FEASIBILITY STUDY

LAS CRISTINAS GOLD PROJECT

Bolivar State, Venezuela

September 2003

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EXECUTIVE SUMMARY

1.1

Introduction

In response to a verbal request from Crystallex International Corporation (Crystallex),

in December, 2002, SNC-Lavalin Engineers & Constructors (SNC-Lavalin) submitted
a proposal dated January 10, 2003 to prepare a feasibility study for the Las Cristinas
gold project. The feasibility study proposal was accepted on February 6, 2003 and
SNC-Lavalin was authorized to proceed with the project immediately. A formal
contract for the feasibility study has been executed.
Section 2.2 of this report summarizes the terms of reference of SNC-Lavalin and
other participants in the study. The terms of reference and scope of services are
conventional for the type of study completed, one that could be presented to financial
institutions for the purpose of raising financing to construct and commission the
project.
The key findings of the Las Cristinas Gold project are summarized in the bullet points
below and explained in more detail in the body of the report:

Location

Bolivar State, South Eastern Venezuela

Mineralization

2% to 5% sulphides (pyrite and chalcopyrite)

Reserves

246 million t (1.29 g/t average grade,10.2 million oz.)

Gold Recovery

89.0 %

Gold Recovered

9.1 million ounces

Annual Gold Production

o
o

266,000 oz. life of mine

311,000 oz. first five years

Operating Cost

$6.70/t
royalty)

Capital Cost

$243 million (excludes $38 million of refundable VAT)

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($182/oz without royalty, $196/oz with

Sustaining Capital

$160 million (without VAT)

Mine Life

34 years

Mining Equipment

Trucks and Shovels

Mine Stripping Ratio

1.34 to1

Process Plant

Conventional Gravity and Carbon-in Leach

At a gold price of $325/oz the project is estimated to have the following results:

o
o
o
o

IRR
Net Cash Flow
NPV at 5%
Payback

Before Tax

After Tax

13.8%
$742.4 million
$238.5 million
4.7 years

10.5%
$515.9 million
$139.7 million
6.9 years

Environmental Risks
o
o
o
o
o

Effluent Discharge Low

Tailings Dam Failure Low
Closure Challenges Low
Acid Generation Potential Low to Marginal
Permitting expected to be straight forward

The report was prepared by SNC-Lavalin with input from others and also Crystallex,
through the provision of numerous technical reports. Sections of the report that have
been primarily prepared by others are as noted below:
Section 3 Property Description and Location

Mine Development Associates MDA)

Section 4 Geology, Mineral Resources and

Mineral Reserves

Mine Development Associates (MDA)

Section 5 Mining

Mine Development Associates (MDA)

Section 6 Metallurgy

J.G. Goode and Associates

Section 10 Administration and Operations

Harapiak-Buckland

Section 13 Project Economics

SNC-Lavalin Capital

On behalf of Crystallex MDA carried out confirmatory drilling, a review of the geology,
reserves estimates were computed and a mine plan was developed; SGS Lakefield
Research (Lakefield) ran a metallurgical carbon-in-leach pilot plant for 21 days

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treating 1 tonne of representative drill core; SNC-Lavalin completed preliminary

engineering design of the major facilities. Where other sources of information have
been used in preparing this report they are referred to in the applicable sections.
1.2

Property Description and Location

The Las Cristinas Property consists of 4 contiguous concessions (LC 4-5-6-7)

totaling 3,885.6 hectares. The property is located in Bolivar State, southeastern
Venezuela, 6 km west of the village of Las Claritas and approximately 670 km
southeast of Caracas. Access to the property is via Troncal 10, the main paved
highway linking Puerto Ordaz with the Brazilian border. A soon to be upgraded 19
km unpaved road will connect Troncal 10 to the Las Cristinas camp. Current access
is via a 6 km dirt road from Las Claritas. An air strip at Las Cristinas allows for the
landing of small aircraft. Commercial airstrips are located at El Dorado and Luepa, 80
km north and south , respectively, relative to Las Cristinas. The concessions are
located in flat terrain at elevations ranging from 130 m to 160 m above sea level. The
climate is tropical and humid.
On September 17, 2002, Crystallex and the Compaia Venezolana de Guayana
(CVG) signed a Mining Operation Contract (MOC) for the development of Las
Cristinas 4, 5, 6 and 7. The MOC provides Crystallex with the exclusive right to
explore, design and construct facilities, exploit, process and sell gold from Las
Cristinas. An official translated version of the MOC is available on the Companys
website (www.crystallex.com).
The MOC has been entered into in accordance with applicable Venezuelan laws and
under authority granted to the CVG by the Ministry of Energy and Mines. A report in
late February, 2003 from the Commission of Energy and Mines of the National
Assembly of Venezuela confirms the legal and administrative process by which the
contract rights of Minca, a previous partner with the CVG, were terminated. The
report also confirms the process by which the related assets were acquired by the
Republic of Venezuela, and by which the government, through the CVG, entered into
the Mining Operation Contract with Crystallex.

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1.3
1.3.1

Geology and Resources

Geology and Mineralization

The Las Cristinas property is located in a part of the Archean to early Proterozoic
granite-greenstone terrain of the Guayana Shield. Supracrustal sequences on the
property are predominantly intermediate metavolcanic and pyroclastic rocks. Several
rock types intrude the stratigraphic package; some post-date the mineralization.
There are two main deposits at Las Cristinas: Conductora/Cuatro Muertos and
Mesones/Sofia. At Conductora/Cuatro Muertos, gold and copper mineralization are
associated with pyrite-chalcopyrite disseminations, veinlets (2-5% sulfides) and blebs
generally oriented parallel to the foliation, which strikes north-northeast and dips
moderately to steeply west to southwest. The occurrence of sulfide mineralization is
not associated with any particular rock type, but rather, with alteration assemblages
that include secondary biotite and a younger carbonate-epidote assemblage. On a
microscopic scale, gold can be found as free grains in quartz and as blebs and
fracture fillings in pyrite and/or chalcopyrite. Silicate-carbonate-sulfide veins tend to
parallel foliation.
At Mesones/Sofia, gold-copper mineralization occurs within
tourmaline breccia zones, which have obliterated primary tuffaceous textures.
Sulfide concentrations are coarser grained and more chalcopyrite rich than those at
Conductora/Cuatro Muertos.
Extensive weathering has led to the development of saprolite to depths of over 90 m
locally. The upper part of the saprolite is oxidized. Within the oxidized saprolite,
copper has been predominantly leached, but the gold remains generally in its original
distribution. The sulfide saprolite, which has been enriched in copper leached from
the overlying oxide saprolite, also retains the original gold distribution. Copper and
gold grade distributions in the bedrock have not been affected by weathering.
Data and Verification
Under the terms of the September 2002 agreement between Crystallex and the CVG
Crystallex obtained an electronic database from CVG, which included drill,
topographic, geologic, and engineering data.. Presently, data from 1,174 drill holes
and 108 trenches are included in the Las Cristinas database (Table 1-1).

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Table 0-1 Drill Data Description

Data

Data
Drill holes

1,174

Meters of drilling*

160,600

Gold assays

162,806

Copper assays

145,547

Copper CN Soluble
assays

40,655

Silver assays

145,221

Trenches

108

*Includes trenches

Mine Development Associates (MDA) visited the Las Cristinas site in October 2002
and found drill pads, drill collars, drill core and samples, core photographs, and other
supporting data demonstrating that exploration was done in a fashion described in
the documentation of Placer Dome Incs (PDI) work. Based on the previous
operators descriptions, exploration and sampling procedures conform to or exceed
industry standards. Nevertheless, Crystallex drilled 2,188 m in twelve diamond drill
holes, for a total of 1,087 core samples, to verify the presence and tenor of
mineralization. In addition, 275 quality assurance/quality control (QA/QC) samples
were analyzed. The Crystallex drill results and check samples corroborate the
general tenor of gold mineralization reported by the previous operator. For additional
confirmation, Crystallex re-assayed 262 pre-existing pulps, 200 pre-existing coarse
rejects and 342 pre-existing quarter core samples. Mean grades are similar for both
datasets.
1.3.2

Resources

MDA completed a resource model that incorporated geology and analytical data.
The model contains estimates of gold, copper, cyanide soluble copper, silver, rock

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type, rock density and metallurgical type. The estimation process began with the
creation of cross sections and interpretation of the geology. Once the geologic
model was defined, mineral domains for gold and copper were identified and
modeled. All of this data was refined on level plans and used to code the block
model.
There are seven material/rock types defined in the Las Cristinas model, listed from
the deepest to the surface: carbonate-stable bedrock (CSB), carbonate-leached
bedrock (CLB), saprock, sulfide saprolite (SAPS), mixed sulfide and oxide saprolite,
oxide saprolite (SAPO), and overburden. Gold was modeled in three mineral
domains (unmineralized, low-grade and higher-grade) across all material types
except overburden. Copper was modeled in four separate geologic domains: a)
bedrock and saprock (a thin veneer of partially saprolitized rock lying on top of the
bedrock); b) saprolite sulfide and mixed saprolite zones; c) oxide saprolite; and d)
overburden. For Mesones/Sofia, the bedrock copper was also modeled in three
copper domains. Silver was modeled without domains across all material types
except for overburden, which was estimated separately. A summary of the total gold
resources, following National Instrument 43-101 classifications, is given in Table 1-2.
Table 0-2 Las Cristinas Mineral Resources (Including Reserves)
Total Measured and Indicated
Cutoff
Tonnes
Gold
(g Au/t)
(g/t)
0.5
438,931,000
1.09
0.6
354,171,000
1.22
1.0
169,467,000
1.72

