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Soledad Mountain Project

Flow Sheet Development And Benefits Of The HPGR

By H.L. Klingmann, Golden Queen Mining Co., Ltd., August 2005



Table Of Contents

1 Introduction

2 Process Development2.1 Background2.2 Primary Rock/Ore Types

2.3 Development Of The HPGR Flow Sheet2.4 HPGR Test Programs2.5 Samples & Sample Preparation

2.6 KHD HPGR Tests2.7 Polysius HPGR Tests2.8 Analysis Of HPGR Test Results

2.9Leach Test Work 2.10 Rock Type Indices2.11 Mineralogy

2.12 Slump & Permeabilities Under Load2.13 Design Of The Heap

3 Crushing & Screening

3.1 Flow Sheet3.2 Assessment Of The HPGR 3.3 Crushing-Screening Plant

3.4 Technical3.5 Capital & Operating Cost Comparisons

4 Gold & Silver Recoveries

4.1 The Characterization Program

4.2 The HPGR Test Program – 2003 To 20054.3 Recovery Analysis4.4 Leach Curves



Soledad Mountain Project

Flow Sheet Development And Benefits Of The HPGR

By H.L. Klingmann, Golden Queen Mining Co., Ltd., August 2005

1 Introduction

Golden Queen Mining Co. Ltd. (GQM) is a public company listed on the Toronto Stock Exchange (TSX-GQM). GQM is developing the Soledad Mountain Project (the Project) insouthern California as an open pit, gold-silver heap leach operation.

The mineral reserve is 57.4million t with grades of 0.832 g/t gold (0.024 oz/ton) and 13.49 g/tsilver (0.39 oz/ton). This mineral reserve contains 1,534,700 oz gold and 24,884,000 oz silver.

Five feasibility studies were done between 1990 and 2000 and GQM has just completed a sixthfeasibility study with dramatic changes in the flow sheet and the layout and design of thecrushing-screening plant. The key comminution device is now a high-pressure grinding roll

(HPGR) and this has replaced the vertical shaft impact crusher (VSI crusher).

The proposed mining rate is 5.7million t of ore per year with projected gold and silver recoveries

of 81.9 % and 52.6 % respectively in 270 days of leaching. Ore would be mined initially for 7.1years and production would average 122,500 oz of gold and 1,570,000 oz of silver per year in 6years of full production. Only 37.3million t of ore would be mined in these 7.1 years and the

potential for a longer life is therefore excellent.

Various HPGR terms are explained in Reference 1.

2 Process Development

2.1 Background

Extensive test work and process development work done on Soledad Mountain ores from 1988 to1999 shows that these ores are readily amenable to heap leaching provided the ore is crushed torelatively small sizes. This test work is well documented and test results have been used in a

number of feasibility studies for the Project. Parameters such as agglomerate strength and binder addition rates, percolation rate, cyanide consumption and reagents required for pH control werealso determined in numerous tests.

2.2 Primary Rock/Ore Types

The primary rock/ore types that will be mined are rhyolite porphyry and flow-banded rhyolite(68.1 %), quartz latite porphyry (21.3 %), pyroclastics (10.5 %) and siliceous vein rock (0.1 %).

The rock types will be found in different areas and at various stages of the life of the mine. Therocks are high in silica with little or no clay. Rhyolite porphyry and flow-banded rhyolite were

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grouped as a single rock type for the metallurgical test work and subsequent recovery analysis because of their similar physical properties.

2.3 Development Of The HPGR Flow Sheet

Three key sets of tests that are relevant to the development of the HPGR flow sheet are brieflydescribed below:

a Polysius Corporation crushed samples of rhyolite and pyroclastics in a laboratory-scale HPGR in 1989. McClelland Laboratories, Inc. (MLI), Sparks did column leachtests and these tests were completed in July 1990.

b Comparative tests were done on rhyolite and pyroclastics using a VSI crusher andthese tests were completed in February 1991.

Tests were also done using cone crushers and screens but the yield of fines was too

low to give adequate recoveries and all further test work was done with VSI crushers.

c Extensive tests were done on bulk samples of rhyolite, pyroclastics, quartz latite andvein ore obtained from surface and old underground workings between 1997 and1999. The ore was crushed in a VSI crusher and screened to produce samples sized

to 100 % - 8mesh or 100 % - 2.37 mm. MLI did both bottle roll and column leachtest work on these samples and the MLI report was dated February 25, 1999. Thiswas considered by GQM management to be the definitive test program to provide

detailed information required for both the design of a four-stage crushing-screening plant and to complete a feasibility study.

The results from the first two test programs were analyzed in detail in-house in 2002 with a focus

on particle size distribution (psd) vs gold and silver recoveries. The graphs for rhyolite are veryconvincing and these are shown in Figure 6.1a and Figure 6.1b. Note that both the recoveryrate and the total gold recovery were higher when the sample was crushed in the HPGR althoughthe proportion of fine particles was higher when the sample was crushed in the VSI crusher.

The four-stage crushing-screening plant, the design of which was based upon the results of thethird test program, would be exceptionally costly to design, build and operate and a more cost-effective solution had to be found for a viable Project. An alternative flow sheet was developed

with a high-pressure grinding roll or HPGR as the key comminution device in 2002. The flowsheet was reviewed and a report prepared by Chris Morley, Signet Engineering Pty Ltd (nowFluor Australia Pty Ltd), Perth in December 2002 and this flow sheet became the basis for

further work on the Project from 2003 onwards.

Finally, the combination of a VSI crusher and screen can size particles but the VSI crusher may be fundamentally the wrong equipment choice to prepare particles for heap leaching and the

HPGR may have distinct and as yet unrealized advantages in heap leach applications.

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Golden Queen Mining Co. Ltd.Soledad Mountain Project

Figure 6.1a

Particle Size Distributions

Rhyolite

0

20

40

60

80

100

0.01 0.10 1.00 10.00 100.00

Screen Opening mm

C u m u l a t i v e % P a s s i n g

Barmac 1997 Barmac 1990 HPGR 1990

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Figure 6.1b

Gold Recovery vs Time

Rhyolite

0

20

40

60

80

100

0 50 100 150 200 250 300 350 400 450 500 550 600

Days

G o l d R e c o v e r y %

Barmac 1997 Barmac 1990 HPGR 1990

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2.4 HPGR Test Programs

HPGR tests were required to provide the following:

x The design parameters required to size and to determine the power for the HPGR;

x Design details for the flow sheet, for example the need to recycle edge material

x The target psd for a commercial operation and

x Moisture contents, specific weights and “slump” to confirm heap design parameters.

The first HPGR test was done on a sample of rhyolite ore, as this is the hardest and most abrasive

of the 3 ore types. A second HPGR test was done on a sample of quartz latite ore.

KHD Humboldt Wedag AG (KHD) and Polysius AG (Polysius) have test facilities in Germanyand both companies did tests as described in the following sub-sections. This permitted a most

interesting comparison of test results.

2.5 Samples & Sample Preparation

Cement Addition

Cement was added to the samples before the HPGR test was done in 1989 at the rate of 5 kg/t.

The cement was therefore intimately mixed and effectively ground into the sample in the HPGR and before MLI did the bottle roll and column leach tests. It was decided to follow the same procedure for the two current test programs.

Rhyolite Test Sample

The rhyolite sample for the HPGR tests was collected in July 2003. Eight drums of rock werecollected from four different locations. The sample consisted only of coarse rock fragments andno fine material was included. There is therefore less fine material in the sample than would beexpected in a commercial operation. Hand specimens were also collected for unconfined

compressive strength and point load tests and tests to determine the impact work index and theabrasion index.

The rhyolite sample was delivered to MLI and sample preparation was done in August 2003.The sample had a moisture content of w = 0.7 % and a bulk density of 1.36 t/m3. The samplewas crushed to 100 % - 32 mm. MLI did a number of tests to determine the alkalinity of asolution for a range of cement addition rates. MLI expressed concern that the pH would be

higher than desired for a column leach test if cement was added to the sample at the rate of 5

kg/t. It was decided to reduce the cement addition rate and normal Portland cement was added tothe sample after crushing at the rate of 4 kg/t.

The gold and silver grades determined for the rhyolite sample and comparative grades for rhyolite ore are shown in Table 1:

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Principal Ore Types t % g/t oz/ton g/t oz/tonRhyolite - Mineral Reserves 39,011,000 68.100 0.82 0.024 11.7 0.34

Rhyolite HPGR Test Sample - Estimated 2 100.000 0.90 0.026 46.7 1.36

Rhyolite HPGR Test Sample - Actual - MLI 2 100.000 0.46 0.013 39.3 1.14

Rhyolite HPGR Test Sample - Actual - AMTEL Ltd. 2 100.000 0.556 0.016 47.0 1.37

Note:

1 Mineral reserve quantity and grade for rhyolite from the Feasibility Report Update, September 2000.

2 Grades for the HPGR test sample were estimated by Edward Orbock from field records.

3 The actual grade for the HPGR sample was determined by MLI as part of sample preparation for the HPGR test program.

4 The actual grade for the HPGR test sample was also determined by AMTEL Ltd. as part of the mineralogical studies.

Table 1

Rhyolite Test Sample - Gold & Silver Grades

Ore Gold Silver

Two samples, each 950 kg, were sent by airfreight to the facilities of KHD and Polysius in

Germany on August 29, 2003.

