CRYSTALLEX INTERNATIONAL CORP - 6-K - 20071109 - EXHIBIT_99
MINE DEVELOPMENT ASSOCIATES
MINE
ENGINEERING SERVICES
Technical Report Update on the
Las Cristinas Project,
Bolivar State, Venezuela
Prepared for
CRYSTALLEX INTERNATIONAL CORPORATION
November 7, 2007
Steven Ristorcelli, P. Geo.
Richard Spencer, Ph.D., P.Geo.
Thomas Dyer, P. Eng.
John Goode, P. Eng.
David Evans, P. Eng.
Ljiljana Josic, P. Eng.
Henri Sangam, P. Eng.
Helen Jackson, P.Geo.
775-856-5700
210 South Rock Blvd.
Reno, Nevada 89502
FAX: 775-856-6053
MINE DEVELOPMENT ASSOCIATES
MINE
ENGINEERING SERVICES
TABLE OF CONTENTS
1.0
EXECUTIVE SUMMARY
1
1.1
Introduction and Property Location
1
1.2
Geology and Mineralization
2
1.3
Exploration Concept
2
1.4
Exploration and Historic Resource Estimates
3
1.5
Metallurgy
4
1.6
Resource and Reserve Estimation
5
1.7
Development and Production
8
1.8
Conclusions and Recommendations
9
2.0
INTRODUCTION
11
2.1
Introduction
11
2.2
Terms of Reference
11
2.3
Sources of Information
12
2.4
Personal Inspection by the Authors
12
2.5
Effective Date
13
2.6
Note on Language, Terminology and Definitions
13
2.7
Definitions
13
3.0
RELIANCE ON OTHER EXPERTS
15
4.0
PROPERTY DESCRIPTION AND LOCATION
16
4.1
Location
16
4.2
Land Area
16
4.3
Agreements and Encumbrances
19
4.4
Environmental Reports and Liabilities
21
4.4.1 Regulatory Framework
22
4.4.2 Existing Environment
22
4.4.3 Analysis of Alternatives
23
4.4.4 Assessment of Impacts to the
Bio-Physical Environment
24
4.4.5 Assessment of Impacts to the
Socio-Economic Environment
26
775-856-5700
210 South Rock Blvd.
Reno, Nevada 89502
FAX: 775-856-6053
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page ii
4.4.6 Environmental Supervision Plan
27
4.4.7 Site Closure and Rehabilitation
27
4.4.8 Conclusions
27
5.0
ACCESSIBILITY, CLIMATE, LOCAL
RESOURCES, INFRASTRUCTURE,
PHYSIOGRAPHY
29
5.1
Accessibility
29
5.2
Climate
29
5.3
Physiography
30
5.4
Local Resources
31
6.0
HISTORY
32
6.1
General History
32
6.2
Ownership History
32
6.3
Previous Work
34
6.4
Historical Mineral Resource and Mineral
Reserve Estimates
36
6.4.1 Estimates by Placer
36
6.4.2 Estimates by MDA
38
6.5
Historic Feasibility Studies
47
6.5.1 Placer Dome Studies
47
6.5.2 Crystallex Studies
48
7.0
GEOLOGY
51
7.1
Regional Geology
51
7.2
Local Geology
51
7.2.1 Lithology and Stratigraphy
51
7.2.2 Structure
55
7.2.3 Weathering
56
8.0
DEPOSIT TYPES
58
9.0
MINERALIZATION
60
9.1
Mineralization and Alteration
60
9.2
Alteration and Metal Zoning
61
9.3
Relationship between Structural Fabrics and
Mineralization
62
9.4
Conductora-style Mineralization
63
9.5
Mesones-Sofia
64
10.0
EXPLORATION
70
10.1
Exploration by Placer
70
10.2
Exploration by Crystallex
71
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page iii
11.0
DRILLING
73
11.1
Drilling by Placer
73
11.2
Drilling by Crystallex
76
11.2.1 2003 Drilling
76
11.2.2 2004 and 2005 Drilling
77
11.2.3 2006 and 2007 Drilling
77
12.0
SAMPLING METHOD AND APPROACH
79
12.1
Sampling by Placer
79
12.2
Sampling by Crystallex
79
12.2.1 2003 Drilling Program
79
12.2.2 2004 Drilling Program
79
12.2.3 2005 Drilling Program
80
12.2.4 2006-2007 Drilling Program
81
13.0
SAMPLE PREPARATION, ANALYSES AND
SECURITY
82
13.1
Placer's Program
82
13.2
Crystallex's Program
85
13.2.1 2003 Drill Program
85
13.2.2 2004 Drill Program
88
13.2.3 2005 Drill Program
89
13.2.4 2006 and 2007 Drill Program
89
14.0
DATA VERIFICATION
90
14.1
Data Verification by Placer
91
14.2
Placer Data Verification by Crystallex
92
14.3
First Preliminary Independent Corroboration
of Project
93
14.4
MDA/Crystallex Joint Check Program on
Previous Samples
96
14.5
Twin Hole Analysis
100
14.6
MDA Checks on 2003 Crystallex Sampling
101
14.7
2004 Drill Program
102
14.8
2005 Drill Program
103
14.9
2006-2007 Drill Program
104
14.9.1 Introduction
104
14.9.2 Lab Inspection and Recommendations
104
14.9.3 Program Design and Implementation
105
14.9.4 Active QA/QC Monitoring for Gold (Au)
108
14.9.5 External Data Verification
117
14.9.6 Summary and Conclusions
124
14.10
Grade versus Core Recovery Comparison
125
14.11
Miscellaneous Data Verification and Sampling
Studies
127
14.12
Data and Sample Verification Conclusions
128
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page iv
15.0
ADJACENT PROPERTIES
129
16.0
MINERAL PROCESSING AND
METALLURGICAL TESTING
132
16.1
Introduction
132
16.2
Summary
136
16.3
Samples
137
16.4
Grinding Tests
140
16.5
Gravity Recovery of Gold
142
16.6
Cyanide Leaching
144
16.6.1
Bottle roll tests
144
16.7
Pilot plant
149
16.7.1
Pilot plant configuration
149
16.7.2
Gravity concentration data
149
16.7.3
CIL pilot plant data
149
16.8
Carbon elution
151
16.9
Viscosity Tests
152
16.10
Thickening Tests
152
16.10.1
Flocculant Scoping Tests
152
16.10.2
Laboratory Thickening Tests
153
16.10.3
Outokumpu Thickening Tests
153
16.11
Environment-Related Testing
154
17.0
MINERAL RESOURCE ESTIMATES
157
17.1
Database
157
17.2
Model Areas
158
17.3
Las Cristinas Resources General
160
17.4
Gold
162
17.4.1
Conductora
162
17.4.2
Mesones-Sofia
163
17.4.3
Morrocoy and Cordova
164
17.5
Copper
164
17.5.1
Conductora
164
17.5.2
Mesones-Sofia
165
17.5.3
Morrocoy and Cordova
166
17.6
Silver
166
17.7
Specific Gravity
167
17.8
Metallurgical Model
167
17.9
Conductora Grade Models
168
17.9.1
Conductora - Assays
168
17.9.2
Conductora - Composites
171
17.9.3
Conductora - Geostatistics and Estimation
173
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page v
17.9.4
Conductora - Resources
174
17.10
Mesones-Sofia Grade Model
179
17.10.1
Mesones-Sofia - Assays
179
17.10.2
Mesones-Sofia - Composites
181
17.10.3
Mesones-Sofia Geostatistics and Estimation
183
17.11
Morrocoy Grade Model
189
17.11.1
Morrocoy - Assays
189
17.11.2
Morrocoy - Composites
191
17.12
Morrocoy Geostatistics and
Estimation
193
17.13
Cordova Grade Model
196
17.13.1
Cordova - Assays
196
17.13.2
Cordova - Composites
198
17.14
Cordova Geostatistics and
Estimation
199
17.15
Total Resources of Las Cristinas
Project
202
17.16
Resource Estimate Checking and
Changes over Time
205
17.17
Mineral Reserve Estimates
208
17.17.1
Applied Methodologies
209
17.17.2
Pit Design Parameters
209
17.17.3
Dilution
210
17.17.4
Lerchs-Grossman Pits
211
17.17.5
Ultimate Pit Design
212
17.17.6
Cutoff Grades
213
17.17.7
Mineral Reserve Estimate
215
18.0
OTHER RELEVANT DATA AND
INFORMATION
217
19.0
ADDITIONAL REQUIREMENTS FOR
TECHNICAL REPORTS ON DEVELOPMENT
PROPERTIES AND PRODUCTION
PROPERTIES
218
19.1
Mining Operations
218
19.1.1
Open Pit Hydrogeology and Dewatering
218
19.1.2
Pit Phases
223
19.1.3
Pre-Production Work
226
19.1.4
Mining
226
19.1.5
Waste Dumps
227
19.1.6
Stockpiles
228
19.1.7
Mining Equipment
228
19.1.8
Mine Manpower
229
19.2
Processing
229
19.2.1
General
229
19.2.2
Primary Crushing
229
19.2.3
Ore Storage and Reclaim
229
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page vi
19.2.4
Saprolite Handling
229
19.2.5
Grinding
229
19.2.6
Carbon-in-Leach
229
19.2.7
Carbon Desorption and Regeneration
229
19.2.8
Electrowinning and Refining
230
19.2.9
Cyanide Destruction
230
19.3
Geotechnical Studies
230
19.3.1
Process Plant
230
19.3.2
Tailings Management Facility ("TMF")
230
19.3.3
Open Pit
232
19.3.4
Waste Rock Dumps and Ore Stockpiles
232
19.3.5
Construction Borrow Materials
234
19.3.6
Clay Borrow
234
19.3.7
Sand, Granular B and Fine Concrete Aggregates
234
19.3.8
Granular A, Structural Rockfill and Coarse
Concrete Aggregates
234
19.3.9
Water Management Facilities
234
19.3.10
Infrastructure
234
19.3.11
Geotechnical Design Recommendations
234
19.4
Tailings Management Facilities
and Water Management
234
19.4.1
Design Basis and Criteria
234
19.4.2
Tailings Characteristics
235
19.4.3
TMF Design
235
19.4.4
Planned Construction
235
19.4.5
Planned Operations
235
19.4.6
Closure
235
19.5
Infrastructure and Ancillary
Services
235
19.6
Project Implementation
235
19.7
Project Costs
235
19.7.1
Taxes 235
19.7.2
Capital Costs
238
19.7.3
Operating Cost Estimates
248
19.8
Economic Analysis
249
19.9
Sensitivity Analysis
250
20.0
INTERPRETATIONS AND CONCLUSIONS
252
20.1
Geology and Exploration
252
20.2
Resources
252
20.3
Development and Production
253
21.0
RECOMMENDATIONS
255
21.1
Geology
255
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page vii
21.2 Resources
255
21.3 Development and Production
256
22.0
REFERENCES
258
23.0
DATE AND SIGNATURE PAGE
262
24.0
AUTHORS' CERTIFICATES
263
LIST OF TABLES
Table
Page
Table 1.1
Las Cristinas Total Measured and Indicated Resources
6
Table 1.2
Las Cristinas Total Inferred Resources
6
Table 1.3
Las Cristinas Gold Reserve Estimate
7
Table 1.4
Las Cristinas Inferred Gold within Pit Design
7
Table 1.5
Comparison of 2005 Estimate and 2007 Update
8
Table 1.6
Operating Cost Estimates
8
Table 4.1
List of Las Cristinas Concessions
16
Table 6.1
Placer Dome 1993-1996 Measured and Indicated
Resource Estimates for Conductora-
Cuatro Muertos Only
37
Table 6.2
Placer Dome 1997 Measured and Indicated
Resource Estimate for Conductora-Cuatro
Muertos-Potaso
37
Table 6.3
Placer Dome 1997 Inferred Resource Estimate
for Conductora-Cuatro Muertos-Potaso
37
Table 6.4
Placer Dome Reserve Estimates for Las
Cristinas
38
Table 6.5
Total Estimated Resources at Conductora and
Mesones Sofia (2003)
40
Table 6.6
Crystallex's Total Las Cristinas Proven and
Probable Reserves - 2003
41
Table 6.7
Las Cristinas Reserves 2003 Update
42
Table 6.8
Total Estimated Resources at Conductora and
Mesones Sofia (2004)
43
Table 6.9
Las Cristinas Reserves 2004
43
Table 6.10
Total Estimated Resources at Conductora and
Mesones Sofia (2005)
44
Table 6.11
Las Cristinas Reserves 2005
45
Table 6.12
Las Cristinas Reserves 2006
46
Table 6.13
Las Cristinas Reserves 2007
46
Table 7.1
Regional Stratigraphy and Broad
Description of Lithology for Greenstone Rocks of the
Guyana Shield in Venezuela
52
Table 11.1
Placer's Drill Database Description
74
Table 13.1
Summary of Placer's Assaying Procedures at
Las Cristinas
82
Table 13.2
Descriptive Statistics on Inserted Coarse
Rejects
88
Table 13.3
Descriptive Statistics on Inserted Barren
Core
88
Table 14.1
Descriptive Statistics of MDA 2002 Check
Samples
94
Table 14.2
Correlation of 2002 MDA Check Samples
94
Table 14.3
Descriptive Statistics on Quarter-Core
96
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page viii
Table 14.4
Descriptive
Statistics on Coarse Rejects
98
Table 14.5
Descriptive
Statistics on Pulps
99
Table 14.6
Twin Hole
Comparison
100
Table 14.7
MDA Checks on
Crystallex 2003 Drilling
101
Table 14.8
2004 MDA
Independent Samples
103
Table 14.9
CRM Gold Grades
and Confidence Intervals
105
Table 14.10
Standard Data
Summary for 2006/07 Crystallex Las Cristinas QA/QC Program
109
Table 14.11
Standard
Failures/Corrections for 2006/07 Crystallex Las Cristinas QA/QC Program
109
Table 14.12
Biases for
2006/07 Crystallex Las Cristinas QA/QC Program Standards
109
Table 14.13
Blank
Failures/Corrections for 2006/07 Crystallex Las Cristinas QA/QC Program
115
Table 14.14
Blank Data
Summary for 2006/07 Crystallex Las Cristinas QA/QC Program
115
Table 14.15
Statistical
Analysis of External Duplicate Pulp Samples
117
Table 14.16
Statistical
Analysis of External Duplicate -10 Mesh Samples
118
Table 14.17
Statistical
Analysis of External Core Duplicate Samples
119
Table 14.18
Statistical
Analysis of Internal Lab Duplicate Pulp Samples
121
Table 14.19
Statistical
Analysis of External Lab -10 Mesh Duplicate Samples
122
Table 14.20
Statistical
Analysis of External Lab -10 Mesh Duplicate Samples vs. Pulp Duplicate
123
Table 14.21
Gold Grade vs.
Core Recovery in Saprolite
125
Table 16.1
Summary of Main
Sample Shipments
138
Table 16.2
Composites Used
in Testwork
140
Table 16.3
Grinding
Parameters from Standard Tests
141
Table 16.4
Selected Bond
Ball Mill Work Indices from Leach Grinds
141
Table 16.5
Average Data from
Gravity Tests Ahead of Bottle Roll Leach Tests
142
Table 16.6
Gravity
Concentration Data from Pilot Plant Feed Preparation Work
143
Table 16.7
Intensive
Cyanidation of Gravity Concentrate
144
Table 16.8
Summary of Pilot
Plant Data
150
Table 16.9
Carbon Stripping
Results
152
Table 16.10
Lakefield Static
Thickening Tests
153
Table 17.1
Descriptive
Statistics of Database Used
157
Table 17.2
Descriptive
Statistics of Crystallex Data
158
Table 17.3
Modeled Gold
Zones at Conductora
163
Table 17.4
Modeled Gold
Zones at Mesones-Sofia
164
Table 17.5
Modeled Copper
Zones at Conductora
165
Table 17.6
Modeled Copper
Zones at Mesones-Sofia
166
Table 17.7
Modeled Silver
Zones at Conductora
166
Table 17.8
Modeled Silver
Zones at Mesones-Sofia
167
Table 17.9
Material Types
used to Define Specific Gravity
167
Table 17.10
Copper and
Soluble Copper Grades by Material Type and Area
168
Table 17.11
Descriptive
Statistics of the Conductora Assay Database
169
Table 17.12
Capping Limits
and Assay Statistics Conductora Samples
170
Table 17.13
Statistics by
Zone (Au) and Type (Cu) of Conductora Composites
172
Table 17.14
Criteria for
Classification of Conductora Resources
174
Table 17.15
Conductora
Measured Resources
177
Table 17.16
Conductora
Indicated Resources
177
Table 17.17
Conductora
Measured and Indicated Resources
178
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page ix
Table 17.18
Conductora
Inferred Resources
178
Table 17.19
Descriptive
Statistics of the Mesones-Sofia Assay Database
179
Table 17.20
Capping Limits
and Assay Statistics at Mesones-Sofia
180
Table 17.21
Statistics by
Zone (Au) and Type (Cu) of Conductora Composites
182
Table 17.22
Criteria for
Classification of Mesones-Sofia Resources
183
Table 17.23
Mesones-Sofia
Measured Resources
187
Table 17.24
Mesones-Sofia
Indicated Resources
187
Table 17.25
Mesones-Sofia
Measured and Indicated Resources
188
Table 17.26
Mesones-Sofia
Inferred Total Resources
188
Table 17.27
Descriptive
Statistics of the Morrocoy Assay Database
189
Table 17.28
Capping Limits
and Assay Statistics at Morrocoy
190
Table 17.29
Statistics by
Zone (Au) and Type (Cu) of Morrocoy Composites
192
Table 17.30
Criteria for
Classification of Morrocoy Resources
193
Table 17.31
Morrocoy Measured
Resources
194
Table 17.32
Morrocoy
Indicated Resources
194
Table 17.33
Morrocoy Measured
and Indicated Resources\
195
Table 17.34
Morrocoy Inferred
Resources
195
Table 17.35
Descriptive
Statistics of the Cordova Assay Database
196
Table 17.36
Capping Limits
and Assay Statistics at Cordova
197
Table 17.37
Statistics by
Zone (Au) and Type (Cu) of Cordova Composites
199
Table 17.38
Criteria for
Classification of Cordova Resources
200
Table 17.39
Cordova Inferred
Resources
201
Table 17.40
Las Cristinas
Total Measured Resources
202
Table 17.41
Las Cristinas
Total Indicated Resources
203
Table 17.42
Las Cristinas
Total Measured and Indicated Resources\
204
Table 17.43
Las Cristinas
Total Inferred Resources
204
Table 17.44
Economic
Parameters
210
Table 17.45
Physical
Parameters
210
Table 17.46
Lerchs-Grossman
Results by Gold Price
211
Table 17.47
Gold Cutoff
Grades
213
Table 17.48
Las Cristinas
Gold Reserve Estimate
215
Table 17.49
Las Cristinas
Inferred Gold within Pit Design
216
Table 19.1
Simulated
Groundwater Inflow
222
Table 19.2
Dump Capacities
228
Table 19.3
CVG Royalty
238
Table 19.4
Comparison of
2005 Estimate and 2007 Update
239
Table 19.5
2007 Capital
Costs Update
240
Table 19.6
Escalation of
Costs Between 2004 and 2007
247
Table 19.7
Operating Cost
Estimates
248
Table 19.8
Principal Base
Case Financial Model Inputs
249
Table 19.9
Base Case Summary
Results (Unleveraged)
250
Table 19.10
Sensitivity to
Gold Price (Before-Tax)
251
Table 19.11
Sensitivity to
Development Capital Costs (Before-Tax)
251
Table 19.12
Sensitivity to
Operating Costs (Before-Tax)
251
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page x
LIST OF FIGURES
Figure
Page
Figure 4.1
Location of Las Cristinas Property
17
Figure 4.2
Las Cristinas Project Area Location and
Concessions
18
Figure 9.1
Cross Section 9150 Gold Zones at Conductora
66
Figure 9.2
Cross Section 9150 Copper Zones at
Conductora
67
Figure 9.3
Cross Section 950 Gold Zones at Mesones-Sofia,
Morrocoy and Cordova
68
Figure 9.4
Cross Section 950 Copper Zones at Mesones-Sofia,
Morrocoy and Cordova
69
Figure 11.1
Drill Hole Location Map
75
Figure 13.1
Placer's Sample Preparation Procedures
83
Figure 14.1
Photograph of Well-Mineralized Core
91
Figure 14.2
Gold Check Assay Correlations
95
Figure 14.3
Copper Check Assay Correlations
95
Figure 14.4
Scatterplot of All Crystallex Checks on
Quarter Core
97
Figure 14.5
Scatterplot of Crystallex Checks on Quarter
Core
97
Figure 14.6
Scatterplot of Crystallex Checks on Coarse
Rejects
98
Figure 14.7
Scatterplot of Crystallex Checks on Pulps
99
Figure 14.8
MDA Checks on Crystallex 2003 Drilling
102
Figure 14.9
Control and Range Charts for Standard GS-P5B
110
Figure 14.10
Control and Range Charts for Standard GS-1C
111
Figure 14.11
Control and Range Charts for Standard GS-1P5A
112
Figure 14.12
Control and Range Charts for Standard GS-IP5
113
Figure 14.13
Control and Range Charts for Standard GS-15
114
Figure 14.14
Control Chart for Blank Material
116
Figure 14.15
Regression Plot for External Pulp Duplicate
Samples
117
Figure 14.16
Regression Plot for -10 Mesh Duplicate
Samples
118
Figure 14.17
Regression Plot for Core Duplicate Samples
119
Figure 14.18
Quarter-core Duplicate Data
120
Figure 14.19
Regression Plot for Internal Lab Duplicate
Pulp Samples
121
Figure 14.20
Regression Plot for External Lab -10 Mesh
Pulp Samples
122
Figure 14.21
Regression Plot of External Lab -10 Mesh
Duplicate Samples vs. Pulp Duplicate
123
Figure 14.22
Box and Whisker Plot for Gold Grade versus
Core Recovery
126
Figure 14.23
Box and Whisker Plot for Copper Grade versus
Core Recovery
126
Figure 16.1
Plan Map Showing Metallurgical Samples
133
Figure 16.2
Cross Section Showing Metallurgical Samples
Looking North
134
Figure 16.3
Cross Section Showing Metallurgical Samples
Looking West
135
Figure 16.4
Variation of Head Assay with Depth in CSB
139
Figure 16.5
Gravity Recovery Data
143
Figure 16.6
Copper Leached From SAPS-Bearing Ore
145
Figure 16.7
Cyanide Consumed in Bottle Roll Tests
146
Figure 16.8
Lime Addition in Bottle Roll Tests
147
Figure 16.9
Grade - recovery relationship
148
Figure 16.10
Summary Pilot Plant Data
150
Figure 16.11
Basic Viscosity Data
152
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page xi
Figure 16.12
Outokumpu Thickening Test Data
154
Figure 16.13
Natural Degradation of PP1 and PP2 Tailings
155
Figure 17.1
Locations of the Four Las Cristinas Sub-Areas
159
Figure 17.2
Typical Cross Section (9150) of Conductora
Gold Model
175
Figure 17.3
Typical Cross Section (9150) of Conductora
Copper Model
176
Figure 17.4
Typical Cross Section (950) of Mesones-Sofia,
Morrocoy and Cordova Gold Model
184
Figure 17.5
Typical Cross Section (950) of Mesones-Sofia,
Morrocoy and Cordova Copper Model.
185
Figure 17.6
Lerchs-Grossmann Pits Graph
212
Figure 17.7
Ultimate Pit Design
214
Figure 17.8
Changes to Reserves 2006 EOY to Final
216
Figure 19.1
Surface Facilities and Infrastructure Map:
Year 15
219
Figure 19.2
Surface Facilities and Infrastructure Map:
End-of-Mine-Life
220
Figure 19.3
Phased Pits
224
Figure 19.4
Ultimate Pit Design
225
LIST OF APPENDICES
Appendix A
Contract with CVG
Appendix B
Estimation
Parameters
Appendix C
Preliminary Open
Pit Slope Stability Analysis Updated
Appendix D
TMF Dam Stability
Analysis 2007 Updated
Mine Development Associates
November 7,
2007
MINE DEVELOPMENT ASSOCIATES
MINE
ENGINEERING SERVICES
1.0
EXECUTIVE SUMMARY
1.1
Introduction and
Property Location
Crystallex International Corporation ("Crystallex")
is exploring and developing the Las Cristinas project in southeastern Venezuela.
Since 2003, Mine Development Associates ("MDA") has been engaged to estimate and
update the mineral resources and reserves for the property and was engaged in
July 2007 to prepare this updated Technical Report for the purpose of reporting
the most recent updated resources and reserves. The current report updates the
2003 Feasibility Study by SNC-Lavalin Engineers and Constructors Inc. ("SNC-Lavalin")
and their subsequent 2005 Technical Report. The total resource at Las Cristinas
as reported herein represents a significant increase since the resource estimate
reported in 2005.
The Las Cristinas property is located in
southeastern Venezuela in the State of Bolivar. The project site is about 670km
southeast of Caracas and 370km by road south-southeast of the city of Puerto
Ordaz at approximately N 006o 12' Latitude and W 061o 29' Longitude. The village
of Las Claritas lies 6km east of the property.
The Las Cristinas project consists of 3,885.6
hectares in four concessions: Cristina 4, 5, 6, and 7. On September 17, 2002,
Crystallex and the public entity Corporación Venezolana de Guayana ("CVG")
signed a Mining Operation Agreement ("MOA") for the development of a mine on the
Cristina 4, 5, 6 and 7 concessions. The MOA provides Crystallex with the
exclusive right to explore, design and construct facilities, exploit, process,
and sell gold from Las Cristinas but does not transfer property rights to
Crystallex. The term of the MOA is 20 years, subject to extension for up to 20
more years in two 10-year renewal terms. At a processing rate of 20,000 tonnes
per day and current proven and probable reserve estimates, the expected mine
life is 64 years. However, Crystallex has completed a study and intends to
increase the capacity to 40,000 tonnes per day as soon as practicable, at which
rate the current reserves would be depleted in about 32 years.
The Las Cristinas project consists of a large
moderately dipping set of tabular mineralized gold zones. The project is
designed for open-pit development at 20,000 t/d with planned expansion to 40,000
t/d. Metallurgical recovery of the gold is by cyanide-leach. There are four main
mineralized areas at Las Cristinas: the Conductora area (including the Cuatro
Muertos, Potaso and Conductora zones), the Mesones-Sofia area (including both
the Mesones and the Sofia zones), the Morrocoy area and the Cordova area.
775-856-5700
210 South Rock Blvd.
Reno, Nevada 89502
FAX: 775-856-6053
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 2
1.2
Geology and
Mineralization
Las Cristinas is located in a Proterozoic
granite-greenstone terrain of eastern Venezuela, with stratigraphy in the
district consisting of a west-dipping sequence of lower Proterozoic supracrustal
metavolcanic and metasedimentary rocks. Mineralization at Las Cristinas is
hosted by a mafic to intermediate-composition volcanic sequence. Three phases of
intrusive rocks, including diorite stocks, an aplite dike, and diorite sills,
occur on the Las Cristinas property. The diorite stocks and aplite dike are
thought to be pre-mineralization, while the diorite sills appear to post-date
mineralization.
A near-pervasive foliation (S
1
) occurs in the
Las Cristinas area where it varies in intensity up to very strong. The S
1
foliation is sub-parallel to bedding (S
0
). Mapping of the orientation of
foliation and bedding reveals the presence of a fold hinge whose axial trace
strikes northeast with a plunge to the southwest, coinciding with the axial
trace of a regional synform. A northeast-striking fault, located in the axial
zone of the regional synform, passes between the Mesones and Sofia mineralized
centers. This fault is believed to have cut through a single mineralized breccia
complex and resulted in the displacement of the Mesones component of that body
approximately 200m to the southwest of the Sofia remnant.
Weathering has had a critical effect on copper
distribution at Las Cristinas and will have an impact on mine development. The
copper has been leached from the oxide saprolite and redeposited in the sulfide
saprolite.
The two most important types of gold
mineralization at Las Cristinas in terms of the identified resource are
stratiform bodies such as Conductora, Morrocoy, and Cordova and hydrothermal
quartz-tourmaline breccias exemplified by Mesones-Sofia. About 95% of the
identified gold resource comes from the stratiform deposits and 5% from the
breccias. Mineralization in Mesones-Sofia is concentrated in the
quartz-tourmaline-sulfide-calcite vein breccias and extends laterally into the
adjacent country rocks. Pyrite and chalcopyrite occur as aggregates up to 5cm in
diameter, as semi-massive replacements in the matrix of the quartz-tourmaline
breccias, and as disseminations both in the breccias (in the matrix and in
breccia clasts) and in the enclosing country rocks. In the Conductora-type
stratiform mineralization, distribution of mineralization is controlled by the
permeability of the host rocks gold grade and alteration intensity typically
decrease abruptly at the contact between permeable volcaniclastic units and
impermeable lava layers. Pyrite and chalcopyrite are, again, the main sulfides.
The majority of the gold resource at Las Cristinas is located within biotite
alteration facies, and to a lesser extent within the tourmaline zone, while the
distal chlorite-epidote-calcite alteration facies is essentially barren of
significant gold mineralization.
1.3
Exploration Concept
The Las Cristinas mineralization has a number of features in
common with porphyry gold-copper deposits, including hydrothermal
quartz-tourmaline breccias at the core of the mineralized system, alteration
zoning, and the metal association of gold with copper and minor molybdenum.
However, unlike typical porphyry systems, there is no evidence of either a
closely related porphyry intrusion or abundant quartz veins at Las Cristinas.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 3
There is a strong relationship between
mineralization and structure at Las Cristinas. Specifically most of the
mineralization lies parallel to the foliation and is influenced by the
stretching orientation defined by a mineral lineation. This structural
information is consistent with mineralization being coeval with shearing over an
interval in excess of a kilometer in width.
Recent drilling at Las Cristinas has been
focused on extension of resources both laterally and down dip with more of a
development focus rather than an exploration focus.
1.4
Exploration and Historic
Resource Estimates
Most of the exploration work at Las Cristinas
has been performed by Placer Dome Inc. ("Placer"), who worked on the property
from 1991 to 2001. Placer completed line cutting, mapping, rock and soil
sampling, geophysics, trenching, and drilling. Since acquiring the property in
2002, Crystallex has focused its exploration on drilling, with particular
attention paid to the studies of the alteration, stratigraphy and structure of
the deposit to define the controls on mineralization so as to improve confidence
in the validity of correlating mineralized zones between adjacent drill-hole
intersections.
The current database for Las Cristinas has
189,026m of trench and drill-hole samples from 108 individually named trenches
and 1,321 drill holes. There are a total of 187,226 gold assays, 168,020 copper
assays, 43,830 cyanide-soluble copper assays, and 145,021 silver assays.
Drilling alone totals 187,165m. The average drill spacing over the entire
modeled area at Conductora is roughly 70m, dropping to about 30m in the core
area where economic mineralization is shallowest and where mining is planned to
commence. The Mesones-Sofia area has an average drill spacing of 55m, while
Morrocoy, a newly estimated deposit lying between Cordova and Mesones-Sofia, has
a drill spacing of about 85m.
Placer drilled 1,174 drill holes for a total of 158,738m and
excavated all of the 108 trenches; 77% of the holes had at least one down-hole
survey. Placer tried several different drilling techniques in order to overcome
the challenges of drilling in an intensely weathered tropical environment and
chose triple-tube diamond drilling. They found that PQ tools provided the best
recovery in saprolite, with HQ in bedrock. NQ was used systematically in bedrock
during the infill-drilling phase and occasionally in difficult drilling
situations. Placer's drilling was conducted in essentially three phases
shallow drilling to test saprolite, bedrock drilling and infill drilling in
saprolite, and finally infill drilling of the pit area. Placer had a quality
control program in place evaluating sampling and sub-sampling procedures and
results.
Crystallex drilled 90 holes for a total of 28,427m from 2003
through early 2007, generally using HQ tools for saprolite and NQ for bedrock.
Crystallex's 2003 drilling twinned selected Placer holes to independently
evaluate a portion of the Placer drill-hole database and assay data.
Crystallex's twin holes were drilled with smaller diameter core than Placer's
had been, and Crystallex sampled with 2m continuous sample intervals in contrast
to Placer's 1m sample intervals. Crystallex's subsequent drilling, conducted
from 2004 through 2007, focused on increasing the reserve and resource through
infill drilling, drilling down-dip extensions of the stratiform mineralized
zone, and exploring strike extensions of the deposit. This drilling used blanks
and pulp standards for quality control, and for their 2006-2007 drilling.
Crystallex also conducted check assaying with a second assay lab. Checks on
Placer's sample data verified the general tenor of grades reported by Placer.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 4
Issues of variability and biased-low samples were addressed
in a heterogeneity study. The high variability must be addressed prior to and
during production to avoid massive misclassifications of ore and waste rock
during production. This material heterogeneity or grade variability has
negatively impacted the ability to make any resource estimate precisely reflect
local estimated grades. Importantly, the style of mineralization and its natural
variability are the likely causes of the underlying difference in grades between
Placer data and Crystallex data, where Crystallex samples are both smaller and
slightly lower grade than Placer's samples. It has been demonstrated that this
is likely due to sample size. Taking this further, the entire sample database
might be understating the mean grade of the deposit, even Placer's data. While
this appears possible, there is no way to quantify this potential underreporting
of grade or any way to incorporate this into the database or resource model.
