Cobre Panama Basic Engineering Summary Report

Mina de Cobre Panama
BASIC ENGINEERING
SUMMARY REPORT
May 2012
PROJECT DESCRIPTION
Capital Cost
Cobre Panama
Panama, Coln province
Investment grade
13,000 ha
31 years
1Q16
$US6.18b
TIER I CHARACTERISTICS
Average annual production (Y2-16)
Average annual production (LOM)
C1 cash costs (Y2-16)
C1 cash costs (LOM)
Strip ratio
Design mill throughput (Y1-9)
Design mill throughput (Y10-31)
298 ktonnes Cu
266 ktonnes Cu
$US0.72/lb Cu
$US0.82/lb Cu
0.58
160 ktpd
240 ktpd
Project
Project location
Sovereign rating
Concession area
Life of mine
Start of Production
RESERVE & RESOURCE

Proven
Probable
Total
ktonnes
258,000
2,061,000
2,319,000
Cu (%)
0.57
0.38
0.40
Measured
Indicated
Total
Inferred
262,000
3,905,000
4,167,000
3,749,000
0.56
0.34
0.35
0.23
Status
Shovel-ready, ESIA approved December 2011
Products Cu-Au and Mo concentrates

Features Botija, Colina, Valle Grande open pits
Gyratory crushing, grinding, flotation

Owner port site, Panamax capable
Owner 300 MW coal-fired power
Concentrate pipeline
AVG ANNUAL PROD.

Cu ktonnes
Au koz
Ag koz
Mo ktonnes
Au (g/t) Ag (g/t)
0.14
1.6
0.06
1.4
0.07
1.4
0.13
0.06
0.07
0.04
1.5
1.2
1.3
1.0
Y2-16
298
106
1,572
3.1
LOM
266
87
1,545
2.9
TOTAL LOM
8,237
2,705
47,899
90.2
Moly (%)
0.010
0.007
0.007
Cu ktonnes
1,478
7,781
9,258
Au koz
1,126
4,041
5,167
Ag koz
13,020
91,008
104,028
Mo ktonnes
25
145
169
0.009
0.005
0.006
0.004
1,476
13,237
14,715
8,660
1,118
7,845
8,963
4,805
12,979
155,392
168,454
120,534
24
214
238
156
LT Consensus
14.3%
16.7%
$3.2b
$3.5b
$2.4b
$2.8b
$1.8b
$2.2b
FW Curve
18.5%
21.9%
$4.8b
$5.0b
$3.9b
$4.2b
$3.2b
$3.6b
3Y Trl. Avg.
19.2%
22.5%
$6.0b
$6.3b
$4.9b
$5.2b
$4.0b
$4.4b
(resources inclusive of reserves)
PROJECT ECONOMICS
CAPITAL COSTS
$USm
Mining
760
Process plant
1,184
Site and services
550
Port site
543
Power plant
646
Total Direct
3,682
Construction indirects
844
Total field costs
4,526
EPCM
355
Owner Costs
885
Contingency
415
Total project cost
6,181
Sustaining capex
2,916
POTENTIAL FOR UPSIDE
Expand throughput beyond max planned 240ktpd
Accelerate increase to 240ktpd
Conversion of substantial resources beyond reserves
%
12
19
9
9
10
59
14
73
6
14
7
100
PROJECT ADVANTAGES
Low strip-ratio (one fifth of industry O/P Cu mine avg 2011 )
Ammenable to large scale, efficient mining
Powered by owner-built, 300mW coal-fired plant
Proximity to tidewater, permitting inexpensive con transport
Clean concentrate
Extensively reviewed by 3rd parties (capex and opex)
AFTER TAX VALUATION

IRR
NPV8%
NPV9%
NPV10%
Financed Case 1
Financed Case 2
Financed Case 1
Financed Case 2
Financed Case 1
Financed Case 2
Financed Case 1
Financed Case 2
Financed Case 1: $US1.6b in debt drawn over 3.5 years

Financed Case 2: $US1.6b in debt drawn over 3.5 years
$US1.2b upfront payment for 86% of MPSA precious metals
and on-going paid $400/oz Au and $6/oz Ag for PM stream
LT Consensus: Flat $2.75/lb Cu, $15/lb Mo, $1,250/oz Au, $20/oz Ag

FW Curve: Forward curve dropping to LT Consensus
(2016 start at $3.66/lb Cu, $1,785/oz gold and $31/oz Ag)
3Y Trail. Avg: Flat $3.42/lb Cu, $14.68/lb Mo, $1,316/oz Au, $24.90/oz Ag
COBRE PANAMA FACT SHEET - PG 1
PROJECT DETAIL
SCHEDULE
Notice to proceed
Mine/process construction start
Process earthworks complete
Plant to port road complete
Port complete
Power line complete
Tailings dam complete
Ore hits grinding lines
Power plant complete
Start of production
Concentrate shipment
Commercial production
RESOURCE ADDITIONS SINCE 2010
(contained metal)
M&I
FEED
Increase
Current
Cu (m lb)
25,800
6,641
32,441
Au (k oz)
Ag (k oz)
Mo (m lb)
6,533
133,300
474
2,430
35,154
51
8,963
168,454
525
INF
Cu (m lb)
Au (k oz)
Ag (k oz)
Mo (m lb)
FEED
16,600
4,003
103,100
236
Increase
2,492
802
17,434
18
Current
19,092
4,805
120,534
344
2Q12
2Q12
4Q13
4Q13
2Q14
3Q14
3Q15
4Q15
4Q15
4Q15
1Q16
2Q16
UNIT COSTS ($US/t ORE MILLED) - LT CONSENSUS

Labour
Material
Power
Mining
0.27
1.87
0.05
Processing
0.24
2.13
0.91
G&A
0.15
0.01
0.04
Site Services
0.11
0.07
0.01
Total
0.77
4.08
1.01
Other
0.24
0.01
0.69
0.09
1.03
Total LOM
2.44
3.29
0.88
0.28
6.88
LT Consensus
2.44
3.29
0.88
0.28
6.88
Total LOM
FW Curve
2.46
3.36
0.88
0.28
6.98
3YR Trl. Avg.

2.55
3.60
0.89
0.28
7.32
Power($US/kWh) Y1-9 1,2
0.027
0.033
0.034
Power($US/kWh) Y10-31 2
C1 cash cost ($US/lb) Y2-16 - Fin Case 1
C1 cash cost ($US/lb) LOM - Fin Case 1
0.05
0.72
0.82
0.05
0.74
0.83
0.055
0.77
0.87
UNIT COSTS ($US/t ORE MILLED)

Mining
Processing
G&A
Site Services
Total
Total Y2-16
2.68
3.28
0.97
0.3
7.23
1-Power costs adjusted to reflect sales into grid 2-Power costs are quoted before D&A expense covering the $646m capital
(resources inclusive of reserves)
RESOURCE NOT IN MINE PLAN
Measured and Indicated

Inferred
Cu ktonnes
5,457
8,660
Cu mlbs
12,031
19,092
NSR BY METAL
Cu
Au
Ag
Mo
Total
Avg. Annual Avg. Annual

Y2-16 ($USm) LOM ($USm)
1,557
1,389
121
100
28
27
93
86
1,798
1,602
OTHER USEFUL INFORMATION

TAXATION
Corporate tax rate
Alternative minimum tax rate
Base metal royalty
Precious metal royalty
25%
1.17%
5%
4%
AVG LOM RECOVERIES

Copper
Molybdnemum
Gold
Silver
89.0%
53.3%
52.4%
46.1%
CONCENTRATE ASSUMPTIONS
Copper TC
Copper RC
Gold RC
Silver RC
Molybdenum roast and freight
Freight
Copper Con Moisture
Losses and Insurance charges
$70/dmt
$0.07/lb
$5/oz
$0.50/oz
$1.49/lb
$41/t wet con
8%
0.25%
VARIANCE FROM FEED CAPEX

Capital costs
$USm
FEED study estimate
4,320
Power plant
646
Increased process plant estimate
403
Increased mining estimate
312
Increased port site estimate
285
Other
215
Basic Engineering Estimate
6,181
Drivers:
Process
Changed scope to achieve higher productivity
2 year tailings starter dam (vs. 1 prev)
Higher certainty of estimates
Mining
Fuel costs of $1.06/litre in capex (vs. $0.56 prev)
Higher certainty of earthwork estimates
Pre-strip costs moved from indirect to direct
BENEFITS TO PANAMA
$110m regional development plan to maximize sustainable socio-economic benefits
Increased local access to healthcare, education, sanitation and clean drinking water
Generates $US20b purchases in national economy and $US3.6b in royalties and taxes
Prioritizes local hiring and job-training, total salaries $US2.2b (locals and expats):
Peak total manpower during construction of 10,000
Average total manpower during operations of 2,100
COBRE PANAMA
COBRE PANAMA FACT SHEET - PG 2
Minera Panama, S.A.

Mina de Cobre Panama Project
BASIC ENGINEERING SUMMARY REPORT
Cautionary statement regarding forward-looking statements

This Basic Engineering Summary Report contains forward-looking statements with respect to the Cobre
Panama development project (Cobre Panama or the Project), including, without limitation, information
relating to future financial or operating performance, plans, outlook, financing plans, growth in cash flow
and operating margin; projections, targets and expectations as to reserves, resources, results of
exploration (including targets) and related expenses, mine development mine production costs, drilling
activity, sampling and other data; receipt of construction permits; estimated grade levels; future recovery
levels; future production levels, capital costs, costs savings, cash and total costs of operations, production
of copper and other minerals; expenditures for environmental matters; projected mine life; reclamation and
other post-closure obligations and estimated future expenditures for those matters; future copper, and
other mineral prices (including the long-term estimated prices used in calculating mineral reserves).
All statements in this Basic Engineering Summary Report that address events or developments we expect
to occur, are forward-looking statements. Forward-looking statements are statements that are not
historical facts and are generally, but not always, identified by the words expects, plans, anticipates,
believes, intends, estimates, projects, potential, target, plan, scheduled, forecast, budget
and similar expressions or their negative connotations, or that events or conditions will, would, may,
could, should or might occur. All such forward-looking statements are based on our opinions and
estimates as of the date such statements are made. Forward-looking statements are necessarily based
on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and
other factors, many of which are beyond our ability to control, that may cause the Projects actual results,
level of activity, performance or achievements to be materially different from those expressed or implied by
such forward-looking statements. Such factors include, without limitation:
price levels and volatility in the spot and forward markets for metals and;
access to the necessary capital to fund the development and construction of the Project;
the ability to develop and construct the Project in accordance with the currently projected budget and
timeline;
the uncertainties inherent in current and future legal challenges we or the Project are or may become
a party or subject to;
changes in national and local government legislation or regulations;
the lack of certainty with respect to foreign legal systems, which may not be immune from the
influence of political pressure, corruption or other factors that are inconsistent with the rule of law;
the speculative nature of mineral exploration and development, including the risks of obtaining and
maintaining the validity and enforceability of the necessary licenses and permits and complying with
permitting requirements;
inherent hazards, risks and uncertainties associated with mining exploration, development and
operations, including accidents;
diminishing quantities or grades of reserves;
discrepancies between actual and estimated production, between actual and estimated costs,
between actual and estimated reserves and resources and between actual and estimated
metallurgical recoveries;
geotechnical issues;
the possibility of temporary or permanent shutdown;
the actual costs of reclamation;
Page 4
May 2012
Minera Panama, S.A.

increased energy prices;
dependency of cash flow and earnings growth upon the development of our current reserve base and
converting our resource base to reserves and production;
actual capital costs, operating costs and expenditures, production schedules and economic returns
from the Project;
fluctuations in the international currency markets and the rates of exchange between currencies;
volatility of global financial conditions;
taxation, including with respect to tax laws and regulations that are unclear or subject to ongoing
varying interpretations;
significant capital requirements and additional funding requirements;
risks associated with joint ventures;
dependence on transportation, electric and water facilities and infrastructure;
fluctuation in the cost of significant inputs including fuel;
delays or disruptions in supplies required for exploration, development, mining or processing,

activities;
disruptions arising from non-performance of off-take and other counterparties;
changes in environmental laws and regulations;
potential losses, liabilities and damages related to the Projects business which are uninsured or
uninsurable;
regulation of greenhouse gas emissions and climate change issues;
labour disputes;
defective title to mineral claims or property or contests over claims to mineral properties;
competition; and
the loss of key employees and the ability to attract and retain qualified personnel.
In addition, there are risks and hazards associated with the business of mineral exploration, development
and mining, including environmental hazards, industrial accidents, unusual or unexpected formations,
pressures, (and the risk of inadequate insurance or inability to obtain insurance to cover these risks) as
well as other risks, uncertainties and other factors.
Forward-looking statements are not guarantees of future performance, and actual results and future
events could materially differ from those anticipated in such statements. All of the forward-looking
statements contained in this Basic Engineering Summary Report are qualified by these cautionary
statements.
Although we have attempted to identify important factors that could cause actual results to differ materially
from those contained in the forward-looking statements, there may be other factors that cause actual
results to differ materially from those which are anticipated, estimated or intended. There can be no
assurance that such statements will prove to be accurate, as actual results and future events could differ
materially from those anticipated in such statements. You should not place undue reliance on
forward-looking statements. We expressly disclaim any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, events or otherwise.
Page 5
May 2012
Minera Panama, S.A.

Market, ranking, industry data and forecasts

This Basic Engineering Summary Report includes industry data and forecasts that we obtained from
industry publications and surveys, public filings and internal company sources. Industry publications,
surveys and forecasts generally state that the information contained therein has been obtained from
sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of
included information. We have not independently verified any of the data from third-party sources, nor
have we ascertained the underlying economic assumptions relied upon therein. We cannot guarantee the
accuracy or completeness of such information contained in this Basic Engineering Summary Report.
Cautionary notice regarding reserve and resource estimates
The disclosure in this Basic Engineering Summary Report uses mineral reserve and resource
classification terms that comply with reporting standards in Canada, and certain mineral resource
estimates are made in accordance with Canadian National Instrument 43-101Standards of Disclosure
for Mineral Projects (NI 43-101). NI 43-101 is a rule developed by the Canadian Securities
Administrators (the CSA) that establishes standards for all public disclosure an issuer makes of scientific
and technical information concerning mineral projects. Unless otherwise indicated, all reserve and
resource estimates contained in this Basic Engineering Summary Report have been prepared in
accordance with NI 43-101. These standards differ significantly from the mineral reserve disclosure
requirements of the Securities and Exchange Commission (SEC) set out in Industry Guide 7.
Consequently, reserve and resource information contained in this Basic Engineering Summary Report is
not comparable to similar information that would generally be disclosed by U.S. companies in accordance
with the rules of the SEC.
In particular, the SECs Industry Guide 7 applies different standards in order to classify mineralization as a
reserve. As a result, the definitions of proven and probable reserves used in NI 43-101 differ from the
definitions in the SECs Industry Guide 7. Under SEC standards, mineralization may not be classified as a
reserve unless the determination has been made that the mineralization could be economically and
legally produced or extracted at the time the reserve determination is made. Among other things, all
necessary permits would be required to be in hand or issuance imminent in order to classify mineralized
material as reserves under the SEC standards. Accordingly, mineral reserve estimates contained in this
Basic Engineering Summary Report may not qualify as reserves under SEC standards.
In addition, this Basic Engineering Summary Report uses the terms mineral resources, measured
mineral resources, indicated mineral resources and inferred mineral resources to comply with the
reporting standards in Canada. The SECs Industry Guide 7 does not recognize mineral resources and
U.S. companies are generally not permitted to disclose resources in documents they file with the SEC.
Readers are specifically cautioned not to assume that any part or all of the mineral deposits in these
categories will ever be converted into SEC defined mineral reserves. Further, inferred mineral resources
have a great amount of uncertainty as to their existence and as to whether they can be mined legally or
economically. Therefore, readers are also cautioned not to assume that all or any part of an inferred
resource exists. In accordance with Canadian rules, estimates of inferred mineral resources cannot form
the basis of feasibility or pre-feasibility studies. It cannot be assumed that all or any part of mineral
resources, measured mineral resources, indicated mineral resources or inferred mineral resources
will ever be upgraded to a higher category. Readers are cautioned not to assume that any part of the
reported mineral resources, measured mineral resources, indicated mineral resources or inferred
mineral resources in this Basic Engineering Summary Report has demonstrated economic viability or is
economically or legally mineable. In addition, the definitions of proven mineral reserves and probable
mineral reserves under reporting standards in Canada differ in certain respects from the standards of the
SEC. For the above reasons, information contained in this Basic Engineering Summary Report that
describes the Projects mineral reserve and resource estimates is not comparable to similar information
made public by U.S. companies subject to the reporting and disclosure requirements of the SEC.
Page 6
May 2012
Minera Panama, S.A.

The Projects proven and probable reserve estimates contained throughout this Basic Engineering
Summary Report are as of March 5, 2012, and are estimated based on information compiled by or under
the supervision of a qualified person as defined under NI 43-101.
Important Notice
This report shall not constitute an offer to sell or a solicitation of an offer to purchase any securities of
Inmet Mining Corporation in the United States or any other jurisdiction. Any securities of Inmet Mining
Corporation have not and will not be registered under the U.S Securities Act of 1933, as amended (the
Securities Act), or the securities laws of any other jurisdiction and may only be offered and sold in the
United States pursuant to an exemption from the registration requirements of the Securities Act and
applicable state securities laws
Page 7
May 2012
Minera Panama, S.A.

Contents
1
INTRODUCTION .........................................................................................................15
1.1
A Tier 1 Copper Asset ........................................................................................16
1.2
Concession, Permits and Socio-Environmental Commitments ......................19
1.3
Capital Costs ......................................................................................................19
1.4
Operating Costs..................................................................................................20
1.5
Project Economics .............................................................................................21
1.6
Third Party Reviews ...........................................................................................22
1.7
Risks and Opportunities ....................................................................................23
1.8
Project Execution ...............................................................................................25
1.9
Conclusions ........................................................................................................26
TECHNICAL SUMMARY ............................................................................................27

2.1
2.1.1
Geology and Mineral Resources ................................................................29
2.1.2
Mine Plan and Mineral Reserves ................................................................33
2.1.3
Metallurgy.....................................................................................................39
2.1.4
Mine Waste Management ............................................................................43
2.1.5
Solid and Hazardous Waste Disposal ........................................................44
2.1.6
Tailings Management Facility .....................................................................44
2.1.7
Water Management ......................................................................................46
2.1.8
Power Plant ..................................................................................................47
2.1.9
Project Infrastructure / Ancillary Facilities ................................................49
2.1.10
Port ...............................................................................................................50
2.1.11
Pipelines .......................................................................................................51
2.1.12
Balance of Plant ...........................................................................................52
2.2
Project Description .............................................................................................27
INDEPENDENT THIRD-PARTY REVIEWS ..........................................................52
2.2.1
Independent Tailings Review Board (ITRB) ...............................................52
2.2.2
URS Corporation Independent Review.......................................................53
PRIVILEGE TO OPERATE .........................................................................................54

3.1
Panama ...............................................................................................................54
3.1.1
Mining in Panama: Changes to the Mineral Code in 2012........................56
3.1.2
Contract Law 9 .............................................................................................57
3.1.3
MPSAs Panamanian Society Participation ...............................................58
3.2
Inmets Approach To Corporate Responsibility ...............................................58
3.3
Cobre Panama: Inmets Commitment in Action ..............................................59

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Minera Panama, S.A.

3.3.1
3.4
Regulatory Context for Environmental and Social Impact Assessments 61
Socio-environmental Context of the Project.....................................................63
3.4.1
Environmental Baseline Conditions ...........................................................63
3.4.2
Social Baseline Conditions .........................................................................65
3.4.3
Community Relations and Community Development Activities...............67
3.4.4
Project Socio-environmental Actions and Benefits ..................................69
3.4.5
Partnerships.................................................................................................71
CAPITAL COST ESTIMATE .......................................................................................73

4.1
Basis of Estimate................................................................................................73
4.1.1
4.2
Site Investigation .........................................................................................74
Capital Cost (CAPEX $US) .................................................................................75
4.2.1
Contract budgetary incentives ...................................................................79
4.3
Sustaining Capital (SUSEX) ...............................................................................79
4.4
Independent Third Party Review Capital Cost Estimate ...............................80
OPERATING COST ESTIMATE .................................................................................82

5.1
Basis of Estimate................................................................................................82
5.2
Operating Cost Estimate (OPEX) .......................................................................83
5.3
Brook Hunt C1 Cash Cost ..................................................................................86
5.4
Independent Third Party Reviews .....................................................................88
5.4.1
Process Plant Operating Cost Estimate .....................................................88
5.4.2
Benchmark of Mining Cost .........................................................................89
5.4.3
Power Plant Operating Cost Estimate ........................................................89
5.4.4
Power Plant Coal Supply Analysis .............................................................90
PROJECT ECONOMICS ............................................................................................91

6.1
Modelling Assumptions .....................................................................................91
6.2
Value and Returns ..............................................................................................93
6.3
Sensitivity Results ..............................................................................................95
6.4
Cash Costs..........................................................................................................96
6.5
Net Smelter Returns ...........................................................................................99
6.6
Project Cash Flows .......................................................................................... 101
6.6.1
Debt Case ................................................................................................... 101
6.6.2
Debt plus Stream Case .............................................................................. 102
6.7
7
Upside of Resource Value Not Reflected in Traditional Discounted Cash Flow

Valuation ........................................................................................................... 103
PROJECT FINANCING ............................................................................................. 104
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Minera Panama, S.A.