Quartz Latite Test Sample

Why is there a need for confirmation HPGR and column leach tests on quartz latite ore?

The gold recoveries obtained for quartz latite ores in column leach tests were in the high 80 %

range when the first test work was done in the late 1980’s. These recoveries were obtained onsamples crushed in a cone crusher with a relatively coarse psd. The recoveries were significantlylower when the 1997-1999 VSI crusher tests were done with the sample crushed to 100 % - 8

mesh. It was therefore important to confirm recoveries for the quartz latite ore crushed in theHPGR as this could have a major impact on the feasibility study and the cash flow projections.

The quartz latite sample for the HPGR tests was collected in the spring of 2004 and 1.1 t wasdelivered to MLI. The sample was crushed in stages to just passing 38 mm and split to obtain a100 kg sample for test work to be done by MLI and Jenike & Johanson, Inc. The 100 kg samplewas split in half to obtain approximately 50 kg for flowability test work. Cement, equivalent to

4.0 kg/t, was added to this sample and this was shipped to the laboratory of Jenike & Johanson,Inc. in Westford in June 2004.

The gold and silver grades determined for the quartz latite sample and comparative grades for quartz latite ore are shown in Table 2:

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Principal Ore Types t % g/t oz/ton g/t oz/ton

Quartz Latite - Mineral Reserves 12,212,000 21.3 0.83 0.024 19.5 0.57Quartz Latite HPGR Test Sample - Estimated 1 100.0 1.56 0.046 42.0 1.23

Quartz Latite Test Sample - Actual - MLI - Average of 3 fire assays 1.33 0.039 39.2 1.14

Quartz Latite Test Sample - Actual - MLI - Calculated from the column leach test 1.23 0.036 45.7 1.33

Quartz Latite HPGR Test Sample - AMTEL Ltd. 1.29 0.038 33.0 0.96

Note:

1 Mineral reserve quantity and grade for quartz latite from the Feasibility Report Update, September 2000.

2 Grades for the HPGR test sample were estimated by Edward Orbock from field records.

3 The actual grade for the HPGR test sample was determined by MLI.

4 The actual grade for the HPGR test sample was also determined by AMTEL Ltd. as part of the mineralogical studies.

Ore Gold Silver

Table 2

Quartz Latite Test Sample - Gold & Silver Grades

MLI added cement to the crushed quartz latite sample at the rate of 2 kg/t and a 908 kg samplewas shipped by airfreight to the Polysius facilities in Germany.

2.6 KHD HPGR Tests

KHD did HPGR tests on the rhyolite sample in September 2003.

KHD did four preliminary tests, A1 to A4, and the test data is shown in Table 3. A total of 8 psds were plotted and analyzed. The psds for test A4 and the 1997-1999 VSI crusher test areshown in Figure 9.7

2 as a typical example of such a plot.

Units

Test Unit Data # R1 R2 R3 R4.0 R4.1 A1 A2 A3 A4 A5 R1 R2 R3 R4

Roll Diameter m 0.71 0.71 0.71 0.71 0.71 0.80 0.80 0.80 0.80 0.8 0.71 0.71 0.71 0.71Roll Width m 0.21 0.21 0.21 0.21 0.21 0.25 0.25 0.25 0.25 0.25 0.21 0.21 0.21 0.21

Zero Gap mm 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0

Test Conditions

Roll Speed m/s 0.29 0.29 0.29 0.29 0.29 0.36 1.17 0.74 0.74 0.74 0.29 0.29 0.29 0.29

Specific Press Force N/mm2

2.69 3.79 4.55 4.37 4.46 4.2 4.1 5.6 4.8 5.4 3.17 3.53 4.12 4.18

Moisture Content - w % 0.3 0.3 0.3 6.0 6.0 1.0 1.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0

Test Results

Throughput t/h 9.13 8.80 8.80 7.29 7.82 17.6 54.6 34.3 34.8 33.8 8.48 7.76 7.51 8.13

Specific Throughput ts/hm3

211.9 204.1 204.1 179.4 192.4 246 233 231 233 227 196.1 179.6 173.7 187.9

Net Power Consumed kW 16.8 21.1 23.5 21.8 24.2 34.5 103.5 90.0 82.3 88.0 16.8 17.8 20.0 20.1

Specific Energy Input kW.h/t 1.84 2.39 2.66 2.81 2.90 1.96 1.90 2.62 2.37 2.61 1.85 2.15 2.51 2.34

Operating Gap mm 19.3 17.7 17.0 17.4 17.1

Flake Detail

Flake Thickness mm 17.0 17.8 19.1 17.5 17.4 18.0

Flake Quantity > 16 mm in %

Flake Density gm/cm3

2.07 2.04 2.15 2.16 2.17 2.2

Total Product Size Distribution

80 % Passing Size, Total Product mm 12.0 7.8 7.1 5.9 4.0 8.0 7.5 6.0 5.7 6.0

50 % Passing Size, Total Product mm 4.3 1.9 1.5 1.3 0.8 2.0 1.9 1.3 1.3

Mass % < 1.0 mm, Total Product % 26.2 38.9 44.1 45.5 52.8 38.9 38.5 46.8 44.8 47.0

Distribution of Material

Ratio: Edge to Total Product % 0.320 0.320 0.318 0.325 0.322 0.170 0.147 0.165 0.170 0.172 0.310 0.303 0.295 0.333

Note:

1 The 1989 tests were performed on rhyolite with smooth rolls. The 2003 tests were performed with studded rolls.

2 Cement was added to the test sample at the rate of 5 kg/t for the 1989 tests, 4 kg/t for the 2003 tests on rhyolite and 2 kg/t for the 2004 tests on quartz latite.

3 KHD increased the moisture content from the as-received values to 3.0 % after the first two tests.

4 Polysius reported bulk densities of 1.219 t/m3and 1.290 t/m

3for the rhyolite and quartz latite feed material respectively.

5 Aspect ratio of the test rolls (Diameter:Width): KHD - 3.200; Polysius - 3.381

6 All calculations are done on a wet basis.

Table 3

HPGR Test Comparisons - Rhyolite & Quartz Latite

Pol ysius Tests On Rhyolite 2003 KHD Tests On Rhyoli te 2003 ol ysius Tests On Quartz Latite 200

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KHD did the first two tests, A1 & A2, at the as-received moisture content. KHD indicated thatthe flake consistency was poor and that the autogenous layer was not fully formed between thestuds on the test rolls. The moisture content was therefore increased to w = 3.0 % for tests A3 toA5. KHD indicated that the rhyolite sample still appeared to be dry with w = 3 %.

Test A5 was done to provide material for a confirmation column leach test. Test conditions for test A3 and test A5 were the same and the data for test A5 is also shown in Table 3.

2.7 Polysius HPGR Tests

Tests On Rhyolite

Polysius did HPGR tests on the rhyolite sample in September 2003.

Polysius did the first three tests, R1 to R3, at the as-received moisture content. Polysius did two

further tests, R4.0 and R4.1, with a moisture content of w = 6 % in January 2004.

Polysius initially did three tests, R1 to R3, and the test data is shown in Table 3. Test R4.0 wasdone to determine the effect of higher moisture content on flake quality and leach characteristics

in a column leach test. The test data is again shown in Table 3. The edge product from test R4.0was recycled and added to the feed for test R4.1 to provide a sample of center product for afurther column leach test. A total of 9 psds were plotted and analyzed. The psds for test R3 and

the 1997-1999 VSI crusher test are shown in Figure 9.152

as a typical example of such a plot.

The ATWAL wear test data is shown in Table 4:

Quartz Latite

Test Unit Data Units 1989 1989 2003 2004

Test Number # 1 2 1 1

Roll Diameter m 0.10 0.10

Roll Length m 0.03 0.03

Feed Size mm 0 - 3.15 0 - 3.15 0 - 3.15 0 - 3.15

Test Conditions

Roll Speed m/s 0.43 0.43

Moisture Content % 3.0 0.0 As-received As-received

Test Results

Test Time min 18.57 17.83 38.96 37.80

Throughput kg/h 161.55 168.26 171.30 159.80

Specific Throughput ts/hm3

125.23 130.43 132.75 123.91

Specific Grinding Force N/mm3

4.00 4.07

Specific Power Consumed kW.h/t 7.12 6.40 3.92 3.97Wear

Total Wear g 4.94 3.94 2.36 3.08

Wear Rate g/t 98.8 78.8 21.2 30.6

Note - Polysius Tests

1 Only the tests performed on rhyolite in 1989 are shown.

2 Polysius assessment of the 2003 wear rate is that the rhyolite is a medium abrasive ore.

3 Note the increase in the wear rate with an increase in the moisture content.

Note - KHD Tests

1 KHD assessment of the 2003 wear rate is that this is a moderately abrasive ore.

Table 4

Wear Test Comparisons

Rhyolite

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Tests On Quartz Latite

Polysisus did HPGR tests on the quartz latite sample in September 2004.