1.5
Metallurgy
Several samples of saprolite oxide ("SAPO"),
saprolite sulfide ("SAPS"), carbonate-leached bedrock ("CLB") and
carbonate-stable bedrock ("CSB")ore from the planned Conductora pit area were
examined in bench tests and pilot plant operations by SGS Lakefield Research
("Lakefield") from April 2003 through mid-2004. Samples of waste from the
Conductora pit and four samples of Mesones ore were also studied. Sub-samples of
Conductora ore were sent to McGill University for gravity recovery test work.
Outokumpu Mintec Canada Ltd. ("Outokumpu") conducted pilot-plant settling tests
on several samples. The various test programs were designed to confirm relevant
data generated by Placer, determine the gold recovery and reagent requirements
for the proposed gravity-leach flowsheet, and generate plant design data.
Grinding data are generally in accordance with
data generated by Placer. Pilot-scale gravity concentration tests at Lakefield
on Conductora ore 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.
Preliminary data for Mesones show an even better response. Intensive cyanidation
of the concentrates from Conductora gave ~99% leach recovery. Tests at McGill to
determine the gravity-recoverable gold ("GRG") content of Conductora 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 on
Conductora gravity tailings confirm that SAPO leaches very well to give about
99% overall (gravity + leaching) extraction and a 0.02 g Au/t tailing. With a 24
h leach time, tailings were 0.03 g Au/t corresponding to 98% extraction. CSB
gives about 85% overall extraction (0.17 g Au/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 of370 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.
An initial gravity-leach test on each of the
four Mesones samples showed an average 85% overall gold extraction and modest
reagent consumption. It is believed that higher extraction could be obtained
with optimization of the leach conditions.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 5
Duplicate bench-scale tests on a series of
samples containing 20% CLB and 80% CSB and between 1 and 2 g Au/t yielded an
average of 88.7% overall gold recovery (gravity and leaching) with no measurable
dependency on head grade.
A 2 kg/h pilot plant was operated for three
weeks in which batch-ground/gravity concentrated Conductora ore was subjected to
carbon-in-leach ("CIL") processing. During the first 13 days (PP1), a blend of
20% SAPO and 80% CSB was leached with an addition of 0.7 kg/t of cyanide (0.3
kg/t consumed) to give a final overall gold extraction of 89.6% (tailings
average of 0.15 g Au/t). A SAPO-SAPS-CLB-CSB blend was processed for the last
week (PP2). The plant tailing was 0.15 g Au/t for an extraction of 89.3% with a
cyanide addition of 0.8 kg/t (0.3 kg/t consumed).
Viscosity measurements by Lakefield indicated
nothing problematical in 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/m
2
/h
or greater. Allowing for a 15% scale-up, the data showed that a 50m 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.
Natural degradation tests and continuous INCO
Air/SO
2 cyanide destruction
tests have been performed on pilot plant tailings. Natural degradation under
Lakefield climatic conditions reduced weak-acid dissociable cyanide ("CNWAD") to
below 20 ppm in about40 d for pilot plant tailings from PP1 and 100 d for PP2
tailings. The INCO process then reduced CNWAD to <0.3 ppm and Cu to about 1 ppm
under industry-typical operating conditions. INCO tests on naturally degraded
PP2 tailings solution gave <0.1 ppm CNWAD and <0.5 ppm Cu.
1.6
Resource and Reserve
Estimation
The total resource at Las Cristinas as reported herein
represents a significant increase since the previous resource reported in 2005
and since Crystallex initially obtained the rights to production in 2002. The
increase is the result of drilling that expanded Conductora (inclusive of Cuatro
Muertos and Potaso) down dip, drilling that expanded and allowed for inclusion
of Morrocoy, and the first-time inclusion of Cordova resources, located west of
Mesones-Sofia, and Morrocoy.
The mineralized zones at Conductora were
defined in 2002, but Crystallex's exploration and geological studies have
yielded new insight into the gold distribution. The controls on mineralization
are lithological with the more-favorable units having more primary porosity and
permeability. In addition to lithology, alteration and sulfide content also
correlate with the mineralization. Higher-grade zones can be visually identified
by lithology, alteration, and sulfides.
Table 1.1 and Table 1.2 show the updated
Measured and Indicated resources and Inferred resources, respectively, for the
entire Las Cristinas project area. These resources are inclusive of the areas a)
Conductora-Cuatro Muertos-Potaso ("Conductora"), b) Mesones-Sofia, c) Morrocoy,
and d) Cordova. The deposit is bounded at the south by a property boundary and
ends at Mesones-Sofia, Cordova and
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 6
Morrocoy in the north. The deposit is open at depth. This
report is the first to disclose a resource estimate for Morrocoy and Cordova,
the latter of which is classified as Inferred only.
Table 1.1 Las Cristinas Total Measured and
Indicated Resources
(Including Reserves*)
*Note: Mineral Resources which are not Mineral Reserves do not have
demonstrated economic viability.
Table 1.2 Las Cristinas Total Inferred
Resources
(Including Reserves*)
*Note: Mineral Resources which are not Mineral Reserves do not have
demonstrated economic viability.
It is important to note that since the first
estimate was made of the Las Cristinas deposit resources by Crystallex in 2003,
all new drilling done in 2004 (18 holes), 2005 (14 holes), and 2006-2007 (46
holes) has supported the model in that the defined zones needed little
modification even at a drill-hole spacing of over 100m,
i.e.
, the
high-grade/high-sulfide and low-grade/low-sulfide zone gradational contacts needed only minor changes to fit the new drill-hole data. This
fact is a testament to the predictability of the Las Cristinas deposit in
general, but Conductora particularly, where most of the drilling took place.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 7
The economic and design criteria used to
determine the reserves in this report were derived from existing reports. MDA
believes that there is enough information in prior reports concerning the
appropriate mining, processing, economic and other factors to support Proven and
Probable reserves. The work undertaken by MDA in 2007 consisted of updating
mining costs using factors and estimates provided by Crystallex, developing
Lerchs-Grossmann ("LG")ultimate pits using current economics, redesigning the
ultimate pits, and reporting reserves. Because the updated economic data have
not been rigorously verified by MDA, the 2007 work should be considered
pre-feasibility level. The Proven and Probable mineral reserve estimates by area
are given in Table 1.3. Along with the reserves reported, within the boundaries
of the pit design there are an additional 1.6M contained ounces of Inferred
material. These are shown in Table 1.4 below.
Table 1.3 Las Cristinas Gold Reserve Estimate
Table 1.4 Las Cristinas Inferred Gold within Pit Design
In Pit Inferred Summary (Tonnes, Grams, and Ozs in
Thousands)
Total Ore
Tonnes
gAu/t
Grams Au
Ounces Au
Conductora
46,985
0.97
45,569
1,465
Mesones/Sofia
1,651
0.65
1,080
35
Morocoy
3,103
0.73
2,252
72
Total Proven
51,739
0.95
48,901
1,572
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 8
1.7
Development and
Production
It is estimated that the total capital cost of
the project has increased from $293 million dollars as reported in 2005 to
approximately $356 million in the third quarter of 2007 (Table 1.5). Crystallex
has spent, through August 2007, approximately $112 million on items included in
the revised cost estimate of US$356 million.
Table 1.5 Comparison of 2005 Estimate and 2007 Update
DESCRIPTION
2005
2007
% Increase
Total Direct Costs
218.7
238.3
8.9%
Indirect Costs
30.4
66.4
118.4%
Owner's Costs
24.9
27.5
10.4%
Contingency
19.0
23.8
25.3%
TOTAL PROJECT COST
293.0
356.0
21.5%
In addition, operating costs have changed since 2005 as shown
in Table 1.6.
Table 1.6 Operating Cost Estimates
Operating
Operating
Operating
Operating Cost
Item
Cost/t Ore
Cost/t Ore
Cost /oz Gold
/oz Gold
(Aug 2005)
(Oct 2007)
(Aug 2005)
(Oct 2007)
Mining
$2.68
$3.22
$72
$101
Processing
$4.45
$5.86
$119
$183
G & A
$0.52
$0.72
$13
$22
TOTAL
$7.66
9.80
$204
$306
Note: Does not include any off-site costs or royalties
Since the 2005 update to the 2003 feasibility study, there
have also been some changes in plans for mining and processing.
The increase of reserves is the result of
additional drilling defining additional resources downdip. The consequence is a
larger and deeper ultimate pit design. The current 2007 ultimate pit is designed
to be approximately 1,250m wide, 3,100m long, and up to 490m deep. Mining is
planned using truck and shovel methods. Current plans include processing 20,000
t/d with a variable strip ratio averaging 1.38 and ranging from 0.30 to 3.29
tonnes of waste per tonne of ore mined.
Water flow into the pit has been determined to
be greater than what was estimated in the 2005 study. MDA has not addressed the
potential flow increase in detail, but given the significance of dewatering to
the project, more detailed analyses and engineering are needed. Dewatering costs
are estimated at $0.185 per tonne mined, and the dewatering cost estimate is
thought to be within accuracy for pre-feasibility work. Nevertheless, MDA
cautions that the practical aspects of dealing with the extra volume of water
will be challenging. If these costs increase significantly, the economics of the
deeper reserves may be affected.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 9
There has also been a change with regard to cyanide
destruction. The cyanide destruction process is air/SO2 using sodium
metabisulphite as the source of SO2. Originally it was envisioned that the
excess reclaim water from the tailings management facility (TMF) would be
treated; however, it is now Crystallex's intent to treat the entire stream of
CIL tailings.
Delays in acquiring the environmental permits allowing
construction to commence have impacted the overall project startup. It is now
expected that project start up completion will be achieved approximately 24
months following the receipt of the full permits and the mobilization of the
early works-construction contractors.
1.8
Conclusions and
Recommendations
Since signing the MOA for Las Cristinas, Crystallex has
successfully increased both the estimated resources and reserves. Las Cristinas
presents a well-defined resource that has undergone extensive engineering and
economic studies. The project is waiting for government permitting to begin
production of the defined reserves.
At this stage, while waiting for final government permission
to begin construction, multiple tasks in differing disciplines should be
accomplished to optimize expected production. Crystallex should continue with at
least a) exploration, b) geological studies, c) sub-sampling evaluation for
production samples, d) metallurgical testing, e) water flow studies, f) detailed
engineering work, and g) optimizing the production schedule.
Analysis of the drilling results has further defined controls
on mineralization in the various portions of the property and will aid in future
exploration. To potentially continue the expansion of reserves, MDA recommends
that two areas deserve attention in the near term. Infill drilling is needed
immediately south of the Sofia area, beneath the Quebrada Amarilla, to upgrade
the Inferred resource there. It is recommended that three holes totaling about
1,200m be drilled in this area. The second area with an Inferred resource that
needs to be upgraded is Cordova. A lack of continuity of gold zones demonstrated
by Placer's drilling may actually reflect intense folding. Detailed stratigraphic analysis, perhaps combined with lithogeochemistry to attempt to
distinguish volcanic units, should be followed by about 1,500m of drilling in
five holes.
MDA is not reporting copper resources or reserves because CVG,
who has granted mining rights to Crystallex, currently only has the rights to
the gold in Las Cristinas. Since copper has a negative effect on cyanide
recovery of gold in the saprolite sulfide material, MDA has modeled copper.
MDA believes that the single most important factor
influencing mining will be the amount of water entering the pit. As the detailed
engineering stage of project development proceeds, MDA recommends an aggressive
program of testing under the guidance of groundwater hydrologists. Capturing as
much water as practical on upper benches and channeling it to sumps in the upper
elevations of the pit can reduce pit-pumping requirements.
The acid-generating material management plans require mining
of saprolite-sulfide waste material which must be encapsulated within waste
dumps to prevent the production of acid drainage, requiring detailed short-term
planning to ensure that potential acid-generating material being dumped is
properly managed.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 10
Due to the increase in reserves, additional work is needed
for the increased dump size and TMF. It is strongly recommended that a
geotechnical investigation program be carried out to confirm the subsurface
conditions under the proposed new dump location and stability analysis
undertaken to verify design recommendation provided above. Should the option to
expand the TMF footprint be carried forward, substantial dam alignment
optimization and geotechnical field investigation would be required for the
detail design and due to the height increase to about 100 m, additional field
investigation and tests are required to confirm the analysis. Recommendations
presented in 2005 design report regarding site preparation, construction and
monitoring should be still followed.
The expanded pit, which is a result of the increase in
reserves, is now within about 30m of the project's primary crusher.
Consideration should be made to minor relocation of the crusher. This would
provide a cushion against any future modifications to pit designs based on slope
reconfigurations or further expansion of reserves.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 11
2.0
INTRODUCTION
2.1
Introduction
Crystallex International Corporation (Crystallex) is
exploring and developing the Las Cristinas project in southeastern Venezuela.
Mine Development Associates (MDA) has been engaged in estimating and updating
the mineral resource and reserves for the property since 2003. In July 2007, MDA
was contracted to prepare this Technical Report for the purpose of reporting the
most recent updated resources and reserves. This report also describes the
property as known by prior exploration and provides an update on the 2006-2007
drilling, new information gained from that exploration, and results of
continuing data verification. The 2006-2007 drilling that has led to the updated
mineral resource and reserve estimates in this report was designed to bring the
Morrocoy area into a defined resource and to increase resources and reserves
down dip in the Conductora area. It was successful in both tasks. This most
recent update also includes the first time reporting of Inferred resources at
Cordova. The current report updates the 2003 Feasibility Study by SNC-Lavalin
Engineers and Constructors Inc. (SNC-Lavalin) and their subsequent Technical
Report (SNC-Lavalin, 2005a). The total resource at Las Cristinas as reported
herein represents a significant increase since the previous resource reported in
2005 (Ristorcelli, 2005; SNC-Lavalin, 2005a). The current reported reserve has a
production rate of 20,000 t/d with an option to expand to 40,000 t/d.
Crystallex is a Canadian corporation listed on the Toronto
Stock Exchange (TSX) and the American Stock Exchange (AMEX). This report was
written in compliance with disclosure and reporting requirements set forth in
the Canadian Securities Administrators' National Instrument 43-101, Companion
Policy 43-101CP, and Form 43-101F1. The mineral resources and reserves reported
in Section 17.0 were classified to the standards and requirements stipulated in
Canadian National Instrument 43-101. It is intended that this report may be
submitted to those Canadian stock exchanges and regulatory agencies that may
require it. It is further intended that Crystallex may use it for any lawful
purpose to which it is suited.
MDA prepared two previous 43-101 Technical Reports on the Las
Cristinas project for Crystallex (Ristorcelli, Hardy, and Prenn, 2002;
Ristorcelli and Hardy, 2003) as well as reports that were not filed. The 2002
report described historic work on the property and results from previous
operators. The 2003 report presented the first resource and reserve estimations
of Crystallex's tenure on the property, which are included in this report in the
section on historic resources and reserves (Section 6.4.2). These reports form
the basis for much of this report to which more recent information has been
added, principally from new co-authors.
2.2
Terms of
Reference
The resource estimates for this report have been prepared by
Steven Ristorcelli, P. Geo, Principal Geologist, Mine Development Associates,
principal author of the report. Thomas Dyer, P. Eng., Mine Development
Associates was responsible for mine design, planning and mineral reserve
estimates, and Dyer was assisted by MDA associate Scott Hardy, P.Eng. Richard
Spencer, PhD, P. Geo., of Crystallex provided updated information on geology,
mineralization, and exploration by Crystallex, ran the exploration at Las
Cristinas and had overall supervision and planning responsibility for those
programs, and had significant input to this report. Mr. John Goode, P.Eng.,
independent metallurgist, has been involved with Las Cristinas and Crystallex
since 2003 and has written, compiled and interpreted the metallurgical data for
this project. Mr. David Evans, P. Eng., of SNC-Lavalin, was heavily involved in
previous feasibility work on this project and has taken the lead role in this
recent work on behalf of SNC-Lavalin, principally in coordinating SNC-Lavalin's
work on capital and operating costs. Ms. Ljiljana Josic, P.Eng, of SNC-Lavalin,
was responsible for the geotechnical study of the deepened open pit. Mr. Henri
Sangam, P. Eng, was responsible for evaluating the geotechnical aspects of the
tailings management facility and waste dumps. Ms. Helen Jackson, P. Geol, was
responsible for the mine dewatering section. Each of these co-authors is a
qualified person under Canadian Securities Administrators' National Instrument
43-101 for their area of responsibility. Certificates of these qualified persons
are provided in Section 24.0.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 12
2.3
Sources of
Information
MDA has relied almost entirely on data and information
derived from work completed by Placer Dome Inc. (Placer) and given to MDA by
Crystallex. Crystallex acquired the Placer database in electronic form and
received ~99% of the known drill data. Hard copies of the assay data and drill
logs are not available. This is one aspect of the project that may never be able
to be audited or checked. Validation drilling and re-assaying of pre-existing
samples permit MDA to present a conclusion under Data Verification of adequacy,
reasonableness and accuracy for the underlying database. Furthermore, an
additional 12 twin drill holes completed in 2003, 18 drill holes completed in
2004, 14 drill holes drilled in 2005, and 46 drill holes in 2006-2007 have
further verified the location and tenor of the mineralization. Though MDA has
reviewed much of the available data, made site visits and taken independent
samples, these tasks and data validate only a portion of the entire data set.
MDA therefore has made judgments about the general reliability of the underlying
data. Where deemed either inadequate or unreliable, the data were either
eliminated from use or procedures were modified to account for lack of
confidence in that specific information. Underlying this assessment on data
quality and integrity is a level of confidence instilled in the project data and
work completed because of the technical ability of the company involved with the
project during the 1990s. In general, Placer's work appears to meet or exceed
industry standards.
In addition, the scope of this study included a review of
pertinent technical reports and data provided to MDA by Crystallex relative to
the general setting, geology, project history, exploration activities and
results, methodology, quality assurance, interpretations, drilling programs, and
metallurgy. For this report, MDA relied heavily for background information on
its prior technical reports described above and on the feasibility report and
its updates by SNC-Lavalin described above. Prior reports that the authors used
in preparation of this report are listed in Section 22.0. In addition to the
company data and documents, public domain information has been gathered from a
number of sources. The authors have also had numerous conversations with
employees and management of Crystallex, who have provided information used in
this report.
2.4
Personal
Inspection by the Authors
MDA's mandate required on-site inspections at Las Cristinas and to that end
Mr. Ristorcelli has visited the property on numerous occasions since 2002. In
addition, MDA associate, Mr. Greg Maynard, has been to the site, and Mr. Trevor
Nicolson of Nicholson Analytical Consulting, independent sampling consultant,
spent 29 days on the project during the 72-day 2006 and 2007 drilling campaign.
Mr. David Evans and Henri Sangam have been to the project site but only in
relation to their specific endeavors.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 13
2.5
Effective Date
The resource and reserve estimates reported here were completed in August and
September 2007, respectively. The results of these estimates were made public on
September 24, 2007. The date of this report as shown on the cover page and in
the authors' certificates is the date on which writing of the report was
completed and is the effective date of this report.
2.6
Note on Language, Terminology
and Definitions
Unless otherwise indicated, all references to dollars ($) in this report
refer to currency of the United States. This is a technical report, and the use
of some technical terms is unavoidable.
2.7
Definitions
Some frequently used acronyms and abbreviations that appear in this report
are listed below.
AA
atomic absorption
spectrometry
Ag
silver
Au
gold
CIM
Canadian Institute of
Mining, Metallurgical, and Petroleum
Conductora
Used to denote the
entire Conductora-Cuatro Muertos-Potaso deposit
Cu
copper
DMT
dry metric tonnes
d
day
FA/AA
fire assay with an
atomic absorption finish
gpm
gallons per minute
g/t
grams per tonne
kg
kilograms
km
kilometer
kPa
kilopascal
kVA
kilovolt-ampere
kWh/t
kilowatt-hours per
tonne
lb
pound (2000 lbs to 1
ton, 2204.6 lbs to 1 tonne)
MDA
Mine Development
Associates, Inc., the authors of this technical report
m
meters
mm
millimeters
µm
micrometers
m/s
meters per second
MW
megawatt
NSR
net smelter return
oz
Troy ounce (12 oz to 1
pound, 1 troy oz = 31.10348 grams)
QA/QC
quality assurance and
quality control
RC
reverse-circulation
drilling method
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 1
4
RQD
rock-quality
designation
SNC-Lavalin
SNC-Lavalin Engineers
and Constructors Inc.
tonne
metric ton
tpd
metric tonnes per day
tph
metric tonnes per hour
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 15
3.0
RELIANCE ON
OTHER EXPERTS
The authors wish to make clear that they are qualified
persons only in respect of areas in this report identified in their Certificates
of Qualified Persons submitted with this report to the Canadian Securities
Administrators. The authors have relied, and are unaware of any reason not to
have relied upon the following individuals and companies who have contributed
the sample quality control, engineering, legal, environmental, administration,
taxation and financial information stated in this report, as noted below:
Mr. Trevor Nicholson, Independent Consultant, 2006-2007
drill program data and sample quality control and reliability;
Mr. Scott Hardy, P. Eng., associate to MDA, engineering for
reserves;
SNC-Lavalin for historic work on feasibility study issues
and environmental; and
Crystallex staff and legal counsel on environmental issues,
permitting, taxation, finance and contract rights.
Crystallex has provided its opinions and opinions of its
legal counsel regarding the status of mining rights to the property. MDA is not
qualified for assessing the validity of these issues and therefore presents its
opinions for completeness and without comment. The classification of reserves is
given by MDA from a technical standpoint, while Crystallex's legal work for
mining rights and contractual issues provides the information for contractual
rights' obligations for resource and reserve classification.
MDA did not investigate the environmental issues associated
with the property, and none of the authors is qualified for environmental issues
in Venezuela. However, Crystallex did address environmental and permitting
issues updating historic work.
MDA is of the opinion that each of the other contributors to
this report represented as a Qualified Person (QP) is a QP with respect to the
work for which such QP is taking responsibility. Except as may be stated in this
report, none of the QPs coauthoring this Technical Report has taken steps to
verify data identified as having been prepared by or under the supervision of
another QP identified in this report. The reason for not verifying such data is
that another QP has stated that it was prepared by or under the supervision of
that QP.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 16
4.0
PROPERTY
DESCRIPTION AND LOCATION
All information in this Section 4.0 is derived from others,
and MDA has relied entirely on Crystallex to update the environmental Section
4.4 (unless otherwise specifically noted) from SNC-Lavalin (2005a). Crystallex
is entirely responsible for Sections 4.2 and 4.3. MDA is not qualified to assess
mineral rights, contract law, or environmental law or regulations in Venezuela
and therefore cannot and does not give any opinion on the information given in
Section 4.0 but presents this information to fulfill requirements of Canadian
Instrument 43-101.
4.1
Location
The Las Cristinas property is located in the southeastern
part of Venezuela in the Municipality of Sifontes in the State of Bolivar.
Bolivar is the largest of the three states comprising the Guyana Region, the
remaining states being the Amazonas and Delta Amacuro. The project site is
located approximately 670km directly southeast of Caracas, 30km west of the
border with Guyana, and 200km north of the border with Brazil (Figure 4.1). The
property is 6km west of the village of Las Claritas. The project's approximate
geographical coordinates are N 006
o
12' Latitude and W 061
o
29' Longitude.
The name KM 88 for the district came from the area being
located near kilometer 88 marker of the road linking El Dorado with the
Brazilian border.
4.2
Land Area
The property consists of 3,885.6 hectares in four concessions
(Table 4.1). Although Crystallex has not legally surveyed the property, the
concession boundaries are presented in the underlying agreement between
Crystallex and Corporación Venezolana de Guayana (CVG) (Appendix A). Figure
4.2 shows the general outline of the concessions and includes an outline of
mineralized areas. Details of these four concessions are given in Appendix A,
including surface area and corner coordinates given in UTM (Universal
Transversal Mercator) coordinates using the Canoas datum. There are four main
mineralized areas at Las Cristinas: the Conductora area (including the Cuatro
Muertos, Potaso and Conductora zones), the Mesones-Sofia area (including both
the Mesones and the Sofia zones), the Morrocoy area and the Cordova area.
Table 4.1 List of Las Cristinas Concessions
Concession
Hectares
Cristina 4
1,000.0
Cristina 5
939.4
Cristina 6
944.2
Cristina 7
1,002.0
Total
3,885.6
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 17
Figure 4.1 Location of Las Cristinas Property
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 18
Figure 4.2 Las Cristinas Project Area Location and Concessions
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 19
4.3
Agreements and
Encumbrances
Under the Venezuelan constitution, all hydrocarbon and
mineral resources belong to the Republic. The Mining Law of 1999 (VML)
regulates the exploration and exploitation of mineral resources (other than some
industrial minerals not found on government lands). The Ministry of Basic
Industries and Mining (MIBAM) (formerly, the Ministry of Energy and Mines) is
responsible for administering the VML. The VML permits the exploration and
exploitation of mineral resources in several ways, including concessionary
exploration and exploitation by private companies pursuant to mineral
concessions granted by the MIBAM and direct exploration and exploitation by the
Government of Venezuela.
The Government of Venezuela may reserve for itself through a
decree the right to directly explore and exploit specific areas or some or all
of the minerals within specific areas. Direct exploration and exploitation may
be carried out either by the Government itself through the MIBAM or by a public
entity such as CVG. The effect of such a reservation is to prohibit the granting
of mineral concessions within the reserve area to private parties. If the
Government of Venezuela has reserved direct exploration and exploitation of
minerals for itself, the MIBAM or the public entity may enter into operation
agreements with third parties with respect to the exploration and exploitation
of the reserved minerals.
Crystallex's interests in the Las Cristinas deposits are
derived from:
a Presidential
decree pursuant to which the Government of Venezuela reserved for itself,
through the then Ministry of Energy and Mines, the direct exploration and
exploitation of the gold located in the Las Cristinas deposits and granted to
the Ministry of Energy and Mines the right to contract with CVG the activities
required to carry out such exploration and exploitation;
an agreement
between the Ministry of Energy and Mines and CVG pursuant to which the
Ministry of Energy and Mines granted to CVG the right to explore and exploit
the gold mineral located in the Las Cristinas deposits and to enter into
operations agreements with third parties for such purposes; and
a mine operation
agreement between CVG and Crystallex (Appendix A).
On September 17, 2002, Crystallex and CVG signed a Mining
Operation Agreement (MOA) for the development of a mine on the Cristina 4, 5,
6 and 7 concessions. The MOA provides Crystallex with the exclusive right to
explore, design and construct facilities, exploit, process, and sell gold from
Las Cristinas but does not transfer property rights to Crystallex. An official
translated version of the MOA is included as an appendix to the Crystallex
Annual Information Form and is available at www.sedar.com and in Appendix A. A
summary of the agreement is presented below (italicized) in its original text
from Crystallex.
The Corporación Venezolana de Guayana and Crystallex
International Corporation on September 17, 2002, entered into a mining operation
agreement whereby Crystallex has been granted the exclusive right to develop the
Las Cristinas 4, 5, 6 and 7 deposits. A point form summary of the agreement
follows
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 20
The agreement exclusively
authorizes Crystallex to make all the investments and works necessary to
reactivate and execute in its totality the Mining Project of Cristina 4,
Cristina 5, Cristina 6 and Cristina 7, design, construct the plant, operate
it, process the gold material for its subsequent commercialization and sale,
and return the mine and its installations to the Corporation (CVG) upon
termination of the Contract.
The agreement is for an initial
term of twenty (20) years with two (2) renewal terms, each for ten
(10) years.
Crystallex will complete and
present for approval within one (1) year from the date of signature of the
agreement a financial and technical Feasibility Study which addresses the
objectives of the agreement for the benefit of both parties.
Crystallex will present for
approval with the Feasibility Study an investment and financing plan which
supports the Feasibility Study.
Crystallex shall prepare and
present to the CVG for approval annual production plans as well as plans of
exploitation for the life of the Project. The plans will include volume of
production and other pertinent aspects of development including environmental
protection and security.
Crystallex's annual production
commitment will be based upon the approved annual production plan.
Compensation to the CVG consists
of an initial payment of US$15,000,000 for delivery of reports, data and
existing infrastructure and a royalty calculated against the value of gross
monthly production as follows:
when the US$ troy ounce of
gold is less than $280, a royalty of 1%;
when the US$ troy ounce of
gold is equal to $280 and less than $350,
a royalty of 1.5%;
when the US$ troy ounce of
gold is equal to $350 and less than $400,
a royalty of 2%; and
when the US$ troy ounce of
gold is greater than $400, a royalty of 3%.
Crystallex will
also pay to the Republic the Exploitation Tax established by the Law of Mines,
currently 3%.
Crystallex will provide for the
year 2002 and throughout the contract certain special programs whereby they
will create employment for the region and provide training programs, provide
technical assistance to small miners, improve community health care facilities
and make various infrastructure improvements to water and sewage systems as
well as to the access road to the Project site.
Crystallex will be the sole
employer of personnel at the Project site and will be responsible for
compliance with labor laws. Crystallex will participate jointly with the CVG
in permitting for the Project including explosive permits and any municipal,
state or national permits required for operation. The CVG will be responsible
for environmental and mining permits and Crystallex will supply the necessary
technical information to support its applications.
Crystallex will supply
performance bonds related to construction, labor obligations and compliance
with environmental requirements.
Crystallex will provide
technical assistance to groups of Small Miners identified in the agreement and
installed only within the limited areas of the Project approved by Crystallex.
Should Crystallex fail to
fulfill the daily production or grade average contemplated by the annual
production plan for reasons other than as contemplated by the agreement
(example: force majeure), Crystallex is simply required to compensate the CVG
for lost profits (royalties)
otherwise payable. The transition teams have been on site for the last several
days completing inventory, reviewing data and finalizing the delivery of
possession to Crystallex. The contract may be terminated unilaterally in the
event of the inactivity of the Project for a period of one (1) year without
just cause. Any breach by either party will require a written notice of breach
invoking a ninety (90) day curative period.
The agreement contemplates the
subsequent addition to the agreement of authorization for the exploration,
exploitation, commercialization and sale of the mineral of copper existent in
the area Las Cristinas 4, 5, 6 and 7.
The parties through their
transition teams will settle a detailed inventory of the installations,
assets, and equipment property of the Republic within thirty (30) working
days of signature of the agreement.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 21
The MOA has been entered into in accordance with applicable
Venezuelan laws and under authority granted to 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 CVG, were
terminated. The report also confirms the process by which the Republic of
Venezuela acquired the related assets and by which the government, through CVG,
entered into the MOA with Crystallex.
As described in the executive summary of the MOA, the term of
the MOA is 20 years subject to extension by both parties for two renewal terms
each of 10 years. At a processing rate of 20,000 tonnes per day (tpd) the
expected mine life, based on the current proven and probable reserve estimate,
is 64 years, which exceeds the term of the Mine Operation Agreement. However,
the process plant has been designed to accommodate an expansion to 40,000 tpd,
and Mr. Robert Crombie, Senior Vice President, Corporate Development, for
Crystallex reports that Crystallex intends to increase the capacity as soon as
practicable. SNC-Lavalin completed a full feasibility study for a 40,000 tpd
project in 2004 (SNC-Lavalin, 2004a), followed by a pre-feasibility expansion
study in October 2005, which contemplated expanding from an existing 20,000 tpd
operation to a 40,000 tpd operation (SNC-Lavalin, 2005e). At a processing rate
of 40,000 tpd, the current reserves would be depleted in approximately 32 years.
4.4
Environmental
Reports and Liabilities
Information in the following section was modified from
SNC-Lavalin's (2005) development plan by Crystallex with updated information
added where applicable. SNC-Lavalin has done no environmental work since their
2005 report.
Crystallex undertook an Environmental Impact Study (EIS) (SNC-Lavalin,
2004b) for Las Cristinas at the same time as the 2003 feasibility study and
submitted the EIS to the Ministry of the Environment (whose acronym was MARN
at the time and has now changed to MinAmb) for review in April 2004. The EIS
was a new one, required as a result of the changes to the Las Cristinas project
relating to Crystallex becoming the operator in 2002 and undertaking a
fundamental re-design of the project. In addition, an Environmental Supervision
Plan was prepared in September 2004. The EIS was formally accepted by MinAmb on
May 16, 2007 in MinAmb document number 0000328.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 22
4.4.1
Regulatory
Framework
The Las Cristinas project is being designed to meet and
exceed Venezuelan environmental laws and standards, as well as World Bank
guidelines and targets. Together, these regulations and standards provide the
framework for the environmental assessment and environmental design for the Las
Cristinas project. Venezuelan Decree No. 1257 defined the environmental
assessment requirements for the Las Cristinas gold-copper project development as
envisioned by Placer. These requirements were modified somewhat by MinAmb as a
result of changes in the scope of the project planned by Crystallex, such as the
project now being gold only. The EIS that was submitted to MARN addressed the
requirements defined in Decree 1257 as well as the additional requirements in
various addenda to the original EIS document.
