The La Fortuna deposit of the El Morro Project can be classified as a typical copper-gold porphyry deposit. Porphyry copper-gold deposits are associated with the intrusion of multiple phases of similar composition porphyritic rocks into the country host rocks and the fluids that accompany them during the transition and cooling from magma to rock. Successive envelopes of hydrothermal alteration typically enclose a core of ore minerals disseminated in breccia zones, stockwork hairline fractures and veins. The deposits typically have an outer chlorite mineral alteration zone. Quartz-sericite alteration typically occurs closer to the center and may overprint. A central potassic alteration zone is commonly associated with most of the mineralization. Fractures are often filled or coated by sulfides, or by quartz veins and veinlets with sulfides. The upper portions of the deposit are often subjected to supergene enrichment whereby the metals in the upper portion of the deposit are dissolved and carried down to below the water table where they are precipitated.

At the El Morro Project, centres of mineralization have been identified at El Morro, El Negro and La Fortuna which is the most significant. At La Fortuna, mineralization is developed in an Eocene to Oligocene multiphase porphyry system that has intruded volcanic rocks of the Paleocene to Early Eocene Los Altares Formation.

The mineralized multiphase porphyry system is a vertically dipping cylindrical shape that covers an approximate area of 800 m by 600 m, and exists to a vertical extent of at least one kilometre. It remains open at depth. North-northwest trending faults and the La Fortuna and Cantarito Faults appear to constrain the northern and southern limits of the intrusive complex. The two most productive porphyries at La Fortuna are the Feldspar Porphyry (FP) and Quartz Porphyry (QP). A third porphyry, the Biotite Porphyry (BP), is also mineralized.

Four distinct zones of mineralization have been defined:

• Upper leached cap horizon
• Transitional assemblage of secondary supergene copper oxides
• Intermediate assemblage of secondary supergene copper sulphides (“enrichment blanket”)
• Deeper assemblage of primary hypogene sulphides.

The leached cap varies markedly in thickness from tens of metres up to 300 m. Copper grades typically range from 0.01% to 0.04% Cu, while gold grades tend to reflect original primary hypogene grades.

The copper oxide zone is poorly developed and is typically less than 30 m in thickness and grades on average 0.5% Cu. Copper oxide minerals are located directly on top of the secondary enrichment blanket and preferentially inside the FP unit. Mineralogy consists of both copper oxides and a mixed assemblage of copper oxides and secondary copper sulphides. Copper oxide minerals include atacamite, chrysocolla and minor cuprite and copper wad.

The secondary enrichment zone is a 30 m to 40 m thick blanket on average but is up to 100 m in thickness in the northeastern part of the deposit. Copper mineralization includes chalcocite, digenite, and lesser covellite. Grades within the blanket range from about 0.2% Cu in the volcanic host country rocks to 0.7% to 1.0% Cu in the intrusive units.

Chalcopyrite, bornite, minor tennantite and tetrahedrite, and associated pyrite form the copper mineralization in the primary zone. Gold occurs as free grains, and as inclusions in bornite and pyrite. Mineralization remains open at depth and is associated with three main vein types which are the following;

• Quartz veinlets with magnetite (or hematite), potash feldspar, occasional chalcopyrite and bornite, and no alteration halo
• Quartz veinlets with chalcopyrite, bornite, and pyrite with no alteration halo
• Sulphide veinlets, with pyrite-chalcopyrite, and a sericitic halo.

Primary copper sulphides and gold mineralization are strongest within the FP unit where average grades are 0.6% Cu and 0.7 g/t Au. Lower grade mineralization occurs within the BP with grades averaging 0.4% Cu and 0.44 g/t Au. Copper and gold grades within the AP and tuff units are still lower, averaging 0.22% and 0.18% Cu, and 0.32 g/t Au and 0.15 g/t Au, respectively.

In the primary zone, gold and copper ratios are approximately 1:1, and the grade distribution is laterally and vertically uniform.

The El Morro Project will be an open pit truck/shovel operation. The open pit has six phases. The ultimate pit will measure approximately 2.0 km east to west, 2.5 km north to south, and have a maximum depth of approximately 825 m. The Main Waste Rock Facility (WRF) is located to the south of the open pit. The Tailings Storage Facility (TSF) is located to the south and west of the open pit and downstream of the Main WRF.

Processing is based on a sulphide flotation concentrator. Oxide material is treated as waste rock. Separation of the ore types is done by the mine department based on blast hole sample analysis. Some rehandling sulphide ores is necessary in the run-of-mine (ROM) stockpiles. The sulphide mill processing is based on feeding 90,000 tpd of sulphide ores for a period of 18 years.

For 90,000 tpd of nominal ore throughput, a process plant utilization of 92% and 63% solids in the high density tailings pulp, the desalinated water requirement is 521 L/s. The desalination plant is located at Punta Cachos on the coast. A 202 km, 30 in. diameter pipeline carries water to the concentrator and to the minesite at 4,000 masl. A potable water treatment plant will be provided for safety showers, camp, and administration areas.

The concentrate pipeline route follows the new access road. The pipeline is a 156 mm (6 in) steel pipe. It starts at the holding tanks at the concentrator plant site and ends at the filter plant on the coast. It is designed for 120 tph capacity (solids). Filtered concentrate will be stored next to the filter plant and ship loaded for delivery to smelters.

The process plant areas include:

PLANT SITE
• Primary crushing
• Coarse ore stockpile and reclaim system
• Primary grinding
• Secondary grinding and classification
• Flotation
• Concentrate regrinding
• Concentrate dewatering
• Concentrate pumping and pipeline system
• Tailings water reclaim
• Water treatment
• Process water pond and pump system
• Fresh/fire water ponds and pumping systems.

PUNTA CACHOS
• Concentrate dewatering storage
• Port facilities to load trucks and ships
• Sea water desalination plant
• Desalination water storage, pumps and pipeline.