Polysius initially did 3 tests, R1 to R3, and the test data is shown in Table 3. The HPGR products from these tests were used for bottle roll tests to obtain an indication of how the quartzlatite might perform when crushed in the HPGR. A fourth test, R4, was done with a target

specific press force of 4.0 N/mm2

to provide additional HPGR product for column leach tests andthe test data is again shown in Table 3. The center product and edge product were returned inseparate packages to MLI.

The ATWAL wear test data is again shown in Table 4.

2.8 Analysis Of HPGR Test Results

Tests On Rhyolite

Test results show that it is the total psd for any particular test rather than a point value such as a

P80 that is the key to interpreting and understanding the results of the bottle roll tests and columnleach tests. Psds were therefore plotted for every test. Note further that KHD, Polysius and MLIuse different screening techniques to determine psds and trends may therefore be more important

than absolute values.

Two psds for KHD test A4 and Polysius test R3 are compared in Figure 9.172. Note the

significant difference in the psds of the edge products. This is directly related to the differentratio of edge product to total product shown in Table 3.

The psd for the rhyolite sample from the 1997-1999 VSI crusher test program is also shown in

Figure 9.172. Note that the sample is finer than the HPGR products in all size ranges and this isdiscussed further in sub-section 2.9 Leach Test Work .

The HPGR test results by KHD & Polysius are shown and compared directly in Figure 9.182 to

Figure 9.202. Considerable experience is required to interpret this information and this is

beyond the scope of this report.

Various particle sizes such as for example the 80 % passing size vs specific press force are

shown in Figure 9.212

to Figure 9.242. The curves show a distinct leveling off as a specific

press force of 5 N/mm2 is approached. This may therefore be a point of diminishing returnsalthough minor increases in fineness may still yield significant increases in recovery as discussed

in detail in section 4 Gold & Silver Recoveries. Note that KHD indicated that a specific pressforce of 5 N/mm2 is currently a practical operating limit for a commercial HPGR.

The largest relative decrease in the fineness of particles vs. specific press force appears to occur

in the 1 mm size range as indicated by the distinctly steeper slope of the curves shown in Figure

9.232 vs. the curves shown in Figure 9.24

2.

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Polysius provided a range of psds that can be expected in a commercial HPGR and these wereused to model recoveries expected in a commercial operation as discussed in detail in section4 Gold & Silver Recoveries.

The specific energy input vs specific press force for a range of screen sizes was prepared byPolysius as shown in Figure 9.252. Polysius used the graph to determine a specific press forcethat would make optimum use of energy for size reduction. Note that the specific press force

that makes optimum use of energy may not give a fine enough psd for the best possible leachrecoveries as discussed in sub-section Rhyolite - Bottle Roll Tests.

Figure 9.25

Specific Energy Input vs Specific Press Force

2.0

4.0

6.0

8.0

10.0

12.0

1.00 2.00 3.00 4.00 5.00 6.00


S p e c i f i c E n e r g y I n p u t k W • h

/ t

0.25 mm1.00 mm

2.00 mm

4.00 mm

8.00 mm

Tests On Quartz Latite

Particle size distributions for the four tests are shown in Figure 4.13. The proportion of fines did

not increase significantly with an increase in specific press force. Note however that specificthroughput decreases and the specific energy input increases with an increase in the specific press force as shown in Table 3. This indicates that the lowest specific press force, that stillgives acceptable recoveries for the quartz latite, should be used in the commercial HPGR.

2.9 Leach Test Work

Rhyolite - General

The HPGR products from the tests done by KHD were returned to MLI on October 29, 2003.An extensive program of both bottle roll and column leach tests was done to confirm leach

recoveries. The center product from Polysius test R4.1 was also returned to MLI for further bottle roll and column leach tests. The final MLI report was received on November 12, 2004.

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Rhyolite - Bottle Roll Tests

The results of the bottle roll tests are shown in Table 5. Five tests were repeated at a lower pHand with longer leach times and the gold recoveries are consistently higher when compared to

the original tests. The average, absolute increase in gold and silver recovery was 4.4 % and 4.7% respectively for 5 tests when time was increased from 120 days to 408 days; the longer leachcycle is effective in yielding both higher gold and silver recoveries.

Three tests were also done on sample A4C at both lower and higher cyanide concentrations todetermine the effect of cyanide concentrations on gold and silver recovery. There was nodiscernable increase in gold recovery but the silver recovery did increase, although not

significantly.

The variability in the direct head assays and the calculated head grades shown in Table 5

indicates and confirms the spotty nature in which gold and occurs as discussed in sub-section2.11 Mineralogy. Compare the grades shown in Table 5 to the grades shown in Table 1.

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Leach Time 120 408 Extracted Tail Calculated Assayed 120 408 Extracted Tail Calculated Assayed NaCN. CementTest No. HPGR Product h h h g/t g/t g/t g/t h h g/t g/t g/t g/t kg/t kg/t

CY-1 A1/A2 Comp. 120 58.9 0.33 0.23 0.56 0.82 29.0 13.2 32.3 45.5 51.3 0.15 5.1CY-1R A1/A2 Comp. 408 61.6 65.2 0.45 0.24 0.69 0.82 34.4 38.8 13.5 21.3 34.8 51.3 0.31 0.0

CY-2 A5 Comp. 120 65.6 0.42 0.22 0.64 0.65 34.1 15.7 30.3 46.0 45.7 0.00 5.4CY-2R A5 Comp. 408 69.4 75.8 0.69 0.22 0.91 0.65 31.3 37.4 18.7 31.3 50.0 45.7 0.74 0.2CY-3 A1/A2 Center Comp. 120 55.3 0.52 0.42 0.94 0.53 32.5 14.8 30.7 45.5 41.3 0.15 5.7CY-4 A1/A2 Edge Comp. 120 39.7 0.46 0.70 1.16 0.54 14.8 10.1 58.3 68.4 38.0 0.00 6.0CY-5 A3 Center 120 74.6 0.53 0.18 0.71 0.67 38.7 17.9 28.3 46.2 44.7 0.00 6.1

CY-6 A3 Edge 120 53.4 0.39 0.34 0.73 0.67 20.3 11.9 46.7 58.6 53.7 0.15 5.5CY-7 A4 Center 120 69.7 0.46 0.20 0.66 0.69 42.1 16.5 22.7 39.2 54.7 0.10 5.4

CY-7R A4 Center 408 77.1 78.7 0.48 0.13 0.61 0.69 36.5 42.3 15.9 21.7 37.6 54.7 0.30 0.4CY-8 A4 Edge 120 55.7 0.39 0.31 0.70 0.83 22.6 10.8 37.0 47.8 55.0 0.15 5.3

CY-8R A4 Edge 408 50.2 56.1 0.46 0.36 0.82 0.83 16.8 21.1 8.9 33.3 42.2 55.0 0.30 0.4CY-9 A5 Center 120 57.5 0.46 0.34 0.80 0.57 33.0 20.3 41.3 61.6 41.0 0.15 5.4

CY-9R A5 Center 408 82.5 86.9 0.93 0.14 1.07 0.57 41.1 43.8 20.3 26.0 46.3 41.0 0.64 0.0CY-10 A5 Edge 120 63.9 0.39 0.22 0.61 0.65 24.1 11.0 34.7 45.7 40.0 0.10 5.5

Average 0.77 0.68 47.8 47.5

Note:1 Cement addition does not include initial cement addition of 4 kg/mt ore.2 Tests noted in blue are repeat tests at lower pH.

The following head grades were determined for the rhyolite test sample:MLI - Gold - 0.46 g/t; Silver - 39.3 g/t Amtel - Gold - 0.556 g/t; Silver - 47.0 g/t

Table 5

Gold & Silver Recoveries - Bottle Roll Tests - KHD HPGR Products

Reagent RequirementGold Recovery Gold Grade Silver Recovery Silver Grade

Gold recoveries vs specific press force and specific energy input are shown in Figure 13.12 andFigure 13.2

2respectively. Silver recoveries vs specific press force and specific energy input are

shown in to Figure 13.32 and Figure 13.4

2 respectively. The initial test result for sample A5Chas not been used for plotting the curves, as the recovery was low by comparison to all other test

results and an error is suspected. The curves slope distinctly from left to right and recoveriesincrease significantly with an increase in specific press force and specific energy input.

A direct comparison of the recoveries obtained for the rhyolite samples in the 1997-1999 VSIcrusher and 2003 HPGR test programs is shown in Table 6. The gold and silver recoveries are

higher by 6.3 % and 5.6 % respectively for the ore crushed in the HPGR. The consensus is thatthis increase in recoveries is due to the micro-cracking that is caused by the high specific press

force applied in the HPGR.

