Deposits within the Peñasquito Operations are considered to be examples of breccia pipe deposits developed as a result of intrusion-related hydrothermal activity.

In addition to the deposit types already identified and exploited, there is potential for additional deposit styles within the extensive Peñasquito Operations area, including base metal skarns and porphyry-related disseminated deposits in geological settings as indicated in Figure 8-1. Exploration for these mineralization styles is ongoing.

Peñasco and Brecha Azul are funnel-shaped breccia pipes, which flare upward, and are filled with brecciated sedimentary and intrusive rocks, cut by intrusive dikes.

The larger diatreme, Peñasco, has a diameter of 900 m by 800 m immediately beneath surface alluvial cover, and diatreme breccias extend to at least 1,000 m below surface. The Brecha Azul diatreme, which lies to the southeast of Peñasco, is about 500 m in diameter immediately below alluvium, and diatreme breccias also extend to at least 1,000 m below surface. Porphyritic intrusive rocks intersected in drilling beneath the breccias may connect the pipes at depth.

The Peñasco and Brecha Azul diatremes are considered to represent breccia-pipe deposits developed as a result of Tertiary intrusion-related hydrothermal activity. Alteration, mineral zoning, porphyry intrusion breccia clasts, and dikes all suggest the diatreme-hosted deposits represent distal mineralization some distance above an underlying quartz-feldspar porphyry system.

Manto-style sulphide replacements of carbonate strata have been discovered beneath the clastic-hosted disseminated sulphide zones, and adjacent to the diatreme pipes. The mantos consist of semi-massive to massive sulphide replacements of subhorizontal limestone beds, as well as cross-cutting chimney-style, steeply-dipping, fracture and breccia zones filled with high concentrations of sulphides.

Garnet skarn-hosted polymetallic mineralization has been identified at depth between the Peñasco and Brecha Azul diatremes. The skarn has horizontal dimensions of approximately 1,000 m by 1,200 m and is open at depth.

Both deposits are centered on diatreme breccia pipes, the Peñasco diatreme at Peñasco, and the Brecha Azul diatreme at Chile Colorado. The diatremes contain and are surrounded by disseminated, veinlet and vein-hosted sulphides and sulphosalts containing silver and gold.

Mineralization consists of disseminations, veinlets and veins of various combinations of medium to coarse-grained pyrite, sphalerite, galena, and argentite (Ag2S). Sulphosalts of various compositions are also abundant in places, including bournonite (PbCuSbS3), jamesonite (PbSb2S4), tetrahedrite, polybasite ((Ag,Cu)16(Sb,As)2S11), and pyrargyrite (Ag3SbS3). Stibnite (Sb2S3), rare hessite (AgTe), chalcopyrite, and molybdenite have also been identified. Telluride minerals are the main gold-bearing phase, with electrum and native gold also being identified.

Gangue mineralogy includes calcite, sericite, and quartz, with rhodochrosite, fluorite, magnetite, hematite, garnets (grossularite-andradite) and chlorite–epidote. Carbonate is more abundant than quartz as a gangue mineral in veins and veinlets, particularly in the “crackle breccia” that occurs commonly at the diatreme margins.

Breccia-hosted mineralization is dominated by sulphide disseminations within the matrix with lesser disseminated and veinlet-controlled mineralization in clasts. All breccia types host mineralization, but the favoured host is the intrusion-clast breccia. Much of the mineralization within the Peñasco and Brecha Azul pipes lies within the intrusion-clast breccia.

All of the dike varieties may also be mineralized, and they are almost always strongly altered. Mineralization of dikes occurs as breccia matrix fillings, disseminations and minor veinlet stockworks at intrusion margins, and veinlets or veins cutting the more massive dikes. Mineralized dikes form an important ore host in the Peñasco diatreme but are not as abundant in Brecha Azul.

Open pit mining is undertaken using a conventional truck-and-shovel fleet, currently consisting of seventy-eight haul trucks, five rope shovels, two hydraulic shovels and four loaders. The fleet is supported by twelve blast hole productions drills, track dozers, rubber tire dozers, excavators, and graders; the mining fleet is owner-operated. Maintenance of mine equipment is covered by MARC contracts with current strategy to move towards owner-based maintenance. The current loading capacity of the mining fleet is sufficient for the current 12-year LOM; however, additional haul trucks will need to be added to the fleet over the next several years as the haulage profiles continue to increase with greater pit depths and distance to the waste dumps.

Drilling for all materials is on 15 m benches drilled with 1.0 to 1.5 m of sub-drilling. Drill patterns range from 9.00 m x 9.00 m in overburden to 4.30 m x 5.00 m in sulphide ore. Blasting is carried out primarily with conventional ANFO explosives, supplied by an explosives contractor. Appropriate powder factors are used to match ore, waste, and overburden types.

The Peñasquito Operations consist of a heap leach gold and silver recovery facility that can process a nominal 25,000 t/d of oxide ore and a sulphide plant that processes a nominal 130,000 t/d of sulphide ore.

Oxide Ore
Run-of-mine (ROM) ore is delivered to the heap leach pile from the mine by haul trucks. Lime is added to the ore, prior to addition of the ore to the pad. Ore is placed in 10 m lifts, and leached with cyanide solution. Pregnant leach solution is clarified, filtered, and de-aerated, then treated with zinc dust to precipitate the precious metals. The precipitated metals are subsequently pressure filtered, and the filter cake smelted to produce doré.

Sulphide Ore
Run-of-mine sulphide ore is delivered to the crusher dump pocket from the mine by 290 tonne rear-dump-haul trucks. The crushing circuit is designed to process up to 148,000 tonnes per day of run-of-mine sulphide ore to 80% passing 159 millimetres. A near-pit sizing conveyor (NPSC ........