8
RISKS AND OPPORTUNITIES ................................................................................. 107

8.1
Project Risk Management ................................................................................ 107
8.1.1
8.2
9
Special Considerations ............................................................................. 110
Opportunities .................................................................................................... 113
PROJECT EXECUTION ............................................................................................ 116

9.1
Project Background.......................................................................................... 116
9.2
Project Organization......................................................................................... 116
9.3
Health and Safety ............................................................................................. 119
9.4
Environmental Management Plan.................................................................... 119
9.5
Labour Relations, Training and Hiring ............................................................ 121
9.6
Sequence of Construction ............................................................................... 122
9.6.1
EPCM Scope Under JVP ............................................................................ 122
9.6.2
EPC Scope Yet to be Awarded.................................................................. 123
9.6.3
EPC Scope Under SK E&C ........................................................................ 123
9.7
Materials Management and Logistics ............................................................. 123
9.7.1
Logistics Strategy...................................................................................... 123
9.8
Procurement ..................................................................................................... 124
9.9
Security ............................................................................................................. 124
9.10
Project Master Schedule and Key Milestones ................................................ 124
9.11
Independent Reviews ....................................................................................... 127
9.11.1
Independent Project Schedule Review .................................................... 127
9.11.2
Independent Project Readiness Assessment .......................................... 127
9.11.3
Independent Project Controls Health Check ........................................... 127
10
OPERATIONAL READINESS................................................................................... 129
11
MARKETING AND MARINE TRANSPORT OF CONCENTRATE ............................ 133

11.1
Scope and Summary ........................................................................................ 133
11.2
Composition of Revenue and Price Assumptions ......................................... 133
11.3
Copper Prices and Trends ............................................................................... 134
11.4
Concentrate Quality.......................................................................................... 135
11.5
Summary of Copper Concentrate and Freight Market Expectations ............ 136
11.6
Preliminary Copper Concentrate Sales Plan .................................................. 137
11.7
Summary of Molybdenum and Freight Market Expectations ........................ 138
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May 2012
Minera Panama, S.A.

List of Tables
Table 1-1
Tier 1 Characteristics ...................................................................................15
Table 1-2
Metal Production ..........................................................................................17
Table 1-3
Cobre Panama Mineral Reserves ................................................................17
Table 1-4
Cobre Panama Mineral Resources ..............................................................17
Table 1-5
Basic Engineering Capital Cost by Major Area .............................................20
Table 1-6
C1 Cash Costs($US/lb of Cu) at Copper Price Scenario of $US2.75/lb. .......20
Table 1-7
Summary of Operating Costs by Component ($US/t of ore milled) ...............21
Table 1-8
After-Tax Economics: Debt Case .................................................................22
Table 1-9
After-Tax Economics: Debt plus Stream Case .............................................22
Table 1-10
Third Party Reviews .....................................................................................23
Table 1-11
Project Milestones........................................................................................26
Table 2-1
Tier 1 Characteristics ...................................................................................27
Table 2-2
Cobre Panama Mineral Resources ..............................................................31
Table 2-3
Mine Production Schedule ...........................................................................35
Table 2-4
Mining Schedule by Pit ................................................................................36
Table 2-5
Cobre Panama Mineral Reserve ..................................................................39
Table 2-6
Recovery Forecast Algorithms .....................................................................40
Table 2-7
Mill Production Schedule..............................................................................42
Table 3-1
Cobre Panamas Progress in Implementing the IFC Performance Standards61
Table 4-1
Basic Engineering Capital Cost by Major Area .............................................78
Table 4-2
FEED Study to Basic Engineering Capital Cost Estimate Variances ............78
Table 4-3
FEED Study to Basic Engineering Variance Description ..............................79
Table 5-1
Total Operating Cost Summary ....................................................................83
Table 5-2
Summary of Operating Costs per Year ($US/t of ore milled)* .......................83
Table 5-3
Summary of Operating Costs by Component ($US/t of ore milled)* .............84
Table 5-4
FEED Study vs. Basic Engineering Operating Costs ....................................85
Table 5-5
Operating and Input Cost Estimates at Selected Copper Price Assumptions86
Table 5-6
Years 2-16 C1 Cash Cost ($US/lb) ..............................................................87
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May 2012
Minera Panama, S.A.

Table 5-7
Life of Mine C1 Cash Cost ($US/lb) .............................................................87
Table 5-8
Power Costs at Selected Copper Price Assumptions ($US/kWh) .................89
Table 6-1
Modelling Assumptions ($US) ......................................................................91
Table 6-2
Pre-Financing Sponsor Funding Requirement ............................................92
Table 6-3
Financing Assumptions ................................................................................93
Table 6-4
Metal Price Assumptions ($US) ...................................................................94
Table 6-5
After-Tax Economics: Debt Case .................................................................94
Table 6-6
After-Tax Economics: Debt plus Stream Case .............................................95
Table 6-7
Years 2-16 Cash Costs Based on Payable Copper ($US/lb) ........................96
Table 6-8
Life of Mine Cash Costs Based on Payable Copper (US/lb) .........................96
Table 6-9
Year 2-16 C3 Costs ($US/lb)........................................................................98
Table 6-10
Life of Mine C3 Costs ($US/lb) .....................................................................98
Table 6-11
Life of Mine Revenues and NSR (Consensus LT Prices) ........................... 100
Table 6-12
Construction Period Funding Requirement Debt Case ($US) .................. 101
Table 6-13
Construction Period Funding Requirement Debt plus Stream Case ($US)

.................................................................................................................. 102
Table 7-1
Independent Funding Breakdown .............................................................. 104
Table 7-2
Inmets Funding Plan ................................................................................. 104
Table 7-3
Total Project Funding ................................................................................. 105
Table 8-1
Key Project Risks and Treatment Plans ..................................................... 112
Table 8-2
Potential Reserves Should Indicated Resources at Balboa and Brazo be

Converted to Reserves .............................................................................. 114
Table 9-1
Project Milestones...................................................................................... 125
Table 10-1
Elements of and Assurance of Operational Readiness .............................. 129
Table 11-1
Forecast Copper Concentrate Commercial Terms ..................................... 138
Table 11-2
Molybdenum Concentrate NSR Calculation* .............................................. 139
Page 12
May 2012
Minera Panama, S.A.

List of Figures
Figure 2-1
Site & Infrastructure Map .............................................................................28
Figure 2-2
Mineral Deposits and Defined Resources Plan Map ....................................30
Figure 2-3
Increase in Resources Since FEED Study ...................................................31
Figure 2-4
Contained Copper Endowment (resource proxy) for Undeveloped Copper

Deposits .......................................................................................................32
Figure 2-5
Contained Copper Endowment (resource proxy) for Undeveloped Copper

Deposits Not Controlled by >$10b Market Cap or Sovereigns......................32
Figure 2-6
Summary of Mining Schedule ......................................................................34
Figure 2-7
Mining Schedule Shown by Type of Material Moved and by Pit ...................34
Figure 2-8
Inferred Resource In-Pit ...............................................................................37
Figure 2-9
Plan View of Site Infrastructure and Design Pits ..........................................38
Figure 2-10
Plan View of TMF Including Dams ...............................................................45
Figure 3-1
IHS Comparative Historical Risk Showing Panamas Risk Trending Down ..55
Figure 3-2
Estimated Cobre Panama Job Additions ......................................................56
Figure 3-3
Pro-Mining Demonstration of 2,500 People March 10, 2012 ........................67
Figure 5-1
Breakdown of Operating Costs by Function and Input Cost .........................84
Figure 5-2
Comparison of Cobre Panamas C1 Cost on the 2020 Projected Brook Hunt

Cost Curve ...................................................................................................88
Figure 6-1
NPV Sensitivities..........................................................................................95
Figure 6-2
Comparison of Project C1 Costs on the Projected 2020 Brook Hunt Cost

Curve ...........................................................................................................97
Figure 6-3
Comparison of Project C3 Costs on the Projected 2020 Brook Hunt Cost

Curve ...........................................................................................................99
Figure 6-4
Payable Cu Production and C1 Cash Cost by Year (Consensus LT Prices

Debt Case)................................................................................................. 100
Figure 6-5
Project Life After-Tax Cash Flows (Debt Case)* ........................................ 101
Figure 6-6
Project Life After-Tax Cash Flows (Debt + Stream Case)* ........................ 102
Figure 8-1
Plan of Distribution of Resources 2012 ...................................................... 113
Figure 8-2
Plan of Distribution of Resources 2012 ...................................................... 115
Figure 9-1
Project Schedule ........................................................................................ 126

Page 13
May 2012
Minera Panama, S.A.

Figure 11-1
Cobre Panama NSR by Metal Based on Long-term Consensus Prices...... 133
Figure 11-2
Gap Between Base Case Mine Production and Demand that Needs to be
Filled with Capacity Additions .................................................................... 134
Figure 11-3
Forecast vs Actual Sources of Supply 2003-2010 ...................................... 135
Figure 11-4
Historical Trends in Treatment and Refining Changes in Real 2011 Dollars137
GLOSSARY
k
m
b
oz
lb
kt
kTon
ktpd
mt
mt/a
US$/t
Cu
Au
Ag
Mo
bbl
l
mW
kWh
dmt
wmt
LOM
g/t
thousand
million
billion
troy ounces
pounds
thousand tonnes
thousand tons
thousand tonnes per day
million tonnes
million tonnes per annum
US dollars per tonne
Copper
Gold
Silver
Molybdenum
barrel
litre
megawatt
kilowatt hour
dry metric tonne
wet metric tonne
life of mine
grams per tonne
Page 14
May 2012
Minera Panama, S.A.

1
INTRODUCTION
The Mina de Cobre Panama Project (Cobre Panama; the Project) consists of a conventional
open pit mine and the associated infrastructure to produce copper-gold and molybdenum
concentrates. The concession for the Project covers an area of 130 square kilometres (km2) and
is located in the Donoso District, Coln Province in north central Panama.
Cobre Panamas projected significant annual production at first quartile cash costs, long mine
life, extensive mineral reserves and resources, and high proportion of net revenues from copper
all provide exceptional exposure to copper. With the Environmental and Social Impact
Assessment (ESIA) regulatory approval for the Project already received, a strong social license
and Basic Engineering completed, the Project is construction-ready. It is essentially the only
Tier 1 copper asset not in the hands of a senior mining company.
Table 1-1 Tier 1 Characteristics
Tier 1 Characteristic
Life of Mine
31 years
Capital Cost
$US6.18b
Annual production (Yr 2-16)
298 kt
Annual production (LOM)
266 kt
C1 cash costs (Yr 2-16)
$US0.72/lb Cu
C1 cash costs (LOM)
$US0.82/lb Cu
Strip Ratio
Scale
0.58
160 ktpd to 240 ktpd throughput with further expansion capacity
Consensus Long-Term
Forward Curve
3YR Trailing Avg.
(declining to
(SEC case)
consensus)
IRR (debt financing)
14.3%
18.5%
19.2%
NPV @ 8% ($m)
3,200
4,800
6,000
IRR (debt plus stream financing)
16.7%
21.9%
22.5%
NPV @ 8% ($m)
3,500
5,000
6,300
Annual free cash flow
$US0.90b
(Yr 2-16, debt financing)

Annual free cash flow
$US0.81b
(LOM, debt financing)

Copper reserves*
9.3 mt
Copper resources (M&I)*
14.7 mt
Copper resources (Inferred)*

Concentrate
Logistics
8.7 mt
Clean concentrate not expected to draw penalties
Proximity to tidewater and Panama Canal
*See Table 1-3 and Table 1-4
Page 15
May 2012
Minera Panama, S.A.

Cobre Panama would be developed as a conventional truck and shovel open pit mine with a
concentrator that uses the direct application of proven technology (crushing, grinding, flotation)
to produce copper-gold and molybdenum concentrates. A 300 mW coal-fired power plant and
ship loading port facilities are also part of the Project.
Basic Engineering was conducted by Joint Venture Panama Inc. (JVP), a joint venture led by
SNC-Lavalin Group Inc. (70%) with partners GyM S.A. (a member of Graa y Montero Group)
(15%) and Techint International Construction Corp. (15%) between November 2010 and March
2012. The purpose of Basic Engineering was to further develop the scope and execution plan
for the Project, and to serve as the basis for detailed engineering, procurement and construction.
This work builds on the March 2010 Front End Engineering Design Study (FEED) Study. Basic
Engineering provides:
A capital cost estimate with an accuracy of +10%/-10%
A Project Execution Plan in readiness for the full Notice to Proceed
A detailed Level 3 Project Master Schedule
Detailed engineering for site capture and civil works and
Initial Work Packages and contracting strategy to support procurement activities.
The total estimated capital cost to bring the Project into operation is $US6.2b (expressed in Q3
2011 dollars), over half of which is based on firm quotes. Sustaining capital is estimated to be
$US2.9b required over the mine life. This includes an expansion in the form of adding a third
crushing and grinding line to the process plant to increase capacity from 160ktpd to 240ktpd,
which would to be ready for production in Year 10. Operating costs are estimated to be
$US6.88/t of ore milled, with mining costs benefitting from a life of mine strip ratio of 0.58 tonnes
waste per tonne of ore. The power cost of $US1.01/t of ore milled is an endorsement of the
decision in 2011 to undertake the capital cost to build a coal-fired power plant. Assuming a full
Notice to Proceed in May 2012, first concentrate would be scheduled for early 2016.
Reconciliations to the 2010 FEED Study can be found in Sections 4 (Capital Costs) and 5
(Operating Costs).
1.1
A Tier 1 Copper Asset
The Project has the key attributes of a Tier 1 copper asset with substantial exposure to copper,
projected long life, low operating costs and significant expansion potential in a geopolitically
favourable jurisdiction.
Cobre Panamas projected average annual copper production of 298kt for Years 2-16 and 266kt
over the life of operations are indicative of a world class asset. The expected 31 year life with
these levels of output would provide exceptional exposure to copper.
Page 16
May 2012
Minera Panama, S.A.

Table 1-2 Metal Production
Copper (kt)
Molybdenum (kt)
Gold (koz)
Silver (koz)
Annual Average
Years 2-16
298
Annual Average
Life of Operations
Total
Life of Operations
266
2.9
87
1,545
8,237
90.2
2,705
47,899
3.1
106
1,572
Estimated C1 cash costs (see Section 5 for definition) of $US0.72/lb for Year 2-16 and
$US0.82/lb for the life of the operation would put the Project in the very favourable position of
being in the first quartile of the projected industry cost curve.
Table 1-3 Cobre Panama Mineral Reserves
Category
Tonnes
Cu
Au
Ag
Mo
(x 1000)
g/t
g/t
258,000
0.57
0.14
1.6
0.010
1,478
1,126
13,020
25
Probable
2,061,000
0.38
0.06
1.4
0.007
7,781
4,041
91,008
145
Total
2,319,000
0.40
0.07
1.4
0.007
9,258
5,167
104,028
169
Cu
Au
Ag
Mo
(x1000)
(x1000)
(x1000)
(x1000)
Tonnes
ounces
ounces
tonnes
Proven
Cu
Au
Ag
Mo
(x1000)
(x1000)
(x1000)
(x1000)
Tonnes
ounces
ounces
tonnes
Table 1-4 Cobre Panama Mineral Resources

Category
Tonnes
Cu
Au
Ag
Mo
(x 1000)
g/t
g/t
Measured
262,000
0.56
0.13
1.5
0.009
1,476
1,118
12,979
24
Indicated
3,905,000
0.34
0.06
1.2
0.005
13,237
7,845
155,392
214
Total
4,167,000
0.35
0.07
1.3
0.006
14,715
8,963
168,454
238
Inferred
3,749,000
0.23
0.04
1.0
0.004
8,660
4,805
120,534
156
Notes to mineral reserves and resources table

Mineral reserves and resources are shown on a 100 percent basis for each property. Except as stated, mineral resources are
exclusive of mineral reserves.
The mineral reserve and resource estimates are prepared in accordance with the CIM Definition Standards On Mineral Resources
and Mineral Reserves, adopted by CIM Council on November 14, 2004, and the CIM Estimation of Mineral Resources and Mineral
Page 17
May 2012
Minera Panama, S.A.

Reserves Best Practice Guidelines, adopted by CIM Council on November 23, 2003, using geostatistical and/or classical methods,
plus economic and mining parameters appropriate to each project. You will find the definitions and guidelines at www.cim.org.
Estimates for all operations are prepared by or under the supervision of a qualified person as defined in National Instrument 43-101
(usually an engineer or geologist).
There are no known environmental, permitting, legal, taxation, political or other relevant issues that would materially affect the
estimates of the mineral reserves.
Mineral resources which do not form part of the mineral reserves do not have demonstrated economic viability.
Mineral resources as at March 5, 2012, were estimated by Robert Sim, P. Geo., of SIM Geological Inc. Mineral reserves as at
December 31, 2011 were estimated by William Rose, P.E., of WLR Consulting, Inc., a qualified person under National Instrument 43101.
Reserve estimates are based on the following assumptions:
- copper price: $US2.25 per pound
- gold price: $US1,000 per ounce
- silver price: $US16 per ounce
- molybdenum price: $US13.50 per pound
- Mining costs : $US1.66 per tonne of ore mined, $US 1.96 per tonne of waste mined and
- Milling and general and administration cost: $US 5.27 per tonne of ore milled, average life of mine metallurgical recoveries: 89
percent for copper, 52 percent for gold, 46 percent for silver and 53 percent for molybdenum.
Mineral resources include mineral reserves.
Resource grades are estimated using ordinary kriging with a nominal block size of 25 metres by 25 metres by 15 metres. Resources
are limited inside a pit shell defined by a copper price of $US2.60 per pound, $1.75 per tonne mining cost and $7.02 per tonne total
site operating cost, and are tabulated at a cut-off grade of 0.15 percent copper
Measured and Indicated (M&I) resources have grown to approximately 32.4b lb of copper and
9.0m oz of gold. This represents a 26% increase of 6.6b lb of copper and a 37% increase of
2.4m oz of gold over the FEED Study. In addition, inferred mineral resources have grown to
19.1billion lbs of copper and 4.8m oz of gold an increase of 2.5b lb of copper (15 percent) and
an increase of 0.8m oz gold (20 percent) over the FEED Study.
Currently there are 12b lb of contained copper in M&I mineral resources and some 19b lb of
copper in inferred mineral resources not exploited in the mine plan. While mineral resources do
not have demonstrated economic viability, based on commonly used market precedent, these
additional units of copper could potentially be valued at between $US0.03 and $US0.06/lb in the
ground, suggesting an option value on those copper units of between $US0.9b and $US1.8b.
This is especially true once the infrastructure is in place and the mine is operating.
If work progresses to allow us to move these resources into reserves, it would provide
opportunities to:
extend mine life beyond the current 31 years; and/or
accelerate the addition of a third line to the process plant that would increase
production in Years 3 to 9; and/or
justify expanding the planned operation beyond 240ktpd throughput.
Cobre Panama would enjoy a number of other positive attributes. In an industry with a trend of
increasing presence of deleterious elements in concentrates, the Project would have a clean
concentrate. The port, located on tide water, would be only 30 km from the mine site, allowing
for ease of exporting concentrates as well as importing supplies. This would provide a unique
Page 18
May 2012
Minera Panama, S.A.

opportunity to potentially enhance profitability through swaps to reduce transportation costs and
to share the benefit of reduced penalties with swap counterparties.
1.2
Concession, Permits and Socio-Environmental Commitments
The Project exploration and mining concession was granted under Law 9 of February 26, 1997,
promulgated by the Legislative Assembly of Panama. This, in addition to an amended Mineral
Resources Code in Panama, provides clarity on the fiscal framework for Cobre Panama. The
ESIA approval was received in December 2011 and gives the Project the right to obtain the
balance of the permits required to commence operations. Several such construction permits
have already been obtained.
MPSA has created an existing privilege to operate locally by building relationships with local
communities, an intention to comply with the International Finance Corporations Performance
Standards on Environmental and Social Sustainability and by meeting its responsibility to ensure
that the benefits of the Project are shared with the people of Panama.
1.3
Capital Costs
The estimated capital cost of $US6.18b is based on a comprehensive estimate comprised of

over 9,000 lines and 800 pages as well as third party reviews of the process and outcome.
Adding further to the confidence in the figures is the inclusion of lump sum turnkey contracts,
firm price estimates and vendor quotes for well over ninety per cent of the capital cost.
Page 19
May 2012
Minera Panama, S.A.