4.4.2
Existing
Environment
As described in Section 5.0, the Las Cristinas site is
located within the sub-equatorial tropical zone in a flat area with minor
undulations, parts of which, under normal conditions, are subject to flooding.
Although much of the site has been previously disturbed by small-scale mining,
the area can generally be characterized as tropical rain forest with a distinct
rainy season between May and September and a drier period from January to April.
Despite the fact that the Las Cristinas area has been designated as a mining
district, it lies within the boundaries of the Imataca Forest Reserve and
therefore is subjected to more stringent environmental controls than areas
outside of the Imataca Reserve.
A significant portion of the concession area (approximately
34% of total area of the concessions, and 53% of area required to develop the
project) has been intensely disturbed by previous mining activities. Although
the surficial laterite soils are not very productive, vegetation grows very
quickly, and biological diversity of the area is high. Crystallex has updated
air quality, soil, flora and fauna baseline studies of the area and continues to
monitor water quality within the project area.
Ethnically the population is divided between indigenous and
criollos
(individuals of mixed blood). According to a national census in 2001,
approximately 57% of inhabitants in the project's zone of influence are
indigenous.
Artisanal
or small-scale mining is considered the most
economically important activity in the area.
Updates to the Acid base accounting (ABA) and humidity-cell
tests was done by SNC-Lavalin. ABA and humidity-cell tests were conducted by SGS
Lakefield Research Ltd. (Lakefield) to determine the balance between
acid-generating and acid-consuming components of mine waste as described in (SNC-Lavalin,
2005d). In March 2004, 103 samples containing ore and waste were submitted for
ABA testing (SNC-Lavalin, 2005d). After the initial assessment of the ABA
results, nine waste-rock samples and one ore sample were prepared for 21-week
humidity-cell testing, of which five of the waste-rock samples were tested for
additional time; four of the five were also submitted for net acid generation
(NAG) tests. Through the ABA, NAG, and humidity-dell testing,
it was
confirmed that waste rock samples of SAPO and CSB-C had very low potential for
acid generation and actually they were acid consuming, whereas waste rock
samples of CLB-C, SAPRK-CM, CSB-M and CLB-M had high potential to generate acid.
Special attention will be focused on these samples during the operation to
reduce or eliminate the acid leachate generation by implementing best management
practices
(SNC-Lavalin, 2005d). In addition, two tailings samples were also
subjected to 25-week humidity-cell testing, which indicated that the sulfides in
the samples were depleted at a much faster rate than the neutralizing
materials, while maintaining neutral pH and low metal
concentrations in the leachate. No concentrations of any elements in the
leachate were measured at values higher than the limits specified by Venezuelan
regulation or World Bank guidelines (SNC-Lavalin, 2005d).
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 23
4.4.3
Analysis of
Alternatives
A comparative analysis was carried out to rank alternatives
for infrastructure components, based on environmental, socio-economic,
constructability and other technical issues, permitting, cost, and where
applicable, safety. Briefly, the analysis determined:
Diversion Channel
Three alternatives were assessed to divert the watercourses
that cross the project area. The alternative that diverts the waters through the
southern border of the Las Cristinas concessions and discharges them into the
Quebrada Amarilla channel (approved by MARN for the original project) was chosen
for the following reasons:
This would minimize the potential biophysical impact;
Water would be contained within one watershed and would
only affect either previously disturbed areas or areas planned for development
of the mine;
This would provide flooding protection up to a 1-in-200
year flood event;
This does not require approval of third parties for its
construction, operation and maintenance;
It represents the shortest channel length and therefore the
lowest impact to soils (less excavation and movement of soil overall) and
vegetation; and
The flow of the water within the channel makes use of the
topography and the natural slope of the terrain, and therefore the water does
not have to be pumped.
Since the completion of the feasibility study in 2003 (SNC-Lavalin,
2003), the design of the diversion channel has been modified and its length
reduced from approximately 8.5 km to 6.9 km, as the Morrocoy Creek will no
longer be included in the initial development of the channel. This current
design emphasizes the reasons that made this route the best alternative. A
change has recently been made to the southern part of the route to accommodate
the layback of the designed pit on the adjacent Brisas del Cuyuni deposit.
Power Transmission Line
From two alternatives, the most direct power transmission
line route from the existing CVG-Edelca substation at Kilometer 86 to the
process plant location was selected over the alternative route that would have
followed the national highway, Troncal 10, to Las Claritas, and from there
continued past the villages of Santo Domingo and Nuevas Claritas. The
cross-country route was selected because of its shorter distance, lower cost and
lower impact on local residents, and favorable topography, despite greater loss
of forest vegetation.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 24
Tailings Management Facility Location
The tailings management facility (TMF) was located in the
only area large enough within the concession boundaries that would not be used
for mining or processing. The location suitable for the TMF is further
restricted by the location of areas currently assigned to
artisanal
mining activities in the eastern part of the Cristinas 5 concession.
Mine Access Road
From three alternatives, each along existing roads, the
preferred mine access road from Troncal 10 to the process plant is the northerly
route, exiting Troncal 10 at Kilometer 84. Despite its greater length (19 km)
and associated costs, it is the only alternative that avoids local communities,
providing greater safety and minimal impacts of noise and dust to the residents.
This access route was constructed in 2005-2006.
Plant Site
No alternatives were examined for the plant site, as, for
efficiency reasons, it will be located on the highest land with the most stable
underlying soils, in proximity to the open pit mines and TMF.
4.4.4
Assessment of
Impacts to the Bio-Physical Environment
The project's potential, direct and indirect, positive and
negative impacts, impact duration, probability, and reversibility, mitigation,
and net effects have been assessed. Overall, it is expected that the
environmental impact of the development of the Las Cristinas project can be
minimized through the implementation of best management practices, responsible
design and operations, and monitoring. It is of particular importance that the
project is operated to protect the environmental quality of the Imataca Forest
Reserve. This will be achieved by protecting water quality, minimizing erosion
and geomorphological processes, protecting air quality, limiting clearing,
controlling noise and dust, and ensuring that the site is closed responsibly
once mining is completed, including re-vegetation and reforestation.
Construction Phase
During the construction phase, environmental impacts can
result from site preparation including deforestation, clearing and earthworks,
and construction of the mine facilities. The impacts from construction of the
mine facilities may involve the initial footprint of the pit, initial
construction of the TMF, watercourse diversions, waste rock storage area
footprints and the site drainage management system, site access roads, power
lines, process plant, ancillary facilities, warehouses, and concrete plant.
Surface-water impacts from erosion and sediment transport
will be minimized through a properly designed and maintained site-drainage
management system, including collection ditches and runoff-collection ponds.
Potential contamination of surface and ground waters and soils by spills or
improper storage, handling, or use of fuel, lubricants, and other chemicals will
be minimized by spill-contingency and response-measures training, on-site
clean-up kits, hazardous-materials management procedures, and containment
systems and by using designated equipment refueling and maintenance areas.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 25
Apart from the creation of two artificial lakes, the impacts
to the physical environment are generally anticipated to be reversible and not
significant with proper implementation of control measures.
From a terrestrial, biological perspective, the site, which
has been previously disturbed, does not represent habitat that is not readily
available or unique from the habitat adjacent to the site. It is also noteworthy
that many of the previously disturbed areas of the site have naturally recovered
over time. Regardless, lost forest habitat will be replaced through site and
environmental rehabilitation at closure. Reclamation will include conversion of
the open pits into lakes. Overall, impacts to biological resources are not
expected to be significant or permanent as a result of construction.
An Environmental Supervision Plan (ESP) has been developed
for implementation during construction, as described in Section 4.4.6. The ESP
provides direction for proper management of construction activities to minimize
environmental effects, prescribes mitigation measures, and provides an
organizational framework for implementation and reporting to the authorities.
Operations Phase
Many of the mitigation measures implemented during
construction will also be applied during operations, including sediment and
erosion controls and prevention of contamination. Runoff from on-site facilities
will be directed to a series of runoff collection ponds and monitored for
compliance prior to release to the environment. Rock facing on the downstream
face of the TMF dam and a collection ditch at the toe of the dam will also be
provided, with runoff and seepage being pumped back to the tailings basin.
ABA tests to date indicate that there is low potential for
acid mine drainage from waste-rock dumps or temporary ore stockpiles adversely
affecting surface-water quality. Potentially acid-generating rock will be
encapsulated or buffered by acid-neutralizing rock within the dumps. Runoff and
seepage from all waste-rock dumps and temporary stockpiles will be collected in
perimeter ditches, directed to a runoff pond, and monitored. Effluent that does
not meet acceptable discharge standards will be pumped to the
cyanide-destruction plant.
The cyanide concentration in the tailings basin are expected
to meet Venezuelan and World Bank standards because all the effluent will be
treated in a cyanide-destruction plant prior to its disposal in the TMF. All
sanitary waste from on-site buildings will be directed to the proposed
wastewater treatment plant for treatment, and effluent from the treatment plant
will be discharged to the polishing pond. Impacts on wildlife and vegetation and
impacts of dust, noise and vibration will be minimized through special blasting
procedures (e.g., low-frequency and low-shock blasting techniques); hunting will
be prohibited within the concession lands and adjacent natural areas.
Overall impacts to the biophysical environment resulting from
operations of the mine are anticipated to be reversible and not significant with
the implementation of controls and mitigation measures.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 26
Closure
During closure it is intended to return the site as close as
possible to pre-project conditions consistent with the objectives of the Imataca
Forest Reserve Plan. Active monitoring, inspection, and intervention will
continue until acceptable chemical, physical, and biological stability has been
achieved.
4.4.5
Assessment of
Impacts to the Socio-Economic Environment
The socio-economic impact assessment for the Las Cristinas
Project is based on historic information developed in 1996, plus a 2004-updated
characterization and analysis conducted by the Venezuelan firm ProConsult C.A.
(ProConsult). SNC-Lavalin has edited the information provided by ProConsult
for content and consistency with the format of the report.
Overall, ProConsult expects that the project will result in
many positive benefits at the national, regional, and local levels, such as:
generation of a dynamic effect on the economy, contribution to the gross
domestic product, increase of tax collection, creation of jobs, inclusion of
workers into the social security system and improved work conditions,
improvement of infrastructure and implementation of social strengthening and job
plans, technical assistance to small-scale miners, and improvement in health
conditions of population and quality of life.
Negative impacts are also expected as a result of introducing
a large-scale industrial project into a stable, rural community. These negative
impacts include accelerated migration, drastic changes in the labor market and
local economy, risk of social conflicts, increased lack of public security,
potential for inflation, impacts to cultural traditions and cultural landscapes,
synergic increase in loss of cultural values among the indigenous population,
and impact on the demand for public and social services.
However, it is also recognized by ProConsult that some or all
of these impacts may already have been experienced due to the rapid influx of
thousands of small-scale miners over the course of 2003. The recent significant
reduction in the number of these small-scale miners reported by Crystallex has
resulted in many positive improvements, such as reduced demand on community
services, increased community stability, and reduced crime rates. In addition,
Crystallex has already implemented a number of programs to add benefits to the
local communities, including: the construction of 30 houses; construction of
three water treatment plants and piped-water supply systems for eight
communities; construction of a sewage collection system for three communities
and is currently constructing a sewage treatment system; monthly medicine supply
and improvements to a local health center; the sponsoring of two doctors; and
the training of up to 25 university and college graduates on an annual basis.
Crystallex has been instrumental in working with the State in the control of
malaria, the incidence of which was increasing exponentially. With the
implementation of mobile clinics and frequent testing of the local population,
the number of diagnosed malaria cases has declined significantly.
Crystallex has indicated that additional mitigation measures
will be implemented over the course of the construction and operations period to
minimize socio-economic impacts. These measures will include training programs;
technical assistance to local communities in the area of waste management and
administrative management; continued technical assistance to the authorized
small-scale miners; and continuation of the company and community liaison
program to ensure that community issues are identified and addressed.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 27
In the opinion of ProConsult, the Las Cristinas project can be developed in a
manner that minimizes impacts to the socio-economical environment.
4.4.6
Environmental Supervision Plan
Crystallex has prepared an ESP for the construction phase of
the Las Cristinas mining project, with the purpose of providing an overall plan
for the supervision and management of construction activities to minimize the
environmental effects, both biophysical and socio-economic, and to ensure
compliance with regulatory requirements and environmental commitments made
during the environmental planning process. The ESP includes comprehensive
environmental protection procedures and guidelines for execution during a range
of typical and emergency conditions; organizational structure and reporting
requirements; personnel training requirements; and an environmental follow-up
(monitoring) plan. The ESP intended to develop the environmental mitigation
measures identified for the construction phase in the EIS into a comprehensive
plan and framework for implementation by personnel who will work in the field
during this phase.
4.4.7
Site Closure and Rehabilitation
Preliminary objectives and general concepts for a Closure and
Rehabilitation Plan were developed as part of the EIS prepared in 2004. The
overall strategy of the closure plan is to comply with the project's
environmental obligations so that the facility can achieve acceptable chemical,
physical, and biological stability by meeting all regulatory requirements and
standards without human intervention.
Crystallex and CVG will maintain an active presence at the
site for an interim period following termination of mine production. During this
interim period they will continue to actively operate the site water-management
system, monitor for contamination, and intervene as required to ensure
compliance with applicable standards and regulations. The interim period will
end once the physical stability of all remaining structures is demonstrated and
site drainage meets regulatory discharge standards and can be released directly
to the environment without treatment.
4.4.8
Conclusions
Based on all of the above, Crystallex believes that the Las
Cristinas project can be developed in a manner that minimizes impacts to the
biophysical environment. Main projected measures include:
The waste-rock dumps will be designed to ensure that
potentially acid-generating waste is placedover the low-permeability saprolite
soils and covered/buffered by non-acid-generating or net-acid-consuming waste.
A cyanide destruction plant will treat the entire discharge
from the gold processing facility. The cyanide-free slurry will then be pumped
from the cyanide destruction plant for deposition in the TMF.
Treated effluent from the sewage treatment plant will be
discharged to the polishing pond. Leachate collected from the sanitary
landfill will be transferred to the TMF.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 28
The TMF dam is designed with appropriate standards and
safety factors to guarantee its stability and is also designed to contain a
24-hour Probable Maximum Precipitation (PMP) event. The Las Cristinas site
area is in a zone with the lowest possible risk of seismic activity.
The entire tailings basin is founded on a low-permeability
saprolite soil layer, providing a competent containment barrier to contaminant
migration, as demonstrated by contaminant transport modeling (SNC-Lavalin,
2005b). Crystallex and CVG will maintain an active presence at the site for an
undefined interim period following termination of mine production and prior to
their leaving the site permanently.
Proposed measures to prevent, mitigate or compensate
socio-economic impacts, as recommended in the Detailed Evaluation of
Socio-economic Impacts of Las Cristinas Project, prepared by Proconsult C.A.,
2004, and submitted to the MARN as Addendum #3 to the EIS, will be implemented
[MDA has not reviewed this report].
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 29
5.0
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,
INFRASTRUCTURE, PHYSIOGRAPHY
5.1
Accessibility
The Las Cristinas project area lies 370km by road
south-southeast of the city of Puerto Ordaz. The first 55km of this highway,
called Troncal 10, is a four-lane road between Puerto Ordaz and Upata; the
highway continues as a well-maintained two-lane paved road to the border with
Brazil at Santa Helena de Uairén. The Las Cristinas project can be accessed via
two alternative routes from Troncal 10. The shortest access is westwards via a
6km unpaved road from the village of Las Claritas, through which Troncal 10
runs. The alternative route, which was designed to bypasses the local villages,
is an upgraded, unpaved 19km access road from the highway at Kilometer 84. Under
normal conditions, the drive from Puerto Ordaz to the camp takes about five
hours. The Las Cristinas camp is located in the sub-Amazon rainforest of the
Imataca Forest Reserve.
Puerto Ordaz is a port city on the Orinoco River, which flows
into the Atlantic Ocean. The city of Puerto Ordaz is served by three airlines,
with numerous daily flights to Caracas and other major Venezuelan cities. The
nearest commercial airstrips to Las Cristinas are at El Dorado, 80km and
approximately one hour by highway north of the camp, and at Luepa, 80km to the
south. A charter flight from Puerto Ordaz to El Dorado takes about one hour. A
980m-long air strip with 6m-wide asphalt paving at Las Cristinas allows for the
landing of small aircraft.
5.2
Climate
The climate at Las Cristinas is tropical and humid, with wet
and dry seasons. The monthly temperature average rises to a 26.3ºC peak in March
and 25.7ºC in September. In February and July the temperature reaches minimums
of 24.3ºC and 24.5ºC respectively. The seasonal climate variation results from
fluctuations in the location of the Inter-Tropical Convergence Zone (ITCZ)
throughout the year, between summer and winter solstices. The overriding
atmospheric circulation in this location causes the winds to be from the
northeast.
Precipitation falls as tropical showers that are mainly
short-term events of a few hours duration or less. Data obtained from the Las
Cristinas weather station between 1992 and 2000 and from December 2003 until
present indicate that the project area experiences a dry season (lower than
average monthly rainfall, 273mm) that extends from January to April, and a wet
season (higher than average rainfall) that extends from May to September, with a
transitional period between October and December. The area receives an annual
average of 3,283mm of rainfall. Monthly averages reach a maximum of 454.8mm and
437.8mm in June and July respectively, and a minimum of 76.6mm and 120.1mm in
March and April respectively.
The average regional evaporation is equivalent to 58% of
average annual precipitation. This results in an estimate of average annual
evaporation at the Las Cristinas site of 1,904mm (=3,283mm x 0.58).
The average annual relative humidity on site is 81% with
maximums in June, July and August (84%) and minimums in April and October (78.2
and 75.6% respectively). The average wind speed is consistent through the year
and overall is determined to be 0.90m/s. The wind category of 0.5 - 2.1m/s is
rarely exceeded.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 30
Operations can be conducted year round.
The site is located in Seismic Zone 1 with a LOW Seismic
Hazard in accordance with the recent Venezuelan Code.
5.3
Physiography
Las Cristinas lies in the physiographic region known as the
Guyana Shield, a natural peneplain characterized by flat topography which is
crossed by streams and rivers and, under normal conditions, is subject to
flooding. The most prominent local topographic features are isolated hillocks or
ranges of low hills that rise up to a maximum of about 80m above the peneplain;
these features correspond to the location of diorite intrusions.
The geomorphological features of the Las Cristinas area are
influenced by topography, slope, vegetation, soil, hydrography and climate,
combined with anthropogenic physiographic disturbances resulting from years of
small-scale gold mining activity. Climatology, hydrology and vegetation are
considered the most important factors that control and regulate morphodynamic
processes, especially erosion, weathering, sedimentation and flooding. Disturbed
areas are particularly susceptible to erosion primarily due to the exposure of
the clayey layers of the soil resulting from the removal of the uppermost,
organic layer.
The most comprehensive report on anthropogenic disturbances
of the area was provided in a study spanning the 1992-1994 period (cited in
SNC-Lavalin, 2005a; MDA has neither seen nor reviewed this report, and this is
provided for information purposes only). Since this study was conducted,
small-scale mining activity has increased significantly, although the extent of
the additional area affected is not expected to have increased significantly as
most of the activities are focused in the areas of the main deposits of Mesones
and Conductora.
There is very little topographic relief within the concession
area. The average elevation is 130m above sea level, with small rounded hills
reaching a maximum elevation of 160m above sea level. Four streams flow through
the property: Amarilla, Las Claritas, Sofia and Morrocoy. These streams are wide
and shallow, and occasionally flood during the rainy season. Much of the project
area has been deforested and hydraulically mined by itinerant miners. As a
result, there are numerous water-filled pits and large areas of tailings
material. Some areas of poorly consolidated tailings are unstable and cannot
support the weight of a vehicle, making access to some areas difficult.
Las Cristinas is contained within the sub-equatorial tropical
zone. Although small-scale mining has previously disturbed much of the site, the
area can generally be characterized as tropical jungle with distinct rainy and
dry seasons. The surficial laterite soils, which are typical of tropical
habitats, are not very productive, containing very low percentages of organic
material and nutrients, but vegetation grows very quickly and biological
diversity of the area is high.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 31
Undisturbed primary vegetation is typical of the Sub-Amazon
type rain forest. Large trees dominate the forest, with their canopy up to 30m
above the ground. The forest floor is relatively open. Secondary vegetation,
which has now invaded the mined or otherwise disturbed areas, consists of small
weed trees, bushes, creeping vines and various grasses. This secondary growth
is often quite dense and can be difficult to penetrate on foot.
5.4
Local Resources
The infrastructure in the region will require some
improvement to support the proposed mining operation. The local population is
not sufficient to fully operate the mine, and additional personnel will have to
be brought in for construction and mining operations. Improvements to sewer,
water and other local facilities will be made in order to accommodate the
additional workers. There are sufficient water sources and land surface areas
for mining, tailings disposal, and plant sites. Improvements have been made to
the on-site airstrip.
Existing facilities include the exploration camp, whose
electricity is supplied by a link to the national grid (there is a stand-by
generator on site), sample preparation facilities, offices, dormitories, sample
storage and seven core sheds.
The construction camp built by Placer Dome has been
extensively refurbished. The camp consists of an office block, administration
units, dormitory units, maintenance units, a kitchen and dining facility, gym,
recreation center, a clinic permanently manned by a doctor, and outdoor
basketball and mini-soccer courts. Catering is currently undertaken by contract
with Universal Sodexho, and several hundred people can be fed at a time with
little trouble. The camp is powered with electricity from the national grid, and
two stand-by generators are located on site. A cell phone repeater station has
also recently been constructed adjacent to the administration building, and thus
the whole of the Las Cristinas project area now has cellular phone reception.
Significant power demands are required and will increase from
an average of about 10 MW to 45 MW when the plant is in full production. Maximum
demand could reach 55 MW. A 400 KVA power line has been installed near the
project to supply power to Brazil. EDELCA, a State utility company, has
installed a substation near the town of Las Claritas that is capable of
supplying the electricity required by the project.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 32
6.0
HISTORY
6.1
General History
General Fernandez Amparan first discovered gold in the Las Cristinas region
in 1920, and gold mining at the site was initiated in the 1930s. During the
1940s, an underground mine was operated by New Goldfields de Venezuela,
reportedly called Mina Alto-Cuyuni, whose shaft was in the vicinity of what is
now the Hoffman pit (David Rogerson, personal communication, 2007). Mining
continued sporadically on a minor scale until the early 1980s when a gold rush
occurred. Some 5,000 to 7,000 small-scale miners worked alluvial and saprolite-hosted
gold deposits using hydraulic mining techniques. Many square kilometers of
jungle were stripped of soil and saprolite. This material was processed in
sluices and small hammer mills. The amount of gold recovered is unknown, and
much of the area of the concessions is now covered with tailings.
After extensive exploration, Placer Dome Inc. (Placer) announced
commencement of construction of the Las Cristinas mine on August 2, 1997. The
inauguration took place at the site with officials of Placer, CVG, and
representatives of the Venezuelan government present. On January 20, 1998,
Placer announced that its operating company in Venezuela, Minera Las Cristinas
C.A., had decided to suspend construction. Construction resumed in May 1999 but
was again suspended on July 15, 1999 due to uncertainty with respect to gold
prices and title. Up until that time, Placer had reportedly spent US$168 million
on the project.
CVG took possession of the property in 2001 and in 2002 signed a mine
operating agreement (MOA) whereby Crystallex is required to explore, mine, and
produce gold at Las Cristinas.
6.2
Ownership History
An outline of the history of property ownership was described by Crystallex
on its website (2002), and the following was copied from that source:
May 1986 Inversora Mael, C.A. receives rights to Las Cristinas
property (4&6) from Mr. Ramon Torres. Mr. Torres received the titles one month
earlier from Ms. Dot Culver de Lemon who was granted the title for Cristina 4
in February 1964 and Cristina 6 in August of that same year. (Notices of the
transfers were recorded on the Registry, but not published in the Official
Gazette of Venezuela as required under the Venezuelan mining law).
November 1988 Following various refusals by the Ministry of Energy
and Mines (MEM) to publish notice of the transfers of the concessions, Mael
commences lawsuit seeking invalidation of MEM action.
January 1989 Mael files petition with MEM to renew Cristinas 4
concession, which MEM denies.
February 1989 MEM purports to extinguish Cristinas 4 concession.
March 1989 MEM purports to extinguish Cristinas 6 concession.
May 1991 The Supreme Court of Venezuela rules that the transfer from
Ms. de Lemon to Mr. Torres, then from Mr. Torres to Inversora Mael, C.A. was
perfectly valid. The court orders MEM to publish the notice of the transfers
in the Official Gazette.
June 1991 Corporación Venezolana de Guayana (CVG), a state-owned
corporation, awards Placer Dome a contract for the right to form a corporation
(MINCA) to explore and mine Las Cristinas 4, 5, 6 and 7.
[Placer stated in
its 1996 feasibility study (Placer Dome Technical Services Ltd., March 1996)
that Las Cristinas was controlled by two Venezuelan companies, which were
formed in 1992: Minera Las Cristinas, C.A. (MINCA), 70% owned by Placer Dome
de Venezuela, C.A. (PDV) and 30% owned by Corporación Venezolana Guyana (CVG),
a state-owned resource company, and Relaves Mineros Las Cristinas, C.A. (Reminca),
51% owned by PDV and 49% by CVG.]
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 33
July 1991 CVG and Mael enter into a settlement agreement in relation
to the actions of the MEM which were ruled illegal in the May 1991 court
decision.
October 1996 Supreme Court again confirms the validity of the
transfers to Mael of the Cristinas 4 & 6 gold concessions and requests that
MEM publish the required notice of the transfers.
March 1997 Crystallex acquires Inversora Mael for US$30 million based
upon multiple legal opinions and two Supreme Court decisions that Inversora
Mael has valid claim to Las Cristinas 4 and 6.
April 1997 The Supreme Court takes the extraordinary step of directly
ordering the publication of the notice of transfer between Mr. Ramon Torres
and Inversora Mael in the Official Gazette.
April 1997 Mael commences an action to declare various MEM actions
invalid and requiring MEM to recognize Mael's ownership.
May 1997 Supreme Court publishes notice of transfers to Mael of
Cristinas 4 and 6 concessions in Official Gazette.
January 1998 Placer suspends construction at Las Cristinas, citing a
need to ensure it gets the best possible terms to finance the rest of the
project; and again in August 1999, blaming low gold prices.
June 1998 Venezuela's Supreme Court rules that Mael does not have
status to assert ownership rights over Cristinas 4 and 6 concessions and
declines to proceed with Mael's April 1997 lawsuit.
August 1999 Crystallex files new actions for its claim on Las
Cristinas 4 and 6 seeking to nullify (i) the CVG MINCA joint venture agreement
and (ii) the effect of the July 1991 settlement agreement.
September 1999 Admission chamber of Supreme Court refuses to admit
Mael's action seeking to nullify CVG/MINCA joint venture agreement.
September 1999 Venezuela enacts new mining law which calls into
question the legality of mining contracts issued by CVG.
February 2000 - Admission chamber of Supreme Court refuses to admit
Mael's action to nullify the July 1991 settlement agreement. Mael appeals.
May 2000 The Supreme Court grants Mael's appeal and in June 2000
re-admits Mael's claim in relation to the 1991 settlement agreement. Decision
confirms Mael's legal standing.
July 2001 Placer Dome sells its interest in MINCA to Vannessa
Ventures Ltd.
[On July 13, 2001 Placer sold 100% of the issued and
outstanding shares in Placer Dome de Venezuela C.A to Vannessa Ventures Ltd.
(Placer press release dated July 13, 2001), retaining an interest in the gold
and copper revenue generated by Las Cristinas and under certain circumstances
having the right to reacquire the shares in Placer Dome de Venezuela C.A.]
November 2001 CVG terminates its mining contract with MINCA and
subsequently takes possession of the property.
March 2002 MEM cancels the MINCA copper concessions.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 34
April 2002 By Presidential Decree, Venezuela reserves for the MEM the
direct exercise of the mining rights over Las Cristinas, through decree 1757
published in the Official Gazette #37,437 dated May 7th, 2002.
May 2002 Through Agreement entered during May 2002 between MEM and
CVG, MEM granted mining rights over Las Cristinas to CVG.
September 2002 Crystallex and Venezuela(CVG) to develop Las Cristinas
6.3
Previous Work
Placer conducted essentially all of the modern exploration on
Las Cristinas prior to acquisition of the property by Crystallex. During their
tenure on the property from 1991 to 2001, Placer completed line cutting,
mapping, rock and soil sampling, geophysics, and drilling. These are described
in Section 10.1.
Golder and Associates (Golder) was contracted by Placer to
collect drill core and surface geotechnical data in the spring of 1993,
culminating in a preliminary draft report covering pit slope stability,
availability of construction aggregates, tailings disposition, and waste
disposal. Bruce Geotechnical Service from Vancouver completed complementary
studies in 1994. Water Management Consultants (Denver, Co.) and Hay and Co.
(Vancouver, B.C.) completed hydrological and hydrogeological studies (pumping
test, mine dewatering,
etc
.) during 1996. MDA has not reviewed any of
these reports. Placer completed a comprehensive feasibility study on the project
in 1996 that was updated in 1998, which MDA has reviewed (Placer Dome
Exploration and/or Placer Dome Technical Services Ltd., 1996a-f; 1998a, b).
After acquiring the property, Crystallex engaged MDA to
review the geology at Las Cristinas, estimate resources and reserves, and
provide a mine plan (Ristorcelli, Hardy, and Prenn, 2002; Mine Development
Associates and Kappas, Cassiday and Associates, 2003; Ristorcelli and Hardy,
2003; Ristorcelli and Hardy, 2004a and Ristorcelli and Hardy, 2004c; Ristorcelli,
2005; Hardy, 2006; Hardy, 2007). The 2002 technical report prepared by MDA (Ristorcelli,
Hardy, and Prenn, 2002) described the historic work and results of that work
done by previous operators and discussed the adequacy of that data. Because the
work, data, and studies were from others, the recommendations made in MDA's 2002
report were aimed at validating the previous work and revising the engineering
studies culminating in a feasibility study of the project. Based on Placer's
descriptions, MDA concluded that their exploration and sampling procedures
conformed to or exceeded industry standards, but because all prior exploration
had essentially been done by only one company and because hard copies of assay
data were not available, substantial data verification was necessary. Placer had
extensive checks and quality assurance/quality control (QA/QC) protocols
incorporated throughout the process and had noted no major problems. Placer
reported minor biases in the laboratory results on the order of 5% to 10%, but
believed that these were not material and that the groups of samples used often
compensated for each other. Preliminary sampling by Crystallex verified the
presence of gold and copper. Though inconclusive because of their small number,
MDA's sampling found some grade differences, which they thought needed to be
addressed during the then-upcoming validation program. MDA recommended that this
validation program twin drill holes, conduct infill drilling, and take
additional check samples on core splits, coarse rejects and pulps. During this
program, Crystallex planned to assess sample preparation procedures and conduct
a heterogeneity study to determine gold distribution in the rock and appropriate
sample and sub-sample preparation procedures.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 35
Crystallex undertook drilling to confirm results of the
previous operator prior to their first resource estimate. Crystallex drilled 12
holes totaling 2,199m in 2003 to confirm the tenor of mineralization presented
in the pre-existing database and also assayed check samples as described in
Section 10.2. The drill holes were designed to twin existing drill holes as a
check of the Placer drilling data. MDA's analysis (Ristorcelli and Hardy, 2003)
of the twin holes indicated that while the comparison of location of gold grades
was found to be reasonable, analyses on a hole-by-hole basis yielded highly
variable results. Overall, the average gold grades for Crystallex's drilling
were 15% lower than the Placer results, with more similarity in the
twin-hole-sample assays in Conductora in general than in Mesones-Sofia. For
additional confirmation, Crystallex re-assayed 262 pre-existing pulps, 200
pre-existing coarse rejects, and 342 pre-existing quarter-core samples. Although
mean grades are similar for both datasets, there is a large variance in grade
between individual pairs of Placer's core assays and Crystallex's core check
samples. As expected, the variance is lower in the pulp and coarse reject
checks. MDA evaluated the relationship between metal grades and core recovery
and found a bias in the saprolite gold data, most prevalent in low-grade
samples. This bias was not found in bedrock, which makes up the majority of the
resource and reserve. MDA (Ristorcelli and Hardy, 2003) concluded,
The bias
should not materially affect the global estimated gold and silver grades;
however within the saprolite in areas where core recovery is low, grades may be
lower than predicted
. Overall, based on the 2003 program, MDA (Ristorcelli
and Hardy, 2003) concluded that
The Las Cristinas database can be used for
feasibility-level study and resource estimation. Having said this, all future
work must be cognizant of the underlying difference in grades between Placer
data and the Crystallex verification drilling and the difference must be
explained. It cannot be stated which is the more accurate at this time but the
data remains sufficiently accurate for further use. Negligible contamination
during sample preparation may have occurred during sample preparation of the
Crystallex samples. The larger concern is the high variance noted in check
assays, which should not affect the global metal estimate but could affect local
estimates. This concern can be mitigated by completing a heterogeneity study of
gold in the rock
. Crystallex's work corroborated the general tenor of gold
mineralization reported by Placer. MDA completed a resource model at the
conclusion of this work (Ristorcelli and Hardy, 2003) that is discussed in
Section 6.4.2.
