1.

CONSTRUCTIBILITY COSTS AND ECONOMY

The construction has been developed from the point of view of costs. For this purpose,

CAPEX and OPEX have been determined, and assuming mine costs, a cash flow has also

been determined that indicates the possibility of the project.

You can see the capex in chapter 2.0 MAIN PLANT, subtitle 2.4. CAPEX AND OPEX,

section 2.4.2. CAPEX.

CAPEX evaluates the net cost of equipment, direct and indirect construction and installation

costs. Within these, we estimate the cost of assembly, pipelines, land management, civil

works and electrical installations through factors. Likewise, CAPEX evaluates the indirect

costs of the project that represent EPCM, spare parts, commissions, startup, freight and

transport. A contingency of 35% is also evaluated. All these costs were estimated by factors

provided by Peruvian consultants dedicated to plant design, which gladly provided us with

this information. In this case, part of the CONSTRUCTIBILITY evaluated at this point by

means of a factor.

All equipment costs were taken from InfoMine USA. (2014). We consider these equipment

costs as FOB costs, CIF cost was considered as 8% of equitment cost. In order to obtain

equipment in plant positions we considered a freight of USD 600.00. To update the

equipment cost values, the M&S Index extracted from Chemical Engineering magazine were
used. For the year 2019 the factor is 1716.2 while for the year 2014 is 1566.9. We chosed

2014 like the first year because the edition of the InfoMine USA.

You can see the OPEX in chapter 2.0 MAIN PLANT, subtitle 2.4. CAPEX AND OPEX,

section 2.4.1. OPEX.

OPEX

The calculation of the energy consumed per month, the value given in HP was multiplied by

0.745 to convert it to kw, the it was multiplied by the number of hours worked per day.

It was considered 28 days per month to calculate the monthly energy. In the cost of this

project, the salaries of people directly and indirectly involved with the production process of

the concentrate (engineers, technicians, operators, etc.) have been considered acording to the

current market in Peru.

Direct and indirect materials have been considered within the supply group, such as reagents,

spare parts and maintenance materials. Spare parts and maintenance were considered as 1%

of the cost of equipment. Within the service group, the energy consumption of each

equipment was mainly considered. The cost of energy is 0.065 kw - hr. It was obtained

through an average of the energy costs in which some Peruvian companies work.

We have a representation of the plants in two dimensions in plans which are in the annexes

of the report. You can see the PLANS in chapter 4.0 ANNEX, subtitle 4.1. MAIN

PLANT, section 4.1.2. PFD MAIN PLANT; subtitle 4.2. REAGENT PLANT section

4.2.2. PFD REAGENT PLANT and subtitle 4.3. DISALINATION PLANT, section

4.3.1. HYDRIC BALANCE.

CASH FLOW IN can be observed in the chapter 1.0 FINAL REPORT in title 8.

FINANCIAL ESTIMATION, subtitle 8.2 CASH FLOW.

For cash flow we could not work only with plant costs, so mine costs were estimated by

benchmarking, with data from Peruvian companies with close capabilities and approximate

mineralogy, for example the “Toromocho” and “Cerro Lindo” mines. Expert criteria were

also consulted for engineers who work in operation and have current data. Also for mine data

according to Lightning. J (2012) in his work "VALUATION OF CAPEX AND OPEX IN

MINING PROJECTS". Extracted from https://es.scribd.com/document/162766220/6-

Valorizacion-Capex-Opex-Juan-Rayo-JRI, offers study data for estimates of capex and opex

in mine and plant.

2. SUSTAINABILITY, HEALTH AND SAFETY

In the design of the plant, health and safety criteria were considered, which is detailed in the

technical report, such as the following example taken from technical report the chapter of

reagents (3.1.1):

Another approach in which it was considered was during the design and storage of reagents

based on Peruvian regulations, and the MSDS sheets of each reagent, which has facilitated

the drafting of the descriptive reports of each of these.

In addition the other technical reports are in the points (3.2.1) and (2.1)

3. ENVIRONMENTAL, SOCIAL AND SECURITY IMPACT

Social aspect

In the community of Yauca del Rosario it is estimated rainfall is estimated 1 liter per square

meter per day, groundwater 33 liters per cubic meter and an evaporation of 7 liters per square

meter per day; performing a water balance in the area, there is a shortage of water to carry

out the different activities.

In this community because it is an arid zone it has the following characteristics:

Natural water shortage

Increase in the demand for water due to the demographic increase, due to investments

in industries, agriculture.

Reduction of the quantity and quality of available water, due to the overexploitation

of local sources of supply.

Short periods of drought and long periods of drought.

For our project located in this community, seawater desalination emerges as an alternative

for obtaining industrial water and drinking water supply for the surrounding population;

which would favor the consolidation of the approval of our project.