Table 1-5 Basic Engineering Capital Cost by Major Area
CAPEX Total
($US)
Area
Mining
% of Project
760
12
1,184
19
Site & Services
550
Port Site Facilities
543
Power Plant
646
10
3,682
59
844
14
4,526
73
EPCM Services
355
Owner Costs
885
14
Contingency*
415
6,181
100
Process Plant
Total Direct Costs

Construction Indirects
Total Field Costs
Project Total Costs
Note: Totals may not add due to rounding

*Contingency: The contingency table provided to the estimate reviewers had an overall Project contingency of 9.63% (as a
percentage of Total Installed Cost (TIC)). When owners costs (mine preproduction, mine equipment and Owners Project
Management (PM)) and contingency on owners costs are removed, the remaining value is 11.18%. The percentage is in line with
what might be expected of an Authority for Total Cost Management (AACE) Class 2 engineering estimate which is described in
Section 4.4.
1.4
Operating Costs
C1 cash costs during Years 2-16 of operation are expected to average $US0.72/lb of copper and
for the life of operations average $US0.82/lb (see Section 5 for further details). These costs
should put Cobre Panama in the first quartile of the projected industry curve and support the
economic robustness of the operation under most foreseeable market conditions.
Table 1-6 C1 Cash Costs($US/lb of Cu) at Copper Price Scenario of $US2.75/lb.
Cost Item
Average Yr 2-16
Life of Operations
Mine
0.30
0.32
Plant
0.37
0.44
G&A
0.11
0.12
Site services
0.03
0.04
Offsite costs
By-product credits
C1*
Page 20
May 2012
0.30
0.30
(0.40)
0.72
(0.40)
0.82
Minera Panama, S.A.

Table 1-7 Summary of Operating Costs by Component ($US/t of ore milled)
Cost Centre
Total
Labour
Material
Power
Other
Mine
2.44
0.27
1.87
0.05
0.24
Process Plant
3.29
0.24
2.13
0.91
0.01
G&A
0.88
0.15
0.01
0.04
0.69
Site Services
0.28
0.11
0.07
0.01
0.09
Total
6.88
0.77
4.08
1.01
1.03
A third party review of process plant operating costs concluded that the estimate of operating
costs was realistic and consistent with other operating concentrators. A separate reviewer
concluded that the Projects mining productivity ratios were at the average or slightly
conservative as compared to other similar open-pit mining operations.
Analysis of costs for input commodities such as oil (diesel), freight, steel (grinding media),
ammonia (explosives) and coal (power) has demonstrated a strong correlation to the historical
price of copper. When prices of oil and other raw materials are relatively high, statistically
significant correlations demonstrate that it is reasonable to expect that the economic
environment is robust and, likewise, so presumably would be the price of copper. The cost
assumptions for these commodities can therefore linked to price assumptions for copper over
the long term. The life of mine operating costs estimate of $US6.88/t of ore milled is based on a
long-term copper price assumption of $US2.75/lb. Table 5-5 shows the various input costs used
for each metal price scenario in the $US2.75/lb copper case oil is $US68.68/bbl, diesel is
$US0.62/l, coal is $US82.54/t, steel grinding media is $US935.25/t, explosives are $US936.21/t
and concentrate freight cost was $US41.21/t.
In the $US3.42/lb copper case oil is
$US80.53/bbl, diesel is $US0.72/l, coal is $US96.93/t, steel grinding media is $US1,143.62/t,
explosives are $US1,011.18/t and concentrate freight cost was $US48.32/t.
1.5
Project Economics
Three metal price scenarios were used to evaluate the Project economics: Consensus LongTerm ($US2.75/lb), Forward Curve, and Three Year Trailing Average ($US3.42/lb). It is our
belief that the Consensus Long-Term price is conservative and does not reflect anticipated
supply-demand dynamics (see Section 11 Marketing for additional discussion). Two financing
structures were considered in the Project economic analysis:
1. a levered case with third party and subordinate shareholder debt, and
2. a levered case with third party and subordinate shareholder debt, plus a gold and silver
stream sale.
Page 21
May 2012
Minera Panama, S.A.

These structures represent Inmet Mining Corporations (Inmets) financing assumptions applied
to 100% of the Project. All scenarios and cases appear to provide solid returns that range from
14.3% to 22.5% after-tax IRR.
Table 1-8 After-Tax Economics: Debt Case
Metal Price Scenario
Consensus Long-Term
Forward Curve
(declining to
consensus)
3-Year Trailing Average (SEC

case)
IRR
14.3%
18.5%
19.2%
NPV @ 8%
3,200
4,800
6,000
NPV @ 9%
2,400
3,900
4,900
NPV @ 10%
1,800
3,200
4,000
($USm)
Table 1-9 After-Tax Economics: Debt plus Stream Case

Consensus Long-Term
Forward Curve
(dropping to
consensus)

case)
IRR
16.7%
21.9%
22.5%
NPV @ 8%
3,500
5,000
6,300
NPV @ 9%
2,800
4,200
5,200
NPV @ 10%
2,200
3,600
4,400
($USm)
However, readers should be aware that the static Discounted Cash Flow valuation methodology
employed in the analysis does not capture the value of the optionality embedded in a long-life
asset and additional mineral resources that may be incorporated into the mine plan.
1.6
Third Party Reviews
Many recent projects in the mining industry have been impacted by unreliable capital estimates.
To ensure the reliability of Cobre Panamas capital estimate, third party reviews of key aspects
of the Project overall were undertaken to mitigate risks and improve the confidence of estimates.
Page 22
May 2012
Minera Panama, S.A.

Table 1-10 Third Party Reviews
Scope
Overall Project
Capex
Opex
Power
Tailings
Tailings
Project Controls
Project Readiness
1.7
Reviewer
Outcome
Chlumsky, Ambrust & Meyer

(CAM) Independent
Engineer
Legico-CHP
AMEC
Sunrise Americas & Wood
Mackenzie
URS Corporation
ITRB
KPMG
IPA
Confirmative
Confirmative
Confirmative
Confirmative
Confirmative
Confirmative
Confirmative
Confirmative
Risks and Opportunities
Cobre Panama stakeholder risks and opportunities were identified and risk mitigants put in place
as part of Basic Engineering.
Cost Escalation
Quotes to build the power plant and the process plant (together a significant component
of Project capital expenditures) were and are being written on a Lump Sum and Not to
Exceed basis in order to reduce the likelihood that these components will bring the
Project over budget. These quotes will be received from audited vendors with the
sophistication and balance sheet to manage costs and deliver on budget.
The advanced stage of engineering for the Project (currently 38% completed) in
combination with the large portion of firm bids received to-date (58%) should further
reduce the potential for unforeseen costs.
Panamas use of the US currency is another positive characteristic of the Project that
should reduce the potential for material cost escalation due to foreign exchange
fluctuation.
The manner in which the Request for Quotation process was conducted should reduce
the potential for cost overruns.
The Projects Engineering, Procurement and
Construction (EPC) and Engineering, Procurement, Construction and Management
(EPCM) contracts are designed to incent contractors to stay on budget and on schedule.
We believe the quotes obtained are materially conservative in some cases the labour
multiplier (unit of work over unit of time) used for work on the Project is as high as three
times what would normally be employed and some of the quotes for individual work
packages have small overlaps in scope (which could potentially reduce costs).
By the end of 2012, 50% of the Project expenditures are expected to be committed
against firm quotes currently in hand.
Overall Project contingency is 9.6% (as a percentage of TIC). When owners costs (mine
preproduction, mine equipment and owners project management (PM)) and contingency
Page 23
May 2012
Minera Panama, S.A.

on owners costs are removed, the remaining contingency level is 11.2%. This
percentage is in line with what might be expected of an AACE Class 2 engineering
estimate.
The Project is actively considering early group purchase of bulk commodities (to lock in
some costs of steel, diesel, cement) for construction and passing out to suppliers.
Low Cost Production from a Low Grade Mine

Cobre Panama is amenable to large scale, open pit mining methods that should result in
the efficient handling of ore and waste.
Mining costs should benefit from a very low strip ratio, roughly one fifth of the average
(0.58 vs 2.53 Source: Brook Hunt) for all open pit copper mines in 2011.
The Projects proximity to the coast and the low altitude of the Project should allow the
mine and the port to be located close together, thus decreasing linear maintenance and
allowing for integrated management of remote facilities.
The project would have access to low-cost, self-generated power that takes advantage of
proximity to a coal source.
Management Depth
Inmet has developed three mines within the tenure of the current management; the Las
Cruces, ayeli and Troilus mines.
For the Project, Inmet has recruited a strong owners team (detailed in Section 9) that
has relevant experience in construction and operations. Further, reputable Engineering,
Procurement and Construction contractors with a proven history of quality have been
selected.
Support for the Project
Approval of the ESIA is in our view indicative of governmental support for the Project.
Permits post-ESIA approval are being received.
Extensive engagement and cooperation at both the government and community levels.
At the community level, the current level of support in the Project area indicates that
community engagement efforts are working and a recent study shows overwhelming
support for the Project (Section 3.3.3).
Minera Panama, S.A. (MPSA) has received free prior and informed consent of the
indigenous communities who will be physically and economically displaced by the
Project.
MPSA has continuous engagement with the local communities and a broad range of
stakeholders and is delivering employment to local residents.
Mine Life
Current mineral resources are in excess of the Basic Engineering mine plan and point to
the potential for mine life extension and expansions beyond the currently planned
addition of a third crushing and grinding line to the process plant.
Page 24
May 2012
Minera Panama, S.A.

Acceleration of Third Line
Moving the third line addition forward could enhance the mill throughput by approximately
50% in Years 3 to 9 and would make Cobre Panama one of the ten largest copper mines
in the world in terms of annual production.
Further Expansion under Extended Resource
There is a significant mineral resource under the Basic Engineering plan, exclusive of
mineral reserves, that is largely near surface and proximal to the planned plant. This
could potentially support future expansion.
Exploration Potential
In late 2010 MPSA initiated a concession-wide exploration program via airborne
geophysical survey. This survey identified known shallow mineralization and generated
numerous targets. One of the first targets tested in early 2011 resulted in the discovery of
the Balboa deposit. An extensive exploration program for 2012 is underway with 36
holes testing additional targets on the concession.
1.8
Project Execution
A project execution plan has been developed to move Cobre Panama from completion of Basic
Engineering through design, construction and commissioning phases all the way to shipment of
the first concentrate anticipated in the first quarter of 2016. The MPSA Project team would grow
from 50 today to 107 members at its peak in 2013.
Milestones from the Project master schedule are presented below.
Page 25
May 2012
Minera Panama, S.A.

Table 1-11 Project Milestones
Milestone
Date
(Estimated)
Notice to Proceed
2Q12
Mine/Process Plant Construction Start
2Q12
Port Site Construction Camp Complete
4Q12
Process Plant Bulk Earthworks Complete
4Q13
Coast Road Open (Plant to Port Site)
4Q13
Port Dock Facility Construction Complete
2Q14
230 kV Power Transmission Line Construction Complete
3Q14
Tailings Starter Dam Construction Complete
3Q15
Introduction of Ore to Grinding Line No. 1
4Q15
Power Plant Complete Unit No. 1 Operational
4Q15
4Q15
4Q15
Start of Production
4Q15
Shipment of Concentrate
1Q16
Commercial Production
2Q16
1.9
Conclusions
With Basic Engineering completed, detailed engineering underway, key permits in process, and
continued efforts to maintain and enhance its privilege to operate locally, Cobre Panama is a
construction-ready Tier 1 project. With few such assets in a construction-ready position and not
already in the hands of a senior mining company, we believe the Project has potential value
beyond what is estimated in the NPV analysis.
Page 26
May 2012
Minera Panama, S.A.

TECHNICAL SUMMARY
2.1
Project Description
Cobre Panama would be a world-class Tier 1 asset based on projected mine life, annual
production, cash costs, scalability and annual cash flow.
Table 2-1 Tier 1 Characteristics
Tier 1 Characteristic
Life of Mine
31 years
Annual production (Yr 2-16)
298 kt
Annual production (LOM)
266 kt
C1 cash costs (Yr 2-16)
$US0.72/lb Cu
C1 cash costs (LOM)
$US0.82/lb Cu
Strip Ratio
0.58
Scale
160 ktpd to 240 ktpd throughput with

further expansion capacity
Annual free cash flow (Yr 2-16) at $US2.75/lb Cu, debt financing
$US0.90b
Annual free cash flow (LOM) at $US2.75/lb Cu, debt financing
$US0.81b
Copper reserves*
9.3 mt
Copper resources (M&I)*
14.7 mt
Copper resources (Inferred)*
8.7 mt
Concentrate
Clean concentrate not expected to draw

penalties
Logistics
Proximity to tidewater and Panama

Canal
*See Table 1-3 and 1-4
Cobre Panama would be developed as a conventional truck and shovel open pit mine with a
concentrator employing proven technology (crushing, grinding, flotation) to produce copper-gold
and molybdenum concentrate. A 300 mW coal-fired power plant and ship loading port facilities
would also be part of the Project.
The Project would be within an exploration and mining concession covering 130 km2 located in
the Donoso District, Coln Province in north-central Panama. The development would be close
to tidewater and would be advantaged by its proximity to the Panama Canal which provides
increased flexibility in sourcing supplies from both the Gulf of Mexico (North America) and South
America as well as providing convenient shipping of mine concentrates to global markets.
Page 27
May 2012
Minera Panama, S.A.

Figure 2-1 Site & Infrastructure Map
Page 28
May 2012
Minera Panama, S.A.

The Project infrastructure, ancillary support facilities and systems would include:
2.1.1
Three open pits (the Botija, Colina and Valle Grande deposits) which would be
progressively developed;
Ore crushing, conveying and stockpiling facilities, consisting of two gyratory crushers,
belt conveyors and a pad for crushed ore stockpiling for the initial Botija pit;
Provisions for a second crusher and associated conveying and stockpiling facilities to
handle ore from the Colina and Valle Grande pits
A 160 ktpd process plant consisting of two lines;
Provisions for an addition of a third line in the concentrator expanding its capacity to 240
ktpd throughput in Year 10 with negligible infrastructure modifications;
A slurry pipeline to transport concentrate to the port facility;
A port facility including concentrate loading and coal offloading facilities;
A 300 megawatt coal-fired power plant;
A coast access road, connecting the process plant with the port facility;
Plant and truck repair shop;
Warehouse and tank farm;
Camp and administrative offices;
Facilities and systems for environmental monitoring and management of effluents in
compliance with Project commitments; and
Transmission line from the power plant at the port facility to the process plant and
switchyard, continuing south to connect with the Panamanian grid at the Llano Sanchez
substation.
Geology and Mineral Resources
Copper-gold-molybdenum porphyry-style mineralization was discovered in central Panama

during a regional survey by the United Nations in 1968. Exploration has since outlined five large
deposits and several smaller ones on the concession. Drill programs have been conducted by
the United Nations Development Program (1968-1969), Panama Mineral Resources
Development Company (PMRD), a Japanese consortium (1970-1980), Inmet-Adrian ResourcesTeck as MPSA (1990-1997), Petaquilla Copper (2006-2008), and Inmet and Teck and then
Inmet as MPSA (2007-2009). A total of 1,275 diamond drill holes (230,555 m) have been
completed.
The relevant deposits are all porphyry copper deposits and include Botija, Colina, Medio, Valle
Grande, Brazo and Balboa. All of the porphyry-style mineralization on the property is hosted in
granodiorite, feldspar-quartz-hornblende porphyry, and adjacent andesitic volcanic rocks. The
scope of the Basic Engineering, as well as the approved ESIA, only covers the development of
the Botija, Colina, Medio and Valle Grande deposits.
Page 29
May 2012
Minera Panama, S.A.

Figure 2-2 Mineral Deposits and Defined Resources Plan Map
Cobre Panama mineral resources (inclusive of reserves) were re-estimated in early 2012 to
incorporate the 171 holes completed since the 2010 FEED Study (see Table 2-2). The increase
in measured and indicated resources reflected conversion of inferred resources into indicated
resources on the Brazo deposit and the addition of the Balboa resource. Most of the increase in
inferred resources came from Balboa.
Page 30
May 2012
Minera Panama, S.A.

Table 2-2 Cobre Panama Mineral Resources
Contained Metal (x1000)
Category
Tonnes
(x 1000)
Cu
Au
Ag
Mo
g/t
g/t
Cu
Au
Ag
Mo
Tonnes
ounces
ounces
tonnes
Measured
262,000
0.56
0.13
1.5
0.009
1,476
1,118
12,979
24
Indicated
3,905,000
0.34
0.06
1.2
0.005
13,237
7,845
155,392
214
Total
4,167,000
0.35
0.07
1.3
0.006
14,715
8,963
168,454
238
3,749,000
0.23
0.04
1.0
0.004
8,660
4,805
120,534
156
Inferred
Mineral resources which do not form part of the mineral reserves do not have demonstrated economic viability.
Mineral resources as at March 5, 2012 were estimated by Robert Sim, P. Geo., of SIM Geological Inc.
Mineral resources include mineral reserves.
Resource grades are estimated using ordinary kriging with a nominal block size of 25 metres by 25 metres by 15 metres. Resources
are limited inside a pit shell defined by a copper price of $USUS2.60 per pound, $US1.75/t mining cost and $US7.02/t total site
operating cost, and are tabulated at a cut-off grade of 0.15 percent copper.
Figure 2-3 Increase in Resources Since FEED Study
Cobre Panama has one of the largest undeveloped resources in the Metals Economics Group
(MEG) and Brook Hunt databases (see Figure 2-4). As a copper deposit not held by a major
(>$US10b market cap or sovereign), Cobre Panama stands out even more (Figure 2-5).
Page 31
May 2012
Minera Panama, S.A.

Figure 2-4 Contained Copper Endowment (resource proxy) for Undeveloped Copper
Deposits
Cu Contained in
total endowment (resource proxy) (mt)
Undeveloped Copper Deposits

Pre-feasibility
40
35
30
25
20
15
10
5
-
Based on MEG, Brook Hunt and in the case of Cobre Panama, Inmet databases.
Figure 2-5 Contained Copper Endowment (resource proxy) for Undeveloped

Copper Deposits Not Controlled by >$10b Market Cap or Sovereigns
Cu Contained in
total endowment (resource proxy) (mt)
25
Copper Deposits not controlled by >$10b Mkt Cap or Sovereigns

Pre-feasibility
Feasibility
Construction Ready
20
15
10
0
KSM
Galore
Creek
Haquira
Casino
Schaft
Creek
Based on MEG, Brook Hunt and in the case of Cobre Panama, Inmet databases.
Page 32
May 2012
Red Chris
Cobre
Panama
Sentinel
Minera Panama, S.A.

2.1.2
Mine Plan and Mineral Reserves
The mine production schedule has been developed to maximize early revenues and improve overall
Project returns utilizing a conventional mining fleet. The economics of Cobre Panama would benefit
from a low life of mine strip ratio of 0.58 tonnes of waste for every tonne of ore. Mine operations
would be scheduled for two 12-hour shifts per day, 365 days per year.
A series of analyses were conducted for Basic Engineering to determine economic pit limits and the
mining phase development sequence for three mineral deposits in the concession area: Botija,
Colina, and Valle Grande. The concentrator site would be centrally located within 2 km of all three
deposits as well as the stockpile (Figure 2-9). A fourth smaller deposit, Medio, is about 500 m
northeast of the Colina pit. The new block model incorporates a small Medio pit which was targeted
by recent drilling and is part of the mine production schedule in Years 11-14.
The economic pit limit evaluations, open pit development sequence plans, and reserve estimates are
based on metal prices of $US2.25/lb Cu, $US13.50/lb Mo, $US1,000/oz Au, and $US16.00/oz Ag.
Over the life of the Project, forecast concentrator recoveries used are based on the revised Basic
Engineering flow sheet forecasts and should average about 89% for Cu, 53% for Mo, 52% for Au,
and 46% for Ag. Weighted average mining costs of $US1.77/t were used in the pit limit analyses,
along with base ore processing and general/administration costs of $US3.83/t and $US1.44/t,
respectively. The costs used to estimate mineral reserves are conservative compared to the Basic
Engineering final operating cost summarized in Section 5.2.
The ultimate pit plans and mining phase designs have not changed from the FEED Study of March
2010, with the exception of the Medio pit extension. The open pit development sequence has been
adjusted to reflect slightly lower effective cut-off grades that have resulted from increased copper
recoveries and higher metal prices used to define ore in the Basic Engineering Study. These minor
reserve changes resulted in an increase in ore tonnages of about 8%.
2.1.2.1 Mine Production Schedule

A third grinding circuit is planned to be added to the concentrator, which would commence operation
in Year 10, increasing the base ore processing rate capacity from 160ktpd to 240ktpd. Mine
operations would be scheduled for two 12-hour shifts per day, 365 days per year. Mining department
manning levels should vary between about 850 and 956 people during the operating years, including
both salaried and hourly workers, expatriates, and nationals. Four rotating crews would provide
continuous operator and maintenance coverage in the mine. The concentrator is anticipated to
operate an estimated 31.1 years, including the processing of about 193 mt of stockpiled ore during
Years 28 to 31 (Figure 2-6 below and Table 2-3).
Page 33
May 2012
Minera Panama, S.A.

