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La Colorada Mine
Owner: Pan American Silver Corp

The La Colorada Mine is located in the Chalchihuites district in Zacatecas State, Mexico, approximately 156 kilometres northwest of the city of Zacatecas and 99 kilometres south of the city of Durango. The La Colorada mine is comprised of three separate underground silver mines covering an area of approximately 2,864 hectares.

 
Mining and Processing Operations

La Colorada produces oxide and sulphide ores from the three separate Candelaria, Estrella and Recompensa underground mines. During the years between 2003 and 2010, oxide ore accounted for 65% of the total tonnes processed and that ratio is now decreasing as we mine deeper in the system. In 2011, sulphide ore accounted for 58% of the tonnes processed and we anticipate that in the next few years sulphide ore will account for nearly 80% of total tonnes processed due to depletion of the oxide resource. The oxide resource is expected to be fully depleted in 2016, although we may discover additional oxide resources to allow some additional continuation of oxide ore production. Considerable exploration success during the year has extended the life of mine plan. We currently anticipate that the mine will operate beyond 2021.
 
The mining method used at all three mines is cut and fill stoping. This method allows for improved ore recovery and selectivity from irregular, steeply dipping veins. Ground support is provided by backfilling the voids created by mining with development rock or mill tailings as the ore extraction advances.
 
Cut and fill stoping begins at the bottom of the ore zone and works upward in horizontal slices that follow the strike, dip and width of the ore zone. Ore extraction begins by cutting a 2 metre thick slice from the bottom of the ore zone and removing the broken ore from the stope. As each successive slice of the stope is taken, the void below is backfilled to support the side walls and to provide a stable working platform for mining the next ore slice.
 
The cut sequence begins with drilling the mine face. Working on a platform of the ore broken in the previous advance, miners use jacklegs and stopers to drill blast holes into the ore in the mine face above the work platform. After drilling, blasting agent is loaded into the holes, and the material is broken and dropped to the floor below. This material then becomes the working platform for advancing the next cut. After blasting, and after the atmosphere in the stope has been ventilated and is determined to be safe, roof support is completed by removing loose rocks from the newly exposed area and installing rock bolts. The fill sequence is completed by bringing in backfill material and placing it in the void created by ore extraction. The advancing face of the backfill material is separated from the ore to limit ore dilution.
 
Either hand held drills or electric hydraulic jumbo drills are used for development mining to access the ore, depending on the size of the excavation required. The mine currently has sufficient ore development ahead of stoping to provide flexibility for planning and scheduling.
 
Ore extracted from the Candelaria Mine is hoisted approximately 450 metres to the surface through the El Aguila Shaft. Two different 300 tonne capacity bins are used to segregate sulphide from oxide/mixed ore. Once on surface, the ore is dumped into one of two 200 tonne capacity ore storage bins according to material type. The ore is removed from the bins and hauled to the appropriate mill crusher stockpile by 12 tonne capacity surface haul trucks. The hoist system is capable of delivering approximately 900 tonnes per day to the surface. When required, Candelaria ore can be hauled up to the surface using one of the mine access ramps.
 
Ore extracted from the Estrella and Recompensa Mines is hauled to the surface by an underground mine truck fleet and stockpiled on the surface near the mine portals. The ore is then reclaimed from the stockpile and hauled to the appropriate mill crusher stockpile by the surface haul trucks.
 
The operation currently produces around 400 tonnes per day of oxide ore and 670 tonnes per day of sulphide ore. Each type of ore is processed through separate circuits which share a single crushing plant. Material mined from the transition zone between the oxide and sulphide zones is typically treated as oxide ore for processing. The daily processing capacity of the oxide plant is 650 tonnes of ore and the capacity of the sulphide plant is 750 tonnes.
 
The oxide plant comprises a conventional cyanide leach plant consisting of crushing, grinding, leaching, Merrill Crowe zinc precipitation and on-site refining to produce precious metal doré. Doré bars produced at La Colorada typically contain 98% precious metal, primarily silver, and 2% impurities. The sulphide plant is a conventional flotation plant comprised of crushing, grinding and selective lead and zinc froth flotation circuits to recover precious and base metals into separate lead and zinc concentrates.
 
Tailings from both plants are delivered as slurry to a lined tailings storage facility. Tailings from the sulphide plant are directed as required to a hydraulic backfill plant for re-use underground as backfill in the stopes. Tailings from the oxide plant are placed in tailing facility number six. We completed a fourth expansion phase in 2008 and are currently undergoing a further dam raise. Approval was received for tailings dam number 7, for tailings from the sulfide plant, was received in 2010 and construction was completed in 2012.
Production at the La Colorada mine in 2012 was 4.4 million ounces of silver, 3,578 ounces of gold, 5,599 tonnes of zinc, and 2,766 tonnes of lead. Metal recovery at La Colorada has been relatively constant over the past five years of production. Between 2008 and 2012, silver recovery has averaged 82% from the oxide processing circuit and 92% from the sulphide processing circuit. In 2013, we anticipate producing between 4.6 million and 4.7 million ounces of silver, between 4,300 and 4,500 ounces of gold, between 5,000 and 5,800 tonnes of zinc, and between 2,800 and 2,900 tonnes of lead.
 
Activities in 2013
In 2013, we anticipate producing between 4.6 million and 4.7 million ounces of silver, between 4,300 and 4,500 ounces of gold, between 5,000 and 5,800 tonnes of zinc, and between 2,800 and 2,900 tonnes of lead.
 
La Colorada reviews and updates mineral reserves and long term production plans on an annual basis, based on our experience in prior years. Mining is scheduled to provide reasonably consistent ore quality for processing and to maintain consistent silver production levels. The current long term plan is based on the mineral reserve and spans the period from 2013 to 2020. This time frame is expected to be pushed out as we encounter more economic mineralization through our exploration drilling programmes. 
According to our plans, the rate of ore extraction will average approximately 1,000 tonnes per day over the remaining life of mine. The plan includes provisions for ongoing underground development to support the planned ore extraction. The plan will be reviewed in 2013 to study the viability of an expansion to the production rate to take advantage of the exploration successes of recent years.
 
In 2013, La Colorada will continue shifting production from the oxide zone and expand production from the sulphide zone, in particular from the Estrella mine. With a new sulphide tailings dam fully operational, we expect to expand the remaining capacity within the oxide facility with the replacement of oxide mineral reserves through our exploration programs. Increased overall throughput rates, combined with stable silver grades and recovery rates are expected to result in higher silver production to 2013. The shift towards a higher proportion of ore feed sourced from the Estrella sulphide zone is expected to result in higher base metal by-product production, while gold production is expected to benefit from slightly higher grades in 2013.
 
Capital expenditures at La Colorada in 2013 are expected to decline substantially from 2012 levels, down to $15 million from $21.7 million. Our capital plans at La Colorada are comprised mostly of expenditures related to mine development and equipment purchases for the Estrella and Candelaria mines, an Estrella mine expansion, a continuation of the near-mine exploration drilling program, and an expansion of the crusher/plant dam.
 
In 2013, Pan American expects to invest approximately $3.4 million dollars to complete approximately 32,000 metres of diamond drilling. The aim of this drilling is to expand and upgrade the confidence in our mineral resource and mineral reserve estimates.