Leach Time Gold Silver

Sample Test h % % NaCN lb/ton NaCN kg/t Cement lb/ton Cement kg/t

Vein Initial 120 61.2 20.3 <0.05 <0.025 8.0 4.0

Vein Duplicate 120 61.2 25.8 <0.05 <0.025 8.0 4.0

Quartz Latite Initial 120 71.4 40.6 <0.05 <0.025 8.0 4.0

Quartz Latite Duplicate 120 69.4 38.5 0.16 0.08 8.0 4.0

Rhyolite Initial 120 67.4 32.2 <0.05 <0.025 8.0 4.0

Rhyolite Duplicate 120 66.7 35.2 0.15 0.075 8.0 4.0

Pyroclastics Initial 120 63.6 38.2 <0.05 <0.025 8.0 4.0

Pyroclastics Duplicate 120 61.9 36.1 <0.05 <0.025 8.0 4.0

Note:

1 The tests were started in 1997 and the final report was dated February 25, 1999 (MLI Job No.2454).

2 Samples were crushed in the VSI crusher to 100 % - 8 mesh..

Reagent Consumption

Table 6

Gold & Silver Recoveries - Bottle Roll Tests - 1997-1999 VSI Crusher Tests

Recovery

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Rhyolite - Column Leach Tests

The column leach test results are shown in Table 7.

The MLI psds for column leach tests A1/A2T, A4C and A5T are shown in Figure 13.62. Therecoveries would be expected to be highest for test A4C, somewhat lower for test A5T and

lowest for test A1/2T and this is borne out by the test results shown in Table 7.

Polysius

A1/A2 A4 A5 R4.1 R3/R4 R3/R4 R3/R4

Total Center Total Center Center Edge Combined

7

Gold extraction, column test2

77.3 80.9 80.0 81.9 89.3 84.2 88.5

Gold extraction, 200-day forecast 79.5 82.9 82.3 85.0 90.8 88.3 90.4

Silver extraction, column test2

43.1 50.8 51.0 58.7 47.8 31.8 45.4

Silver extraction, 200-day forecast 46.5 53.8 53.5 65.6 52.2 36.8 49.9

Leaching days 104 104 104 64 54 54 54

Leaching days + rinsing days 128 140 128 76 71 71 71

Tonnes solution per tonne ore3

3.4 6.9 3.8 6.7 2.2 2.3 2.2

Calculated head, g/t Au4 0.66 0.68 0.65 0.83 1.21 1.33 1.22

Calculated head, g/t Ag4

50.3 50.8 43.9 39.5 46.0 44.0 45.7

Tails assay, g/t Au5

0.15 0.13 0.13 0.15 0.13 0.21 0.14

Tails assay, g/t Ag5

28.6 25.0 21.5 16.3 24.0 30.0 24.9

% moisture after draining6

13.9 15.2 13.5 15.6 12.3 7.4 11.6

% moisture during leach6

16.2 21.2 16.6 20.3 18.2 14.3 17.6

Note:

1 Data based on MLI reports of Nov. 12, 2004 (rhyolite) and May 6, 2005 (quartz latite), MLI Job #2933.

2 Extraction at end of leach and rinse; based on calculated heads.

3 Tests A4 Center rhyolite and R4.1 Center rhyolite were in 10 feet tall columns. The other tests were in 20 ft columns.

4 Calculated head = sum of all Au or Ag in pregnant solutions plus the Au or Ag in the tails (all expressed in mg or g/t).

5 Tails assay = [(average of triplicate FAs of tails) + (tails screen assay)] / 2

6 Moisture content w % = (weight of water / weight of solids) x 100 %

7 The combined quartz latite is 85 % Center Product and 15 % Edge Product to simulate the commercial HPGR..

Information including the 200-day extraction projections by Paul Chamberlin.

KHD Tests Polysius Tests

Table 7

Column Leach Test Results - 2003-20051

Rhyolite Quartz Latite

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Actual and projected gold and silver recoveries vs specific press force and days leached areshown in Table 8. The highest recoveries were obtained in test R4.1, a test on a center product,with a specific press force of 4.46 N/mm2.

Units & Test Number Units A1/A2 Total A4 Center A5 Total R4.1 Center


4.15 4.80 5.40 4.46

HPGR Product Tested Total Product Center Product Total Product Center Product

No. Of Days Leached d 104 104 104 70

Actual Gold Recovery % 77.3 80.9 80.0 81.9

Projected Gold Recovery In 200 Days % 79.5 82.9 82.3 85.0

Actual Silver Recovery % 43.1 50.8 51.0 58.7

Projected Silver Recovery In 200 Days % 46.5 53.8 53.5 65.6

Note:1 The tests were done by MLI in 2004 and 2005 on a sample of rhyolite (MLI Job No. 2933)

2 The projected recoveries in 200 days of leaching were determined by P. Chamberlin using regression analysis.

Table 8

Actual & Projected Gold & Silver Recoveries vs Specific Press Force - Rhyolite

Note that the average calculated head grade for gold for the rhyolite sample of 0.705 g/t, shownin Table 1 and used in the recovery calculations, is lower than the average head grade for gold of

0.821 g/t for rhyolite in the mineral reserves. Possibly higher recoveries are indicated with ahigher, average head grade and a constant tail, see sub-section Constant Tail Phenomenon.

A direct comparison of the extraction rates and recoveries for gold and silver for test A4C andthe 1997 - 1999 VSI crusher test is shown in Figure 13.10

2 and the differences shown in the

extraction rates and ultimate recoveries are significant.

The moisture contents, specific weights and slump and the results for standard drain down tests

for all HPGR products are shown in Table 9.

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To Saturate To Agglomerate Retained Slump

Ore Type Test % % % lb/ft3

t/m3

lb/ft3

t/m3

% L/t gal/to

Rhyolite1

MLI 1990, P7 14.6 8.1 9.4 86.98 1.39 87.59 1.40 Little Not Done Not Done

Pyroclastics1

MLI 1990, P9 19.5 8.8 9.5 91.10 1.46 92.81 1.49 Little Not Done Not Done

Rhyolite2

MLI 1991 22.2 8.4 12.8 79.89 1.28 79.89 1.28 Little Not Done Not Done

Pyroclastics2

MLI 1991 17.0 7.9 11.3 77.48 1.24 77.58 1.24 Little Not Done Not Done

Vein3

MLI 1999, P1 31.7 10.4 15.4 75.06 1.20 78.02 1.25 3.8 Not Done Not Done

Quartz Latite3


Rhyolite3


Pyroclastics3


Rhyolite A5T 16.6 11.1 13.5 80.5 1.29 80.5 1.29 0.0 22.26 5.35

Rhyolite A1/A2T 16.2 11.5 13.9 83.6 1.34 84.9 1.36 1.5 21.09 5.07

Rhyolite A4C 21.2 12.7 15.2 79.9 1.28 92.4 1.48 15.6 27.51 6.61

Rhyolite R4.1C 20.3 6.9 15.6 88.0 1.41 88.6 1.42 0.7 34.26 8.23

Quartz Latite R3/R4C 18.2 Not Done 14.3 98.0 1.57 99.8 1.60 1.8 99.0 23.78

Quartz Latite R3/R4E 14.3 Not Done 7.4 99.2 1.59 99.2 1.59 0.0 78.0 18.73

Quartz Latite Combined 17.6 Not Done 11.6 1.5 95.9 28.10

Note:

1 Results for the HPGR test done in 1989 from MLI report dated July 18, 1990.

2 Results for the Barmac VSI test done in 1991 f rom MLI report dated February 4, 1991..

3. Results for the 1997-1999 VSI crusher tests with particle size 100 % - 8 mesh from MLI report dated February 25, 1999.

4 The R4.1C sample was not agglomerated before leaching although the moisture content was adjusted to a nominal 6 %.

5 The drain down test for samples A5T and A1/A2T were terminated at 72 h. The drain down tests for tests R3/R4C & R3/R4E ran for 336 h. Standard time is 120 h.

6 The combined values for the quartz latite tests are weighted 85 % Center Product and 15 % Edge Product to simulate a Total Product.

7 Moisture contents are calculated on a dry weight basis.

Table 9

Moisture Content, Specific Weight & "Slump"

Drain DownBefore Leach Test After Leach Test

Moisture Content Specific Weight

n

Quartz Latite - General

The HPGR products from the tests done by Polysius were returned to MLI in late 2004. An

extensive program of both bottle roll and column leach tests was done to confirm recoveries andthe final MLI report was received on May 6, 2005.

MLI had the following comments on the head assays for the R3/R4 center product and edge product composites:

“ Gold head assay results were “spotty” and did not agree within normally expected precisionlimits. These results may indicate the presence of particulate “free milling” gold values. Silver head grade agreement was less variable and silver head grades agreed within normally expected precision limits.”

Quartz Latite - Bottle Roll Tests

The results of the bottle roll tests are shown in Table 10. Note that there is no apparent

relationship between specific press force and gold and silver recoveries. Recoveries are however again higher with longer leach times. The results of the bottle roll tests obtained in the 1997-1999 VSI crusher test program are also shown in Table 10. These samples were crushed to 100

% - 8 mesh. The gold and silver recoveries are higher by an absolute 11.6 % and 7.4 %respectively for the samples crushed in the HPGR.