Figure 2-6 Summary of Mining Schedule
Figure 2-7 Mining Schedule Shown by Type of Material Moved and by Pit
Page 34
May 2012
Minera Panama, S.A.

Table 2-3 Mine Production Schedule
Time Period
Prior to M-15*
PP M-15 to M0
Y1
Y2
Y3
Y4
Y5
Y6
Y7
Y8
Y9
Y10
Y11-Y15
Y16-Y20
Y21-Y25
Y26-Y31**
Total
Ore to ROM
Stockpile
or Mill
(kt)
214
1,227
50,241
58,062
58,400
58,654
58,400
57,950
58,400
58,400
57,360
85,407
437,152
438,001
411,876
428,310
2,320,054
To Saprock
Ore
Stockpile
(kt)
1,751
7,643
5,382
2,108
739
4,331
9,519
4,843
11,391
4,167
7,085
1,378
1,291
5,571
8,216
75,414
To
Low-Grade
Ore
Stockpile
(kt)
Waste
Rock
& Saprolite
(kt)
766
9,478
14,006
23,897
23,592
18,520
14,424
4,844
4,167
2,489
1,961
118,145
47,552
50,406
47,089
31,762
21,099
22,135
21,493
37,793
32,884
45,337
62,567
49,906
247,902
251,978
128,054
55,953
1,153,910
Total
Material
(kt)
50,282
68,755
118,718
115,829
103,831
103,640
103,837
105,429
106,842
110,392
128,973
136,691
686,345
695,550
548,147
484,263
3,667,523
*M denotes months e.g. M minus fifteen

**Includes 147,957 kt of ore stockpile reclamation in Years 26 to 31
Page 35
May 2012
Strip Ratio
234.41
55.02
1.27
0.99
0.78
0.77
0.78
0.82
0.83
0.89
1.25
0.60
0.57
0.59
0.33
0.13
0.58
Contractor
(kt)
50,282
12,912
7,351
376
6,476
5,614
8,680
9,806
13,019
10,138
3,119
586
38,422
44,565
28,895
240,238
Owner
(kt)
55,843
111,367
115,452
97,355
98,026
95,157
95,623
93,823
100,254
125,854
136,106
647,923
650,985
519,252
484,263
3,427,284
Cu-Au (Cu
26%)
Concentrate
Production
(k dmt)
789
1,077
1,114
1,137
1,122
1,161
1,185
1,111
933
1,344
5,830
5,858
4,702
4,318
31,681
Minera Panama, S.A.

Table 2-4 Mining Schedule by Pit
Time
Period
Total Ore Milled or to ROM Ore Stockpile

B
Y26-Y31
214
1,227
52,241
58,062
58,400
56,595
46,412
35,332
23,731
13,585
7,036
16,219
164,073
272,047
16,342
77,599
Total
899,114
Prior to M-15
PP M-15 to M-0
Y1
Y2
Y3
Y4
Y5
Y6
Y7
Y8
Y9
Y10
Y11-Y15
Y16-Y20
Y21-Y25
VG
To Saprock Ore Stockpile
1
2,059
11,988
22,617
33,084
40,686
39,753
63,426
164,432
164,402
284,198
84,587
1,585
4,129
10,571
5,762
91,316
1,552
111,337
266,124
17,331
-
1,751
7,643
5,382
2,108
49
27
36
49
-
691
4,331
9,519
4,842
9,814
429
3,532
690
339
5,001
-
911,233
492,375
17,331
17,044
39,187
VG
To Lowgrade Ore Stockpile

M
VG
0
1,577
3,710
3,517
689
903
570
8,216
-
766
9,478
14,006
23,897
23,591
16,818
10,767
1,022
199
171
-
1
1,702
3,657
3,797
3,377
352
577
-
25
790
1,938
1,214
-
19,182
100,715
13,462
3,968
B = Botija Pit, C = Colina Pit, VG = Valle Grande Pit, M = Medio Pit
Page 36
May 2012
Waste Rock and Saprolite

VG
Total
Ktonnes
47,552
50,406
47,089
31,762
9,520
4,834
1,507
9,542
5,452
27,200
49,903
41,006
147,894
24,950
331
-
11,579
17,301
19,986
23,039
11,552
3,411
3,353
4,050
74,758
147,678
35,825
2,023
5,212
15,880
14,726
9,311
4,850
5,359
79,351
91,898
53,930
19,891
-
50,282
68,755
118,718
115,829
103,831
103,640
103,837
105,429
106,842
110,392
128,973
136,691
686,345
695,550
548,147
484,264
498,948
354,555
280,516
19,891
3,667,523
Minera Panama, S.A.

The Cobre Panama pit design used for mineral reserve estimates is based only on M&I
resources. Inferred mineral resources, which amount to 321 Mt at 0.26% Cu within current pit
design, are treated as waste. An increased confidence level on the inferred mineral resources
could result in those being converted to mineral reserves and integrated into a revised mine
plan, which would significantly improve Project economics by both lowering the strip ratio and
benefiting from increased tonnage. Figure 2-8 illustrates the inferred resources in the current
mine plan pits.
Figure 2-8 Inferred Resource In-Pit
Note: Inferred mineral resources highlighted in pink.
Page 37
May 2012
Minera Panama, S.A.

Figure 2-9 Plan View of Site Infrastructure and Design Pits
Total material within the designed ultimate pits is estimated to be 3.501bt. Contained metal from
proven and probable mineral reserves is projected to be approximately 20.4b lb of copper, 373m
lb of molybdenum, 5.17m oz of gold, and 104m oz ounces of silver.
Page 38
May 2012
Minera Panama, S.A.

Table 2-5 Cobre Panama Mineral Reserve

Category
Tonnes
Cu
Au
Ag
Mo
(x 1000)
g/t
g/t
258,000
0.57
0.14
1.6
Probable
2,061,000
0.38
0.06
Total
2,319,000
0.40
0.07
Proven
Cu
Au
Ag
Mo
(x1000)
(x1000)
(x1000)
(x1000)
Tonnes
ounces
ounces
tonnes
0.010
1,478
1,126
13,020
25
1.4
0.007
7,781
4,041
91,008
145
1.4
0.007
9,258
5,167
104,028
169
Mineral reserves as at December 31, 2011 were estimated by William Rose, P.E., of WLR Consulting, Inc., a qualified
person under National Instrument 43-101.
Reserve estimates are based on the following assumptions:
copper price: $US2.25 per pound
gold price: $US1,000 per ounce
silver price: $US16 per ounce
molybdenum price: $US13.50 per pound
Mining costs : $US1.66/t of ore mined, $US1.96/t of waste mined and
Milling and general and administration cost: $US5.27/t of ore milled, average life of mine metallurgical recoveries: 89
percent for copper, 52 percent for gold, 46 percent for silver and 53 percent for molybdenum.
2.1.3
Metallurgy
Extensive metallurgical test work was carried out on the Botija and Colina deposits as part of a
feasibility study completed in 1997. This work included mineralogical and geochemical ore
characterization, comminution, copper flotation, copper-molybdenum separation and dewatering
studies.
As part of the 2010 FEED Study, an extensive sampling and test program was undertaken to
bolster the knowledge from previous work and provide insight into the variability of the
comminution and flotation response. A total of 16 metallurgical holes for grinding and flotation
tests were drilled in the Botija, Valle Grande, and Colina ore bodies. Sample preparation,
flotation testing, and testing of flotation products were done primarily at G&T Metallurgical
Services, Kamloops, B.C.. Comminution work was conducted at SGS Mineral Services,
Lakefield, Ontario, and at Philips Enterprises LLC, Golden, Colorado.
During Basic Engineering, the process flowsheet was further optimized with the removal of
sodium cyanide as a pyrite depressant. Improvements to the cleaner circuits such as a reduction
of a stage and the recycling of cleaner tails to the regrind mill have improved recovery. Test work
to support these changes to the flow sheet was performed at SGS Mineral Services, Lakefield.
Page 39
May 2012
Minera Panama, S.A.

The final flotation protocol selected was:
Rougher grind size P80 = 180 microns;
Rougher pH of 10 10.5;
Addition of Cytec 3302 at 5 g/t in the primary grind and 5 g/t in the rougher
flotation;
Stage addition of 25 g/t SIPX in the rougher and flotation time of 15 minutes;
Methyl Isobutyl Carbinol (MIBC) and frother as needed;
Concentrate regrind to P80 of 30-35 m and lime addition to have pH ~11.0 at the
start of the 1st Cleaner;
Cleaning via a 1st Cleaner (3 minutes), 1st Cleaner Scavenger (5.5 minutes) and
2nd Cleaner (2 minutes) with 0.5 g/t addition of SIPX in the first stages; and
Recycling of 1st Cleaner Scavenger Concentrate and 2nd Cleaner Tail to the
regrind in locked cycle tests.
The metallurgical recoveries used for the production forecasts in this Report are based on the
results from the 2010 FEED Study metallurgical program and were modified by the revised flow
sheet test work completed during Basic Engineering.
Table 2-6 Recovery Forecast Algorithms
Recovery Formula
Notes
Cu
5.8287*Ln(Cu%) + 95.775
Mo
Au
Ag
Fixed recovery 55.0%

15.993*Ln(AuGPT) + 92.138
Fixed recovery 47.3%
Cap at 96%. 4% (absolute) deduction for

Valle Grande
3% (absolute) deduction for Valle Grande
Process Plant
The Cobre Panama concentrator will be designed to use current proven technology to produce
copper and molybdenum concentrates. The Project design is based on an initial ore feed rate of
160 ktpd. The processing plant is designed with two grinding lines, each having nominal capacity
of 80 ktpd. The design also includes a planned increase to 240 ktpd in Year 10 of operations.
This expansion would include the addition of a second crusher station to crush Colina and Valle
Grande ore and a third line in the concentrator. The expansion would also include the addition of
a third grinding line, additions to bulk rougher flotation, water and air systems.
The process plant is designed to process ore at a nominal head grade of 0.5% Cu and 0.01%
Mo and maximum head grades of 0.9% Cu and 0.015% Mo.
Copper concentrate would be delivered by a 32 km slurry pipeline from the mine site to the filter
plant located at the port in Punta Rincon. After pressure filtration, the dewatered concentrate
would be stored and subsequently reclaimed and loaded onto bulk concentrate vessels for
delivery to international customers. Molybdenum concentrate would be produced from the
copper concentrate by differential flotation when the molybdenum head grade is sufficiently high
Page 40
May 2012
Minera Panama, S.A.

to produce a marketable product. The molybdenum concentrate would be filtered, dried and
bagged, and then containerized for shipping.
Process Plant Design Changes in Basic Engineering
The following design changes were made during Basic Engineering from the FEED Study to
reflect current conditions and basis of design:
Changed the feed grade design criteria from 0.41% Cu nominal and 0.7% Cu design
maximum to 0.5% Cu nominal and 0.9% Cu design maximum
Increased the SAG and Ball Mill sizes and motors to ensure design throughput rate is
met over a range of ore hardness characteristics
Eliminated the use of cyanide in the flotation circuit by modifying the reagent suite
Revised the cleaner circuit configuration to remove the 3rd cleaner circuit
The middlings (scavenger concentrate and second cleaner tails) were rerouted to the
regrind mills whilst previously they were routed to the 1st cleaner bank. This should
liberate more minerals and improve recoveries
The SAG mill and ball mill discharge pumps were combined which should improve plant
availability and lowering maintenance costs.
The mill maintenance workshop was relocated so as not to interfere with the installation
of a third line.
Increased the size but reduced the number of units of regrind mills
Modified the molybdenum flotation circuit configuration by adding rougher feed
conditioning tank, and increased number of 1st and 2nd cleaner cells
Eliminated the molybdenum regrind mill
Resized the concentrate thickeners to reflect changes in copper head grade design
criteria
Increased the copper concentrate filter size
Increased throughput capacity from 150 to 160 ktpd using some of the design
contingency in the crushing and grinding circuits
The initial Botija gyratory crushers have been be resized from 60 x 89 to 60 x 110
Page 41
May 2012
Minera Panama, S.A.

Table 2-7 Mill Production Schedule
Ore Milled
Time
Period
Recoveries
Contained
Recoverable
Au
Ag
Cu Rec
Mo Rec
Au Rec
Ag Rec
Cu lbs
Mo lbs
Au Troy
Ag Troy
Cu lbs
Mo lbs
Au Troy
Ag Troy
x1000
x1000
Oz
Oz
x1000
x1000
Oz
Oz
(kt)
Cu %
Mo %
(g/t)
(g/t)
(%)
(%)
(%)
(%)
Y1
52,241
0.43
0.008
0.09
1.31
91.2
55.0
57.7
47.3
496,017
9,382
158,761
2,197,379
452,440
5,161
91,587 1,039,369
Y2
58,062
0.52
0.009
0.11
1.34
92.3
55.0
59.2
47.3
668,657 11,406
201,038
2,500,983
617,084
6,273
118,933 1,183,015
Y3
58,400
0.54
0.011
0.11
1.38
92.4
55.0
59.7
47.3
691,000 13,524
207,106
2,593,730
638,532
7,439
123,676 1,226,899
Y4
58,654
0.55
0.009
0.11
1.42
92.5
55.0
60.1
47.3
705,071 11,840
209,068
2,684,133
651,975
6,509
125,691 1,269,685
Y5
58,400
0.54
0.010
0.10
1.57
92.4
55.0
58.1
47.3
695,850 12,948
186,451
2,941,948
642,976
7,121
108,390 1,391,647
Y6
57,950
0.56
0.010
0.11
1.50
92.7
55.0
58.7
47.3
718,384 13,375
197,394
2,795,988
665,643
7,356
115,895 1,322,630
Y7
58,400
0.57
0.009
0.13
1.77
92.6
55.0
63.3
47.3
733,126 11,474
243,878
3,329,455
679,234
6,305
154,281 1,574,945
Y8
58,400
0.54
0.009
0.11
1.72
92.1
54.8
60.4
47.3
691,835 11,818
199,577
3,224,473
636,983
6,481
120,578 1,525,262
Y9
57,360
0.47
0.008
0.08
1.56
90.8
54.4
56.5
47.3
588,441 10,025
153,870
2,882,785
534,597
5,454
86,978 1,363,598
Y10
85,407
0.45
0.008
0.08
1.48
91.2
54.8
55.7
47.3
844,811 14,728
220,231
4,067,640
770,176
8,071
122,647 1,924,103
Y11-Y15
437,152
0.39
0.007
0.06
1.37
89.6
54.2
49.7
47.3
3,730,176 63,071
809,995
19,245,778 3,341,760
34,178
402,698 9,103,594
Y16-Y20
438,001
0.38
0.008
0.07
1.27
90.7
55.0
54.1
47.3
3,701,883 73,346 1,055,394
17,923,250 3,357,878
40,338
571,152 8,478,077
Y21-Y25
411,876
0.34
0.006
0.05
1.45
88.5
54.1
47.9
47.3
3,044,904 55,696
656,669
19,226,507 2,694,961
30,156
314,317 9,094,779
Y26-Y31
428,310
0.33
0.006
0.05
1.34
79.9
46.4
37.2
40.2
3,097,280 60,475
666,843
18,396,852 2,474,937
28,040
248,038 7,401,672
2,318,613
0.40
0.007
0.07
1.40
89.0
53.3
52.4
46.1
Total
20,407,435 373,108 5,166,274 104,010,901 18,159,176 198,883 2,704,862 47,899,276
Page 42
May 2012
Minera Panama, S.A.

2.1.4
Mine Waste Management
Three forms of mine waste materials would be generated during the mine construction and mine
operation.
They include:
i) Pit Waste Rock
Various facilities would be constructed to stockpile and store saprolite and waste rock:
The Botija North Waste Rock Storage Facility would store the waste rock generated in the
early years of mine construction and mine operation.
The Botija North Saprolite Stockpile (BNSS), constructed within the footprint of the Tailings
Management Facility (TMF) during the early phase of mine construction, would receive
saprolite materials excavated from the Botija Pit development.
The Botija South Waste Rock Storage Facility, as well as a low-grade ore stockpile in the
Botija West area, would be constructed in the early years of mine development. Waste rock
stockpiles to be constructed at a later phase in the mine operation, when required, would
include the Botija West Waste Rock Storage Facility, the Colina North Waste Rock Storage
Facility, and the Southwest Waste Rock Storage Facility.
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Minera Panama, S.A.

ii) Tailings
Tailings generated before Year 22 would be stored in the TMF located north of the mine area.
Tailings generated thereafter would be stored in the mined out pits under water cover. Details
are provided in Section 2.1.5
iii) Earthwork Construction Waste
This waste would be stored in the saprolite stockpile, waste rock dumps or the TMF as
appropriate.
Wastewater Treatment and Disposal
Sewage treatment plants would be provided at both the mine/plant site and the port site. During
operations, the mine site sewage treated effluent would be pumped to the TMF. The sewage
sludge cake would be burned in the incinerator.
2.1.5
Solid and Hazardous Waste Disposal
Solid waste from both the mine/plant site and the port site would be disposed of using
incinerators, waste storage buildings, a solid waste sorting facility, and sanitary landfills.
Hazardous waste would be stored in secure facilities prior to being shipped offsite to approved
disposal facilities.
2.1.6
Tailings Management Facility
The TMF would store tailings for the first 22 years of mine operation, after which tailings would
be discharged into the mined-out pits for the remainder of mine life. Water recycled from the
TMF would also provide mill process water. Tailings would be transported from the plant site
through a pump and pipeline system. The TMF is designed to store a minimum of 1.54bt tailings
produced over the first 22-year period; about 1.35bt of this will be placed in the impoundment
and the remainder used in cycloned sand embankment construction. A storage capacity of
approximately 1.0b cubic metres would be created within the impoundment area. The milling
operation produces two separate tailings streams, each of which would be deposited separately:
90% rougher tailings (non-acid generating or NAG) deposited on the beaches and
cycloned for producing sand for dam construction; and
10% cleaner tailings (potentially acid generating material or PAG) deposited and
maintained under submerged condition. Cleaner tailings would be deposited into the TMF
for the first 20 years and thereafter into pits.
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Minera Panama, S.A.

2.1.6.1 Site Conditions
The TMF is located in a natural basin a valley with relatively high ground on three sides. Over
the life of the TMF a number of dams would be required to supplement natural topography to
provide the planned TMF storage capacity. The TMF would be situated north of the plant site
and the open pits and would cover an area of approximately 20 km2 and would be about 4.5 km
wide (east to west) by 4.5 km long (north to south) (Figure 2-10).
Figure 2-10
Plan View of TMF Including Dams
2.1.6.2 Design and Construction

The TMF is designed to national and international accepted standards to provide a facility for the
safe and environmentally acceptable storage of the process tailings wastes. The operational
design takes into account the requirements for closure at the end of the mine life. The TMF
would be constructed in stages with the first stage starter dams constructed before operations
begin to provide tailings storage and water management for the first two years of operation. As
dam raising would progress on the north and east side (or North Dam and East Dam), the West
Dam would be required to hold tailings waste from Year 4 production onwards.
The embankment would be raised in stages in a downstream manner as required to provide
tailings storage and water management to the end of the TMF operating period in Year 22. After
this time, tailings storage and water management would be provided in the mined-out open pits
(Botija and Colina) to the end of the estimated 31 year mine life. The maximum dam height
would be about 100 m at the end of the active TMF operations.
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Slope stability analyses have been carried out for the starter dam that indicate that stability
berms are required to meet the safety criteria due to the saprolite foundation as well as cyclic
softening under design earthquake loadings. Seepage analyses have been carried out for the
tailings North Starter Dam and the ultimate Sand Dam to support the tailings dam and drainage
design.
Basic Engineering has introduced a number of modifications to the FEED Study design of the
TMF, including: increasing the starter dam service life from one to two years; re-aligning the East
Dam so as not to impact the adjacent Pifa River basin and an adjacent community of indigenous
people; removing cyanide from the mill process circuit; relocating the supernatant pond and
pump-barge from the north-east corner to north-west corner of the TMF; tightening design
criteria to reflect more stringent earthquake and hydrology safeguards; and changing the
temporary diversion from box culvert to sequential open channel diversion. These modifications
have been endorsed by an MPSA-commissioned Independent Tailings Review Board (ITRB).
Flood routing and freeboard requirements for the TMF dams have been selected in accordance
with the Canadian Dam Association (CDA) Dam Safety Guidelines (CDA, 2007) for dam
classification of very high consequence. A tailings water pond would be formed within the tailings
storage basin.
2.1.7
Water Management
The Project area receives between 4.5 and 5 m of rain annually, making water management an
important consideration. The water management system has been designed to minimize the use
of freshwater and thereby reduce the water footprint of the Project. The principal water
management facilities incorporated into the Project design include:
Botija North Saprolite Stockpile sedimentation pond
Botija Pit sedimentation pond
Botija South Waste Rock Storage Facility collection ponds
Process Water Pond (PWP)
Botija West sedimentation pond
TMF pond and ancillary facilities (including seven seepage collection facilities at Year 5)
Fresh water ponds (one at the mine area and another at the port area)
Open pits (including Botija, Colina and Valle Grande)
Sedimentation ponds along access roads or for temporary works
These water management facilities would:
Collect potentially contaminated surface runoff or seepage
Control total suspended solids level in discharge
Alleviate the impact of runoff due to extreme rainfall events
Provide water supply for mine operations
Facilitate the dam raise operation of the TMF
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Minera Panama, S.A.