Gold
Ounces
15,328,000
13,841,000
9,354,000

Total Inferred
Cutoff

Tonnes

Gold

Gold

(g Au/t)
(g/t)
Ounces
0.5
207,889,000
0.91 6,064,000
0.6
144,999,000
1.07 4,966,000
1.0
47,726,000
1.76 2,703,000
*Note (1) Mineral Resources include mineral reserves
(2) Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

For comparison, the last resource estimate reported by Placer, at a cutoff of 0.6 g
Au/t, totaled 448,857,000 tonnes grading 1.19 g Au/t, for a total of 17,200,000
ounces of gold, which compares to the MDA total of 499,000,000 tonnes grading
1.17 g Au/t for a total of 18,807,000 ounces of gold (Measured, Indicated and
Inferred; reported together for comparison purposes only). MDAs estimated
resource is larger presumably because Placers reported resource is that material

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contained within the limits of an optimistic pit, whereas the MDA resource is not
limited.
1.3.3

Interpretations and Conclusions

Las Cristinas contains a gold deposit that is unique in terms of its geologic
characteristics and size. The geometry and size of the deposit give the project
operational flexibility that will allow optimal exploitation. The deposit is open ended at
depth and, with increased metal prices, decreased costs, and/or increased
metallurgical recoveries, reserves could increase. Additional drilling may result in
upgrading some or all of the Inferred resources to Measured or Indicated, which
could add to reserves.
As in all projects, there are certain aspects of the project and resource estimate that
can use additional study. The following recommendations regarding the geology and
resources are given not to show deficiencies, but rather to provide a higher level of
understanding of the project.
Additional drilling should be done which may upgrade resources from Inferred to
Measured and Indicated which could potentially increase reserves. Given the same
economic, mining, and engineering criteria, it is likely that the reserves can be
increased at depth but potentially also at Potaso where drilling could not be done in
an area of historic mining.
In a future stage there will be a heterogeneity study carried out to optimize sampling
protocol and minimize sample variance.
1.4

Reserves and Mining

The Las Cristinas deposit is planned to be mined as a conventional truck/shovel

operation. The bedrock will be mined by Crystallex using hydraulic excavators and
standard-rear-wheel-drive-haul trucks while the saprolite material will be mined by a
contractor using a different equipment fleet more suited to the material
characteristics. This strategy is based on Crystallex experience in similar conditions
in Venezuela.
Deposit reserves were developed by MDA from the MDA resource model using the
Canadian Institute of Mining, Metallurgy and Petroleum reserve definitions. The
reserves are summarized in Table 1-3.

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Table 0-3 Las Cristinas Reserves

Category

Ore

Grade

(applies to ore only)

Bedrock
Saprolite

kt
36,620
26,147
10,473
187,117
144,358
42,759
21,922
12,754
9,168
36,620
26,147
10,473
209,039
157,112
51,927

(Au g/t)
1.38
1.37
1.41
1.27
1.30
1.20
1.24
1.32
1.11
1.38
1.37
1.41
1.27
1.30
1.18

Contained
Au oz
x1000
1,625
1,150
475
7,669
6,025
1,644
871
543
328
1,625
1,150
475
8,540
6,567
1,973

Bedrock
Saprolite

245,659
183,259
62,400

1.29
1.31
1.22

10,165
7,717
2,447

Deposit
PROVEN
Conductora

Bedrock
Saprolite
PROBABLE
Bedrock
Saprolite
PROBABLE

Mesones/Sophia

Bedrock
Saprolite
PROVEN

Total

Total

Bedrock
Saprolite
PROBABLE

PROVEN &
PROBABLE

Waste

Strip

kt

Ratio

Total
Bedrock
Saprolite

296,962
240,433
56,529

Total
Bedrock
Saprolite

31,537
15,286
16,251

Total
Bedrock
Saprolite

328,499
255,719
72,780

Total
Bedrock
Saprolite

328,499
255,719
72,780

1.33:1

1.44:1

1.34:1

1.34:1

Parameters used to develop the reserves, define cutoffs and develop pit designs are
summarized in Tables 1-4 and 1.5.

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Table 0-4 Pit Design Parameters

Description
CSB Gold plant recovery
CLB Gold plant recovery
SAPO Gold plant recovery
SAPS Gold plant recovery
Specific gravity (varies by rock type)
Saprolite bench height (double benched 12m)
Bedrock bench height
Road width
Maximum road grade saprolite
Maximum road grade bedrock
Overall slope angle in saprolite
Overall slope angle in CLB
Overall slope angle in CSB east wall
Overall slope angle in CSB west wall
Slope angle south wall all rocks
Overall slope angle in deep saprolite >70 m

Value
87.6%
87.6%
98.0%
86.8%
1.56-2.79
6m
12m
25m
8%
10%
35
45
45
50+
25
30

Table 0-5 Economic Parameters

Value
$325
$1.00
$1.17
$0.31
$3.81
$3.11
$2.11
$4.44
2204.62
31.1035
99.8%
$1.50
1.0%
1.5%
2.0%
3.0%
3.0%
1
2

Description
Gold price
Cost of mining bedrock
Cost of mining saprolite
General and Administration
Cost of milling-processing CSB
Cost of milling-processing CLB
Cost of milling-processing SAPO2
Avg Cost of milling-processing SAPS2
(saps cost=2.487+0.0024235*CNSCu)
Pounds per tonne conversion
Grams per oz conversion
Gold payable in dore oxide
Gold refining oxide
CVG Royalty on gold
If gold is <= $280/oz
If gold is < $350/oz and > $280/oz
If gold is < $400/oz and >= $350/oz
If gold is >= $400/oz
Venezuelan Exploitation Tax

Units (US$)
$/oz
$/DMT1
$/DMT1
$/DMT1 ore
$/DMT1 ore
$/DMT1 ore
$/DMT1 ore
$/DMT1 ore
lb/tonne
g/oz
%
$/oz
%
%
%
%
%

DMT = Dry Metric Tonne

Saprolite processing cost includes $0.24/t for ore control

MDA used Medsystem-MineSight computer software to develop and report the

reserves. The general procedure was to generate a suite of ultimate pit shells for a

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10

range of gold prices using the Medsystem Lerchs-Grossmann program. A specific pit
shell, based on the $325 gold price was chosen as a template for the final pit design.
The final design includes haul ramps and excludes areas that cannot be mined. (The
Lerchs-Grossmann program does not produce a designed pit.) Two separate pits
were designed, the larger Conductora, which contains the bulk of the reserves and
the Mesones/Sofia (referred to as Mesones). The Conductora pit was divided into
five phases or pushbacks to improve project economics and delay waste mining as
much as possible.
The pit slope angles were reviewed by Brawner Engineering Ltd (Vancouver B.C.,
Canada) which confirmed their appropriateness.
Waste dumps which follow were designed using Placer Dome criteria, general
industry standards. Because there is the potential for some of the mined waste to be
acid generating, this material will be encapsulated within the largest of the dumps
and surrounded by acid neutralizing materials. Placer Dome estimated that
approximately 31 million tonnes of saprolite sulfide and carbonate-leached bedrock
waste need encapsulation.
The final pit and dump designs are shown in Figure 1-1.

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11

Figure 1-1
Pit and Dump Designs

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12

Because the region experiences considerable rainfall, over three metres per year on
average, water will be a major factor in mining. Groundwater flows from Placer
Dome documents were used to determine the amount of inflow expected in the pits.
Measured rainfall from a weather station on the site was used for the surface water
flows. SRK Consultants of Santiago Chile reviewed the available documentation and
developed anticipated inflows using computer modeling techniques.
The mine production schedule developed by MDA is based on providing the plant
with 20,000 tonnes of ore per day, or 7.3 million ore tonnes per year. This schedule
results in a mine life of just under 34 years. Waste to ore stripping ratios range from
0.21:1 in the second quarter of the first production year to a maximum of 3.0:1 in year
28. Saprolite oxide ore is accessible on the surface from startup. During the preproduction period 7.0 million tonnes of saprolite are mined, 5.5 million of which are
ore and are stockpiled until bedrock ore is available. The production schedule is
shown in Table 1-6.
The cut-offs range from 0.37 g/t to 0.69 g/t depending on material type.