Crystallex completed an 18-hole, 7,131m drill program in 2004
and an additional 5,419m in 14 drill holes in 2005. Drilling in these two
programs was focused in the western and southern parts of the modeled Conductora
Cuatro Muertos pit shell. The objective of these programs was to infill drill
those poorly drilled areas to upgrade resource classification and ultimately
increase the reserve. MDA took independent samples from the 2004 drill program,
which verified the general tenor of mineralization. When the resource was
evaluated in 2003, a difference in mean grades had been noted between Placer's
data and Crystallex's initial verification drilling, and during the 2004
drilling and resource estimation, a similar difference in global mean grades
ranging between 6% and 8% was noted, although differences are not statistically
significant due to the small number of Crystallex drill holes (30) compared to
over 1,000 Placer drill holes (Ristorcelli and Hardy, 2004a). These mean grade
differences, though not statistically significant, were thought (Ristorcelli and
Hardy, 2004a) to potentially indicate a sampling and sub-sampling issue related
to heterogeneity of Las Cristinas, raising the possibility of a difference in
mean grade of the deposit, possibly even higher grade than is presently noted.
The 2004 drilling showed that while local grades were difficult to predict, the
general form and continuity of the deposit was very predictable.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 36
The objective of the 14-hole drill program in 2005 in the
Conductora area was to increase material in the Measured and Indicated
categories. During the course of the drill data verification and the resource
expansion drilling, it was noted (Ristorcelli, 2005) that some biases existed
between Crystallex and Placer data, the latter of which represent by far the
bulk of the exploration data. A heterogeneity study was undertaken to better
understand the grade biases noted, to define more appropriate sub-sampling
procedures and protocol, and to maximize the efficiency of the upcoming
grade-control program during mining operations. A report by Francis Pitard
(2005) suggested that the grade bias of Crystallex grades being lower than
Placer grades likely was due to the difference in size of the core samples. He
further pointed out that the samples taken by Placer also could be understating
the global grade of the Las Cristinas deposit.
Crystallex completed a 46-hole drill program in February
2007. Drilling during this campaign was done down dip of the Conductora - Cuatro
Muertos deposit and along strike into the Morrocoy area, which lies between
Cordova and Mesones-Sofia. The objective of this program was to better delineate
the Morrocoy area into a defined resource and to increase resources and reserves
down dip along the Conductora area. The results of this drilling are
incorporated into the resource estimation in this technical report.
Crystallex commissioned a feasibility study by SNC-Lavalin
that was completed in September 2003 (SNC-Lavalin, 2003) and updated in 2004 and
2005 (SNC-Lavalin, 2004a, 2005). These studies are more fully described in
Section 6.5.2.
6.4
Historical
Mineral Resource and Mineral Reserve Estimates
6.4.1
Estimates by
Placer
Placer completed its most recently reported resource for
Conductora-Cuatro Muertos and Mesones-Sofia in 1997, summarized in its 1998
Feasibility Study Update (Placer Dome Exploration and Placer Dome Technical
Services, 1998a). MDA cannot verify that the calculations for Placer's resource
and reserve estimates met NI 43-101 standards; these resources and reserves are
provided here for historic perspective only. Placer first reported Measured and
Indicated resources for the property in 1993, although the Mesones and Sofia
areas were not included in the totals until 1997. Table 6.1 is a summary of the
Placer resources completed prior to 1997. Table 6.2 summarizes the 1997 Placer's
Measured and Indicated Las Cristinas resources, and Table 6.3 is a summary of
the 1997 reported Inferred resource.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 37
Table 6.1 Placer Dome 1993-1996 Measured and
Indicated Resource Estimates for Conductora-Cuatro Muertos Only
(From Ristorcelli and Hardy, 2003)
Date
Cutoff
Tonnes
Grade
Grade
Contained
Contained
Au g/t
('000s)
Au g/t
Cu %
Au oz ('000s)
Cu lbs ('000s)
June 1993
0.8
45,157
1.65
0.18
2,396
179,197
Sep 1993
0.7
164,375
1.29
0.13
6,818
471,100
Nov 1993
0.7
189,664
1.26
0.13
7,684
543,578
Sep 1994
0.7
214,305
1.25
0.12
8,613
566,481
Jan 1996
0.7
214,699
1.25
0.12
8,628
567,522
Table 6.2 Placer Dome 1997 Measured and
Indicated Resource Estimate for Conductora-Cuatro Muertos-Potaso
(From Ristorcelli and Hardy, 2003)
Cutoff
Tonnes
Au Grade
Cu Grade
Au Ounces
Cu Pounds
(g Au/t)
('000s)
(g Au/t)
(%Cu)
('000s)
('000s)
Co/CM
0.5
347,318
1.12
0.11
12,507
815,475
Mesones/Sofia
0.5
41,598
1.08
0.33
1,444
299,334
TOTAL
388,916
1.12
0.13
13,951
1,114,809
Table 6.3 Placer Dome 1997 Inferred Resource
Estimate for Conductora-Cuatro Muertos-Potaso
(From Ristorcelli and Hardy, 2003)
Area
Cutoff
Tonnes
Au Grade
Cu Grade
Au Ounces
Cu Pounds
(g Au/t)
('000s)
(g Au/t)
(%Cu)
('000s)
('000s)
Co/CM*
0.5
110,929
1.12
0.10
3,994
234,186
Mesones/Sofia
0.5
21,992
0.79
0.12
559
56,473
TOTAL
132,921
1.07
0.10
4,554
290,658
MDA reviewed the modeling methodology of the resources
reported in Placer's 1998 feasibility study update. While MDA believes that
Placer has done careful work from the fieldwork to database quality control and
believes that the resource is reliable, MDA has neither audited nor checked
Placer's reported resources. They are reported here only for historic
perspective.
Placer also calculated reserves for Las Cristinas, but again
MDA cannot verify that these calculations met NI 43-101 standards; they are
provided here for historic perspective only. The results of these studies,
conducted between 1996 and 1999 and presented in Table 6.4, were taken from the
public domain (annual reports and press releases). The March 1996 calculation
did not include the Mesones-Sofia deposit, but all later calculations did. The
1996 calculations were based on a $375 per ounce gold price and a $1.00 per
pound copper price. The 1999 reserves were based on a lower gold price of $325
per ounce and $1.00 per pound copper price, hence the drop in reserve. Placer
did not report its reserves broken out by Proven and Probable as is now required
by National Instrument 43-101.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 38
Table 6.4 Placer Dome Reserve Estimates for Las Cristinas
Date
Tonnes
Au Grade
Cu Grade
Au Ounces*
Cu Pounds*
('000s)
(g Au/t)
(%Cu)
('000s)
('000s)
Mar-96
181,064
1.28
0.13
7,463
506,955
Aug-96
232,619
1.21
NA
9,027
NA
Dec-97
326,288
1.13
0.14
11,802
1,007,077
Dec-98
323,253
1.13
0.14
11,702
983,457
Dec-99
276,717
1.19
0.14
10,614
860,179
*In-situ contained metal
Grill (1999) reported several geological resource estimates
for other mineralization on the Las Cristinas concessions; MDA cannot confirm
this information, but it is presented for historical perspective. With regard to
a low-grade gold model for the Cantera-Cordoba area, Grill (1999) reported
the
recompilation and reinterpretation of geologic data from Cantera-Cordoba did not
yield a geologic model significantly different from the 1995 model which is
estimated to contain 20.7 Mt grading 1.30 g/t at a
0.6 g/t cut-off
, and no updated resource was
estimated in 1999. A rough polygonal resource estimate for high-grade gold was
also made for the Cantera-Cordoba area, where selective mining of high-grade
vein material by underground methods may be possible, according to Grill (1999).
The study estimated a total of 569,000 tonnes of mineralized material grading
5.11 g Au/t, for a total of 93,400 ounces of gold, based on a model in which
gold is concentrated in tabular veins and/or stockwork-like layers (Grill,
1999).
In the South Cantera (near the Hoffman) areas, Grill (1999)
reported that, based on a manual resource estimate using data from 24 diamond
drill holes, the area is roughly estimated to contain 3.22 million tonnes of
mineralized material grading 1.46 g Au/t for a total of 149,000 oz of gold.
Grill (1999) noted that
full development of the South Cantera resource would
require further plant design modifications as the approximate pit limit would
significantly overlap the area currently occupied by the high grade stockpile,
located on the southeast side of the plant site
.
Based on limited, widely spaced diamond drilling, Grill
(1999) reported that using a manual resource estimate, the main mineralized
parts of the Morrocoy zone were
roughly estimated to contain 9.12 million
tons of mineralized material grading 1.36 g/t Au for a total of 411,000 ounces
of gold
but noted that the overall drill-hole density in the Morrocoy area
was very low in some parts. Data from 20 diamond drill holes and 13 trenches
were used in this estimate.
Grill (1999) reported that based on data from 31 drill holes,
a manual polygonal resource estimate for the Potaso area yielded a gold resource
of 6.2 million tonnes of combined saprolite and bedrock resource material, with
an average grade of 1.04 g Au/t at a 0.5 g Au/t cutoff for a total of 206,000 oz
of gold.
6.4.2
Estimates by MDA
MDA has been contracted by Crystallex since 2002 to estimate
resources and reserves for and report on the Las Cristinas project. Following
the initial estimate, updates have been completed each year warranted by new
drill data and/or changing economics.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 39
2003
In 2003, Crystallex commissioned MDA to estimate a resource
and a reserve for Las Cristinas, which were reported in a technical report (Ristorcelli
and Hardy, 2003). This represented the first work by Crystallex in estimating a
resource and reserve for the property. The following discussion is taken from
that technical report.
MDA classified the resource by a combination of distance to
the nearest sample, the number of samples used to estimate a block, and the
number of drill holes used to estimate a block. As gold is the dominant metal
from a value standpoint, all blocks were classified based on a modified distance
calculated during gold estimation. A resource was estimated for the Conductora
and Mesones-Sofia areas. The estimated resource for Conductora does not
represent the entire body of mineralization at Conductora but does represent the
most prolific of the resources and best understood and defined. The deposit is
open ended at depth but is bounded at the south by a property boundary and the
north by Mesones-Sofia. Combined resources are given in Table 6.5.
MDA noted that Placer's estimates of resources represented
material inside an optimistic-floating-cone pit (MDA had no information
defining their term optimistic). Placer's method of resource definition
results in fewer tonnes at higher grades than an
in situ
method. The
Placer methodology eliminates lower-grade resources outside an optimized pit
shell but above cutoff that would become available for conversion to reserves
with reasonable changing economics, metallurgy or economics. MDA's resources are
tabulated by a cutoff close to economic so as to also report material that could
become economic with reasonable technological and economic changes.
The principal resources outside of Conductora (including
Cuatro Muertos and Potaso) and Mesones-Sofia lie in the Cordova and Morrocoy
areas, which had not been estimated in 2003. In their 2003 report, Ristorcelli
and Hardy remarked that these latter areas would require geological and data
compilation prior to any estimation, but they do represent areas deserving of
work. These areas are reported in the current report for the first time.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 40
Table 6.5 Total Estimated Resources at
Conductora and Mesones Sofia (2003)
(Including Reserves*)
(From Ristorcelli and Hardy, 2003)
CO & M/S Measured and Indicated
Cutoff
Tonnes
Gold
Gold
(g Au/t)
(g/t)
Ounces
0.2
862,680,000
0.71
19,800,000
0.4
557,646,000
0.95
17,010,000
0.5
438,931,000
1.09
15,327,000
0.6
354,171,000
1.22
13,842,000
0.7
285,709,000
1.35
12,426,000
0.8
235,022,000
1.48
11,217,000
0.9
197,459,000
1.61
10,202,000
1.0
169,467,000
1.72
9,354,000
1.5
84,231,000
2.22
6,007,900
2.0
39,693,000
4.26
5,434,300
2.5
17,976,000
3.48
2,010,200
3.0
9,738,000
4.13
1,293,000
3.5
5,855,000
4.74
892,000
4.0
3,670,000
5.36
632,000
5.0
1,941,000
6.15
384,000
Conductora and Mesones/Sofia
Inferred
Cutoff
Tonnes
Gold
Gold
(g Au/t)
(g/t)
Ounces
0.2
471,685,000
0.59
8,895,000
0.4
287,897,000
0.78
7,205,000
0.5
207,889,000
0.91
6,064,000
0.6
144,999,000
1.07
4,966,000
0.7
97,673,000
1.27
3,992,000
0.8
70,884,000
1.47
3,354,000
0.9
55,924,000
1.64
2,951,000
1.0
47,726,000
1.76
2,703,000
1.5
24,311,000
2.28
1,779,700
2.0
11,887,000
4.16
1,591,600
2.5
5,094,000
3.77
617,200
3.0
3,380,000
4.31
468,000
3.5
2,490,000
4.70
376,000
4.0
1,823,000
5.05
296,000
5.0
853,000
5.76
158,000
Reserves were developed from the Measured and Indicated
resources by establishing the ultimate economic pit limits using Medsystem
Lerchs-Grossman ultimate pit software. This optimized pit outline was used as a
template for the ultimate pit design. The economic calculations were based on a
gold price of US$325 per ounce and a breakeven copper-mining cost (assuming that
Crystallex is compensated for all costs associated with copper production, but
receives no profit from the recovered copper). Operating costs, recoveries and
design criteria were based on Placer's feasibility studies. The reserves are
summarized in Table 6.6.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 41
Table 6.6 Crystallex's TotalCristinas Proven
and Probable Reserves - 2003
(From Ristorcelli and Hardy, 2003)
Deposit
Category
Tonnes
Gold
Gold
Strip
(g/t)
Ounces
Ratio
Conductora
Proven
34,133,000
1.43
1,569,000
1.3:1
Probable
167,955,000
1.31
7,073,000
Mesones/Sofia
Probable
21,860,000
1.28
900,000
1.89:1
Total
Proven
34,133,000
1.43
1,569,000
1.34:1
Probable
189,815,000
1.31
7,973,000
Total
Proven & Probable
223,948,000
1.33
9,542,000
1.34:1
Pit design parameters were taken directly from the 1996
feasibility study, except for the ramp width, which was increased to 30m to
accommodate larger haul trucks. Inter-ramp angles are 45º in bedrock and 35º in
saprolite. There is an area in the southern portion of the Conductora pit that
has been designed at 25º in accordance with Placer's noting of a shallow-dipping
fault, but this has since been studied and deemed to not be material.
Mining was planned to be conducted in two distinct, but
concurrent, operations. The first would be mining of the saprolite, which was
planned to be done by a contractor using one equipment fleet, and the second was
mining of the bedrock, which was planned to be done by Crystallex, using a
separate set of equipment. Different equipment fleets would be required because
of the significantly different characteristics of saprolite and bedrock.
Drilling and blasting will not be required in the majority of saprolite but will
be necessary in the bedrock.
While the mining contractor would select the actual equipment
to be used, it was expected that the saprolite mining fleet would consist of
all-wheel-drive articulated haul trucks and hydraulic excavators. Scrapers would
be the preferred choice under certain conditions. Bedrock mining was planned to
be conducted using excavators and conventional haul trucks. Haul roads in the
saprolite portions of the deposits need to be designed and constructed to handle
the appropriate-sized equipment (150-tonne trucks), which means that road-base
material needed to be available from bedrock-waste areas of the pit.
Based upon the initial production phase, the reserves produce
a mine life in excess of 25 years, depending upon operating schedule, at a
planned production rate of 20,000 ore-tonnes per day. Because ore is exposed at
the surface, or just below the overburden, it will not be necessary to perform
pre-stripping to access ore. Initial ore production is entirely from saprolite,
with the ability to begin bedrock mining as early as the second year, depending
upon the mining schedule. Once sufficient bedrock is exposed and enough working
room provided, production will be from both saprolite and bedrock ores.
In the subsequent September 2003 feasibility study (SNC-Lavalin,
2003), reserves were reported as summarized in Table 6.7.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 42
Table 6.7 Las Cristinas Reserves 2003 Update
(From SNC-Lavalin, 2003)
Category
Ore
Grade
Contained
Waste
Strip
Deposit
Au oz
(applies to ore only)
kt
(Au g/t)
x1000
kt
Ratio
PROVEN
36,620
1.38
1,625
Bedrock
26,147
1.37
1,150
Total
296,962
Conductora
Saprolite
10,743
1.41
475
Bedrock
240,433
1.33:1
PROBABLE
187,117
1.27
7,669
Saprolite
56,529
Bedrock
144,358
1.30
6,025
Saprolite
42,759
1.20
1,644
PROBABLE
21,922
1.24
871
Total
31,537
Mesones/Sophia
Bedrock
12,754
1.32
543
Bedrock
15,286
1.44:1
Saprolite
9,168
1.11
328
Saprolite
16,251
PROVEN
36,620
1.38
1,625
Bedrock
26,147
1.37
1,150
Total
328,499
Total
Saprolite
10,473
1.41
475
Bedrock
255,719
1.34:1
PROBABLE
209,039
1.27
8,540
Saprolite
72,780
Bedrock
157,112
1.30
6,567
Saprolite
51,927
1.18
1,973
PROVEN &
PROBABLE
245,659
1.29
10,165
Total
328,499
Total
Bedrock
183,259
1.31
7,717
Bedrock
255,719
1.34:1
Saprolite
62,400
1.22
2,447
Saprolite
72,780
2004
In 2004, after an 18-hole drill program, Crystallex requested
an update to the resources and reserves. The 2004 drilling showed that while
local grades were difficult to predict, the general form and continuity of the
deposit were very predictable. MDA checked the modeling procedures and
parameters and the model results. The model was checked for bias against the
composites from which it was estimated. Multiple runs were made to assess
sensitivity to modeling parameters. An independent geostatistician (Sandefur,
2004) was commissioned to perform a review of the geostatistical aspects of
modeling. In the end, few changes were made to the estimation procedures.
Resources (Table 6.8) again calculated by MDA were updated
and reported in a second feasibility report (SNC-Lavalin, 2004a), in which it
was noted that copper and silver resources were not reported because Crystallex
had not been granted the right to receive revenue from these metals and the
SNC-Lavalin feasibility study was based on a gold-only project. The updated
reserves in 2004 are given in Table 6.9.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 43
Table 6.8 Total Estimated Resources at
Conductora and Mesones Sofia (2004)
(Including Reserves*; from Ristorcelli and Hardy, 2004a)
Total Las Critinas Measured and Indicated Resources
(rounded)
Cutoff
Tonnes
Gold
Gold
Silver
Copper
CNSolCu
Silver
Copper
(g Au/t)
(g/t)
Ounces
(g/t)
(ppm)
(ppm)
Ounces
Kilograms
0.2
910,846,000
0.71
20,893,000
0.50
1,031
137
14,628,000
939,014,000
0.4
581,370,000
0.96
17,915,000
0.54
1,167
165
10,095,000
678,642,000
0.5
462,328,000
1.09
16,220,000
0.56
1,222
177
8,306,000
565,193,000
0.6
375,367,000
1.22
14,695,000
0.57
1,270
188
6,924,000
476,840,000
0.7
303,106,000
1.35
13,203,000
0.59
1,319
200
5,734,000
399,918,000
0.8
251,819,000
1.48
11,976,000
0.60
1,349
211
4,860,000
339,684,000
0.9
212,368,000
1.60
10,911,000
0.61
1,377
221
4,172,000
292,397,000
1.0
183,140,000
1.70
10,020,000
0.62
1,404
229
3,638,000
257,164,000
1.5
92,436,000
2.18
6,468,200
0.65
1,498
278
1,931,300
138,437,000
2.0
44,566,000
2.67
3,822,500
0.66
1,605
329
946,700
71,530,000
2.5
19,783,000
3.24
2,061,900
0.67
1,729
401
423,400
34,199,000
3.0
9,601,000
3.80
1,173,000
0.67
1,788
421
206,000
17,162,000
3.5
4,616,000
4.45
660,000
0.67
1,886
444
100,000
8,705,000
4.0
2,492,000
5.10
409,000
0.66
1,870
417
53,000
4,661,000
5.0
1,047,000
6.09
205,000
0.59
1,559
252
20,000
1,632,000
Total Las Critinas Inferred Resources
(rounded)
Cutoff
Tonnes
Gold
Gold
Silver
Copper
CNSolCu
Silver
Copper
(g Au/t)
(g/t)
Ounces
(g/t)
(ppm)
(ppm)
Ounces
Kilograms
0.2
435,122,000
0.54
7,500,000
0.41
761
65
5,715,000
330,999,000
0.4
246,696,000
0.73
5,780,000
0.43
812
67
3,436,000
200,201,000
0.5
172,417,000
0.85
4,719,000
0.45
830
65
2,473,000
143,163,000
0.6
117,957,000
0.99
3,768,000
0.46
858
65
1,744,000
101,172,000
0.7
76,026,000
1.19
2,906,000
0.47
894
63
1,153,000
67,969,000
0.8
53,390,000
1.38
2,367,000
0.48
889
61
828,000
47,463,000
0.9
41,328,000
1.54
2,041,000
0.48
895
59
639,000
36,985,000
1.0
34,792,000
1.65
1,843,000
0.47
903
57
530,000
31,419,000
1.5
17,332,000
2.09
1,166,300
0.47
908
51
260,800
15,745,000
2.0
8,182,000
2.48
653,400
0.43
946
53
112,300
7,738,000
2.5
2,235,000
3.23
232,000
0.38
867
80
27,300
1,938,000
3.0
878,000
4.04
114,000
0.35
853
105
10,000
749,000
3.5
487,000
4.79
75,000
0.32
813
117
5,000
396,000
4.0
350,000
5.15
58,000
0.36
823
122
4,000
288,000
5.0
215,000
5.64
39,000
0.29
781
137
2,000
168,000
Table 6.9 Las Cristinas Reserves 2004
(From SNC-Lavalin, 2004a)
Deposit
Category
Ore
Grade
Contained
Waste
Strip
(applies to ore only)
kt
(Au g/t)
Au oz x1000
kt
Ratio
PROVEN
42,671
1.27
1,739
Bedrock
31,204
1.24
1,247
Total
281,585
Conductora
Saprolite
11,467
1.33
491
Bedrock
225,593
1.04:1
PROBABLE
227,793
1.15
8,441
Saprolite
55,992
Bedrock
176,991
1.17
6,667
Saprolite
50,802
1.09
1,774
PROBABLE
26,396
1.11
944 Total
27,063
Mesones/Sophia
Bedrock
15,308
1.20
589
Bedrock
12,731
1.03:1
Saprolite
11,088
0.99
355
Saprolite
14,332
PROVEN
42,671
1.27
1,739
Bedrock
31,204
1.24
1,247
Total
308,648
Total
Saprolite
11,467
1.33
491
Bedrock
238,324
1.04:1
PROBABLE
254,189
1.15
9,384
Saprolite
70,324
Bedrock
192,299
1.17
7,256
Saprolite
61,890
1.07
2,129
PROVEN & PROBABLE
296,860
1.17
11,123
Total
308,648
Total
Bedrock
223,503
1.18
8,503
Bedrock
238,324
1.04:1
Saprolite
73,357
1.11
2,620
Saprolite
70,324
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 44
2005
MDA was requested by Crystallex to update the Conductora
resource model to include data from 14 new drill holes drilled by Crystallex in
2005. The objective of the 14-hole drill program in 2005 was to increase
material in the Measured and Indicated categories. MDA used the same modeling
procedures as were used in the 2004 resource. The updated 2005 Conductora
resource estimate is given in Table 6.10.
Table 6.10 Total Estimated Resources at
Conductora and Mesones Sofia (2005)
(Including Reserves*; from Ristorcelli, 2005)
2005
Total Las Critinas Measured and Indicated Resources
(rounded)
Cutoff
Tonnes
Gold
Gold
Silver
Copper
CNSolCu
Silver
Copper
(g Au/t)
(g/t)
Ounces
(g/t)
(ppm)
(ppm)
Ounces
Kilograms
0.2
998,163,000
0.71
22,876,000
0.49
1,004
117
15,593,000
1,001,926,000
0.4
632,610,000
0.96
19,532,000
0.52
1,142
143
10,671,000
722,590,000
0.5
500,657,000
1.10
17,661,000
0.54
1,202
153
8,729,000
602,020,000
0.6
406,499,000
1.23
16,011,000
0.56
1,251
162
7,267,000
508,691,000
0.7
330,868,000
1.36
14,445,000
0.57
1,298
170
6,037,000
429,478,000
0.8
276,976,000
1.48
13,164,000
0.58
1,327
177
5,146,000
367,495,000
0.9
234,450,000
1.59
12,008,000
0.59
1,354
184
4,422,000
317,426,000
1.0
202,367,000
1.70
11,033,000
0.59
1,382
190
3,852,000
279,626,000
1.5
102,514,000
2.16
7,123,200
0.62
1,466
226
2,043,500
150,280,000
2.0
48,347,000
2.66
4,127,400
0.64
1,572
273
988,200
75,994,000
2.5
20,806,000
3.25
2,171,600
0.66
1,710
338
438,900
35,578,000
3.0
10,180,000
3.80
1,245,000
0.66
1,776
342
216,000
18,083,000
3.5
5,027,000
4.42
714,000
0.67
1,858
350
108,000
9,340,000
4.0
2,810,000
4.98
450,000
0.64
1,821
309
58,000
5,116,000
5.0
1,044,000
6.02
202,000
0.60
1,528
159
20,000
1,595,000
2005
Total Las Critinas Inferred Resources
(rounded)
Cutoff
Tonnes
Gold
Gold
Silver
Copper
CNSolCu
Silver
Copper
(g Au/t)
(g/t)
Ounces
(g/t)
(ppm)
(ppm)
Ounces
Kilograms
0.2
436,092,000
0.53
7,425,000
0.39
775
49
5,531,000
337,810,000
0.4
239,045,000
0.73
5,620,000
0.42
845
51
3,240,000
201,971,000
0.5
163,046,000
0.87
4,537,000
0.44
874
47
2,285,000
142,577,000
0.6
113,940,000
1.01
3,682,000
0.45
906
44
1,639,000
103,192,000
0.7
77,557,000
1.18
2,933,000
0.45
950
37
1,111,000
73,666,000
0.8
59,002,000
1.31
2,492,000
0.44
967
31
842,000
57,063,000
0.9
46,481,000
1.44
2,154,000
0.44
993
27
661,000
46,147,000
1.0
38,362,000
1.55
1,908,000
0.44
1,019
24
548,000
39,081,000
1.5
16,415,000
1.99
1,052,300
0.46
1,000
18
244,400
16,423,000
2.0
6,428,000
2.39
494,500
0.44
995
16
90,100
6,395,000
2.5
1,340,000
3.07
132,100
0.41
891
18
17,800
1,194,000
3.0
450,000
3.80
55,000
0.41
887
11
6,000
399,000
3.5
188,000
4.63
28,000
0.33
840
2
2,000
158,000
4.0
123,000
5.06
20,000
0.25
862
-
1,000
106,000
5.0
75,000
5.39
13,000
0.41
840
-
1,000
63,000
In its August 2005 update to the 2003 feasibility report (SNC-Lavalin,
2005a), MDA re-estimated the reserves. The calculated reserves are shown in
Table 6.11.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 45
Table 6.11 Las Cristinas Reserves 2005
(From SNC-Lavalin, 2005a)
Category
Ore
Grade
Contained
Waste
Strip
Deposit
(applies to ore only)
kt
(Au g/t)
Au oz x1000
kt
Ratio
PROVEN
40,681
1.41
1,840
Bedrock
31,026
1.39
1,385
Total
429,385
Conductora
Saprolite
9,655
1.47
455
Bedrock
346,346
1.55:1
PROBABLE
235,660
1.30
9,881
Saprolite
83,039
Bedrock
197,996
1.31
8,370
Saprolite
37,664
1.25
1,511
PROBABLE
18,489
1.27
754
Total
33,369
Mesones/Sophia
Bedrock
11,819
1.36
516
Bedrock
17,807
1.8:1
Saprolite
6,670
1.11
238
Saprolite
15,562
PROVEN
40,681
1.41
1,840
Bedrock
31,026
1.39
1,385
Total
462,754
Saprolite
9,655
1.47
455
Bedrock
364,153
Total
1.57:1
PROBABLE
254,149
1.30
10,635
Saprolite
98,601
Bedrock
209,815
1.32
8,886
Saprolite
44,334
1.23
1,749
PROVEN &
PROBABLE
294,830
1.32
12,475
Total
Total
462,754
1.57:1
Bedrock
240,841
1.33
10,271
Bedrock
364,153
Saprolite
53,989
1.27
2,204
Saprolite
98,601
Saprock included with bedrock
2006
At the request of Crystallex, MDA provided a revised estimate
of reserves as of January 1, 2006, that reflected a gold price of US$400 per
ounce (Hardy, 2006). The same pit design and other physical parameters and costs
as used in the 2005 revision (SNC-Lavalin, 2005a) were used in the 2006
revision, with no new work undertaken. Table 6.12 shows the revised 2006 Las
Cristinas reserves.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 46
Table 6.12 Las Cristinas Reserves 2006
(From Hardy, 2006)
January 2007
An updated estimate of reserves as of January 1, 2007 was
also prepared for Crystallex by MDA (Hardy, 2007). This estimate used a gold
price of US$450 per ounce. The same pit design and other physical parameters and
costs used in the 2005 and 2006 revisions were used in the 2007 update, with no
new work undertaken. Table 6.13 shows the updated 2007 Las Cristinas reserves.
Table 6.13 Las Cristinas Reserves 2007
(From Hardy, 2007)
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 47
6.5
Historic
Feasibility Studies
6.5.1
Placer Dome
Studies
Placer, through Placer Dome Exploration and Placer Dome
Technical Services Limited, completed a comprehensive feasibility study on Las
Cristinas in 1996 that was updated in 1998 (Placer Dome Exploration and/or
Placer Dome Technical Services Ltd., 1996 a-f; 1998a, b). MDA cannot verify that
the calculations for Placer's resource and reserves estimates met NI 43-101
standards; these resources and reserves are provided here for historic
perspective only.
The 1996 feasibility study (Placer Dome Exploration and/or
Placer Dome Technical Services Ltd., 1996a) reported an estimated Kriged
geostatistical resource for the Conductora-Cuatro Muertos-Potaso zone of 9.55
million ounces of gold contained in 255.4 million tonnes grading 1.16 g Au/t and
0.12% Cu at a 0.6 g Au/t cutoff. The deposit was reported to be open at depth
and along strike to the south. The study also reported an estimated Kriged
geological resource for the Cordova zone of 20.7 million tonnes grading 1.30 g
Au/t at a 0.6 g Au/t cutoff but noted
An economic evaluation of the Cordova
deposit has shown that it is of marginal importance to the project because of
the high waste/ore strip ratio and the complex, erratic nature of the high grade
gold mineralization. Due to the lack of a suitable site for the metallurgical
facilities, within reasonable distance of the mineralized zones, the
metallurgical plant site has been located adjacent to the Cordova zone
The 1996 feasibility study (Placer Dome Exploration and/or
Placer Dome Technical Services Ltd., 1996b) was based on operation of a 14.6
million ton-per-year cyanide leach and flotation plant. Mineable reserves in the
Conductora-Cuatro Muertos-Potaso zone were estimated at 48,340,000 tonnes of
saprolite ore grading 1.254 g Au/t and 0.126% total copper and 156,477,000
tonnes of bedrock ore grading 1.206 g Au/t and 0.122% total copper. A total of
6.5 million ounces of gold and 168.4 kt of copper would be produced over the
mine life (Placer Dome Exploration and/or Placer Dome Technical Services Ltd.,
1996f). The overall strip ratio is 0.88. Mine life was estimated to be 14.5
years, including two years of low-grade ore stockpile recovery starting in year
13. Open-pit production was planned with haul truck and hydraulic excavator
mining equipment.
Construction costs before financing were estimated to be
US$525.5 million, with post-construction capital costs during production life
estimated at $120.8 million (Placer, 1996f). Throughput was estimated at 20,000
t/d for oxide saprolite, 40,000 t/d for sulfide saprolite, and 40,000 t/d for
bedrock ore. Total operating costs were estimated to average $298/oz of gold
over the mine life, assuming a gold price of US$400/oz and a copper price of
US$1.15/lb (Placer Dome Exploration and/or Placer Dome Technical Services Ltd.,
1996f).
Mine dewatering will be an ongoing process and expense
requiring a sophisticated system of perimeter wells and full-time in-pit
pumping. The water table is near the topographic surface, and the Conductora
ultimate pit bottoms at -120m absl (120m below sea level).
Placer's 1996 feasibility study was updated in July 1998
(Placer Dome Exploration and Placer Dome Technical Services Ltd., 1998a).
