

The primary laboratory for exploration samples was changed to Geoassay in Antofagasta starting in March 2020. In May 2020, Geoassay became the primary laboratory for both exploration and infill drilling program samples. Geossay is a local laboratory independent of Yamana and is in the process of being certified to ISO/IEC 17025 standards.

 

Umpire Laboratories 2018 to 2020

Umpire laboratory check assays were carried out at Intertek laboratory in Copiapo, Chile, until February 2019 and at Geoassay’s laboratory in Antofagasta, Chile, until May 2020, when it became the primary laboratory. Intertek is independent of Yamana and was certified to ISO9001:2015 standards by ABS Quality Evaluations, but not to ISO/IEC 17025 standards. Geoassay is a local laboratory independent of Yamana and is in the process of being certified to ISO/IEC 17025 standards. The selection process for a new umpire laboratory is ongoing.

 

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Laboratory for Underground Laboratory for Channel Samples 2018 to 2020

Samples from underground channels are assayed at the in-house El Peñón mine laboratory. This laboratory is owned and operated by Yamana and is certified to ISO/IEC 17025 standards.

 

Analytical Procedures

The following procedures are used for sample preparation and analysis at SGS, Geoassay, Intertek, and El Peñón laboratories:

 

1.

A submittal form (or Dispatch Form) is filled out by an El Peñón geologist or technician and is delivered with the samples to the El Peñón or SGS/Geoassay/Intertek laboratories.

 

2.

Samples are sorted, logged in the laboratory database (LIMS), weighed, and dried in a furnace at 105°C.

 

3.

The complete sample is crushed to 85% less than # 10 mesh (passing 2 mm), and riffle split to obtain 1 kg of material.

 

4.

A 1 kg sample is pulverized at 95% through # 140 mesh (passing 0.105 mm).

 

5.

The laboratories clean the crushing and grinding instruments with compressed air between samples, insert sterile quartz every 10 samples, and perform a granulometric control of crushing and pulverization on at least 3% of the samples.

 

6.

Two pulp packages of 250 g each (labelled A and B) are prepared at SGS, Geoassay, or Intertek laboratories. The master pulp (pulp A) is used for the analysis. Remaining material from pulp A is combined with pulp B, which is returned to site for storage. At the El Peñón mine laboratory, only a single package of 250 g pulp is prepared and used for analysis.

 

7.

To determine the gold content, the samples are analyzed by fire assay (FA) on 30 g samples (prior to February 2018, the fire assays used a 50 g sample). Fluxes, lead oxide litharge, and silver are mixed and fired at 1,100°C to 1,170°C for 50 to 60 minutes to separate the precious metals as a molten lead metallic phase. The samples are removed from the oven and poured into moulds. Next, the slag is removed from the cooled lead button and the button is placed in a cupel and fired at 920°C to 960°C for an hour to oxidize all the lead and make a precious metal bead.

 

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○

The cupels are removed from the furnace and the beads are separated by acid digestion using nitric and hydrochloric acid to dissolve the precious metals into solution.

 

○

At SGS, Geoassay, and Intertek laboratories the sample solutions are analyzed by atomic absorption spectrometry (AAS) and samples containing more than 5 g/t gold are finished by gravimetry. At the El Peñón mine laboratory, the analysis is finished by gravimetry.

 

8.

The silver determination is done by AAS at SGS, Geoassay, and Intertek laboratories and by fire assay at the internal El Peñón mine laboratory.

 

○

At SGS, Geoassay, and Intertek laboratories, a 2 g sample is first digested in a solution of four acids (nitric, hydrochloric, perchloric, and hydrofluoric). The digested solution is brought to volume with hydrochloric acid for the quantification of the analytes through AAS. If the sample contains more than 220 g/t silver, the silver content is quantified by gravimetry.

 

○

At the El Peñón mine laboratory, the silver is determined in a manner similar to gold, using fire assay and finished by gravimetry.

 

9.

For screened metallic assays, the totality of the coarse fraction is assayed and an aliquot of the fine fraction is analyzed. The gold concentration of the entire sample is determined by weighted average.

 

At SGS and Geoassay laboratories, each analytical batch contains the following:

 

•

75 client samples

 

•

2 preparation blanks (quartz) per batch, one at the beginning and the other at the end of the batch

 

•

1 pulp duplicate every 50th sample

 

•

2 reagent blanks per batch

 

•

2 Certified Reference Materials (CRMs or standards) per batch

 

In addition, the laboratories perform granulometric control of the crushing and pulverization of 3% of the samples.

 

At the El Peñón mine laboratory, analytical batches contain 24 samples, described as follows:

 

•

18 client samples

 

•

1 preparation blank (quartz)

 

•

2 CRMs

 

•

1 analytical blank

 

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In addition, the laboratory performs granulometric controls of the crushing and pulverization every 20^th processed sample.

 

The qualified person responsible for this section of the technical report is of the opinion that the sample preparation, analytical, and assay procedures of channels and drill core samples used for production and exploration are consistent with industry standards and adequate for use in the estimation of mineral resources.

 

11.2

Quality Assurance/ Quality Control

 

Yamana employs a comprehensive quality assurance/quality control (QA/QC) program for the El Peñón exploration drilling programs, infill drilling programs, and grade control channel samples. This program applies the following steps to monitor the accuracy and bias of the gold and silver:

 

•

Insertion of CRMs.

 

•

Monitoring of contamination in preparation and analysis by inserting blanks in the preparation and analytical sampling streams.

 

•

Control of the precision by taking duplicates during preparation and analysis.

 

•

Sending pulp samples for umpire check assaying at secondary laboratories.

 

Yamana has protocols in place for describing the insertion frequency and the type of QA/QC samples as well as failure limits for each type of control sample. The insertion protocol for control samples states that one blank pulp, one coarse blank and two CRMs per batch of 75 samples should be inserted. This results in an insertion rate of quality control samples for exploration and infill drilling of approximately 5% (Table 11-2). There are also established criteria to be followed in case of failure when a failure is flagged in the QA/QC database. The results from the QA/QC program are reviewed and monitored by a geologist who presents the results in monthly reports.

 

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Table 11-2: Summary of analytical quality control data produced between 2018 and 2020

 

						Production					Exploration and Infill
						El Peñón Lab.					Intertek					SGS					Geoassay
						Samples		(%)			Samples		(%)			Samples		(%)			Samples		(%)			Source
Sample Count						121,946					3,836					130,481					62,793
Blanks						1,775		1.5	%		70		1.8	%		2,562		2.0	%		1,900		3.0	%
Pulp Blank						885					53					2,265					810					CDN Laboratories
Sterile Blank						-					17					36					548					Core from previous drilling
Quartz Blank						890					-					261					542					Winkler milled quartz
CRM		Au (g/t)		Ag (g/t)		876		0.7	%		76		2.0	%		2,835		2.2	%		1,214		1.9	%
EP_STD7		0.52		48.6		-					-					18					536					Geoassay from El Peñón material
EP_STD1		0.56		47.0		-					20					268					-					INTEM from El Peñón material
CDN-GS-P5D		0.64		66.0		-					-					384					41					CDN Laboratories
CDN-ME-1403		0.95		53.9		-					-					481					1					CDN Laboratories
EP_STD8		1.91		86.6		-					-					5					162					Geoassay from El Peñón material
CDN-ME-1407		2.12		245.0		-					-					273					19					CDN Laboratories
CDN-ME-1605		2.85		269.0		173					-					33					-					CDN Laboratories
EP_STD3		2.88		184.2		-					18					335					-					INTEM from El Peñón material
EP_STD2		3.07		191.4		15					15					147					-					INTEM from El Peñón material
CDN-ME-1607		3.33		150.0		-					-					440					5					CDN Laboratories
EP_STD9		3.41		173.1		-					-					23					316					Geoassay from El Peñón material
OREAS 603		5.18		284.0		32					-					56					-					Ore Research
EP_STD4		5.96		253.2		49					2					65					-					INTEM from El Peñón material
EP_STD10		8.00		341.0		41					-					2					67					Geoassay from El Peñón material
IN-B156-53		10.02		253.0		47					-					80					11					INTEM from El Peñón material
EP_STD11		13.11		501.8		28					-					4					27					Geoassay from El Peñón material
IN-156-55		13.37		429.0		342					-					113					6					INTEM from El Peñón material
EP_STD5		14.25		633.0		31					13					58					-					INTEM from El Peñón material
EP_STD6		18.84		523.5		99					8					50					-					INTEM from El Peñón material
EP_STD12		25.54		923.0		18					-					-					23					Geoassay from El Peñón material
EP_LP30		30.60		15.5		16					-					-					-					ALS from La Pepa material
Umpire Check Assay Intertek						1,561		1.1	%		-					317		0.2	%		-					Inter-laboratory check
Umpire Check Assay Geoassay						1,537		1.1	%		-					585		0.4	%		-					Inter-laboratory check
QA/QC Samples						5,749		4.7	%		146		3.8	%		6,299		4.8	%		3,114		5.0	%

  

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11.2.1

Certified Reference Materials

 

Yamana inserts two CRMs (or standards) for every 75 samples submitted to the primary laboratories (SGS, Geoassay, Intertek, and El Peñón laboratories) to control accuracy and bias. The majority of reference materials have been manufactured with material from El Peñón. The CRMs have been prepared by the National Institute of Technology, Standardization and Metrology (INTEM) in Chile, and Geoassay Group, both in Antofagasta, Chile. Each CRM is provided with a certificate listing the round-robin assay results and the expected standard deviation. These CRMs are individually packed in paper envelopes (100 to 120 g per envelope), inserted in plastic bags, and vacuum sealed.

 

Other reference materials were purchased from Ore Research & Exploration Pty Ltd in Australia, CDN Resource Laboratories Ltd. in Canada, and one CRM prepared by ALS Chemex with material from Yamana’s La Pepa project.

 

El Peñón exploration staff submitted 4,927 CRMs between 2018 and 2020 (Table 11-2). Results from commonly used CRMs at the three primary laboratories are presented in Figure 11-1.

 

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Figure 11-1: Time-series plots: gold assays of select CRMs by laboratory (2018–2020)

 

11.2.2

Blank Samples

 

Three types of blank samples are inserted that are known to contain gold and silver grades that are less than the detection limit of the analytical methods. The first type consists of pulp blanks purchased from CDN Resource Laboratories Ltd. in British Columbia, Canada. The second type consists of sterile core from previous drilling campaigns that assayed below detection limit for gold and silver. The third type consists of coarse quartz purchased from Winkler Ltda in Antofagasta, Chile, with granulometry within 2.00 to 2.83 mm.

 

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The insertion protocol establishes that one coarse quartz blank and one pulp blank should be inserted per batch of 75 samples. In addition, a sterile blank should be inserted immediately after an expected mineralized zone. Between 2018 and 2020, El Peñón exploration staff submitted 6,237 blank samples with drilling and channel samples (Table 11-2). The criteria for acceptance or rejection of results due to contamination for all the blank control samples is ten times the lower detection limit (DL x 10) (Table 11-3). Results from select blanks at the three primary laboratories are shown in Figure 11-2.

 

Table 11-3: Lower detection limits and acceptance limits for blanks

 

Laboratory		Analyte		Method		Detection Limit		Blank Acceptance Limit
						(g/t)		(DL x 10) (g/t)
El Peñón		Au		FA Grav		0.2		2
		Ag		FA Grav		1		10
SGS		Au		FA AAS		0.02		0.2
				FA Grav		0.5
		Ag		MA AAS		0.5		5
				Grav		10
Geoassay		Au		FA AAS		0.02		0.05
				FA Grav		0.2
		Ag		MA AAS		0.5		5
				Grav		10
Intertek		Au		FA AAS		0.01		0.1
				FA Grav		0.2
		Ag		MA AAS		0.5		5
				Grav		10

 

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Figure 11-2: Time-series plots: gold assays of select blanks by type and laboratory (2018–2020)

 

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11.2.3

Umpire Laboratory Check Assays

 

The primary laboratories are requested to send pulp samples, as selected by El Peñón staff, on a monthly basis to the secondary laboratory as defined in Section 11.1.3, for umpire check assays. Analysis of these pulps is useful for measuring the precision of the analytical process of the primary laboratories, including the in-house mine laboratory, assuring a better degree of accuracy and control on assays. A total of 902 pulp samples from drill core and 3,098 channel pulp samples were sent between January 2018 and May 2020 (Table 11-2). Results of umpire check assays comparing SGS and Geoassay are shown in Figure 11-3.

 

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Figure 11-3: Comparison between SGS and Geoassay umpire gold assays (2019-2020)

 

11.3

Sample Security

 

Samples are handled only by personnel authorized by Yamana. Channel samples from the mining operation are delivered directly to the El Peñón mine laboratory each day upon completion of underground sampling. All drill core from surface and underground drill holes is taken directly to authorized exploration personnel to a drill logging and sampling area within the secured and guarded mine property. The mineralized core intervals are logged, sampled, placed in plastic bags properly labelled for identification. Core samples are subsequently delivered to the primary laboratory in Antofagasta by truck in secured plastic bins along with dispatch forms. The pulps and rejects that are returned by the laboratory are transported inside the plastic bins, by the same truck that collects the samples at the mine.

 

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Each sample is assigned a unique sample number that allows it to be traced through the sampling, database, and analytical procedure workflow, and is validated against the original sample site. For exploration drill holes, the remaining half of the split core is stored on-site as a control sample, available for review and resampling if required. The photographic record of all drill holes is kept as reference.

 

In the opinion of the qualified person responsible for this section of the technical report, the sample preparation, sample security, and analytical procedures at El Peñón are adequate and consistent with industry standards.

 

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12

Data Verification

 

The exploration work carried out on the El Peñón property is conducted by Yamana personnel. Yamana implements a series of routine verification procedures to ensure the collection of reliable exploration data. All work is conducted by appropriately qualified personnel under the supervision of qualified geologists.

 

El Peñón staff carried out a data verification program for the assay tables included in the drill hole databases by spot-checking 5% of the assay data from a selection of drill holes that intersected the mineralized wireframe domains, thus relevant to the current mineral resource estimate. The validation was done by comparing the selected information entered in the digital database with that of the original laboratory certificates.

 

Additional checks included a comparison of the drill hole collar location data with the digital models of the surface topography and excavation models, as well as a visual inspection of the downhole survey information. The validation routines in Leapfrog Geo and Maptek Vulcan software, consisting of checking for overlapping samples and duplicate records, were also carried out.

 

The on-site database administrator, under the supervision of the El Peñón resource geology team, validated the QA/QC results when received from the laboratories. The pre-2018 QA/QC database has been validated by independent consultants, most recently by RPA (2018). The QA/QC database review for the drilling and underground channel sampling from 2018 to 2020 is described in Section 11.2.

 

There were no limitations in the ability of the qualified person to verify the data. In the opinion of the qualified person responsible for this section of the technical report, the verification of the sampling data, including the data entry and verification procedures, and the analytical quality control data produced by Yamana for samples submitted to various laboratories, indicate that the analytical results delivered by the laboratories are sufficiently reliable for the purpose of mineral resource and mineral reserve estimation.

 

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13

Mineral Processing and Metallurgical Testing

 

13.1

Processing Plant

 

The El Peñón processing plant has a nominal production capacity of approximately 1.533 Mtpa, or 4,200 tpd, for stockpiled and mined ore. Mineral processing includes the following principal stages:

 

•

Crushing

 

•

Grinding and pre-leaching thickening

 

•

Leaching

 

•

Recovery of concentrate solution from counter-current decantation

 

•

Pregnant solution clarification

 

•

Gold and silver recovery by zinc precipitation (Merrill-Crowe process)

 

•

Filtering of precipitate

 

•

Refining to doré

 

Tailings are filtered to recover water and to obtain tailings with an approximate moisture content of about 20%. These are subsequently loaded on trucks and transported to the nearby tailings storage area.

 

Since 2017, the plant throughput has been lower than design, ranging from 1 Mtpa to 1.3 Mtpa, in line with the mine plan. The lower throughput is beneficial in terms of leach residence time and results in a marginal increase of both gold and silver recovery. Stockpiled ore can be fed to the plant feed system to supplement feed if required.

 

Manganese and silver salts that occur in zones of high sulphur are deleterious elements that have a negative effect on silver recoveries and therefore on potential economic extraction.

 

13.2

Metallurgical Testing

 

Significant metallurgical testwork has been carried out on a continual basis at El Peñón since 2014. Samples, both from drill holes and from chip samples obtained from faces, have been collected across a range of grades and from different zones that include oxides and material with high and low sulphur content. The qualified person considers the samples to be representative of the plant feed expected in the life of mine plan. The following metallurgical tests have been conducted:

 

•

Leaching tests to address gold and silver recoveries as well as cyanide consumption

 

•

Sedimentation and filtration tests

 

•

Mill time or Bond Work Index tests

 

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Tests results have allowed obtaining a gold and silver recovery matrix based by zone, ore type and grade range, which is used to calculate net-smelter returns (NSR) (Section 15.3) on the block models, is considered for mineral resource and mineral reserve estimation, and is updated continually. The recovery matrices for gold and silver are shown in Table 13-1 and Table 13-2 respectively.

 

Table 13-1: Gold recovery by zone, ore type, and grade category

 

		Gold Recovery (%)
Zone and Ore Type		Low-Grade Supplementary Ore1  (< 3.0 g/t Au)		Low-Grade  (3.0–6.0 g/t Au)		Medium-Grade (6.0–15.0 g/t Au)		High-Grade (> 15.0 g/t Au)
El Peñón Core Mine - Oxide		84.13		94.06		96.22		96.64 to 97.38
El Peñón Core Mine - Low Sulphur		84.13		92.98		94.75		92.57
El Peñón Core Mine - High Sulphur		84.13		91.13		93.88		93.49
Fortuna - Oxide		84.13		90.34		90.34		90.34
Fortuna - High Sulphur		84.13		89.95		89.95		89.95
Pampa Augusta Victoria - Oxide		84.13		86.93		89.30		89.30
Pampa Augusta Victoria - High Sulphur		84.13		84.99		92.50		92.50
Laguna - All		84.13		88.74		88.74		88.74
Chiquilla Chica - All		84.13		89.22		89.22		89.22

 

¹ Low-grade supplementary ore is defined in Section 15.2.

 

Table 13-2: Silver recovery by zone, ore type, and grade category

 

		Silver Recovery (%)
Zone and Ore Type		Low-Grade Supplementary Ore-1 (< 3.0 g/t Au)		Low-Grade Ore (3.0–6.0 g/t Au)		Medium-Grade Ore (6.0–15.0 g/t Au)		High-Grade Ore (> 15.0 g/t Au)
El Peñón Core Mine - Oxide		79.71		88.92		90.74		92.31 to 92.33
El Peñón Core Mine - Low Sulphur		79.71		90.96		89.52		75.23
El Peñón Core Mine - High Sulphur		79.71		76.49		74.86		68.76
Fortuna - Oxide		79.71		88.24		88.24		88.24
Fortuna - High Sulphur		79.71		82.29		82.29		82.29
Pampa Augusta Victoria - Oxide		79.71		83.98		83.98		83.98
Pampa Augusta Victoria - High Sulphur		79.71		67.06		56.47		56.47
Laguna - All		79.71		64.42		64.42		64.42
Chiquilla Chica - All		79.71		81.67		81.67		81.67

 

¹ Low-grade supplementary ore is defined in section 15.2

 

Results from metallurgical tests inform the geometallurgical block model utilized for operational and mine planning purposes. The geometallurgical model includes variables for gold and silver recoveries, cyanide consumption, and sedimentation and filtration rates. Grinding parameters for different ores have also been established. Typically, the ores are relatively hard, with Bond Work Index values of between 19 and 20 kWh/t.

