Climax Mining's principal mining development asset is the Dinkidi gold and copper deposit, held under the Didipio Financial or Technical Assistance Agreement (‘FTAA’). The Project area is located in Northern Luzon, Philippines.

Climax Mining's priority is to progress the development of the Dinkidi gold and copper deposit, thus unlocking the significant value of the long-life Dinkidi project for shareholders and Filipinos.

Didipio FTAA – Dinkidi project, Didipio FTAA, Luzon
Dinkidi gold and copper project
Climax interest: 92%.
Operator: Australasian Philippines Mining Inc, a wholly owned subsidiary of Climax Mining Ltd.

The Dinkidi deposit forms part of Climax’s Didipio holdings, located approximately 200 kilometres north of Manila, in the central part of Luzon Island in the Philippines.

Dinkidi is a porphyry deposit with a resource of 121 million tonnes, grading 1.0 g/t Au and 0.4% Cu, for contained gold of 3.8 million ounces and 470,000 tonnes of copper (for a total gold equivalent resource of 5.8 million ounces). The Dinkidi development comprises four years open cut mining and a minimum life of eleven years underground sub-level caving operations. The project is designed for a throughput of two million tonnes of ore processed per annum. Government approval to develop the project was obtained on 13 October 2005, finalising permitting to build the project.

Above: Dinkidi proposed opencut, process facility and tailings dam


Dinkidi ore reserves
Detailed mine reserve and design reviews were completed in October 2005. The reserve review and ongoing detailed mine design is done by the mining consultants, AMDAD, in association with AST, a specialist design group advising on optimization of the sublevel cave mining method using proven industry-based parameters.

Ore reserves at the Dinkidi project are now 23.7mt at 1.8 g/t Au and 0.65% Cu. Commodity prices assumed in this reserve analysis remained unchanged from the previous reserves work and assume a gold price of US$400/ounce and a copper price of US$1.00/lb. Using these metal prices the ore reserves equate to 2.08 million recoverable ounces gold equivalent.

Mine design review, as part of this detailed design phase, identified that underground mine ore recovery would be significantly improved. This mine design review also demonstrated the viability of an increase in the underground mining rate of some 50%, which will have a major impact on gold and copper output from the underground mining phase. No changes were made to the planned overall processing rate of 2 million tonnes per annum and no significant increases in capital or operating costs are anticipated. The new ore reserve for Dinkidi is detailed in the table below:-

Dinkidi resources
The Dinkidi gold/copper porphyry deposit contains 121 million tonnes grading 0.97 g/t Au and 0.39% Cu for contained gold resource of 3.8 million ounces of gold equivalent and 470,000 tonnes of copper, for a gold equivalent resource of 5.8 million ounces.

Climax, through the exploration group is also now focusing on identifying resources within the above resource envelope that have the potential to be later converted to reserves to support the long life Dinkidi Project. Initial indications of resources lying adjacent to the planned underground sub level cave ( SLC) developments, that have potential for later reserves conversion are shown in the attached figure. These resources total 7.7 million tonnes (undiluted) at 2.1 g/t gold and 0.5% copper. This work will be progressively reported.

Projected production
The detailed mine engineering for the Dinkidi project indicates substantial increases in gold and by-product copper production at a commensurate reduction in cash costs over the initial 10 years of reserve life.

This is based on recovered mine reserves of 2.1 million ounces of gold equivalent (gold plus by-product copper) and a mine design for an initial four year open pit at a process rate of 2 mtpa, followed by 11 years of underground production (7 years of reserves followed by 4 years of resources). At an underground production rate of some 1.5 mtpa plus 0.5 mtpa of open pit stockpile this produces, over the first ten years of reserve production, an average of 200,000 gold equivalent ounces per annum, for total cash cost of US$200/oz Au equivalent.

Table 1. Dinkidi 10 years reserves production & costs

Production beyond year 10 to year 15 will draw progressively from potentially mineable underground resources already identified instead of processing the residual open cut low grade stockpiles, as is the basis of the above reserves model.

A further design iteration which lifts underground production to 2 mtpa by mining 0.5 mtpa of resource tonnes in parallel with the 1.5 mtpa of reserve tonnes is the basis for detailed design. Under this production scenario, the 10 year profile and design criteria, is projected to average 220,000 gold equivalent ounces per annum, for total cash cost of just under US$200/oz Au equivalent over the first ten years.

Table 2. Dinkidi 10 years with 2 mtpa underground production