29 Projects Report Projects Report Geology Feasibility Study Resource The silver and gold mineralisation is hosted  within tertiary-aged volcanic units at Arqueros  and Teterita, and in Paleozoic sediments at  Chimberos. The alteration and mineralisation are all Miocene in age and associated with the  Cerros Bravos paleovolcano. Mineralisation comprises two main compo- nents. Silver-rich horizontal units termed  ‘mantos’ (Spanish for blanket) and a series of  near-vertical, cross-cutting gold-rich structures.  The mantos silver mineralisation is hosted by  vuggy silica within dacitic lapilli tuff. Mantos  occurs at Arqueros and Teterita where the  mineralising process has replaced horizontal  porous tuffs. At Chimberos, silver mineralisation  is hosted in vuggy silica hydrothermal breccia  superimposed on folded Paleozoic sediments. The vertical gold-rich mineralisation, also charac- terised by vuggy silica, is well-developed at  Arqueros. It has been interpreted as feeders for  mineralising fluids. Nonetheless, this style of  mineralisation has not yet been observed at  Teterita and is poorly preserved at Chimberos. A Definitive Feasibility Study commenced on the  project at the end of May 2011 with the focus  on Arqueros, and open pit mining of that deposit  with processing by traditional mill and agiitation  leaching in cyanide. Subsequent acquisition of  the Teterita and Chimberos deposits resulted in  an expansion of the feasibility study to incorpo- rate their resources. The environmental permitting process for the  original Arqueros project has been completed,  with approval to commence construction and  mining granted by the Chilean authorities. A modification of the environmental assessment  is being prepared to have the approvals modified  for heap leaching and on-site power generation.  Extensive community consultation has been  undertaken with positive outcomes, and rela- tionships with indigenous rural and urban  communities remain a priority. In late 2012, a decision was taken to examine  lower cost options for processing using heap  leaching. With major engineering already done,  technical studies focussed on metallurgical  testwork and heap leach design. It has been  established that the mineralisation from the  three deposits can be processed by HPGR (High  Pressure Grinding Rolls) crushing and heap  leaching with silver and gold recoveries of the  order of 70% to 75% for silver and 65% to 70%  for gold. The project development plan is now  focussed on a 3 million tonne per annum heap  leach operation with an initial mine life of over 6  years. Annualised production levels (post ramp- up) are estimated at 6.0–8.0 million ounces of  silver and 18,000–22,000 ounces of gold, at an  indicative start-up capital cost between  US$130–150 million (inclusive of 25%  contingency). Kingsgate has updated the project resource base to incorporate the recent drilling on the  Chimberos project and using the current gold/ silver ratio of 60 (previously 45) for its gold  equivalent (AuEq60) and silver equivalent  (AgEq60) calculations.The combined Measured,  Indicated and Inferred mineral resource for the  Nueva Esperanza Project is based on resource  block modelling of Arqueros, Chimberos and  Teterita, and has been estimated at a cut-off  grade of 0.5 grams per tonne (g/t), gold equiva- lent (AuEq60) to be 28.9 million tonnes at  0.27 g/t gold and 84 g/t silver. This represents about 250,000 ounces of gold  and 78.5 million ounces of silver.  The Measured, Indicated and Inferred resource  may be expressed in gold or silver equivalent  ounces as: These project parameters are based on prelimi- nary results only and are insufficient to provide  assurance as to the economic development of  the project at this stage and these parameters  may also change following completion of the  Definitive Feasibility Study. With the technical and economical feasibility of  heap leaching being established, the project will  now move into the final feasibility and design  stage with results expected to be available  during the March quarter 2014. 〉 Gold equivalent ounces (AuEQ60): 1.6  million ounces at 1.7 g/t gold equivalent; and 〉 Silver equivalent ounces (AgEQ60): 93.5  million ounces at 100 g/t silver equivalent.