In Years 1 to 22, tailings generated would be deposited in the TMF and from Year 23 to Year 30,
tailings would be deposited in the mined-out pits under water cover.
After the mine is closed, inflows into the TMF would only be from direct precipitation, catchment
runoff and runoff from the Botija North Saprolite Stockpile. TMF outflows would include
evaporation and passive discharge to the environment. Seepage and dam runoff to the
environment would continue from the Tailings Dam. All the waste dumps and the low grade ore
stockpile would be closed. Non-contact water from the dumps would be allowed to flow to the
environment and adjacent catchment; however, contact water would still be routed through the
various collection ponds for dilution and treatment (if required) before discharging to the
environment. All mine pits would be closed and once filled with tailings, the pits discharge would
be by gravity to the environment. Evaporation from the pit lake would continue during and after
this mine phase. All modelling to-date indicates that water treatment would not be required
during construction. Adaptive management, coupled with on-going monitoring of site conditions,
would be used to ensure that Cobre Panama complies with all requirements and does not have
an adverse impact on the receiving environment during the operations phase.
2.1.7.1 Water Supply, Treatment and Distribution
At the mine/plant site, raw water for potable and other uses would be obtained from a fresh
water reservoir filled by surface water runoff and rainwater in a natural valley between the
construction and operations camps east of the Botija pit. Potable water would be supplied from a
Potable Water Treatment Plant. Fire protection water loops would be provided around all the
main facilities to supply hydrants installed at minimum 90-meter spacing. Sprinkler systems
would be installed in the accommodation facilities, administration offices, assay lab, office areas,
and warehouse areas of the equipment shops.
Process water for the plant would come from three sources: overflow water from the copper
concentrate and bulk thickeners; pit dewatering water and collection ponds water; and reclaim
water pumped from the TMF. No fresh water would be needed to be supplied to the plant as
reclaim water would be used for the higher-quality water demand.
At the port site, raw water for potable and other uses would come from a reservoir to be
constructed by damming a small channel upstream of the port site. Water from this reservoir
would be pumped to a fresh/fire water gravity head tank located along the Coast Road. Water
from the head tank would be distributed to the port site area through two independent pipelines
buried along the Coast Road. Potable water would be produced by treating water from the
fresh/fire water tank in a treatment plant.
2.1.8
Power Plant
The power plant is scheduled for construction during 2013 to 2015, concurrent with overall
project construction. It is expected to produce electric power at an average life-of-mine cost of
US4.43/kWh which should result in a significant cost savings compared to an approximate
average cost of US10/kWh in Panama. The power plant would consist of two pulverized coalPage 47
May 2012
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fired units and associated steam turbine generators, each unit rated at 150 mW. The power plant
would be a highly efficient and reliable utility scale generating station that incorporates modern
equipment, software and features. It would operate primarily at base load and would supply
electric power via a double circuit 230 kV transmission powerline, designed and installed to the
mine switchyard 22 km from the power plant. The transmission powerline would also be
extended to connect to the Panamanian grid at Llano Sanchez, 94 km to the south of the mine
site. During the first nine years operating at steady state, the power plant should be able to
supply 100% of the mines electricity requirements (currently estimated peak load range is about
226 to 257 mW). Excess electricity generated by the power plant would be exported and sold
into the grid, subject to dispatch requirements. During periods of scheduled maintenance or
forced outages of the power plant, the mine would purchase electricity from the grid.
The power plant design incorporates two 150 mW conventional subcritical pulverized coal-fired
boilers, air quality control systems utilizing seawater flue gas desulfurization (FGD), continuous
emissions monitoring systems, steam turbine generators (STGs) with full condensing and reheat
capabilities, turbine water induction prevention, condenser cooling via once-through sea water,
condensate systems and boiler feed water systems.
Power Plant Capital Cost
The 300 mW gross capacity power plant capital cost is estimated to be $US676m; including EPC
capital costs of $US646m and $US30m of owners contingency.
Power Cost
During the first nine years of mine operation, the power plant would be able to sell excess
electricity to the grid. The average MPSA power cost during this period is estimated to be
US2.65/kWh after sales credits. With the addition of a third mill to the processing circuit at the
mine, MPSA would need to buy a very small amount of additional electricity from the grid starting
in Year 10. The average MPSA power cost during Years 10 to 30 of mine operation is estimated
to be US4.96/kWh, including the cost of more electricity purchases from the grid. The power
plant has been designed and would be built with accommodation to further expand output should
it be required.
Power Sources
Panamas primary source of power is hydroelectricity. The Bayano Hydro power plant 260 MW
and Fortuna 300 MW, are two of the countrys major power providers. Thermo-electric power
generation is the second major power source. The 280 wW Bahia Las Minas thermal power
plant in Coln Province refurbished its 120 MW Bunker fired unit that was converted into
Panamas first coal-fired generator and has been in operation since 2011. Panama has an
installed capacity of 2,145 mW including many run of river hydros, and a peak demand of 1,355
mW. Approximately 14% of Panamas population, primarily in the countrys rural areas, does not
have access to power. Potential to expand the grid is varied and includes new hydroelectric
projects, implementation of a natural gas power plant (the canal expansion will allow standard
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Minera Panama, S.A.

LNG ships to pass through) and a connection to the Colombian grid where there is an excess of
3,000 mW. There is also the 1,800 km SIEPAC 230 kV transmission line with a 300 mW
capacity that interconnects Panama with Central America. The Cobre Panama power plant
would take advantage of the abundant low sulphur, high quality coal supply from nearby
Colombia. Power plant maintenance activities would be done during the wet season when there
is an oversupply of energy on the grid.
2.1.9
Project Infrastructure / Ancillary Facilities
Project infrastructure includes:
Project Access, including roads;

Electrical power supply and distribution;
Water supply, treatment and distribution;
Wastewater treatment and disposal;
Waste disposal;
Mine/Plant site support facilities (e.g. maintenance shops, camps, offices, warehouses,
etc.);
Port Site and related support facilities;
Communications systems;
Transport and logistics; and
Tailings management facility
2.1.9.1 Project Access

The site is located in Coln Province, approximately 20 km north of the Continental Divide that
bisects the northern and southern parts of Panama. The process plant site would be located at
North 850 and West 8038, approximately 205 km by road from Panama City. The
international airport in Panama City serves passengers as well as air freight. The Scarlett
Martinez International Airport is also under construction some 30 km from Penonom to handle
chartered vacation flights servicing the beach resorts. Once the Project development is
completed, the new port facility at Punta Rincon will provide principal access for import of major
consumables and export of copper and molybdenum concentrates.
Roads: From Panama City, the route to the mine would first follow 140 km along the four lane
Pan-American Highway to Penonom. From Penonom to the site, the Llano Grande Road is
currently being upgraded by MPSA to improve longitudinal and transversal drainage,
sedimentation control and to smoothen the longitudinal slope (the route will be partially paved).
Other roads required are the Pioneer Road (up to Botija quarry), the Molejn by-pass, and the
La Pintada by-pass, all of which are currently under construction (there is already a useable
Penonom bypass). These roads would provide ready access to the site while bypassing local
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Minera Panama, S.A.

communities to minimize the impact of increased traffic flow. This improved infrastructure should
provide significant benefits to the population in the affected area.
The road from the mine/plant site to the new Punta Rincon port site, designated as the Coast
Road, would be 30 km long. It will be designed for the transport of freight and equipment
required for construction and operation of the mine and process plant. Use of this road should
decrease the impact of freight transportation through the towns along the southern Llano Grande
access route.
2.1.9.2 Electrical Power
Construction and Emergency Power: This would consist of diesel-electric generating units
that would be provided during the construction phase of the mine/plant and port sites. During the
operation stage of the Project, they would serve as a back-up emergency source of power.
Power Transmission: Preliminary design of the power plant assumes a base load operation,
with purchase and sale of electricity from and to the Panamanian grid. Electricity would be
delivered via a 120 km double circuit 230 kV transmission line, with interconnections at the Mine
Switchyard and Llano Sanchez Substation. Each circuit of the 230 kV transmission line would be
rated to transmit full power requirements of the plant, assuring higher reliability of the electric
power.
The grid would allow for the sale of excess power to the national grid as it is available. It would
also supply back-up power requirements for the power plant, mine/plant site and port when
needed. The transmission line interconnection has been authorized by ETESA, the governmentowned transmission line operating company.
Power Distribution: The 230 kV transmission lines from both the generating plant and the Llano
Snchez substation would be interconnected with utility-grade 230 kV air-insulated switchyard
located 4.5 km from the mine/plant site. The switchyard includes a control house building for
protection, control and metering equipment as well as a 125 V DC battery system.
The mine/plant site 230 kV substation would be located adjacent to the concentrator building.
Secondary distribution for the process plant, mining area, TMF, and water reclaim system would
be at 34.5 kV. The 34.5 kV system would deliver power to area distribution unit substations that
would step the voltage down to 4.16 kV or 480 volts as required for the service. Each of the pits
would be supplied with power from 34.5 kV overhead lines running from the main plant site
substation to portable substations around the pit rim. The portable substations would have 34.5
kV/4.16 kV and 4.16 kV/0.48 kV transformers to provide power to the pit equipment.
2.1.10 Port
The port site would be located at Punta Rincon, Panama approximately 30 km from the mine site
on the Caribbean Coast which is located at latitude of N902 and longitude W8041. Once
construction is complete, it would become the main point of entry of supplies and equipment for
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Minera Panama, S.A.

the entire Project site, including coal for the power plant, and it would act as the point of export
for the copper concentrate. While for the most part only 50-60 kTon freight vessels are
anticipated, the port, with its planned draft of 16-17 m, would be able to handle vessels up to
Panamax in size (requiring a 12 m draft).
Basic Engineering has been completed for the following port site facilities: a copper concentrate
filter plant; a copper concentrate storage building; a deep sea platform with ship loading facilities
for copper concentrate export; facilities for receiving coal; barge and ship facilities for receiving
fuel and operating supplies; temporary unloading facilities that are capable of receiving
construction equipment and supplies; camp facilities which include necessary utilities and
services; a power plant for the generation of electricity, together with its coal handling and
storage facilities, ash disposal and water systems; and a fuel tank farm.
2.1.11 Pipelines
Three major pipelines would run between the mine/plant site and the port site: a copper
concentrate pipeline to move the concentrate slurry from the process plant to a filter plant at the
port site; a return water pipeline to return the filtrate from the filter plant at the port site to the
tailings management facility at the mine/plant site; and a diesel fuel pipeline to deliver fuel
received at the port to the mine/plant site.
The three pipelines would be buried in a common trench along the shoulder of the Coast Road,
together with a polyethylene conduit to protect optical fibre cables that would also be run
between the mine/plant sit and the port. All pipelines would be equipped with leak detection
systems and a cathodic protection system would be installed to prevent external corrosion of
pipelines.
Along the access road, culverts would be used for most stream crossings with the exception of
larger river crossings for which bridges would be built. Two rivers will be crossed: Uvero River
and Del Medio River. The pipelines would be installed on supports attached to the beams of the
road bridges on the downstream side to provide greater protection. This configuration should
significantly reduce the risk of damage by external means, in comparison with the common
method of burying the pipes below the riverbed. For additional protection, the pipes would be
sleeved at river crossings.
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2.1.12 Balance of Plant
The mine/plant site design includes buildings and structures for repair and maintenance of mine
and plant equipment, and the nearby Eastern Infrastructure Area includes facilities for personnel
accommodations, administration, and security. Buildings and other facilities that make up part of
the Project infrastructure at the mine/plant site would consist of:
2.2
2.2.1
Mine Truck Shop, Service Bays and Wash Station

Service Vehicle Shop
Fuel Oil Storage and Distribution
Mill Maintenance Shop
Blasting Agent Storage Facilities
Temporary Accommodations of 7,800 beds during construction
Permanent Accommodations of 2,400 beds for operation
Medical Clinic
Main Administration Building
Construction Administration and Operations Services Building
Training Facility
Guard House and Security Building
Panamanian Police Station
Microwave Communications System
INDEPENDENT THIRD-PARTY REVIEWS
Independent Tailings Review Board (ITRB)
As part of its commitment to Corporate Responsibility and incorporation of best practice in its
operations, MPSA established an ITRB in 2009 during the FEED phase of the Project. The
MPSA ITRB was established to provide on-going, independent confirmation to MPSA by
internationally-recognized experts that the design, construction, operation and closure of the
Cobre Panama TMF would conform to international best practice. The objective of establishing
the ITRB was to confirm that the TMF would ensure the operational sustainability of the mining
operation and would not pose a hazard to the environment and the local communities over the
long term. The ITRBs mandate is to monitor the design and operating plans of the TMF to
ensure that Inmets Mine Waste Management Policy will be incorporated into the TMF at all
stages of the mining life cycle. The ITRB is independent of the TMF designers and the ITRBs
scope includes reviewing, commenting, questioning and critiquing all aspects of the TMF,
including, but not limited to: engineering design, including design criteria and factors of safety
under both static and pseudo-static loads; construction practices; operation and maintenance;
closure and post-closure; stability analyses; water management and treatment, including both
surface and ground water; geochemical considerations; management systems; budget and
staffing; emergency preparedness and response planning; and community interaction. The ITRB
considers the risks and possible impacts to health and safety, environmental protection and
communities and will advise MPSA on designing and implementing mitigation strategies.
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Minera Panama, S.A.

The ITRB will review management responses to questions it raises and will recommend practical
and achievable actions to MPSA to address identified issues. The ITRB will not have decisionmaking authority with regard to the Cobre Panama TMF.
MPSA would be responsible for open and transparent communication with the ITRB, and for
responding in a responsible, considered and proactive manner to all recommendations resulting
from the work of the ITRB. MPSA would also be responsible for covering the expenses of the
ITRB.
On April 4, 2012, MPSA and JVP updated the ITRB on the Basic Engineering. Based on its
review of the Basic Engineering, the ITRB was satisfied that all significant items previously
identified had been addressed by JVP, and that the designs presented at the meeting were
adequate for Basic Engineering.
The proposed path forward for detailed engineering was presented by JVP and accepted as
appropriate by the ITRB. The ITRB then identified several sensitivities and made
recommendations regarding these for the detailed engineering phase, and advised that other
recommendations may come from it after reviewing other Basic Engineering addendums that are
to follow.
The ITRB has also noted the need for a policy statement on instrumentation (degrees of
automation) to be declared early in the process, to guide the selection of appropriate instruments
and layouts.
The involvement of the ITRB will continue as the Project moves forward and into the operations
stage.
2.2.2
URS Corporation Independent Review
URS Corporation was mandated by MPSA to independently review the plans for the Project
tailings dam.
The focus of attention of the URS report was on:
the geotechnical feasibility of the starter dam and initial diversions;
the ultimate dam base case concept; and
precedent and best practices in the construction of tailings dam in high rainfall conditions.
The URS report concluded that the TMF design criteria is in compliance with international design
standards and CDA guidelines and constitutes a robust design. The report also noted the level of
competency of the ITRB and JVP engineering and construction team and confirmed their
understanding of the significant challenges involved in the execution of the tailings dam for
Cobre Panama.
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Minera Panama, S.A.

3
PRIVILEGE TO OPERATE
3.1
Panama
History, Geography and Political Map

Panama
has
a
geographically privileged
position, lying at the
narrowest part of the
Americas with a width of
only 80 km. It is also the
lowest point on the
Continental
Divide,
making it the natural
location for a canal across
the isthmus. In addition,
Panama is not in the
pathways of hurricanes, major earthquakes are rare and it has no active volcanoes. The
temperature is warm year-round.
Panamas surface territory is approximately 75,000 km2 and is bordered by Costa Rica to the
west and Colombia to the south-east. The country has nine provinces with appointed Governors
and three Comarcas or indigenous reservations: Ngbe Bugl, Guna Yala and EmberaWounaan, that are semi-autonomous, largely self-governed jurisdictions under a complex
structure of traditional indigenous and state-recognized authorities. The Concession lies entirely
in the Donoso district in the western part of the Coln Province and has no link with the
Comarcas. This is in contrast to the Cerro Colorado copper project, that is within the Ngbe
Bugl Comarca and which has been the focus of ongoing conflict and controversy, and is
discussed in this section as well as in Section 3.4.
Panama is a multiparty constitutional democracy with a population of 3,510,045 (July 2012
estimate) people. It has been a democracy for four successive transitions of power. The Cambio
Democratico (CD, Democratic Change) party is currently in power with the next general national
election scheduled for 2014. Ricardo Martinelli is the President of the Republic.
Panama Overview and Economy
Panama has been a commercial center since colonial times when the Spanish used the Camino
de Cruces land route to transport precious metals from western South America across the
isthmus. Today the country is an international banking center and logistics hub. This
commercial culture is deeply engrained in the Panamanian psyche and helps explain the
economic vigour of the country.
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Minera Panama, S.A.