Additional drilling in 1997 led to recalculation of the Kriged geostatistical
Measured and Indicated resource for the Conductora and Cuatro Muertos zone to
12.5 million ounces of gold contained in 347.3 million tonnes grading 1.12 g
Au/t and 0.11% copper at a 0.5 g Au/t cutoff. The 1997 deep drilling
demonstrated the down-dip continuity of the Conductora zone, but both the
Conductora and Cuatro Muertos zones remained open at depth and along strike to
the south.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 48
The July 1998 feasibility update pointed out that the deep
drilling at Conductora had introduced a new problem for resource classification
because some of the deep estimates were below a limit that could likely be mined
in the future. Taking this concern into consideration, a limiting envelope was
developed using an optimistic optimized pit, whose resulting pit shell provided
a good indication of what material had potential to be mined in the future. This
optimistic pit limit was used to prevent any unwanted extrapolation of the
resource to depth (Placer Dome Exploration and Placer Dome Technical Services
Ltd., 1998a).
Following the 1997 drilling program in the Mesones-Sofia
area, Placer estimated a Measured and Indicated geostatistical resource of 1.4
million ounces of gold in 41.6 million tonnes grading 1.08 g Au/t and 0.33%
copper at a 0.5 g Au/t cutoff (Placer Dome Exploration and Placer Dome Technical
Services Ltd., 1998a). The estimation used ordinary Kriging. The combined
Measured and Indicated geological resource for the Conductora-Cuatro Muertos and
Mesones-Sofia zones totaled 13.9 million ounces of gold in 388.9 million tonnes
grading 1.12 g Au/t and 0.13% copper at 0.5 g Au/t cutoff.
6.5.2
Crystallex
Studies
In January 2003, Mine Development Associates and Kappes,
Cassiday and Associates completed an internal prefeasibility study for Las
Cristinas based on data provided by CVG (Mine Development Associates and Kappes,
Cassiday and Associates, 2003). As noted in that report, this study was
entirely
based upon Placer's Las Cristinas resource estimates and reserve calculations
and supporting engineering work
. Most of the infrastructure, mine
dewatering, processing capital and operating cost estimates were derived from
Placer's documents, updated based on suppliers' quotations. Since MDA did not
have access to the underlying data, it could not corroborate the Proven or
Probable reserve for public reporting. However, assuming that the underlying
data and conclusions were correct, MDA recommended that the results could be
used for internal corporate decisions. MDA reported that the saprolite oxide
material would be treated in an oxide carbon-in-pulp circuit to produce doré
containing gold and silver, while the remaining ore types would be processed in
a flotation/carbon-in-leach plant to produce gold and silver doré and copper
concentrate.
In September 2003, SNC-Lavalin completed a 20,000 t/d
feasibility study for Crystallex that incorporated reserve estimates by MDA
(Table 6.7) (SNC-Lavalin, 2003). The study found that reserves totaled 246
million tonnes at an average grade of 1.29 g Au/t for 10.2 million ounces of
gold. With a gold metallurgical recovery of 89.0%, 9.1 million ounces of gold
would be recovered. Operating cost was estimated to be US$6.70/t, and capital
costs were estimated to be $243 million (without VAT) with sustaining capital
costs of $160 million (without VAT).
Mining would be by trucks and shovels, with conventional
gravity and carbon-in-leach processing for a mine life of 34 years. The strip
ratio would be 1.34:1.
At a gold price of $325/oz, the project was estimated to have
an IRR of 14.5% (before VAT and taxes), cash flow of $742.4 million (before
taxes), NPV at 5% of $238.5 million (before taxes), and a payback before taxes
of five years. Environmental risks of effluent discharge, tailings dam failure,
and closure challenges were thought to be low, while acid-generation potential
was low to marginal.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 49
This feasibility study reported that SGS Lakefield Research
(Lakefield) had conducted extensive metallurgical test work in which a one-tonne
sample derived from representative drill core was run through a 50 kg/day,
bench-scale carbon-in-leach (CIL) plant for 21 days. Sub-samples were sent to
McGill University for gravity recovery testing.
In October 2003, SNC-Lavalin was asked to prepare a
feasibility study for a 40,000 t/d operation rate (SNC-Lavalin, 2004a). Reserves
(conforming to 43-101 and CIM definition) were reported as 297 million tonnes at
an average grade of 1.17g Au/t for 11.12 million ounces of contained gold. At a
gold recovery of 89.0%, 9.9 million ounces of gold would be recovered. Operating
cost dropped from the earlier feasibility study to $5.964/t. Capital cost rose
to $365.4 million (without VAT), and sustaining capital rose to $169.5 million
without VAT. The strip ratio would have been 1.04:1, and mine life would be 20
years. At this operation rate and assuming a gold price of $325/oz, the project
was estimated to have a before-tax IRR of 17.7% (also before VAT), net cash flow
of $746 million, and payback in four years.
In August 2005, SNC-Lavalin completed a 43-101 Technical
Report updating the September 2003 feasibility study (SNC-Lavalin, 2005a). As
cited in the 2005 report, the following are the key changes made in 2005
compared to 2003:
Mineral resources and mining reserves, following two
in-fill drilling program;
Investigation of a suspected low fault angle in the open
pit ;
TMF design, following an extensive field investigation
program and third party review;
Foundation and waste dump designs, following an
extensive field investigation program;
Water Management Plans following completion of
hydrological field work.
Mining plans that originally envisaged a contractor
mining the saprolite and Crystallex mining hard rock. Now it is planned that
Crystallex will do all the mining with its own mining fleet based on the
practical experience on a similar operation.
Environmental factors, following completion of an
Environmental Impact Assessment (EIA) and much consultation with the CVG, MARN
and MEM.
Capital and Operating Cost Estimates, following
significant progress on the award of purchase orders for equipment, the award
of contracts for construction and an extensive review of operating costs.
Changes to the project schedule, resulting from
permitting activities.
The August 2005 update to the 2003 feasibility report
estimated Proven and Probable reserves at 294.8 million tonnes with an average
grade of 1.32 g Au/t for a total of 12.475 million ounces of gold. At a rate of
88.7% gold recovery, 11.05 million ounces would be recovered with an annual gold
production, averaged over the life of the mine, of 270,730 oz of gold. Over the
life of the mine, the average operating cost was estimated to be $7.66 per tonne.
Capital cost was now estimated to be $293 million (excluding VAT), and
sustaining capital was estimated at $284 million (excluding the VAT). The
revised mine life was estimated to be 41 years with a strip ratio of 1.57:1.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 50
At a gold price of $350/oz, the project was estimated (SNC-Lavalin, 2005a) to
have the following results:
Before Tax
After Tax
IRR
12.5%
8.4%
Net Cash Flow
$814million
$547million
NPV at 5%
$217million
$ 98 million
Payback
5.1 years
8.5 years
The August 2005 report modified the expected
acid generation potential, from "low to marginal" in 2003 to "low and will be
mitigated" in 2005. The 2005 report indicated that the seismic hazard zone was
"low."
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 51
7.0
GEOLOGY
Placer has been the principal operator at Las Cristinas.
While Placer collected much of the original data and performed the earliest
geological interpretations, Richard Spencer of Crystallex has recompiled and
reinterpreted the geology. This section of the report is an outgrowth of that
effort and is written by Mr. Spencer.
7.1
Regional
Geology
The Las Cristinas concessions are located in a poorly
understood part of the Archean to early Proterozoic granite-greenstone terrain
of the Guyana Shield. The Guyana Shield underlies the eastern part of Venezuela,
Guyana, Surinam, French Guiana and parts of northern Brazil. Tentative
correlations have been made with the granite-greenstone terrains of the West
African Shield.
Three major geological subdivisions have been established for
the Guyana Shield. Archean rocks older than 2.5 billion years consist of
metamorphic high-grade gneiss, local charnockite (a hypersthene-bearing
granite), and widespread granitoid bodies. Structurally separate from the
Archean silicic crust are metasedimentary and metavolcanic rocks of early
Proterozoic age. Early Proterozoic rocks have undergone compressional tectonism
and are metamorphosed and intruded by syn-orogenic granites of the
Trans-Amazonian Orogeny. Unconformably overlying the early Proterozoic rocks are
mid-Proterozoic continental clastic units of the Roraima Formation.
The rocks of the Guyana Shield have undergone intense
tropical weathering. The tropical weathering process has produced a lateritic
profile 30m to 100m thick, as a result, basic geological information about the
Guyana Shield is limited due to the paucity of outcrops in the Las Cristinas
area.
7.2
Local Geology
7.2.1
Lithology and Stratigraphy
Las Cristinas is located in a Proterozoic granite-greenstone
terrain of eastern Venezuela. Stratigraphy the Kilometer 88 district consists of
a west-dipping sequence of lower Proterozoic supracrustal metavolcanic and
metasedimentary rocks. Upward or westward younging directions have been
confirmed in graded volcanosedimentary sequences cut in recent drilling.
Mineralization at Las Cristinas is hosted by a mafic to
intermediate-composition volcanic sequence. The stratigraphy is conspicuously
layered with fragmental volcaniclastic facies interpreted as autobreccias,
lapilli tuffs of mafic to intermediate composition, interlayered with basalt and
andesite lava flows. Regional mapping by the Venezuelan Geological Survey shows
the Las Cristinas project lying within the Caballape Formation of the Botanamo
Group. The Caballape Formation is described as consisting largely of graded
wackes and other sedimentary facies with minor andesitic to rhyodacitic volcanic
intercalations. This description contrasts with the dominantly mafic to
intermediate-composition volcanic nature of the sequence that hosts the
mineralization at Las Cristinas. The host sequence at Las Cristinas is now
considered to constitute part of the Carichapo Group of the Pastora Supergroup
(Table 7.1).
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 52
Table 7.1 Regional Stratigraphy and Broad
Description of Lithology for Greenstone Rocks of the Guyana Shield in Venezuela
(from Day, et. al., 1995)
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 53
Exploration drilling at Las Cristinas provides intercepts
over an approximately 1,000m stratigraphic interval. The stratigraphic sequence
at Las Cristinas is mafic to intermediate-composition, with the majority of
rocks ranging from basaltic to andesitic. There is some evidence for a change
from dominantly basaltic compositions in the lower part of the sequence to
dominantly andesitic rocks in the middle to upper part of the volcanic pile.
Metavolcanic rocks range from homogeneous lavas, some of which have preserved
amygdales, to fine-grained tuff and fine-grained volcanic sand, to fragmental
facies. By far the majority of the fragmental rocks are monolithic in which the
clasts have a similar composition to the matrix, with polylithic fragmental
units constituting a very small part the stratigraphy.
Monolithic fragmental rocks range from those in which the
clasts are clearly differentiated from the typically fine-grained volcanic
matrix (lapilli tuffs) to those in which the margins of the fragments are not
easily distinguished from the matrix. A common andesitic facies is that in which
monolithic porphyritic fragments (plagioclase phenocrysts) are supported by a
porphyritic matrix in which the plagioclase phenocrysts are of a similar size
and have a similar distribution to that of the clasts. The monolithic fragmental
rocks in which the matrix is similar in texture and composition to the fragments
are interpreted as autobreccias.
Polylithic facies typically contain angular to subrounded
clasts of similar size, supported in a fine- to medium-grained matrix. These
units tend to be graded with both upward-fining and upward-coarsening
components. These rocks may be pyroclastic in origin, although metamorphism and
pervasive cleavage development make the identification of shards difficult.
Sedimentary units occur throughout the sequence but
constitute a higher proportion of the stratigraphy in the upper part of the
sequence drilled at Las Cristinas. The most common facies might be termed
graywacke: volcanic sand-gritstone interlayered with mudstone-siltstone, which
is laminated in some intersections. Some intervals show that the coarser facies
grade upward into siltstone and mudstone.
Conglomerate facies are confined to the upper part of the
stratigraphy at Las Cristinas. Polylithic conglomerates with poorly sorted
clasts that range from cobbles to pea-sized granules are matrix supported; the
matrix ranges from coarse sandstone to mudstone. The clasts are typically
rounded to well rounded. Some of the conglomerate units fine upwards into muddy
sandstones and siltstone layers. Conglomerate facies are interpreted as
mass-flow deposits.
The very upper part of the stratigraphy intersected in
drilling at Las Cristinas is dominated by fine-grained sedimentary or
volcanosedimentary rocks. This siltstone- and mudstone-dominated sequence
contains some jasperitic chert layers. It is not clear whether these are true
chert beds, or whether they were formed from the pervasive silicification of
mudstone facies.
Drill holes collared in the vicinity of the diorite stock in
the Potaso area described below intersected a medium- to coarse-grained,
phaneritic dacite body. The dacite is characterized by the presence of quartz
phenocrysts, and the majority of the feldspar phenocrysts are more square than
oblong which is consistent with a more potassic composition. Drill-hole
intercepts show that the body has an inverted saucer-shape with a relatively
flat lower surface. The intrusive body had a maximum thickness of 50m. The lower
and upper contacts of the homogenous-textured igneous body typically consist of
monolithic breccias that are interpreted as autobreccias. Similar monolithic
breccias extend beyond the limits of the igneous body and become interlayered
with laminated sandstone and siltstone-mudstone units that contain clasts of
dacite as well as equant feldspar crystals reminiscent of the form of square
feldspars found in the dacite. The dacite and related breccias and sedimentary
rocks are interpreted as a central dome with proximal autobreccias that grade
outwards into a series of mass-flow deposits whose matrix is sandy in more
proximal situations and more muddy in areas distal to the central dome. The
stratigraphic position of the apron of autobreccias and mass-flow deposits ties
the extrusion of the dacite dome to the lower part of the volcanosedimentary
pile in the Las Cristinas area.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 54
Three phases of intrusive rocks, including diorite stocks, an
aplite dike and diorite sills, occur on the Las Cristinas property.
Porphyritic diorite stocks have been intersected in drilling in two parts of the
Las Cristinas property. The interior of the diorite stocks is medium to coarse
grained and is homogeneous to porphyritic in texture. The margins of the stocks
are generally finer grained and contain xenoliths grading to monolithic
fragmental rocks, in which fragments are enclosed in a matrix of similar
composition and texture. These fragmental rocks are interpreted as autobreccias
in which the fragments are xenoliths.
Hornblende in the diorite is pervasively altered to chlorite,
while some of the plagioclase is altered to epidote and calcite.
Potassium-silicate alteration, consisting principally of secondary biotite, is
locally developed. Pyrite and chalcopyrite occur in shear zones and veinlets.
The occurrence of sparse mineralization with the same sulfide species and
similar alteration assemblages as the principal deposit is consistent with the
diorite stocks being pre-mineralization in age.
The largest and best-defined stock reaches surface, in the
saprolite, in a northeast-trending zone in the Potaso area on the south edge of
the Las Cristinas deposit. The diorite, located north of the Potaso area, is
asymmetric in a north-south section: it has a sub-vertical northwest face while
its roof is shallowly inclined, dipping south at an angle of approximately 30°
beneath the northern edge of the Brisas de Cuyuni deposit. This diorite stock
occupies the gap in economic mineralization between the Las Cristinas and Brisas
de Cuyuni deposits.
The second diorite stock is located in the northern part of
the Las Cristinas property, where it occupies the gap in mineralization between
the Mesones and Morrocoy areas.
A flat-lying intrusion termed aplite by Placer's
exploration team occurs in the northwestern part of the Las Cristinas deposit in
the Mesones, Morrocoy, and Cordova areas. This sill varies between 5m and 35m
thick with an average of about 12m. Although the intrusive body is flat lying,
it is near-perpendicular to the steep-dipping stratigraphy, and therefore it may
have been intruded as a dike prior to tilting of the stratigraphy, as opposed to
being intruded as a sill after tilting of the stratigraphy. The aplite is
medium grained, and relict textures suggest that the original rock was
homogenous. The intrusion typically shows well-developed chilled margins against
the country rock. The intrusion is pervasively altered to a muscovite-calcite
assemblage with minor tourmaline. Its original composition, therefore, appears
to have been dominated by plagioclase with minor mafic minerals while being
devoid of free quartz, implying an original composition closer to that of
monzonite.
Three-dimensional modeling of gold-grade shells shows that
gold mineralization related to the breccia complex at Mesones passes through an
oval-shaped hole in the aplite intrusion, which is consistent with the breccia
complex having punched through the intrusive body. This implies that the
intrusive body is pre-mineralization in age, which is consistent with the
intense, pervasive muscovite-calcite (
+
tourmaline) assemblage to which
the intrusive body has been altered. Similar muscovite-calcite alteration is
common to the upper parts of the Mesones breccia complex. Despite the evidence
for the intrusive body being pre-mineralization in age, it is devoid of gold and
copper mineralization.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 55
Mafic sills of gabbroic to dioritic composition occur
throughout the Las Cristinas area. The sills strike northeast and dip to the
southeast at an average of about 20°. They are arranged in upward-stepping
en
echelon
sets, and the sills generally increase in number and thickness from
south of the Conductora area to the Mesones-Sofia-Morrocoy area in the northern
part of the deposit. These sills cut the aplite intrusive body described above
and maintain their orientation irrespective of the dip of the stratigraphy,
which is consistent with intrusion post-tilting. The sills are barren with
respect to gold and copper and are partially altered or metamorphosed to a
chlorite-epidote-calcite assemblage. These sills are considered to be
post-mineralization, and the conclusion drawn from regional mapping is that the
sills are Proterozoic in age.
7.2.2
Structure
A near-pervasive foliation (S
1
) occurs in the Las Cristinas
area where it varies in intensity from strong to absent. The S
1
foliation is
sub-parallel to bedding (S
0
). The intensity of foliation development is largely
controlled by the nature of the rock, with massive beds, such as lava units,
exhibiting the weakest cleavage development and fine-grained and fragmental
rocks displaying the most intense foliation. A stretching lineation (L
1
) is
evident in the S
1
foliation and rakes to the southwest at an average plunge of
54° on a bearing of 213° (Gordon, 2005). The association of the stretching
lineation with the planar S
1
foliation is consistent with the fabrics having
developed under conditions of simple shear, with the shear plane orientated
sub-parallel to bedding. Graded bedding on core indicates that stratigraphy is
right-way-up on the Las Cristinas property.
Bedding and the S
1
cleavage strike north and dip moderately
(30°-45°) to the west in the southern part of the property through the Conductora and Sofia areas. North and west of Sofia, the dip of bedding and the
S
1
foliation change orientation abruptly to an overall northwest strike, and
dips to the southwest are steeper (30°-70°). This change in orientation of
bedding and S
1
cleavage defines a fold hinge whose axial trace strikes northeast
with a plunge to the southwest (Gordon, 2005) and coincides with the axial trace
of a regional synform delineated in mapping of the district. The generally
northwest-striking limb of this fold contains a number of 100m-500m long N- and
NW-striking limbs that constitute smaller-scale folds that have a similar
geometry to the main synform. In contrast, the N-striking south limb (Conductora
to Sofia) of the regional synform does not contain smaller-scale folds.
A second foliation (S
2
) occurs sporadically on the Las Cristinas property, where it varies in intensity from absent to moderate; it is
never strongly developed. The S
2
foliation strikes southeast (average 111°) and
has an average dip of 36° to the northeast. S
2
is best developed as an axial
planar cleavage in areas of ten-meter scale folding, where it appears as a
moderate crenulation of S
1
(Gordon, 2005).
A northeast-striking fault is located in the axial zone of
the regional synform defined by the S
1
foliation. This fault has been intruded
by a thick (up to 100m wide) mafic dike and passes between the Mesones and Sofia
mineralized centers (Figure 4.2) This fault is believed to have cut through a
single mineralized breccia complex and resulted in the displacement of the
Mesones component of that body 200m to the southwest of the Sofia remnant. From
Mesones-Sofia, the fault coincides roughly with the location of the Quebrada
Amarilla stream.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 56
Quartz-tourmaline-sulfide breccias are concentrated in the
Mesones-Sofia areas in the northern part of the Las Cristinas deposit. Two other
small pipe-like breccia bodies outcrop to the northwest of Mesones-Sofia. In
detail, the Mesones and Sofia breccia bodies consist of concentrations of
bundles of sub-parallel sheeted vein breccias. These planar, sheet-like entities
are clustered in Mesones and Sofia such that they constitute two elongate,
pipe-like bodies that consist of ~30% breccia. Both bodies contain two principal
sets of sub-parallel sheeted vein breccias; these are subvertical and bedding
sub-parallel. Steep-dipping, sub-vertical vein breccias have a preferred
northeast strike, which results in Mesones and Sofia having roughly elliptical
footprints. Many of the vein breccias observed in drill hole core are
sub-parallel to bedding. Some core intervals show bedding-sub-parallel vein
breccias branching off sub-vertical breccias suggesting that they extend outward
in the country rock from the sub-vertical structures.
Structure has a very significant role in relationship to
mineralization at Las Cristinas, which is described in detail in Section 9.0.
7.2.3
Weathering
Weathering, a critical control on copper distribution, will
also affect mining at Las Cristinas. Placer categorized the rocks into pedolith,
saprolith, and bedrock.
Pedolith:
The uppermost interval of the geological
profile has undergone a volume reduction due to the intense weathering and
consequent destruction of original textures, potentially enriching and/or
homogenizing the gold concentrations. Pedolith is broken down into three
subgroups:
Laterite: Usually gold-bearing, this
was the target of
garimpeiro
miners and is recognized by the presence of
goethitic pisolites in red clay matrix. Laterite is occasionally covered by
duricrust, consisting of quartz clasts and pisolites in iron oxide cement.
Mottled Zone: This unit is recognized
by hematitic and/or kaolin patches in massive, ferruginous clay matrix. This is
locally referred to as
tigrito
texture. Original textures have been
destroyed.
Clay Zone: This unit is made up of
white and green or iron-oxide--colored clays. It is defined by faint remnant
texture to completely obliterated texture. This zone is best developed in
kaolin-rich areas.
Saprolith:
Saprolith has preserved textures, but with
clay psuedomorphs and original volume unchanged. It is broken down into five
subgroups based on oxidation and hardness (International Society for Rock
Mechanics (ISRM)). The breakdowns are described below.
Oxide Saprolite (SAPO): This
consists of white, green or iron-oxide--colored clays and silts. Relict
textures/structures are generally preserved and nearly all sulfide minerals are
oxidized.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 57
This unit averages 30m in thickness,
but ranges from 5 to 60m. ISRM hardness = S1-S6 (can be indented with
fingernail).
Mixed Saprolite (SAPM): This
interface between oxide and sulfide-stable saprolite can reach 20m in thickness
and is defined by the presence of both oxide and sulfide minerals. ISRM hardness
= S1-S6 (can be indented with fingernail).
Sulfide-Stable Saprolite (SAPS):
This part of the saprolite that is located below the current redox front
consists of green, gray, and white clay minerals and silt-size rock. Sulfide
minerals and relict textures/structures are preserved. Supergene copper
enrichment occurs in the upper part of this horizon. ISRM hardness = S1-S6 (can
be indented with fingernail).
Saprock (SAPR): Saprock forms a one
to 10m gradational contact between saprolite and bedrock; in places where it is
absent, the contact between saprolite and bedrock is sharp. Saprock can consist
of weathered rock fragments floating in a matrix of sulfide-stable saprolite and
is defined as the first occurrence of material with an ISRM hardness = R1
(cannot be indented with fingernail but can be broken easily with a
pocketknife).
Bedrock:
The bedrock is divided into two main groups
based on the stability of carbonate: carbonate-leached and carbonate-stable
bedrock.
Carbonate-Leached Bedrock (CLB):
The carbonate-leached bedrock is characterized by centimeter-sized vugs and
voids caused by the leaching of carbonate veins and matrix. Porosity can reach
30% and the thickness of this zone ranges from 10 to 50m. ISRM hardness = R1-R6
(cannot be easily broken with a fingernail).
Carbonate-Stable Bedrock (CSB): The
carbonate-stable bedrock has a gradational contact with the carbonate-leached
bedrock over one to five meters. This unit is defined by the first occurrence of
carbonate in veins or in matrix. Weathering is absent. ISRM hardness = R1-R6
(cannot be easily broken with a fingernail).
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 58
8.0
DEPOSIT TYPES
Three types of mineralization are evident at Las Cristinas (see Section 9.0
for more detail). These include:
Mineralization associated with hydrothermal quartz-tourmaline breccias
typical of the Mesones-Sofia area.
Stratiform mineralization in which elevated gold and copper
values are found within specific strata that are interbedded with strata that
are poorly mineralized. Well-mineralized strata are typically volcaniclastic
or sedimentary units that have a relatively high permeability. Poorly
mineralized units are typically competent, such as homogeneous lava flows or
intrusive rocks, whose permeability is relatively low. Stratiform
mineralization is typical of the Conductora (including Cuatro Muertos and
Potaso), Morrocoy and Cordova areas.
Discrete auriferous quartz veins are located adjacent to
the Las Cristinas deposit. Such veins include the Los Rojas and Albino veins
that lie approximately 1km to the east of the Conductora area, and the Hofman
vein, which lies about 1km to the west of the Cordova area. These veins
consist of quartz with gold mineralization associated with pyrite (there is no
appreciable chalcopyrite). The veins have chlorite selvages about 50cm wide.
Although gold mineralization in these veins does not constitute part of the
Las Cristinas resource, they are considered to be genetically related, and
peripheral, to the Las Cristinas deposit. This type of mineralization is not
discussed further in this report.
In terms of classification, Las Cristinas has been assigned
to shear zone-hosted systems by some geologists, and to a porphyry association
by others; however, several key elements of the Las Cristinas deposit must be
satisfied in any attempt to classify the deposit. These include:
Hydrothermal quartz-tourmaline breccias are present at the
core of the mineralized system. Although the quartz-tourmaline breccias
contain less than 5% of the reserve at Las Cristinas, the concentric
arrangement of alteration facies record a decrease in hydrothermal fluid
temperatures away from the breccias, showing that these constituted the core
of the hydrothermal system. The quartz-tourmaline breccias are features that
cross-cut stratigraphy and are clearly not shear zone related. Similar
breccias are common in porphyry environments, and some show alteration and
metal zoning similar to that observed at Mesones-Sofia, such as secondary
biotite at depth to quartz-sericite at shallower levels, as well as a decrease
in chalcopyrite upwards within the breccias.
Alteration zoning at Las Cristinas is similar to that
associated with porphyry systems with proximal secondary biotite giving way to
distal chlorite-epidote-calcite (propylitic) facies. Quartz-sericite
alteration is superimposed on other alteration facies and is likely to have
resulted from the draw-down of meteoric water as the prograde hydrothermal
system collapsed.
The metal association of gold with copper and minor
molybdenum is reminiscent of porphyry systems and is not common in shear
zone-related gold systems.
Despite these factors that are typical of porphyries, Las
Cristinas clearly is not a classic porphyry system since mineralization is not
contained within, or closely associated with, any porphyritic intrusive stock.
Furthermore, the abundant quartz veining associated with most porphyries is
largely absent from the Las Cristinas deposit.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 59
The conclusion, based on these factors, is that Las Cristinas
is a porphyry-
related
mineralized system: it may be classified as a mafic-volcanic-hosted
porphyry-associated system in which mineralization is located relatively distal
from the porphyry. However, the fact remains that the majority of the
mineralization lies parallel to the foliation and is influenced by the
stretching orientation defined by a mineral lineation. This structural
information is consistent with mineralization being coeval with shearing over an
interval in excess of a kilometer in width.
The setting for Las Cristinas mineralization, therefore, is
intrusion of a porphyry system into a regional-scale shear zone.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 60
9.0
MINERALIZATION
9.1
Mineralization
and Alteration
Two distinct styles of mineralization account for the
resource at Las Cristinas: that at Mesones-Sofia is associated with hydrothermal
breccias, while that in the Conductora, Morrocoy and Cordova areas is stratiform.
The breccia-hosted mineralization at Mesones-Sofia contains about 5% of the
current gold reserves at Las Cristinas, with the vast majority of the gold
contained in the adjacent stratiform mineralized zone.
Mineralization in Mesones-Sofia is concentrated in the
quartz-tourmaline-sulfide-calcite vein breccias and extends laterally into the
adjacent country rocks. The breccias are sufficiently closely spaced that the
country rock between them also constitutes ore in the central part of Mesones-Sofia.
Grades in the country rock on the periphery of the system become less consistent
as the distance between the breccias increases.
Breccias consist of quartz, tourmaline, calcite and sulfides,
and the country rock alteration assemblage consists of fine-grained quartz,
muscovite (sericite), calcite, tourmaline and disseminated clots of sulfides.
Silicification is variably developed, with pervasive silicification largely
confined to the breccias where it encapsulates the sulfides. Muscovite gives way
to secondary biotite in the deepest intercepts in Mesones-Sofia. The occurrence
of relict laths of biotite within intensely sericitized zones, as well as relict
biotite in the central parts of larger muscovite laths, provides evidence that
muscovite replaced pre-existing secondary biotite in the upper parts of the
Mesones-Sofia hydrothermal breccia system. Patchy potassium-feldspar alteration
is evident in the central part of Mesones-Sofia.
Sulfides commonly occur in aggregates up to 5cm in diameter
at Mesones-Sofia. Sulfides also occur as semi-massive replacements in the matrix
of the quartz-tourmaline breccias and as disseminations both in the breccias (in
the matrix and in breccia clasts) and in the enclosing country rocks. Sulfide
content in primary, hard-rock ore is 5-10% with a pyrite/chalcopyrite ratio of
<5. Pyrite and chalcopyrite are the only common sulfides in Mesones-Sofia;
molybdenite is scarce, but where it does occur, it is associated with pyrite and
chalcopyrite. There is evidence that chalcopyrite gives way to pyrite upwards in
the breccia bodies. For example, breccia bodies at Morrocoy, located
structurally 200m above Mesones-Sofia, have similar overall sulfide contents but
contain only a minor proportion of chalcopyrite. There is no appreciable
difference in the nature and distribution of sulfides, sulfide species, or
grade, between the muscovite- and biotite-dominated alteration assemblages. This
implies that the majority of the mineralization was in place by the time that
secondary biotite was overprinted by muscovite.
The Conductora (including Cuatro Muertos and Potaso),
Morrocoy and Cordova areas contain over 95% of the gold resource at Las
Cristinas. Mineralization in these zones (here called Conductora-style
mineralization) is stratiform in nature and is concentrated in volcaniclastic
units within the mafic-to intermediate-composition volcaniclastic host sequence.
The distribution of mineralization is controlled by the permeability of the host
rocks; gold grade and alteration intensity typically decrease abruptly at the
contact between permeable volcaniclastic units and impermeable lava layers, for
example. Pre-mineralization, altered dioritic intrusive stocks are largely
devoid of significant gold mineralization due to their low permeability.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 61
Mineralization occurs in a greater than three-kilometer long,
north-trending zone that dips moderately (30° - 40°) to the west, sub-parallel
to the volcanic stratigraphy and to the pervasive (S
1
) cleavage. Gold
mineralization is associated with a sulfide assemblage that consists essentially
of pyrite and chalcopyrite.
Alteration mineral assemblages in Conductora are secondary
biotite, minor potassium feldspar, calcite, chlorite and minor epidote and
sericite. Calcite is ubiquitous, occurring mainly as disseminations but also in
carbonate-sulfide veinlets, carbonate-only veinlets, and quartz-carbonate
veinlets. Silicification is minimal in Conductora-type mineralization. Minor
tourmaline disseminations occur in some parts of Conductora, but in much lower
concentrations than in the Mesones-Sofia area. The most consistent gold
mineralization occurs in zones in which secondary biotite is most intensely
developed. Many sulfide clots within these biotite-dominated alteration zones
are rimmed by a green chlorite alteration that has overprinted the secondary
biotite.
Pyrite and chalcopyrite constitute the only sulfide species
of significance in primary ore. The average pyrite/chalcopyrite ratio is >5.
Sulfides occur principally as disseminations, but also in narrow veinlets 1-2mm
wide. These veinlets are variable in composition ranging from sulfide-only to
sulfide-calcite and sulfide-calcite-quartz. These veins have selvages of
secondary biotite, chlorite or chlorite-epidote. Quartz-sulfide veins are rare,
but where they do occur, they are in zones of intense secondary biotite
development against which they have indistinct margins and are associated with
multi-ounce gold values. Higher than average gold grades (>2 g/t) are associated
with areas in which pyrite occurs as coarse clots up to 2cm in diameter in zones
of intense secondary biotite alteration. Generally, however, the sulfides are
fine-grained much more so than in Mesones-Sofia.
Molybdenite is locally quite abundant, occurring in
quartz-calcite-sulfide veinlets and disseminated with pyrite and chalcopyrite.
The Potasso area, which constitutes the northern extremity of the adjacent
Brisas deposit located adjacent to but off of the Las Cristinas property,
contains disseminated molybdenite that appears to have no spatial relationship
with pyrite and chalcopyrite on a hand-specimen scale.
9.2
Alteration and
Metal Zoning
Alteration and metal zoning are interpreted such that the
Mesones-Sofia breccia complex, whose tourmalinebearing alteration assemblage
defines the highest-temperature hydrothermal conditions on the Las Cristinas
property, constitutes the core of the mineralized system about which the
Conductora, Morrocoy, and Cordova zones are arranged. The Potaso area is
separated from the Conductora deposit by an essentially barren,
pre-mineralization intrusive stock. This dioritic intrusive body is weakly to
moderately altered to a chlorite-epidote-calcite assemblage. Secondary biotite
and associated mineralization are confined to shear zones that extend through
the stock from the enclosing country rock. The spacing of the mineralized shear
zones is relatively wide, resulting in the stock having generally low
gold-copper grades. Mineralization at Potaso is in strata that are located above
the southward-dipping roof of the diorite stock. Mineralization at Potaso
constitutes the northern fringe of mineralization related to the Brisas de
Cuyuni deposit, which lies immediately south of the Las Cristinas property.