 

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Actual plant-adjusted production figures with gold and silver recoveries for 2019 and 2020 are presented in Table 13-3 and Table 13-4.

 

Table 13-3: Processing plant production for 2019

 

		Tonnage		Gold						Silver
Month		Tonnes		Grade		Production		Recovery		Grade		Production		Recovery
		(t)		(g/t Au)		(Au oz)		(% Au)		(g/t Ag)		(Ag oz)		(% Ag)
January		109,847		3.62		11,964		93.11		121.3		366,197		84.20
February		92,079		3.91		11,011		93.62		123.7		311,695		83.10
March		114,515		3.24		11,050		92.93		100.7		316,917		85.68
April		96,634		3.18		9,238		93.26		98.8		272,944		87.28
May		96,646		4.00		11,769		94.52		99.8		270,618		87.18
June		112,810		4.06		13,639		93.76		96.2		300,023		86.98
July		100,588		3.99		11,938		92.43		95.8		268,973		87.38
August		109,823		4.36		14,660		94.05		124.3		382,258		88.68
September		108,211		5.00		16,116		94.39		148.6		444,704		86.72
October		117,830		4.72		17,156		94.51		127.1		430,110		86.71
November		111,756		4.42		15,086		94.58		142.2		430,206		86.98
December		119,500		4.40		15,888		94.52		159.8		522,646		84.42
Total 2019		1,290,239		4.09		159,515		93.96		120.6		4,317,292		86.20

 

Table 13-4: Processing plant production for 2020

 

		Tonnage		Gold						Silver
Month		Tonnes		Grade		Production		Recovery		Grade		Production		Recovery
		(t)		(g/t Au)		(Au oz)		(% Au)		(g/t Ag)		(Ag oz)		(% Ag)
January		113,436		4.57		15,734		94.11		156.1		493,664		85.05
February		97,409		4.63		13,759		95.03		168.8		458,479		88.41
March		112,128		3.72		12,738		94.36		124.9		403,768		87.83
April		90,386		4.53		12,113		92.68		196.1		474,100		85.47
May		93,108		4.24		12,011		93.41		139.1		370,957		86.96
June		90,616		4.50		11,636		93.39		184.1		432,181		86.41
July		101,546		4.52		14,083		93.40		183.3		536,760		85.59
August		92,424		4.40		12,462		93.85		174.7		467,049		88.00
September		118,680		3.65		12,777		93.13		106.9		357,190		87.45
October		117,920		3.59		12,630		93.37		100.1		323,819		85.67
November		120,443		4.04		14,589		94.26		84.2		292,879		88.71
December		118,733		4.57		16,292		93.41		93.5		306,255		86.40
Total 2020		1,266,829		4.22		160,824		93.71		138.9		4,917,101		86.74

 

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Technical Report El Peñón Mine, Chile

14	Mineral Resource Estimates

 

14.1	Mineral Resource Summary

 

The mineral resource estimate of El Peñón has been estimated in conformity with generally accepted standards set out in CIM Mineral Resource and Mineral Reserves Estimation Best Practices Guidelines (November 2019) and has been classified according to CIM (2014) Standards.

 

Interpreted geological wireframes were constructed in Vulcan based on geology sections, assay results, lithological information and structural data. Assays were composited to one-metre lengths, then interpolated using capping and a high-yield restriction for anomalously high grades. Gold and silver grades were interpolated into a sub-blocked model with minimum block size of 0.5 × 0.5 × 0.5 m and a parent block size of 20 × 20 × 20 m. Estimated grades were interpolated into blocks using Inverse Distance Cubed (ID3) and checked using Nearest Neighbor (NN) methods. Block estimates were validated using industry standard validation techniques. Classification of blocks was completed following distance-based criteria.

 

Mineral resources are reported exclusive of mineral reserves. Mineral resources are not mineral reserves and have not demonstrated economic viability. Underground mineral resources are estimated within conceptual underground mining shapes at a cut-off value of US$95.31/t, which corresponds to 75% of the break-even cut-off value used to estimate the mineral reserves. A minimum mining width of 0.60 m as well as 0.30 m of hanging-wall and 0.30 m of footwall overbreak dilution are used to construct the conceptual mining shapes. Mineral resources are reported fully diluted.

 

The Mineral Resource Statement of El Peñón as of December 31, 2020, exclusive of mineral reserves, is presented in Table 14-1.

 

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Table 14-1: El Peñón Mineral Resource Statement as of December 31, 2020

 

Mineral Resources		Category		Tonnage		Grade				Contained Metal
				(kt)		Au (g/t)		Ag (g/t)		Au (koz)		Ag (koz)
Underground		Measured		667		4.81		143.0		103		3,063
		Indicated		6,355		3.06		105.4		625		21,535
		Total Measured + Indicated		7,022		3.22		109.0		728		24,599
		Inferred		5,208		3.61		118.0		605		19,758
Tailings		Measured		–		–		–		–		–
		Indicated		–		–		–		–		–
		Total Measured + Indicated		–		–		–		–		–
		Inferred		13,767		0.55		18.9		245		8,380
Stockpiles		Measured		–		–		–		–		–
		Indicated		1,019		1.13		28.8		37		942
		Total Measured + Indicated		1,019		1.13		28.8		37		942
		Inferred		–		–		–		–		–
Combined		Measured		667		4.81		143.0		103		3,063
		Indicated		7,374		2.79		94.8		662		22,478
		Total Measured + Indicated		8,041		2.96		98.8		765		25,541
		Inferred		18,975		1.39		46.1		850		28,138

 

1.

Mineral resources have been estimated by the El Peñón resource geology team under the supervision of Marco Velásquez Corrales, Registered Member of the Chilean Mining Commission, a full-time employee of Minera Meridian Limitada, and a qualified person as defined by NI 43-101. The estimate conforms to the CIM (2014) Standards. Mineral resources are reported exclusive of mineral reserves. Mineral resources were evaluated using an inverse distance weighting algorithm informed by capped composites and constrained by three-dimensional mineralization wireframes. Mineral resources are not mineral reserves and have not demonstrated economic viability. Metal price assumptions of US$1,250/oz for gold and US$18.00/oz for silver were used.

 

2.

Underground mineral resources are estimated at a cut-off NSR of US$95.31/t, which corresponds to 75% of the mineral reserves cut-off value. Processing recoveries assumptions range from 84.13% to 97.38% for gold and from 56.47% to 92.33% for silver. The estimation considered the following cost assumptions: mine operating cost of US$80.10/t; processing cost of US$29.42/t; sustaining capital cost of US$4.10/t; and G&A costs of US$13.46/t. A royalty of 2% was also considered for mineral resources contained in the Fortuna zone. Mineral resources are reported fully diluted; they consider a minimum mining width of 0.60 m and hanging wall and footwall overbreak dilutions of 0.30 m each to determine reasonable prospects of economic extraction. Bulk densities ranging from 2.36 g/cm3 to 2.57 g/cm3 were used to convert volume to tonnage.

 

3.

Mineral resources contained in tailings are reported at a cut-off grade of 0.50 g/t gold-equivalent, using recoveries of 60% for gold and 30% for silver, operating cost of US$2.39/t, and processing cost of US$29.42/t. A bulk density value of 1.75 g/cm3 was used to convert tailings volume to tonnage.

 

4.

Mineral resources contained in stockpiles are reported at a cut-off grade of 0.79 g/t gold-equivalent, using recoveries of 88.0% for gold and 80.8% for silver, operating cost of US$2.39/t, and processing cost of US$29.42/t. A bulk density value of 1.60 g/cm3 was used to convert the stockpile volume to tonnage.

 

5.	Mineral resources are reported as of December 31, 2020.

 

6.	All figures are rounded to reflect the relative accuracy of the estimate.

 

7.	Numbers may not add up due to rounding.

 

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14.2	Resource Database and Validation

 

All information used for the mineral resource and mineral reserve estimates, including drill core, survey, geological, and assay data, is verified and approved by the El Peñón geological staff and is maintained in on-site databases. Verification is done using the Maptek Vulcan software data validation tools. Drill hole data are stored in 6 databases; underground face samples are stored in 26 databases (one database per mining zone).

 

14.3	Definition and Interpretation of Estimation Domains

 

The mineral resource models of El Peñón are supported by geological domains defined by samples logged as either massive quartz vein (MQV), hydrothermal breccia (HYB), or stockwork (STW). These domains are modelled in the Vulcan software by snapping the limit of the selected samples in each drill hole or underground face sample. No cut-off grade or value is used to define the estimation domains. Wireframes are classified into two different zones:

 

•

Wireframes in zones supported by drill hole information extend a maximum of 60 m from the last sample along the dip and strike directions.

 

•

Wireframes in zones supported by underground face samples extend 10 m along the dip direction of the vein and 2 to 3 m along the strike direction.

 

The resultant wireframes define the mineral resource estimation domains at El Peñón (Figure 14-1). Each independent splay or parallel vein is considered as an independent estimation domain to avoid sharing samples between adjacent structures. It is important to note that wireframes have to be spatially disconnected to be considered to be an independent structure and domain.

 

The modelling process results in two sets of wireframes per mining zone:

 

•

The first wireframe corresponds to all the interpreted veins located within the zone; the wireframe is used to code drill hole and channel databases, is used as a hard boundary for the generation of composites, and is coded into a variable called “shellug” contained in the composites database.

 

•

The second wireframe corresponds to each individual vein or vein splay which define the estimation domains at El Peñón. This second set of wireframes is used to code the “ug” variable in the composites database according to the position of the centre of each composite.

 

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Figure 14-1: Plan view of estimation domains in El Peñón core mine area

 

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14.4	Compositing Methods

 

A sample length of 1.0 m is the most common sample length at El Peñón. Therefore, a regular composite length of 1.0 m was selected for all drill holes and channel samples to try to minimize the splitting of assays into different composites. Interpreted vein wireframes are used as a hard boundary for compositing. Generation of equal-length composites commonly results in fractional length composites, especially at the last interval of each drill hole contained within the constraining wireframes. Composites shorter than 0.10 m were discarded for mineral resource estimation purposes.

 

Before exploratory data analysis (EDA) is carried out, coordinates of the centre of each composite as well as vein- and splay-codes were assigned.

 

14.5	Basic Statistics

 

Descriptive statistics were computed for every interpreted vein domain on composite datasets; the exploratory data analysis was done performed using histograms, probability plots, and box-plots.

 

Since, the presence of local high-grade outliers could potentially affect the accuracy of the mineral resource estimate, composite samples were statistically examined for the presence of grade outliers using a combination of methodologies, such as inspection of probability plots, histogram analysis, and the Parrish method. Based on historical calibration with production data, outliers were usually defined for channel samples at the 96^th percentile of the cumulative distribution, while for drill hole data this threshold was generally set at close to the 99^th percentile.

 

Once defined, both capping and high-yield restriction were used to control the influence of the high-grade composites on the block model. High-yield restrictions were used by setting the thresholds equal to the capping threshold and by limiting the influence to a 5.0 × 2.5 × 2.5 m search ellipse, measured along the strike, dip, and width directions, respectively. Threshold used for capping and high-yield restriction for each zone are summarized in Table 14-2.

 

Table 14-2: Summary of gold and silver capping values by zone

 

Vein		Gold						Silver
		Drill Hole Samples (g/t)		UG Samples (g/t)		Surface Samples (g/t)		Drill Hole Samples (g/t)		UG Samples (g/t)		Surface Samples (g/t)
505		101		45		40		1,000		537		520
506		60		40		N/A		324		433		N/A
Abundancia		40		195		N/A		750		1,750		N/A
Aleste		50		145		N/A		3,500		4,954		N/A
Angosta		30		N/A		N/A		500		N/A		N/A

 

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Vein		Gold						Silver
		Drill Hole Samples (g/t)		UG Samples (g/t)		Surface Samples (g/t)		Drill Hole Samples (g/t)		UG Samples (g/t)		Surface Samples (g/t)
Bermellón		30		150		N/A		800		3,320		N/A
Bermuda		25		N/A		N/A		400		N/A		N/A
Bonanza		169		100		N/A		1,944		1,150		N/A
Borde Oeste		70		N/A		N/A		1,990		N/A		N/A
Caracoles		N/A		N/A		N/A		N/A		N/A		N/A
Carmín		90		157		N/A		800		2,020		N/A
Cerro Martillo		25		36		N/A		1,407		1,311		N/A
Cerro Martillo Central Sur		36		137		N/A		2,346		6,155		N/A
Chiquilla Chica		2		N/A		8		1,730		N/A		3,336
Diablada		70		103		N/A		312		438		N/A
Discovery Wash		25		20		N/A		700		536		N/A
Dominador		45		35		N/A		1,540		920		N/A
Dorada		20		40		N/A		1,385		2,090		N/A
Dorada SW		29		47		N/A		2,281		3,000		N/A
El Valle		50		23		N/A		1,190		773		N/A
Elizabeth		15		65		N/A		1,420		10,927		N/A
Esmeralda		40		137		N/A		1,517		5,678		N/A
Esperanza		86		46		N/A		1,655		1,949		N/A
Fortuna Este		20		N/A		N/A		1,400		N/A		N/A
Fortuna Norte		27		105		N/A		2,000		6,200		N/A
Fortuna Sur		35		55		N/A		3,500		3,675		N/A
La Paloma		75		53		N/A		1,300		1,110		N/A
Laguna		36		53		N/A		370		524		N/A
Lazo		10		N/A		N/A		200		N/A		N/A
Magenta		64		115		N/A		1,080		2,140		N/A
Martillo Flat		60		44		N/A		2,131		2,648		N/A
Orito Norte		50		54		127		308		320		1,357
Orito Sur		40		41		N/A		817		778		N/A
Orito West		35		N/A		N/A		1,500		N/A		N/A
Pampa Campamento		56		56		N/A		1,569		1,200		N/A
Pampa Providencia		35		N/A		N/A		600		N/A		N/A
Providencia		41		33		N/A		1,726		2,001		N/A
Quebrada Colorada Sur		60		N/A		N/A		1,200		N/A		N/A
Rieles		N/A		N/A		N/A		N/A		N/A		N/A
Sorpresa		40		47		N/A		1,561		1,743		N/A
Ventura		70		99		N/A		2,100		7,246		N/A
Veta NW		56		24		N/A		2,314		1,054		N/A
Victoria		36		97		N/A		1,235		3,012		N/A
Vista Norte		63		90		N/A		508		1,041		N/A

 

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14.6	Specific Gravity

 

Specific gravity (or density) measurements using the water immersion method were performed on core samples and on specimens collected underground. Approximately 670 samples were analyzed at the University of Antofagasta between September 2011 and July 2014, and 7% of those samples were cross-checked at Laboratorio Geoanalítica in Antofagasta. Average bulk densities were calculated for each zone (Table 14-3) and single density values were assigned to the block models for each zone for both mineralization and waste.

 

Table 14-3: Specific gravity density values assigned to each zone

 

14.7	Variography

 

Variography used at El Peñón for mineral resource estimation is based on the report “Actualización de modelos variográficos – El Peñón” dated August 5, 2015 and authored by independent consultants Octal Ingeniería y Desarrollo and Magri Consultores Limitada. The methodology used by the consultants is described below.

 

Correlograms were computed for every vein, since, in the presence of high-grade outliers, correlograms are more stable than traditional semi-variograms. Experimental correlograms were calculated in the strike, dip, and pole direction of each vein using combined drill hole and underground channel data, considering data from all the splays as part of a single population. Nugget effect values were obtained from “down-the-hole” correlograms. Typical experimental correlogram calculation parameters are shown in Table 14-4. Examples of typical experimental correlograms and adjusted models are shown in Figure 14-2 for the 505 and Magenta veins. Variogram model parameters for both zones are used as examples and are shown in Table 14-5.

 

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Table 14-4: Typical calculation parameters for experimental correlograms

 

Color

Direction

Azimuth Tolerance

Azimuth Band

Dip Tolerance

Dip Band

Lag

Lag Tolerance

Red

Dip

22.5°

15 m

22.5°

30 m

Level Spacing

1/2 Lag

Green

Strike

22.5°

30 m

22.5°

1/2 Level Spacing

Face Sample Spacing

1/2 Lag

Blue

Pole

22.5°

10 m

22.5°

1/2 Level Spacing

1m

1/2 Lag

 

Table 14-5: Correlogram model parameters for 505 and Magenta veins

 

Element		Vein		Structure		Contribution		Model		R1x		R1y		R1z		Angle1		Angle1		Angle1
										(m)		(m)		(m)		1 (°)		2 (°)		3 (°)
Au		505		C0		0.15		Nugget		-		-		-		-		-		-
				C1		0.67		Exp		4.0		1.5		3.0		260		-75		0
				C2		0.15		Exp		32.5		19.5		3.0		260		-75		0
				C3		0.03		Sph		60.0		44.0		3.0		260		-75		0
		Magenta		C0		0.60		Nugget		-		-		-		-		-		-
				C1		0.28		Exp		25.0		6.0		2.0		275		-70		0
				C2		0.12		Sph		70.0		65.0		2.0		275		-70		0
Ag		505		C0		0.20		Nugget		-		-		-		-		-		-
				C1		0.55		Exp		16.0		1.5		3.0		260		-75		0
				C2		0.19		Sph		21.0		32.0		13.0		260		-75		0
				C3		0.06		Sph		65.0		60.0		15.0		260		-75		0
		Magenta		C0		0.20		Nugget		-		-		-		-		-		-
				C1		0.53		Exp		12.0		3.0		2.5		275		-70		0
				C2		0.19		Sph		60.0		52.0		2.5		275		-70		0
				C3		0.08		Sph		95.0		70.0		2.5		275		-70		0

 

¹ The rotation angles are shown in GSLIB convention.

 

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Figure 14-2: Experimental gold and silver correlograms and fitted correlograms models for the 505 and Magenta veins

 

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14.8	Block Models

 

A total of 39 independent block models were constructed for every mining zones at El Peñón. Typical block models contain one to three main veins. Block models were constructed using a common parent block size of 20 × 20 × 20 m and sub-block size of 0.5 × 0.5 × 0.5 m. The main block model variables are described in Table 14-6. Additional flag and distance variables are not shown. A summary of the 39 block models, as well as the zones in which each one is located, are shown in Table 14-7.