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13

Table 0-6 Production Schedule

P r o d u c tio n
Y e a r

P re

P r o d u c tio n

C o n ta in e d

Q 2

Q 3

Q 4

6 -1 0

1 1 -1 5

1 6 -2 0

2 1 -2 5

1 ,8 2 5

1 ,8 2 5

1 ,8 2 5

7 ,3 0 0

7 ,3 0 0

7 ,3 0 0

7 ,3 0 0

7 ,3 0 0

3 6 ,5 0 0

3 6 ,5 0 0

3 6 ,5 0 0

3 6 ,5 0 0

2 ,7 4 7

2 ,5 4 6

2 ,9 5 7

2 ,7 5 5

1 1 ,0 0 5

1 0 ,6 2 9

1 0 ,1 2 5

1 0 ,5 4 4

1 0 ,4 7 7

4 3 ,0 0 4

4 4 ,5 9 1

4 9 ,1 8 3

4 3 ,9 3 5

8 8

8 2

9 5

8 9

3 5 4

3 4 2

3 2 6

3 3 9

3 3 7

1 ,3 8 3

1 ,4 3 4

1 ,5 8 1

1 ,4 1 3

1 .5 1

1 .4 0

1 .6 2

1 .5 1

1 .5 1

1 .4 6

1 .3 9

1 .4 4

1 .4 4

1 .1 8

1 .2 2

1 .3 5

G o ld

(% )

9 4 .0 %

9 3 .5 %

9 3 .9 %

9 3 .2 %

9 3 .7 %

9 1 .9 %

9 1 .2 %

9 0 .7 %

9 0 .3 %

8 9 .9 %

8 8 .7 %

8 8 .5 %

8 8 .2 %

G o ld , k g

2 ,5 8 2

2 ,3 8 0

2 ,7 7 6

2 ,5 6 8

1 0 ,3 0 7

9 ,7 7 0

9 ,2 3 5

9 ,5 6 6

9 ,4 6 2

3 8 ,6 7 8

3 9 ,5 6 2

4 3 ,5 3 6

3 8 ,7 4 7

8 3

7 7

8 9

8 3

3 3 1

3 1 4

2 9 7

3 0 8

3 0 4

1 2 4 4

1 2 7 2

1 4 0 0

1 2 4 6

G o ld , k g

R e c o v e ry

R e c o v e re d

G o ld , o z

S a p r o lite

O x id e

P e rc e n ta g e
A u

G o ld

G o ld , k g

G o ld , o z

R e c o v e re d

S a p r o lite

A u

G o ld

G o ld

G o ld

2 8 4 7
9 2

G o ld , k g

1 ,6 5 5

1 ,4 1 4

1 ,7 5 4

1 ,4 5 7

6 ,2 7 9

4 ,3 9 9

3 ,5 1 1

3 ,1 6 9

2 ,7 3 8

9 ,7 4 5

5 ,1 0 1

4 ,6 2 1

2 ,7 9 0

5 3

4 5

5 6

4 7

2 0 2

1 4 1

1 1 3

1 0 2

8 8

3 1 3

1 6 4

1 4 9

9 0

( 0 0 0 's )
(k t)

o f T o ta l
G o ld , k g
( 0 0 0 's )
(% )

G o ld , k g
( 0 0 0 's )

B e d ro c k

(k t)

o f T o ta l
G o ld , k g
( 0 0 0 's )
(% )

G o ld , k g
( 0 0 0 's )

B e d ro c k

(k t)

o f T o ta l
G o ld , k g
( 0 0 0 's )
(% )

G o ld , k g
( 0 0 0 's )

O x id e

P re
(k t)
(k t)

S ta b le

B e d ro c k

(k t)

T O T A L
S T O C K P IL E
O x id e

P re

(k t)

S u lp h id e

(k t)

T O T A L
S T O C K P IL E
O x id e

P re

(k t)

S u lp h id e

(k t)