Panama has become one of the most robust economies in the world with growth of 10.6% during
2011 (Panama National Institute of Statistics and Census, March 2012). The current Martinelli
government has positioned Panama on the world stage by signing free trade agreements with
Canada, United States, Taiwan, Singapore, El Salvador and Peru, and is currently exploring an
agreement with Mexico. With 2011 gross domestic product (GDP) of $US23.3b (Panama
National Institute of Statistics and Census, March 2012), Panama is a US dollar-based economy,
a stable democratic system and has earned an investment grade rating from each of the major
rating agencies. It is second only to Chile in per capita GDP in Latin America and is the second
most competitive Latin American country according to the World Economic Forum.
IHS Global Insights Panama economic outlook states that In the medium term, Panamas
economy should benefit from several factors. The country's stable political environment, open
economy, and somewhat low interest rates make it an ideal destination for foreign direct
investment. Figure 3-1 illustrates that Panamas overall risk (a combination of political, legal,
economic, tax and operational risks) is trending downward despite an upward trend in Latin
America and the world overall.
Figure 3-1 IHS Comparative Historical Risk Showing Panamas Risk Trending Down
Higher Risk
3.00
2.90
2.80
2.70
2.60
2.50
2.40
Lower Risk
2.30
1998
1999
2000
2001
Overall Risk, World
2002
2003
2004
2005
2006
2007
Overall Risk, Latin America and Caribbean
2008
2009
2010
2011
Overall Risk, Panama
Source: Country Intelligence Report Panama, Global Insight April 2012
Recognizing Panamas improving financial track record, particularly during the 2009 financial
crisis when Panamas economy continued to grow, Standard & Poors upgraded Panamas credit
rating in 2011 from BB+ to BBB- status. Fitch had already upgraded the country in 2010.
Cobre Panama would have a significant impact on the economy of Panama. 6,700 direct jobs
would be created during construction and 2,100 jobs during operations. Including indirect jobs,
these figures would climb to 17,900 and 6,300, respectively (Figure 3-2). It has been estimated
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Minera Panama, S.A.

that over the life of the Project, it would generate purchases in the national economy of over
$US22b (Source: Economic Impact Study, May 2011, Intracorp Estrategias Empresariales. Life
of mine exports of over $US49b (based on total NSR) would contribute positively to the balance
of payments.
Figure 3-2 Estimated Cobre Panama Job Additions
Jobs created by the Cobre Panama project, predominantly Panamanian
(number of jobs per year)
Operation
Construction
11,200
4,200
6,280
17,900
6,700
Direct jobs
2,080
Indirect jobs
Annual labour over

construction
Direct jobs
Indirect jobs
Annual labour over

operation
The Cobre Panama Project would bring with it the introduction of large scale mining to the
country and the start of a new, major industry. The government executive has visited different
mining countries in the region and has had high level discussions with its peers. These meetings
have helped the government determine that a strong mining industry would help with the social,
technological and economic development of the country.
3.1.1
Mining in Panama: Changes to the Mineral Code in 2012
Minera Panama was granted the mineral concession to explore and exploit the property under
Law 9. Law 9 has an initial twenty-year term ending in 2017 and provisions for two consecutive
twenty-year extensions.
Under Law 9, Minera Panama has the rights to explore for, extract, exploit, beneficiate, process,
refine, transport, sell and market the gold, copper and other mining deposits on the concession.
It must pay a 2 percent royalty on all mineral product revenues to the Government of Panama.
Law 9 also grants to Minera Panama rights of way on state owned lands and easements to use
surface lands on concessions adjacent to the Law 9 concession, and the right to build, maintain
and use on such lands and easements for use to build, install, maintain and use facilities and
installations that Minera Panama deems convenient for the development of the Cobre Panama
project.
The legal regime established by Law 9 for the development of the Cobre Panama concession is
supplemented by the Mineral Resources Code of Panama (Code). In February 2011,
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Minera Panama, S.A.

amendments to modify the Code, including clarifications regarding the ability of foreign stateowned entities to own interests in mineral concessions were enacted. However, such
modifications were subsequently repealed by the National Assembly of Panama and given legal
effect on March 18, 2011. The repeal recognized concerns from indigenous communities in the
Comarcas. As part of the repeal, the Government of Panama appointed a special commission to
consider and recommend to the National Assembly of Panama future modifications to the Code
in consultation with affected parties.
In April of 2012, after consultation and dialogue with indigenous representatives over the past
year, the National Assembly reached a settlement that ceded authority to the Comarcas in
determining how and when mineral deposits in their Comarca could be developed and shortly
thereafter, the Mineral Code of 2012 was passed without incident by the National Assembly,
modernizing royalties and regulation governing mining, including clarifications regarding the
ability of foreign stock-owned entities to own interests in mineral concessions.
3.1.2
Contract Law 9
MPSA has been a registered Panamanian business since 1995. It was previously called Minera
Petaquilla S.A. and was renamed in 2008.
MPSA was granted the 13,600 hectare Petaquilla concession via Contract Law 9. Being a
contract law, Law 9 requires the consent of both parties to effect any changes. Renewals are
standard and are awarded in the year of the renewal. Law 9 establishes the financial and
juridical stability arrangements with the government for the development of Cobre Panama.
Some of the benefits that MPSA would enjoy are duty-free imports, no withholding tax on exports
and dividends, fewer restrictions on the use of foreign workers and professionals and automatic
Rights-of-Way through government lands.
Two items in Law 9 will likely be changed to align with the new Code:
The current 2% royalty under Law 9 would be increased to 5% for base metals and 4%
for precious metals. A significant part of the revised royalty, 2% of the 5%, would likely go
to the local municipalities, which should help ensure strong local support for the Project.
A tax provision that currently states that no income tax would be payable for as long as
any debt exists on the Project. Recent discussions with the government would most
likely see this tax holiday eliminated. See Table 6-2 for modelled debt assumptions.
Both these anticipated revisions to Law 9 have been reflected in the financial forecasts and the
economic evaluations contained in this document.
For the changes to Law 9 to be implemented, MPSA and the government would have to agree
and then these would have to be approved by the Legislative Assembly.
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3.1.3
MPSAs Panamanian Society Participation
Minera Panama Government Relations

MPSA maintains an active government relations function, with ongoing engagement with local,
regional and national government representatives. Furthermore, MPSA has signed agreements
with different government agencies, establishing itself as an ally in the development of the
country.
Minera Panama - Media Relations
MPSA meets regularly with editorial boards of all major print and electronic media in Panama to
provide Project information and answer questions with transparency and accountability, and
establish good working relationships with all major media and journalists covering mining.
Several Panamanian journalists have visited the Cobre Panama site and adjacent communities.
MPSA has hosted media in press conferences to explain landmark issues such as the approval
of the ESIA. This openness has been well-received by journalists and editors, and several key
media have already reflected a shift in their view and coverage as a result of receiving more
information.
Minera Panama - Civil Society Relations
MPSA has established excellent relations and presence with the main civil society groups in the
country. MPSA has members on the Boards of the American Chamber of Commerce, Sectorial
Groups of the Association of Panamanian Professionals, the Panamanian Society of
Industrialists and an Executive Forum of Panamanian CEOs. MPSA is collaborating with
different environmental NGOs to comply with the ESIA requirements. Minera Panama has also
been a co-sponsor of some of the main conferences and expositions in the country. These
activities have rooted MPSA within the fabric of the business leaders of the country.
MPSA has civil society opponents, both within Panama and internationally, as does any large
extractive project being developed today. Most of these groups object to the project on the basis
of environmental concerns and fears about impacts to the biodiversity of the area. MPSA has
reached out to these groups, seeking to better understand their concerns and describe how
Cobre Panama will address environmental concerns and serve as a catalyst for the protection of
a large area of forest that is currently under threat. Many of the environmental concerns ignore
the fact that primary forest throughout Panama and in the project area is already disappearing at
an alarming rate because of the inherent poverty of local populations, and that responsible and
sustainable economic development is the only way out of this cycle of destruction.
3.2
Inmets Approach To Corporate Responsibility
Inmet believes that corporate responsibility builds reputation and reputation drives value. Our
commitment to meeting leading standards of health, safety and environmental management, to
contributing to the development of sustainable communities and to being open and transparent
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in our operations enhances our reputation. This in turn makes Inmet a company that people,
communities and governments should want to do business with and that creates increased value
for all of our stakeholders. Cobre Panama is the largest project to-date in Inmets history of
building, owning and operating copper and base metals mines, and for that reason, Cobre
Panama would be a benchmark for Inmets values in action.
Voluntary Initiatives
Inmet has adopted a number of voluntary codes and participates in external initiatives
considered particularly relevant to our business. These initiatives are intended to add value to
our operations and our business; many of these have been implemented for several years.
Adoption of some of these were triggered by development of Cobre Panama:
Mining Association of Canadas Towards Sustainable Mining Initiative;

UN Global Compact;
Carbon Disclosure Project;
Devonshire Initiative;
Fund for Peace Human Rights and Business Roundtable;
Business and Biodiversity Offsets Program;
International Finance Corporation Performance Standards on Environmental and Social
Sustainability;
Voluntary Principles on Security and Human Rights;
Global Reporting Initiative Sustainability Guidelines (G3.1) A+ Reporting (2011); and
International Council on Mining and Metals (application pending).
We believe this level of outreach and activity with organizations shaping the future of sustainable
resource development is a necessity in our business. We also believe commitments to evolving
international best practice in Corporate Responsibility (CR) deliver clear business benefit to us.
3.3
Cobre Panama: Inmets Commitment in Action
At Cobre Panama, our goal our responsibility is to ensure that the benefits of our operation
are shared with the people of Panama. We are committed to leveraging the positive and helping
reduce adverse impacts of the Project. We expect that Cobre Panama would to help improve
the economic conditions of nearby residents and lead to sustainable socioeconomic
improvements throughout Panama. As well, through a rigorous focus on environmental
management, landscape-scale conservation and species-level conservation, we are confident
that the rich biodiversity of the area surrounding our operation will be protected.
An endorsement of this vision for Cobre Panama, and Inmets commitment to it, after several
years of presence in the area was the approval of the ESIA in December 2011. In light of the
challenging context of the Project, the ESIA approvals highlight Minera Panamas capability to
work with local stakeholders and to develop and implement innovative approaches to deliver net
positive benefit.
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Cobre Panama is located in an undeveloped and remote part of north-central Panama with a
complicated socio-environmental setting. The following challenging aspects of the Project have
been the focus of our actions to incorporate evolving international best practice:
Within a tropical rainforest with high biodiversity value;

Presence of threatened and endangered species of concern, some of which are endemic
to the Project footprint;
Endemic poverty of local communities;
Presence of indigenous people;
Resettlement of Latino and indigenous people;
Lack of infrastructure and access to healthcare, education, sanitation and clean drinking
water;
A country with little experience of modern mining; and
Presence of artisanal mining.
By implementing positive practices and delivering on a broad set of socio-environmental actions,

we expect Cobre Panama to produce net positive benefit, establishing itself as a model project
and building reputation for Inmet.
Minera Panama is committed to evolving national and international best practice for
environmental protection, social development, quality and safety. In line with this commitment,
Minera Panama will comply with the International Finance Corporation (IFC) Performance
Standards on Social and Environmental Sustainability.
To-date, Cobre Panama has delivered on the standards summarized in Table 3-1.
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Table 3-1 Cobre Panamas Progress in Implementing the IFC Performance Standards
INTERNATIONAL
FINANCE
CORPORATION
PERFORMANCE
STANDARD
1. Social and
Environmental
Assessment and
Management
Systems
OUR RESPONSE TO-DATE
2. Labour and
Working Conditions
3. Pollution
Prevention and
Abatement
4. Community Health,
Safety and Security
5. Land Acquisition
and Involuntary
Resettlement
6. Biodiversity
Conservation and
Sustainable Natural
Resource
Management
7. Indigenous
Peoples
8. Cultural Heritage
3.3.1
Approval of ESIA which establishes the foundation on which we

are building a robust and leading corporate responsibility
management program
Environmental Management Plan developed in consultation with
national authorities, international experts, local communities and
NGOs.
Strategic Plan for Sustainable Community Development
developed in consultation with national authorities, international
experts, local communities and NGOs.
Application of Inmets Health & Safety Management System at
Cobre Panama for employees and contractors
Introduction of skills training programs with a focus on health,
safety and environment
Mine and plant site, port site, power plant and supporting
infrastructure designed to have the least overall Project impact to
deliver net positive environmental, social, technical and economic
benefits.
Civic safety programs introduced for local communities. Social
Development Action Plan includes commitments to community
health
Membership in and implementation of the Voluntary Principles on
Security and Human Rights
Resettlement Action Plan signed by all six Resettlement
Negotiation Committees, overseen by the Government of
Panama ombudsman
Reforestation program off-site that will reforest two hectares for
every hectare of original forest lost.
Support the management of two existing national parks and
establishment of a new multiple-use protected area
encompassing more than 290,000 hectares of primary forest.
Commitment to net positive benefit in biodiversity.
Participation of the Ngbe Bugl community members in
preparation of the draft Indigenous Peoples Development Plan
Initial recovery of all cultural heritage artefacts confirmed by
Panamanian National Institute of Culture.
PAGE
63-67,
112
112,
119,
121
44,
112
60
68
63,
112
71
63
Regulatory Context for Environmental and Social Impact Assessments
Panamas constitution states that it is the responsibility of the State to ensure the proper use of
natural resources and the protection of the environment for the benefit of society. Law No. 41 of
July 1, 1998 identifies the Autoridad Nacional del Ambiente (ANAM), the Panamanian
environmental regulator, as having primary responsibility for the administration of the ESIA
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process associated with the development of mining projects. Article No. 23 of Law No. 41
establishes that any project that may generate environmental risks or impacts is subject to an
ESIA. Law No. 41 of July 1, 1998 is directly related to two regulations that pertain to ESIAs, the
first one passed as Executive Decree No. 59 in 1998, and the second passed as Executive
Decree No. 209 in 2006.
Executive Decree No. 209 contained the regulations that were applicable, and defined the
process for conducting ESIAs in Panama. Executive Decree No. 123 of 2009 now regulates
Chapter II of Title IV of Law No. 41 of July 1, 1998 (General Law of the Environment of Panama)
and repeals Executive Decree No. 209 of 2006. Article 8 of Executive Decree No. 123 of 2009
establishes that ANAM is responsible for administration of the ESIA process in accordance with
Law No. 41 of July 1, 1998.
There are three categories of projects defined in the regulation, Categories I, II and III, each
successive category representing projects with increasing scope and potential for environmental
and social impact. Mining projects are defined as Category III projects under the regulation.
The Cobre Panama Category III ESIA was submitted to ANAM in September, 2010. ANAM
approved the Cobre Panama ESIA on December 28, 2011 following a 15 month review process
involving public consultation and external review by consultants with considerable experience
evaluating large mining projects.
Once the Cobre Panama ESIA was approved, MPSA began the process of applying for the 40
sectorial permits required to start all of the earthmoving activities. Eleven of these have been
received to-date and the remaining 29 are on track to be acquired by mid-year. These permits
are for water use, water crossings, construction, seabed concession, mining plan, electrical,
sanitary and a variety of other permits typical of an industrial installation. During the process of
bringing the engineering and project planning to its current state, most of these types of permits
were received for prior, smaller-scale MPSA projects and therefore no significant issues in
obtaining the larger scale permits are expected.
MPSA requires the acquisition of a significant quantity of land for the Project area and linear
facilities. The land has diverse uses, owners and occupants. This includes Latino rural
communities, international investors as well as indigenous groups that settled in the Project area
over the last 10-15 years. In most instances the people occupy the land and do not have title.
MPSA recognizes their right to occupy land and will compensate them according to evolving
international best practice. In a process of free, prior and informed consent, all of the groups who
will by physically or economically displaced by the development of Cobre Panama signed a
Resettlement Action Plan (RAP) which describes the resettlement process and compensation
either in kind or in cash. The RAP and aforementioned compensation for resettlement are part
of MPSAs commitments under the ESIA.
To-date MPSAs land acquisition is very advanced with the necessary purchases of land for
resettlement largely complete and some rights-of-ways still pending contractual agreement.
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3.4
Socio-environmental Context of the Project
MPSA conducted socio-environmental studies of the Project area to characterize baseline

conditions and to provide the basis for the ESIA. The ESIA was prepared to comply with both
Panamanian regulatory requirements and with international evolving best practice (as
represented primarily by the IFC Performance Standards on Social and Environmental
Sustainability) in a single document.
The Project ESIA work represents one of the most comprehensive studies ever undertaken of
the socio-economic environment of the Atlantic slope of Panama. Golder Associates spent more
than 40,000 person-hours of effort from June 2007 to April 2010 studying all socio-environmental
aspects of the region across the different seasons. Golder also reviewed scoping and baseline
studies from the late 1990s, studies by other researchers that identified rare, threatened and
endangered plant and animal species (species of concern) outside of the Project area that could
be affected by the Project and studies completed for ESIAs for the Petaquilla Gold Moljon Mine
and for the Panama Canal expansion. Golder also established socio-economic and community
baselines using community surveys and fieldwork as primary sources.
3.4.1
Environmental Baseline Conditions
The Project area is located in an area of steep,

rolling hills and valleys, with elevations rising up
to 400 m. Towards the coast, the topography is
more subdued. Climate is warm and humid yearround with approximately 4,500 mm of annual
rainfall at the proposed mine site and 5,000 mm
of annual rainfall at the Punta Rincon port site on
the Caribbean coast. (See section 2.1.6 for water
management plan.
Temperatures and relative humidity in the Project
area are high, and do not vary much during the
year. The temperature typically ranges from 20 to
32 degrees Celsius and relative humidity is generally around 80 percent. For most of the year,
the winds in Panama are generally from the north-northeast, except for in the Autumn when the
winds shift to the southwest. The average wind speeds range from about 5 kilometres per hour
(km/h) at the Colina camp to about 10 km/h at the Ro Caimito River mouth. Although the
Project area has high humidity and rainfall, evaporation during the day can increase the potential
for airborne dust.
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The proposed mine site is located within the upper catchment area of three river systems which
all eventually drain north to the Caribbean Sea. The three catchments are:
The Petaquilla River basin, which drains northwest from the west side of the mine site to
the Caribbean coast;
The Caimito River basin, which has six sub-basins: Rinconcito River (Uvero), Uvero
River (del Medio), Del Medio River (Pif), Hoja River (Caimitn) Upper Caimito River and
Lower Caimito River, which mostly drain northward to the Caribbean coast; and
The San Juan River basin, which has four sub-basins, including the Upper San Juan,
Turbe, Limn and Botija rivers. The San Juan River basin drains eastward joining the
Cocle del Norte River basin, which drains north to the Caribbean coast, and combines
runoff from the Coclesito, Cascajal, Toabr and Cuatro Calles river basins, in addition to
that of the San Juan River basin.
The Project area features the rich biodiversity of

the Mesoamerican Biological Corridor (MBC).
The MBC is a land-use planning concept
incorporating sustainable development and
biodiversity protection that stretches from Mexico
to Colombia.
Governments throughout Latin
America have recognized the concept of the MBC
and several have taken steps to make it a reality
through the creation of a network of multiple-use
protected areas. Panama has established a
hierarchical protected areas system with six
categories of protected status. National Parks
are at the top of the system. The system recognizes multiple-use protected areas that can
incorporate both conservation areas and use of areas for sustainable business use.
Approximately 34 percent of Panamas land area has been set aside as protected within the six
categories of protected areas.
Despite this
commitment to protecting Panamas biodiversity,
the capacity to enforce protection of the areas is
generally lacking.
Moreover, as an existing
background condition, it is estimated that
between 10,000 and 40,000 ha of primary forest
is lost in Panama every year, principally as a
result of slash and burn agricultural practices by
poor and landless families.
There are two
national parks in the vicinity of Cobre Panama;
Omar Torrijos and Santa Fe. Both of these parks
show evidence of human impact within their
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borders.
During the baseline studies for the ESIA, we identified 45
fauna species of concern and 211 flora species of concern
(SOC). Sixty-four flora species were identified as possibly
being new to science and additional studies were
undertaken to determine the classification. Since the time of
the original field work we have been working to identify
species of concern in protected areas off-site and
collaborating with world-recognized flora experts to confirm
how many of the 64 new species of plants are actually new
to science. The work was comprehensive and involved the
review of the SOC status based on International Union for
Conservation of Nature (IUCN) criteria for all of the SOC
flora and fauna species identified in the ESIA. This work
has narrowed our list of species of concern down to 25
species of fauna and 86 species of flora.
3.4.2
Social Baseline Conditions

The majority of the Project is within the District of Donoso,
one of the poorest rural districts in the Province of Coln and
in Panama as a whole. The Llano Grande substation,
powerline and some of the road access, and the bypasses
around the towns of Penonom and La Pintada are within the
Cocl Province. Part of the mine area is largely inaccessible
except by foot or horseback along a system of trails, or by
boat from the coast up-river into watersheds that have their
headwaters in the Project vicinity.
There are 22 local communities that are considered affected

for the purposes of the Project.
The total combined
population of these 22 communities is approximately 2,500;
most of these have populations of 200-300 persons.
Scattered Latino communities are primarily located along the
access road that extends north to the Project area from
Penonom and La Pintada. Most of the people who live and work in these communities are
campesinos they speak Spanish and are generally fully integrated into Panamanian society.
The coast community of Rio Caimito is located near the proposed Punta Rincon port site.
There are also three communities of indigenous Ngbe Bugl people located close to the Project
footprint. The Government of Panama and the international community recognize the Ngbe
Bugl as a distinct indigenous group. These people have migrated into the Project area over the
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Minera Panama, S.A.

past 10 to 15 years from the Ngbe Bugl
Comarca located approximately 150 km west of
the Project area. However, Cobre Panama is not
located on or close to a Comarca. Regardless,
we have recognized the customary use of land
by these indigenous residents in our resettlement
process and have ensured that their rights as
indigenous peoples are respected.
Panama has a long history of difficult indigenous
rights issues and indigenous peoples in Panama
are a vulnerable population. The Ngbe Bugl
Comarca is characterized by conditions of endemic poverty caused by lack of economic
opportunities, unproductive land and overcrowding. The Cerro Colorado copper deposit, located
on a Comarca, has long been a source of conflict concerning indigenous rights and mining
development. Ngbe people in the Project area migrated from the Comarca in search of land
and economic opportunity. These family groupings practice subsistence slash and burn
agriculture.
The Project area is characterized by a lack of

basic infrastructure. Healthcare and educational
services are poor and our baseline studies
demonstrate that local Latino and indigenous
communities do not have access to clean
drinking water.
Artisanal mining activities are conducted primarily
by indigenous people along the Petaquilla River
northwest of the Project footprint. These mining
activities are mainly performed using portable
pumps and sluices; no evidence has been found
indicating the use of mercury.
The social dynamic in the Cobre Panama Project area is tranquil compared to the large and
violent indigenous rights- and mining-related demonstrations over the past year in the Ngbe
Bugl Comarca. Those demonstrations were precipitated by two instances of the Government
of Panama introducing changes to the Mineral Resources Code that were perceived as greenlighting the development of Cerro Colorado without consulting indigenous people and ensuring
that their rights to self-determination were being respected. The Government of Panama has
recently resolved this situation through dialogue and legislative changes enshrining the rights of
indigenous people on the Comarca to self-determination.
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There have been two instances of local demonstrations around Coclesito over the past year,
both of which were small and organized by anti-mining activists from Panama City. These shortlived demonstrations took the form of non-violent roadblocks involving 10 to 20 people, many of
whom do not, we believe, reside in the immediate Project area. In contrast, a pro-mining
demonstration recently organized by local residents in Penonom on March 10, 2012 involved
roughly 2,500 people.
Figure 3-3 Pro-Mining Demonstration of 2,500 People March 10, 2012
A video of the pro-mining rally can be viewed at:

http://www.youtube.com/watch?v=OidCvbM8Vnw
3.4.3
Community Relations and Community Development Activities
Building Strong Privilege to Operate