 

Table 14-6: Generalized block model variables

 

Variable	Format	Description
Density	Float (Real * 4)	Bulk density assigned per vein
Shellug	Integer (Integer * 4)	Vein code
ug	Integer (Integer * 4)	Splay (estimation domain) code
au1	Float (Real * 4)	Estimated gold grade (g/t)
ag1	Float (Real * 4)	Estimated silver grade (g/t)
Categ	Integer (Integer * 4)	Original resource classification
Class	Integer (Integer * 4)	Resource classification based on majority criteria
aunn1	Float (Real * 4)	Gold grade estimated by nearest neighbour (g/t)
agnn1	Float (Real * 4)	Silver grade estimated by nearest neighbour (g/t)

 

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Table 14-7: Block models per veins and per mining zones

 

Veins	Mining Zone	Model Name
505 and 506	Orito	ye20_505_506_class.bmf
Abundancia	Bloque Norte	ye20_abundancia_class.bmf
Aleste	Bloque Norte	ye20_aleste_class.bmf
Angelina, Diablada, Orito Norte	Orito	ye20_oritonorte_class.bmf
Angosta	Bloque Norte	ye20_angosta_class.bmf
Bermellón	Quebrada Colorada	ye20_bermellon_class.bmf
Bermuda	Quebrada Colorada	ye20_bermuda_class.bmf
Bonanza	Bloque Norte	ye20_Bonanza_class.bmf
Borde Oeste	Bloque Norte	ye20_bordeoeste_class.bmf
Caracoles, Dominador	Fortuna	ye20_Dom_Cac_class.bmf
Carmín, Escarlata	Quebrada Colorada	ye20_carmin_class.bmf
Cerro Martillo	Dorada - Cerro Martillo	ye20_cma_class.bmf
Cerro Martillo Central Sur	Dorada - Cerro Martillo	ye20_cmcs_class.bmf
Chiquilla Chica	Chiquilla Chica	ye20_chiquilla_class.bmf
Discovery Wash	Quebrada Colorada	ye20_dwa_class.bmf
Dorada	Dorada - Cerro Martillo	ye20_dorada_class_v1.bmf
Dorada SW	Dorada - Cerro Martillo	ye20_dorada-sw_class.bmf
El Valle	Quebrada Colorada	ye20_eva_class.bmf
Esmeralda, Esperanza	Bloque Norte	ye20_esm-esp_class.bmf
Fortuna	Fortuna	ye20_fortuna_class.bmf
Fortuna Este	Fortuna	ye20_fortuna_este_class.bmf
Laguna, Laguna West	Laguna	y20_lag_class.bmf
Lazo	Quebrada Colorada	ye20_lazo_class.bmf
Magenta	Quebrada Colorada	ye20_mag_class.bmf
Martillo Flat	Dorada - Cerro Martillo	ye20_mflt_class_v2.bmf
Orito Sur	Orito	ye20_oritosur_class.bmf
Orito West	Orito	ye20_orito_west_class.bmf
La Paloma	Bloque Norte	ye20_paloma_class_v2.bmf
Pampa Campamento, Sorpresa	Quebrada Colorada	ye20_pca_sor_class_v1.bmf
Pampa Providencia	Quebrada Colorada	ye20_pprv_class.bmf
PAV (Elizabeth, Victoria)	Pampa Augusta Victoria	ye20_PAV_class.bmf
Playa	Orito	ye20_playa_class.bmf
Providencia	Dorada - Cerro Martillo	ye20_providencia_class_v1.bmf
Púrpura	Quebrada Colorada	ye20_purpura_class.bmf
Quebrada Colorada Sur	Quebrada Colorada	ye20_colorada_sur_class.bmf
Rieles	Bloque Norte	ye20_rieles_class.bmf
Ventura	Bloque Norte	ye20_ventura_class.bmf
Veta NW	Dorada - Cerro Martillo	ye20_vnw_class.bmf
Vista Norte	Orito	ye20_vistanorte_class.bmf

 

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Gold and silver grades were interpolated into block using ID3, taking into account anisotropic distances for weight calculations and considering hard boundaries between domains. Search ellipses were rotated to orient the first axis along the strike direction of the vein, the second axis along the dip direction, and the third axis along the pole direction. Anisotropic distance factors were generally set equal to 80% to 100% of the range of the correlogram model. A summary of typical estimation and search parameters is shown in Table 14-8.

 

Table 14-8: Summary of the typical estimation search parameters

 

Estimation Pass1		1st		2nd		3rd		4th		5th		6th
Block type2		ST		ST		ST		LT		LT		LT
Sample type3		CH		CH		CH		CH+DH		DH		DH
Interpolation method		ID3		ID3		ID3		ID3		ID3		ID3
Search range X (m) - Along strike		5		15		30		15		35		60
Search range Y (m) - Along dip		20		30		30		15		35		60
Search range Z (m) - Perpendicular		5		10		15		5		10		15
Minimum number of composites		6		4		3		4		3		1
Maximum number of composites		8		8		8		8		8		8
Octant search		No		No		No		No		No		No
Minimum number of octant		-		-		-		-		-		-
Minimum number of composites/octant		-		-		-		-		-		-
Maximum number of composites/octant		-		-		-		-		-		-
Maximum number of composites/DH		2		2		2		2		2		-

 

¹ Parameters can change slightly for some veins          

² ST: Blocks located in zones supported by channels; LT: Blocks located in zones supported by drill holes

³ CH: Channel samples; DH: Drill hole samples          

 

14.9	Block Model Validation

 

Block models were validated by means of global bias checks (between estimated means and declustered composite means obtained by Nearest Neighbor estimation), swath-plots against Nearest Neighbor estimates, and graphic analysis of charts showing results displaying both the estimated grades and the informing composite grades in plan views and long sections. The following tables and figures illustrate examples of the validations and results obtained for the 505 and Magenta veins. Table 14-9 and Table 14-10 show the statistical differences between the ID3 and NN model results. Figure 14-3 and Figure 14-4 show swath-plots for the 505 and Magenta veins, with the average gold grades estimated by ID3 (in red) and by NN (in black), and the informing capped composites (in blue).

 

The results of the validation are considered to be adequate, demonstrating that the estimated models honour the input data both visually and statistically.

 

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Table 14-9: Statistical validation of the estimated block model – 505 Vein

 

Vein: 505		ID3		NN
Number of Blocks		4,769,947		4,769,947
Gold Statistics (Au g/t)
Minimum		0.01		0.01
Q1		3.72		2.65
Median		6.56		5.51
Q3		10.98		10.61
Maximum		101.00		101.00
Mean		8.62		8.61
Standard Deviation		7.70		9.60
Variance		59.31		92.07
Coefficient of Variation		0.89		1.11

 

Table 14-10: Statistical validation of the estimated block model – Magenta Vein

 

Vein: Magenta		ID3		NN
Number of Blocks		4,667,316		4,667,316
Gold Statistics (Au g/t)
Minimum		0.00		0.00
Q1		0.75		0.39
Median		3.91		3.26
Q3		13.10		11.31
Maximum		115.46		115.46
Mean		11.30		11.55
Standard Deviation		18.17		21.16
Variance		330.06		447.79
Coefficient of Variation		1.61		1.83

 

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Figure 14-3: Gold swath plots for 505 Vein

 

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Figure 14-4: Gold swath plots for Magenta Vein

 

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14.10

Resource Classification

 

Resource classification was completed using an in-house algorithm which works according to the following workflow:

 

•

Blocks located in areas supported by underground channel samples are classified as measured mineral resources.

 

•

Blocks located in areas supported by drill hole information and that are within a 10 m-radius from underground channel samples are classified as indicated mineral resources.

 

•

Blocks supported only by drillholes are classified as indicated mineral resources if they meet both following criteria: Blocks are contained within a 26.25 m-search square from a single informing intercept AND the informing intercept is contained within a 52.5 m search square that includes at least one additional informing intercept. Distances defining both search squares are measured in the plane of the vein plane (in the strike and dip directions) and from the center (intercept position) to the edge of the search square.

 

•

The remainder of the blocks estimated within the interpreted vein wireframes are classified as inferred mineral resources.

 

•

Blocks located outside the vein wireframes are not classified and are considered dilution for mineral resources reporting.

 

•

Finally, the mineral resource classification results are smoothed, using an in-house algorithm based on local classification proportions, to remove geometrical artifacts. The local proportions are calculated in a 10 × 10 m moving window.

 

14.11

Resource Estimation of Stockpiles and Tailings

 

In addition to the 39 block models constructed by applying the methodologies previously described, mineral resources contained within the Escarlata low-grade stockpile and within tailings are also reported.

 

In January 2018, El Peñón commissioned a conceptual metallurgical study to explore alternative extraction processes to recover metal from tailings. Heap leaching was proposed as a viable option for metal extraction from tailings. Twenty shallow boreholes were drilled on a 100 m-grid spacing, while the stockpile was drilled by 32 drill holes at a 25 m-grid spacing. Grade estimations for the tailings and stockpile were based on capped assay data interpolated using ordinary kriging in three estimation passes. Mineral resources contained in the stockpile are classified as indicated, while mineral resources contained in tailings are classified as inferred.

 

14.12

Mineral Resource Estimate

 

The mineral resources are reported at El Peñón exclusive of mineral reserves and are prepared using conceptual mining shapes (from Vulcan Stope Optimiser (VSO)) that are based on a cut-off value of US$95.31/t, which corresponds to 75% of the cut-off value used to estimate mineral reserves (described in Section 15.3). The cut-off value is based on the calculation parameters shown in Table 14-11.

 

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Mined out, sterilized (non- mineable blocks), and current mineral reserves are subtracted from the block models. SMUs measuring 5 m-long × 4 m-high, similar to cut-and-fill SMUs, are then constructed using Vulcan Stope Optimiser (VSO) using a minimum mining width of 0.60 m and hanging wall and footwall overbreaks of 0.30 m (per side).

 

Blocks lying outside the interpreted geological vein wireframes are considered to have zero gold and silver grades for stope optimization. Subsequently, the constructed SMUs are classified by majority criteria into measured, indicated, or inferred categories, and are included into the mineral resources inventory and reported fully diluted.

 

Mineral resources are reported at cut-off grades of 0.50 g/t gold-equivalent for resources contained in tailings and at 0.79 g/t gold-equivalent for those contained in stockpiles.

 

The use of constraining conceptual mining shapes to report underground mineral resources and cut-offs to report mineral resources contained in stockpiles and tailings demonstrate that the “reasonable prospects for eventual economic extraction” criteria, as defined in the CIM (2014) Standards, is met.

 

Table 14-11: Resource NSR cut-off value calculation parameters

 

Parameters		Units		Value
Gold Price		US$/oz		1,250
Silver Price		US$/oz		18
Gold Selling Cost		US$/oz		11.22
Silver Selling Cost		US$/oz		0.13
Gold Metallurgical Recovery		%		Model
Silver Metallurgical Recovery		%		Model
Underground Mining Cost		US$/t ore mined		80.10
Process Cost		US$/t processed		29.42
G&A Cost		US$/t processed		13.46
Sustaining Capital Cost		US$/t processed		4.10
Premium on Cut-Off		%		25
Mineral Resources Cut-Off Value		US$/t		95.31

 

The Mineral Resource Statement for El Peñón as of December 31, 2020, exclusive of mineral reserves, is presented at the beginning of this Section 14 in Table 14-1. A summary of the mineral resources by mining block is presented in Table 14-12.

 

The qualified person responsible for this section of the technical report is not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other relevant factors that could materially affect the mineral resource estimate.

 

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Table 14-12: Summary of El Peñón mineral resources by zone, as of December 31, 2020

 

Zone		Tonnage		Au		Ag		Au		Ag
		(kt)		(g/t)		(g/t)		(koz)		(koz)
Measured
Bloque Norte		142		5.59		212.7		26		971
Chiquilla Chica		9		0.61		645.8		0		189
Dorada - Cerro Martillo		109		3.64		189		13		661
Fortuna		15		3.62		240.6		2		118
Laguna		8		7.97		74.7		2		19
Pampa Augusta Victoria		39		3.98		196		5		246
Quebrada Colorada		142		4.82		105.1		22		479
Quebrada Orito		203		5.21		58.3		34		379
Stockpile		–		–		–		–		–
Tailings		–		–		–		–		–
Total Measured		667		4.81		143		103		3,063
Indicated
Bloque Norte		1,194		3.38		113.8		130		4,370
Chiquilla Chica		84		0.42		298.5		1		809
Dorada - Cerro Martillo		2,645		2.63		117		224		9,950
Fortuna		251		2.62		183.6		21		1,485
Laguna		50		3.52		30.6		6		50
Pampa Augusta Victoria		213		2.89		95.6		20		654
Quebrada Colorada		1,103		3.17		84.1		112		2,983
Quebrada Orito		814		4.25		47.2		111		1,235
Stockpile		1,019		1.13		28.8		37		942
Tailings		–		–		–		–		–
Total Indicated		7,374		2.79		94.8		662		22,478
Measured + Indicated
Bloque Norte		1,336		3.61		124.3		155		5,342
Chiquilla Chica		93		0.44		332.4		1		999
Dorada - Cerro Martillo		2,754		2.67		119.8		236		10,612
Fortuna		267		2.68		186.9		23		1,602
Laguna		58		4.13		36.7		8		69
Pampa Augusta Victoria		252		3.06		111.2		25		900
Quebrada Colorada		1,244		3.36		86.5		134		3,462
Quebrada Orito		1,017		4.44		49.4		145		1,614
Stockpile		1,019		1.13		28.8		37		942
Tailings		–		–		–		–		–
Total M+I		8,041		2.96		98.8		765		25,541

 

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Zone		Tonnage		Au		Ag		Au		Ag
		(kt)		(g/t)		(g/t)		(koz)		(koz)
Inferred
Bloque Norte		1,414		4.23		115		192		5,227
Chiquilla Chica		286		0.31		288.4		3		2,656
Dorada - Cerro Martillo		1,141		3.19		123		117		4,510
Fortuna		243		3.11		221.8		24		1,734
Laguna		18		2.94		36.6		2		21
Pampa Augusta Victoria		147		2.68		171.3		13		810
Quebrada Colorada		1,291		3.78		101.2		157		4,198
Quebrada Orito		668		4.54		28		98		602
Stockpile		–		–		–		–		–
Tailings		13,767		0.55		18.9		245		8,380
Total Inferred		18,975		1.39		46.1		850		28,138

 

1.

Mineral resources are reported exclusive of mineral reserves

 

2.

Mineral resources are not mineral reserves and do not have demonstrated economic viability

 

3.

Underground mineral resources are estimated at a cut-off NSR of US$95.31/t, which corresponds to 75% of the mineral reserves cut-off value. Underground mineral resources are reported fully diluted within constraining conceptual mining shapes: they consider a minimum mining width of 0.60 m and hanging wall and footwall overbreak dilutions of 0.30 m each to determine reasonable prospects of economic extraction.

 

4.

Mineral resources contained in tailings and stockpiles are reported at a cut-off grade of 0.50 g/t and 0.79 g/t gold-equivalent, respectively.

 

5.

All figures are rounded to reflect the relative accuracy of the estimate

 

6.

Numbers may not add up due to rounding

 

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15	Mineral Reserve Estimates

 

15.1	Mineral Reserve Summary

 

The Mineral Reserve Statement of El Peñón as of December 31, 2020, is presented in Table 15-1.

 

Table 15-1: El Peñón Mineral Reserve Statement as of December 31, 2020

 

Mineral Reserves		Category		Tonnage		Grade				Contained Metal
				(kt)		Au (g/t)		Ag (g/t)		Au (koz)		Ag (koz)
Open Pit		Proven		–		–		–		–		–
		Probable		53		0.34		316.2		1		543
		Total Open Pit		53		0.34		316.2		1		543
Underground		Proven		368		5.73		213.4		68		2,526
		Probable		5,068		5.07		158.6		826		25,835
		Total Underground		5,436		5.12		162.3		894		28,361
Stockpile		Proven		9		1.40		54.1		0		16
		Probable		651		1.26		14.1		26		294
		Total Stockpile		660		1.26		14.6		27		310
Combined		Proven		377		5.63		209.5		68		2,542
		Probable		5,772		4.60		143.7		853		26,672
		Grand Total		6,149		4.66		147.8		921		29,214

 

1.

Mineral reserves have been estimated by the El Peñón long-term mine planning team under the supervision of Sergio Castro, Registered Member of the Chilean Mining Commission, a full-time employee of Minera Meridian Limitada, and a qualified person as defined by National Instrument 43-101. The estimate conforms to the CIM Definition Standards on Mineral Resources and Reserves. Mineral reserves are stated at a mill feed reference point and allow for dilution and mining losses. Metal price assumptions of US$1,250/oz for gold and US$18.00/oz for silver were used.

 

2.

Open-pit mineral reserves are reported at a cut-off NSR of US$ 49.14/t. Processing recoveries assumptions range from 84.13% to 89.22% for gold and from 79.71% to 81.67% for silver. Mine operating (including transport), processing and G&A costs assumptions of US$6.27/t and US$29.42/t and US$13.46/t were considered, respectively.

 

3.

Underground mineral reserves are reported at an NSR cut-off of US$127.08/t (Section 15.3). Processing recoveries assumptions range from 84.13% to 97.38% for gold and from 56.47% to 92.33% for silver. The following cost assumptions were considered: mine-operating cost: US$80.10/t; processing cost: US$29.42/t; sustaining capital cost: US$4.10/t, and G&A cost: US$13.46/t. A royalty of 2% was considered for reserves planned to be mined in the Fortuna zone.

 

4.

Mineral reserves contained in low-grade stockpiles are reported at a cut-off grade of 0.90 g/t gold-equivalent. Processing recoveries assumptions of 95.2% for gold and 83.0% for silver were used. Operating and processing costs assumptions of US$2.02/t and US$29.42/t, respectively, were considered.

 

5.

Mineral reserves are reported as of December 31, 2020.

 

6.

All figures are rounded to reflect the relative accuracy of the estimate.

 

7.

Numbers may not add up due to rounding.

 

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15.2	Conversion Methodology

 

The methodology used at El Peñón to convert mineral resources to mineral reserves is summarized as follows:

 

•

Drift and bench (stope) selective mining units (SMUs) are designed using Vulcan Stope Optimiser, based on the design parameters summarized in Table 15-3 and Table 15-4.

 

•

The metal prices, processing recoveries, and operating costs summarized in Table 15-2 are used to determine an economic score for each SMU. Only measured and indicated mineral resources are considered for conversion to mineral reserves.

 

•

SMUs with positive scores are analyzed for inclusion into the mineral reserve inventory. This is done by analyzing development costs, considering the capital and auxiliary development required to enable mining of the designed SMUs, such as the cost of ramps, ventilation, materials handling, and development of access and infrastructure.

 

•

Before including SMUs with positive scores in the mineral reserves inventory, geomechanical considerations are revised, especially in areas with known poor ground conditions or were pillars between the new stopes and previously backfilled areas are thin. Design is adjusted when required.

 

•

Finally, small amounts of supplementary lower-grade drift segment that must be developed to enable mining of the higher-grade mineral reserves are also included in the mineral reserves inventory, since this improves the cashflow generation profile. This material represents approximately 1% of the mineral reserves inventory.

 

•

SMUs containing a majority portion of measured or indicated blocks are converted to proven or probable mineral reserves, respectively.

 

15.3	NSR Cut-Off Value

 

The mineral reserves for El Peñón were completed using a break-even cut-off value of US$49.14/t for open pit and US$127.08/t for underground.

 

The cut-off grade used for reporting mineral reserves contained in the low-grade stockpiles was 0.90 g/t gold-equivalent. The parameters used to determine the NSR cut-off value are summarized in Table 15-2.