V O L U M E S

P r o d u c tio n

P re

5 1 1

5 1 1

5 1 1

5 1 1

2 ,5 5 5

3 ,6 5 0

3 ,6 5 0

3 ,6 5 0

0 .0 %

0 .0 %

0 .0 %

0 .0 %

0 .0 %

7 .0 %

7 .0 %

7 .0 %

7 .0 %

7 .0 %

1 0 .0 %

1 0 .0 %

1 0 .0 %

0 .0 0

0 .0 0

0 .0 0

0 .0 0

0 .0 0

1 .7 8

1 .7 8

1 .7 6

1 .3 8

1 .3 7

1 .4 0

1 .3 3

1 .2 5

9 1 2

9 1 1

9 0 0

7 0 3

3 5 0 7

5 1 0 8

4 8 6 3

4 5 4 8

2 9

2 9

2 9

2 3

1 1 3

1 6 4

1 5 6

1 4 6

8 6 .8 %

8 6 .8 %

8 6 .8 %

8 6 .8 %

8 6 .8 %

8 6 .8 %

8 6 .8 %

8 6 .8 %

8 6 .8 %

8 6 .8 %

8 6 .8 %

8 6 .8 %

8 6 .8 %

7 9 2

7 9 1

7 8 1

6 1 1

3 ,0 4 4

4 ,4 3 4

4 ,2 2 2

3 ,9 4 8

2 5

2 5

2 5

2 0

9 8

1 4 3

1 3 6

1 2 7

9 1 2

9 1 2

9 1 2

9 1 2

3 ,6 4 8

3 ,3 6 4

2 ,4 9 0

1 ,0 2 4

5 3 6

1 6 ,0 3 6

6 ,4 3 5

1 ,1 9 9

1 2 ,8 9 2

5 0 .0 %

5 0 .0 %

5 0 .0 %

5 0 .0 %

5 0 .0 %

4 6 .1 %

3 4 .1 %

1 4 .0 %

7 .3 %

4 3 .9 %

1 7 .6 %

3 .3 %

3 5 .3 %

1 .1 6

1 .2 1

1 .2 8

1 .3 9

1 .2 6

1 .4 3

1 .4 7

1 .4 9

1 .4 6

1 .1 9

1 .2 1

0 .9 8

1 .0 4

1 0 5 8

1 1 0 4

1 1 6 7

1 2 6 8

4 5 9 6

4 8 1 1

3 6 6 0

1 5 2 6

7 8 3

1 9 0 6 9

7 7 6 1

1 1 7 1

1 3 4 7 0

3 4

3 5

3 8

4 1

1 4 8

1 5 5

1 1 8

4 9

2 5

6 1 3

2 5 0

3 8

4 3 3

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

9 2 7

9 6 7

1 ,0 2 3

1 ,1 1 0

4 ,0 2 7

4 ,2 1 4

3 ,2 0 6

1 ,3 3 7

6 8 6

1 6 ,7 0 5

6 ,7 9 9

1 ,0 2 6

1 1 ,8 0 0

3 0

3 1

3 3

3 6

1 2 9

1 3 5

1 0 3

4 3

2 2

5 3 7

2 1 9

3 3

3 7 9

2 8 6

1 ,1 6 0

2 ,6 2 6

3 ,1 1 4

8 ,4 9 2

2 1 ,1 2 0

2 6 ,9 0 6

1 7 ,0 3 8

0 .0 %

0 .0 %

0 .0 %

0 .1 %

0 .0 %

3 .9 %

1 5 .9 %

3 6 .0 %

4 2 .7 %

2 3 .3 %

5 7 .9 %

7 3 .7 %

4 6 .7 %

0 .0 0

0 .0 0

0 .0 0

0 .8 3

0 .8 3

1 .4 6

1 .7 0

1 .8 6

1 .9 9

1 .2 3

1 .2 6

1 .4 3

1 .3 5

4 1 8

1 9 7 2

4 8 8 4

6 1 9 7

1 0 4 8 4

2 6 5 1 7

3 8 4 3 3

2 3 0 7 1

1 3

6 3

1 5 7

1 9 9

3 3 7

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

8 7 .6 %

3 6 6

1 ,7 2 7

4 ,2 7 9

5 ,4 2 8

9 ,1 8 4

2 3 ,2 2 9

8 5 3

3 3 ,6 6 7

1 2 3 6

2 0 ,2 1 0

7 4 2

1 2

5 6

1 3 8

1 7 5

2 9 5

7 4 7

1 0 8 2

6 5 0

Q 1

2 1 -2 5

Q 2

Q 3

Q 4

6 -1 0

1 1 -1 5

1 6 -2 0

1 ,2 0 8

7 4

2 2

1 2 8

5 0 8

7 3 2

1 ,9 3 8

2 ,6 9 6

3 ,0 3 8

2 ,2 9 5

1 0 ,7 4 8

1 0 ,1 6 6

9 ,1 2 9

1 0 1

2 6 8

2 7

7 4

3 6 9

2 0

4 2

1 ,9 5 1

6 ,3 9 7

1 ,4 3 5

9 ,7 6 9

7 ,6 7 2

7 0 9

5 6 3

4 3 9

3 8 8

2 ,0 9 9

1 ,2 8 5

6 7 0

1 ,1 7 8

1 ,3 1 6

1 9 ,0 9 6

6 ,1 6 9

3 ,0 5 2

2 3 ,8 5 6

5 1 4

1 6 4

4 5 2

5 1 2

1 0 1

9 ,3 5 0

3 2 ,0 8 2

1 7 ,1 8 8

1 9 ,5 0 4

1 ,3 0 9

1 ,0 5 1

6 1 2

6 4 2

9 0 1

3 ,2 0 6

3 ,4 0 7

3 ,8 1 8

4 ,7 7 0

5 ,6 6 3

4 5 ,5 9 1

4 9 ,8 5 2

3 9 ,1 3 8

5 1 ,5 4 6

6 -1 0

1 1 -1 5

1 6 -2 0

2 1 -2 5

P r o d u c tio n

4 ,6 7 9

3 7 6

7 0 6

1 ,0 8 2

1 4 0

5 ,6 6 5

2 ,3 9 9

8 4 3

2 ,3 3 0

7 4 6

8 0 8

1 2 8

4 ,0 1 2

7 0 3

6 ,0 4 1

1 ,5 4 0

4 1 4

5 ,5 2 2

2 ,3 3 0

1 ,1 2 2

8 0 8

8 3 4

5 ,0 9 4

1 4 0

7 0 3

1 1 ,7 0 6

3 ,9 3 9

4 1 4

Q 1

Q 2

Q 3

Q 4

6 -1 0

1 1 -1 5

1 6 -2 0

2 1 -2 5

6 4 9

1 4 0

7 8 9

2 3

1 ,0 8 2

3 ,9 0 4

3 ,4 5 2

1 ,6 6 4

P r o d u c tio n
0

T O T A L

(e n d

4 7 1 6

9 8 .0 %

C a rb o n a te

S T O C K P IL E

5 2 0 5

1 5 2

(k t)

S a p r o lite

9 9 4 4

9 8 .0 %

B e d ro c k

F R O M

2 7 9 4

1 6 7

L e a c h

S a p r o lite

3 2 3 4

9 8 .0 %

C a rb o n a te

T O

3 5 8 2

3 2 0

S u lp h id e

S a p r o lite

4 4 8 9

9 8 .0 %

W A S T E

S a p r o lite

6 4 0 8

9 0

G o ld , o z

S a p r o lite

1 4 8 7

9 8 .0 %

G o ld , o z

S a p r o lite

1 7 8 9

1 0 4

R e c o v e ry

R e c o v e re d

0 .9 8

1 4 4 3

9 8 .0 %

(g /t)

R e c o v e re d

8 .0 %

1 6 8 9

1 1 5

P e rc e n ta g e

C o n ta in e d

2 ,9 2 0

0 .9 9

9 8 .0 %

S ta b le

C o n ta in e d

4 ,7 4 5
1 3 .0 %

0 .9 8

1 4 4

G o ld , o z

A u

5 ,2 9 5
1 4 .5 %

1 .0 6

9 8 .0 %

R e c o v e ry

C a rb o n a te

9 ,4 1 7
2 5 .8 %

0 .8 9

2 0 6

(g /t)

R e c o v e re d

3 ,1 3 9
4 3 .0 %

1 .0 3

9 8 .0 %

G o ld , o z

R e c o v e re d

3 ,1 3 9
4 3 .0 %

1 .1 4

4 8

P e rc e n ta g e
C o n ta in e d

3 ,1 3 9
4 3 .0 %

1 .4 3

9 8 .0 %

L e a c h

C o n ta in e d

3 ,1 3 9
4 3 .0 %

1 .7 6

5 8

G o ld , o z

A u

3 ,6 5 1
5 0 .0 %

1 .6 3

9 8 .0 %

R e c o v e ry

C a rb o n a te

9 1 2
5 0 .0 %

1 .9 6

4 6

(g /t)

R e c o v e re d

9 1 3
5 0 .0 %

1 .5 8

9 8 .0 %

G o ld , o z

R e c o v e re d

9 1 3
5 0 .0 %

1 .8 5
5 4

S u lp h id e

C o n ta in e d

9 1 3
5 0 .0 %

9 8 .0 %

G o ld , o z

( 0 0 0 's )

1 .2 0

(% )

P e rc e n ta g e

C o n ta in e d

(k t)

o f T o ta l

R e c o v e ry

R e c o v e re d

( 0 0 0 's )

(g /t)

C o n ta in e d
C o n ta in e d

( 0 0 0 's )

(g /t)

R e c o v e re d

P e r io d

Q 1

G o ld , o z
A u

b y

1 ,8 2 5

M ill T h r o u g h p u t (k t)
C o n ta in e d

S c h e d u lin g

Q 1

Q 2

Q 3

Q 4

2 ,7 6 6

2 6 1

5 1 0

4 8 1

2 ,6 8 8

1 ,5 5 7

1 ,5 4 1

6 4 9

1 4 0

7 8 9

2 6 1

5 3 3

4 8 4

1 ,0 8 2

3 ,9 0 4

6 ,1 4 0

3 ,2 2 1

4 ,3 0 7

Q 1

Q 2

Q 3

Q 4

6 -1 0

1 1 -1 5

1 6 -2 0

2 1 -2 5

P r o d u c tio n

o f p e r io d )

S a p r o lite
S a p r o lite

O x id e

(k t)

S u lp h id e

(k t)

T O T A L

4 ,6 7 9

4 ,0 3 0

4 ,4 0 6

4 ,2 6 6

4 ,9 7 2

4 ,9 7 2

5 ,1 1 2

5 ,0 8 9

5 ,0 8 6

4 ,0 0 4

5 ,7 6 5

2 ,3 1 3

3 ,0 4 8

2 8 2

8 4 3

3 ,1 7 3

3 ,9 1 9

4 ,7 2 7

4 ,8 5 5

4 ,8 5 5

4 ,5 9 4

4 ,0 8 4

3 ,6 0 3

4 ,3 0 6

1 0 ,3 4 7

7 ,6 5 9

7 ,6 4 2

6 ,5 1 5

5 ,5 2 2

7 ,2 0 3

8 ,3 2 5

8 ,9 9 3

9 ,8 2 7

9 ,8 2 7

9 ,7 0 6

9 ,1 7 3

8 ,6 8 9

8 ,3 1 0

1 6 ,1 1 2

9 ,9 7 2

1 0 ,6 9 0

6 ,7 9 7

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Stockpiling of saprolite ore is necessary to maintain the desired blend of saprolite

and bedrock plant feed. The majority of the saprolite is mined in the first half of the
mine life because the saprolite overlies the bedrock and therefore must be mined
before the bedrock can be accessed. Saprolite oxide is restricted to a maximum of
50% of the plant feed in year 1, or 10,000 tonnes per day and 43% per year
thereafter. Bedrock ore cannot exceed 75% of the plant feed without a drop in
production rates. The bedrock limit was relaxed after year 20 to 80% and allowed to
reach 90% after year 25. This was done to reduce the size of the saprolite ore
stockpiles, which would otherwise become costly.
Additionally, saprolite sulfide material cannot exceed 7% of the total plant feed during
the first 10 years and cannot exceed 10% after that. This restriction is relaxed in the
last two years of life. The increase in the proportion of sulfide feed to the plant is a
compromise between plant operations and ore stockpile management. A separate
stockpile is maintained for the saprolite sulfide.
The maximum size of the saprolite ore stockpiles is just under 16.5 million tonnes.
Over the life of the mine a total of approximately 28 million tonnes of saprolite ore is
stockpiled. Re-handling the stockpiled ore will be a challenge given the material
characteristics and the amount of rainfall at the site.
The saprolite oxide stockpile is divided into two areas, a high-grade area and a lowgrade area. This is done to increase the feed grade in the early years by sending the
high-grade material to the plant first, thus increasing the recovered gold ounces and
improving the overall project economics. After year 10 the distinction between high
and low grades was discontinued. The average gold grade in the high-grade
stockpile is 2.0 g Au/t and the gold grade in the low-grade stockpile is 0.76 g Au/t.
MDA divided only the oxide in this way but the sulfide material could be handled in a
similar manner, although the benefit of this is limited by the restriction on the amount
of sulfide material in the plant feed.
Different mining equipment is used in the saprolite and bedrock due to the
significantly different material characteristics. A contractor will mine the saprolite
using a fleet of all-wheel-drive trucks and excavators. Crystallex will mine the
bedrock using conventional 136 tonne haul trucks and 21m3 capacity excavator and
loader. The bedrock requires drilling and blasting while the saprolite does not. The
number of trucks in the bedrock mining fleet averages 6 over the life of the mine with
a maximum of 15 during years 27 through 29. Appropriate support equipment is
planned to maintain the site roads and access roads as well as the pit and dumps.