As part of its commitment to building relationships with local communities and a broad range of
stakeholders to ensure strong privilege to operate, MPSA began an intensive and continuous
program of community engagement in mid-2007 to inform local residents about the Project and
to listen to and incorporate their concerns into the project planning. During engagement we
heard that local communities were primarily concerned with local employment and environmental
protection. We now have approximately 18 community liaison officers active in the local
communities and have implemented a leading practice community feedback mechanism,
incorporating guidance from the United Nations Special Representative on Business and Human
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Rights and that is overseen by a dedicated Grievance Officer. Our dialogue extends to
organizations throughout Panamanian society, with groups that are supportive of our plans and
with those that are not.
We began resettlement-related dialogue with those who would be physically and economically
displaced by the Project in 2008. We retained recognized resettlement experts and began a
trust-building process. This culminated in 2011 with the signing of the Resettlement Action Plan
by the six Resettlement Negotiations Committees that were established by local community
members to represent them in resettlement
discussions. We have now secured title to the
replacement land for the two indigenous
communities and are moving forward with the
design of replacement homes. Our resettlement
process complies with international best practice
for Free, Prior and Informed Consent (FPIC) and
MPSA is conferring rights on local indigenous
people (for instance in terms of FPIC and land
title) that the national government has yet to fully
recognize.
The national Directorate of
Indigenous Affairs has been a keen observer
and supporter of our resettlement activities.
To build trust within the local communities over the veracity of our community development
commitments, we initiated a series of phase-appropriate community development projects
starting in 2008. These projects began with school food, agricultural extension and scholarship
programs and have since expanded to include infant stimulation and nutrition, sanitation, and
micro-credit programs. Most of these programs are delivered in conjunction with nongovernment organization (NGO) partners. Moreover, we have been engaging government in
partnerships to deliver improved access to healthcare and education in local communities. We
are developing a Strategic Plan for Sustainable Community Development that focuses on the
establishment of public-private partnerships. This initiative reflects our belief that sustainable
development will be best achieved through the participation of all stakeholders. We have
catalyzed creation of a regional development plan for the area involving local residents and
governments to define their vision for the region going forward. This should help ensure
measured and planned growth and help ensure that Cobre Panama will be able to meet its
regional biodiversity conservation goals.
All of our community relations and community development work over the past five years has
built trusting relationships and a strong privilege to operate locally. Our actions have also begun
to be recognized throughout Panama as we make steady progress in countering negative bias
against mining in the Panamanian press.
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Efforts seem to be paying off and relations with the communities are, we believe, excellent. After
the ESIA for the Project was approved, MPSA held a workshop with community leaders. A
questionnaire was given regarding the leaders attitude towards the Project which was very
favourable. A summary of the results are shown below.
There is no doubt that the local communities expect us to deliver action and they will hold us to
the high standard that we have set for Cobre Panama.
3.4.4
Project Socio-environmental Actions and Benefits
From the outset, MPSA has recognized that strong public

actions to demonstrate compliance with evolving best
international corporate responsibility practice would be
necessary to build support for the Project within local
communities, throughout Panama and internationally.
Moreover, we strongly believe that the socio-environmental
challenges posed by the Project presented a unique
opportunity to marry economic development, social
development and biodiversity protection to deliver compelling
net positive benefit to the local region and to Panama as a
whole.
We are committed to meeting the requirements of the IFC
Performance Standards (PS) for Social and Environmental
Sustainability and the Equator Principles, regardless of the
type of financing required for the Project. Inmet is also a
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Minera Panama, S.A.

signatory to the Voluntary Principles on Security and Human Rights.
Cobre Panama has undergone review and scrutiny by an independent engineer (IE) to
determine whether the Project complies with the requirements of the IFC PS (2006 version).
Export Development Canada has been providing strong oversight as the social and
environmental agent. Cobre Panama touches all eight PSs and a Phase II opinion from the IE
indicates that the Project is on track to demonstrate compliance with each of them.
Our actions to achieve net positive benefit are described in
our Environmental Management Plan (EMP) and Social
Development Plan (SDP).
The EMP actions primarily
revolve around management of water quality and quantity
and our biodiversity action plan (BAP). Our BAP is built
around two primary actions; flora and fauna rescue and
landscape-scale conservation (LSC). We will rescue and
relocate species of concern from the Project footprint prior to
forest clearing and reintroduce them back into protected
areas off-site to ensure species survival. LSC is designed to
ensure the protection of more than 290,000 ha of primary
forest that is under threat of impact from slash and burn
agricultural practices through establishment of a new
multiple-use protected area in Donoso, conducting research
into our mitigation actions and building capacity to enforce
the protection of the Omar Torrijos and Santa Fe National Parks.
A multiple-use protected area was established by the previous government in 2009. MPSA and
other parties sought an injunction against the creation of the area because the required
consultation with them was not performed. In late 2011, the Supreme Court upheld the creation
of the area while acknowledging MPSAs right to develop Cobre Panama. MPSA has since
sought clarification of that ruling. MPSA fully supports the establishment of a multiple use area
in Donoso and is working with ANAM to co-develop a management plan for the area. Such a
multiple-use protected area is one of the foundations of our LCS conservation approach.
Our SDP outlines our immediate and future actions to communicate, protect and potentially
improve the social well-being of stakeholders. A main focus is to build local capacity by
supporting community development in several areas, including education and training, health
and wellness and civic safety. It also calls for the creation of an independent Community
Development Foundation that will invest in development opportunities with indigenous people
and affected communities. Our vision is that the foundation, with a steady income stream from
the Project during operations, will be able to catalyze sustainable economic and community
development over the mines estimated 30-year life, and, if managed responsibly, for many
years after the mine is closed.
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Minera Panama, S.A.

We are also incorporating actions to prevent in-migration into the area and to manage the social
issues that often accrue from the development of large projects. We are developing an
Indigenous Peoples Development Plan (IPDP) that, coupled with the actions contained in the
Resettlement Action Plan (RAP), will help transition indigenous people to the sustainable
livelihoods that they seek.
The actions and outcomes of the EMP, SDP, IPDP and RAP will be monitored by MPSA to
ensure that the planned outcomes are achieved. We will adapt our actions should monitoring
identify suboptimal outcomes.
3.4.5
Partnerships
Many of the actions that MPSA is undertaking now and would undertake in the future to deliver a
net positive benefit require expertise that is not central to our experience. MPSA has
incorporated partnerships with NGOs and educational institutions to bring the required expertise
to bear, build public confidence in our actions and to deliver on our actions. Partnerships will
involve both the environmental (biodiversity) and social (community development) elements and
we have already been active in establishing such relationships.
In summary, despite the challenging context, Inmets and MPSAs best and next practice
approach has resulted in a clear privilege to operate. Indicators for this are summarized below.
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May 2012
Minera Panama, S.A.

Indicators
Peaceful conditions in the Project area and
local communities
Lack of take-up of indigenous protests
taking place on the Comarca
March 10, 2012 demonstration supporting
mining in Penonom
Grievance system functioning well, and
complaints being addressed
ESIA approval December 28, 2011
Permits being issued post-ESIA
Government support for the Project
On track to demonstrate compliance with

the IFC Performance Standards on Social
and Environmental Sustainability
Signing of the Resettlement Action Plan by
all six Resettlement Negotiation
Committees, overseen by the Government
of Panama ombudsman
Free, Prior and Informed Consent of the
Ngbe Bugl communities to resettlement
and proceeding with the Project
Participation of local communities and
governments in the regional development
planning process
Participation of Ngbe Bugl community
members in preparation of the draft
Indigenous Peoples Development Plan
Participation of local community members
in MPSA Community Development
programs
Number of local residents working for
MPSA, including members of the Ngbe
Bugl community
Positive proof
MPSA Community Relations monitoring
Media report, MPSA Community Relations monitoring
Media reports
MPSA Grievance Officer data
Government of Panama decree
Permit documents in-hand
Minister of Industry and Commerce (MICI) Quijanos
statements supporting the mining industry after passing
of the mineral resources code April 3, 2012.
Government officials present (including Minister of
Government, MICI Vice Minister) at the MPSA launch of
the Donoso regional development plan April 27.
Bilateral agreements between MPSA and various
government institutions including health and agriculture
ministries and training and human development agency.
CAM Phase II Independent Engineers Report
Signed RAPs
MPSA Community Relations documentation on

resettlement process and signed RAPs
Completion of draft Regional Development Plan
Completion of draft Indigenous Peoples Development

Plan
MPSA Community development monitoring
MPSA Human Resources and Community Relations

monitoring
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May 2012
Minera Panama, S.A.

4
CAPITAL COST ESTIMATE
4.1
Basis of Estimate
The Basic Engineering capital cost estimate for the Cobre Panama Project is based on an initial
ore feed rate of 160 ktpd to the grinding plant. The total estimated capital cost to bring the
Project into operation is $US6.18b.
Sustaining capital, that includes a third line expansion to 240ktpd, is estimated to be $US2.92b
over the projected 31-year life of operations. All dollars in this section are third quarter 2011
United States dollars, with no allowance for escalation.
Engineering, procurement and construction scope of work for the Basic Engineering estimate
was completed to a level consistent with an Association for the Advancement of Cost
Engineering (AACE) Class 2 estimate (the Estimate) with an intended accuracy level of +/-10%,
as determined by a team of independent third party reviewers who assessed the quality of the
estimate, including quantities and productivities (see Section 4.4 for more details, including a
definition of an AACE Class 2 estimate).
The comprehensive estimate is comprised of over 9,000 lines over 800 pages. No major
omissions were identified by independent third party reviewers, and the majority of
inconsistencies identified were found to have a conservative effect. The review also produced
several recommendations, which were subsequently implemented to enhance the quality of the
estimate.
The engineering to-date is significantly advanced and has been focused on high over-run risk on
large capital spending items.
An extensive amount of engineering has gone into
installation/construction planning and detail engineering for the initial activities of the execution,
ie site capture, site services and earthworks. The graphic below shows the engineering progress
by area.
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Minera Panama, S.A.

As well, the cost estimation process includes firm price estimates for over half of the $US6.18b total
capital cost. The graphic below details the proportion of capital based on the level of pricing work
completed:
JVP Estimates
$US0.57b
19 Packages
Budget
$US2.00b
74 Packages
Firm
$US3.61b
70 Packages
The capital estimate is not subject to significant foreign exchange fluctuations as the estimate is
based on information and quotations that were obtained mainly in US dollars (93%) and
Canadian dollars (6%). The remainder was mostly in euros, Korean won and a small degree of
Swiss francs.
Estimates regarding mining equipment, a portion of the mine stripping and owners costs were
provided by MPSA.
4.1.1
Site Investigation
Extensive additional site investigation activities were completed, both onshore and offshore,
during the course of Basic Engineering that lend greater certainty to the capital cost estimate.
This additional information added to previous site investigation campaigns conducted as part of
the FEED Study and previous feasibility studies.
The areas that were further investigated included:
- TMF starter dam and borrow areas
- Waste Rock Storage Facilities
- Collection, Sedimentation and Fresh water pond dams
- Plant site
- Onshore and offshore portion of the port site
- Eastern Infrastructure Facilities
- Coast and Eastern Access roads with associated bridges
The program included drilling, test pits and was supported by geophysical surveys that consisted
of seismic refraction surveys which were completed at select transects located along the access
road alignment, TMF starter dam and borrow areas, camp site facilities and the crusher location.
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The offshore geotechnical drilling program took place between April 2011 and June 2011 at the
site of the future marine facilities at Punta Rincon. It covered both port facilities and the power
plant cooling intake and outfall pipeline locations. Seafloor sediments and bulk sampling of
beach sands in the vicinity of the proposed marine and onshore structures was also carried out.
An updated Earthquake Ground Motion Hazard Assessment established seismic parameters
that were incorporated into facilities design for the Project.
4.2
Capital Cost (CAPEX $US)
The graphics below show the total estimated capital cost by major area including allowances (where
applicable) and contingencies.
$US265m, 8%
Site Capture & Infrastructure

= $US3,316m
$US26m, 1%
$US355,
11%
$US844m, 25%
$US1,748m, 53%
$US79m, 2%
Page 75
May 2012
Direct Costs
Growth - Direct
Indirect Costs
Growth - Indirect
EPCM
Contingency
Minera Panama, S.A.

$US105m, 8%
$US97m, 8%
Process Plant = $US1,281m
$US52m, 4%
Direct Costs
Growth - Direct
EPC
$US1,027m,
80%
$US17m
Contingency
Power Plant = $US676m
$US30m
EPC - Less Camp

Black Start Option
Contingency
$US629m
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May 2012
Minera Panama, S.A.

$US23m, 3%
$US29m, 3%
Owner = $US908m
$US103m, 11%
Mine Equipment
$US347m,
38%
Yard Equipment
Operations
Project Team
MPSA Capex
$US386m,
43%
Contingency
$US20m, 2%
Process Plant,
$US1,132m , 18%
Total Capital Cost = $US6.18b
Power Plant,
$US646m , 10%
Allowances,
$US157m , 3%
Owner, $US885m
, 14%
Other, $US572m
, 10%
Mine, Port, &
Infrastructure,
$US2,946m , 48%
Mine, Port, & Infrastructure
Process Plant
Power Plant
Owner
Contingency,
$US415m, 7%
Contingency
Allowances
Note: Allowance of $US157m includes $52m for Process Plant growth and $105m for Mine, Port & Infrastructure growth.
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Minera Panama, S.A.

Table 4-1 Basic Engineering Capital Cost by Major Area
Area
Mining
Process Plant
CAPEX Total
($USm)
% of Project
760
12
1,184
19
Site & Services
550
Port Site Facilities
543
Power Plant
646
10
Total Direct Costs
3682
59
Construction Indirects
844
14
Total Field Costs
4526
73
EPCM Services
355
Owner Costs
885
14
Contingency*
415
6,181
100
Project Total Costs

*Contingency: The contingency table provided to the estimate reviewers had an overall Project contingency of 9.63% (as a
percentage of Total Installed Cost (TIC)). When owners costs (mine preproduction, mine equipment and owners Project
Management (PM)) and contingency on owners costs are removed, the remaining value is 11.18%. The percentage is in line with
what might be expected of an AACE Class 2 engineering estimate which is described in Section 4.4.
The above capital cost estimate has increased from the previously announced FEED Study estimate
of $US4.3b. A third of the change is due to the inclusion of the power plant which has a positive
internal rate of return (IRR) on the Project. The bulk of the remainder of the increase is due to
escalation in estimates from the FEED Study which was prepared during the 2009 economic crisis
and completed in March 2010 compared to the current estimate that has been prepared in light of
higher forecast commodity prices. A reconciliation of the major changes are listed in Table 4-2
below:
Table 4-2 FEED Study to Basic Engineering Capital Cost Estimate Variances
CAPEX Total
($USm)
FEED Study capital costs
4,320
Power plant
646
Increased process plant capital cost estimate
403
Increased mining capital cost estimate
312
Increased port site capital cost estimate
285
Other
215
Basic Engineering Capital Cost Estimate
6,181
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Variances from the FEED are explained in greater detail below:
Table 4-3 FEED Study to Basic Engineering Variance Description

Variance
Explanation
Process Plant
Higher production factors than FEED

Tailings dam increased from 1 year starter dam to 2 year starter dam
Better pricing of equipment with firm price quotes
Mining
Fuel cost in FEED Study was $US0.56/l, current estimate uses $US1.06/l
Unit rates for earthworks higher based on firm price quotes
Indirect costs were allocated to direct such as camp and catering
4.2.1
Contract budgetary incentives
The power plant has been contracted at a fixed price under a lump sum engineering,
procurement and construction EPC contract with liquidated damages tied to Project completion
date. The process plant is currently in the bidding process also under a fixed price EPC contract.
The balance of the Project, under an EPCM contract with JVP, includes both penalties and
incentives tied to the Project budget, schedule and performance.
4.3
Sustaining Capital (SUSEX)
A sustaining capital cost estimate was prepared, indicating sustaining capital and including a
third line expansion, estimated at $US2.92b being over the 31-year life of operations. This
estimate allows for increasing the plant grinding capacity of 160 ktpd to 240 ktpd. The plant
expansion would be developed in two phases, with the Colina primary crushers and overland
conveyor completed by Year 5 and the third grinding line completed and ready for production in
Year 10. This expansion would significantly lower capital intensity given that the associated
infrastructure would already be in place, allowing for the expansion that should be very
economical.
Estimates are included for replacement and additional mining equipment. Other plant and port
mobile equipment is included in sustaining capital based on the replacement time cycle for each
piece of equipment.
Sustaining capital also includes costs for the continued development of the TMF, including
additional tailings pumps, tailings and reclaim pipelines. Continued development of pit
dewatering systems is also included. Additional costs are also included for expansion of the
truck shop by four bays.
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4.4
Independent Third Party Review Capital Cost Estimate
Legico-CHP Consultants were asked to conduct an independent estimate review on behalf of

MPSA. A team of estimators and planners from Samuel Engineering of Denver and Hill
International of Las Vegas assessed the feasibility of the Project Budget Price Estimate
(consistent with AACE Class 2 estimate) (+/- 10% referred to as the Estimate) and
Construction Management Level 3 Project Schedule (referred to as the Schedule).
The review examined in detail:
Basic Project scope;
The methodology used;
Fundamental calculation errors;
Allowances for growth and contingency;
Possible duplication;
Quantities and pricing;
Basis and assumptions for estimate components;
Areas where estimate might not meet the classification criteria;
Estimate and execution plan congruence; and
Errors, omissions and any other factors that could have affected the precision and quality
of final pricing and quantities included in the original estimate.
Under to the contract with JVP, the Estimate that is submitted to MPSA for final contract
approval prior to a full Notice to Proceed must be a Class 2 estimate as defined by the AACE. At
an overall design completion of 37.6% (as calculated by JVP), Legico-CHP concluded that the
design is in the upper design threshold as a class 3 and the lower threshold for being a class 2.
An AACE Class 2 estimate describes a level of project definition required in the 30% to 70%
range. Legico concluded that most of the design documents listed as a minimum by the AACE
have been produced to the required level of completion.
Due to the large volume of earthwork for the Project, the estimate accuracy is dependent upon
the extent of civil design work completed and the contractor quotations for that work.
When dealing with unknowns (soil conditions, backfill requirements, haulage distances, erosion
control measures, electrical installations, support services, freight, etc.) Legico-CHP found that
JVP had estimated conservatively and no major omissions were identified by it.
As such, Legico-CHP found the final estimate to be within the expected accuracy of an AACE
Class 2 estimate and meets the plus/minus 10% accuracy.
Contingency: The contingency table had an overall Project contingency of 9.63% (as a
percentage of Total Installed Cost (TIC). When owners costs (mine preproduction, mine
equipment and owners PM and contingency on owners costs are removed, the remaining value
increases to 11.18%. The percentage is in line with what might be expected of an AACE Class 2
estimate.
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Minera Panama, S.A.