Hence, Brisas de Cuyuni and Las Cristinas are considered to be distinct and
separate deposits located within the same mineral belt and separated by a
pre-mineralization stock of dioritic composition.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 62
Tourmaline-bearing assemblages have the smallest footprint of
all of the alteration types. Tourmaline-bearing alteration, which is largely
confined to the Mesones-Sofia area, passes outward into a secondary biotite zone
whose distribution is asymmetric with respect to Mesones-Sofia: biotite
alteration extends 2km to the south, through the Conductora area, while
extending only several hundred meters to the north of Mesones-Sofia. Secondary
biotite alteration gives way laterally to a chlorite-epidote-calcite assemblage.
The majority of the gold reserve at Las Cristinas is located within biotite
alteration facies, and to a lesser extent within the tourmaline zone, while the
distal chlorite-epidote-calcite facies is essentially barren of significant gold
mineralization.
Two alteration facies have been superimposed on the simple
alteration zoning described above that ranges from proximal, high temperature
tourmaline, through secondary biotite to lower temperature chlorite-epidote at
the periphery of the system. The first is the muscovite alteration, which relict
textures show was superimposed on secondary biotite, in the upper part of the
Mesones-Sofia hydrothermal breccia system. The second is widespread,
low-intensity chlorite epidote - calcite alteration that occurs in the
secondary biotite zone. Sulfides and some mineralization are associated with
chlorite-epidote-calcite clots and veinlets. These minerals overgrow and
overprint the secondary biotite and are interpreted to have developed from
cooler fluids as the hydrothermal system collapsed in the waning stages of the
mineralizing event.
The highest and most consistent copper grades at Las
Cristinas occur in the Mesones-Sofia breccia complex, from which the grades
decrease in all directions. Gold shows a different distribution than copper: it
occurs in Mesones-Sofia, outwards from which the gold grade decreases before
increasing significantly towards the peripheral, southern part of the deposit.
The highest grade-thickness values for the deposit are located in the southern
part of the Conductora area adjacent to the change from pervasive secondary
biotite alteration to the distal chlorite-epidote-calcite assemblage.
9.3
Relationship
between Structural Fabrics and Mineralization
Structural and fabric textures in sulfides provide some
evidence for the timing of mineralization relative to the structural events
described above.
Most of the pyrite and chalcopyrite grains at Las Cristinas
are aligned within the S
1
foliation and many have calcite developed in pressure
shadows adjacent to the grains. This spatial relationship may have resulted from
preferential development of the sulfides in the cleavage planes, implying that
mineralization was associated with cleavage formation, or alternatively, from
the deformation and alignment of pre-existing sulfide grains in the cleavage.
Some S
1
cleavage planes show sulfides aligned parallel to the stretching
lineation. In addition, the majority of sulfide-bearing veinlets are also
aligned in the S1 foliation: again, there may have been pre-existing veinlets
that were rotated into the foliation plane during cleavage development or,
alternatively, they may have formed in that orientation during development of
the foliation.
Despite the fact that the majority of veinlets are parallel
to the S
1
fabric, some cross-cut the foliation and some of the disseminated sulfide grains overgrow the S
1
planar fabric. These relationships are consistent
with the sulfides post-dating fabric development. In addition, some of the
fragments in the Mesones-Sofia breccias have a pervasive S
1
cleavage whose
orientation is different in each clast, which shows that brecciation occurred
after the onset of cleavage development. Sulfides overgrow these fragments and
their contacts with the matrix of the breccia, showing that at least a component
of mineralization occurred after breccia development, while the fact that the
breccias contain significant mineralization implies that the majority of the
mineralization was introduced during development of the breccia. Therefore, the
conclusion drawn from these relationships between structural fabric and sulfides
is that mineralization occurred during formation of S
1
and continued after the
cessation of S
1
development.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 63
The minimum relative age of mineralization is constrained by
the fact that sulfides are intensely folded in crenulations typical of the S
2
fabric. Placer reported, from the mapping of trenches, that post-mineralization
displacement of a few meters is found along northwest-trending structures
dipping shallowly to the northeast. The orientation described is the orientation
of small shear zones related to development of the S
2
fabric (Gordon, 2005).
9.4
Conductora-style Mineralization
The Conductora (including Cuatro Muertos and Potaso) and
Morrocoy deposits occur within the previously mentioned main north-trending and
west-dipping ductile-deformation zone that can be traced for 3.5km along strike
from the southern boundary of the Cristina 4 concession northward to the
northern part of the Cristina 5 concession. The deformation zone is
characterized by an S
1
foliation that varies in intensity from absent to
moderately strong. Some S
1
foliation planes contain a stretching lineation (L
1
),
which implies that the structural fabric was generated by simple shear. Although
the S
1
foliation is developed in a stratigraphic interval of over 1000m, there
is no central zone of pervasive, intense foliation development that can be
defined as the central part of a regional shear zone. Hence, the Las Cristinas
deposit either lies on the margin of a wide, regional shear zone, or in a >1000m
wide corridor of moderate to weakly developed shear zones in which the center of
each is defined by a zone of more intense S
1
foliation development.
Gold-copper mineralization is associated with
pyrite-chalcopyrite disseminations, veinlets (sulfide-only and
quartz-calcite-sulfide veinlets), and massive sulfide replacement blebs that are
generally oriented parallel to the S
1
foliation. Total sulfide content ranges up
to about 5% locally in Conductora-style mineralization with an average of about
2% sulfides. The pyrite/chalcopyrite ratio is typically >5. Sulfides are
concentrated in zones of intense secondary biotite (+ calcite) alteration in the
volcaniclastic units of the stratigraphy. These volcaniclastic units are
generally characterized by more intense S
1
foliation development in comparison
to massive volcanic or intrusive facies. Intrusive bodies and competent volcanic
facies have a lower average sulfide content than adjacent volcaniclastic facies.
Pyrite and chalcopyrite also occur in association with epidote-chlorite-calcite
alteration facies, where it is superimposed on the secondary biotite-calcite
facies. On a microscopic scale, gold can be found as free grains in quartz and
as blebs and fracture filling in pyrite and/or chalcopyrite.
Geological cross sections throughout the length of the
deposit show that the mineralization is found within alternating bands, up to
tens of meters thick, of higher and low gold grades that correspond to lithology;
lower gold grades typically occur in massive, competent volcanic facies while
zones of elevated gold grade are commonly hosted by volcaniclastic units.
Geological mapping in trenches indicates that within the
oxide saprolite at Conductora, well-defined sub-parallel zones of high-grade
mineralization occur intermixed with lower-grade zones of mineralization. Placer
(Placer Dome Exploration and Placer Dome Technical Services, 1998a) states:
These
higher-grade' zones range from a few meters to tens of meters in thickness and
can be up to 50m in strike length in a north-south direction. The occurrence of
abundant disseminated limonite appears to differentiate higher-grade mineralized
zones from the lower-grade ones. Geological boundaries can be drawn based on the
presence of disseminated limonite for the Conductora area.
Down-dip
continuity is considered good to excellent. The overall true thickness of the
gold mineralization envelope throughout the Conductora area reaches 500m.
Individual higher-grade gold zones (>1 g Au/t) are up to 100m thick. Gold and
copper mineralization identified to date occurs over a strike distance of over
3.5km, from the south end of Potaso to the north end of Morrocoy. Figure 9.1 is
a general geological cross section.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 64
Mineralization in the Cordova area, located west of Morrocoy,
is similar to that of Conductora-style in being stratiform, but differs slightly
in that it is not as laterally continuous, and the associated alteration
assemblage is somewhat different from that typical of classic Conductora-style
mineralization. Host rocks at Cordova consist of a volcaniclastic-dominated
sequence with some massive volcanic units (some of which contain preserved
amygdales) and matrix-supported polylithic conglomerates.
The host rocks are intensely altered to widespread sericite-pyrite
and chlorite-epidote-calcite alteration. The sulfide assemblage consists mainly
of pyrite with minor chalcopyrite and occurs as heavy disseminations and massive
sulfide replacements that constitute about 10% of the rock. The majority of the
pyrite occurs within the S
1
foliation with a small proportion overgrowing this
S
1
cleavage. Gold grades are associated with zones of higher pyrite content.
The distribution of gold in the saprolite developed on
Conductora-style mineralization is essentially the same as in the bedrock. In
contrast, the distribution of copper in the saprolite has been affected by the
intense tropical weathering, which resulted in the leaching of copper from the
oxide saprolite and its precipitation as secondary copper minerals such as
covellite, chalcocite and bornite below the paleo - water table in the
sulfide-stable saprolite. The enriched, secondary copper zone located in the
sulfide saprolite is analogous to a poorly developed, incipient copper blanket
similar to those that are commonly associated with porphyry copper deposits in
climates with fluctuating water tables. The copper-enriched zone within the
sulfide saprolite is sub-horizontal at Las Cristinas, while the primary copper
mineralization that occurs in the hard rock below is stratiform and lies
sub-parallel to stratigraphy that is inclined to the west at 30° - 40°. Figure
9.2 is a cross section of the copper model.
9.5
Mesones-Sofia
The Mesones-Sofia deposits, located 200m north of the Cuatro
Muertos area of Conductora, consist of two mineralized hydrothermal centers.
Figure 9.3 is a general geological cross section through the Mesones-Sofia
deposits. These centers each have a diameter of 400m 500m and are separated by
a northeast-striking, steep southeast-dipping, dioritic dike that is up to 100m
wide.
Each center consists of a concentration of planar,
quartz-tourmaline-calcite-sulfide breccia veins. Gold and copper mineralization
is generally highest in these vein breccias. Sulfide content, metal grade,
silicification and the intensity of tourmaline development generally decrease
away from the margins of vein breccias, although a small proportion of the
breccias have insignificant gold and copper mineralization. Local stratigraphic
control on mineralization is evident where volcaniclastic lithologies are better
mineralized than adjacent massive volcanic strata in the vicinity of the
breccias. A section showing copper zones in Mesones-Sofia is presented in Figure
9.4.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 65
The concentration of sulfides and corresponding elevated
gold-copper grades in the hydrothermal breccias is consistent with
mineralization being coeval with breccia development. Many of the sulfides are
intergrown with, or directly rim, tourmaline clusters in the breccias and in the
enclosing country rocks. In addition, pyrite and chalcopyrite occur disseminated
through the breccia, having the same concentration in the matrix as in the
clasts, with some sulfide grains overgrowing the contact between breccia matrix
and fragments which shows that a component of Mesones-Sofia style
mineralization post-dated, or continued after, brecciation ceased.
The percentage of sulfides in the mineralized zones in
Mesones-Sofia is higher than at Conductora, ranging to a maximum of 30% locally.
The average chalcopyrite content of Mesones Sofia is ~1%, and the average
total sulfide content is approximately 5%. Gold and copper mineralization at
Mesones-Sofia occurs as disseminations, clots, blebs, and veinlets of
pyrite-chalcopyrite with minor covellite and bornite. The clots and blebs of
sulfide are coarser than those typical of the Conductora-style, reaching
diameters of up to 5 cm. In contrast with Conductora-style mineralization, the
majority of the sulfides in Mesones-Sofia are encapsulated in quartz. Crushing
of coarser sulfide accumulations and their liberation from quartz encapsulation
would lead to a relatively high proportion of newly fractured surfaces on
sulfide grains that may account for the higher efficiency achieved in floatation
tests of Mesones-Sofia material over ore typical of the Conductora-style.
As in Conductora-style mineralization, copper is depleted in
the oxide saprolite and enriched in the sulfide-stable saprolite. The
precipitation of copper in the sulfide saprolite generated copper-enriched zones
that are sub-horizontal, parallel to the paleo-water table. This sub-horizontal
distribution is significantly different from the distribution of primary copper
in the bedrock, where copper grades are controlled by the location of breccia
veins.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 66
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 67
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 68
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 69
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 70
10.0
EXPLORATION
The following section describes non-drilling exploration
completed on the property. Exploration at Las Cristinas is dominated by
drilling, and that drilling is described in Section 11.0.
10.1
Exploration by
Placer
Exploration done by Placer prior to Crystallex's involvement
at Las Cristinas included the following:
Line cutting
.
Parallel lines were cut
through the vegetation at 100m and 200m intervals, and were sampled at a
spacing of 50m.
Mapping
.
Geological mapping was done
at scales of 1:5,000 and 1:500. Due to the paucityof exposure as a result of
extensive weathering, mapping was largely conducted in trenches.
Rock sampling
.
Over 1,200 samples were
collected, mainly from the sides of trenches.
Soil sampling
: About 3,700 samples were taken
from the upper part of the saprolite on gridsof 50m by 100m or 50m by 200m.
Analysis was by fire assay for gold plus, reportedly, 17 other elements by ICP.
In addition about 1,100 samples were collected and assayed from 95 shallow
auger holes. MDA did not use this data because it does not impact the defined
resource, but the information will be of value in future exploration.
Geophysics
. Ground magnetometer, induced
polarization (IP), radiometry, airborne magnetic survey, and transient
electromagnetic geophysical surveys were done. Magneticand electromagnetic
methods have proven the most effective in defining the altered zone associated
with the principal areas of mineralization. MDA did not review this data.
Tailings evaluation
. An evaluation of the
tailings as a resource was completed in 1993, but results were not available.
Drilling
. Completion of 1,174 drill holes for
a total of 158,738m of drilling. This work is described in the following
sections of this report.
Hydrologic studies
. Groundwater and surface
water studies were completed, most done by North American independent
contractors. Based on Placer's documentation and descriptions, Placer's work
conforms to, or exceeds, industry standards.
Placer undertook extensive trenching in several different
programs at Las Cristinas as follows:
In 1994, a close-spaced surface trenching and mapping
program was conducted to augment data collected in the close-spaced drill
program and to provide detailed geological information used principally to
assess the continuity of mineralization between close-spaced drill-hole
intercepts. Four areas were selected for these studies in the Conductora area.
These areas were stripped with a bulldozer to expose
in situ
saprolite.
The areas were then washed with a hydraulic pump to highlight relic geological
features and textures in the saprolite and were subsequently mapped at a scale
of 1:100. Three of the four areas trenched measured 25m wide (perpendicular to
foliation) by 40m long (parallel to foliation). Continuous trench samples were
collected at a 1.5m spacing across the width of the areas (perpendicular to S
1
foliation) with a line spacing of 1.5m. The fourth grid area was smaller,
measuring 25m by 25m, but the same sample spacing was used. In addition, six
east-west trenches were dug to a depth of 3m and sampled with continuous 1.5m
channel samples, both horizontally (along the trench face) and vertically
(down the trench face). Additional 1.5m square blocks were sampled in 0.5m
square panels.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 71
The 1995 test area straddles the eastern edge of the
planned location of the Conductora pit. A series of trenches, spaced at 10m
intervals, were oriented in an east-west direction (perpendicular to
foliation), with one trench cut north-south parallel to the S
1
foliation. A
bulldozer was used to prepare and access the sites, and a backhoe was used to
dig the one-meter-wide trenches. Water was pumped from the flooded existing Conductora pit made by the small-scale miners, to allow access into much of
the test area.
The trenches excavated in 1994 and 1995 have depths ranging
from one meter to four meters, depending upon the local amount of overburden
and tailings. Every trench exposed a minimum of one meter of fresh oxide
saprolite. These trench data were plotted on cross section and used to support
and define mineral zone boundaries, but the data were not used for modeling.
Trenching was done in both the Conductora and Cuatro Muertos target areas that
measured 200m by 400m and 200m by 100m respectively. A total of 1,862m was
excavated in 108 trenches in 1995, and a total of 1,840 one-meter samples were
taken from these trenches.
During 1998, 36 surface trenches were excavated in the
Cantera-Cordova and Morrocoy areas to test the vertical and lateral continuity
of high-grade gold mineralization in drill core projected to the surface and
to test other occurrences of strong surface mineralization along strike
(Grill, 1999). A total of 1,546 channel samples were collected from 1,625m of
trenching. Most trenches were oriented in a northeast direction, perpendicular
to foliation that strikes northwest in that area. The geology of all trenches
was mapped at a scale of 1:100 and professionally surveyed.
As noted, exploration assay data from Las Cristinas includes
surface samples of rock and saprolite, trench samples of saprolite, and drill
samples of overburden, saprolite and rock. As MDA's work did not utilize any
surface geochemical samples and only used the trench samples to support zone
definition in modeling, further discussions in this report will concentrate on
the drilling.
Topographic data were modeled from an aerial survey conducted
by Eagle Mapping Services Ltd. in 1995.
10.2
Exploration by
Crystallex
Exploration work by Crystallex focused initially (in 2003) on
verifying the presence and tenor of mineralization at Las Cristinas. Further
drill campaigns carried out in 2004, 2005 and 2006-2007 focused on increasing
the reserve and resource through infill drilling, drilling down-dip extensions
of the stratiform mineralized zone, and exploring strike extensions of the
deposit. Particular attention has been paid to the studies of the alteration,
stratigraphy and structure of the deposit in order to define the controls on
mineralization so as to improve confidence in the validity of correlating
mineralized zones between adjacent drill-hole intersections. Details of these
drill campaigns are provided in Section 11.0 to Section 13.0. Particular
attention was paid to sampling issues during these drill campaigns as described
in Section 14.0. These drill campaigns also provided the opportunity to
investigate the distribution of gold and gold heterogeneity.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 72
Crystallex undertook a detailed drill program to determine
the optimal means of sampling of the oxide saprolite for grade-control purposes
for application when mining is started. The area selected for this study
straddles the eastern edge of the planned Conductora pit at which there is a
change from ore to waste. The objective of study was to compare the consistency
of gold grade samples generated from reverse circulation (RC) and conventional
hammer drilling; to determine the sampling method which yielded the most
consistent and repeatable assays; and to determine the consistency with which
waste could be distinguished from low-grade ore.
This drilling simulated bench-scale drilling with two
east-west orientated lines of drill holes 6m apart, and the same was done with
shorter drill lines orientated north-south, parallel to the edge of the planned
pit, forming an L-shaped drill pattern. Conventional drilling was done at 6m
spacing along the lines spaced 6m apart, forming a square drill-hole pattern (40
conventional holes were drilled). The conventional drilling seldom exceeded 10m
due to the technical difficulties with the drilling of saprolite below the
current water table. Drill holes in the north-south orientated lines and
alternate holes in the east-west orientated lines were twinned with RC drilling
to a depth of 25m to simulate the sampling of four benches (24 RC holes were
drilled). Since the planned bench height in the saprolite is 6m, each 6m
interval was collected as a separate sample. Six-meter long samples were taken
where possible from the conventional drill holes, while the size of subsequent
sample intervals depended on the total depth to which the conventional rig
penetrated. For example, a hole that reached 15m depth would have generated two
6m samples and the third sample would be from the lowest 3m interval of the
hole. Assay results of this study, from which a sample protocol for grade
control will be established, were not available at the time of writing of this
report.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 73
11.0
DRILLING
The average drill spacing over the entire modeled area at
Conductora (Figure 11.1) is roughly 70m. In the more intensely drilled areas,
drill spacing decreases to 50m, and in the core of the deposit where economic
mineralization is shallowest and where mining is planned to commence, the drill
spacing is 25 to 35m. The entire modeled area at Mesones-Sofia (Figure 11.1) has
an average drill spacing of 55m, while Morrocoy has wider drill spacing of
approximately 85m. Figure 11.1 shows drill-hole locations for holes drilled by
Placer and Crystallex at Las Cristinas.
The database presently has 189,026m of trench and drill-hole
samples with a total of 187,226 gold assays, 168,020 copper assays, 43,830
cyanide-soluble copper assays, and 145,021 silver assays in 1,372 drill holes
and/or trenches. Within this total are 108 individually named trenches and 1,264
drill holes. The drilling component of the database includes a total of 179,930m
of drilling with 185,373 gold assays, 168,000 copper assays, 43,830
cyanide-soluble copper assays, and 145,001 silver assays.
11.1
Drilling by
Placer
Placer drilled 1,174 holes at Las Cristinas between 1994 and
1997. Once early exploration drilling had determined the approximate location
and strike direction of mineralization, most later drilling was undertaken on
section lines orientated perpendicular to that trend (Figure 11.1).
According to historic documentation of procedures (Placer
Dome Exploration and/or Placer Dome Technical Services, 1996a), drill-hole
locations were established using a prismatic or Brunton compass and adjusted
into position with a Brunton compass. After completion, each hole was fitted
with a collar pipe, and a cement collar block was inscribed with the drill-hole
number. Final drill-hole collar locations were then surveyed in UTM coordinates
by Surco, C.A., an independent professional surveyor, and translated into local
grid coordinates and entered into a GEOLOG database. As an aside, the same
surveying company is presently involved with surveying. Down-hole survey
readings, generally taken about every 50m, were completed using a Sperry Sun
single-shot survey camera or a Pajari compass. Shallow holes (typically 30m to
50m deep) were surveyed by acid tests (dip deflections only). A total of 907 of
the 1,174 holes (77%) have at least one down-hole survey.
Crystallex's Placer drill database was obtained from CVG and
is summarized in Table 11.1; the drill plan map is shown in Figure 11.1. The
database has detailed geological descriptions, geological codes, check assay
data, specific gravity data, core recovery and rock quality designation (RQD)
data, and some trace element geochemical data. Through 1997, Placer reported
that 1,167 holes and 155,370m of drilling had been completed on the Las
Cristinas property (Placer Dome Exploration and Placer Dome Technical Services,
1998a).
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 74
Table 11.1 Placer's Drill Database
Description
Data
Number
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
Drilling in an intensely weathered tropical environment
presented challenges and, consequently, several different drilling techniques
were attempted by Placer before choosing triple tube diamond drilling. Other
methods tested include Vibracore, auger, and reverse circulation rotary
drilling, none of which produced acceptable results. Up to seven hydraulic
diamond-drill rigs were used simultaneously to complete the drilling. The best
recovery was achieved with PQ tools (85 mm diameter) in saprolite, and with HQ
tools (61 mm diameter) in bedrock. HQ was also used to drill some of the
saprolite, as not all rigs were equipped to handle PQ (85 mm diameter) core. NQ
(47.6 mm diameter) was used systematically in bedrock during the infill drilling
phase within the Stage I pit area and occasionally in difficult drilling
situations. The saprolite interval was drilled uncased until casing could be set
in bedrock. Sample lengths ranged from 0.1 to 8.0m, with most being ~1.0m.
Drilling was done in essentially three phases:
Phase 1 Dominated by shallow drilling to test
saprolite (drill spacing of ~90m);
Phase 2 Dominated by bedrock drilling and filling
gaps in the saprolite drill pattern (drill spacing of ~90m); and
Phase 3 Infill drilling of the pit areas (drill
spacing of ~50m).
Majortec Drilling, of Moncton, New Brunswick, undertook the
majority of Placer's drilling at Las Cristinas.
Drill core was logged for rock type, alteration,
mineralization, structure, and magnetic susceptibility. In addition, RQD, core
recovery, rock strength, and joint roughness and coating were logged. If core
recovery in the saprolite averaged less than 80%, the hole was re-drilled at the
contractor's expense; global average core recovery in saprolite was between 85%
and 90%. Hard-rock core recovery was above 95%. Oriented core was drilled in
selected areas using a down-hole crayon test for determining the true
orientation of foliation, bedding and lineation, as well as the orientation of
veins and veinlets. This information was made available to Crystallex in the
drilling database.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 75
Figure 11.1 Drill Hole Location Map
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 76
11.2
Drilling by
Crystallex
11.2.1
2003 Drilling
In 2003, Crystallex drilled 2,198.5m in 12 diamond drill
holes (including one re-drilled hole), six of which were located in the Mesones-Sofia
area and six in the Cuatro Muertos - Conductora zone. A total of 1,079 samples
were collected from these holes. Drilling was conducted by Majortec Drilling
under contract to Crystallex International. Majortec used an Acker MP-5 drill
(an overpowered Longyear 44) mounted in a skid-mounted cargo container. A log
skidder with rod sled completed the drill equipment roster.
The objective of this drill campaign was to twin selected
holes drilled prior to 2003 in order to independently evaluate a portion of the
Placer drill-hole database and assay data delivered to CVG, who delivered it to
Crystallex. The sites of the proposed holes were located in the field by a
geological technician and approved by the Project Geologist or the MDA
representative. Spotting of holes involved identifying the collar location
relative to drill holes being verified, and identifying the foresight/backsight
for correct azimuth and hole inclination. The collar position of the Crystallex
hole was fixed within a 2m-5m radius of the collar of the existing hole. The
selection of the actual collar position was influenced by ponds and
unconsolidated tailings generated by the informal mining operations.
Drilling was conducted 24 hrs per day, excluding one-hour
travel between shifts. The core was recovered every 1.5m for HQ drilling and
every 3m for NQ drilling, unless drill conditions necessitated shorter intervals
for improved core recovery. The inner tube was recovered by wireline. Water
under pressure was used to expel saprolite from the inner tube while rock core
fell from the inner tube without encouragement. Polymers were used liberally to
maintain high core recovery, especially in saprolite.
Ideally, core was collected from the drill site twice a day,
but occasionally core sat boxed at the drill site for over two days. Core was
received at camp in sequential four-slot wooden core boxes. Approximately 1 box
in 20 was incorrectly numbered by the drill crew but was corrected prior to
logging. The hard-rock core was cleaned using water, and saprolite core was
typically scraped with a spatula to remove the skin of wet or dried polymer.
Geotechnicians reoriented the core and put it back together
by rotating core, minimizing gaps and fitting pieces back together. A trained
geotechnician then used a cloth
scalimetrica
to measure core lengths,
to mark down-hole depth in meters, and to measure recovered core.
A geologist logged geotechnical items such as the longest
core piece, sum of core pieces greater than 10 cm, and fractures per meter.
Sample intervals based on geology, such as intrusive rock and lithologic
contacts, were identified with flagging in the core box and noted on logs. The
geotechnicians used a digital camera to photograph three boxes at a time.
Flagged sample intervals and geological contacts were included in the photo, as
were a header file with hole number, down-hole depth and box numbers.
Sampling typically was on 2m intervals but honored geological
boundaries. Sample intervals were noted with blue flagging in the core box;
numbered rip-off tickets were inserted into the core box immediately prior to
sample bagging; and the core box was labeled. Irregular and significant
quartz-tourmaline mineralization in the Mesones-Sofia area saprolite resulted in
technical difficulties associated with sawing or cutting core, therefore it was
decided to send all of the Mesones-Sofia saprolite for sample preparation. This
material was not present in the Conductora area saprolite so that saprolite was
cut (with a spatula or machete), and one half of the interval was submitted for
preparation and analysis. Cloth bags were used for over ~90% of the samples and
heavy translucent plastic bags were used for the remaining ~10%. Sample book
rip-off tags with sample numbers were inserted into each bag. In 2003, all
sampling and geology were overseen by Crystallex, while MDA had a representative
on site for half of the program.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 77
11.2.2
2004 and 2005
Drilling
Crystallex completed an 18-hole, 7,131m drill program in 2004
and an additional 5,419m in 14 drill holes in 2005. There are 5,993 and 5,419
gold assays for each drill program, respectively. Majortec Drilling was again
the drilling contractor. Collar positions of the first four holes in
Crystallex's 2004 drill campaign were located with compass and tape from the
nearest identifiable drill-hole collar positions. The remaining 14 drill holes
in this program were located directly by survey crews. Those drill holes
completed in the 2005 program were all located with compass and tape from known
collar positions. All of the collar positions of the drill holes drilled in
Crystallex's 2003 and 2004 programs were subsequently surveyed by an independent
contractor, Construcciones 2E-B C.A. Survey of the 2005 drill collar positions
was done by Surco C.A. Down-hole surveys were done at 100m intervals, and these
data, with that of the collar position, were incorporated into MDA's Medsystem®
database.
Drilling in these two programs was focused in the western and
southern parts of the modeled Conductora Cuatro Muertos pit shell. The
objective of these programs was to infill drill those poorly drilled areas to
upgrade resource classification and ultimately increase the reserve. In 2004 and
2005, all sampling and geology were overseen by Crystallex.
11.2.3
2006 and 2007
Drilling
Crystallex completed a 46-hole drill program started in
November 2006 and completed in February 2007. Total meters drilled were 13,574m,
producing 12,178 samples. Sampling typically was on one-meter intervals and
honored geological boundaries. Diorite sills and a monzonite intrusive body
(referred to as aplite by Placer) were not sampled in their entirety since all
previous analyses had shown this material to be barren with respect to gold and
copper. For control purposes, a one-meter sample was taken from each intrusion
adjacent to its upper and lower contact with enclosing country rocks.
Majortec Drilling was again the drilling contractor. Collar
positions of the holes in Crystallex's 2006-2007 drill campaign were located
with GPS and then verified by compass and tape from the nearest identifiable
collar positions of pre-existing drilling. All of the collar positions of the
drill holes drilled in Crystallex's 2006-2007 program were subsequently surveyed
by independent contractor, Mr. David Rogerson (Surco CA), the same contractor
who had undertaken Placer's surveying. Down-hole surveys were done at 100m
intervals and these data, with that of the collar position, were incorporated
into MDA's Medsystem® database.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 78
Drilling during this campaign was done down-dip of the
Conductora - Cuatro Muertos deposit and along strike into the Morrocoy area,
which lies in between Cordova and Mesones-Sofia. The objective of this program
was to bring up the Morrocoy area into a defined resource and to increase
resources and reserves down-dip along the Conductora area. In 2006 and 2007, all
sampling and geology were overseen by Crystallex, while MDA did visit the site
during the drill program and independent sampling consultant, Mr. Trevor
Nicolson, was on site for about 40% of the drill program.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 79
12.0
SAMPLING METHOD
AND APPROACH
12.1
Sampling by
Placer
Prior to Crystallex's involvement at Las Cristinas and
according to Placer reports, standard drilling procedure was to collar all drill
holes with PQ core (8.5cm diameter) through the saprolite and reduce to HQ core
(6.35cm diameter) in the underlying bedrock. HQ core, with which the majority of
the hard-rock intersections were made, yields a ½ core sample volume of
approximately 1,583cm
3
for one meter of core. Samples were prepared
under supervision on site at Las Cristinas. Entire drill holes were generally
sampled on one-meter intervals or less, as dictated by geology. Technicians a)
assigned sample numbers, b) photographed the core, c) split or sawed the core in
half, and d) sent one half to the on-site sample preparation laboratory for
processing. Sample preparation and analytical procedures are well described in
Placer's reports.
12.2
Sampling by
Crystallex
12.2.1
2003 Drilling
Program
The holes drilled by Crystallex in 2003, which were designed
to twin previously drilled holes, differed in core diameter from the prior
drilling. Crystallex's drilling was collared with HQ core (6.35cm diameter), and
this was reduced to NQ core (4.76cm diameter) in the hard rock beneath the
saprolite. NQ core, with which most of the hard-rock intersections were made in
Crystallex's drilling, yields a ½-core sample volume of approximately 890cm
3
per meter of core, which is 56% of the volume of samples derived from ½-HQ core
from Placer's drilling. Crystallex's sampling protocol was two-meter continuous
sample intervals in contrast to Placer's protocol that called for continuous 1m
sample intervals through the principal mineralized zones.
Core loss and RQD data were measured by Crystallex
technicians on site at Las Cristinas under the supervision of the MDA and
Crystallex geologists. The core was subsequently marked in continuous 2m sample
lengths by these geologists. Saprolite core was split with a spatula, and rock
was cut with a diamond saw by technicians on site. The samples of half core were
bagged, numbered, and stored in a safe room prior to transport to the
laboratory.
Samples were transferred from the Las Cristinas camp to the
independent commercial preparation laboratory owned and operated by Triad in
Tumeremo, Bolivar State, Venezuela in a vehicle that belonged to Crystallex and
was, for the first half of the program, driven by the MDA representative.
Reception at Triad's preparation facility was by the lab manager or his
assistant during normal business hours.
12.2.2
2004 Drilling
Program
Core drilling in the 2004 program followed the same
procedures as were used in the 2003 program, with HQ core diameter in saprolite
reduced to NQ core diameter in hard rock. Digital photos were taken of
sequential sets of three core boxes on delivery of the core at the exploration
camp. Core loss and RQD data acquisition by Crystallex's geological technicians
for the 2004 program followed the same procedures as described above for 2003.
Crystallex geologists then marked the core for continuous sampling of 1m and 2m
intervals. The 2m sample intervals were used for the saprolite and the hanging
wall of the main mineralized zone in 12 of the 18 holes. Continuous samples from
core from the lower parts of these 12 holes and all core from the other 6 holes
drilled in this program were sampled in continuous one-meter intervals. The core
was cut as described for the 2003 program, and half core was logged by the
Crystallex geologist on site.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 80
Samples were bagged in suitable plastic bags and sequentially
numbered. Blanks (half-core samples of barren mafic dikes) were inserted every
50 samples. The blanks were bagged and numbered in sequence with the drill
samples and could not be identified without careful study of the rock. Pulps of
standards were inserted into the sample sequence at intervals of every 30
samples. These samples are conspicuously different from the core samples.
