The authors consider that Volcan has characteristics similar to other known deposits which occur within the Maricunga Gold-(Copper) Belt of Chile.

The Maricunga belt is a region of numerous gold silver-copper prospects and deposits in the high Andes of northern Chile. Zones of hydrothermally altered rocks give rise to strong colour anomalies detectable by satellite imagery and aerial photography. Several of the altered zones host significant metal concentrations including high-sulphidation epithermal gold-(silver) deposits (La Coipa, La Pepa) and porphyry gold (copper) deposits (Refugio, Aldebaran, Marte, Lobo).

Three main structural trends are present in the Maricunga belt. First, north to northeasttrending high-angle reverse faults that bound basement rocks are probably coincident with the onset of flattening of the subduction zone. A second structural trend consists of northwest-striking normal faults, dikes and veins, suggesting southwest-northeast extension. A third structural trend is defined by east-northeast satellite lineaments interpreted as dexteral shear zones that mark the southern boundary of the Altiplano Puna plateau.

The Volcan property covers the Dorado sector (Dorado Este, Central and Oeste zones, of which the latter has been sub-divided into the Oeste Norte and Oeste Sur zones) and the Ojo de Agua sector which lies to the northeast of Dorado. The following descriptions of the Dorado deposits have been excerpted from Easdon (2005) to which the reader is referred for more detail.

The Dorado Este mineralization and deposit is contained within dacitic tuffs and dacite porphyries which show extensive advanced argillic and argillic-silica alteration and with the development of a generally centrally located irregularly shaped, hydrothermal breccia pipe. Initial geological mapping indicates that the mineralization is grossly banded in an east-west sense and that the mineralization dips steeply to sub-vertically. The emplacement of the mineralization may be in part controlled by the intersection of WNW and NNW steeply dipping structures; the NNW structures may be terminating, or down dropping, the mineralization on both the east and west sides of the >0.2 g/t Au geochemical anomaly which defines the Dorado Este area. The western extension of the mineralization may also be partially limited by a post-mineral intrusive which is located approximately 200 m to the west of currently [i.e., in 2005] defined western limit of the deposit.

The Dorado Central zone is hosted by the same rocks and has undergone similar alteration to that seen in the Dorado Este zone. Host rocks to the mineralization comprise dacitic domes and dacitic tuffs and dacitic porphyry flows with the accompanying and localized development of hydrothermal breccias. The geochemical sampling that has been done in this zone [i.e., to 2005] indicates that this zone is apparently part of the roughly east-west dilational jog zone as seen at Dorado Este but which is offset approximately 600 m to the SW of the Dorado Este zone and is located approximately 200-300 m west of Dorado Este.

The Dorado Oeste zone is defined by what is an essentially northerly (NNE) trending somewhat discontinuous geochemical anomaly (>0.2 g/t Au) which is approximately 1.75 km long (N-S) and up to 500 m wide. Dorado Oeste is predominantly underlain by dacticic tuffs and porphyries and has apparently been intruded by at least two variably continuous NE trending dacitic dikes.

The Volcan project is planned as an open-pit gold operation processing 55,000 t/d of ore. A total of up to 75 Mt of material (ore and waste) are scheduled to be mined per year. The operation is designed to use industry-proven mining practices and equipment. Mining will be accomplished using a combination of 9.25-in and 12.25-in blasthole drills, loading units consisting of 34-m 3 shovels (PC8000 class) and 24-m 3 front-end loaders, and CAT 797- class haul trucks (320-t) as the primary mining equipment. These production units will be supported by D10 and Dl1 size dozers, 40-m 3 water trucks and CAT 16G size graders. It is assumed that management of explosives will be done by a contractor.

The Volcan Project has been designed as a 55,000 t/d combination heap leach and mill operation utilizing a multiple-lift, single-use valley leach pad for processing 80% of the mineralization (44,000 t/d) and a mill for processing 20% (11,000 t/d).

Mined ore will be delivered to a primary crusher near the pit. The crushed ore discharged from the primary crusher will be transported via an overland conveying system to the plant site located approximately 6 km away. The ore will pass through secondary crushing and on to tertiary crushing which will be accomplished with HPGR. The highest grade 10% of the ore of the day will be campaigned on a daily basis through the crushing circuit and directed to the mill and agitated leach system. The fines (designated as the finest 10% portion by weight) from the remaining lower grade ore will be removed with an air sweep system and also directed to the mill. The remainder of the crushed ore, after fines removal, will be conveyed to the leach pad.

The mill will consist of a single stage ball mill followed by a carbon-in-leach (CIL) circuit to treat a total of 11,000 t/d of the combined high grade and crusher fines. Three parallel trains of five CIL tanks in series will provide a total of 20 h residence time for adsorption of gold onto carbon.

Mill tailings will be thickened to a paste and deposited in a geomembrane-lined zerodischarge facility. The tailings impoundment area is located southwest of the mill facilities and is designed to hold 60 Mt (dry tonnes) of CIL tailings. The ultimate volume for the tailings impoundment will be 47.5 Mm3 . The entire area of the impoundment will be lined with a high density polyethylene (HDPE) geomembrane liner.

Crushed ore for heap leaching will be conveyed to the leach pad and stacked in 10-m lifts with a radial stacker at a rate of 44,000 t/d. A total of 15 10-m lifts are planned for a maximum heap height of 150 m in the deepest part of the heap. The entire leach pad area will be lined with a single HDPE membrane on prepared substrate. The design leach time is 90 days. Leach solutions will be applied to the heap at a nominal rate of 10 L/h/m2 and the solution ponds (also lined with HDPE membranes) will be located in the area downslope from the leach pad.

In both the agitated leach and the heap leach systems the gold will be dissolved with a dilute cyanide solution and adsorbed onto activated carbon. The gold will be stripped from the activated carbon via a standard Zadra pressure elution system and smelted to produce doré bars on site.

It is estimated that the Volcan ore contains an average of 575 g/t copper. A portion of this copper is cyanide-soluble and is expected to be extracted in both the heap leach and agitated leach circuits. In general, the medium and higher grade gold grade material also has higher copper grades.

For the purpose of the pre-feasibility study, cyanide consumption has been estimated without consideration of removal of copper from the leach circuits. However, KCA believes that an additional circuit (such as SART) may be incorporated to allow recovery of cyanide bound with copper and, also, to allow recovery of a copper precipitate for sale.