The Shalipayco deposit is interpreted to be a Mississippi Valley-type (MVT) deposit. The following is taken from Leach et al. (1995).

The mineralization at Shalipayco consists of stratabound mantos and lenses subparallel to the stratigraphy. Vein mineralization (Veta Eddy) has also been identified at the Project site, however, it is not considered part of the resources because of insufficient drill hole information and lack of structural interpretation.

The main mantos are the Resurgidora, Intermedio, San Luis, Pucará, and Virgencita mantos. The mantos do not generally display extensive lateral continuity. Length varies between 50 m and 400 m and thickness averages 1.50 m. However, the Intermedio and Resurgidora Mantos can reach up to 3.0 km and 4.0 km in length, respectively, and a thickness of up to 18 m.

Mineralization in the Project consists of sphalerite, galena, and pyrite, with a gangue of marcasite, bravoíte, barite, dolomite, calcite, quartz, and dolo-sparite. Mineralization occurs with varying textures like rhythmites, replacements, collapse breccias, crackle breccias, mosaic breccias, veinlets, and evaporitic textures among others. The zinc and lead content may vary up to 51% Zn (Intermedio Manto) and 17% Pb (Intermedio Manto). The average grades for mineralization are 4.9% Zn and 0.5% Pb, respectively. The Zn/Pb ratio varies from 73.2 in the Resurgidora to 304.6 in the Intermedio Manto.

INTERMEDIO AND RESURGIDORA MANTOS
Mineralization in the Intermedio and Resurgidora mantos appears to be related to lateral variation in the former amount of gypsum in the carbonate mud and to porous dolostone that is interpreted to be a hydrocarbon and reduced sulphur reservoir that precipitated the sulphides. Although both mantos have carbonate host rocks with locally important evaporitic facies, the Intermedio Manto contains considerably more evidence for the presence of former evaporites as well extensive porous dolostone that probably served as a laterally permeable reservoir for hydrocarbon and reduced sulphur gases. Furthermore, a fine-grained dolomite mudstone of a sabkha facies that overlies the Intermedio Manto could have served as an excellent hydrocarbon and gas trap that provided a large source of reduced sulphur and reductants for the mineralized fluid. The Resurgidora Manto appears to lack a comparable seal for hydrocarbons.

THE PUCARÁ AND SAN LUIS MANTOS
Unlike the Intermedio and Resurgidora mantos that have abundant evaporative facies, former evaporites and porous dolostone, these textures have not been identified at the Pucara and San Luis Mantos to date. The mineralization observed is in fractures and organic-rich concentrations within a bituminous limestone. This style of mineralization is common in many MVT deposits in the world, however, it usually represents a minor part of reserves. Generally, mineralization in limestone is lower grade than in dolostone, which can be attributed to the usually lower permeability of limestone. The precipitation of sulphides in organic-rich rocks, limestone or dolostone, is related to the greater reducing capacity of these rocks that are better precipitation sites. However, in the case of the Pucará and San Luis Mantos, the limited lateral permeability of the limestone will probably limit resources in these rocks.

VIRGENCITA MANTO
In the Virgencita Manto, the mineralized host rocks appear to be a poorly sorted sedimentary breccia with mineralization that replaced carbonate fragments and fine-rock matrix of a debris flow from an adjacent fault. Considering the apparent spatial relationship of the mineralization with the debris flow, it seems reasonable to suggest that mineralization will continue to be limited to the fault intersection with the breccia.

EDDY VEIN
The Eddy Vein is a complex structure that played an uncertain role in the Zn-Pb mineralization based on the apparent lack of mineral or element zonation from the fault into the manto. Nevertheless, the fault appears to have been active before and after deposition of Zn-Pb mineralization. The presence of reasonably abundant evaporite tectonic breccia in the fault appears to have been a common site for Zn-Pb mineralization. However, mineralization has been commonly brecciated by later fault movements. Particularly characteristic of the Eddy Fault (and associated fractures) is a late-stage overprinting by a pyrite-rich (Zn-Pb poor) event.

The production plan envisages mining with a variety of underground mining methods dependent on the vein characteristics. The mine design is based on the use of a combination of Room and Pillar and Bench and Fill methods. Stoping development will be predominantly carried out within the mineralization. The particular variant of the mining method applied depends largely on the vein thickness and continuity of the mineralization. Three different variations of the method are envisaged for veins with the following average widths: 3.2 m, 6.8 m, and 14.3 m.

