Cotabambas

Panoro announced in September 2015 that it has received the results of an updated independent Preliminary Economic Assessment (“PEA”) of the Company’s 100% owned Cotabambas porphyry copper-gold-silver project in Peru. The results show strongly improved economics compared with PEA results announced on April 9, 2015 as the result of an optimized mine plan and processing cut-off grade strategy along with associated improvements to waste rock and tailings management.

Highlights

  • At the updated base case prices of copper at $3.00/lb, gold at $1,250/oz and silver at $18.50/oz:
    • After tax economic metrics of:
      • NPV(7.5%) of $US 683.9 million, increased from $US 379.4 million;
      • IRR of 16.7%, increased from 11.8%; and
      • Payback of 3.6 years, decreased from 4.8 years
    • Pretax economic metrics of:
      • NPV(7.5%) of $US 1,052.6 million, increased from $US 647.9 million;
      • IRR of 20.4%, increased from 14.2%; and
      • Payback of 3.2 years, decreased from 4.4 years
  • Decreased average direct cash costs (C1) to $US1.22 per pound of copper, decreased from $US1.26, net of by product credits
  • Increased average annual payable metal of:
    • Copper 155.1 million pounds, increased from 143.3 million pounds;
    • Gold 95.1 thousand ounces, increased from 88.0 thousand ounces; and
    • Silver 1,018.4 million ounces, increased from 967.2 thousand ounces.
  • As a comparison only with the now superseded prices used in the April 2015 PEA: copper at $3.25/lb, gold at $1,300/oz and silver at $20.50/oz, after tax economic metrics of:
    • NPV(7.5%) of $US 961.6 million, increased from $US 627.5 million;
    • IRR of 19.9%, increased from 14.4%; and
    • Payback of 3.1 years, decreased from 4.0 years

NI 43-101 Technical Report

In April 2015 Panoro announced the results of the Preliminary Economic Assessment (PEA) for the Cotabambas Cu/Au/Ag Project. The highlights of the PEA include:

  • Pre-tax NPV(7.5%) is US$ 981.7 million, IRR is 17.3% and payback is estimated at 3.6 years
  • After-tax NPV(7.5%) is US$ 627.5 million, IRR is 14.4% and payback is estimated at 4.0 years
  • Conventional open pit mining and flotation processing at a design throughput of 80,000 tonnes per day with a mine life of 19 years
  • Average annual payable copper of 143.4 million pounds
  • Average annual payable gold of 88.0 thousand ounces
  • Average annual payable silver of 967.2 thousand ounces
  • Average direct cash costs (C1) of US$1.26 per pound of copper, net of by product credits
  • Initial project capital costs of US$ 1.38 billion, including contingencies
  • Good potential for discovery of additional mineralization

Panoro announced the updated resources estimate for the Cotabambas Project in October 2013. The project contains a Base Case NI 43-101 Indicted mineral resource estimate of 117.1 million tonnes at 0.42% Cu, 0.23 g/t Au and 2.74 g/t Ag and 0.0013%Mo at a cut-off of 0.20 % Cueq within a Mineral Resource Pit Shell. Also an Inferred mineral resource estimate of 605.3 million tonnes at 0.31% Cu, 0.17 g/t Au, 2.33 g/t Ag and 0.0019% Mo at a cut-off of 0.20% Cueq 0within a Mineral Resource Pit Shell. A High Grade Component of Mineral Resources within the Mineral Resource Pit Shell contains 60.7 Mt of Indicated Mineral Resources at 0.61% Cu, 0.34 g/t Au, 3.53 g/t Ag and 0.0005%Mo at a cut-off of 0.40% Cueq and 216.4 Mt 0.49%Cu, 0.25 g/t Au, 2.77 g/t Ag and 0.0014% Mo at a cut-off of 0.40% Cueq. The project has confirmed preliminary metallurgical recoveries previously published of 87% Cu, 62% Au and 60% Ag into a clean concentrate grading 27% Cu, 11.9 g/t Au and 152 g/t Ag. The potential to significantly increase resource tonnage, at least partially within the current conceptual pit shell, and maintain grade on the basis of strong porphyry mineralization east of the stated base-case mineral resource estimate area have been identified. The 2013 resource estimate was carried out by Tetra Tech and the details are available here.

The 2013 resource update supersedes the 2012 resource which included a Base Case NI 43-101 Inferred mineral resource estimate of 404.1 Mt at 0.42% Cu, 0.23 g/t Au and 2.84 g/t Ag at a cut-off of 0.20 % Cueq within a Mineral Resource Pit Shell. The 2012 resource estimate was carried out by AMEC Peru S.A. and the details are available here.

Prior to this update, the Cotabambas project contained an estimated resource of 90 million tonnes within the Ccalla Porphyry with an average Copper grade of 0.77% and an average Gold grade of 0.42 g/t applying a cut-off grade of 0.4% Copper. The resource estimate was carried out by SRK Consulting and the details are available here.

Further exploration work at the Cotabambas project is planned. An infill drilling program is planned to upgrade the resource classification while step out drilling at the Ccalla Deposit will target growth of resource. A number of other geologic targets clustered around the Ccalla Porphyry have been targeted for more detailed exploration. Environmental and Engineering studies are planned evaluate potential enhancements to the current project definitions included in the PEA. The overall objectives for the project are to move into the execution of Prefeasibility and Feasibility studies while concurrently completing and Environmental Baseline and Impact Studies.

Luis Vela, P. Geo., Vice President of Exploration for Panoro and a “qualified person” under National Instrument 43-101, has reviewed and approved the scientific and technical information.

EXPLORATION POTENTIAL

Highlights

The exploration work on the property has continued to outline a number of porphyry-style mineralized zones grouped in two main Clusters, where multiple intrusions of porphyry and skarn type mineralization were recognized with anomalous copper, gold, silver and molybdenum (see Map 5 July 2016 – Cotabambas Cluster 1 & Cluster 2). Cluster 1 is located in the north-northeast side of the property, in a geologic environment governed entirely by igneous rocks. Six mineralized porphyries intruding along two parallel structural controls in a NE-SW direction were found in an area of 4-km by 8-km: Ccalla and Azulccacca (included in current resource estimate), Maria Jose, Cochapata, Buenavista and Guaclle (see Figure 1 in press release of June 23, 2014). Most of these targets have not been drilled as yet and represent prime targets for continued exploration with the potential to significantly increase the property resource base.

Cluster 2 is located in the south-southwest side of the property, along the regional contact between the Andahuaylas-Yauri Batholite (medium upper cretassic age) and the carbonate rocks of Ferrobamba formation (lower tertiary age) striking in NW-SE direction within Panoro’s concessions. Cluster 2 is also located and extended along this structural and lithological contact hosting skarn/porphyry type mineral occurrences in an area of 4-km by 12-km, including: Chaupec, Cullusayhua, Jean Louis, Chuyllullo, Cayrayoc and, Añarqui. In general, the skarn mineralization in Chaupec has the highest grades found yet at the Cotabambas project (see Map 3 July 2016 - Target Chaupec Copper Potential).



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