Mine manpower requirements vary with production levels but start at a base level of
94 people. This figure includes 15 in mine engineering and geology, 27 in mine
maintenance and 52 in mine operations. The maximum manpower level is 217
during years 27 through 29. The mine operations manager, chief mine engineer and
maintenance superintendent are initially expatriates and are replaced by Venezuelan
nationals after the second operating year.
The life-of-mine mine operating cost is estimated to be $2.94 per tonne of total ore or
$1.26 per total mined tonne, including saprolite mining. Pre-production contract
mining ($9.6 million) is considered a capital cost and not included in operating costs.
Total bedrock mining costs without the contract saprolite mining amount to $0.95 per
mined tonne or $2.23 per ore tonne.
Costs for major consumables and labour are primarily based on prices reported by
Crystallex from its current Venezuelan operations and independent budget
quotations. Fuel prices are low in Venezuela, $0.04 per litre is used for this work.
Contract saprolite mining is $1.37 per dry tonne based on budgetary bids from
contract mining firms currently working in Venezuela.
Currently in Venezuela the prices for explosives are established by a non-competitive
market and consequently are higher than prices in most other South American
countries. The costs used in this study of $1830/tonne for emulsion and $1000/tonne
for ANFO are based on the actual prices paid by Crystallex at their existing
operations and averages of other quotes received by MDA and Crystallex. Crystallex
currently pays $1200/tonne for ANFO at a Venezuelan mine much smaller than Las
Cristinas.
1.5

Metallurgy

SGS Lakefield Research (Lakefield) conducted an extensive program to test samples

of saprolite oxide (SAPO), saprolite sulphide (SAPS), carbonate leached bedrock
(CLB) and carbonate stable bedrock (CSB) in bench tests and a 50 kg/day pilot plant
operation, run for 21 days during the months of April through July 2003 . Subsamples were sent to McGill University for gravity recovery testwork. Outokumpu
conducted pilot plant settling tests on several samples. The various test programs
were designed to confirm relevant data generated by PDI, determine the gold
recovery and reagent requirements for the proposed gravity-leach flowsheet, and
generate plant design data.

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Grinding data from Lakefield are generally in accordance with data generated by
Placer Dome. Pilot scale gravity concentration tests at Lakefield show about 30%
gold recovery from both a SAPO-CSB blend and a SAPO-SAPS-CLB-CSB blend at
mass concentration ratios of about 4000:1. Intensive cyanidation of the concentrates
from these tests gave >99% leach recovery. Tests at McGill to determine the gravity
recoverable gold (GRG) content of SAPO and CSB samples showed 39% and 46%
GRG, respectively which would translate into practical recoveries of about 25%
Thirty-six hour bottle roll leach tests (an industry standard) on gravity tailings confirm
that SAPO leaches very well to give about 99% overall (gravity+leaching) extraction
and a 0.02 g/t tailing. With a 24 h leach time, tailings were 0.03 g/t corresponding to
98% extraction. CSB gives about 85% overall extraction (0.17 g/t tailing). Cyanide
additions for SAPO and CSB have been less than 1 kg/t ore. Pure SAPS samples
with cyanide soluble copper (CNSCu) levels of 370 ppm or less have been tested
and gave 85 to 88% extraction, albeit with cyanide additions of 1.7 to 1.9 kg/t.
Mixtures containing SAPO, SAPS and CSB gave 85 to 90% overall extraction
provided that sufficient NaCN was present. The NaCN addition varied with the
CNSCu level in the ore.
A 2 kg/h pilot plant was operated for three weeks in which batch-ground/gravity
concentrated ore was subjected to carbon-in-leach (CIL) processing. During the first
13 days, a blend of 20% SAPO and 80% CSB was leached with 0.7 kg/t of cyanide to
give a final overall gold extraction of 89.6% (tailings average of 0.15 g/t). A SAPOSAPS-CLB-CSB blend was processed for the last week. The plant tailing was 0.15
g/t for an extraction of 89.3% with a cyanide addition of 0.8 kg/t. Overall gold
recovery used in the preliminary design was 89%.
Viscosity measurements by Lakefield were acceptable for the mixtures that will be
handled in the Las Cristinas plant.
Outokumpu conducted high-rate thickening tests on nine sample blends, ranging
from pure SAPO to pure bedrock, using its pilot-scale thickener. At 50% solids in the
underflow, all blends containing 50% SAPO or less could be processed at 0.46 t/m2/h
or greater. Allowing for a 15% scale-up, the data showed that a 50 m diameter
thickener would give at least 47% solids in the underflow when processing up to 20
000 t/d of a 50% SAPO, 50% CSB mixture.

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Acid-base-accounting (ABA) tests and various geotechnical studies were performed

by Lakefield on several samples to determine the potential for acid generation. Data
are discussed in Section 12 of this study report.
Natural degradation tests and continuous INCO Air/SO2 cyanide destruction tests
have been performed on pilot plant tailings. Natural degradation under Lakefield
climatic conditions reduced CNWAD to below 20 ppm in about 40 d. The INCO
process then reduced CNWAD to 0.2 ppm and Cu to about 1 ppm under industrytypical operating conditions. INCO tests will be performed on PP2 tailings solution in
the near future.
1.6
1.6.1

Processing
General

All equipment, with the exception of secure areas such as electrowinning and the
gold, electrical and control rooms, is located in open sided structures or outdoors.
The processing plant is fenced for gold security reasons. Installed spare pumps are
provided for all critical process streams.
The process plant consists of single line crushing, semi-autogenous primary grinding
(SAG) followed by secondary grinding using a ball mill. A pebble crusher is
incorporated in closed circuit with the SAG mill.
A gravity circuit is included in closed circuit with the cyclones in order to recover any
coarse, free gold prior to regrinding in the ball mill.
Gold extraction is achieved in a conventional carbon-in-leach (CIL) circuit. Gold is
removed from the loaded carbon by pressure stripping, electrowinning and smelting a
gold dore product.
1.6.2

Primary Crushing

CLB and CSB ore is delivered by mine truck to the primary crushing station which is
permanently located to the east of the process plant. The primary crusher product
discharges via an apron feeder on the stockpile feed conveyor.

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1.6.3

Ore Storage and Reclaim

CLB and CSB ore is reclaimed from the coarse ore stockpile using apron feeders
located in the reclaim tunnel situated below the stockpile. The ore is loaded onto the
SAG mill feed conveyor.
1.6.4

Saprolite Crushing

SAPO and SAPS ore is delivered by mine truck to the saprolite crushing station. The
mine trucks direct dump into a feed hopper which is positioned over top of an apron
feeder. The apron feeder passes the saprolite ore into a mineral sizer in order to
reduce over sized clumps before being fed on to the SAG mill feed conveyor.
1.6.5

Grinding

The SAG mill feed conveyor delivers a combination of saprolite, CLB and CSB ore
directly to the SAG mill. The SAG mill is driven by a clutch and pinion gear
arrangement by a variable speed synchronous motor. The SAG mill discharge is
screened by a double deck vibrating screen to remove over sized 12 mm pebbles.
The 12 mm pebbles from the vibrating screen are crushed in a cone crusher prior to
being recycled back to the SAG mill feed chute. Provision has also been made so
the pebbles can be recycled directly back to the SAG mill without further size
reduction or can be stockpiled outside the process plant building.
The under sized product from the vibrating screen drops into the cyclone feed pump
box where it is combined with the discharge from the ball mill. The ball mill is driven
by a wrap around, variable speed motor through a cycloconverter drive unit.
The combined SAG and ball mill discharges are diluted in the pump box with process
water and pumped to a cyclone cluster which sorts the ore particles by size and
returns the over size to the ball mill for further size reduction.
Also included in the grinding circuit is a gravity recovery circuit. A portion of the ball
mill discharge is diverted over a vibrating screen with the under size fed to one of two
centrifugal concentrators. Gravity concentrate from each centrifugal concentrator is
stored in a secured holding cone until it is leached in a semi-batch, high intensity
cyanide leach reactor. Gravity and leach reactor tailings are pumped backed to the
grinding circuit. The gold loaded solution from the leach reactor is pumped to a
dedicated electrowinning circuit located in the secured gold room.