 

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Table 15-2: NSR cut-off value calculation parameters for mineral reserves

 

Parameters		Units		Value
Gold Price		US$/oz		1,250
Silver Price		US$/oz		18
Gold Selling Cost		US$/oz		11.22
Silver Selling Cost		US$/oz		0.13
Gold Metallurgical Recovery		%		Model
Silver Metallurgical Recovery		%		Model
Underground Mining Cost		US$/t ore mined		80.10
Process Cost		US$/t processed		29.42
G&A Cost		US$/t processed		13.46
Sustaining Capital Cost		US$/t processed		4.10
Underground NSR Cut-Off Value		US$/t		127.08

 

15.4	Design, Dilution, and Mining Recovery Parameters

 

Key stope SMU design parameters used for generating the underground mineral reserves stope shapes are summarized by zone in Table 15-3. Due to the narrow vein width, split-blasting is usually applied at El Peñón, and ore drift SMUs are therefore designed accordingly. Drift design parameters used for mineral reserve estimation are summarized in Table 15-4.

 

Table 15-3: Stope SMU design parameters by zone

 

Stope Length

Minimum Mining Width

Minimum Waste Pillar Width

Hanging Wall Overbreak

Footwall Overbreak

Mining Recovery

Zone

(m)

(m)

(m)

(m)

(m)

%

Bloque Norte

5

0.8 to 1.0

3

0.35 to 0.50

0.35 to 0.50

97.5

Dorada - Cerro Martillo

5

0.8 to 1.0

3

0.25 to 0.35

0.25 to 0.35

97.5

Fortuna

5

0.8 to 1.0

3

0.20 to 0.80

0.20 to 0.80

97.5

Laguna

5

0.8 to 1.0

3

0.20 to 0.40

0.20 to 0.40

97.5

Pampa Augusta Victoria

5

0.8 to 1.0

3

0.35 to 0.50

0.35 to 0.50

97.5

Quebrada Colorada

5

0.8 to 1.0

3

0.30 to 0.60

0.30 to 0.60

97.5

Quebrada Orito

5

0.8 to 1.0

3

0.50 to 1.10

0.50 to 1.10

97.5

 

Table 15-4: Drift (split blasting) SMU design parameters

 

Parameter		Units		All Zones
Drift Height		m		4
Drift Length		m		5
Minimum Mining Width		m		0.60
Hanging Wall Overbreak		m		0.25
Footwall Overbreak		m		0.25
Mining Recovery		%		100.0

 

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Hanging wall and footwall overbreaks are applied to the stope design of mineral reserves. The overbreaks consider actual stope reconciliation for each zone and the stope span, which is determined by the sub-level spacing and maximum stope length opened before the backfill cycle is started.

 

Mining recovery factors are based on Cavity Monitoring System measurements taken from actual 2020 results.

 

15.5	Reconciliation

 

Mine to mill reconciliation for the period comprised between January 2018 and December 2020 is presented in Table 15-5. Differences are within the expected ranges.

 

Table 15-5: Reconciliation

 

Reconciliation 2018-2020		Tonnage		Au		Ag
		(kt)		(g/t)		(g/t)
Total mined and reclaimed from stockpiles - 2018		1,104		4.47		139.6
Processed feed reported 2018		1,104		4.53		131.3
Difference 2018 (%)		0.0	%	1.4	%	-5.9	%
Total mined and reclaimed from stockpiles - 2019		1,290		4.09		124.0
Processed feed reported 2019		1,290		4.09		120.7
Difference 2019 (%)		0.0	%	0.0	%	-2.7	%
Total mined and reclaimed from stockpiles - 2020		1,267		4.26		141.5
Processed feed reported 2020		1,267		4.22		138.9
Difference 2020 (%)		0.0	%	-0.9	%	-1.9	%
Total mined and reclaimed from stockpiles - 2018 to 2020		3,661		4.26		134.8
Processed feed reported 2018 to 2020		3,661		4.27		130.2
Difference 2018 to 2020 (%)		0.0	%	0.1	%	-3.4	%

 

15.6	Mineral Reserve Estimate

 

The Mineral Reserve Statement for El Peñón as of December 31, 2020, is presented at the beginning of Section 15 in Table 15-1. A summary of the mineral reserves by mining block is presented in Table 15-6.

 

The qualified person responsible for this section of the technical report is not aware of any mining, metallurgical, infrastructure, permitting, or other relevant factors that could materially affect the mineral reserve estimate.

 

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Table 15-6: Summary of El Peñón mineral reserves by zone, as of December 31, 2020

 

		Proven										Probable										Proven + Probable
		Tonnage		Grade				Contained Metal				Tonnage		Grade				Contained Metal				Tonnage		Grade				Contained Metal
		(kt)		Au (g/t)		Ag (g/t)		Au (koz)		Ag (koz)		(kt)		Au (g/t)		Ag (g/t)		Au (koz)		Ag (koz)		(kt)		Au (g/t)		Ag (g/t)		Au (koz)		Ag (koz)
Underground
Bloque Norte		18		6.07		230.4		3		132		1,043		5.80		139.7		195		4,683		1,061		5.81		141.2		198		4,815
Dorada - Cerro Martillo		160		4.32		277.1		22		1,428		1,778		3.93		200.4		225		11,459		1,939		3.96		206.8		247		12,887
Fortuna		25		4.73		300.2		4		238		240		4.46		310.2		34		2,390		264		4.49		309.3		38		2,628
Laguna		13		7.94		61.9		3		27		208		8.80		86.7		59		581		222		8.75		85.2		62		607
Pampa Augusta Victoria		5		5.93		279.0		1		44		4		3.85		80.9		1		11		9		4.96		187.2		1		55
Quebrada Colorada		93		8.09		181.8		24		541		1,348		5.29		132.5		229		5,741		1,441		5.47		135.6		253		6,283
Quebrada Orito		54		5.65		66.1		10		116		446		5.84		67.6		84		969		501		5.82		67.4		94		1,085
Subtotal Underground		368		5.73		213.4		68		2,526		5,068		5.07		158.6		826		25,835		5,436		5.12		162.3		894		28,361
Open-Pit
Chiquilla Chica		-		-		-		-		-		53		0.34		316.2		1		543		53		0.34		316.2		1		543
Subtotal Open Pit		-		-		-		-		-		53		0.34		316.2		1		543		53		0.34		316.2		1		543
Totals
UG and Open-Pit Mine		368		5.73		213.4		68		2,526		5,121		5.02		160.2		827		26,378		5,489		5.07		163.8		895		28,904
Stockpile		9		1.40		54.1		0		16		651		1.26		14.1		26		294		660		1.26		14.6		27		310
Total Mineral Reserves		377		5.63		209.5		68		2,542		5,772		4.60		143.7		853		26,672		6,149		4.66		147.8		921		29,214

 

1.	Mineral reserves are stated at a mill feed reference point and allow for dilution and mining losses. Metal price assumptions of US$1,250/oz for gold and US$18.00/oz for silver were used.

 

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2.

Open-pit mineral reserves are reported at a cut-off NSR of US$ 49.14/t. Processing recoveries assumptions range from 84.13% to 89.22% for gold and from 79.71% to 81.67% for silver. Mine operating (including transport), processing and G&A costs assumptions of US$6.27/t and US$29.42/t and US$13.46/t were considered, respectively.

 

3.

Underground mineral reserves are reported at an NSR cut-off of US$127.08/t (Section 15.3). Processing recoveries assumptions range from 84.13% to 97.38% for gold and from 56.47% to 92.33% for silver. The following cost assumptions were considered: mine-operating cost: US$80.10/t; processing cost: US$29.42/t; sustaining capital cost: US$4.10/t, and G&A cost: US$13.46/t. A royalty of 2% was considered for reserves planned to be mined in the Fortuna zone.

 

4.	Mineral reserves contained in low-grade stockpiles are reported at a cut-off grade of 0.90 g/t gold-equivalent. Processing recoveries assumptions of 95.2% for gold and 83.0% for silver were used. Operating and processing costs assumptions of US$2.02/t and US$29.42/t, respectively, were considered.

 

5.	All figures are rounded to reflect the relative accuracy of the estimate.

 

6.	Numbers may not add up due to rounding.

 

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16

Mining Methods

 

Ore from underground mines have recently been—and will continue to be—the main source of feed for the El Peñón mill. Currently, ore is sourced from one small active open pit mine (Chiquilla Chica) and from five of the seven major underground mining zones.

 

The various underground mining zones are accessed by ramps; this type of access is suitable for this mine in light of its shallow depth. The underground workings of the core mine extend approximately ten kilometres along strike and span a vertical extent of approximately 500 m, measured from the highest portal collar elevation to the bottom-most mine workings. The ramps provide flexibility for rapid adjustments for changes in direction and elevation and allow access to the veins at appropriate elevations.

 

Mining at El Peñón utilizes mainly the bench-and-fill mining method (B&F); a small percentage of cut-and-fill mining (C&F) is also applied where required, depending on the characteristics of vein geometry and ground conditions.

 

Yamana continue to apply its Operational Excellence program across all departments to increase productivity, minimize dilution, and identify opportunities to reduce operating costs. Initiatives under this program include testing of smaller drift profiles in specific sectors, optimization of stoping and of development-face drill patterns, and minimizing the use of consumables.

 

16.1

Underground Mining Methods

 

The main mining method utilized at El Peñón is the bench-and-fill method, which is a narrow longhole-stoping method that uses a combination of rockfill and cemented rockfill. The method involves ore development at regular level intervals, which, at El Peñón, range generally between 10 and 20 m. Due to the narrow vein widths, a “split-blasting” technique is used in many areas of the mine to reduce dilution in secondary development of ore zones. The minimum mining width of a split blast is of 0.6 m, plus 0.5 m of total overbreak, generating a minimum blast void of 1.1 m width. Once the split-blast ore is mucked out, the remaining waste is slashed out and used for rockfill purposes. A schematic cross-section of a split blasting face is shown in Figure 16-1. The split-blasting technique has been refined and improved at El Peñón since 2016, reducing the achievable ore mining width from 2.1 m to 1.1 m, minimizing dilution and ore loss, and improving productivities for faster face cycle times. The result is increased gold and silver mining grades. In some cases, development rounds that would have previously been mined as waste if blasted to the full drift dimensions, are now mined selectively as separate ore and waste rounds, resulting in increased mineral reserves.

 

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Stopes are formed by drilling blast holes between levels. After blasting, the broken ore is extracted from the lower level using conventional and remotely operated load-haul-dumps (LHDs). Bench-and-fill is a bottom-up method, in which mining takes place above and adjacent to previously mined and backfilled stope voids. Once the maximum-allowed stope span is reached, and after completion of ore extraction from the blasted stope, stopes are filled with rockfill and selective use of cemented rockfill.

 

 

Figure 16-1: Schematic cross-section of drift and vein showing extent of split-blasting technique

 

16.2

Underground Mine Design

 

Mine access is achieved via spiral declines generally located in the footwall of veins. The declines have section dimensions of 4.3 m wide × 4.5 m high at a gradient of up to ± 16% and a minimum turning radius of 15 m. Access to the ore is made approximately every 10 to 20 vertical metres via crosscuts. Infrastructure generally included at every intersection of declines with crosscuts consists of service bays, ventilation drifts to connect crosscuts to return air raises, remucks, and dewatering infrastructure when required.

 

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Drifts are designed at 4.0 m wide x 4.0 m high and are developed, as mentioned in the previous section, using a split-blasting technique when required. The drift dimensions enable the use of medium-sized equipment for improved productivity. Ore drift development is guided by geological controls to ensure that development closely follows the mineralization. All ore drifts are therefore sampled for grade control during every drill, blast, load, and haul cycle, at approximately 3.3 m intervals. These samples are used to delimit the economic portion of each stope, which generally varies in width between 1.2 and 6.0 m. An example of a bench-and-fill mining panel is shown in Figure 16-2.

 

 

Figure 16-2: Schematic example of bench-and-fill mining method

 

16.3

Mining Sequence

 

The underground mining sequence starts with the development of the spiral decline. Once the ramp decline reaches the required level elevation, three faces are generated which consist of the continuation of the ramp decline, the access crosscut to the ore and the service bay, which is located opposite the crosscut at the ramp. The crosscut development continues until the vein is intersected. During the development of the crosscut, the remuck and the ventilation drift (which is subsequently connected to the upper-level ventilation drift via drop raising) are also developed. Once services are available at the crosscut, the drift development starts, generally in both directions along the vein strike. The ramp decline development continues in parallel towards the next level, where the development sequence is repeated.

 

For mining sequence optimization purposes, large mining zones are divided into mining panels, generally consisting of three to four levels per panel. The bottom-level drift is developed in a 4 m-wide × 6 m-high section; the bottom 2 m is then filled with 10% cemented rockfill, creating a stable sill pillar to separate mining panels. This allows stoping to commence while ramp decline development continues and ensures maximum recovery of the mineralization.

 

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Once the drift reaches the vein edge, to start stoping of the ore between levels, vertical slot raises are excavated at both extremities of the level to generate free faces for production blasting. Once the slot is opened, the stoping sequence retreats towards the crosscut. Typically, open-stope spans measuring 15 to 60 m along strike can be achieved before backfilling.

 

The following procedure is implemented to minimize dilution. When the maximum stope span is reached (as determined by geotechnical considerations and laser scan measurements), a cemented barricade is constructed and 3% cemented rockfill is placed in the stope from the upper level until a 2 m-wide solid pillar is generated. Then, the remainder of the stope void is filled with rockfill from waste development and split-blast slashing. Subsequently, a new slot raise is constructed beside the cemented pillar and stoping continues towards the access. Backfilled stopes are also used subsequently as working floors for the mining of the upper levels of the production panel. The sequence is finished when the top level of the panel is mined by undercutting the back, beneath the overlying panel’s sill pillar.

 

16.4

Geomechanics and Ground Support

 

The El Peñón deposit comprises multiple geomechanical domains within the epithermal deposit. The steeply dipping mineralization is structurally controlled and primarily associated with north-south-trending major faults which cut across the volcanic rock. Vein dips are moderate to steep, ranging between 50° and 90°.

 

The competency of the rock mass is primarily affected by argillic siliceous alteration. Other types of alteration are present but to a lesser extent. The mineralized veins are associated with intense to moderate argillic alteration haloes which typically result in a weakened rock mass on the vein margins. This argillic alteration grades into siliceous alteration further away from the veins. The intense argillic alteration haloes around the mineralized zones vary in thickness (1 to 2 m); the moderate argillic alteration haloes extend up to 10 m away from the veins.

 

The structural model includes major, intermediate, and minor structures. The major structures are persistent faults when compared to the mine scale and their thickness exceed 10 cm. The mineralization is hosted within these structures. The major faults are oriented along the primary structural trend but local variations are observed. Intermediate structures are not associated with specific orientations, have a shorter persistence than the major faults, their thickness does not exceed 10 cm. The minor discontinuities consist primarily of joints.

 

The various combinations of alteration type, alteration intensity, and structures result in highly variable rock mass properties. The mineralized zone is typically associated with strong fracture intensity and intense alteration which results in a weak rock mass (RMR89: 15 to 40). The extent of this weak zone varies from 1 to 10 m. Further away from the mineralized veins, the rock mass is less fractured and without weakening alteration (RMR89: 45 to 70). The mining operation is in a region where the horizontal stress is slightly higher than vertical stress. The k-ratio is estimated at between 1.1 and 1.4.

 

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The stope design recommendation is based on the stope height, rock mass quality, vein inclination, and unplanned dilution. The recommendations are generated using the Matthews method to predict the unplanned overbreak. Each abacus is based on a specific stope height while considering a range of stope lengths, rock mass quality (RMR89), stope inclination, and stope widths. Dilution calculations are continually calibrated with actual stope reconciliation: these results are integrated into the design parameters applied to the mineral reserves stope optimization process.

 

Ground support for development consists of shotcrete, wire mesh, and rockbolts. Shotcrete (50 mm-thick) is applied to the back and walls in areas associated with weak rock mass. Where excavations are located in more competent rock, wire mesh is installed along the back and shoulders. Rock bolts (2.4 to 2.8 m-long) are installed to support the back and sidewalls. The bolt length and spacing vary depending on the condition of the rock mass and on the dimension of the excavation.

 

16.5

Mine Equipment

 

All underground mining operations are carried out by Yamana, while the open pit mining operations, representing only a very small proportion of the production over the LOM, are carried out by a contractor.

 

A list of the active mine equipment at El Peñón is shown in Table 16-1 and Table 16-2. Equipment varies in types, models, and ages.

 

Table 16-1: Underground mobile equipment for development & production

 

Underground Equipment	Model	Description	Units
Development Jumbo drills	Atlas Copco Boomer S2	Jumbo	3
Development Jumbo drills	Atlas Copco Boomer M2C	Jumbo	7
Development Jumbo drills	Epiroc Boomer S1D	Jumbo	1
Long hole production drills	Atlas Copco Simba H-1254	Simba	3
Long hole production drills	Atlas Copco Simba S7D	Simba	5
Long hole production drills	Epiroc Simba S7C	Simba	1
LHD 6 yd3	Cat R-1600G	Scoop	8
LHD 6 yd3	Cat R-1600H	Scoop	7
LHD 2 yd3	TORO LH-203	Scoop	4
Conventional trucks	Scania P400	Trucks	13
Conventional trucks	Mercedes Benz Arocs 4848K	Trucks	4

 

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Underground Equipment	Model	Description	Units
Conventional trucks	Mercedes Benz Axor 3344	Trucks	4
Ejection bed trucks	Cat AD-30	Dumper	5
Ejection bed trucks	Mercedes Benz Axor 3344	Trucks	2
Bolters	Boltec Atlas Apernador H235S	Boltec	4
Bolters	Jumbo Resemin Bolter 99	Boltec	1
Roboshots	Normet Alpha 20	Roboshots	4
Roboshots	Normet Alpha 30	Roboshots	3
Mixers	Normet Variomec MF050	Mixer	4
Mixers	Normet Tornado S2	Mixer	3

 

Table 16-2: Support mobile equipment

 

Support Equipment	Model	Description	Units
Wheel Loaders	Volvo L220G	Wheel Loaders	1
Wheel Loaders	Volvo L260H	Wheel Loaders	1
Wheel Loaders	Volvo L120F	Wheel Loaders	4
Wheel Loaders	SDLG LG 968	Wheel Loaders	1
Scalers	CAT 416F2	Scalers	8
Telescope crane	Manitou MT1030S	Crane	16
Telescope crane	Manitou MT1030ST	Crane	2
Scissor lift	Normet Utilift 1430	Normet	1
Grader	Komatsu GD675	Grader	2
Grader	Caterpillar 140H	Grader	1
Grader	Caterpillar UG20K	Grader	1
Service trucks	Various		4
Excavators	Various		2
Water trucks	Various		6

 

16.6

Mine Services

 

16.6.1

Dewatering

 

Three pumping systems are currently operating at the mine. The auxiliary pumping system collects water at the faces and pumps it to the secondary pumping stations using Grindex portable pumps; these have a dewatering capacity of 10 L/s, maximum power of 20 kW, and can handle water columns of up to 40 m. Secondary pumping stations are therefore constructed every 40 vertical metres. These secondary pumping stations consist of a fibre pool and centrifugal multistage 40 hp pumps of 20 L/s capacity. Water is pumped from there towards the main pumping stations.