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Specific Press Force Gold Silver Gold Silver

Test Program Sample N/mm2

% % % %

HPGR Tests - 2004 R1 3.17 82.5 47.0 86.7 51.3

R2 3.53 82.3 49.0 87.4 54.3

R3 4.12 81.2 44.7 86.0 48.8

82.0 47.0 86.7 51.4

VSI Crusher Test Initial Not Applicable 71.4 40.6

1997-1999 Duplicate Not Applicable 69.4 38.5

Average Not Applicable 70.4 39.611.6 7.4Absolute Increase In Recoveries

Note:

1 Leach time was 120 h for tests done in 1997..

2 The recoveries for the 2004 tests are the average of 2 tests.

Average for three tests

Table 10

Gold & Silver Recoveries - Comparisons

Bottle Roll Tests - Quartz Latite

Recovery - 144 h Recovery - 408 h

Quartz Latite - Column Leach Tests

One aspect to be assessed is the importance of the “edge” effect when crushing ore with the

HPGR and the column leach tests on quartz latite were used to study this effect. Two identicalcolumn leach tests were done on composites of center product and edge product and the twocomposites were prepared by MLI from 26/74 weighted blends of the R3 and R4 HPGR samples.

The quartz latite samples were not re-agglomerated by MLI but were loaded into the columns for the tests as returned by Polysius. The addition of 2 kg/t of cement by MLI before the samples

were shipped to Germany, was not adequate to maintain protective alkalinity for the duration of the leach tests and filtered milk-of-lime was added. There were no signs of solution percolation problems or excessive slumping of the column charges while the tests were under way.

The results of the column leach tests are shown in Table 7. The tests were terminated after only54 days of leaching. The combined time for leaching and rinsing was 65 days. The difference in

recoveries between the center product and the edge product is significant, especially for silver.

Leach extractions for gold and silver vs time (the leach curves) for the tests on rhyolite (TestA1/A2) and quartz latite (Test R3/R4) are shown in Figure 6.2. The difference in the leachcurves for the center product and the edge product for the test on quartz latite is again distinctive.The following points are of interest:

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x The edge product gold recovery tends to approach the center product gold recovery as theleach time increases;

x The extraction rate for gold is exceptionally high at the start of leaching and up to 95 %

of gold was extracted after only 10 days of leaching andx The edge product silver recovery is relatively low and this is due both to incomplete

leaching of exposed minerals and poor liberation of minerals in the coarser particle sizes.

Figure 6.2

Leach Curves, Rhyolite and Quartz Latite

0

10

20

30

40

50

60

70

80

90

100

0 30 60 90 120 150 180 210

Column Days of Leaching

% E

x t r a c t i o n ,

A u o r A g

2004-2005 HPGR Test Program

QL, center, AuQL, total, Au

QL, edge, Au

Rhyolite, Au

QL, center, AgQL, total, AgRhyolite, Ag

QL, edge, Ag

There is another interesting aspect of crushing ore with the HPGR that is indicated by the columnleach tests on quartz latite. Note that both gold and silver contents are higher in the edge productresidue than in the center product residue. Two analyses show the difference:

Gold Silver

g/t g/tCenter Product Coarse Particles 0.21 40.0Edge Product Coarse Particles 0.63 47.0

Center Product Fine Particles 0.07 6.0

Edge Product Fine Particles 0.10 7.0

The differences in the absolute assay values can only be ascribed to micro-cracking due to the

higher stress applied to the center product.

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Center Product Coarse Particles 0.21 40.0Center Product Fine Particles 0.07 6.0

Assay ratio, Center Product, Coarse to Fine 3.0 6.7

Edge Product Coarse Particles 0.63 47.0

Edge Product Fine Particles 0.10 7.0

Assay ratio, Edge Product, Coarse to Fine 6.3 6.7

The head and tails assays for these samples are shown in Table 7.

It is evident that the coarser particles leached less well than the finer particles and this is to be

expected. It is further evident that leaching was more complete for both the coarse and fine particles in the center product than in the edge product although this is more pronounced for gold

than for silver. It is known that silver minerals generally leach slowly and especially slowlywhen diffusion controlled leaching is the process at work.

This analysis may indicate that the importance of operating the HPGR with a high specific pressforce should not be overlooked.

The moisture contents, specific weights and slump and the results for standard drain down tests

for all HPGR products are shown in Table 9.

MLI did agglomeration tests on the quartz latite samples. Relatively high rates of cement

addition and moisture contents were required to avoid degradation of the agglomerates. It doesappear that the low proportion of fines present in the sample affected the results of the tests.

2.10 Rock Type Indices

ATWAL Test & Wear Rate

The wear characteristics of an ore can be tested on a set of laboratory rolls – ATWAL – and thewear life of a set of commercial rolls can be predicted from the results.

Polysisus did ATWAL tests on the rhyolite and quartz latite samples and test results are shown inTable 4. The ATWAL test indicates a total wear rate of 30.6 g/t for quartz latite and this 50 %higher than the indicated wear rate of 21.2 g/t for rhyolite.

Polysius is developing a relationship between the ATWAL wear rate and unconfinedcompressive strengths as shown in Figure 6.3. Good compressive strength data for the variousore types may therefore be one important parameter in determining wear.

Rock Strengths

Unconfined compressive strengths, point load strengths and specific weights for the 3 primaryrock types are shown in Table 11. The tests were done on diamond drill core from the major

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waste zones by Seegmiller International, Salt Lake City as part of a slope stability program for the Project. Rock strength tests were also done by AMEC Earth & Environmental, Inc., Phoenixon the rhyolite HPGR test sample. Lower rock strengths might be expected for the ore whencompared to the waste as indicated by these test results. The test results also indicate that the 3

primary rock types are not very strong when compared to other rocks encountered typically inopen pit mining.

w

Rock Type1

psi MPa psi MPa lb/ft3

kg/m3

% SG

Flow-banded Rhyolite 12,620 87.0 950 6.55 147.4 2,361.10 0.4 2.36

Altered Flow-banded Rhyolite 490 3.4 84 0.58 113.3 1,814.80 1.81

Rhyolite Porphyry 17,200 118.9 1,000 6.9 143.1 2,292.20 0.4 2.29

Pyroclastics 3,880 26.8 200 1.38 135.6 2,172.00 0.5 2.18

Altered Pyroclastics 320 2.2 50 0.35 88.1 1,411.20 1.41

Quartz Latite Porphyry 13,200 91.0 1,010 6.96 146.2 2,341.80 0.6 2.34

Altered Quartz Latite Porphyry 3,160 21.8 581 4.01 133.8 2,143.20 2.15

HPGR Rhyolite Test Sample2

881 6.07 150.8 2,415.60 0.7 2.42

HPGR Rhyolite Test Sample2

7,867 54.2 147.3 2,358.70 0.7 2.36

Note:

1 Tests were done on diamond drill core by Seegmiller International, Salt Lake City.

2 Tests were done by AMEC Earth & Environmental, Inc., Phoenix on hand-picked samples of rhyolite.

The indicated silica content of the various ore types is as high as 80 %.

The ore at Cyprus Sierrita, tested in the HPGR, had an unconfined compressive strength of 270 MPa

Lamproite at Argyle Diamond Mine has unconfined compressive strengths ranging from 55 MPa for weathered rock to 120 Mpa for fresh rock.

The ore tested at Lone Tree had an unconfined compressive strength of 200 MPa, Ai of 0.64, Si from 78 % - 84 % and ATWAL value > 40 g/t

Table 11

Rock Strengths & In-situ Specific Weights

Compressive Strength Point Load Strength Specific Weight

Impact W.I. & Ai

Two key indices are used to design crushers, feeders and screens and these are the ImpactCrushability Index or Impact W.I. and the Abrasion Index or Ai.

A twin pendulum test is used to determine the Impact W.I. Values for the index are reported inkW.h/t. The variability in the Impact W.I. is typically large. Note the following range suggested by Nordberg:

Ores are soft if W.I. < 12 and hard if W.I. > 20.

The standard paddle abrasion test is used to determine the Ai and values for this index arereported in g.

Typical values for Impact W.I. and Ai for the 3 primary ore types are shown in Table 12.

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Abrasion Index Impact Crushability Index. Bond Rod Mill Work Index

Rock Type Proportion of Reserves - % SG Ai - g W.I. - kW.h/t kW.h/t

Pyroclastics 10.1 2.33 0.3926 15.29 17.3

Quartz Latite 21.3 2.31 0.4775 16.96 17.14

Rhyolite 68.1 2.30 0.6219 12.43 18.02

Rhyolite1

68.1 2.42 0.3471 & 0.3465 13.9 Not determined.

Lamproite2

Current Production 0.35 18 Not determined.