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1.6.6

Carbon-in-Leach (CIL)

Slurry from the grinding circuit cylcone overflow, after trash removal, is gravity fed to
the thickener feed collection box where slurry flows into a 45 m diameter thickener.
The thickener overflow flows by gravity into the process water tank. The thickener
underflow is pumped at 50% solids by weight into dual parallel 6-stage CIL circuits.
Cyanide and lime are staged added to each tank train. On an intermittent basis,
loaded carbon is pumped counter current to the slurry flow in order to increase the
gold loading. Loaded carbon is removed from the head end of each tank train and is
transferred to the acid wash vessel via a vibrating screen.
1.6.7

Carbon Desorption and Regeneration

Loaded carbon captured by the vibrating screen drops by gravity into the acid wash
vessel. A 3% acid solution is pumped into the acid wash vessel and overflows the
top and returns to the acid mix tank. Acid washing takes approximately 1 hour. After
acid washing is complete, the spent acid is neutralized with sodium hydroxide before
discarding it to the tails pump box.
The desorption elution cycle starts with the preparation of a 3% sodium cyanide and
2% sodium hydroxide solution in the barren eluate tank. The solution is initially
pumped through the strip solution heater and returns to the barren eluate tank until
its temperature reaches 80C. The solution is then directed through a recovery heat
exchanger, and through the strip solution heater to bring its temperature up to 145C
before entering the elution column. Barren eluate solution at operating temperature
and 300 kPa pressure enters the bottom of the elution vessel through in-line screens
then flows up through the carbon bed. The solution desorbs the metal loaded onto
the carbon then exits from the top of the elution vessel and passes through a screen
basket to retain carbon. The new solution passes through the solution/solution heat
exchanger where it transfers its thermal energy to the incoming barren eluate
solution. The pregnant solution exits the hot side outlet of the heat recovery
exchanger at 65C. This pregnant solution stream then flows to the pregnant elution
tank in the electrowinning and refining area.
Stripped carbon is evacuated from the bottom of the elution vessel and is transferred
to a vibrating screen at the top of the carbon regeneration kiln feed hopper. Carbon is
screened out and drops by gravity into the hopper. Screen fines flow by gravity to the

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carbon fines tank. Water collected in the carbon fines tank is pumped through a plate
and frame filter press to capture any carbon fines.
The activity of the stripped carbon is restored in a kiln. After passing through the kiln,
the carbon drops out into a quench tank and is transported to the reactivated / fresh
carbon sizing screen. Screened carbon drops by gravity to the reactivated carbon
transfer hopper where it is mixed with washed fresh carbon. Screen fines flow by
gravity to the carbon fines tank. Water collected in the carbon fines tank is pumped
through a plate and frame filter press to capture any carbon fines.
There is some carbon loss through attrition and is made up with fresh carbon. Mixed
regenerated/fresh carbon in the transfer hopper is moved to the last leach tank in the
train via a horizontal recessed impeller pump.
1.6.8

Electrowinning and Refining

Pregnant eluate solution from the desorption operation reports to the pregnant eluate
tank. Pregnant eluate solution is pumped to four electrowinning cells (two rows of
two in parallel). Gold metal is electrowon loosely on the stainless steel wool
cathodes in the electrowinning cells. Depleted solution flows from the outlet of each
cell to the barren eluate return tank and is then transported either back to the barren
eluate tank or recirculated back through the electrowinning cells via the pregnant
eluate tank.
Pregnant eluate from the concentrate leach circuit is pumped to the leach reactor
pregnant eluate tank in the refinery area. Pregnant eluate solution is transported
from the tank to two electrowinning cells in series. Gold metal is electrowon loosely
on the stainless steel wool cathodes in the electrowinning cells. Depleted solution
flows from the outlet of the last cell to the leach reactor barren eluate return tank and
is then transported either to the CIL circuit or recirculated back through the
electrowinning cells via the leach reactor pregnant eluate tank.
At the end of the run, the cathodes are removed from the cells; the gold bearing
sludge is washed off and then pumped to a plate and frame filter press. The filter
cake is mixed with fluxes, usually borax, soda ash and occasionally sodium nitrate
and fed to an electric induction furnace. The dor metal and slag separate in the
furnace, and the slag is poured off to slag pots then the dor metal is poured into
bars for shipment.

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1.6.9

Cyanide Destruction

The cyanide destruction process is air/SO2 using sodium metabisulphite as the

source of SO2. At present only reclaim water from the TMF will be treated however
provision for future treatment of CIL tailings has been made, if deemed necessary.
This will not have a significant economic impact on the project and current Crystallex
experience in Venezuela indicates that this will not be necessary. The cyanide
destruction tank is fitted with an agitator consisting of dual impellers supported from a
bridge mounted on the tank shell. Air is introduced through a bottom entering line to
an inverted cone under the centre shaft of the agitator. The air bubbles then travel
upward into the maximum shear zone of the impeller blades.
Sodium metabisulphite solution is added at a rate sufficient to reduce the free
cyanide to below detection limits along with the level of weak acid dissociable (WAD)
cyanide complexes in the tailings pond water. Provision is made to add lime slurry to
maintain pH between 8 and 8.5.
1.7
1.7.1

Infrastructure and Services

Site Access

The Las Cristinas site is situated in south eastern Venezuela and is some 6 km west
of the village of Las Claritas on Troncal 10 the main highway running from the
Brazilian border to the Venezuelan port of Puerto Ordaz on the Orinoco River. The
site is some 360 km by road from Puerto Ordaz and the road presents no significant
obstacles to the transportation of goods and materials to the site.
Access to the site will be from Troncal 10 along an existing unpaved road that will be
upgraded to take construction and operational traffic. This route is 19 km long and
being north of Las Claritas circumnavigates all the local villages and will thus avoid
any disruptions to the local population.
1.7.2

Power Supply

An existing 400 kV power line parallels Troncal 10 and a new substation was
constructed in 2001 just south of Las Claritas at Km 86 to service the area. The
substation has two 150 MVA power transformers and provision has been built in to
supply Las Cristinas with a 230 kV power line.

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The site power demand is estimated at 30 MW which can be adequately supplied by

the substation.
Power to the site will be carried via a new overhead power line, a distance of
approximately 6 km, and will terminate at a new substation to be built on site from
where power will be distributed at 6.6 kV.
1.7.3

Site Water Supply

Potable water will be drawn from on-site wells and will be chlorinated prior to
distribution for consumption. Make-up water for process requirements will be drawn
from the Potaso Pit, an old mining pit that is permanently flooded. During operations
the Potaso pit will be charged with water from the diversion ditch.
1.7.4

Sewage Treatment

Domestic sewage will be collected by a system of gravity sewers and treated

biologically with the resulting effluent being pumped to the tailings pond.
1.7.5

Existing Facilities

In 1998 a 3,058 person construction camp was constructed at the Las Cristinas
property. The camp included dormitories for workers and supervisors, kitchen and
canteen facilities, administration building, water and firewater plant and a sewage
treatment plant. The camp was subsequently abandoned and has been subject to
neglect and minor vandalism.
For the current project the construction camp will not be utilized except that the
administration building will be refurbished and will serve as the main administration
centre, the kitchen and canteen will be converted to a construction and operations
warehouse and the existing water plant will be brought on line. Sewage from the
camp site will be redirected to the new sewage treatment plant.
1.7.6

Ancillary Buildings

Aside from the main administration facilities located in the existing construction camp
additional buildings will include a Guard House at the entrance to the process plant
area, a Mill Administration and Dry, a Truck Maintenance and Mine Dry and a Truck
Wash.

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1.7.7

Site Water Management Scheme and Water Balance

Tailings area water management forms a large component of overall site water
management.
Therefore the tailings area water balance was developed in
combination with the overall site water balance to support the development of the site
water management scheme. The water balance provides an indication of average
process water flow rates, range of tailings pond operating volumes, average
treatment rates for water treatment plants, average pumping rates from water
management ponds and average discharge rates of excess water to the
environment.
The site water management scheme has been developed so that pumping and
treatment costs are minimized by isolating clean runoff from potentially contaminated
runoff and process water streams. Environmental impact is reduced by providing
appropriate containment and treatment to all potentially contaminated site water
before discharge, and by maximizing the use of water recycling.
Six site water management ponds are proposed in addition to the tailings pond. All
runoff from waste rock dumps and saprolite waste dumps will be collected in ponds
to provide settling of suspended solids. All runoff from waste rock dumps will be
monitored for acid drainage.
Process reclaim water from the Tailings Management Facility (TMF) water reclaim
system will pass through a cyanide destruction facility before use in the process
plant. Freshwater makeup will be supplied by pumping from the Potaso Pit. This
water will require treatment in a sedimentation/filtration plant before entering the
process stream. Any seepage from the TMF dike will be collected by a perimeter
ditch and pumped back. Excess TMF pond water will be considered suitable for
discharge to the environment following cyanide removal if suspended solids are
within an acceptable range.
Clean surface water from upstream drainage areas will be collected into a diversion
channel and conveyed around the perimeter of the site. Clean surface runoff from
undisturbed drainage areas within the mine site will be collected and diverted to the
Potaso Pit which overflows into the river diversion system. Site drainage was
designed for a 1:25 year flood event and the river diversions for 1:100 year events.

