Frequently Asked Questions

1. Does Cuervo have a NI 43-101-compliant resource report for the Cerro Ccopane Property?

The Company has an NI 43-101-compliant geological report and Mineral Resource Estimate which was completed in March 2009. A “measured and indicated” resource of 56 million tonnes (Mt) grading 46.7% Fe and an “inferred” resource of 51 million Mt grading 43.7% Fe, were reported from the Orcopura zone, based on the results from 121 drill holes.

A compliant Mineral Resource Estimate pertaining to the Huillque and Aurora zones was completed in February 2012; this estimate is based on the results of drill holes completed in 2009 during the Company’s original campaign of drilling. Mineral Resource Estimates of 56 Mt “inferred” grading 53.5% Fe and 16 Mt “inferred” grading 49.3% Fe are reported from the Huillque and Aurora zones of mineralization respectively.

A compliant Mineral Resource Estimate pertaining to the Bob 1 zone was completed in February 2013; this estimate is based on the results of 17 drill holes completed in 2012. Mineral Resource Estimates of 453.5 Mt “inferred” grading 42.0% Fe were reported.

2. What grade of iron does the steel industry require, and can the sulfur and copper that have been reported in the drilling results from Cerro Ccopane be removed?

The steel industry requires a grade of between 62% and 69% Fe for iron ore feedstock. This level of concentration is customarily achieved through mineral processing.  The Company believes that sulfur and copper can be removed through the application of a low-intensity magnetic separation. Davis Tube testing carried out in November of 2007 and February of 2009 on a small suite of samples, removed most of the sulfur and copper and upgraded the iron content of the resulting magnetite concentrate to between 66% and 69% Fe. Evidence that the sulfur- and copper-bearing minerals (e.g. pyrite and chalcopyrite) have been observed to be coarse (rather than fine) grained also bodes well for the process since only limited grinding would be necessary to effect their separation from the magnetite.

3. What are the planned methods and economics of transporting the iron ore from the Cerro Ccopane property to port?

The Company reported on March 17, 2009 the results of a comprehensive transportation study undertaken by Sandwell Engineering Inc. The principal findings and recommendations were that transportation of material from the Cerro Ccopane property does not present unique logistical challenges and all examined transport scenarios are technically feasible. A slurry pipeline from the property to port is considered to be the best overall transportation alternative. As an example scenario involving a slurry pipeline to port, based on a production rate of 20 million tonnes per year and a 20 year mine life, our median total transportation cost, that is, including CAPEX and OPEX, is estimated to be $US8.04 per tonne. Even at 10 million tonnes per year production, the median cost would be only $US10.12 per tonne. These estimates exclude the cost of permits, licenses, right-of-ways and power transmission. CAPEX is estimated at -35%/+50% and OPEX at -/+50%.

4. What size of deposit is needed to be economical?

A deposit of 200 million to 300 million tones is needed. The Company reported throughout May 2009 the results of a geophysical survey carried out on the Cerro Ccopane property. The geophysics identified two magnetic and gravity anomalies that modeling suggests are over a billion tonnes each. This survey gives evidence that the Company’s Cerro Ccopane property has the potential to contain a iron ore deposit, with excess of 2.5 billion tones.

5. How will the iron ore be mined?

The known mineralization is found at or near surface. This indicates that the iron ore could be mined by a low-cost open-pit method.