Note:

1 Values determined by Sandvik in 2002 & 2003.

2 Values are for unweathered lamproite mined by Argyle and fed to a HPGR in the recrush circuit.

General:

a Values shown for the three primary rock/ore types are average values determined between 1989 and 2000.

b Rock contains upwards of 80 % silica as SiO2.

c Specific weight (loose) of run-of-mine ore is 1.76 t/m3.

d The test sample had a specific weight (loose) of 1.36 t/m3

as determined by MLI.

e The test sample had a specific weight (loose) of 1.33 t/m3 as determined by Polysius.

f The test sample had a SG of 2.43 as determined by AMEC

Nordberg classified the 3 primary ore types as “Abrasive” and “Hard”.

Table 12

Rock Type Indices

Flowability Tests By Jenike & Johanson, Inc.

Jenike & Johanson, Inc. (J&J), San Luis Obispo conducted tests to determine the flowcharacteristics of the quartz latite HPGR test sample. J&J found that the ore-cement mixture was

easy flowing under continuous flow conditions, even with a moisture content w = 5.9 %. J&Jrecommended a mass flow bin with a slot outlet.

2.11 Mineralogy

Historic Studies

Gold is present as native gold and electrum ranging in size from <10 micron to > 150 micronswith the silver content of the electrum as high as 25 %. Silver is also present as acanthite (Ag2S)as the primary silver mineral with some native silver, pyrargyrite (3Ag2S

.Sb2S3) and polybasite(9Ag2S

.Sb2S3). Pyrite, galena and chalcopyrite are present in minor amounts and there is no

acid-generating potential.

A mineralogical study was done by Pittsburgh Mineral & Environmental Technology, Inc. as

part of the 1997-1999 VSI bulk crushing-screening test. The following are only some of theconclusions and recommendations from the report, which was dated June 20, 1997:

“The following mineralogical features are considered to be pertinent to ore processing and precious metals recovery at the Soledad Mountain Project:

x The bimodal size distribution of the gold as well as the gold/silver association with verycoarse-grained pyrite and iron oxides could result in nugget effects during sampling,sample preparation, assay work and metallurgical testing. In order to minimize these

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mineralogical detriments it is imperative that rigorous blending, splitting and pulverization practices are observed during assay pulp preparation. The amounts of +200mesh material in the assay pulps should be kept at a minimum.

x It is recommended that Golden Queen Mining perform exploratory comminution testswith the high pressure-grinding roll. The metallurgical beneficial effects of microfracturing and more liberation in the – 65 mesh range could potentially increasegold and silver recoveries by several percent. Another beneficial effect inherent inHPGR comminution (which would replace the tertiary crushers) is its acceleration of the

leach kinetics.”

The recommendations in the last paragraph were ignored.

Studies Done From 2003 To 2005

Five studies were done by Amtel Ltd. (Amtel), London, Ontario between 2003 and 2005. Thesestudies were done on both the rhyolite and quartz latite HPGR test samples and the leached

residues from the column leach tests. The Amtel studies show that the mineralogy of the rhyoliteand quartz latite ores is essentially the same and that similar behavior should be expected in a

heap leach operation.

A detailed analysis is beyond the scope of this report.

Silica

There is relatively little factual data about the silica content of the Soledad Mountain ores

although this is typically reported as > 80 %.

Constant Tail Phenomenon

A constant tail phenomenon was identified in an analysis done by an independent consultingengineer in 1995. An analysis of the most recent HPGR bottle roll tests and the work done by

Amtel confirmed this phenomenon and this deserves further study.

2.12 Slump & Permeabilities Under Load

Particle Size Considerations

Gold and silver recoveries are significantly higher for the finer particle sizes and the analysis of

psds will be the key to preparing ore for heap leaching. The proportion of fines in any psd will

have an impact on slump and percolation rates under load as discussed in the following sub-sections.

Moisture Content, Specific Weight & Slump

The moisture content, specific weight and slump for the 1989 HPGR and 1991 VSI crusher testson rhyolite and pyroclastics and the 1997-1999 VSI crusher tests are shown in Table 9. Note thedifferences in moisture contents. Note the relatively high residual moisture content and slump

for the quartz latite and rhyolite samples shown in Table 9. It is suggested that this was due to

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the relatively high proportion of fines in the quartz latite and rhyolite samples by comparison tothe pyroclastics sample as shown in Figure 6.4 and therefore a lower residual moisture contentand essentially zero slump as shown in Table 9.


Figure 6.4

Pilot Plant Test - 1997

Particle S ize Distributions for Three Principal Ore Types

0

20

40

60

80

100

0.01 0.10 1.00 10.00 100.00

Screen Opening mm

C u m u l a t i v e % P a s s i n g

Quartz Latite Rhyolite Pyroclastics

Column Leach Tests – Rhyolite & Quartz Latite

The moisture content, specific weight and slump for the 4 tests on rhyolite and the 2 tests on

quartz latite are also shown in Table 9.

A comparison of moisture contents from 2 different test programs, viz. the 1997-1999 VSIcrusher tests and the 2003-2005 HPGR tests, is illustrative:

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Column Leach Tests – Rhyolite:1997-1999 VSI Crusher Tests HPGR Tests

100 % - 8 mesh Sample A5T

% %To agglomerate the ore 11.5 11.5

To saturate the ore 37.2 16.6

Retained moisture 21.1 13.5

Column Leach Tests - Quartz Latite:

100 % - 8 mesh Sample R3/R4 Combined

To agglomerate the ore 11.2 Not Done

To saturate the ore 42.0 17.6

Retained moisture 23.2 11.6

These lower moisture contents required to saturate the ore and the lower retained moisture

contents will have a significant and positive effect on the ability to construct a heap with an

ultimate height of 60 m.

No difficulties with solution percolation, solution channeling or fines migration were observed in

any of the column leach tests done in 2004 and 2005.

Permeabilities Under Load

Advanced Terra Testing, Inc., Lakewood, Colorado did a test on the rhyolite leached residue

from test A5T to assess the permeability under load. Tests were done to an equivalent heapheight of 76 m.

Golder Associates Inc. (Golder) did tests on both rhyolite and quartz latite leached residues intheir laboratory in Denver to assess permeabilities under load. Tests were done to an equivalentheap height of 60 m.

The results vary widely from test to test and range from 3x10-5 cm/s to 17,000x10-5 cm/s.

It is expected that cement will be used as a binder for agglomeration and also for alkalinity

control with addition rates from 2 kg/t to 5 kg/t of ore and this is in line with the test work.

2.13 Design Of The Heap

Indications are that the coarse fraction produced by the HPGR will provide structure in the heapwhile the fine fraction will ensure recovery. Golder has just completed the design of the heap toan ultimate heap height of 60 m.

Caution:

It will always be necessary to strike a balance in the commercial operation between the proportion of fines produced by the HPGR and therefore recoveries and percolation rates andtherefore the height of the individual lifts and the total height of the heap.

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3 Crushing & Screening

3.1 Flow Sheet

A flow sheet that uses the HPGR to prepare ore particles for heap leaching, was developed jointly with Fluor Australia Pty Ltd, Perth and a copy of the current flow sheet has been attached.

3.2 Assessment Of The HPGR

The HPGR consists basically of two counter-rotating rolls – one a fixed roll and the other a“floating” roll. The “floating” roll is mounted on and can move freely on two slides. The

grinding forces are applied to the floating roll by four hydraulic rams. Ore is choke-fed to thegap between the rolls and comminution takes place by inter-particle crushing in the bed of particles. The gap between the rolls is determined by the nip-in characteristics of the feed and

the total grinding force applied, which in turn depends upon the pressures in the hydraulicsystem. Each roll is driven by an electric motor via a planetary gear reducer.

The total grinding force can range from 750 kN to 20,000 kN and the pressures in the gap canrange from 50 MPa to 250 MPa. The unconfined compressive strength of Soledad Mountainrock ranges from 2.2 MPa to 118.9 MPa by comparison. The operating specific press force is

expected to range from 4.5 N/mm2 for rhyolite to 4.0 N/mm2 for quartz latite and pyroclastics.

Comminution in the HPGR is achieved without impact and essentially without attrition of thewear protection on the surface of the rolls.

The test results and a technical assessment of the HPGR show that this will be a viable and cost-effective approach to preparing ores for heap leaching. The indicated benefits of using theHPGR will be:

x Higher recoveries in the heap leach operation due to micro-cracks in the ore particles;x Faster gold and silver extraction rates;

x Stronger agglomerates due to a more favorable overall particle size distribution and thiswill also impact the flow rate of solutions through the heap;

x Substantially lower capital costs than a conventional crushing and screening plant;

x Manageable dust control with fewer transfer points;

x Lower energy consumption and thus lower operating costs and

x Exceptional circuit flexibility that will readily permit future upgrades such as a finer HPGR feed size or the recycle of edge product.

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KHD and Polysius did in-house analyses of the test results obtained in 2003 and 2004 todetermine the design parameters for a commercial HPGR. A Request For Proposal was issued inFebruary 2004. Two proposal were received and analyzed in detail and meetings were held inGermany for a final review in May 2004. The contract for the design of the HPGR and for

participation in the Project was awarded to Polysius. A note dated May 31, 2004 was preparedto support this decision and this is available on file.