 

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The main pumping stations decant water and pump it to HDPE-lined ponds on surface. The main pumping stations consist of a pond with multistage centrifugal 220 hp pumps of 30 L/s capacity. These pumps can handle water columns of up to 320 m, which is approximately equivalent to a maximum operating pressure of 30 bars. The equipment uses a variable frequency drive (VFD) which allows the regulation of the speed of the motor and the optimization of the electrical and mechanical operation of the pumps.

 

16.6.2

Ventilation

 

Ventilation of the underground mines at El Peñón is provided through the use of primary and secondary ventilation systems. The primary ventilation system is an exhaust/pull system. Fresh air is supplied through portals, intake ventilation raises, and declines. Return air is exhausted through return air raises (RAR) to surface by main exhaust-air axial fans usually positioned on surface. The first section of the vertical RAR, from the surface to the first underground levels, is typically a 2.4 m- or 3.1 m-diameter raise bore. The remaining RAR connections to the different levels are staggered and excavated via drop-raising.

 

The distribution of airflows is different for each mining zone and depends on the elevation of active production levels and the airflows required by regulations. The sum of the airflow required under maximum expected production rates, plus expected leaking losses, define the required fan capacity. All the main fans are controlled online via a telemetry system and are equipped with VFD; this allows for the continuous control of the airflow requirements and for the adjustment of fan power, thereby saving energy.

 

The secondary ventilation system is used for ventilation of blind development faces and production faces. This system is a push system which forces fresh air from declines to the work faces via auxiliary ventilation fans (of varying power and models depending on the local air flow requirements) through 900 mm-diameter flexible ventilation ducts. Ventilation duct ends are located at a maximum distance of 30 m from the face. Air flows back through the drift to the RAR, where it is pulled to surface by the main ventilation system.

 

An example of the ventilation circuit of the Pampa Augusta Victoria underground mine is shown in Figure 16-3.

 

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Figure 16-3: Ventilation circuit of the Pampa Augusta Victoria underground mine

 

16.6.3

Electrical

 

El Peñón is connected to the National Electric Grid by a 66 kV transmission line to the Palestina substation.

 

From the main substation at El Peñón, at 66 kV / 6.6 kV and 20 MVA, power is distributed to the camp, processing plant, and administrative facilities as well as to two mine feeders for distribution to areas southeast of the Core mine area. From the main substation, power is also delivered to three distribution substations:

 

•

One for the Fortuna–Dominador satellite mining zone located west of the core mine area, at 6.6 kV / 23 kV and 2.5 MVA

 

•

Two for the areas northeast of the core mine area, at 6.6 kV / 23 kV and 4 MVA each

 

Several underground substations, at 23 kV / 400 V and 750 kVA or 6.6 kV / 400 V and 750 kVA, are used to provide 400 V power and distribute energy to all electrical loads.

 

16.6.4

Compressed Air

 

Compressed air supply is done through a network of carbon steel pipes of 6” diameter on surface and 4” diameter underground, at a constant pressure of 8 bar. Boosters are installed in remote zones, which are activated when pressure losses occur along the network. Delivered compressed air is dried and cleaned through a system of networks and purifiers.

 

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Two main compressors are currently active at the El Peñón core mine area; they are located near the Orito and Bonanza portals. The compressor located near the Orito portal supplies compressed air to the Quebrada Orito, Quebrada Colorada and Dorada zones, while the compressor located near the Bonanza portal supplies the Cerro Martillo and Bloque Norte zones.

 

16.6.5

Communications

 

Underground communications are carried out with the use of a Leaky Feeder system, which keeps mine supervisors in continuous contact with operating and service crews throughout the different mines.

 

16.7

Life of Mine Plan

 

The life of mine (LOM) plan is based on an integrated operation producing mainly from underground mines and from the Chiquilla Chica open pit. The ore produced by the mining operations and reclaimed from stockpiles is fed to the mill. Considering current mineral reserves, the LOM indicates a total mine life of six years. However, El Peñón has a track-record spanning more than 20 years of replacing mineral reserves through discoveries of new deposits while maintaining 5 to 8 years of mineral reserves. In recent years, mineral resources converted to mineral reserves have more than offset the depletion of mineral reserves; this indicates the significant potential of extending the mine life beyond the current LOM and sustaining a strategic mine life of 10 years or more.

 

The LOM mining and processing plans are shown in Table 16-3. Mining recovery and dilution factors considered for production scheduling are disclosed in section 15.4 of this technical report. The LOM aligns with the rightsizing of El Peñón that was completed in 2017. Continued exploration success would unlock opportunities to leverage on the existing processing capacity of 4,200 tpd (1.533 Mtpa), which would bring forward gold production in the mine plan. Minimal capital investment would be required to achieve the higher processing rate.

 

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Table 16-3: Life of mine plan (LOM)

 

LOM		Planned Production		units				2021				2022				2023				2024				2025				2026				Total
Bloque Norte		Ore mined			kt				145				141				234				115				159				266				1,061
		Gold grade			g/t				5.72				6.56				7.41				5.50				4.81				4.79				5.81
		Silver grade			g/t				84.7				82.7				66.9				191.1				221.9				198.2				141.2
Chiquilla Chica (Open Pit)		Ore mined			kt				53				–				–				–				–				–				53
		Gold grade			g/t				0.34				–				–				–				–				–				0.34
		Silver grade			g/t				316.2				–				–				–				–				–				316.2
Dorada - Cerro Martillo		Ore mined			kt				322				291				376				451				413				85				1,939
		Gold grade			g/t				4.26				4.40				3.99				3.83				3.51				4.09				3.96
		Silver grade			g/t				217.0				197.0				186.9				205.4				228.3				191.8				206.8
Fortuna		Ore mined			kt				–				88				128				49				–				–				264
		Gold grade			g/t				–				4.19				4.72				4.40				–				–				4.49
		Silver grade			g/t				–				273.7				348.3				271.0				–				–				309.26
Laguna		Ore mined			kt				102				79				42				–				–				–				222
		Gold grade			g/t				9.57				8.24				7.72				–				–				–				8.75
		Silver grade			g/t				97.8				78.0				68.0				–				–				–				85.2
Quebrada Colorada		Ore mined			kt				360				354				290				241				160				36				1,441
		Gold grade			g/t				6.06				6.35				5.64				4.11				4.14				4.62				5.47
		Silver grade			g/t				131.1				103.8				120.3				145.9				203.7				248.3				135.6
Quebrada Orito		Ore mined			kt				106				135				67				111				82				–				501
		Gold grade			g/t				5.87				4.85				6.58				5.18				7.55				–				5.82
		Silver grade			g/t				38.7				60.5				37.2				111.4				81.3				–				67.4
Pampa Augusta Victoria		Ore mined			kt				–				–				9				–				–				–				9
		Gold grade			g/t				–				–				4.96				–				–				–				4.96
		Silver grade			g/t				–				–				187.2				–				–				–				187.2
Processing		Ore processed			kt				1,319				1,312				1,159				1,098				815				446				6,149
		Gold grade			g/t				4.01				4.18				4.71				4.97				6.26				4.20				4.66
		Silver grade			g/t				119.7				117.6				141.5				146.2				206.4				232.7				147.8
		Gold recovery			%				94.07	%			93.65	%			94.00	%			94.18	%			94.25	%			93.86	%			94.02	%
		Silver recovery			%				88.66	%			88.13	%			85.36	%			87.52	%			88.59	%			87.26	%			87.60	%
		Gold produced			koz				160				165				165				165				155				57				866
		Silver produced			koz				4,500				4,370				4,500				4,519				4,789				2,913				25,591

 

16 –Mining Methods	95
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Technical Report El Peñón Mine, Chile

  

17

Recovery Methods

 

The El Peñón processing plant and associated facilities process run-of-mine as well as stockpiled ore, using the main processes listed below:

 

•

Crushing

•

Grinding and pre-leaching thickening

•

Leaching

•

Counter-current decantation (CCD) concentrate solution recovery

•

Clarification, zinc precipitation, and precipitate filtering

•

Refining

•

Tailings filtering and disposal

 

The process flowsheet is shown in Figure 17-1. The processing plant has a nominal production capacity of approximately 1.533 Mtpa. The plant processed 3,461 tonnes per calendar day (tpd) during 2020.

 

17.1

Primary Crushing

 

Run-of-mine or stockpiled ore is dumped from a 7 m³ capacity (CAT 988H) front-end loader and screened through a 600 mm square-grid grizzly into a 100 t-capacity hopper. Fine material is collected and transported directly to the conveyor belt that carries primary crushed material. A 1,500 mm-wide apron feeder is used to transfer ore from the dump hopper to the jaw crusher. Coarse material is fed into a 950 mm × 1,250 mm jaw crusher and crushed to a P₈₀ size of 63.5 mm. The crushed ore is transported by a conveyor belt to a 1,500 t-capacity silo. Additionally, an auxiliary stockpile for crushing product is located to the northwest of the silo. The stockpile has a capacity of 10,800 t and covers an area measuring approximately 40 m × 60 m.

 

The ore stored in the silo is transported by a variable-speed mill-feed conveyor belt, which has a nominal capacity of 250 tonnes per hour (tph), to a transfer chute that discharges onto the conveyor belt that feeds the SAG mill.

 

The ore from the auxiliary stockpile is fed via a front-end loader to an encapsulated hopper with suppressor system to mitigate dust emissions. The hopper discharges onto a belt which transports the ore to the mill-feeder conveyor belt.

 

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Technical Report El Peñón Mine, Chile

  

 

Figure 17-1: Mineral processing flowsheet

 

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Technical Report El Peñón Mine, Chile

  

17.2

Grinding and Pre-Leach Thickening

 

Crushed ore and sodium cyanide process solution are fed into the SAG mill; the sodium cyanide solution is used as leaching agent.

 

The SAG mill operates in series with a ball mill, which feeds a battery of hydrocyclones. The underflow of the hydrocyclones returns to the SAG mill. Pebbles formed in the SAG mill are discharged by a trommel onto a conveyor belt, which transports the pebbles to a chute returning them to the mill-feeder conveyor belt. Alternatively, the pebbles can be mixed with crushed material to be recirculated to the grinding circuit. The density of the pulp fed to the hydrocyclone circuit is controlled online via density measurements using a nuclear densitometer.

 

The classification circuit consists of six hydrocyclones. Generally, four hydrocyclones operate while two remain on standby. The cyclone overflow pulp contains between 42% and 46% solids with a P₈₀ of 170 µm. Particle size is measured online through a PSI 300 particle-size analyzer and is controlled by changing hydrocyclones operating pressures. The hydrocyclones overflow is fed to the grinding thickener and the underflow is recirculated to the SAG mill feed. Spills are pumped to the mill’s discharge sump using a floor pump located in the area.

 

Flocculant is added to the grinding thickener to promote solid-liquid separation by decantation. The underflow of the thickener, containing 50% solids, is pumped to the first leach tank. The thickener underflow discharge has two variable speed pumps (generally one operating and one on standby) with a flow rate capacity of 250 m³/h and a 31 m discharge height. The pumping rate is controlled according to the density of the pulp, which is measured online through a nuclear densimeter. The overflow of the grinding thickener, which is called “unclarified pregnant solution” is sent by gravity to a storage tank.

 

17.3

Clarification

 

From the storage tank, the unclarified pregnant solution is pumped to four clarifying filters which clarify the solution to a maximum turbidity of 1 NTU. The clarified solution is transported into the clarified pregnant solution tank for the subsequent zinc precipitation step.

 

17.4

Leaching

 

Gold and silver leaching starts at the SAG mill, where sodium cyanide is added as a leaching agent. An extraction of around 75% is reached in this step.

 

Six reactors, with a combined capacity of 7,279 m³ using mechanical agitators, leach the underflow of the grinding thickener.

 

Oxygen is also added to maximize dissolution kinetics. The oxygen is homogenized with the pulp through recirculation pumps that propel the pulp to an oxygen mixer. Oxygen is supplied from a liquid-oxygen storage tank.

 

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Technical Report El Peñón Mine, Chile

  

Leach tanks are arranged in series with cascading heights to facilitate the transport of pulp by gravity. The reactors are fed from the bottom to reduce the potential for the leach slurry to short-circuit between tanks. Under normal operating conditions, the discharge of the last reactor is sent to the first thickener of the CCD concentrate solution recovery circuit.

 

17.5

CCD Concentrate Solution Recovery

 

The leached pulp, with a concentration of 48% to 55% solids, is transported by gravity to the CCD circuit, which consists of four high-capacity counter-current thickeners. The objective of this circuit is to wash the pulp and recover the pregnant solution. The wash-solution flows counter-current to the solids flow, increasing the precious metal concentration of the solution. The overflow of the first CCD thickener (CCD0) is transported by gravity to the pregnant solution storage tank, while the discharge of the last CCD thickener (CCD3) is pumped to the filtration area.

 

17.6

Pregnant Solution Precipitation

 

In normal operation conditions, the Merrill-Crowe process consists of the following stages:

 

•

Deaeration of the clarified solution by circulating the fluid through a vacuum tower.

 

•

Precipitation of gold and silver by the addition of zinc to the deaerated solution.

 

•

Filtering of gold, silver, and zinc precipitates.

 

The clarified pregnant solution (maximum flow of 275 m³/h) is deaerated through a vacuum tower before entering the zinc precipitation stage. The vacuum tower is a 10.4 m³- capacity reactor which achieves a rich deaerated solution with an oxygen (O₂) concentration of less than 1 ppm. The reject solution that exits the tower is fed to the press filters.

 

The zinc pulp is fed with five peristatic pumps to the feed line of each of the press filters. The contact of the zinc pulp with the rich deaerated solution occurs in the filter piping feed and causes gold, silver, and impurities to precipitate onto the zinc surface. The dosage of zinc is controlled by assays of the rich and barren solutions every two hours.

 

The filtration stage is carried out in five filter presses. Before feeding a filter press with the solution from the precipitation stage, 2 m³ of pulp containing 37.5 g/L of diatomaceous earth are recirculated for 45 minutes to form an initial layer on the filter surface. The diatomaceous earth layer prevents blockage by the very fine undissolved zinc. After the initial layer is formed, the precipitate solution is filtered. The solution that exits the filter is transported to the barren solution tank. To unload, a filter press is opened and the material is removed using a spatula and sent to the retort furnaces.

 

17 –Recovery Methods	99
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Technical Report El Peñón Mine, Chile

  

17.7

Refining

 

Precipitates obtained from the filter presses are deposited in trays with a capacity of approximately 50 kg of precipitate with 30% moisture content. Four retort furnaces eliminate the humidity and the mercury contained in the precipitate. Each furnace is loaded with eight trays and kept at a temperature of 538°C for about 20 hours under vacuum conditions. The product (calcine) is fed to the melting furnaces.

 

A reverberation furnace, which uses liquefied gas and air/oxygen to reach 1,220°C is used for smelting. Calcine is fed to the furnace through a screw feeder. The melt consists of two phases:

 

•

The upper part of the slag, which is of lower density (2.5 g/L) and melts at 850°C, is formed of silica (flux) and impurities such as copper, iron, zinc, and others.

 

•

The lower phase of the slag consists of doré. This lower phase is of higher density (15 g/L), melts at 1,000°C, and is mainly composed of silver and gold, with a small proportion of impurities.

 

The slag is poured into 50 kg-capacity conical steel containers, while the doré is poured into 165 kg-capacity ingot molds. Emissions from the refining furnace are collected by a hood and pass through a high-temperature bag filter to recover the precious metal particles contained in the gases. The solidified slag is recirculated to the crushing stage of the plant to recover any residual gold and silver. The doré is removed from the ingot mold and loaded with a forklift to the bar cleaner to remove the attached slag. After this process, the bars are removed and stored for weighing and shipping.

 

17.8

Tailings Filtering and Disposal

 

The objective of the tailings filtration is to obtain dischargeable tailings containing a moisture content of about 20%. The CCD circuit and filter cake wash step ensure the liquid contained in the filtered tailings has minimum concentration of cyanide and dissolved metals. The pulp is pumped to a filtering system consisting of four 54 m² and one 82 m² horizontal vacuum belt filters.

 

The filtered tailings are transported by two conveyor belts (equipped with a weight-meter and sampler) to two stockpiles, one for each belt. The storage area consists of a 220 m² concrete slab and retaining wall (to protect the belts). A floor pump is located in the area to collect solutions and cleaning water, which are recycled to the filtration area.

 

The collected tailings are loaded on trucks by a front-end loader and transported to the tailings storage area, located approximately two kilometres away.

 

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Technical Report El Peñón Mine, Chile

  

17.9

Metallurgical Reporting

 

The processed tonnes are determined by weight-meter readings that are located on the SAG mill-feed conveyor belt and the tailings discharge conveyors. Daily analytical results from feed and tailings solids samples and solutions samples of discharged tailings are used to calculate plant metallurgical performance. Metal sales and inventory contained in the circuit and refinery are determined at the end of each month and appropriate adjustments are made. The mill reports the back-calculated head grades of the mill feed from this information

 

17.10

Plant Consumption

 

Water consumption by the processing plant is approximately 0.28 m³/t, while the tailings disposal operations require 0.10 m³/t. The energy consumption by the processing plant is estimated at between 46 and 48 kW/dmt. Other reagents and supplies consumptions for 2020 are summarized in Table 17-1 and Table 17-2, respectively.

 

Table 17-1: Consumption of reagents for 2020

 

Reagent		Consumption				Units
Sodium Cyanide			2.51			kg/t
Zinc			2.07			kg/kg (Au+Ag)
Lime			0.36			kg/t
Diatomaceous Earth			0.49			kg/t
Celite 545			18.90			g/t
Celite 7F			10.10			g/t
Flocculant (CCD)			79.00			g/t
Filtering Aid			63.00			g/t
Antiscalant (CCD)			58.90			g/t
Antiscalant (Precipitation)			73.30			g/t
Antiscalant (Retort)			7.90			g/t
Dispersant			100.00			g/t
Oxygen			0.34			l/ t
Borax			0.34			kg/kg (Au+Ag)
Soda Ash			0.16			kg/kg (Au+Ag)
Gas			2.54			l/kg (Au+Ag)

 

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Technical Report El Peñón Mine, Chile

  

Table 17-2: Consumption of processing supplies for 2020

 

Item		Consumption				Units
Balls (Ball Mill)			0.19			kg/t
Balls (SAG Mill)			1.09			kg/t
Refractories			2.20			tpm
Doré Packages			0.008			Boxes/kg (Au+Ag)
Clarifying Filter Fabric			56			Fabric/month
Press Filter Fabric			56			Fabric/month
Band Filter Fabric			1			Fabric/28,000t

 

17.11

Optimization Opportunities

 

In 2021, Yamana initiated a new review of the El Peñón processing plant to identify opportunities for increased throughput, increased recovery, and reduced operating costs. The review, conducted by Paterson & Cooke from Denver, Colorado, USA, and the El Peñón processing team, has identified several opportunities as summarized in a preliminary report (Paterson & Cooke, 2021). Some of these opportunities are summarized below.