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1.8
1.8.1

Tailings Management Facilities

Field Investigations

A field program for the Tailings Pond area was undertaken by Bruce Geotechnical
Consultants Inc. (BGC), in 1994 and 1995 and reported in the Las Cristinas
Feasibility Study (BGC, 1996). BGC drilled 9 boreholes, dug 27 test pits and carried
out geologic mapping of outcrops. The geologic horizons were described as follows.
The upper horizon consists of a thin laterite soil horizon from 0.5 to 1.0 m thick. The
next two units are saprolite which will form the foundation immediately beneath the
tailings dikes. The upper layer of saprolite oxide (SAPO) is from 0 to 40 m in
thickness, while the thickness of the underlying layer of sulphide stable saprolite
(SAPS) varies from 0 m to 65 m. Below the saprolite is a layer of saprock, generally
less than 1 to 2 m thick. Beneath the saprock, bedrock is subdivided into CLB
(carbonate leached bedrock) and CSB (carbonate stable bedrock).
The results of BGCs geotechnical investigation were used by SNC-LAVALIN for the
feasibility level design of the Tailings Management Facility (TMF). In addition, SNCLavalin carried out analysis of samples collected from the sand and gravel deposit in
the tailings area. Results show that the sand and gravel is suitable material for filter,
drainage and other granular usages.
1.8.2

Tailings Dike Design and Construction Concepts

Design criteria for the TMF were selected to optimize groundwater protection,
physical stability and mine closure conditions, and to make maximum use of mine
waste materials on a cost effective basis. Due to the presence of cyanide in the
tailings slurry, the TMF was designed to withstand a maximum credible earthquake
and to contain the runoff from a 24 hour probable maximum flood event, based on
internationally and nationally accepted practice and risk ratings.
A cyanide destruction plant will be built to treat the Weak Acid Dissociable cyanide
concentration in the water discharged with the tailings slurry. It is not expected that
treatment of an acidic runoff will be required during mine operations.
Previous studies by BGC (BGC, 1996) identified a tailings facility comprised of two
cells. A two celled facility is no longer required due to changes in mining plan and
therefore, a single celled facility is proposed. In addition, the proposed dike
alignment differs from that proposed by BGC. The tailings dike does not extend as

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far south as the previous layout since there is an area of sand and gravel deposit
along the old south dike perimeter. This material is not suitable as a foundation
material and therefore, the alignment was adjusted.
The alignment of the Tailings Dike was selected to provide a natural low permeability
foundation, to provide sufficient storage for tailings and water management, and to
utilize available natural topographic conditions.
The Starter Dike will form the first stage before operations begin and subsequent
stages will be constructed during operations. The Starter Dike will be sized to
provide tailings storage and water management for the first three years of operation.
It will be of low permeability design with foundation preparation and seepage control
measures for adequate structural and hydraulic stability. The TMF basin floor is
-5
7
saprolite 20 m to 40 m thick with permeabilities ranging from 8x10 to 3x10- cm/s
which will provide highly competent containment of contaminants.
The Tailings Dike will be raised in stages using mine waste materials from open pit
stripping. The ultimate crest elevation of the Tailings Dike provides storage for 243.1
Mt of tailings. Crest raising by the centreline method of construction will involve fill
placement on the tailings beach for the upstream part of the lift. To facilitate this,
tailings discharge will be carried out from the dike crest. The Tailings Dike is
designed so that supernatant water and runoff reporting to the tailings pond are
recycled for use in the mill process. Water will be pumped to the plant using a
reclaim water barge.
An emergency spillway is provided to safeguard the dike in the event of unexpected
climatic conditions or operational constraints. The emergency spillway will be
constructed in the south east corner of the TMF and will be raised as the dike is
raised.
Seepage analyses were carried out to estimate the seepage through the Tailings
Dike for the purpose of sizing the chimney and finger drains as well as the perimeter
collection ditch. Stability analyses were carried out using parameter values based on
analyses carried out by BGC as reported in the Feasibility Report (BGC, 1996). The
dike structure is stable under various loading conditions and suitable for post-closure
environment.
The minimum and maximum normal operating volumes used for design of the tailings
pond are 500,000 m3 and 3,000,000 m3. The minimum normal operating volume

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provides sufficient water depth to meet barge and reclaim pumping requirements, as
well as settlement of solids. The maximum normal operating volume is based on the
seasonal fluctuation in precipitation and the water treatment plant capacity. In
average conditions, the maximum water level will occur in the tailings pond during the
month of September, at the end of the wet season.
To ensure dike safety and satisfactory performance as tailings depository,
instrumentation is required to be installed in the dike structure. This includes pore
water pressure monitoring, settlement monitoring and groundwater monitoring during
operation and post-closure.
1.9

Administration and Operations

Buckland Harapiak (B-H) was engaged by Crystallex to carry out a study and make
recommendations for the appropriate organization structure for the Las Cristinas
operation, with a particular focus on the Finance & Administrative functions. The
organization proposed would support the 20,000 t/d open pit mine and CIL
processing facility with a total work force of approximately 400 employees. Research
for this report included interviews with senior management from Crystallex, including
in-country management; feasibility work previously completed by SNC-Lavalin and
MDA; the 1996 Socio-Economical Study conducted on behalf of PDI; the Las
Cristinas Development Plan (presented earlier this year by Dr. Sadek El-Alfy and
Julio Rojo) and various other sources of information on Venezuela and comparable
mining operations around the world.
1.10
1.10.1

Environmental Management
Introduction

A number of conclusions and recommendations can be drawn from environmental

analyses and the preliminary assessment of the potential environmental impacts
conducted during the feasibility stage of the Las Cristinas Project, as well as
development of the preliminary concept for site closure and rehabilitation.
A detailed Environmental Impact Assessment of the Las Cristinas project is required
by both Venezuelan and World Bank requirements. A significant amount of
environmental baseline data and impact analysis necessary for EIA preparation was
undertaken by PDI throughout the early to mid 1990s. PDI submitted an EIA
document to the Venezuelan Government for review and approval in 1996, and a

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Land Occupation permit was issued for the project. Building on the work conducted
by PDI, and in consultation with the Venezuelan Ministry of Environment and Natural
Resources, Crystallex initiated an update of the PDI work during the feasibility stage
of their project development to reflect changes in project design and environmental
characteristics. The main environmental activities of SNC-Lavalin and Crystallex
during this feasibility stage were:

Review of the Venezuelan environmental permitting and approval process

and standards/guidelines of the World Bank to ensure that regulatory and
Bank requirements are addressed/accounted for in the project development
schedule and work plan, and project design;

Initial consultation with the Ministry of Environment and Natural Resources;

Initial consultation with local community leaders and residents, including a

preliminary social survey;

Collection and review of all available PDI documents and databases and
other available published data;

Additional acid base accounting testing of waste rock and ore materials;

Updating of the demographic data for the local and regional communities
incorporating 2001 census data;

Review of the (revised) Crystallex project design and assessment of potential

environmental impacts and measures that can be reasonably implemented to
minimize or eliminate environmental effects;

Development of a preliminary site closure concept;

Establishment of objectives and guidelines for the development of an

Environmental Management Plan

Interaction with project designers to ensure that mitigation measures

identified to minimize/eliminate impacts have been incorporated into project
design concepts and capital/operating cost estimates; and

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Identification of studies and testing that must be undertaken in subsequent

stages to provide the data necessary to further assess potential risk and
address concerns at a more detailed level of design.

A revised/updated EIA, Site Closure and Rehabilitation Plan and Environmental

Management Plan that meets Venezuelan and World Bank standards will be
prepared in the next stage of project development.
1.10.2

Conclusions

The following are key conclusions of the preliminary environmental impact

assessment and preliminary site closure and rehabilitation concept for the Las
Cristinas project:
Risk of significant environmental contamination from effluent discharges is
low
The Las Cristinas project can be developed in a manner which minimizes impacts to
the physical and biological environment.
The Las Cristinas project is being designed in accordance with applicable
Venezuelan legislation and regulations, and World Bank standards.
Crystallex has committed to the removal and controlled management/disposal of
mercury contaminated soils in a contained landfill facility, potentially resulting in
improvements to local water quality and reduced mercury load in local fish.
Initial acid base accounting (ABA) tests conducted on representative samples of
waste rock and ore composites indicate that almost 60% of waste rock (oxidized
saprolite and carbonate bedrock) will be non-acid generating and approximately 20%
of waste rock (sulphidic saprolite) will be acid generating; the waste rock dumps will
be designed to ensure that acid generating waste is placed over the low permeability
saprolite soils (to retard downward migration into subsurface soils and ground water)
and covered/buffered by non-acid generating or net acid consuming waste.
As precipitation exceeds evaporation over the course of a full annual cycle, there will
be a net discharge of water from the Las Cristinas site, however the site is being
designed and can be operated to effectively manage site drainage in a manner which
prevents erosion and ensures that all site effluent discharges to surface receivers will
meet Venezuelan and World Bank standards.