Sequential groups of 7 to 10 samples were placed in large nylon bags and
transported to independent commercial preparation facilities in batches of 100
to 300 samples by a Crystallex-employed driver. Samples from 15 of the 18 holes
were delivered to the preparation laboratory of SGS Minerals Services, Venezuela
(SGS) in Tumeremo, and pulps from these samples were then shipped by the
laboratory for assay at SGS's analytical facility in Lakefield, Ontario. Core
samples from the remaining three holes were sent to Triad Laboratories (Triad)
at La Camorra, Venezuela, for preparation and assay.
12.2.3
2005 Drilling
Program
Core drilling in the 2005 program followed the same
procedures as were used in the 2003 and 2004 programs. Eleven of the 14 drill
holes were HQ core in saprolite with a reduction to NQ core in hard rock. Three
drill holes were collared with PQ diameter, although the core recovered was HQ
diameter. The PQ diameter hole was reduced to HQ diameter at the base of the
saprolite.
Digital photos were taken of sequential sets of three core
boxes once the sample intervals and sample numbers had been marked on the core
boxes after delivery of the core to the exploration camp. Core loss and RQD data
acquisition by Crystallex's geological technicians for the 2005 program followed
the same procedures as described above for 2003 and 2004 programs. Crystallex
geologists then marked the core for continuous sampling of 1m intervals.
Intervals of poor core recovery were encountered in the upper parts of the
saprolite in some of the drill holes. In these zones, a 1m core sample
corresponds with a greater drilled length; in these cases the assay value
obtained from the partial recovery is applied to the drilled sample length which
is greater than one meter. The core was split or cut as described for the 2003
program, and half core was logged by the Crystallex geologist on site. A digital
photo library of core that contains clear examples of vein types, lithology, and
texture was developed to facilitate consistency in logging of the core.
Samples were bagged and sequentially numbered as described
for the 2004 program. Blanks (1/2 core samples of barren mafic dikes) were
inserted every 50 samples. The blanks were bagged and numbered in sequence with
the drill samples and could not be identified without careful study of the rock.
Pulps of standards were inserted into the sample sequence at intervals of every
20 samples. These samples are conspicuously different from the core samples.
Sequential groups of 7 to 10 samples were placed in large nylon bags and
transported to SGS's preparation facilities in Tumeremo in batches of 100 to 300
by a driver employed by Crystallex.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 81
12.2.4
2006-2007
Drilling Program
Core drilling and sampling in the 2006 and 2007 program
followed the same procedures as were used in the 2005 program. Core samples were
numbered and sealed by Crystallex technicians under the direction of a geologist
employed by Crystallex. Sample batches of 100 to 500 samples were delivered by
SGS's preparation facility, which had been moved from Tumeremo to La Camorra
since the previous drill program. Blanks, consisting of chips of mafic dike,
were inserted in the sample sequence, and numbered empty sample bags were
inserted in the positions at which standards were to be inserted in the sample
sequence. The sequence of samples and blank sample material and empty, numbered
sample bags was then delivered to the laboratory with appropriate preparation
instructions that included a request to prepare a bar-coded pulp bag
corresponding to each of the empty sample bags. Pulps and reject material from
the prepared samples were then returned to Las Cristinas from the preparation
laboratory. The sealed pulp bags, including the bar-coded and numbered empty
pulp bags corresponding to the empty sample bags delivered to the lab, were laid
out in sequence and pulverized certified standard material was added to the
empty pulp bags. The standards were thus indistinguishable from the real,
duplicate and blank sample pulps. A sample control spreadsheet was updated with
the number of the standard inserted in each of the empty pulp bags. Mr. Trevor
Nicolson, an independent consultant, was contracted by Crystallex to monitor
sampling procedures, sample preparation and QA/QC procedures with
carte
blanche
to interact with the laboratories. Mr. Nicholson directly oversaw
the unpacking of the pulps, insertion of the certified standards, and repacking
of the pulps for shipment during about 40% of the drill program. The pulps were
repacked, and Crystallex shipped the samples to SGS's assay laboratory in Lima,
Peru.
A set of pulp and 10-mesh duplicates from SGS's preparation
facility at La Camorra was sent, after all assays had been received from SGS in
Lima, to ALS-Chemex in Lima for preparation and assay in order to provide an
independent check on SGS-Lima's reported assays.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 82
13.0
SAMPLE
PREPARATION, ANALYSES AND SECURITY
13.1
Placer's
Program
Although sample preparation and analytical procedures are
well described in Placer's reports, it is not clear what special security
procedures were in place at that time. Triad Labs of Tumeremo, Venezuela and
Bondar Clegg, of Vancouver, Canada assayed all samples taken at Las Cristinas in
1992. Beginning in January 1993, Placer Research Center in Vancouver, Canada,
assayed all core samples, while Monitor Geochemical Laboratory de Venezuela, C.
A. (Monitor) analyzed trench samples.
All samples were prepared on site. In 1993, staff from Placer
Research Center reviewed and amended laboratory procedures to conform to Placer
Dome standards. Figure 13.1 shows Placer's sample preparation procedures.
All samples were fire assayed for gold and geochemically
analyzed for silver, molybdenum, copper and cyanide-soluble copper. Table 13.1
shows the assay techniques used on Las Cristinas samples by the Placer Research
Center. Note that the term geochem was not explained.
Table 13.1 Summary of Placer's Assaying Procedures at Las Cristinas
Laboratory
Element
Method
Placer Research Center
Au
Fire Assay, AA finish
1
, 25 g sample
Placer Research Center/Bondar Clegg/Triad
Ag
Geochem, AA finish
2
Placer Research Center/Bondar Clegg/Triad
Cu
Geochem, AA finish
3
MINEN
CNSCu
4
Cyanide Leach
Placer Research Center/Bondar Clegg/Triad
Mo
Geochem, AA finish
5
1
Au > 3 g/t were re-analyzed with a gravimetric
finish;
2
Ag > 10 g/t were re-analyzed using same analytical procedures
3
Cu> 4,000 ppm were re-analyzed using same analytical procedures;
4
CNSCu is cyanide soluble copper
5
Mo >1,000 ppm were re-analyzed using same analytical procedures
In addition to the above elements, core samples collected
early in the program were analyzed for mercury, antimony, arsenic, zinc, and
lead. Multi-element analysis was also performed on 3,700 surface samples.
Additional multi-element analyses were completed on five-meter down-hole
composites from ten holes drilled on cross-section 9,600N in the Conductora
deposit.
In July 1993, R. Mohan Srivastava conducted an
inter-laboratory bias analysis to compare Triad, Bondar Clegg, and Placer
Research Center assay results (Placer Dome Exploration and Placer Dome Technical
Services Ltd., 1996a, 1998a). The study concluded that the Triad results tended
to be biased on the low side, while some of the Bondar Clegg results tended to
be biased on the high side. Consequently it was decided to re-assay all Triad
and Bondar Clegg samples for gold-only at the Placer Research Center and to use
only Placer's gold assays on drill core for the 1996 resource study.
Standards, duplicates, and blanks were used for quality
control of the on-site sample preparation laboratory (Placer Dome Exploration
and Placer Dome Technical Services Ltd., 1996a). For every suite of 20 samples,
there was one each of a duplicate, standard, and blank, which were submitted as
blind samples to the assay lab.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 83
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 84
Thirteen standards were prepared by the Placer Research
Center representing a broad range of gold grades from Las Cristinas surface and
core material. These were used to monitor accuracy of the assay lab as well as
to detect potential contamination in sample preparation. Duplicates were taken
from a split of the preceding sample and were used to test the precision of the
assays and the homogeneity or nugget effect of the samples. Blanks were obtained
from a nearby diorite quarry and were used to detect possible contamination
during sample preparation as well as to verify sample order.
Standards, replicate samples on the same sample pulp, and
blanks were also used for the quality control program for gold assays at the
Placer Research Center. In each suite of 24 samples, one each was a replicate,
standard, and a blank. According to Placer, quarterly statistical evaluations of
the QA/QC data indicated that Placer's lab produced accurate and precise gold
assay results. Results from a geochemical quality control program also indicated
that the Placer Research Center's geochemical analyses for copper, silver, and
molybdenum were highly accurate and precise, according to Placer.
In addition, 10% of the samples were sent to an outside lab
for an independent check; the lab was the IPL laboratory of Vancouver, Canada.
Of the 5,866 samples analyzed from 1993 to 1995, the two data sets were quite
similar with minor differences between the two labs especially for gold grades
less than 1.0 g Au/t, according to Placer's 1996 feasibility report. The average
inter-laboratory bias appeared to be about 5 to 10%, with Placer's lab results
being higher than IPL's. The Placer 1996 feasibility report (Placer Dome
Exploration and Placer Dome Technical Services Ltd., 1996a) noted that this
grade range was important because the economic cutoff for the project is between
0.6 and 0.7 g Au/t. That report stated that
It appears that the PDI
[Placer Dome Inc.]
laboratory is providing more reliable assays of the less
than 1.0 g/t gold grades than is the IPL laboratory. IPL appears to be
understating the gold grade of the less than 1.0 g/t Au grades by about 5 to
10%....From this analysis the PDI assay results can be considered appropriate
for resource estimation.
MDA was unable to definitively analyze and compare
the samples and check samples to verify Placer's above conclusion.
QA/QC information was also gathered on assay samples from the
trenching program; these samples were assayed by Monitor Geochemical Laboratory
de Venezuela, C.A. (Monitor). The Placer Research Center helped Monitor
implement in-house standards and also completed a check assay program on samples
sent to Monitor. A 1995 evaluation indicated that it appeared Monitor's assays
were on average 5 to 10% higher than the expected means of the standards' values
and that Monitor's mean gold grades were about 7% higher than Placer's mean gold
grades on trench samples assayed by both labs. Placer's 1996 feasibility study
(Placer Dome Exploration and Placer Dome Technical Services Ltd., 1996a)
concluded that
The systematic bias in the Monitor assay results presented
above is not thought to have a significant impact on the 1996 Conductora/Cuatro
Muertos resource estimate because the trench data are only a small part of the
data base used for resource estimation.
A similar check on Monitor's
results from the 1998 trenching program showed that Placer results were about 3%
lower than the Monitor results (Grill, 1999).
Monitor also assayed all the Mesones-Sofia drill core from
the 1996 drilling, which represents about 55% of all the samples assayed in the
Mesones-Sofia area. Placer's 1998 feasibility study (Placer Dome Exploration and
Placer Dome Technical Services Ltd., 1996a) reported that, as with the trench
samples, Monitor's drill core assays appeared to be about 5 to 10% higher than
check assays by Placer Research Center. This problem was to be studied further,
but MDA is not aware of any further reported conclusions.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 85
Diamond drilling in the intensely weathered environment,
i.e.
, saprolite, presented potential sample bias (Placer used the term
contamination and considered it similar to that encountered in wet reverse
circulation drilling; to be consistent with Placer's terminology, the same
wording will be used here). Crystallex and MDA noted that this was particularly
apparent at Mesones-Sofia, where chunks of siliceous or tourmalinized hard rock
were floating in the saprolitic clays. During drilling, water flowing around the
core could wash out the clays, relatively increasing the amount of hard,
possibly better-grade material.
Placer's care for this aspect of sampling is reportedly
excellent. While great effort was made to eliminate contamination, occasional
contaminated intervals were unavoidable, according to Placer. Placer (Placer
Dome Exploration and Placer Dome Technical Services Ltd., 1996a) stated that:
Suspected contaminated intervals greater than 20 cm were
sampled and logged as discrete intervals. If the contaminated interval was less
than 20 cm the interval was marked and photographed in place and then removed
prior to sampling. All sampled intervals were assayed for gold, copper and
molybdenum in order to assess the potential for additional unrecorded down-hole
contamination on a case by case basis. A total of 831 samples deemed to
potentially be contaminated were eliminated from use by coding. The mean grade
of these contaminated samples is 3.13 g Au/t with a maximum of 29.73 g Au/t.
In addition, 32 trench samples deemed to potentially be contaminated were also
eliminated from use in estimation
MDA evaluated the contaminated samples by selecting all
samples lying within the area where contaminated samples exist. Descriptive
statistics were calculated on all contaminated and not-contaminated samples.
The results showed that there is a large discrepancy in mean grades between the
two sets of data for gold, silver and copper. MDA capped the outlier samples to
evaluate if the differences were caused by these few high-grade samples, but the
results remained the same. Placer's elimination of these contaminated samples
was justified, and MDA continued with the practice of not using these samples.
13.2
Crystallex's
Program
13.2.1
2003 Drill
Program
MDA's representative, Mr. Maynard, was on site for the first
three weeks of the six-week drilling program. To the extent possible, MDA had
chain of custody of the samples, though some inadvertent breaches did occur. The
protocol of picking up core from the drill rig in the morning and at night
deviated with the availability of Crystallex vehicles for the two- to
three-kilometer trip. There were two periods during weekends when core pickup
occurred only on two to three day intervals. A potentially important point is
that local small-scale miners were conducting their placer mining operations in
the immediate vicinity of the drill rig 24 hours a day. Mr. Maynard never saw
any interest in the drill core on the part of the small-scale miners, but he was
not on the drill site 24 hours a day seven days a week. The protocol of leaving
core spread out in the logging shed within the exploration camp for as little
time as possible prior to cutting and bagging was stretched repeatedly, with
core laid out for two to three days at a time prior to cutting and bagging. The
exploration camp at Las Cristinas is enclosed by a 3m-high diamond-mesh security
fence, and access to the camp is strictly controlled by security personnel.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 86
These minor infrequent exceptions to the security were
inadvertent and accidental, minimizing the probability of compromising the
samples. There was never any indication of intent to compromise the samples, and
MDA does not believe that during any of these times was there any interference
with the samples.
Bagged and labeled samples were transferred to a safe room at
the exploration camp at Las Cristinas, where they were stored prior to transport
to the preparation facility at Tumeremo. People other than the MDA
representative were in the room only on a by invitation or by request basis.
There were minor infrequent exceptions to this security, but the inadvertent and
accidental nature of these exceptions eliminated the probability of compromising
the samples. The protocol of the MDA representative having the only set of keys
to the safe room was compromised when the door to the safe room was found open
one morning, and a floor mop was leaning against the wall. It is suspected that
the cleaner was doing her job of cleaning office floors. The door's lock was
immediately changed, and the MDA representative retained the new set of keys.
Overall, the MDA representative is confident that there was no breach of sample
integrity, but due to certain uncontrolled, albeit minor and probably
inadvertent infringements, cannot state that the samples were entirely in MDA's
control. It is believed that any exceptions are strictly the result of accident
and disinterest.
Samples from the 2003 drill campaign were prepared by Triad
at its laboratory in Tumeremo and analyzed by Chemex in Vancouver. Sample
preparation procedures were as follows:
Dry samples in a low temperature oven;
Jaw crush the sample in its entirety to -2mm;
Run material through a multi-roll crusher and crush to
-1mm;
Split out 250g and pulverize by ring and puck to -150 mesh
and;
Package the 250g pulp and ship to Chemex, Vancouver for
analysis.
Dr. Luca Riccio (then Vice President Exploration, Crystallex)
and Mr. Maynard (MDA's site representative) found that Triad's preparation lab
was clean and appeared to be in good working order. However, Triad did not
present data that demonstrated the effectiveness of laboratory QA/QC procedures
at that time. Crystallex/MDA's assessment of quality control is described later
in this report.
Chemex procedures began with logging in the pulps. Their
standard operating procedures included randomly checking for adequacy of
pulverizing. Chemex required that the pulp was to meet 80% passing 200 mesh with
a 66% pass ratio. In a few batches, additional pulverizing was necessary.
All samples were analyzed for gold and copper, and samples
from the saprolite and underlying carbonate-leached bedrock were analyzed for
cyanide soluble copper (CNSCu). Analyses for gold were by fire assay with an
atomic absorption (AA) finish on one-assay-ton charges (30g aliquots). Any
sample yielding grades over 10g Au/t was fire assayed with a gravimetric finish.
For copper analyses,
aqua regia
was added to 0.5g of
pulp to achieve a total volume of 12.5ml per sample. This solution was analyzed
for copper by AA. Samples with assays greater than 1% Cu were re-assayed with
0.4g of sample in 100ml of
aqua regia
and analyzed by AA.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 87
Samples for CNSCu were prepared with 30ml of 0.5% cyanide
solution added to 0.5g to 1.0g of pulp. The sample was shaken until homogenized,
and the pH of the solution was then checked. Changes in the pH were corrected
with the addition of calcium oxide to increase the pH to between 9 and 13. The
bottle was then rolled for two hours. The leach solution was centrifuged until
clear, and the pH of the solution was checked again; if the pH was below 9, the
leach was repeated with calcium added to the sample. The solution was then
analyzed by AA spectrometry.
During Crystallex's verification drilling program, blanks and
standards were systematically inserted into the sample stream. The following
details are taken from Ristorcelli and Hardy (2003):
Pulp Standards.
Sample material used for
standards was made by Crystallex's Revemin Laboratory. The Revemin pulp
standards were inserted in the sample stream at a rate of 2 per 25, immediately
prior to submission to Chemex.
[Revemin is Crystallex's mine lab located in
El Callao]
A mean difference of 11% exists in the low-grade results
between the Crystallex standard and the sample results received from Chemex,
with the Chemex results lower than the standard (38 assays, standard 0.91 g Au/t
versus Chemex at 0.81 g Au/t). The high-grade standard results are similar to
the Chemex results but are 2% lower (44 assays, standard 6.79 g Au/t versus
Chemex at 6.91 g Au/t).
Coarse Rejects.
Coarse rejects from previous
Placer drilling were inserted into the sample stream, prior to submission to the
Triad prep lab, at a rate of 2 per 25 samples. Coarse-reject material generally
comprised 100% passing 10 mesh, 90% passing 100 mesh material. A similar
relationship of Crystallex results and Placer results exists with Crystallex/Chemex
being lower grade
(Table 13.2)
.
Barren Core (blanks).
Barren aplitic core
was inserted into the front end of the sample stream with new drill samples.
These blanks were given a new number in sequence with the standard samples.
Blanks were inserted into the sample stream at a rate of 1 per 25.
Review of the blank sample grades showed that there was
some contamination in the 2003 sampling program.
Table 13.3
shows that
the Crystallex assays on the barren Placer core returned grades over 2.5 times
higher grade than the original Placer blank sample grades. It is not certain
which data set is correct, though it is believed to be the Placer set. The
implication is that there may have been some contamination in the sample
preparation procedures at the laboratory (Triad) during the 2003 drill-
sample-preparation procedures.
Mine Development Associates
November 7,
2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page
88
Table 13.2 Descriptive Statistics on Inserted
Coarse Rejects
(From Ristorcelli and Hardy, 2003)
Placer
Diff.
Crystallex
Count
105
105
Mean
1.26
11%
1.13
g Au/t
Std. Dev.
1.60
10%
1.45
g Au/t
CV
1.27
-1%
1.28
Min.
0.01
400%
0.00
g Au/t
Max.
8.02
21%
6.65
g Au/t
Table 13.3 Descriptive Statistics on Inserted
Barren Core
(From Ristorcelli and Hardy, 2003)
Placer
Diff.
Crystallex
Count
53
53
Mean
0.02
-60%
0.06
g Au/t
Std. Dev.
0.05
-35%
0.08
g Au/t
CV
2.12
62%
1.31
Min.
0.01
67%
0.00
g Au/t
Max.
0.30
-12%
0.34
g Au/t
13.2.2
2004 Drill Program
Core boxes were collected from the drill
platform by the exploration geologists in the early morning and late afternoon
each day. From there, the core was transported to the exploration camp by
Crystallex's exploration geologists or geological technicians.
Sampling of split core was done at the
exploration camp by Crystallex's geological technicians and geologists under the
supervision of Dr. Luca Riccio. Samples from 15 of the drill holes were
delivered to SGS's preparation facility in Tumeremo by Crystallex personnel.
Samples from three drill holes (1145, 1146 and 1147) were delivered to Triad's
preparation facility in Tumeremo for assay by Triad in Venezuela.
Sample preparation followed the same procedure
as was used in the 2003 program described above. All samples were analyzed for
gold by fire assay of a 30g aliquot with an AA finish as described for the 2003
program. Samples with grades over 10 g Au/t were fire assayed with a gravimetric
finish. All samples were analyzed for copper by ICP, and samples from the
sulfide saprolite and mixed sulfide-oxide saprolite from 14 of the 18 drill
holes were analyzed for CNSCu using the procedure described for the 2003
program.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page
89
13.2.3
2005 Drill
Program
Core boxes were collected from the drill platform by
Crystallex's exploration geologists in the early morning and late afternoon each
day. From there, the core was transported to the exploration camp by the
exploration geologists or geological technicians.
Sampling of split core was done at the exploration camp by
Crystallex's geological technicians and geologists under the supervision of Dr.
Richard Spencer (Vice President Exploration, Crystallex) and Eng. Freddy Quijano
(former Chief Geologist, Las Cristinas Project). Samples from the 14 drill holes
were delivered to SGS's preparation facility in Tumeremo by Crystallex
personnel.
Sample preparation followed the same procedure as was used in
the 2003 and 2004 programs described above. All samples were analyzed for gold
by fire assay of a 30g aliquot with an AA finish. Samples with grades over 10g
Au/t were fire assayed with a gravimetric finish. All samples were analyzed for
copper by ICP, and samples from 13 of the 14 holes were analyzed for a suite of
34 elements by ICP after aqua regia digestion. Samples from the sulfide
saprolite and mixed sulfide-oxide saprolite were submitted for CNSCu analysis by
the procedure described for the 2003 program.
Sample QA/QC was undertaken by Spencer (January 2006) for the
2005 drill program.
13.2.4
2006 and 2007
Drill Program
Similar sampling procedures were used in 2006 and 2007 as in
previous drill programs and hence will not be repeated here. Differences
included:
Material used for
blanks that were inserted at a rate of about 1 in 30 samples was fresh diorite
taken from a quarry located some 100km south of the Las Cristinas property.
In previous drill
programs undertaken by Crystallex, pulps were sent directly to the analytical
facility by the laboratory that undertook the preparation. In 2006-2007,
following the recommendation of Mr. Trevor Nicholson, the independent
consultant responsible for the QA/QC program, pulps were returned to Las
Cristinas after preparation by the SGS laboratory situated near El Dorado,
about 100km to the north of the Las Cristinas property.
Certified standards
were purchased from CDN Resource Laboratories of Burnaby, British Columbia.
The standards included:
CDN-GS-P5B
CDN-GS-1C
CDN-GS-1P5
CDN-GS-1P5A
CDN-GS-15
Bar-coded and numbered empty pulp bags were
registered by the preparation laboratory so that the standards could be
inserted in their correct position in the sample sequence before being shipped
to SGS Lima, Peru, for analysis.
Check assays were done by ALS-Chemex in Lima,
Peru.
The sample QA/QC was undertaken by independent
consultant, Mr. Trevor Nicholson of Nicholson Analytical Consulting, of Comox,
British Columbia. Mr. Nicholson was on site for about 40% of the drill
program.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page
90
14.0
DATA VERIFICATION
As most of the Las Cristinas database is derived from
Placer's work, it is important to note that based on Placer's descriptions of
their procedures, their data collection and exploration procedures conform to or
exceed industry standards. If conducted as reported, Placer's QA/QC program was
high quality. In general, MDA found that, again based on reported methodology,
Placer's exploration data were collected in a technically sound manner.
According to Placer documentation, quality assurance checks were in place for
most of the project, and validation of data was ongoing. Nevertheless, it was
clear that additional verification was necessary because one company had
completed all development work, there were no independent checks or studies of
the work, and most of the original hardcopy data were unavailable for detailed
study or auditing.
Under the terms of the September 2002 agreement between
Crystallex and CVG, Crystallex obtained an electronic database from CVG, which
included Placer's drill, topographic, geological, and engineering data. At that
time, data from 1,174 drill holes and 108 trenches were included in the Las Cristinas database. Although about 99% of the drill data were obtained, hard
copies of the assay and geological data were not available, leaving a gap in the
ability to validate the database.
When MDA visited the Las Cristinas site in October 2002, they
found drill pads, drill collars, drill core and samples, core photographs, and
other supporting data demonstrating that exploration was done in a manner not
incompatible with what was described in the documentation of Placer's work. To
conduct independent corroboration, Crystallex drilled 2,198m in 12 diamond drill
holes, for a total of 1,079 core samples, to verify the presence and tenor of
mineralization. These 12 holes twinned previously drilled Placer holes. In
addition, 275 QA/QC samples from this drill program 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 quarter-core samples of pre-existing core. Although mean grades are
similar for both datasets, there is a large variance in grade between individual
pairs of Placer's core assays and Crystallex's core check samples. The variance
is lower in the pulp and coarse reject checks. However, as a result of some of
these just-mentioned discrepancies, several additional studies were completed to
aid in the understanding of grade variability.
Natural grade variability (heterogeneity) is an issue at Las
Cristinas. Although it has become better understood through the efforts of
Crystallex, it is an issue that should continue to be addressed prior to and
during production. The issue can be a problem if left unchecked during
production possibly resulting in massive misclassifications of ore and waste.
The effect of material heterogeneity on the resource estimate will be dominated
by local variance and may have instilled a minor low bias to the sample
database. The issue is introduced by the distribution of metals originally in
primary ore as shown in Figure 14.1.
For this reason, Pitard (2005) rhetorically questioned: Can
the existing gold grade database, created with diamond drilling and conventional
30-g fire assays, lead to an accurate block model? To which he responded: The
answer is no. But, with good geology of the various quartz and sulfide events,
it can make a world of a difference. The problem he is referring to is the
ability to estimate accurately locally and with precision. MDA believes that
this is difficult to do, but the consequence is not so great that it would
negatively impact a mine and deposit of this scale in an open-pit scenario;
essentially higher grades will be generally where higher grades are estimated to
be, and the same with the mid- and low grades. While the gold occurs in the free
state, it is generally not coarse grained nor visible but does appear to occur
in clots of sulfides (Figure 14.1). It is not possible to compensate for the
issue of a potential low bias instilled in the sample assay results.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page
91
Figure 14.1 Photograph of Well-Mineralized Core
(photograph courtesy of Richard Spencer,
January 2006 showing clots of pyrite +chalcopyrite)
14.1
Data Verification by
Placer
In addition to the internal check assaying,
systematic QA/QC program, and external, independent check assaying program
described in Section 13.1, Placer conducted a PQ/HQ drilling comparison and a
closely spaced drilling program.
Grade versus core recovery was reviewed by
Placer. The results indicate that the influence of core recovery is negligible
on total grade and virtually non-existent on the ore grade. The differences,
though negligible, show higher core recovery drill intervals being slightly
lower grade than the grade of drill intervals with lower core recovery in
saprolite. [MDA believes that this may indicate a bias in sampling due to
selective recovery of mineralized material in the saprolite material. While
Placer had eliminated
many samples due to poor recovery or "contamination", a procedure that MDA
continued, MDA reduced the resource classification for those blocks estimated
from samples with low core recovery.]
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page
92
Placer drilled four 12m-by-18m areas in a star pattern with
13 HQ diamond drill holes in each pattern. Drill hole spacing was 3m in an
east-west direction and 3m in a north-south direction, with two holes drilled at
6m spacing on the north and south ends of the pattern. The long axis of the
pattern was oriented approximately parallel to foliation, i.e., 000
o
azimuth in the Conductora area and 020
o
azimuth in the Cuatro Muertos
area. Depth of the holes was dictated by the oxide/sulfide saprolite contact,
with a minimum of 5m being drilled into the sulfide saprolite. The average depth
of the holes was 40m. Both splits of the drill core were sent to the Placer
Research Center for analysis to test the variability in the sample collection,
preparation, and analysis procedures.
The results of this drill program show that correlation
coefficients typically fall within a range of 0.4 to 0.6 for gold samples 3m
apart and quickly falls to less than 0.1 for samples up to 9m apart. Generally
sample pairs show stronger correlation for drill-hole comparisons along the NNE
strike direction than across or down the dip. Copper typically shows higher
correlation coefficients than gold for holes the same distance apart. Copper
also shows the same general trend correlation, with better correlation in the
north-south direction and poor correlation in the east-west direction.
A comparison of gold fire assays with an AA finish was made
for 2,489 drill core sample splits, with both halves of the core assayed. The
mean grades of the two halves of the core were the same at 1.39 g Au/t with
similar variability. The correlation coefficient was 0.95. The Placer-generated
quantile-quantile (QQ) plots showed similar distributions, while the relative
difference plots did not show any conditional bias.
If done as reported above, the QA/QC program demonstrated
that Placer's exploration work was high quality.
14.2
Placer Data Verification by Crystallex
Crystallex completed a 12-hole drill verification program and
duplicate sampling/check assaying program for which MDA's involvement was to
ensure some independence. The verification program collected:
1,086 split core
samples from 11 holes and one re-drilled hole, all completed by Crystallex,
342 splits of
Placer core (quarter cores) from Placer drilling (1 sample was lost),
262 Placer pulps (3
samples lost), and
200 splits of
Placer coarse-reject samples (2 samples lost).
MDA supervised drill sampling, sample collection, and sample
packaging for the first half of the program, with the goal of maintaining sample
integrity and chain of custody. Sample preparation and assaying were done by
independent laboratories. The program inserted standards, blanks, and coarse
rejects at irregular intervals in the sample stream with an overall frequency of
two standards, two coarse rejects, and one blank per 25 samples submitted for
analysis.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page
93
A QA/QC program for the Crystallex core drilling program was
outlined by Dr. Luca Riccio, former Vice President of Exploration for Crystallex,
and Mr. Ristorcelli of MDA. Dr. Riccio worked with Mr. Maynard during the
initiation of the project while Mr. Maynard carried out the project for the
first three weeks. Dr. Riccio was responsible for the program and was on site
after Mr. Maynard's departure. Mr. Maynard was on the Las Cristinas property
from January 15, 2003 until February 7, 2003, living and working at the camp.
14.3
First
Preliminary Independent Corroboration of Project
At the initiation of this project, MDA compared topographic
data with drill-hole collar elevations and found they agreed. MDA also plotted
drill-hole maps with traces of drill holes and found that the database compiled
by MDA from CVG data corresponded well with electronic drawing files presumed to
have been compiled by Placer. In addition, MDA requested that Crystallex
contract an independent surveyor to check drill-hole locations. Crystallex had
25 drill holes surveyed and, aside from an equal shift with all surveys (~34m in
the east and ~3m in the north), the surveys showed that these original survey
data stand up to verification relative to each other. Correcting for this shift,
all holes were within 1.7m of the surveyed coordinates and generally off by less
than one meter. The coordinate shift is an issue that has recently been resolved
by Crystallex in that independent surveyor Mr. David Rogerson (Surco CA) has
resurveyed the surface in the planned pit area and in the process has corrected
this shift.
In late 2002, MDA took 65 independent samples of core, pulps,
and coarse rejects. After choosing and receiving the samples, MDA renumbered the
samples to names known only to MDA. At most, though not all, times MDA had the
samples in their direct control. But at no time when out of MDA's control
(except during cutting the core) did anyone know which samples were which. Due
to the preliminary nature of this program, which was only the initial part of
the larger program, the check samples, though lower grade, corroborate the
general tenor of historic data.
MDA's samples were taken from various resource areas and were
from varied grade ranges. Samples were taken from split core, sawn core, coarse
rejects and pulps. MDA compared the results of MDA's and Placer's samples for
copper and gold only. Table 14.1 presents descriptive statistics of MDA's
check-sampling program, and the table shows MDA's samples are lower grade for
both copper and gold. Table 14.2 shows the correlations of gold and copper
between MDA and Placer samples. On closer review (Figure 14.2 and Figure 14.3),
it is clear that the differences occur mostly in the check samples of split
core. Since this is such a small dataset, no global, definitive statements can
be made concerning the Placer database based on these samples alone; however, it
does suggest that initial sample preparation may be very important, as the
comparisons are better further down the sample preparation process.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page
94
Table 14.1 Descriptive Statistics of MDA 2002 Check Samples
Table 14.2 Correlation of 2002 MDA Check Samples
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page
95
Figure 14.2 Gold Check Assay Correlations
Figure 14.3 Copper Check Assay Correlations
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page
96
14.4
MDA/Crystallex Joint
Check Program on Previous Samples
Crystallex took samples of existing Placer quarter-core
splits, coarse rejects, and pulps for gold grade re-assay.
Quarter-core splits
of Placer core samples (341) were sawn, prepared, and analyzed to corroborate
assay data. Sample selection was determined by location and grade. Mr. Maynard
chose the intervals to be re-split and did the sawing personally with a tile
cutter rock saw. Each quarter core sample had the original hole number and
sample number recorded and was bagged in a white cloth bag identified with only
a four-digit number on the outside and a slip of paper with the four-digit
number in the bag. These samples were submitted to Triad for sample preparation
and sent to Chemex for analysis.