 

The grinding circuit can be optimized to reduce over-grinding by separating the circuit into primary and secondary grinding. Separating the circuit would require an additional classification mechanism incorporated between the SAG mill and the ball mill.

 

In the leaching circuit, managing the leach solution to decrease the precious metal concentrations can promote a more favorable conditions for leaching.

 

Thickener operation can be improved by adding controls for circuit automation. Improving reagent control will unlock further opportunities to implement new coagulant/flocculant addition schemes that can limit potential overdosing of flocculant. Installing bed depth indicators will also improve thickener performance monitoring and enable future advancements in thickener control.

 

Implementing an advanced process control system (APC) to the CCD circuit will enable continued optimal performance.

 

The viability of each opportunity outlined in the report will be evaluated by the site team. The viable opportunities will be assessed for qualitative implementation costs, probable benefit, and execution risk. The outputs will be compiled into a solution and opportunities matrix and an implementation roadmap developed for the highest priority projects.

 

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Technical Report El Peñón Mine, Chile

  

18

Project Infrastructure

 

El Peñón is accessed by a paved road approximately 165 km southeast of Antofagasta. Travel time from Antofagasta is approximately 2.5 hours. Antofagasta is the principal source of supplies for the mine. It is a port city with a population of 380,000; it is linked by daily air service to Santiago. Power is supplied to the mine site via national power grid. Auxiliary or backup power from generators is also available with 10 MW of power capacity on site.

 

The mine consists of multiple gold and silver deposits that are mainly mined by underground mining methods. Open-pit production was extensive in the past, but now comprises a small proportion of the LOM. Four main mining blocks are currently in operation at the core mine zone. These are: Quebrada Orito, Quebrada Colorada, Dorada-Cerro Martillo and Bloque Norte. Several satellite deposits are or have been active in the past such as Chiquilla Chica, Laguna, Fortuna-Dominador, located to the south west of the core mine, and Pampa Augusta Victoria located to the north.

 

El Peñón has all the required infrastructure for a mining complex, illustrated in Figure 18-1. The main infrastructure includes the following features:

 

•      Underground and open pit mines with all the associated access, power, ventilation compressed air ventilation, industrial water supply, and dewatering infrastructure
•      Process plant and refinery	•      Telecommunications system
•      Stockpiles and waste dumps	•      Water ponds
•      Tailings storage area	•      Water distribution system
•      Concrete and cemented backfill plants	•      Workshops and sheds
•      Groundwater well system for water supply	•      Materials storage areas
•      Main administration building and offices	•      Laboratory
•      Campsite, cafeterias, and change rooms	•      Core shed
•      Energy supply and transmission system	•      Sewage treatment system
•      Storage areas for explosives
•      Facilities for storage and distribution of fuel, oil, and lubricants
•      Mine workshops, maintenance facilities, and warehouses

 

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Technical Report El Peñón Mine, Chile

  

 

Figure 18-1: Plan map of main infrastructure at El Peñón

 

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Technical Report El Peñón Mine, Chile

  

18.1

Filtered Tailings Stack Design and Construction

 

The El Peñón filter stack is located 1.5 km southeast of the processing plant and stores approximately 25.4 Mt. (Figure 18-1). The updated TSF designs included in the newest Declaration of Environmental Impact (DIA) submitted in February 2021 considers a reduction in the ultimate TSF capacity from 58.1 Mt (RCA 270/2010) to 49.8Mt, which is sufficient capacity for current mineral reserves plus an additional capacity of approximately 18.5 Mt.

 

The filtered tailings stack is raised in three platforms to an ultimate elevation ranging between 1835 masl to 1850 masl in the northern section of the facility. Each platform is approximately 10 m in height with slopes of approximately 1.25H:1V. A 5 m-bench is left between platforms, forming an overall approximate slope angle for the filtered tailings stack of approximately 2.5H:1V (Figure 18-2).

 

The eastern portion of the TSF is raised in only two platforms, each with a maximum height of 10 m and slopes of 1.25H:1V. A 5 m-bench between each platform allows for a flatter overall stack slope.

 

 

Figure 18-2: Schematic cross-section of western face of filtered tailings stack

 

The filtered tailings are a non-plastic sandy silt; they consist of about 60% fines with fine- to medium-grained sand particles and have a volumetric moisture content when leaving the filter plant of about 18% (gravimetric moisture content of about 22%) and a specific gravity of about 2.63.

 

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Technical Report El Peñón Mine, Chile

  

Filtered tailings are transported to two stockpiles by conveyor belts, one for each stockpile. Stockpiled tailings are loaded into haul trucks by a front-end loader and transported about 2 km to the TSF. At the TSF, tailings are deposited in mounds and spread into 0.15 to 0.3 m-thick layers with a dozer to promote further aeration and cyanide degradation. Tailings are then turned with a grader and irrigated with process water from the waste water treatment plan to reduce the concentration of cyanide in the solids; this decreases the in-situ moisture content of the tailings. This aeration-and-water process is repeated until the cyanide concentration is less than 2 ppm. The density of the tailings is recorded and measured against a target 90% modified proctor. Once compacted, a new layer of tailings is incorporated into the dry stack and the process is repeated.

 

Quarterly operational reports and monthly quality-control reports are generated for the El Peñón TSF. These reports include test results from samples from every new lift; these tests include in-situ density testing, particle size analysis, and moisture content. In addition, the cyanide content of the tailing is tested regularly.

 

Slope stability assessments of the dry stack facility were conducted by E-Mining and FF GeoMechanics in 2019 and 2020. Results indicate that the facility is stable under static and seismic conditions. Seismic design criteria assume a peak ground acceleration (PGA) of 0.49 g. The proposed PGA seems adequate for the region. Undrained stability is not a concern in this facility as there is no phreatic surface in the filtered stack.

 

In addition, stability analysis completed by FF GeoMechanics (2020) indicate a maximum runoff of the dry tailings material, in case of a slope failure, to be less than 2 m. The mine infrastructure is located approximately 200 m of the facility. As such, a slope failure of the filtered tailings at El Peñón does not pose a risk to the environment or to people. Regardless, as a preventive measure, the mine constructed containment berms located 5 m from the toe of the TSF stack to prevent the spread of tailings, should a localized slope failure occur. These berms also divert surface runoff away from the filtered tailings toe, in the unlikely event of a strong precipitation event in the region.

 

A dam inspection by a third-party geotechnical specialist is planned for 2021 to confirm that the current designs align with evolving international best industry practices proposed for this type of structures. In addition, the site needs to develop an updated Operations, Maintenance, and Surveillance (OMS) manual that aligns with the latest guidelines from the Mining Association of Canada on tailings management. In addition, it is recommended for site to update the closure plan for the TSF area, considering potential changes to the design, such as stack final geometry, water management, long-term geochemical effects, management frameworks and requirements for regulatory compliance and closure permitting.

 

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Technical Report El Peñón Mine, Chile

  

19

Market Studies and Contracts

 

19.1

Market Studies

 

The principal commodities produced at El Peñón are gold and silver in the form of doré bars, which are freely traded, at prices that are widely known, so that prospects for sale of any production are virtually assured. Gold prices of US$1,250/oz and silver prices of US$18/oz were used for mineral reserve estimation as well as for completing the economic analysis outlined in Section 22 of this technical report, which ensures the project is cash-flow positive and therefore supports the mineral reserve estimate.

 

19.2

Contracts

 

Yamana, via its subsidiary Minera Meridian, has four collective bargaining agreements currently in place. The maximum term allowed for collective bargaining agreements by the current legislation is of 36 months. The following agreements are currently in place:

 

•

Union #1A – Mine. Feb.1, 2020, to January 31, 2023: 36-month term (512 employees)

 

•

Union #1B – Plant. July 23, 2018, to July 22, 2021: 36-month term (194 employees)

 

•

Union #2 – Plant. Oct. 13, 2020, to Oct. 12, 2023: 36-month term (351 employees)

 

•

Union #3 – Supervisors. March 1, 2020, to Feb. 23, 2023: 36-month term (121 employees)

 

Yamana also has contracts in place for the operation of the Chiquilla Chica open-pit project; electrical power supply; personnel transport services; catering and camp services; fuel supply services; exploration drilling; and for mine and plant consumables, including drilling products, explosives and cyanide supply.

 

Average prices for consumables during 2020 were as follows:

 

•

Power: US$78.35/MWh

 

•

Fuel: US$0.54/L

 

•

Cyanide: US$2.11/kg

 

•

Flocculant: US$5.19/kg

 

•

Mill balls: US$1.06/kg

 

The qualified person responsible for this section of the technical report has reviewed the market studies and contracts. The results of the review support the assumptions laid out in the technical report. The terms, rates, or charges for material contracts are within industry norms.

 

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Technical Report El Peñón Mine, Chile

  

20

Environmental Studies, Permitting, and Social or Community Impact

 

The information presented in this section is based on a review of previous technical reports available for the site and on discussions with Yamana’s Health, Safety, Environment, and Community (HSEC) team.

 

20.1

Project Permitting and Authorizations

 

The first Environmental Impact Assessment (EIA¹) was submitted to the Chilean Environmental Impact Assessment System (SEIA) in 1997. The Environmental Commission of the Region of Antofagasta (Comision Regional de Medio Ambiente de Antofagasta) approved the application with Exempt Resolution Nr. 043 in 1998.

 

El Peñón has undergone a series of modifications since its original EIA submission. Required Environmental Qualification Resolutions (RCAs) were granted through a series of Declaration of Environmental Impacts² (DIAs). A DIA was approved in 2019 to extend the life of mine until 2023; a new DIA was recently presented in February 2021 considering a life of mine extension until 2026 and closure by 2028. Approval is expected in 2021.

 

El Peñón consists of historical open pits, underground mining operations, a process plant, and other support infrastructure, including waste dumps and a filtered tailings facility with a total storage capacity of 49.8 Mt. The approved plant capacity is 4,800 tpd.

 

Table 20-1 list resolutions granted to El Peñón since 1998. This list was reviewed and confirmed with HSEC management team in El Peñón.

 

¹ An EIA must be submitted by the proponent for projects or project modifications where significant environmental impacts are expected to occur, and where specific measures for impact avoidance, mitigation or compensation will need to be agreed upon.

² A DIA must be submitted by the proponent for projects or project modifications that are significant enough to warrant environmental review, but which are not expected to result in significant environmental impacts, as these are defined legally.

 

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Technical Report El Peñón Mine, Chile

  

Table 20-1: Summary of environmental resolutions since 1998

 

Resolutions		Activities
Resolution 043-98 El Peñón Project		Health report
		Change in land use
		Tailings storage
		Waste dumps
		Construction waste disposal
		Household waste disposal
		Sewage treatment and disposal
Resolution 086-99 Power Supply		Power supply
Resolution 0179-02 Explosive Handling		Explosives
Resolution 050-03 and 227- 04 Extension of Underground Mine		Mine expansion
Resolution 0163-07 Expansion and Optimization El Peñón Mine		Tailings storage area construction
Resolution 0192-07 and 056-2011 Production Fortuna Area		Waste dumps
		Sewage treatment and disposal
		Change in land use
Resolution 106- 2010 Extension of Bonanza and Expansion of Transport and Handling of Explosives		Waste dumps
		Sewage treatment and disposal
		Household waste treatment and disposal
		Industrial designation
		Change in land use
Resolution 0270-2010 Expansion of Tailings Storage Area until 2021		Tailings storage area
Resolution 0233-2012 Open-Pit Mine Production Pampa Augusta Victoria		Waste dumps
		Construction waste disposal
		Mining waste disposal
		Sewage treatment and disposal
		Household waste disposal
		Industrial designation
		Change in land use
Resolution 0229-14 Underground Mine Production Pampa Augusta Victoria		Waste dumps
		Sewage treatment and disposal
		Industrial designation
		Change in land use
Resolution 206 -2018 Production Laguna Underground Mine		New underground mine operation
Resolution 168 -2019 Extension of Process Plant Operations and Ancillary Infrastructure until 2023		Process plant
		Tailings facility
		Waste dump
		Ancillary infrastructure

 

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Other sectoral licences and permits have been obtained and applications for renewals have been filed. These permits are granted by some of the following agencies:

 

•

Dirección General de Aguas (DGA)

 

•

Servicio Nacional de Geología y Minería, (SERNAGEOMIN)

 

•

Ministerio de Salud de Chile

 

•

Concejo de Monumentos Nacionales (CMN)

 

•

Comisión y Servicio de Evaluación Ambiental

 

•

Dirección de Obras Hidráulicas

 

•

Superintendencia de Electricidad y Combustibles (SEC)

 

•

Servicio de Salud de Antofagasta (SSA)

 

•

Ministerio de Defensa Nacional (MDN)

 

•

Municipalidad de Antofagasta

 

•

Dirección General de Movilización Nacional (DGMN)

 

•

Ministerio de Vivienda y Urbanismo

 

•

Servicio Agrícola y Ganadero (SAG)

 

The operation has not been subject to sanctioning for environmental compliance by any of the regulatory agencies.

 

20.2

Environmental Management

 

20.2.1

Environmental Management System

 

El Peñón has implemented an integrated management system covering health, safety, environment, and community through internationally accredited systems that include the ISO 14001 Environment Management System and the OSHAS 18001 Occupational Health and Safety Management System. A risk assessment matrix has been developed for El Peñón that integrates risk matrices for ISO 14001:2015 and OHSAS 18001:2007.

 

Activities for 2021 include the process of certification for ISO 45001 (replacing OSHAS 18001) and recertification of the ISO 14001 Environment Management System. In addition, Yamana is signatory to the International Cyanide Management Code. A standard for operational processes has been developed for the management of other hazardous and non-hazardous solid waste (Certified NCh-ISO 17025 INN – Instituto de Normalizacion Chilena)

 

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Technical Report El Peñón Mine, Chile

  

In 2016, Yamana updated its Integrated Management System by developing a Health, Safety, Environment, and Community (HSEC) (2016) framework that was integrated in the company’s approach to health & safety, environmental management, and management of social risk. The framework establishes a common understanding across Yamana operations of its general approach to HSEC management and indicates how to achieve its vision. Yamana acknowledges that every operation is at a unique stage of development and is situated in unique socio-political and legal contexts. Yamana provides this framework to offer the following guidance:

 

•

Outline industry best practices for HSEC management.

 

•

Guide the development of new tools, processes, procedures, policies, and/or standards, either at the site or at the corporate level.

 

•

Assist operations in any evaluations or self-evaluations of their current state of practice.

 

•

Improve the overall integration of HSEC into the operations.

 

Beginning in 2020, El Peñón also began the implementation of the Mining Association of Canada’s Towards Sustainable Mining framework as well as the World Gold Council’s Responsible Gold Mining Principles, each of which included internal assessments and will require external audits within a 3-year timeframe.

 

20.2.2

Tailings Management

 

Yamana prioritizes the management of tailings and it is currently in the process of aligning the company’s tailings management system with best practices proposed by the Mining Association of Canada (MAC), Canadian Dam Association (CDA) guidelines, and other international standards, including technical guidance provided by the International Committee of Large Dams (ICOLD). Yamana currently has a dedicated Corporate Director whose sole responsibility is the governance of the tailings management system and to provide technical guidance and support.

 

Since 2017, Yamana has implemented a tailings management system known as SYGBAR. The system is built on a six-point management system that focuses on the following protocols:

 

•

Standards for design and construction, and the use of design reviews

 

•

Constant TSF monitoring and site-specific key performance indicators for development and performance management

 

•

Periodic safety inspection

 

•

Documentation and monthly reporting

 

•

Training and continuous improvement

 

•

Emergency response plans with dam failure analysis

 

As a member of the MAC, Yamana is updating its current tailings management systems considering the recommendations included in the tailings framework proposed in MAC (2019). MAC’s tailings management systems and guidelines have been adopted by mining associations in Canada, Argentina, and Brazil, among others, in recent years. The MAC systems include the completion of a Dam Safety Review (DSR) that follows the guidelines and recommendations provided in CDA dam safety guidelines (CDA, 2007) and its corresponding mining bulletin.

 

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The tailings produced at the El Peñón mill are presently stored in a filtered tailings stack in operations since 1998. The TSF is monitored on an ongoing basis for chemical and physical stability conditions by collecting data on cyanide and by conducting visual inspections and regular surveys for potential signs of deformation or other physical instabilities. Volumes of deposited tailings, grain size distribution, and tailings density are recorded on a regular basis. Samples are collected and tested by a registered third-party laboratory. In addition, a network of monitoring wells is used for monitoring any changes in water levels and water quality in the area of the mine, including in the TSF area. Section 20.2.3 outlines additional details on water management and monitoring.

 

As part of the mine’s tailings management system, a geotechnical stability inspection was completed by FF Geomechanics, an independent specialized firm, in 2019 and 2020. The review confirmed the filtered tailings stack are stable and safe.

 

The current closure plan for the TSF area is presently at a conceptual level and will be updated to reflect the most recent TSF designs, corresponding budgets, and implementation schedules.

 

20.2.3

Water Management

 

Water conservation is a primary focus at El Peñón. The water management system at El Peñón has been designed as a closed circuit. Process water from the mill is recovered in the tailings filter plant and recirculated back to the processing plant.

 

Pampa Buenos Aires Aquifer

The Pampa Buenos Aires aquifer is the main source of fresh water for El Peñón; the aquifer is located 25 km from the mine; eight pumping wells intersect the aquifer. The mine has been approved by the regional water authority (DGA) for a consumption of up to 50.4 L/s. Daily consumption to date averages less than half of the approved amount: the average flowrate recorded for 2020 was 22 L/s.

 

Considering the desert characteristics of the area, no risks of groundwater contamination from the mine operations have been identified in the reviewed documentation.

 

A detailed hydrogeological model has been developed for the Pampa Buenos Aires aquifer to monitor and assess recharge, specific yield, storativity, and other important hydrogeological parameters. This model is continually updated to reflect the most recent conditions.

 

Water levels and water chemistry information collected for the Pampa Buenos Aires aquifer is shared with the regional water authority via their online portal every 15 days.

 

Water recycled from Underground Developments

El Peñón recycles the water that accumulates in underground mines; this water derives from mining operations and not from a regional aquifer, as the underground mines at El Peñón are at shallower depths than the regional aquifers, therefore do not intersect them.

 

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Technical Report El Peñón Mine, Chile

  

Water collected in the underground mine is conveyed through a complex drainage system and pumped into fully lined collection ponds. This water is then recirculated to the process plant as needed by the operation. The system is managed, controlled, and monitored using an automatized system.

 

Waste Dumps and Water Management

El Peñón has several mine waste dumps in the core mine area (illustrated in Figure 18-1) as well as at the satellite deposits of Fortuna, Pampa Augusta Vitoria, Laguna, and Chiquilla Chica. Several of these dumps are not being operated and are in temporary closure. Although precipitation in the area is low, a surface water management system is in place in all dumps as a preventive measure; it consists of a surface water collection and drainage system to collect contact water and a system of contour channels for diversion of non-contact water.

 

No acid rock drainage (ARD) and metal leaching (ML) issues associated with the operation and with waste dumps have been identified. Waste rock material does not contain pyrite. Various acid-base accounting (ABA) tests results for the site confirm these observations. In addition, the low precipitation typical for this arid region does not promote acid generation.