The following is the technical specification for the HPGR for the Project:

General Units Polysius

Model No. POLYCOM 17/13-6

Diameter of rolls (D) mm 1,740

Width of rolls (W) mm 1,300

Aspect ratio W/D 0.747

Required throughput t/h (Dry) 800

Design throughput t/h (Wet) 950Maximum recycle % 13

Maximum recycle t/h (Wet) 110

Design specific press force N/mm2 4.98

Operating specific press force N/mm2

4.50

Specific throughput (Wet Basis) ts/hm3 230

Specific energy input kW.h/t Maximum available 2.67

Product size 70 % < 6 mm

Roll speed (Nominal – Variable) rpm 20

Circumferential speed m/s 1.82

Feed moisture content % Range from 3 % to 5 %Feed size mm 100 % - 35

Drive Train

Motor size hp/kW 2,000/1,492 (2)

Motor speed (Nominal – VFD) rpm 1,200

Gear reducer Planetary gear reducer

Roller bearings Self-aligning

Bearing Lubrication Grease-lubricated

Tire

Wear life of tires h 5,000

Page 41 of 59



3.3 Crushing-Screening Plant

AMEC Americas Limited (AMEC), an engineering company with extensive experience in thedesign of crushing-screening plants, has completed a feasibility level design of the plant.

The following are the key operating parameters:

Design feed rate to the process t/h 800Operating time for the plant h/y 7160Overall availability of the plant % 81.7Crushing-screening plant throughput t/d 16,320

Crushing-screening plant throughput t/y 5,728,320

The plant layout and a A 3-D rendering of the plant have been attached.

Note that the plant has been isolated from the mining and conveying and stacking operations bystockpiles, viz the coarse ore stockpile and the fine ore stockpile.

The secondary crushing stage has been specifically designed to prepare the feed for the HPGR.The cone crusher is in closed circuit with the primary screen and the HPGR is in open circuit.

The screen undersize will be conveyed to a fine ore bin. Cement will be added as a binder to thefeed ahead of the HPGR. The intent is to ensure adequate mixing of the cement with the feed

and to avoid the need for de-agglomerating the HPGR product.

The layout considerations for the HPGR were an important element in the overall layout of the plant and this was done in extensive consultation wit Polysius.

Self-cleaning magnets and metal detectors will be installed to protect the primary screen and thecone crusher and on the HPGR feed conveyor to protect the HPGR.

A primary sampler will be fitted to the discharge end of the HPGR product conveyor.

The limited number of transfer points in the plant will make dust control manageable.

3.4 Technical

The crushing-screening plant as designed has considerable flexibility built into it as the HPGR

settings and roll speed can be changed for different ore types and this will provide uniqueoperating flexibility.

The importance of psds and the proportion of fine material in the HPGR product must beemphasized and systematic sampling and analysis will be required to check this.

Finer psds and thus higher recoveries can be obtained if, for example, a specific press force of 4.5 N/mm2 is combined with a 13 % edge recycle. It will therefore be prudent to allow for anedge recycle in the layout and the design of the plant. The equipment need however not be

purchased and installed during the initial construction. The plant and the HPGR can becommissioned to gain some operating experience. Also, some very quick and early tests can bedone to determine the psds produced by the commercial unit to give an indication of the

recoveries that can be expected. The decision can then be made on the edge recycle and notmuch has been lost. A total retrofit could, on the other hand, be expensive to design and install.

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The HPGR feed size can also be reduced from 100 % - 35 mm to 100 % - 25 mm as the conecrusher will have adequate capacity and this will again give finer psds.

It may be necessary to add moisture w > 3 % to the HPGR feed to ensure that a competentautogenous layer is formed and maintained between the studs on the rolls. A moisture contentranging from 4 % to 5 % may be optimum and 6 % to 7 % may be too high.

3.5 Capital & Operating Cost Comparisons

GQM is in a unique position to make this comparison as two detailed designs and capital andoperating cost estimates have been completed for the 2 alternative crushing-screening plants, viz.the 4-stage plant vs the plant with the HPGR as the key comminution device. A comparison of

the capital and operating costs for the two alternative plants is shown in Table 13.

Item Units 2000 (Note 2) 2005

Crushing-screening Plant Detail

No of crushing stages in the crushing-screening plant 4 stages with 7 VSI crushers 3 stages with 1 HPGR

Target particle size 100 % - 8 mesh HPGR particle size distribution

Scale Of Operations

Plant throughput per hour t/h 900 800

Plant throughput per year t/y 5,760,000 5,728,000

Equipment In The Plant

Processing equipment - crushers, feeders & screens 52 6

Conveyors 6 6

Ore bins 28 1

Electrical Design

No of motors including small motors 94 28

No. of VFDs

Installed motor power - total hp 9,677 5,423

Installed motor power - 7 VSI crushers vs 1 HPGR hp 4,200 4,000

Power consumed per year at the design throughput kW.h/y 38,654,000 17,525,000

Costs

Capital cost $ 28,124,000 12,849,400

Operating cost including primary crushing $/t 0.54 0.51

Availability

Overall availability - estimated % 73.0 81.7

Note:

1 The information shown does not include the primary crusher.

2 The feasibility study for the Soledad Mountain Project was brought current in September 2000 and 2000 costs are shown.

3 The flow sheet for the HPGR plant was developed with Chris Morley, Fluor Australia Pty Ltd.

The plant design & capital cost estimates are by AMEC Americas Ltd., Vancouver with technical support by Polysius AG.

4 The 2005 capital cost estimate includes $96,500 for plant tools and is based upon all-new equipment.

5 The comparison in operating costs includes the increase in power from $0.0457/kW.h in 2000 to $0.0825/kW.h in 2005.

Table 13

Feasibility Study

Crushing & Screening Plant Cost Comparison

A key consideration in the decision to install the HPGR is the projected life of the tires and thiswill largely determine the operating costs. The most recent developments in wear protection andespecially edge protection by both KHD and Polysius are significant.

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4 Gold & Silver Recoveries

4.1 Characterization Program

An extensive characterization program using bottle roll tests on RC drill cuttings was done by anindependent consulting engineer in 1995. The ore body was divided into 6 areas, 4 rock typesand 3 vertical zones for this program and a total of 46 standard bottle roll tests were done. An

analysis of the results showed that there was no discernable difference in metallurgical responsefor a particular rock type from area to area and from strata to strata. This is of significance bothin guiding sampling programs for leach test work and as it allows the use of the information provided by such leach test work to be applied to recovery analyses and to project production of

gold and silver in a commercial operation with confidence for all areas that will be mined.

4.2 The HPGR Test Program – 2003 To 2005

The HPGR test program has been completed and the following conclusions can be drawn:

x Recoveries are higher with longer leach times and this confirms the historic findings;

x Recoveries increase with an increase in fineness of the HPGR products and this isespecially pronounced for silver and

x Extraction rates for the HPGR products are faster and recoveries are consistently higher than those obtained from VSI crusher products – the evidence is that this is due to penetration of leach solution into micro-cracks that are created by the high stressesapplied to the ore particles in the HPGR.

The results of the bottle roll tests have been used to provide general guidance only for further testwork and have not been used in this recovery analysis.

4.3 Recovery Analysis

Rhyolite – Column Leach Tests

The column leach tests are described in sub-section Rhyolite – Column Leach Tests and thetest results are shown in Table 7.

Gold and silver recoveries vs cumulative % passing for both the actual recoveries obtained in thetests and for the projected recoveries after 200 days of leaching are shown graphically in Figure

3.222. Data was scaled for 4 points on each psd, viz. 20 %, 30 %, 50 % and 80 % passing, in an

effort to identify and/or confirm trends for different particle sizes. Note that these curves are

used for the recovery analysis described in sub-section Rhyolite – Recovery Analysis.

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Note the following trends:

x The increase in recovery with a longer leach time is illustrated by the upward shift fromthe actual to the projected recovery curves as shown in Figure 3.2

22.

x

The slope of the curves from right to left illustrates the increase in recovery with anincrease in fineness. For silver, the shape of the curves suggests an exponential increase

in recovery with increasing fineness, while for gold the shape of the curves suggests analmost linear trend in the projected recovery with increasing fineness.

x Recoveries are determined by particle size or psds irrespective of how these are obtainedin the HPGR.

Gold and silver recoveries vs % < 1 mm and % < 0.2 mm for both the actual recoveries obtainedin the tests and for the projected recoveries after 200 days of leaching are shown graphically in

Figure 3.322

and Figure 3.422

respectively, i.e. the same test results are shown in a differentform. This analysis is done to highlight the importance of the finer particle sizes on recoveries,especially for silver. The data for the 1997-1999 tests is shown to provide a comparison. The

trends identified in Figure 3.222 are confirmed with this particular analysis and the effect of finer particle sizes on silver recovery is again pronounced.

Rhyolite – Recovery Analysis

Polysius has simulated psds for different production scenarios as shown in Figure 3.522 and

Figure 3.622. These production scenarios can readily be achieved in a commercial operation.