The 341 quarter-core check samples of Placer
core showed poor reproducibility, poor correlation, but a modest comparison of
mean grades. The Crystallex check samples are 8% lower grade (Table 14.3 and
Figure 14.4). Note that most of the difference is caused by four of the
highest-grade samples. Eliminating these four samples increases the slope of the
line from 0.42 to 0.83 (Figure 14.5), though does not materially affect the r
2
,
which remains a low 0.4. By eliminating the four highest mean-grade samples,
Crystallex mean grades become higher grade than Placer by 6%.
Table
14.3 Descriptive Statistics on Quarter-Core
All samples
Placer
Diff.
KRY
Avg.
Diff.
Var.
Abs. Var.
N
341
341
341
341
341
341
Mean
1.96
8%
1.82
1.89
25%
10%
63%
Std
3.72
56%
2.39
2.79
128%
149%
135%
Mn
0.02
122%
0.01
0.02
-89%
-833%
0%
Max
40.35
93%
20.90
30.63
1501%
1501%
1501%
Greater than 0.4 g Au/t Average
Placer
Diff.
KRY
Avg.
Diff.
Var.
Abs. Var.
N
305
305
305
305
305
305
Mean
2.16
8%
2.01
2.09
24%
9%
64%
Std
3.89
58%
2.46
2.89
133%
155%
141%
Mn
0.27
366%
0.06
0.40
-89%
-833%
0%
Max
40.35
93%
20.90
30.63
1501%
1501%
1501%
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page
97
Figure 14.4 Scatterplot of All Crystallex Checks on Quarter
Core
Figure 14.5 Scatterplot of Crystallex Checks on Quarter Core
(excluding four highest-grade samples)
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page
98
Coarse reject checks
on the Placer drilling (198) were submitted for analysis. Coarse rejects,
selected by location and grade, were placed in a four-digit numbered cloth bag
while the drill hole and depth were blind to the laboratory. These were assayed
to corroborate original assays and to check for reproducibility. Results from
198 check assays on coarse rejects showed good correlation, although mean grades
were 6% higher for the Crystallex samples (Table 14.4 and Figure 14.6).
Table 14.4 Descriptive Statistics on Coarse Rejects
All samples
Placer
Diff.
KRY
Avg.
Diff.
Var.
Abs. Var.
Count
198
198
198
198
198
198
Mean
2.01
-6%
2.14
2.08
1%
-4%
25%
Std. Dev.
1.91
-9%
2.11
1.98
58%
66%
61%
Min.
0.19
48%
0.13
0.20
-75%
-302%
0%
Max.
11.20
-29%
15.75
13.48
701%
701%
701%
Greater than 0.4 g Au/t Average
Placer
Diff.
KRY
Avg.
Diff.
Var.
Abs. Var.
Count
192
192
192
192
192
192
Mean
2.07
-6%
2.20
2.13
0%
-5%
24%
Std. Dev.
1.91
-9%
2.11
1.98
58%
66%
62%
Min.
0.37
-12%
0.42
0.43
-75%
-302%
0%
Max.
11.20
-29%
15.75
13.48
701%
701%
701%
Figure 14.6 Scatterplot of Crystallex Checks on Coarse Rejects
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page
99
Pulps
from
Placer drilling (259) were submitted for analysis. Selection of pulps was based
on location and grade. Pulps are stored in paper envelopes in plastic bags in
woven rice bags in open sided sheds at site. MDA obliterated the sample numbers
on the paper envelopes with black markers, and the envelope was inserted in a
new paper envelope with a four-digit sample number; the original hole and sample
number were kept in MDA records only. The newly numbered pulps were sent
directly by courier to Chemex for analysis.
Results from the 259 sample pulps showed good
correlation and similar mean grades (Table 14.5 and Figure 14.7). This is true
for all samples as well as those samples greater than 0.4 g Au/t, a value that
is approximately the economic cutoff. A cluster of five samples was noticeably
higher grade in the Placer set than in the Crystallex set. Variance of check
sample grades is considered high for pulps.
Table 14.5 Descriptive Statistics on Pulps
All samples
Placer
Diff.
KRY
Avg.
Diff.
Var.
Abs. Var.
Count
259
259
259
258
258
258
Mean
1.71
-1%
1.73
1.72
5%
0%
27%
Std. Dev.
1.74
-4%
1.81
1.75
53%
64%
57%
Min.
0.02
NA
0.00
0.01
-82%
-443%
0%
Max.
12.65
-12%
14.45
13.55
513%
513%
513%
Greater than 0.4 g Au/t Average
Placer
Diff.
KRY
Avg.
Diff.
Var.
Abs. Var.
Count
216
216
216
215
215
215
Mean
2.02
-1%
2.04
2.03
4%
0%
25%
Std. Dev.
1.75
-4%
1.82
1.76
55%
64%
59%
Min.
0.28
NA
0.00
0.40
-82%
-443%
0%
Max.
12.65
-12%
14.45
13.55
513%
513%
513%
Figure 14.7 Scatterplot of Crystallex Checks on Pulps
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 100
14.5
Twin Hole Analysis
MDA tabulated the
Placer drill holes with corresponding Crystallex twin holes so that the same
intervals were represented. Analyses were made on a hole-by-hole basis, which
yielded highly variable results, and on all data. Table 14.6 shows that overall
Crystallex drilling yields average gold grades for those true twins are 15%
lower than the corresponding Placer intervals (not all the drilling were true
twins).
Table 14.6 Twin Hole Comparison
Crystallex
Diff.
Placer
Comments
1,669
-1%
1,683
Total meters
1.28
-15%
1.49
Mean Grade (g Au/t)
0.00
-70%
0.01
Minimum grade (g Au/t)
50.50
-38%
80.83
Maximum grade (g Au/t)
The comparison of location of gold grades was
found to be reasonable in that the higher-grade intervals were found to be in
the same locations for the most part. Not unexpectedly, the twin-hole sample
assays were more similar in Conductora than in Mesones-Sofia. One apparent
difference was that the Crystallex drilling did not duplicate the higher-grade
single assays,
i.e.
,
>~ 7 g Au/t. For example, there were 54 (3%) samples over 7 g Au/t in the Placer
data averaging 14.79 g Au/t, but only 14 (2%) above 7 g Au/t in the Crystallex
data, though with a similar mean grade of 14.88 g Au/t. At least some of this
can be attributed to sample lengths, as Placer sampled 0.82m intervals on
average compared to Crystallex's average sample length of 1.94m. Using
composited sample lengths, Placer had 2.7% of the samples greater than 7 g Au/t
while Crystallex had 1.9% greater than 7 g Au/t. Placer's mean composite grade
of composites over 7 g Au/t was 12.5 g Au/t, while Crystallex's was 13.39 g
Au/t.
A comprehensive evaluation was done by
Ristorcelli and Hardy (2004b). In that study, MDA suggested:
"In 2003 after the 12 twin hole
program was completed, a difference in mean grades was noted when a comparison
was made between Placer Dome's (Placer) data and Crystallex's initial
verification drilling. During this most recent estimation process, a similar
difference was noted with the latest drilling being approximately 6% lower in
grade than the nearest Placer drill data. MDA has not attempted to compensate
for this apparent sample bias in the estimation nor is any adjustment warranted.
Taken in context with geologic
information, the results of Crystallex sample verification programs present
information on the behavior of gold distribution of the Las Cristinas deposit.
Briefly, the Crystallex/MDA check assays verified Placer's pulps and coarse
rejects. The checking program did show differences in quarter core (compared to
Placer's one half core) checks but it is important to note that Crystallex only
had quarter core to check and mean differences are dominated by outlier sample
grades. Statistical analysis by Dr. Peter Knudsen, Dean of the School of Mines &
Engineering, University of Montana, concluded there was no significant
difference between the means for the pulp and quarter core and the T test for
the coarse rejects was inconclusive. The Crystallex 2003 twin hole assays
yielded a global mean difference of 15%, with the Crystallex drill assays coming
in lower than the Placer drill core samples. A principal issue regarding this
difference is the fact that Crystallex drilled smaller
diameter core than Placer. Each step
up in core size represents a difference of 80% in volume. Placer tested for a
potential bias (five holes and 277 paired samples) and found that there was a 4%
difference in mean grades with HQ being lower than PQ, though they deemed the
difference not statistically significant. The visual heterogeneity of the
deposit along with the just-mentioned check results suggest that the difference
in grades could be caused by this sample volume difference.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 10
1
These mean grade
differences, though not statistically significant, could indicate a sampling and
subsampling issue related to heterogeneity of Las Cristinas mineralization
raising the possibility of a difference in mean grade of the deposit, possibly
even higher grade than is presently reported. A heterogeneity study has been
initiated to better understand the phenomenon and to obtain better parameters
for subsampling protocol and grade control during mining operations."
Interestingly, the completed heterogeneity study (Section
14.11) suggested that sample size does affect the mean global grade of sample
assays returned, and that this represents an incalculable upside to Las
Cristinas.
14.6
MDA Checks on 2003 Crystallex Sampling
MDA took independent core samples from Crystallex's 2003
verification drill program. The samples were always in the custody of MDA
representative, Mr. Maynard. These samples were taken by Mr. Maynard and
relabeled so as to avoid any possibility of tampering with the samples. As shown
in Table 14.7 and Figure 14.8, Crystallex's data are corroborated. It should
also be noted that the difference in grades between Crystallex core samples and
MDA's core check samples is high.
Table 14.7 MDA Checks on Crystallex 2003 Drilling
Difference
MDA
Diff.
Crystallex
Count
29
Mean
1.62
7%
1.52
g Au/t
Std. Dev.
2.68
27%
2.11
g Au/t
CV
1.66
19%
1.39
Min.
0.06
77%
0.03
g Au/t
Max.
12.75
77%
7.22
g Au/t
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 102
Figure 14.8 MDA Checks on Crystallex 2003 Drilling
14.7
2004 Drill Program
Much of the 2004 drill program verification was based on the
2003 drilling, which post-dated the modeling done for the first resource
estimate. The analysis of this work was first done by Ristorcelli and Hardy
(2004c). MDA also took independent samples from the 2004 drill program (Table
14.8), which verified the general tenor of mineralization. No formal reports
were completed for the QA/QC work of Crystallex's Some preliminary assessment
was done that showed that the2004 drill program. analytical work and standards
used were not particularly clean; however, nothing was noted that would have
negated the use of these 18 holes considering they represented less that 2% of
all drilling at Las Cristinas.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 10
3
Table 14.8 2004 MDA Independent Samples
14.8
2005 Drill
Program
Ristorcelli (July 2005) reported that Overall there is
nothing in this data set to preclude using the assay data in the resource
estimate. There is a high failure rate on the standards, although most of these
could be sample-handling issues. The inserted blanks show that two submittals
are suspect. This QA/QC program has not had external check assays by second
laboratories and there are no duplicate lab checks. There is no split core or
checking on coarse rejects. Overall, the 2005 drill program QA/QC is limited and
leaves some doubts. However, given that all but three failures could be
explained by mishandling standards, the 2005 data are accepted but with some
hesitation. There is high confidence that the drill data did hit the intended
targets and there is nothing suggesting that the data are in fact in error.
Rather, the hesitation is caused by the lack of a comprehensive QA/QC program.
The reader must understand that many ounces in this latest estimate are based on
this relatively small drill database with this limited QA/QC.
As a result of the preceding observations, Spencer (2006)
evaluated the QA/QC of the 2005 drill program. Spencer took pains to evaluate
the data in light of some sub-standard standard assay material and verified all
samples that failed in light of the checks. His work resulted in Crystallex
obtaining new standards for future programs, re-assaying failed batches, and
explaining discrepancies. Spencer's conclusions (2006) were that The high
percentage of repeatable values in the reassay programme demonstrates the
integrity of the assay data from the 2005 drill sampling programme at Las Cristinas. and Poor assay repeatability in high-grade spikes, which are
quite common at Las Cristinas, has the potential to significantly affect the
calculated average grade of a mineralized interval, although less so on a global
basis when considering the effect on the grade of the entire deposit. MDA
concurs and found the 2005 drill-sample assay data suitable for use in resource
estimation to classification of up to and including Measured.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 104
14.9
2006-2007 Drill
Program
The following section concerning QA/QC for the 2006-2007
drill program was taken from Nicholson (2007).
14.9.1
Introduction
Nicholson Analytical Consulting (NAC) was contracted to aid
in the design of and to oversee the QA/QC program for Crystallex's 2006-2007
drill program. NAC's involvement in the program included:
inspection and
recommendations of lab facilities to be used for the program;
recommendations on
design and implementation of the program prior to the start of drilling;
active monitoring
of Crystallex's QA/QC data for the primary element of Au; and
analysis of any
internal and external duplicate assaying.
NAC was on-site for approximately 40% of the time at various
points throughout the drill program. NAC's primary focus was the quality control
of the analytical data. However, at Crystallex's invitation, NAC also examined
the procedures being used in all parts of the drill program. Although only
involved in the design of the QA/QC program, NAC noted no irregularities in any
areas of the drill program. NAC was impressed by the thoroughness and
professionalism displayed by all of the Crystallex personnel.
14.9.2
Lab Inspection
and Recommendations
Prior to the start of the drilling program, NAC and
Crystallex carried out an investigation of the possible labs that could be used
during the program. As a result, the samples were shipped from the property to
the SGS lab at El Dorado for sample preparation only. NAC was on-site for
approximately 40% of the drill program and accompanied the samples to the lab
during this time. NAC made routine visits to the lab while delivering these
samples and gave guidance to the lab staff concerning procedures they were using
to prepare the core samples.
The prepared samples and reject material were picked up and
transported back to the Las Cristinas compound. The prepared pulp samples were
secured in a locked room until they were shipped to SGS-Lima for analysis. NAC
conducted sieve tests on several of the pulp and reject samples from the SGS El
Dorado lab. All of the samples passed the sample preparation criteria set out by
the lab.
Overall, NAC is satisfied with the work done at SGS-El Dorado
and is confident that the samples were adequately prepared.
All samples from this program were shipped to SGS-Lima Peru
for analysis on recommendation from NAC. NAC has dealt with SGS-Lima on other
projects and felt that they would be the best lab within South America to assay
the samples. The lab is very modern and is ISO 9001:2000 and ISO 17025
certified.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 10
5
For convenience, the check lab selected was ALS-Chemex, also
in Lima. NAC has also dealt with this lab on previous projects and found the
quality of the work to be excellent. This lab is also a very large modern
facility and is ISO 9001:2000 certified.
14.9.3
Program Design
and Implementation
The QAQC program was designed in consultation with Richard
Spencer, VP Exploration, of Crystallex.
Active QA/QC Monitoring
Standard Insertion
The active monitoring portion of the program utilized
certified reference materials (CRM) inserted into the sample stream to verify
the accuracy of the data being received from the primary assay lab as the data
were returned to Crystallex. The program employed the use of five CRM's inserted
into the sample stream on a rotating basis. The CRM's used in this program were
obtained commercially from CDN Resources labs in Burnaby, BC, Canada. Each of
the standards has undergone extensive homogenization testing and has been
round-robin assayed by several labs both in Canada and abroad. These standards
come with a certification which includes a recommended value and confidence
interval (Table 14.9) as well as outlining the procedures used for determining
these values.
Table 14.9 CRM Gold Grades and Confidence Intervals
Standard Name
Gold (recommended value and 95% confidence interval)
GS-P5B
0.44 ± 0.04 g/t
GS-1C
0.99 ± 0.08 g/t
GS-1P5A
1.37 ± 0.12 g/t
GS-1P5
1.58 ± 0.16 g/t
GS-15
15.31 ± 0.58 g/t
The analysis protocol called for all samples to be assayed
using 30g fire assay fusion followed by determination by atomic absorption
spectrometry. Any sample with a gold value above 5 g Au/t was to be re-assayed
using a 30g fire assay fusion followed by a gravimetric finish. It was important
that at least one of the standards used in the program had a value above 5 g
Au/t in order to assess the quality of those analyses that were done by this
alternate higher-grade method.
The standards were ordered in bulk (several kilograms each)
and shipped to the Las Cristinas site prior to the start of drilling. NAC
re-labeled these standards with generic names (S1 to S5) and sent them to SGS
labs in El Dorado to be re-homogenized, split and bagged in 100g splits. The
standards were relabeled to prevent the lab from determining the origin and
values of the standards. The standards' bags were then returned to Las Cristinas
and held in a locked room until the start of the drilling program. The decision
of which standard to be inserted at any given location in the sample stream was
made by NAC or one of the Crystallex geologists after examining the core samples
surrounding the standard insertion position. The intent was to have the gold
concentration in the standard be as close as practical to gold concentration in
the surrounding samples. Standards with higher grades were inserted into areas
that had visible mineralization, and those with lower grades were inserted where
little or no mineralization was seen.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 106
The program called for one standard to be inserted
approximately every 25
th
sample. The position of the first standard
in each batch was randomized within the first 25 samples. This way the standard
did not appear in the same ordinal sample position within each batch of samples.
Core samples were shipped to the lab with an empty core bag containing a core
tag placed in the position that the standard was to occupy. The instructions
accompanying the sample batch told the lab that this was a standard position and
to leave an empty labeled pulp bag in that position with a number matching the
accompanying core tag.
After preparation of the core samples was complete and the
pulp samples were returned to the Las Cristinas site, either NAC or one of the
Crystallex geologists added one of the five standards to the empty pre-labeled
pulp bag. Inserting the standards on-site prevented the lab from knowing which
of the standards had been inserted in any given position, and it allowed NAC/Crystallex
to check that the sample numbering and positions were correct prior to
submitting the samples for analysis.
Although one can never completely disguise the presence of
standards in a sample stream, this is as close as one can possibly get. The
standards appeared in bags identical to those of the samples. The bags and
labels did not have any identifying characteristics to distinguish them from
regular samples in the stream.
Blank Insertion
Barren rock material was inserted into the sample stream at
the rate of one every 30
th
sample position. This rock was from a
barren diorite quarry located off-site and was cut with a diamond saw into
5-10cm fragments that were not conspicuously dissimilar to core fragments. Blank
material was bagged as a sample and not identified to the laboratory.
Data Treatment
The active monitoring portion of the QA/QC program was
carried out for gold only. Analysis data were obtained directly from SGS-Lima
via e-mail. Shewhart and Cumulative Sum (CuSum) control charts were
constructed as the data came in and were used to determine quality.
Crystallex and SGS-Lima were notified by NAC when any group
of data failed QA/QC tests. A standard determination that falls outside the
control limits indicated a control failure. The control limits used were ± 2
S.D. for warning limits and ± 3 S.D. for control limits. When a control failure
occurred, NAC directed SGS-Lima to have the affected range of samples
re-analyzed. The protocol for selecting affected samples is that for any
sequence that a QA/QC standard fails:
1)
Re-analysis starts earlier in the sequence at the position of the last valid
QA/QC standard and finishes later in the sequence at the position of the next
valid QA/QC standard. This range includes all samples, standards, blanks and
duplicates that fall between these valid QA/QC standards and also includes the
both-valid QA/QC standards on each end of the sequence.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 107
2)
In the event that there are no QA/QC standards in the sequence prior to the
failed QA/QC standard, the range includes all samples prior to the failed QA/QC
to the beginning of the batch.
3)
In the event that there are no QA/QC standards in the sequence after the failed
QA/QC standard, the range includes all samples after the failed QA/QC to the end
of the batch.
NAC also produced range charts along with the Shewhart
control charts. The range charts are a good indication of the precision of data.
These were not used for active monitoring but for informational purposes only.
Since the Crystallex data are only a subset of the data produced by SGS and the
data are not contiguous, large shifts in range do not necessarily indicate a
failure.
No run rules (for excessive runs above and below the
centerline and 2 S.D.) were applied to the Shewhart chart. Bias was measured
using CuSum charts as they give a much faster and clearer picture than can be
obtained from using Shewhart charts.
External Data Verification
Duplicates
Several different types of sample duplicates were generated
during the drilling program. These duplicates were assayed by either the primary
lab, SGS-Lima, or by the external check lab, ALS-Chemex-Lima. As well as sample
duplicate analyses, each lab produces analysis replicates on a subset of the
pulp samples in a batch. These are supplied as a part of the dataset and will be
called Internal Duplicates for the purposes of this report. Two different
types of duplicate samples were generated for analysis by the primary assay lab:
1) duplicate samples split from -10 mesh material and 2) duplicate samples
obtained by prepping ¼ core samples.
The duplicates obtained from the -10 mesh splits were
generated approximately every 50
th
sample. The duplicates from the ¼
core were also generated approximately every 50
th
sample. In both
cases, the duplicate appeared immediately following the original sample and was
numbered as a normal sample in order to be blind to the primary assay lab.
In the case of the duplicate split from the -10 mesh
material, an empty bag with a core tag in it was placed in the position that the
duplicate was to occupy. The instructions accompanying the samples told the
preparation lab that this was a duplicate position and that a -10 mesh duplicate
split of the previous sample was to occupy the empty bag.
The ¼ core duplicates were not identified to the laboratory,
as the core was already in its assigned bag. In this case, sample prep proceeded
as normal.
Three different types of duplicates were generated for
analysis by the check assay lab: 1) analysis of the original pulp analyzed by
the primary lab, 2) duplicates created by splitting the -10 mesh material, and
3) duplicates created by splitting the sample pulp.
When duplicate samples were required to be prepared for the
external check lab, both types of duplicates were created from the same sample.
The preparation lab generated the -10 mesh duplicates according to Crystallex's
instructions during the original preparation of the samples. The pulp duplicate
was created by the check lab by splitting the -10 mesh duplicate it received
from the primary assay lab. All duplicates sent to the external check assay lab
were sent directly from the primary assay lab.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 108
Data Treatment
Regression plots, t-statistics and basic descriptive
statistics were determined for each duplicate set. Six plots were constructed:
1)
Pulp assay (primary lab) vs. pulp assay (check lab) - these analyses were
performed on the same sample pulp;
The t-statistic (comparison of means) was used as the primary
indicator of fitness of the data. Single regression plots were also constructed.
All t-statistics in this report are calculated at the 95% confidence level.
Data Handling
Data were obtained directly from each lab without
Crystallex's involvement. NAC performed the necessary quality checks on the data
and forwarded QA/QC validated data to Crystallex in Excel format on an ongoing
basis as the data became available.
14.9.4
Active QA/QC
Monitoring for Gold (Au)
Standard Monitoring
The QA/QC program resulted in the insertion of 543 standards
in a total of 12,173 drill core samples. This gives an overall insertion rate of
4.46% or one standard for every 22.4 samples. Of the 543 standards that were
submitted, there were four standard failures (Table 14.10). All of the failed
standards and the associated samples were re-assayed as per the QA/QC protocol,
and all of the re-assayed sequences passed the QA/QC criteria on the second pass
(Table 14.11).
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 109
Table 14.10 Standard Data Summary for 2006/07 Crystallex Las
Cristinas QA/QC Program
Standard Name
No. Of Determinations
No. of Failures
Failure Rate
Analysis Mean (g/t)
Standard Deviation
Recommended Value at 95% C.I.
GS-P5B
58
1
1.72%
0.43
0.002078
0.44 ± 0.04 g/t
GS-1C
190
0
0.00%
0.98
0.002643
0.99 ± 0.08 g/t
GS-1P5A
162
0
0.00%
1.36
0.004319
1.37 ± 0.12 g/t
GS-1P5
27
1
3.73%
1.55
0.005154
1.58 ± 0.16 g/t
GS-15
106
2
1.89%
15.34
0.1693
15.31 ± 0.58 g/t
Overall
543
4
0.74%
Table 14.11 Standard Failures/Corrections for 2006/07
Crystallex Las Cristinas QA/QC Program
Sample ID
Hole ID
Standard ID
Original Analysis (g/t)
Recommended Value at 99% C.I
Corrected Analysis (g/t)
305768
K6MO1196
GS-15
9.830
15.31 ± 0.87 g/t
15.235
307100
K6MO1165
GS-15
10.850
15.31 ± 0.87 g/t
15.291
302382
K6MO1174
GS-1P5
0.526
1.58 ± 0.24 g/t
1.360
307175
K6MO1165
GS-P5B
0.358
0.44 ± 0.06 g/t
0.410
Small biases were detected on all standards used in the
program. This is not uncommon as all of the major assay labs use a batch fluxing
and fusion procedure for any given project. The optimal fusion procedure is
determined for the matrix of the samples within the program. The standards may
have a slightly different matrix than those of the samples, which cause small
biases to be seen in the final result. It is usually a low negative bias that is
seen as the fusion/fluxing process is not optimized for the standard matrix. In
this program, four of the five standards employed showed a small negative bias
(Table 14.12). All of the biases are well with the 95% confidence interval for
the each standard.
Table 14.12 Biases for 2006/07 Crystallex Las Cristinas
QA/QC Program Standards
Standard Name
Analysis Bias (g/t)
Recommended Value
GS-P5B
-0.01
0.44 ± 0.04 g/t
GS-1C
-0.01
0.99 ± 0.08 g/t
GS-1P5A
-0.01
1.37 ± 0.12 g/t
GS-1P5
-0.03
1.58 ± 0.16 g/t
GS-15
+0.03
15.31 ± 0.58 g/t
In addition to gold, each sample was analyzed by ICP-AES/aqua
regia digestion for 38 other elements. There was no active monitoring in
this program for any of these elements. The standards used in this QA/QC program
have no recommended or certified values for any element other than gold. Since
there have been no quality control measures implemented on any of the ICP
elements, they should not be used in any ore reserve calculations. Final
Shewhart and CuSum charts for gold are given in Figure 14.9 to Figure 14.13.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 1
10
Figure 14.9 Control and Range Charts for Standard GS-P5B
Cumulative Sum Chart for Standard GS-P5B
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 1
11
Figure 14.10 Control and Range Charts for Standard GS-1C
Cumulative Sum Chart for Standard GS-1C
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 1
12
Figure 14.11 Control and Range Charts for
Standard GS-1P5A
Cumulative Sum Chart for Standard GS-1P5A
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 1
13
Figure 14.12 Control and Range Charts for Standard GS-IP5
Cumulative Sum Chart for Standard GS-1P5
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 1
14
Figure 14.13 Control and Range Charts for Standard GS-15
Cumulative Sum Chart for Standard GS-15
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 1
15
Blank Monitoring
The blank material used in this program was
collected from a diorite quarry located some 100km south of the property.
Previous assays of the diorite, which is used for construction aggregate, showed
that the rock is essentially barren of gold, and it was therefore considered to
be useful as blank material. The failure level for the blank material was set at
100 ppb Au by the Crystallex geologists. This is high for testing contamination
in a lab setting, but the uncertainty over the baseline levels in the material
was taken into consideration.
There were numerous failures of the blank
material starting right at the beginning of the program. After multiple
analyses, it became apparent that some of the material used as a blank for this
program is not completely barren. Several of the blank samples analyzed returned
concentrations of gold over the allowable limit of 100 ppb. Since all of these
blanks have been analyzed at least twice by the primary lab, it is believed that
this gold actually exists in the blank material and is not contamination or
analytical error. Several of the blank samples have been re-split from rejects
and have returned a comparable result as the initial assay (Table 14.13). There
were 436 blanks inserted into 2173 samples (Table 14.14). This gives an overall
insertion rate of 3.58% or one standard for every 27.9 samples. Final Shewhart
chart is given in Figure 14.14.
Table 14.13 Blank Failures/Corrections for
2006/07 Crystallex Las Cristinas QA/QC Program
Sample
Original Analysis
Additional Analyses
ID
Hole ID
(ppb Au)
(ppb Au)
301107
K6MO1166
346
357
323
301567
K6MO1168
188
17
301624
K6MO1168
421
55
301717
K6MO1168
461
414
431
302099
K6MO1171
694
15
304255
K6CO1187
183
70
306557
K7MO1200
650
650
638
301006
K6MO1166
263
256
307320
K6MO1170
2052
4
307812
K6MO1178
112
28
311825
K7MO1205
150
146
313476
K7MO1204
260
60
68
302996
K6MO1180
281
112
121
(Red indicates continuing failure as explained in text above)
Table 14.14 Blank Data Summary for 2006/07
Crystallex Las Cristinas QA/QC Program
Standard Name
No. Of
Determinations
No. of Failures
Failure Rate
Analysis Mean
(ppb)
Standard
Deviation
Recommended
Value
Blank
436
13
2.98%
14.6
45.35
<100 ppb
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 1
16
Figure 14.14 Control Chart for Blank Material
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Of 13,486 original pulps assayed by the primary lab (SGS-Lima),
673 were forwarded to the external lab (ALS Chemex-Lima) for check assaying.
This represents a total of 5% or one in 20 samples. The regression plot (Figure
14.15) and statistical analysis (Table 14.15) are presented below.
Table 14.15 Statistical Analysis of External Duplicate Pulp
Samples
Mean of primary lab data set
0.707 g Au/t
Standard error of primary lab
data set
0.06710
Mean of external lab data set
0.694 g Au/t
Standard error of external lab
data set
0.06502
Data items
673
Correlation coefficient
0.979071
Paired t-statistic, 95% C.L.
1.2145
t-critical, 95% C.L., 672 D.F.
1.9635
Figure 14.15 Regression Plot for External Pulp Duplicate
Samples
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Out of 12,178 drill core samples assayed by the primary lab (SGS-Lima),
203 were accompanied by pulps, which are duplicates obtained by splitting the
sample material while still at the -10 mesh stage of sample preparation. This
represents a total of 1.66% or one in 60 drill core samples. The regression plot
(Figure 14.16) and statistical analysis (Table 14.16) are presented below.
Table 14.16 Statistical Analysis of External
Duplicate -10 Mesh Samples
Mean of primary lab data set
0.538 g Au/t
Standard error of primary lab
data set
0.05444
Mean of -10 mesh dup. data set
0.540 g Au/t
Standard error of -10 mesh dup
data set
0.05648
Data items
203
Correlation coefficient
0.968242
Paired t-statistic, 95% C.L.
0.0838
t-critical, 95% C.L., 202 D.F.
1.9718
Figure 14.16 Regression Plot for -10 Mesh Duplicate Samples
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
A total of 213 out of 12,178 drill core samples assayed by
the primary lab (SGS-Lima) were ¼ core samples. These samples were accompanied
by pulps, which represented duplicates obtained by splitting the regular
half-core samples in half at the core sampling stage and creating two ¼ core
samples. This represents a total of 1.74% or one in 57 drill core samples. The
regression plot (Figure 14.17) and statistical analysis (Table 14.17) are
presented below.
Table 14.17 Statistical Analysis of External Core Duplicate
Samples
Mean of primary ¼ core data set
0.556 g Au/t
Standard error of primary ¼
core data set
0.09178
Mean of duplicate ¼ core data
set
0.511 g Au/t
Standard error of duplicate ¼
core data set
0.04942
Data items
213
Correlation coefficient
0.28377
Paired t-statistic, 95% C.L.
0.50207
t-critical, 95% C.L., 213 D.F.
1.9712
Figure 14.17 Regression Plot for Core Duplicate Samples
As expected with ¼ core duplicates, the higher the grade of
gold in the sample the less reproducible the assay value becomes. This is likely
due to the nugget effect. Samples with high grades typically have a metallic
gold component to them where the gold occurs within the sample as discrete
"nuggets" instead of as an evenly distributed gold ore. This can be seen by
constructing regression plots with the high- grade values filtered out. Figure
14.18 is plot for values with Au concentration <1 g Au/t. The correlation gets
better as the upper limit of Au concentration is lowered.
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Page 1
20
Figure 14.18 Quarter-core Duplicate Data
(Au in ppb)
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Out of 12,178 drill core samples assayed by the primary lab (SGS-Lima),
1,221 duplicate pulp samples were forwarded to the external lab (ALS Chemex-Lima)
for check assaying. This represents a total of 10.02% or one in 10 drill core
samples. The regression plot (Figure 14.19) and statistical analysis (Table
14.18) are presented below.
Table 14.18 Statistical Analysis of Internal
Lab Duplicate Pulp Samples
Mean of primary lab data set
0.610 g Au/t
Standard error of primary lab
data set
0.03245
Mean of internal duplicate data
set
0.613 g Au/t
Standard error of internal
duplicate data set
0.03299
Data items
1221
Correlation coefficient
0.99659
Paired t-statistic, 95% C.L.
1.2145
t-critical, 95% C.L., 1220 D.F.
1.9619
Figure 14.19 Regression Plot for Internal Lab Duplicate Pulp
Samples
Mine Development Associates
November 7, 2007
Technical Report Update on
the Las Cristinas Project, Bolivar State, Venezuela
Crystallex International Corporation
Out of 12,178 drill-core samples assayed by the primary lab (SGS-Lima),
181 -10 mesh duplicate samples were forwarded to the external lab (ALS Chemex-Lima)
for check assaying. This represents a total of 1.5% or one in 66 drill core
samples. The regression plot (Figure 14.20) and statistical analysis (Table
14.19) are presented below.
Out of 12,178 drill core samples assayed by
the primary lab (SGS-Lima), 188 external lab -10 mesh samples were forwarded to
the external lab (ALS Chemex-Lima) for check assaying. This represents a total
of 1.54% or one in 65 drill core samples. The regression plot (Figure 14.21) and
statistical analysis (Table 14.20) are presented below.
Table 14.20 Statistical Analysis of External Lab -10 Mesh
Duplicate Samples vs. Pulp Duplicate