 

Monitoring

To comply with environmental legislation and applicable standards, El Peñón carries out environmental monitoring in all areas influenced by the operation. Monitoring is performed by internal and external staff who are qualified for execution and evaluation of the monitoring activities. Key current monitoring is ongoing for water, air, noise, soil, impact on wildlife, and cultural resources.

 

The monitoring program at El Peñón relies on 8 groundwater wells, 4 air quality stations, and a weather station located in the camp area. Water quality samples are analyzed for chlorine, pH, and free cyanide in a certified laboratory located at El Peñón. In addition, El Peñón has samples regularly tested for these and other parameters at certified third-party laboratories.

 

No surface water streams exist in the area, and no groundwater quality issues were reported for El Peñón. It is important to note that the risk of groundwater contamination from the waste rock dumps in El Peñón is negligible as aquifers are located at great depths and precipitation in the area is low. In addition, waste rock material in the dumps has a low pyrite content and the mine has implemented adequate controls and environmental monitoring systems.

 

Archeological inspections are completed annually by third-party experts. There is no permanent wildlife in the area, but the site has implemented a visual inspection protocol. Fauna that are rescued are taken to the Wild Fauna Rescue and Rehabilitation Centre at the University of Antofagasta.

 

20 –Environmental Studies, Permitting, and Social or Community Impact	113
Signature Date: March 25, 2021

 

 

Technical Report El Peñón Mine, Chile

  

20.3

Community Relations

 

20.3.1

General Social Context

 

There are no communities in the immediate vicinity of El Peñón. The city of Antofagasta, located approximately 160 km northwest of the mine, is the main source of labour supply. It is a port city with a population of approximately 380,000 inhabitants, and hosts a large number of manufacturers and suppliers that serve the mining industry.

 

20.3.2

Social and Environmental Assessment and Management Systems

 

At the corporate level, Yamana has an Integrated Health, Safety, Environment and Community (HSEC) Framework (2016), which provides guidance across operations to meet the following goals:

 

•

Outline evolving international best practice for HSEC management.

•

Guide the development of new tools, processes, procedures, policies and/or standards.

•

Assist operations in any evaluations or self-evaluations of their current state of practice.

•

Improve the overall integration of HSEC into the operations.

 

The HSEC Framework includes guidance for (1) Health and Safety, (2) Environmental Management, and (3) Social Risk Management. The HSEC Framework provides guidance to Yamana and its operations on the collection of information on relevant stakeholders, assessment of potential impacts, and development of mitigation measures.

 

Of relevance to this technical report and this section is the HSEC Framework guidance for Social Risk Management, which includes the components listed in Table 20-2.

 

Table 20-2: Social risk management element of Yamana’s HSEC Framework (2016)

 

Management Element		Component
Stakeholder Engagement		Stakeholder identification and analysis (mapping)
		Stakeholder engagement
		Issues identification
		Feedback management
Impact Management		Impact identification
		Impact management
		Community baseline information tracking
		Plans for closure
Benefit Management		Expectation management
		Local employment and procurement
		Community investment

 

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Technical Report El Peñón Mine, Chile

  

In accordance with these guidance documents, Yamana has been tracking stakeholder issues and risks related to El Peñón and communicates project activities and other programs with stakeholders and members of the public on an ongoing basis.

 

El Peñón has developed and implemented a site-level grievance mechanism; there have been no complaints registered in recent years, in part due to the fact that there are no host communities located in proximity to the operation. The mine continues to engage with communities located a distance from the mine, including Taltal, and to support community initiatives such as education and cultural projects.

 

20.3.3

Workplace Health and Safety

 

El Peñón prioritizes providing a safe and healthy workplace and building an exceptional safety culture. A number of guidance documents provide the framework for health and safety measures at El Peñón. Yamana’s HSEC Framework (2016) provides guidance to the company and its operations on the development of site-specific health and safety procedures and on how to improve operations, based on monitoring and health and safety performance.

 

Of relevance to this report and this section is the guidance for Health and Safety, which includes the components listed in Table 20-3.

 

Table 20-3: Health and safety management elements of Yamana’s HSEC Framework (2016)

 

Management Element		Component
Leadership		Positive recognition
		Leadership training
Risk and Hazard Management		Hazard identification
		Job hazard analysis
		Field-level risk assessment
		Employee reporting and at-risk behaviour
		Standard operating procedures
		Hazardous materials
		Safety design reviews
Health, Hygiene and Medical		Health and hygiene
		Medical
		Drug and alcohol

 

Furthermore, El Peñón has established a system to promote worker health and safety, including ISO 14001 and 45001 environmental management and occupational health and safety (OH&S) standards, respectively.

 

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Technical Report El Peñón Mine, Chile

  

Regular audits and reports on worker health and safety are conducted for El Peñón and recommendations are made to improve performance based on the audit findings. Monthly and annual audit reports are generated, presenting a number of safety performance indicators that include the following information:

 

•

Frequency of accidents with injury

 

•

Severity and frequency of accidents with and without loss of time

 

•

Accidents by type and company

 

20.3.4

Support for Community Priorities

 

Even though no communities are located near to El Peñón, Yamana has made a number of commitments to the well-being, health, safety, and development of the communities in the area. As such, the social and community activities conducted by Yamana are concentrated in the Taltal District and support educational, health-related and cultural priorities. A summary of activities completed in a typical year include the following:

 

•

Open door policy: visits of 100 stakeholders to mining facilities

 

•

High school scholarships for 10 students

 

•

Free pre-university for students who take the Taltal district University Selection Test

 

•

Support of medical services in Taltal

 

•

Participation in the Business Advisory Council of the Liceo Politécnico

 

•

Broadcasting radio tips to the Taltal community on environmental care and precautions to consider for risks in the home

 

•

Integration Day: a fair held in December in Taltal

 

•

Donations in infrastructure, services, and equipment: donations to kindergartens, schools, dance groups, among others

 

•

Partnership seminar: partnerships with 7 local groups to provide economic development

 

•

Meetings with communities: the main activities developed in support of the commune of Taltal are presented to the community and stakeholders. The following list enumerates some of the topics agreed upon: the application for Partnership Seminar projects, scholarships, free pre-university, medical operation campaigns, and others.

 

•

A socio-economic diagnostic report of the areas of influence within the Taltal region

 

•

Entrepreneurship project to help vulnerable students in the region develop competencies and skills and undertake new projects

 

20 –Environmental Studies, Permitting, and Social or Community Impact	116
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Technical Report El Peñón Mine, Chile

  

20.3.5

Cultural Heritage

 

In the area of the El Peñón operation and its surroundings, 15 archaeological sites have been identified. They are protected by fencing and are monitored twice annually to verify their state of conservation by a professional archeologist recognized by the local cultural agency (Consejo de monumentos).

 

20.4

Mine Closure

 

El Peñón has developed a closure plan and cost estimate covering all current and approved facilities; this plan is in accordance with applicable legal requirements, specifically Law 20.551/2011 and Supreme Decree N°41/2012, and is updated regularly as the life of mine is extended. The competent authority for approving mine closure plans in Chile is SERNAGEOMIN. Under current law, mining projects with an extraction capacity of over 10,000 tonnes per month (tpm) must provide a financial guarantee, the amount of which is to be determined based on the periodic re-evaluation of the closure plan implementation and management costs. The amount of the guarantee must be determined in UF currency (Chilean Unit of Account) from the present-value estimated cost of implementing all measures covered by the closure plan. The latest closure plan for El Peñón was approved through Exempt Resolution Nº 2658/2019. Updates to the closure plan are required whenever the life of mine is extended.

 

The approved 2019 mine closure plan addresses progressive and final closure actions, post-closure inspections, and monitoring. Based on the increase in mineral reserves over the past three years, a new DIA was submitted in February 2021 for an extended life of mine plan. The mine closure costs will be updated according to the extended life of mine.

 

The 2019 closure plan is subdivided by area and includes consideration for the underground operations, waste dumps, tailings facility, infrastructure, and ancillary facilities. It also considers the following post-closure activities:

 

•

Physical stability monitoring in waste dumps

 

•

Biannual monitoring (twice per year) and inspection of downstream control wells and dumps

 

•

Biannual monitoring (twice per year) of control wells associated with the TSF

 

•

Annual monitoring of the El Peñón landfill

 

•

Visual inspection, cleaning, and maintenance of signage, walls, and perimeter closure

 

The closure plan costs are summarized in Table 20-4.

 

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Technical Report El Peñón Mine, Chile

  

Table 20-4: Mine closure costs

 

		Total Cost
Mine Closure		(US$M)
Direct costs			17.3
Indirect cost and administration			3.5
Contingency			5.2
Chilean sales tax (19%)			4.9
Subtotal closure measures			30.8
Post-closure monitoring			6.5
Total mine closure cost			37.4

 

No environmental or permitting issues were identified from the documentation available for review that could materially impact the ability to extract the mineral resources and mineral reserves.

 

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Technical Report El Peñón Mine, Chile

  

21

Capital and Operating Costs

 

The capital and operating costs outlined in this section of the technical report are based on the LOM presented in section 16.7 of this technical report. The capital and operating cost estimates were prepared based on recent operating performance and on Yamana’s current budget forecast. All costs in this section are in US dollars and are based on an exchange rate assumption of 800 CLP: 1 USD.

 

21.1

Capital Costs

 

The LOM capital cost estimate is approximately US$167M and is assumed to support sustaining capital requirements for the mining and processing of mineral reserves over the project’s six-year LOM as well as a small amount of expansionary underground mine development. A summary of the LOM capital costs for El Peñón is given in Table 21-1.

 

Table 21-1: Life of mine capital costs

 

		Total LOM
Item		(US$000)
Mine Development			138,304
Building and Infrastructure			3,348
Hardware and Software			592
Machinery and Equipment			1,132
Vehicles			23,262
Sustaining Capital Cost			166,637
Expansionary Capital Cost			579
Total			167,217

 

Capitalized development consists of 52,324 m, or an average of 10,718 m per year, over the first four years and subsequently declining towards the end of the mine life. Mine closure costs are listed in Table 20-4 in section 20.4 of this technical report and consider progressive and final closure actions as well as post-closure inspection and monitoring.

 

The expected run rate for sustaining capital, including infrastructure, equipment, and mine development is averaged at US$32M per year for the next five years, with spending decreasing in the last year of the mine life.

 

The following are excluded from the capital cost estimate:

 

•

Project financing and interest charges

 

•

Working capital

 

•

Sunk costs

 

21 –Capital and Operating Costs	119
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Technical Report El Peñón Mine, Chile

  

21.2

Operating Costs

 

Operating costs are defined as the direct operating costs and include mining, processing as well as general and administrative costs.

 

The production plan drove the calculation of the mining and processing costs, as the mining mobile equipment fleet, manpower, contractors, power, and consumables requirements were calculated based on specific consumption rates. Consumable prices and labour rates are based on current contracts and agreements.

 

Mining operating costs are forecasted to average US$80.18/t mined over the LOM period, or US$71.57/t processed, when including the 660,000 tonnes of stockpile planned to be reclaimed over the LOM period. Total operating costs are forecasted to average US$116.49/t processed as set out in Table 21-2.

 

Table 21-2: LOM average unit operating costs

 

Item			Total LOM (US$/t processed)
Mining				71.57
Process				29.72
G&A				15.20
Total				116.49

 

21 –Capital and Operating Costs	120
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Technical Report El Peñón Mine, Chile

  

22

Economic Analysis

 

Financial information has been excluded from this technical report as Yamana is a producing issuer and El Peñón is currently in production.

 

Yamana has performed an economic analysis of the current project using a gold price of US$1,250/oz at the forecasted production rates, metal recoveries, and capital and operating cost estimated in this technical report.

 

Yamana confirms that the outcome is a positive cash flow that supports the mineral reserve estimate. Due to the nature of the mining business, these conditions can change significantly over relatively short periods of time. Consequently, actual results may be significantly more or less favourable.

 

22 –Economic Analysis	121
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23

Adjacent Properties

 

There are no adjacent properties that are relevant to this technical report.

 

23 –Adjacent Properties	122
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Technical Report El Peñón Mine, Chile

 

24

Other Relevant Data and Information

 

There is no other relevant data or information regarding El Peñón.

 

24 –Other Relevant Data and Information	123
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Technical Report El Peñón Mine, Chile

 

25

Interpretation and Conclusions

 

More than 5.3 Moz of gold and 134 Moz of silver has been produced at El Peñón since commercial production commenced in 2000. El Peñón’s current production rate, the result of the rightsizing of the operation initiated in late 2016, increased free cash flow generation, reduced capital expenditures while ensuring the long-term sustainability of the mine matching production rate with mineral reserves and mineral resources replacement.

 

Exploration results at El Peñón continue to highlight the expansion potential of the mine and Yamana’s ability to replenish mineral reserves and mineral resources so as to extend the LOM past its current mineral reserve base. Drilling is effective at adding mineral resources and mineral reserves at El Peñón. Similar to drilling results from the previous two years, the 2020 drilling successfully replenished the 2020 depletion of gold mineral reserves. Based on this successful track record, a drilling program totalling 384,000 m is planned from 2021 to 2023.

 

El Peñón mineral resources and mineral reserves have been estimated in conformity with generally accepted CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines (November 2019) and classified in accordance with CIM (2014) Standards. The total proven and probable mineral reserve at El Peñón as of December 31, 2020, is 6.1 Mt averaging 4.66 g/t gold and 147.8 g/t silver, with a metal content of approximately 0.921 Moz of gold and 29.21 Moz of silver. In addition, measured and indicated mineral resources are estimated at 8.0 Mt grading 2.96 g/t gold (0.765 Moz gold) and 98.8 g/t silver (25.5 Moz silver), and inferred mineral resources are estimated at 18.98 Mt grading 1.39 g/t gold (0.850 Moz gold) and 46.1 g/t silver (28.1 Moz silver).

 

The mineral reserves supporting the LOM plan consists of an integrated operation, mining mainly underground ore and a small amount of ore from the Chiquilla Chica open pit. The ore produced by the mining operations and reclaimed from stockpiles is fed to the mill to sustain a six-year mine life. LOM production is estimated at 866 koz gold and 25,591 koz silver.

 

Yamana is confident that, based on required infill drilling, the future conversion of mineral resources to mineral reserves will continue to show positive results. In recent years, mineral resources converted to mineral reserves have more than offset the depletion of mineral reserves; this indicates the significant potential of extending the mine life beyond the current LOM and sustain a strategic mine life of 10 years or more.

 

The capital and operating cost estimates are based on mine budget data and operating experience, and are appropriate for the known mining methods and production schedule. Under the assumptions in this technical report, El Peñón has positive project economics until the end of mine life, which supports the mineral reserve estimate. Capital costs over the LOM period are estimated at US$167M consisting mainly of sustaining underground mine development (83%) and capital required for equipment replacement (14%). An additional US$37M are estimated for mine closure purposes.

 

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Technical Report El Peñón Mine, Chile

 

No environmental or social issues were identified that could materially impact the ability to extract the mineral resources and mineral reserves. Yamana has implemented an integrated HSEC management system covering health, safety, environment, and community through internationally accredited systems that include the ISO 14001 Environment Management System and the OSHAS 18001 Occupational Health and Safety Management System. El Peñón has all the operational licences required for operation according to the national legislation. The approved licences address the authority’s requirements for mining extraction and operation activities.

 

The results of this technical report are subject to variations in operational conditions including, but not limited to the following:

 

•

Assumptions related to commodity and foreign exchange (in particular, the relative movement of gold and the Chilean peso/US dollar exchange rate)

 

•

Unanticipated inflation of capital or operating costs

 

•

Significant changes in equipment productivities

 

•

Geological continuity of the mineralized structures

 

•

Geotechnical assumptions in pit and underground designs

 

•

Ore dilution or loss

 

•

Throughput and recovery rate assumptions

 

•

Changes in political and regulatory requirements that may affect the operation or future closure plans

 

•

Changes in closure plan costs

 

•

Availability of financing and changes in modelled taxes

 

In the opinion of the qualified persons, there are no reasonably foreseen inputs from risks and uncertainties identified in the technical report that could affect the project’s continued economic viability.

 

25 –Interpretation and Conclusions	125
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Technical Report El Peñón Mine, Chile

 

26

Recommendations

 

Based on the information presented in this technical report, the qualified persons recommend the following action items.

 

Over the past 20 years, El Peñón has established an exploration strategy to continually replace depletion of mineral reserves and extend mine life. The strategy involves maintaining a pipeline of mineral resources and exploration potential to maintain a rolling mine life visibility of at least 10 years. To continue this trend, drilling programs should continue to be carried out with the following objectives:

 

•

Infill drilling to replace production by upgrading and extending known mineral resources.

 

•

Expansion exploration drilling to upgrade inferred mineral resources to measured or indicated categories, or to transform zones of geological potential into inferred mineral resources.

 

•

District exploration to test the extension of little-known areas of mineralization or to discover new primary structures by testing targets identified in mapping, geochemistry, geophysics, or machine learning programs.

 

Ongoing exploration success could also unlock the opportunity to leverage the available processing capacity which could increase annual gold and silver production and reduce unit costs.

 

Yamana instituted an Operational Excellence program to improve productivity and control costs. El Peñón should continue to evaluate and prioritize processing plant optimization opportunities and develop an action plan for their implementation.

 

In the underground mine, El Peñón should continue the implementation of Operational Excellence initiatives with an objective to increase productivity, minimize dilution, and reduce operating costs. Mining initiatives include testing of smaller drift profiles for specific sectors, optimized stoping and development face drill patterns, and opportunities to reduce specific consumption of consumables.

 

In 2021, El Peñón should initiate the process of certification for ISO 45001 (replacing OSHAS 18001) and recertification of the ISO 14001 Environment Management System; it should also continue the implementation of the Mining Association of Canada’s Towards Sustainable Mining framework as well as the World Gold Council’s Responsible Gold Mining Principles.

 

26 –Recommendations	126
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Technical Report El Peñón Mine, Chile

 

27

References

 

Astudillo, N.; Ferrando, R.; Montecino, D.; Espinoza, F.; Venegas, C.; Matthews, S.; Cornejo, P.; Arévalo, C. 2017: Carta Augusta Victoria, Región de Antofagasta.Servicio Nacional de Geología y Minería, Carta Geológica de Chile, Serie Geología Básica 189: 97 p., 1 mapa escala 1:100.000. Santiago.

 

Bottinelli, O. C. A., and Valencia, A. M. E., 2016: Informe Técnico de Vida Útil de la Operación Minera (para Ley N° 20.551 sobre Cierre de Faenas e Instalaciones Mineras); Ley N° 20.819 que modifica Ley N° 20.551; Revisión N° 3, August 1, 2016.

 

Canadian Dam Association Dam Safety Guidelines 2007 (2013 Edition). Report available at www.cda.ca

 

Chacón, M. E., Pérez, S. C. M., 2017: Yamana Gold, El Peñón Mine, Region of Antofagasta, Chile, NI 43-101 Technical Report, 144 pp., May 23, 2017.

 

Collins, S. E., Moore, C. M., and Scott, K. C., 2010: Technical Report on the El Peñón Mine, Northern Chile, prepared for Yamana Gold Inc., 132 pp., December 7, 2010.