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An SO2/air cyanide destruction plant is included in process plant design; the plant will
treat all reclaim from the tailings management facility prior to use in the process.
Excess treated water (reclaim which is not required for the process) will be released
to the environment as surface discharge. The CNwad concentration of this effluent is
unknown at this early stage of design (until further design and operating details are
provided for the cyanide destruction plant). If concentrations cannot be reasonably
reduced to levels which comply with the Venezuelan regulations and World Bank
standards (0.5 mg/L CNwad) the destruction plant could be reoriented to treat tailings
as they exit the plant, for storage in the TMF facility.
Treated effluent from the sewage treatment plant will be discharged to the tailings
management facility during periods of low flow (dry season).
Sludges generated at the sewage treatment plant, the potable water plant and (later
if necessary) the ARD treatment plant will be stored in the tailings management
facility, adding less than 2% to total volume over the operating life of the facility.
Periods of flooding and potential site inundation may result in over-topping of site
runoff ponds; dilution from these flood waters is expected to minimize any concern of
contamination.
Risk Of Tailings Management Facility (TMF) Failure or Environmental
Contamination is Low
The Las Cristinas site area is in seismic activity zone 0 which presents the lowest
possible risk of seismic activity.
The TMF dam is designed to a stability factor of 1.3 (initial) and 1.5 (final
configuration and closure condition), which exceeds Venezuelan, European Union,
and Canadian dam association standard of 1.1.
The TMF is designed to contain a 24 hour Probable Maximum Precipitation flood
(PMF).
The tailings dam structure is designed to include a low permeability clay core
(saprolite soils) with a lower permeability hard rock shell on the downstream face. A
chimney drain and finger drains will be provided to minimize head build-up and
dangerously high phreatic head levels in the tailings; dam seepage will be collected
in a perimeter drain and released or re-circulated by a series of perimeter sumps
back to the tailings pond for long-term storage. Estimated seepage rate will be

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approximately 11 m3/hr for the starter dam and 157 m3/hr for the ultimate
configuration.
The entire tailings basin will be cleared of vegetation and founded on a low
permeability saprolite soil layer with an average conductivity rate of 1 x 10-6 cm/s,
and an average layer thickness of 30 m to 40m, providing a competent containment
barrier to contaminant migration.
The tailings dam clay core will be keyed into the low permeability saprolite soils,
preventing any inadvertent by-pass through intermittent sand or gravel lenses.
Permitting Expected to be Straightforward
The Las Cristinas project can be developed in a manner which meets Venezuelan
environmental standards.
The government of Venezuela and the President of the Republic have indicated their
repeated support for the Las Cristinas project, and other mining projects in Bolivar
state.
The Ministry of Environment and Natural Resources (MARNR) has indicated verbally
that EIA requirements for the Las Cristinas project can be met with submission of a
summary of updates and revisions to the PDI environmental impact assessment,
submitted and approved by MARNR in the late 1990s; no significant regulatory
hurdles are expected.
Crystallex maintains routine on-going discussions with CVG, MARNR and local
political leaders; issues are identified early and addressed as quickly as possible;
there are no known concerns on the part of any government agency or political party
that would present a significant risk of opposition to the project.
Leaders of the 6 main unions whose membership incorporates most of the small
miners operating within the Las Cristinas concessions indicated verbal support for
the project during recent interviews.
60% of surveyed residents in the local villages of Nuevas Claritas, Santo Domingo
and Las Claritas, support the Las Cristinas project if they can either continue with
mining activities or are provided another source of employment income.

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Crystallex has committed to providing technical assistance to small miners and will
be examining alternate employment opportunities for small miners in the next stage
of project design. Crystallex has also committed to meeting Venezuelan and World
Bank standards.
CVG is required by law to provide assistance in preventing the re-settlement of small
miners within the concession once the site has been cleared for Crystallex
operations.
Risk of contamination following closure is low
A detailed site closure and rehabilitation plan will be prepared in the next stage of
project design.
The preliminary concept for site closure and rehabilitation at closure is developed on
the basis that final land use for the site area will be natural, consistent with objectives
for the Imataca Forest Reserve.
Crystallex will maintain an active presence at the site for an undefined interim period
following termination of mine production, and prior to walking away from the site.
During this period they will operate an ARD treatment plant (if considered
necessary), and all site drainage necessary to ensure that ARD effluents are not
released to the environment untreated. All essential services such as access roads,
some buildings and some power supply will be maintained during the interim period.
All buildings, equipment, roads, and above ground services (e.g., transmission lines;
water supply lines, pumps, etc.) will be removed at closure (at latest following the
active interim closure period), and all slopes will be graded for public safety and
establishment of vegetation. Non-essential dams and berms will be breached and
graded to blend in with surrounding topography. The interim period will end once
Crystallex can demonstrate that all slopes are physically stable and that all site
drainage can be released to the environment without treatment in compliance with
Venezuelan and World Bank water quality standards.
1.10.3

Overall conclusion

In summary, it is concluded at this stage that the risk of significant environmental

impacts and/or schedule delays arising from environmental or socio-economic
concerns, either during operation, or following closure, is considered to be low.
Additional studies and analyses at a higher level of detail will be conducted in
subsequent stages of development to confirm these conclusions.

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1.10.4

Recommendations

A number of recommendations for specific work tasks to be conducted in subsequent

design stages are considered routine (such as preparation of a detailed
environmental impact assessment), and are not provided in the following summary.
A work plan which contains these activities will be developed by Crystallex prior to
initiating the next stage of design. The recommendations provided below are those
which are considered most significant in the consideration of project feasibility.
It is recommended that Crystallex conduct additional acid base accounting and longterm static tests to confirm results of the initial acid generation potential testing
conducted during the feasibility stage; details of the test program will be developed at
the outset of the next stage of project design.
It is recommended that Crystallex conduct additional interviews and surveys of the
local political leaders, residents, and business operators (including the small miners)
to obtain input on the potential social and economic impacts of the project (positive
and negative), as well as development of an action plan which will address
mitigation/compensation required to offset impacts caused as a result of lost
employment once the small miners are permanently removed from the Las Cristinas
concessions. These activities should be conducted in the context of a broader
action plan program in accordance with established World Bank procedures.
Although not specifically required by Venezuelan regulation, it is recommended
during the next stage of project design that Crystallex arrange for, hold and attend a
series of community meetings in strategic locations throughout the zone of influence
to describe the Las Cristinas project and receive public feedback on potential impacts
of the project and measures which could be implemented to minimize the
significance of potential impacts.
1.11
1.11
1.11
1.11

Capital Cost Estimates

The Las Cristinas project capital costs are summarized in the Table 1-7.

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Table 0-7 Summary of Capital Cost

Item

Estimated Cost (US$ x 1,000)

Mine

27,258

Process Plant

80,196

Tailings Management Facility

25,490

Infrastructure

27,728

Sub-Total Direct Costs

160,672

Owners Costs

10,000

Indirect Costs

72,095

Total Costs

242,767

In addition, sustaining capital totalling $160 million over the 34 years of the mine will
be required.
These estimates do not include VAT of $38.8 million which is recoverable once gold
sales commence.
1.12

Operating Cost Estimates

The estimated Operating Costs for the project, based on life of project averages are
in Table 1-8 as follows (before royalties):
Table 0-8 Operating Cost Estimates
Item

Operating Cost/t Ore

Operating Cost /oz Gold *

Mining

$2.944

$80.01

Processing

$3.378

$91.80

G&A

$0.381

$10.37

TOTAL
$6.704
Note: *Does not include royalties

$182.18

1.13

Financial Analysis

The findings in Table 1-9 were generated by the financial analysis using a gold price
of $325/oz.

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Table 0-9 Financial Summary

Cumulative Project Cash Flow

$ 742 million

IRR Project (without debt financing, before VAT and taxes)

14.5%

NPV Project cash flows @ 5%

$ 238.5 million (before taxes)

Payback Period-Years (from start of project)

5 years (before tax)

PLEASE NOTE: THE ESTIMATES DESCRIBED IN THIS STUDY QUALIFY AS RESERVES IN

ACCORDANCE WITH CANADIAN NATIONAL INSTRUMENT 43-101. HOWEVER, THEY DO NOT
NECESSARILY QUALIFY AS RESERVES FOR UNITED STATES REPORTING PURPOSES.
THEREFORE, READERS SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED IN THE
STUDY IS ACCEPTABLE FOR UNITED STATES REPORTING PURPOSES, FURTHERMORE,
READERS SHOULD NOTE THAT MEASURED AND INDICATED RESOURCES PRESENTED
HEREIN WOULD NOT BE ACCEPTABLE FOR UNITED STATES REPORTING PURPOSES."

NOTE: This may include certain "forward-looking statements" within the meaning of the United
States Securities Exchange Act of 1934, as amended. All statements, other than statements
of historical fact, included in this feasibility study, including, without limitation, statements
regarding potential mineralization and reserves, exploration results, and future plans and
objectives of Crystallex, are forward-looking statements that involve various risks and
uncertainties. There can be no assurance that such statements will prove to be accurate, and
actual results and future events could differ materially from those anticipated in such
statements. Important factors that could cause actual results to differ materially from the
Company's expectations are disclosed under the heading "Risk Factors" and elsewhere in
documents filed from time to time with the Canadian provincial securities regulators, the
United States Securities and Exchange Commission and other regulatory authorities.
Cautionary Note to Investors - The United States Securities and Exchange Commission
permits mining companies, in their filings with the SEC, to disclose only those mineral deposits
that a company can economically and legally extract or produce. We use certain terms in this
presentation , such as "resource," measured resource, indicated resource and "inferred
resource," that the SEC guidelines strictly prohibit us from including in our filing with the SEC.
U.S. investors are urged to consider closely the disclosure in our Form 20F.

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