The mine was geologically broken into four separate areas, Zones One, Two, Three, and Four. The four zones will have independent ramp systems, which will ensure that steady state production can be achieved. Mineralized material from all four zones will be trucked into a central primary crushing station.

Three separate portals will be constructed to access the deposit. The portals are located at Level 4,220 m, 4,290 m, and 4,340 m. A principal level driven at elevation 4,270 m will connect all three portals, as well as all four mineral zones.

The mine was assumed to be operating on a 360 days per year rotation, with two 12-hour shifts per day. The effective operating hours per day were calculated to be 12.75 hours per day. The mine plan was envisaged with a 3,000 tpd or 1,080 ktpa production scenario.

The mining operation will be carried out by a contractor, who will be supervised by the company. The contractor will provide all necessary personnel, mining equipment, and support and infrastructure required to achieve steady-state mining. This arrangement of contractor mining is common in Peru. Due to the nature of the deposit, supervision will be necessary to avoid or reduce dilution, ensure work is occurring in a safe manner, and to ensure that the product leaving Shalipayco meets the required specification of the metallurgical process. The contractor’s scope of work includes:
• Mobilization and Demobilization.
• Drilling and Blasting.
• Loading and Hauling.
• Mine Services.
• Operation of the primary crusher.
• Maintaining the support facilities required to support mining.
• Construct and maintain site access roads, and access to portals.
• Provide all equipment and consumables necessary to achieve the objectives of production and development.
• Provide all necessary surface support facilities including mine dry, offices, maintenance facilities and warehouse.
• Provide wastewater collection systems and be responsible for the safe disposable of all materials used in the mining process.

Essentially, Shalipayco will be operated as a “turn-key” operation by the mining contractor.

CRUSHING
Primary crushing takes place in the underground mines. The Shalipayco material will b trucked to El Porvenir where it will be placed in a stockpile. Feeders remove the material from the stockpile and place it on a conveyor that transports it to the primary double-deck screen. Oversize from the screen is fed to the secondary crusher. Undersize from the screen is conveyed to the two mill feed silos.

The product from the secondary crushers is conveyed to a bin that feeds three double deck screens. Oversize from the screens is fed to the tertiary crushers and undersize from the screens is conveyed to the two mill feed silos. Discharge from the tertiary crushing circuit is returned to the double deck screens so the crusher is operated in a closed circuit to ensure that the correct particle size is achieved.

GRINDING
The mill feed silos hold 1,500 t each. Material from the silos is fed to two primary 9.5 ft x 12 ft Kopper ball mills, which each operate in closed circuit with the secondary ball mills. Primary Mill 1 operates with three secondary mills (i.e., Hardinge 8 ft x 4 ft, Comesa 8 ft x 4 ft, and Comesa 6 ft x 7 ft). Primary Mill 2 operates with two secondary mills (i.e., Comesa 8 ft x 10 ft and Hardinge 8 ft x 5 ft).

Discharge from the grinding circuit flows into sub 1500 unit cells which currently separate lead concentrate from the tailings. The tailings from the cell are classified in high frequency screens. Undersize from the screens are advanced to the flotation circuits and oversize is returned to the secondary grinding circuit. When material from Shalipayco is being processed, the unit cells (i.e., flash flotation) will be used to remove carbon from the slurry prior to advancing to the flotation circuits. The discharge from the secondary mills is processed in flash flotation cells to recover lead concentrate.

The conceptual plan is to process material mined at Shalipayco in the existing plant at El Porvenir. The plant currently processes 6,500 tpd with planned expansion to 9,000 tpd. El Porvenir currently recovers lead, zinc, and copper so the Shalipayco material will be fed to the plant on a campaign basis. For Shalipayco, carbon will be removed in unit cells immediately after the ground slurry discharges from the milling circuit. At a mine production rate of 3,000 tpd, the monthly production is 90,000 t/month, which will feed the El Porvenir plant for approximately 10 days. It is envisaged that Shalipayco material would be campaign milled through the El Porvenir process plant.

The processing circuit consists of:
• Primary, secondary, and tertiary crushing.
• Ball mill grinding.
• Lead unit cells.
• Flash flotation cells.
• Bulk lead-copper flotation.
• Lead-copper separation circuit.
• Zinc flotation.
• Concentrate thickening an ........