 

Commission for the Geological Map of the World (CGMW), 2019: Tectonic Map of South America. Second edition, scale 1:5 000 000. ISBN 978-2-917310-26-7.

 

Cornejo, P.; Mpodozis, C.; Rivera, O. & Matthews, S.J., 2006: Carta Exploradora, Regiones de Antofagasta y Atacama. Servicio Nacional de Geología y Minería (SERNAGEOMIN), Santiago, Chile, Carta Geológica de Chile, Serie Geológica Básica, 1:100.000.

 

Donoso, F., 2012: Caracterización Mineralógica de las vetas Bonanza-Aleste y sus implicancias geometalúrgicas, Mina El Peñón, Región de Antofagasta, Memoria para optar al título de Geólogo, Universidad Católica del Norte, Antofagasta, Chile.

 

E-Mining Technology S.A., 2010: Proyecto de Expansion del Deposito de Relaves Filtrado El Peñón. Report prepared for Yamana Gold Inc., April 2010.

 

Ferrando, R.; Espinoza, F.; Matthews, S.; Cornejo, P.; Arévalo, C., 2013: Carta Aguas Blancas, Región de Antofagasta. Servicio Nacional de Geología y Minería, Carta Geológica de Chile, Serie Geología Básica 160. 1 mapa escala 1:100.000. Santiago.

 

FF GeoMechanics Ing. Ltda., 2020: Informe Tecnico de Estabilidad Deposito de Relaves Filtrados El Peñón, Rev 2. Report prepared for Minera Meridian Ltda., January 2020.

 

Gosselin, P., Dubé, B., 2005: Gold deposits of the world: distribution, geological parameters and gold content. Geological Survey of Canada, Open File 4895, 1 CD-ROM.

 

27 –References	127
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Technical Report El Peñón Mine, Chile

 

Jorquera, H., 2016: QAQC Annual Report 2016, prepared for Minera Meridian Ltda., 36 pp., December 15, 2016.

 

John, D.A., Vikre, P.G., du Bray, E.A., Blakely, R.J., Fey, D.L., Rockwell, B.W., Mauk, J.L., Anderson, E.D., and Graybeal, F.T., 2018: Descriptive models for epithermal gold-silver deposits: U.S. Geological Survey Scientific Investigations Report 2010–5070–Q, 247 p., https://doi.org/10.3133/sir20105070Q.

 

Minera Meridian Ltda., 2017: various presentations, procedures, and spreadsheets for El Peñón Mine.

 

Octal Ingeniería y Desarrollo and Magri Consultores Limitada, 2015: Actualización de modelos variográficos – El Peñón, prepared for Yamana Gold Inc., August 5, 2015.

 

Órdenes, J., 2014: Influencia de la Mineralogía de la veta Bonanza en el Procesos Hidrometalúrgico de Lixiviación de Au y Ag, Yacimiento El Peñón, Chile. Tesis para optar al grado de Magíster en Geometalurgia. Universidad Católica del Norte, Antofagasta, Chile, 168 p.

 

Paterson & Cooke, 2021: El Peñon Process Audits. Report prepared for Yamana Gold Inc. Dated February 22, 2021. P&C Project No.: YMA-31-1256. 14p.

 

Pearson, J. L., and Rennie, D. W., 2008: Technical Report on the El Peñón Mine, Chile, Resource Audit, prepared for Yamana Gold Inc., 130 pp., February 11, 2008.

 

Pérez, M., 1999: Alteración Hidrotermal en el Depósito Epitermal de Au-Ag El Peñón, II Región Antofagasta. Memoria para optar al título de Geólogo. Universidad de Chile, Santiago, Chile, 109 p.

 

Robbins, C.H., 2000: Geology of El Peñón Gold-silver Deposit, Northern Chile: The Great Basin and beyond, Geological Society of Nevada, Symposium, Reno 2000, Proceedings, pp. 249-264.

 

RPA, 2018: Technical Report on the El Peñón Mine, Antofagasta Region (II), Chile. NI 43-101 Technical Report prepared by H. Krutzelmann, N. Lecuyer, C.M. Moore, for Yamana Gold Inc. 170 p. March 2, 2018. Available at www.sedar.com.

 

Warren, I., 2005: Geology, Geochemistry and Ore of the El Peñón Epithermal Au-Ag Deposit, Northern Chile: Characteristics of a bonanza-grade deposit and techniques for exploration. PhD Thesis – Geology, University of Auckland.

 

Warren, I., Zuluaga, J. I., Robbins, C. H., Wulftange, W. H., and Simmons, S. F., 2004: Geology and Geochemistry of Epithermal Au-Ag Mineralization in the El Peñón District, Northern Chile; Society of Economic Geologists, Special Publication 11, pp. 113-139.

 

Vega, A. M., 2015: QAQC Annual Report 2015, prepared for Minera Meridian Ltda., 46 pp., December 15, 2015.

 

27 –References	128
Signature Date: March 25, 2021

 

 

Technical Report El Peñón Mine, Chile

 

Vega, A. M., 2014: QAQC Annual Report 2014, prepared for Minera Meridian Ltda., 34 pp., November 2014.

 

Yamana, 2016: Integrated HSEC Framework. Internal document prepared by Yamana, 21 pp., April 2016.

 

Zuluaga, J.I. (2004): Geología y Mineralización del Distrito El Peñón, Segunda Región de Antofagasta, Chile. Tesis de Magíster en Geología Económica, Universidad Católica del Norte, Antofagasta, Chile, 150 p.

 

27 –References	129
Signature Date: March 25, 2021

 

 

Technical Report El Peñón Mine, Chile

 

28

Certificates of Qualified Persons

 

28 –Certificates of Qualified Persons	130
Signature Date: March 25, 2021

 

 

Technical Report El Peñón Mine, Chile

 

Certificate of qualified person – Sergio Castro

 

I, Sergio Castro, Registered Member of the Chilean Mining Commission, as an author of this report entitled “NI 43-101 Technical Report, El Peñón Gold-Silver Mine, Antofagasta Region, Chile” prepared for Yamana Gold Inc. (the Issuer) and dated effective as of December 31, 2020 (the Technical Report), do hereby certify the following:

 

1.

I am Technical Services Manager, El Peñón Mine, at Minera Meridian Limitada, a subsidiary of the Issuer, with an office at Cerro Colorado 5240, Torre Parque II, 9th Floor, Las Condes, Santiago, Chile.

 

2.

I graduated from the Universidad de Antofagasta in 1997 with a degree in Mining Civil Engineering. I am a member of the Chilean Institute of Mining Engineers of Chile and a member of the Chilean Mining Commission N°0225. I have worked as a mining engineer for approximately 23 years since my graduation. My relevant experience for the purpose of the Technical Report is over ten years of experience at El Peñón as mining engineer, currently focused on planning and developing mineral reserves, as well as estimating economic scenarios for short-term, medium-term, and long-term planning.

 

3.

I have read the definition of “qualified person” set out in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

 

4.

I work at El Peñón on a weekly basis and was most recently at the project on March 25, 2021.

 

5.

I am responsible for Sections 13, 15 to 19 (excluding sub-section 18.1), 21, 22 and 24, and share responsibility for related disclosure in Sections 1, 25, 26, and 27 of the Technical Report.

 

6.

I am not independent of the Issuer. I am a full-time employee of Minera Meridian Limitada, a subsidiary of the Issuer.

 

7.

I have had prior involvement with the property that is the subject of the Technical Report in my role at Minera Meridian Limitada since 2009.

 

8.

I have read NI 43-101 and the sections of the Technical Report for which I am responsible have been prepared in compliance with NI 43-101 and Form 43-101F1.

 

9.

At the effective date of the Technical Report, to the best of my knowledge, information, and belief, Sections 13, 15 to 19 (excluding sub-section 18.1), 21, 22 and 24 and related disclosure in Sections 1, 25, 26, and 27 in the Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

 

“Signature”
Sergio Castro, Registered Member CMC	Dated this 25th day of March, 2021

 

28 –Certificates of Qualified Persons	131
Signature Date: March 25, 2021

 

 

Technical Report El Peñón Mine, Chile

 

Certificate of qualified person – Marco Velásquez Corrales

 

I, Marco Velásquez Corrales, Registered Member of the Chilean Mining Commission, as an author of this report entitled “NI 43-101 Technical Report, El Peñón Gold-Silver Mine, Antofagasta Region, Chile” prepared for Yamana Gold Inc. (the Issuer) and dated effective as of December 31, 2020 (the Technical Report), do hereby certify the following:

 

1.	I am Chief Resource Geologist, El Peñón Mine, at Minera Meridian Limitada, a subsidiary of the Issuer, with an office at Cerro Colorado 5240, Torre Parque II, 9th Floor, Las Condes, Santiago, Chile.

 

2.	I graduated from the Universidad Catolica Del Norte in Antofagasta, Chile in 1995 with a degree in Geology. I am a member of the Chilean Mining Commission N°402. I have practiced my profession continuously since 1995. My relevant experience for the purpose of the Technical Report is:

 

•

Resource geologist since 2009 at El Peñón underground/open-pit gold-silver mine Antofagasta, Chile. I am currently the Chief Resource Geologist at the mine.

 

•

Senior production geologist and resource geologist with mining companies in Chile (Mantos Blancos, Minera El Abra, Cerro Colorado), focusing on data quality, sampling, reconciliation, geological modelling, and resource estimation.

 

3.

I have read the definition of “qualified person” set out in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

 

4.	I work at El Peñón on a weekly basis and was most recently at the project on March 25, 2021.

 

5.	I am responsible for Section 11, 12, and 14, and share responsibility for related disclosure in Sections 1, 25, 26, and 27 of the Technical Report.

 

6.	I am not independent of the Issuer. I am a full-time employee of Minera Meridian Limitada, a subsidiary of the Issuer.

 

7.	I have had prior involvement with the property that is the subject of the Technical Report in my role at Minera Meridian Limitada since 2009.

 

8.	I have read NI 43-101 and the sections of the Technical Report for which I am responsible have been prepared in compliance with NI 43-101 and Form 43-101F1.

 

9.

At the effective date of the Technical Report, to the best of my knowledge, information, and belief, Section 11, 12, and 14, and related disclosure in Sections 1, 25, 26, and 27 in the Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

 

“Signature”
Marco Velásquez Corrales, Registered Member CMC	Dated this 25th day of March, 2021

 

28 –Certificates of Qualified Persons	132
Signature Date: March 25, 2021

 

 

Technical Report El Peñón Mine, Chile

 

 

Certificate of qualified person – Henry Marsden

 

I, Henry Marsden, P.Geo., as an author of this report entitled “NI 43-101 Technical Report, El Peñón Gold-Silver Mine, Antofagasta Region, Chile” prepared for Yamana Gold Inc. (the Issuer) and dated effective as of December 31, 2020 (the Technical Report), do hereby certify the following:

 

1.	I am Senior Vice President, Exploration of the Issuer, with an office at Royal Bank Plaza, North Tower, 200 Bay Street, Suite 2200, Toronto, Ontario M5J 2J3

 

2.

I am a graduate of Carleton University, Ottawa, Ontario, with a Master of Science degree in Earth Sciences in 1991, and of the University of British Columbia with a Bachelor of Science degree in Geology in 1987. I am a Professional Geologist, registered the Association of Professional Geoscientists of Ontario (APGO #0885). My relevant experience for the purpose of the Technical Report is:

 

•

I have worked as a geologist for over 30 years since my graduation including over 20 years as a consulting geologist working with a variety of clients and focusing on field exploration work.

 

•

I have played a key role in the discovery and advancement of several mineral deposits including Rio Blanco and Pico Machay in Peru, and the Timmins West gold deposit in Timmins, Ontario.

 

3.

I have read the definition of “qualified person” set out in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

 

4.	I visited the El Peñón project on many occasions since January 2016 and most recently between March 11 and 13, 2020.

 

5.	I am responsible for Sections 2 to 10, 23, and share responsibility for related disclosure in Sections 1, 25, 26, and 27 of the Technical Report.

 

6.	I am not independent of the Issuer. I am a full-time employee of the Issuer.

 

7.	I have had prior involvement on the property in my role with the Issuer and as a consultant geologist on contract in 2016.

 

8.	I have read NI 43-101, and the sections of Technical Report for which I am responsible have been prepared in compliance with NI 43-101 and Form 43-101F1.

 

9.

At the effective date of the Technical Report, to the best of my knowledge, information, and belief, Sections 2 to 10, 23, and related disclosure in Sections 1, 25, 26, and 27 in the Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

 

“Signature”
Henry Marsden, P.Geo.	Dated this 25th day of March, 2021

 

28 –Certificates of Qualified Persons	133
Signature Date: March 25, 2021

 

 

Technical Report El Peñón Mine, Chile

 

Certificate of qualified person – Carlos Iturralde

 

I, Carlos Iturralde, P.Eng., as an author of this report entitled “NI 43-101 Technical Report, El Peñón Gold-Silver Mine, Antofagasta Region, Chile” prepared for Yamana Gold Inc. (the Issuer) and dated effective as of December 31, 2020 (the Technical Report), do hereby certify the following:

 

1.	I am Director, Tailings of the Issuer, with an office at Royal Bank Plaza, North Tower,200 Bay Street, Suite 2200, Toronto, Ontario M5J 2J3

 

2.

I graduated from the University of Kansas with a dual major in Civil Engineering and Mathematics in 2002. I received a MSc. from the University of Tübingen in Applied Environmental Geosciences in 2007. I am a professional engineer with Engineers and Geoscientist British Columbia since 2010 (License # 40153). I have over 18 years of professional experience in the mining industry in technical and management aspects related to tailings management and related infrastructure, including:

 

•

Completion of designs and engineering studies and dam safety reviews of tailings facilities

 

•

Best management practices following the Mining Association of Canada (MAC) and Canadian Dam Association (CDA) proposed framework and dam safety criteria.

 

•

Implementation of risk management and quality management strategies, including QA/QC programs and risk evaluation and mitigation through identification of critical controls.

 

•

Since 2015 I have been an active member of MAC’s tailings working group (TWG) and participated in the development of the 3rd edition of MAC’s tailings management guidelines.

 

3.

I have read the definition of “qualified person” set out in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

 

4.	I have not visited the El Peñón project due to travel restrictions related to the global COVID-19 pandemic.

 

5.	I am responsible for Sections 18.1 and 20 and share responsibility for related disclosure in Sections 1, 25, 26, and 27 of the Technical Report.

 

6.	I am not independent of the Issuer. I am a full-time employee of the Issuer.

 

7.	I have had no prior involvement with the property that is the subject of the Technical Report.

 

8.	I have read NI 43-101, and the sections of Technical Report for which I am responsible have been prepared in compliance with NI 43-101 and Form 43-101F1.

 

9.

At the effective date of the Technical Report, to the best of my knowledge, information, and belief, Sections 18.1 and 20 and related disclosure in Sections 1, 25, 26, and 27 in the Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

 

“Signature”
Carlos Iturralde, P.Eng.	Dated this 25th day of March, 2021

 

28 –Certificates of Qualified Persons	134
Signature Date: March 25, 2021

 

 

Exhibit 99.2

Filed by SEDAR

 

Sergio Castro

Yamana Gold Inc.

Royal Bank Plaza, North Tower

200 Bay Street, Suite 2200

Toronto, Ontario M5J 2J3

 

CONSENT OF QUALIFIED PERSON

 

I, Sergio Castro, Registered Member Chilean Mining Commission, consent to the public filing of the technical report titled “NI 43-101 Technical Report, El Peñón Gold-Silver Mine, Antofagasta Region, Chile” and dated effective December 31, 2020 (the “Technical Report”) by Yamana Gold Inc.

 

I also consent to any extracts from, or a summary of, the Technical Report in the annual information form for the year ended December 31, 2020 dated March 25, 2021 of Yamana Gold Inc. (the “Annual Information Form”).

 

I certify that I have read the Annual Information Form and that it fairly and accurately represents the information in the sections of the Technical Report for which I am responsible.

 

Dated this 25^th day of March, 2021.

 

“Sergio Castro”
Sergio Castro, Registered Member Chilean Mining Commission

 

 

 

Exhibit 99.3

Filed by SEDAR

 

Carlos Iturralde

Yamana Gold Inc.

Royal Bank Plaza, North Tower

200 Bay Street, Suite 2200

Toronto, Ontario M5J 2J3

 

CONSENT OF QUALIFIED PERSON

 

I, Carlos Iturralde, P.Eng., consent to the public filing of the technical report titled “NI 43-101 Technical Report, El Peñón Gold-Silver Mine, Antofagasta Region, Chile” and dated effective December 31, 2020 (the “Technical Report”) by Yamana Gold Inc.

 

I also consent to any extracts from, or a summary of, the Technical Report in the annual information form for the year ended December 31, 2020 dated March 25, 2021 of Yamana Gold Inc. (the “Annual Information Form”).

 

I certify that I have read the Annual Information Form and that it fairly and accurately represents the information in the sections of the Technical Report for which I am responsible.

 

Dated this 25^th day of March, 2021.

 

“Carlos Iturralde”
Carlos Iturralde, P.Eng.

 

 

 

Exhibit 99.4

Filed by SEDAR

 

Henry Marsden

Yamana Gold Inc.

Royal Bank Plaza, North Tower

200 Bay Street, Suite 2200

Toronto, Ontario M5J 2J3

 

CONSENT OF QUALIFIED PERSON

 

I, Henry Marsden, P.Geo, consent to the public filing of the technical report titled “NI 43-101 Technical Report, El Peñón Gold-Silver Mine, Antofagasta Region, Chile” and dated effective December 31, 2020 (the “Technical Report”) by Yamana Gold Inc.

 

I also consent to any extracts from, or a summary of, the Technical Report in the annual information form for the year ended December 31, 2020 dated March 25, 2021 of Yamana Gold Inc. (the “Annual Information Form”).

 

I certify that I have read the Annual Information Form and that it fairly and accurately represents the information in the sections of the Technical Report for which I am responsible.

 

Dated this 25^th day of March, 2021.

 

“Henry Marsden”
Henry Marsden, P.Geo

 

 

 

Exhibit 99.5

Filed by SEDAR

 

Marco Velásquez Corrales

Yamana Gold Inc.

Royal Bank Plaza, North Tower

200 Bay Street, Suite 2200

Toronto, Ontario M5J 2J3

 

CONSENT OF QUALIFIED PERSON

 

I, Marco Velásquez Corrales, Registered Member Chilean Mining Commission, consent to the public filing of the technical report titled “NI 43-101 Technical Report, El Peñón Gold-Silver Mine, Antofagasta Region, Chile” and dated effective December 31, 2020 (the “Technical Report”) by Yamana Gold Inc.

 

I also consent to any extracts from, or a summary of, the Technical Report in the annual information form for the year ended December 31, 2020 dated March 25, 2021 of Yamana Gold Inc. (the “Annual Information Form”).

 

I certify that I have read the Annual Information Form and that it fairly and accurately represents the information in the sections of the Technical Report for which I am responsible.

 

Dated this 25^th day of March, 2021.

 

“Marco Velásquez”
Marco Velásquez Corrales, Registered Member Chilean Mining Commission

 

 

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