The following is a first attempt to obtain an indication of recoveries by combining the test resultsshown in Figure 3.2

22, Figure 3.322 and Figure 3.4

22 with the production scenarios shown in

Figure 3.522 and Figure 3.6

22.

Sim 01 is the base case production scenario with no edge recycle. Sim 03 and Sim 05 are production scenarios with 15 % edge recycle at a different Specific Press Force. The actual plotdata and an indication of gold and silver recoveries are shown in the table in Figure 3.5

22.Minimum gold and silver recoveries of 79.5 % and 46.6 % respectively are projected for Sim 01

or the base case. Minimum gold and silver recoveries of 81.4 % and 50.7 % are projected for Sim 05. Note also that these recoveries are confirmed by an alternative analysis for the finer particle sizes also shown in Figure 3.5

22.

Sim 01 is again the base case production scenario with no edge recycle. Sim 06 and Sim 07 are production scenarios with the feed size reduced from 100 % - 35 mm to 100 % - 25 mm with theSpecific Press Force for Sim 07 increased from 4.5 N/mm2 to 5.0 N/mm2. The actual plot data

and an indication of gold and silver recoveries are shown in the table in Figure 3.622

. Minimumgold and silver recoveries of 79.5 % and 46.6 % respectively are projected for Sim 01 or the basecase. Minimum gold and silver recoveries of 81.5 % and 50.8 % respectively are projected for

Sim 06. Note also that these recoveries are confirmed by an alternative analysis for the finer particle sizes also shown in Figure 3.6

22.

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Note that the 200-day projected gold recovery for sample A1/A2T is 79.5 % shown in Table 7.This sample was prepared with a Specific Press Force of 4.15 N/mm2. The psd for Sim 01 or the base case is simulated with a Specific Press Force of 4.5 N/mm2 and the indicated recovery is79.5 % as shown in Figure 3.5

22. This, therefore, appears to be an achievable recovery and

provides confidence in the analysis presented in this section.

Note also that the actual silver recovery for rhyolite obtained in the 1997-1999 VSI crusher leach

tests was 48.2 % after 211 days of leaching as shown in Table 14. This silver recovery can becompared to the silver recovery of 46.6 % projected after 200 days of leaching for the base caseas shown in Figure 3.5

22.

Gold Silver Leach Period

Historic Recoveries % % dPaul Chamberlin & American Mine Services, 1990

1,282.0 65.0 548

Pincock, Allen & Holt, 19963

75.0 65.0 850

Review by Steffen Robertson and Kirsten (US), Inc., 19974

83.0 63.0 1,035

M3 Engineering & Technology Corp., Tucson & GQM management, 19985

80.0 65.0 365

Feasibility Study Update, September 2000 80.0 65.0 365

1997 - 1999 VSI Crusher Test Recoveries6

Vein ore sample 74.1 47.5 211

Quartz latite ore sample 79.7 57.0 211

Rhyolite ore sample 71.8 48.2 211

Pyroclastics ore sample 70.8 44.0 211

Weighted average recoveries based upon 1997-1999 VSI crusher tests only5

73.3 49.6 211

2003 - 2005 HPGR Test Program

Weighted average recoveries based upon the 2003-2005 HPGR test program 81.9 52.6 270

Note:

1 The recoveries in the first part of the table were projected as the weighted average recoveries for the 3 primary ore types in a commercial operation.

2 These recoveries were projected by Paul Chamberlin in a pre-feasibility study done by American Mine Services, Inc., September 1990.

3 These recoveries were projected for the feasibility study done by Pincock, Allen & Holt, (PAH), November 15, 1996. PAH also projected recoveries of 80 %

to 85 % for gold and 75 % to 80 % for silver with the extended leach periods available in a commercial heap leach operation.

4 Steffen, Robertson & Kirsten (US), Inc., (SRK) projected recoveries as part of a due diligence review of the Project for Equatorial Mining NL. The SRK

projections were made before the 1997 - 1999 VSI crusher tests had been completed.

5 M3 Engineering & Technology Corp, and GQM management projected the recoveries for the feasibility study done in 1998. The recoveries were generated

by linear regression analysis and both bottle roll and column leach test data was used. Refer to Section 8.2.5 Leaching of the 2000 feasibility study update for detail.

6 The 1997-1999 VSI crusher tests were considered the definitive test at that time. The tests were started in 1997 and the final report was released in February 1999.

The target particle size was 100 % - 8 mesh and this was also the particle size selected for the commercial operation. Refer toCrushing Analysis for a detailed

description of the four-stage crushing plant required to achieve a particle size of 100 % - 8 mesh in a commercial operation.

These recoveries are low when compared to those projected for a number of feasibility studies in the past.

Table 14

Historic Gold & Silver Recoveries

Recovery

The recoveries obtained in the 2003-2005 HPGR tests have been compared to the recoveries obtained in the 1997-1999 VSI crusher tests and this is one of a number

of elements in the decision to use the HPGR to crush and prepare ores for heap leaching.

Consider again the recovery analyses shown in Figure 3.522 and Figure 3.6

22 for production

scenarios other than the base case. Indications are that a 15 % edge recycle has the same effectas reducing the HPGR feed size from 100 % - 35 mm to 100 % - 25 mm. Reducing the HPGR feed size may have a greater affect at the coarser particle sizes and this may be the preferred

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approach in a commercial operation rather than adding additional material at the finer particlesizes, as would be the case with an edge recycle. Both options can however be introduced withminimal changes in the crushing-screening plant as discussed in sub-section 7.11 Technical.These considerations must be balanced against the need for a stable heap and acceptable solution

percolation rates under load as discussed in sub-section 12.4.3 Percolation Rates Under Load.

Minimum gold and silver recoveries of 79.5 % and 50.0 % respectively are projected for the

rhyolite ores in the commercial operation.

Quartz Latite - Column Leach Tests

The column leach tests are described in sub-section Quartz Latite – Column Leach Tests andthe test results are shown in Table 7.

Quartz Latite - Recovery Analysis

An average specific press force of 4.15 N/mm2

was used to prepare the samples for the columnleach test.

Minimum gold and silver recoveries of 90.4 % and 60.0 % respectively are projected for thequartz latite ores in the commercial operation.

Pyroclastics – Recovery Analysis

No new test work has been done on pyroclastics since the 1997-1999 tests were done because pyroclastics now account for only 10.5 % of the mineral reserve.

The recoveries projected for pyroclastics are therefore based upon direct comparisons between

recoveries obtained for rhyolite and pyroclastics in tests done since 1989 and not upon actualrecoveries obtained in bottle roll and column leach tests.

The recoveries projected for gold and silver for pyroclastics were increased by 1.3 % and 5.0 %above the recoveries projected for gold and silver for rhyolite and this is only 50 % of the

indicated absolute difference in recoveries between pyroclastics and rhyolite.

Minimum recoveries for gold and silver of 80.8 % and 55.0 % respectively are projected for the

pyroclastics ores in the commercial operation.

Projected Recoveries For Gold & Silver – 2005

The following recoveries are projected for the commercial operation and these are well withinthe range projected in the past:

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Primary Rock Types Proportion Gold Silver

% % %

Pyroclastics 10.5 80.8 55.0Quartz Latite 21.3 90.4 60.0

Rhyolite 68.1 79.5 50.0

Undefined 0.1 Not Included Not Included

Total & Average 100.0 81.9 52.6

Note that the projected recoveries are based upon an operating specific press force of 4.5 N/mm2

for rhyolite and 4.0 N/mm2 for quartz latite and pyroclastics.

These recoveries are considered to be conservative. Ore mined in the open pit will have a higher proportion of fines than the test samples and extended leach times will be available in the

commercial operation. Both are key parameters in determining recoveries and thus higher recoveries can reasonably be expected.

4.4 Leach Curves

Leach extractions for gold and silver vs time (the leach curves) for the HPGR test program onrhyolite (Test A1/A2T) and quartz latite (Test R3/R4) are shown in Figure 6.2. Note that heextraction rate is rapid at the start of leaching followed by slower diffusion-controlled leaching.

Note also the subtle difference between the leach curves for rhyolite and quartz latite with faster extraction rates for gold and silver for quartz latite than for rhyolite.

The leach curve for Test A1/A2T on the rhyolite sample was used to model the rate of extractionfor gold and silver for rhyolite and pyroclastics and the leach curve for Test R3/R4 on the quartzlatite sample was used to model the rate of extraction for gold and silver for quartz latite. Atypical model with explanations has been attached. Note that column leach tests done in the

laboratory, because of the confined nature and plug flow, leach and rinse much more quicklythan can happen in a commercial heap. The laboratory curves must therefore be adjusted to fieldconditions. The general formula recommended by H.C. Osborne & Associates, which wasderived by comparing the results of column leach tests to actual performance in the field, wasused to develop the 4 models.

5 Conclusion

It is interesting to note that every element that was analyzed supports the decision include theHPGR as the key comminution device in the Soledad Mountain flow sheet.

6 References

1 Rene I.B. Klymowsky, “High Pressure Grinding Rolls For Minerals”, Polysius AG, Beckum,Germany

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HPGR Technical Paper.pdf

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