This would achieve the conservation of natural water resources and also reduce social

conflicts with other activities that require water, such as agriculture.

Environmental aspect

he environmental impact analysis focuses on the disposition of the brine, which comes out

as a by-product of the reverse osmosis process.

As evidenced by the fact that in estuarine areas, where there are significant variations in

salinity, many species cannot survive.

Therefore the treatment we give to brine is according to LAW N ° 29338, LAW OF WATER

RESOURCES, specifically in Article 80 ° Authorization of dumping.

To avoid a negative impact on the marine ecosystem by our dumping of brine; First, we give

you a treatment, such as PH adjustment; Then taking advantage of the speeds of the sea

currents, we expel the brine in a certain section of the final part of the discharge, which would

be the last 100 meters of a pipe 800 meters offshore.

By carrying out this process we achieve that our brine discharge does not produce a negative

environmental impact on our sea.

4. ETHICS, RULES AND NATIONAL AND INTERNATIONAL

REGULATIONS

National and international rules are found in the chapter of annexes (4.0). Some examples
of these are:
• ASTM D 3505 – 96: Standard Test Method for Density or Relative Density of
Pure Liquid Chemicals
This test method describes a simplified procedure for the measurement of density or
relative density of pure liquid chemicals for which accurate temperature expansion
functions are known. It is restricted to liquids having vapor pressures not exceeding
600 mm Hg (0.8 atm) at the equilibration temperature, and having viscosities not
exceeding 15 cSt at 20°C (60°F).
 • ASTM E 200 – 97 (Reapproved 2001) Standard Practice for preparation,
Standardization, and Storage of Standard and reagent Solutions for Chemical
Analysis
This practice covers procedures for the preparation, standardization, and storage of
the standard volumetric solutions and reagent testing solutions commonly used in
chemical analysis.

• Law 28305 “Ley de Control de insumos químicos y productos Fiscalizados”

(june 12th 2007)
Law 28305 “Law on Control of Chemical Inputs and Controlled Products”
(june 12th 2007)
The purpose of this law is to establish control and control measures for chemical
inputs and products that, directly or indirectly. they can be used in the illicit
elaboration of drugs derived from coca leaf, poppy and others that are obtained
through synthesis processes.

• DSN°015-2005-SA, “Valores Límites Permisibles para Agentes Químicos en el

Ambiente de trabajo”
DSN°015-2005-SA, “Permissible Limit Values for Chemical Agents in the
Work Environment”
The importance of this regulation, which is identified as framed in the preventive
function of occupational hazards due to exposure to chemical substances, is
immense, since on the one hand it can update the specification of the chemical
substances used in the country, and on the other , constituents a legal technical
means, presenting the list and specifying the tolerable values of occupational
exposure

5. SCHEDULES

The activities program are the schedules. These were prepared in order to make the scoping

study.

This Project is focus on the mil plant, desalination plant and reagent plant so each plant has

a Schedule. We made a specific document with the details of the schedule of each plant. In

addition, a summary is represented in the Final Report in the chapter 4.6. This summary also

includes an organizational chart.

For the mill plant, there are three schedules: crushing schedule, grinding schedule and

concentrator schedule.

• Crushing has an operational time of six days per week, 2 shift per day and 6 hours

per shift with and availability of 85%.

• Grinding has an operational time of 7 days per week, 2 shift per day and 12 hours

per shift with and availability of 93%.

• Finally, concentration has an operational time similar of grinding of 7 days per week,

2 shift per day and 12 hours per shift with and availability of 93%. All these

information are more detailed in the document Schedule of Rosario Mill Plant.

For the reagent plant, there are eight plants and each one has their own schedule.

• The lime plant has an operational time of 7 days per week, 1 work shift per day and

12 hours per shift with and availability of 93%.

• The xanthate plant has an operational time of 7 days per week, 1 work shift per day

and 12 hours per shift with and availability of 93%.

• The aerofloat 238 plant has an operational time of 7 days per week, 1 work shift per

day and 12 hours per shift with and availability of 93%.

• The aeropromoter 3501 plant has an operational time of 7 days per week, 1 work

shift per day and 12 hours per shift with and availability of 93%.

• The carboxymethyl cellulose plant has an operational time of 7 days per week, 1
 work shift per day and 12 hours per shift with and availability of 93%.

• The sodium sulphide plant has an operational time of 7 days per week, 1 work shift

per day and 12 hours per shift with and availability of 93%.

• The sodium silicate plant has an operational time of 7 days per week, 1 work shift

per day and 12 hours per shift with and availability of 93%.

• The methyl isobutyl carbonyl plant has an operational time of 7 days per week, 1

work shift per day and 12 hours per shift with and availability of 93%. All these

information are more detailed in the document Schedule of Rosario Reagent Plant.

The desalination plant has also an own schedule that are more detailed in the document

Schedule of Rosario Desalination Plant.