Risk Assessment: A risk analysis was performed using the risk modeling software package
@Risk, to calculate the Projects contingency and used as a check against the contingency
value described above. The risk analysis value used as the contingency comparison figure was
taken from the P80 value. The risk analysis therefore generated a probability of 80% overall of
not exceeding a number carried in the Estimate.
Procurement: Legico-CHP examined seven major equipment P packages and nine major
construction C packages. They found that overall, the budget pricing obtained through the
process will be improved once a more complete and formal procurement process results in
competitive bids in the next stage of the Project.
Estimate Components: The review examined the following components of the Estimate in
detail: mechanical equipment, installation hours, built-up labour rates; mine development; site
civil work; concrete; structural steel; electrical; instrumentation; construction equipment; spare
parts; initial fills; vendor representatives; and freight.
In general, estimates were found to be conservative. The review identified a few potential areas
of cost savings and passed these recommendations along to MPSA.
The review concluded that the Project Estimate dated March 16, 2012 is acceptable and meets
the level of accuracy required for an AACE Class 2 estimate.
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5
OPERATING COST ESTIMATE
In this section, the forecast operating costs for Cobre Panama are outlined in further detail. Set
out below is a summary of operating costs both on a per tonne basis and a cash cost net of byproducts basis. In total there are two phases of the mines operation for which the operating
costs have been broken down. Additionally, contained within this section is a broad discussion
of the components (Mine, Plant, G&A and Site Services) that contribute most materially to the
forecast costs as well as the what inputs that contribute most materially (Material, Power,
Labour).
5.1
Basis of Estimate
The operating costs represent the estimated cash cost required during the Projects operation
phase to process a nominal 160 ktpd (58.4 mt/a) of ore, increasing to a nominal throughput of
240 ktpd (87.6 mt/a) from Year 10 onwards. The operating cost estimate is based on a 31-year
life of mine operation. The first quarter of Year 1 is part of the ramp-up period and is therefore
excluded from the estimate.
The operating cost estimate presented herein is expressed in constant fourth quarter 2011 US
dollars with no allowances for escalation or fluctuation in exchange rates. Costs incurred before
plant start-up and during ramp-up periods are treated as capital expenditures and are included in
the capital cost estimate presented in Section 4.
Benchmarking of costs for input commodities such as oil (diesel), freight, steel (grinding media),
ammonia (explosives) and coal (power) demonstrated a strong correlation to the historical price
of copper. All of these commodities are directly related to the overall health of the global
economy. When prices of oil and other raw materials are relatively high, statistically significant
correlations demonstrate that it is reasonable to expect that the economic environment is robust
and likewise the price of copper. The cost assumptions for these commodities are therefore
linked to the price assumptions for copper over the long term, and were applied throughout Basic
Engineering to ensure internal validity and consistency of sensitivity analyses.
The operating costs were estimated on an annual basis for the 31 year life of mine. The costs
are reported in the following cost centres:
Mine operating cost;

Process plant operating cost;
General and administrative (G&A) cost; and
Site services operating cost.
By cost centers, the process plant represents almost 50% of the estimated operating costs.
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Minera Panama, S.A.

5.2
Operating Cost Estimate (OPEX)
The total operating cost is estimated at $US15,897m over the LOM for a mill feed of 2,310 mt
(excluding the 9.1 mt of feed during the ramp-up period in the first quarter of Year 1). The
overall unit operating cost would be $US6.88/t of ore milled.
The total cost for each cost centre was estimated for the LOM (Table 5-1). Average costs of
operation and the LOM weighted average are presented in Table 5-2. Table 5-3 presents the
estimated operating cost by component.
The process plant and mine operations costs would account for 83% of the total operating cost,
while G&A and site services account for the remaining 17% (Figure 5-1). Materials, which
include items such as diesel fuel, maintenance parts and supplies and explosives, etc.,
represent 59% of total operating costs while power and labour represent 15% and 11% of total
operating costs, respectively.
The peak operating cost of about $US609m would occur on Year 17. The annual average
operating cost cash flow would be about $US513m.
Table 5-1 Total Operating Cost Summary
Cost Centre
$USm
$US/t
Mine
5,626
2.44
Process Plant
7,600
3.29
G&A
2,035
0.88
Site Services
636
0.28
Total Operating Costs*
15,897
6.88
*Based on $US2.75/lb consensus long-term copper price
Table 5-2 Summary of Operating Costs per Year ($US/t of ore milled)*
Cost Centre
Years 2-16
LOM
Mine
2.68
2.44
Process Plant
3.28
3.29
G&A
0.97
0.88
Site Services
0.30
0.28
Total
7.23
6.88
*Based on $US2.75/lb Consensus Long-Term copper price
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Minera Panama, S.A.

Table 5-3 Summary of Operating Costs by Component ($US/t of ore milled)*
Cost Centre
Total
Labour
Material
Power
Other
Mine
2.44
0.27
1.87
0.05
0.24
Process Plant
3.29
0.24
2.13
0.91
0.01
G&A
0.88
0.15
0.01
0.04
0.69
Site Services
0.28
0.11
0.07
0.01
0.09
Total
6.88
0.77
4.08
1.01
1.03
*Based on $US2.75/lb Consensus Long-Term copper price
Figure 5-1 Breakdown of Operating Costs by Function and Input Cost
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Minera Panama, S.A.

Table 5-4 compares the operating cost estimates in the FEED Study with those of Basic Engineering:
Table 5-4 FEED Study vs. Basic Engineering Operating Costs
Area
FEED
Study*
Basic
Engineering**
Change
($US/t
milled)
($US/t milled)
(%)
Mine
2.14
2.44
+14%
Process
Plant
3.72
3.29
-12%
G&A
0.73
0.88
+21%
Site
Services
0.64
0.28
-56%
Total
7.23
6.88
-5%
*Based on $US2.10/lb long-term copper price; **Based on $US2.75/lb Consensus Long-Term copper price
Overall, the difference in operating costs between FEED Study and Basic Engineering is a
reduction of approximately 5%. The difference can be largely attributed to higher input
commodity costs as a result of a higher base copper price assumption ($US2.10/lb in FEED
Study and $US2.75/lb in Basic Engineering) offset by power cost savings as a result of an onsite power generating facility. The decline in Site Services cost is partially due to the removal of
a site Technical Services department from the FEED Study estimate and the subsequent
allocation of those costs to the mine and process plant. Table 5-5 illustrates the changes in unit
diesel, coal, steel grinding media, explosives and concentrate freight costs with changes in the
copper price assumption (see Table 5-5 and Table 6-3 for details of the selected metal price
scenarios).
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Minera Panama, S.A.

Table 5-5 Operating and Input Cost Estimates at Selected Copper Price Assumptions
Copper Price Assumption
Life of Mine Operating Costs
Consensus Long-Term
($US/tonne milled)
($US2.75/lb)
Forward Curve
3-Year Trailing Average
(declining to
(SEC case -
consensus)
$US3.42/lb)
Mine
2.44
2.46
2.55
Plant
3.29
3.36
3.60
G&A
0.88
0.88
0.89
Site services
0.28
0.28
0.28
6.88
6.98
7.32
Total
Estimated Input Unit Costs

Oil ($US/bbl)
1,2
68.68
71.01
80.53
0.62
0.64
0.72
82.54
85.37
96.93
935.25
976.27
1,143.62
936.21
950.97
1,011.18
41.21
43.17
48.32
Diesel ($US/l)
1,2
Coal ($US/t)
Steel grinding ($US/t)

Explosives ($US/t)
Concentrate freight ($US/t)
1 - Total cost delivered to site;

2 - 3-Year trailing average of WTI Cushing Crude ~$US83.20/bbl and Columbia thermal coal price ~ $US84.40/t
5.3
Brook Hunt C1 Cash Cost
Brook Hunts C1 cash cost is a commonly used operating cost measure in the base metals
industry. It is defined by Brook Hunt as the net direct cash cost, representing the cash cost
incurred at each processing stage, from mining through to recoverable metal delivered to
market, less any net by-product credits. Tables 5-6 and 5-7 summarize Cobre Panamas C1
cash cost at three metal price scenarios (see Table 5-5 and Table 6-3 for details of the selected
metal price scenarios).
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Table 5-6 Years 2-16 C1 Cash Cost ($US/lb)
Cost Item
Consensus LongTerm ($US2.75/lb)
Forward Curve
(declining to
consensus)
3-Year Trailing
Average (SEC case $US3.42/lb)
Mine
0.30
0.31
0.32
Plant
G&A
Site services
Offsite costs
By-product credits
0.37
0.11
0.03
0.30
(0.40)
0.39
0.11
0.03
0.31
(0.41)
0.41
0.11
0.03
0.32
(0.42)
C1*
0.72
0.74
0.77
*Totals may not add due to rounding
Table 5-7 Life of Mine C1 Cash Cost ($US/lb)

Cost Item
Consensus LongTerm ($US2.75/lb)
Forward Curve
3-Year Trailing
(declining to
Average (SEC case -
consensus)
$US3.42/lb)
Mine
0.32
0.33
0.34
Plant
0.44
0.45
0.48
G&A
0.12
0.12
0.12
Site services
0.04
0.04
0.04
Offsite costs
0.30
0.31
0.32
(0.40)
(0.40)
(0.42)
0.82
0.83
0.87
By-product credits
C1*
*Totals may not add due to rounding
Cobre Panamas C1 cost compares favourably against other copper mines expected to be in
operation by 2020. At a C1 cost of $US0.72/lb, Cobre Panama ranks in the 19th percentile
during Years 2 to 16 of production. Figure 5-2 illustrates Cobre Panamas position on Brook
Hunts projected 2020 C1 cost curve.
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Minera Panama, S.A.

Figure 5-2 Comparison of Cobre Panamas C1 Cost on the 2020 Projected Brook Hunt
Cost Curve
(1)
2020 Copper Cost League by Brook Hunt with Brook Hunts 2012 Q1 assumptions adjusted for
metal prices and derived input costs under the Consensus Long-Term Price Scenario
5.4
Independent Third Party Reviews
5.4.1
Process Plant Operating Cost Estimate
An independent third party review of the process plant operating cost estimate was performed.
Two approaches were used for the review:
Costs were verified for consistency against the design criteria and industry standards;
and
Costs were benchmarked against industry data, using a number of similar operations in
Chile and Peru.
The review concluded that the operating cost estimate for the process plant is realistic, and
consistent with other concentrator projects.
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Minera Panama, S.A.

5.4.2
Benchmark of Mining Cost
AMEC plc was retained to benchmark the mining costs included in the Basic Engineering
operating cost estimate. The review utilized a database of more than 20 South American openpit mines that operate truck fleets with similar operating parameters to those that would be used
at Cobre Panama.
Rather than using a cost-based approach that may be biased due to cost escalation, the
analysis was focused on Cobre Panamas projected productivity ratios (i.e. output per unit of
input consumable) as compared to those of the selected South American mines. The productivity
ratios covered major components of mining costs such as diesel, power, labour, maintenance
parts, tires, and explosives.
The report concluded that, in general, Cobre Panamas mining productivity ratios are average or
slightly conservative as compared to other similar open-pit mining operations.
5.4.3
Power Plant Operating Cost Estimate
In November 2011, MPSA mandated Sunrise Americas, LLC to conduct an analysis of MPSAs
power plant economic model and power price estimates. Sunrises findings were updated in
February 2012 to reflect a revised coal price forecast based on regression analysis modeling the
correlation between copper price and coal price, a revised schedule for mine commercial
production, and updated foreign exchange rates. Overall, the power plant economic model and
power price estimates were deemed reasonable.
Coal prices comprise approximately 80% of the power cost. By performing a regression analysis
using historical price data, MPSA has developed an algorithm to predict coal prices in relation to
copper prices (Table 5-8). See Table 5-5 and Table 6-3 for details of the selected metal price
scenarios. Over the first 9 years of operation, MPSA will obtain a power credit for the excess
power sold.
Table 5-8 Power Costs at Selected Copper Price Assumptions ($US/kWh)
Copper Price Assumption
Consensus Long-Term
Forward Curve (declining
3-Year Trailing Average
($US2.75/lb)
to consensus)
(SEC case - $US3.42/lb)
Years 1-9
0.027
0.033
0.034
Years 10-LOM
0.050
0.050
0.055
Page 89
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Minera Panama, S.A.

5.4.4
Power Plant Coal Supply Analysis
An analysis performed for MPSA by Wood Mackenzie in November 2011 determined that
structural changes in the US coal market have created more low-cost coal supply in the region
that should be available to the Project.
While high-growth economies in Asia, namely China and India, should continue to drive global
demand growth and shift trade flows in their direction, global thermal coal prices should retract
and stay flat, in real terms, over the short to medium term before resuming growth in the longer
term.
With a weak domestic market, United States suppliers of thermal coal should be looking for
export markets and represent a very attractive supply option to MPSA due to its delivered price
and relative proximity. Colombia, a fixture in the seaborne market, typically commands higher
prices and should compete very closely with US coal for MPSA business. Venezuela has similar
delivered costs to the US and Colombia, but is a much higher risk because of the political
situation and a lack of infrastructure.
Page 90
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Minera Panama, S.A.

PROJECT ECONOMICS
In this section a number of standard valuation metrics are presented over multiple scenarios.
Included are project assessments based on varying metal price assumptions (and by correlation,
input costs) as well as varying project financing assumptions. Details of the different metal price
assumptions, input cost assumptions and financing scenarios are all contained in this section.
The operating cost discussion in Section 5 is expanded upon and the impact of a financing
scenario which includes a precious metals stream sale is evaluated in terms of how it would
impact cash costs after by-products. This section concludes with an analysis of the Projects
forecasted annual and cumulative cash flows.
6.1
Modelling Assumptions
Set out below are the assumptions used to generate the financial projections for the Project.
Table 6-1 Modelling Assumptions ($US)

Item
Assumption
Valuation Date
Start of development
Start of production
Cost inflation
March 31, 2012

2012
First concentrate shipped in 2016
Capital costs in real 2011Q3 terms; operating costs
and metal prices are assumed to be in real terms as
at the Valuation Date
JVP Basic Engineering Report
Technical input
Realization costs
Copper treatment charges
Copper refining charges
Gold refining charges
Silver refining charges
Molybdenum roasting & freight charges
Freight charges
Losses & insurance charges
Taxation
Corporate tax rate
Royalty
Alternative minimum tax
Depletion allowance
$US70.00/t dry concentrate

$US0.07/lb
$US5.00/oz
$US0.50/oz
$US1.49/lb
$US41/t wet concentrate
0.25% NSR
25%
5% NSR for Cu and Mo, 4% NSR for Au and Ag
1.17% of NSR
Depletion deduction in any given year cannot exceed
50% of earnings before interest, taxes, depreciation
and amortization (EBITDA)
Page 91
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Minera Panama, S.A.

Withholding tax on exports and dividends
Duty on imports
Development capital expenditures
Sustaining capital expenditures
Copper concentrate moisture
Mine schedule
Recovery rates
Concentrate grades
Operating costs
None
None
$US6.18b (refer to Section 4)
$US2.92b (refer to Section 4)
8%
Refer to Section 2
Refer to Section 2
Refer to Section 2
Refer to Section 5
Total pre-financing sponsor funding requirement during the construction period (up to and
including Q1 2016) is summarized in Table 6-2. Refer to Section 6.6 for sponsor funding
requirement after considering Inmets financing assumptions.
Table 6-2
Pre-Financing Sponsor Funding Requirement
Item
Amount ($USb)
Development capital expenditures*

Working capital**
Total
$6.2
$0.1
$6.3
*Includes $US35m in first fills and capital spares

**Includes power plant working capital items of $32m
Two financing structures are considered in the Project economic analysis (Table 6-3):
1. A levered case with third party and subordinate shareholder debt; and
2. A levered case with third party and subordinate shareholder debt, plus a gold and silver stream
sale.
These structures represent Inmets financing assumptions applied to 100% of the Project.
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Minera Panama, S.A.

Table 6-3 Financing Assumptions
Case
Assumptions
Case 1: Debt only

(Debt Case)
Case 2: Debt plus Precious

Metal Stream Sale
(Debt plus Stream Case)
6.2
$US1.6b of senior debt drawn over three and a half years

proportionate to equity contribution with a 10-year tenor and
bullet repayment
2% one-time fees and 7.25% coupon (nominal)
Incorporates use of subordinated shareholder loans
100% Project ownership
Debt Case described above, plus
Sale of 86% of MPSAs gold and silver for an upfront
payment of $US1.2b drawn proportionate to equity contribution
after $US1.25b has been contributed
In addition to the upfront payment, MPSA would receive
$US400/oz of payable gold and $US6.00/oz of payable silver
with customary inflation adjustment when delivered
Value and Returns
Three metal price scenarios are used in evaluating the Project economics:
Consensus Long-Term Prices - As determined by a broad sampling of industry

forecasters. This scenario represents a conservative view of the future metal prices.
Forward Curve Prices - The forward curve represents the future prices at which the
market is willing to transact based on the markets current expectation of supply and
demand conditions in the short and medium terms. In theory, these future prices can be
locked in through forward sale contracts.
Three-year Trailing Average Prices- Given base metals tendencies to revert to
historical means, the three-year trailing average prices are also considered in our
analysis. This price scenario is also accepted by the United States Securities Exchange
Commission for regulatory filings.
Refer to Section 11 for our analysis on the copper and molybdenum market outlook. Table 6-4
sets out the metal prices used in each of the three price scenarios discussed.
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Minera Panama, S.A.

Table 6-4 Metal Price Assumptions ($US)
Consensus Long-Term
Forward Curve
Three-Year Trailing Average
Assumptions
$US2.75/lb copper, $US15/lb molybdenum,$US1,250/oz gold and $US20/oz
silver
2016 - $US3.66/lb copper, $US1,758/oz gold and $US31/oz silver

Molybdenum prices are set at $US15/lb as no forward market exists
The Consensus Long-Term prices are used for years beyond the end of the
forward curve for each metal
$US3.42/lb copper, $US14.68/lb molybdenum,$US1,316 /oz gold and

$US24.90/oz silver
Tables 6-5 and 6-6 summarize the economics of the Project, showing the estimated internal rates of
return and the net present values for a range of price assumptions and discount rates.
Table 6-5 After-Tax Economics: Debt Case

Consensus Long-Term
Forward Curve
(declining to
consensus)

case)
IRR
14.3%
18.5%
19.2%
NPV @ 8%
3,200
4,800
6,000
NPV @ 9%
2,400
3,900
4,900
NPV @ 10%
1,800
3,200
4,000
($USm)
Page 94
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Minera Panama, S.A.

Table 6-6 After-Tax Economics: Debt plus Stream Case
Consensus Long-Term
Forward Curve
(declining to
consensus)

case)
IRR
16.7%
21.9%
22.5%
NPV @ 8%
3,500
5,000
6,300
NPV @ 9%
2,800
4,200
5,200
NPV @ 10%
2,200
3,600
4,400
($USm)
6.3
Sensitivity Results
As could be expected, the Project is most sensitive to changes in copper price, followed by
capital costs and operating costs. The Projects returns should not be significantly impacted by
changes in the gold price given that gold represents only 6% of total net smelter returns.
Furthermore, changes in each of the input commodity costs of oil, steel, power and explosives
should have insignificant impacts on the overall Project returns (see Figure 6-1).
Figure 6-1 NPV Sensitivities
Debt Case NPV Sensitivity Chart
Debt plus Stream Case NPV Sensitivity Chart
Page 95
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Minera Panama, S.A.

6.4
Cash Costs
The Project has projected operating costs in the first quartile of the industry cost curve. As
described in Section 5, the operating cost model developed during Basic Engineering treats the
price of input commodities such as diesel as a function of the copper price assumption. A higher
copper price in the financial model would therefore drive higher estimated operating expenses.
Tables 6-7 and 6-8 illustrate the sensitivity of C1 cash costs to changes in copper price under
both the Debt case and the Debt plus Stream case financing structures.
Table 6-7 Years 2-16 Cash Costs Based on Payable Copper ($US/lb)
Consensus LongTerm
Forward Curve
(declining to
consensus)
3-Year Trailing
Average (SEC
case)
0.72
0.74
0.77
Stream sale by-product credit adjustment
0.14
0.15
0.16
Debt plus Stream Case adjusted C1
0.86
0.89
0.93
Debt Case C1
*As defined by Brook Hunt
Table 6-8 Life of Mine Cash Costs Based on Payable Copper (US/lb)
Consensus LongTerm
Forward Curve
(declining to
consensus)
3-Year Trailing
Average (SEC
case)
0.82
0.83
0.87
Stream sale by-product credit adjustment
0.13
0.13
0.14
Debt plus Stream Case adjusted C1
0.95
0.96
1.01
C1
*As defined by Brook Hunt
With a gold and silver stream sale, the Projects C1 cash cost during Years 2-16 increases from
$US0.72/lb to a stream-adjusted C1 of $US0.86/lb under the Consensus Long-Term price scenario.
As illustrated by Figure 6-2, Cobre Panamas stream adjusted C1 still ranks favourably in the 23rd
percentile of Brook Hunts projected 2020 C1 cost curve.
Page 96
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Figure 6-2 Comparison of Project C1 Costs on the Projected 2020 Brook Hunt Cost Curve
(1)
2020 Copper Cost League by Brook Hunt with Brook Hunts 2012 Q1 assumptions adjusted for
metal prices and derived input costs under the Consensus Long-Term Price Scenario
A projects C3 cost, defined by Brook Hunt as the C1 cash cost plus depreciation expense,
closure costs, royalties, frontend taxes, interest and other indirect expenses, gives an indication
of the cost to finance, build and operate a production stream. Cobre Panamas estimated C3
operating cost during Years 2-16 of $US1.41/lb under the Debt Case would rank in the 26th
percentile on Brook Hunts projected 2020 C3 cost curve, and would be attractive compared to
the consensus long-term copper price of $US2.75/lb. With a gold and silver stream sale, the
Projects estimated C3 operating cost would increase to $US1.48/lb but would still be well below
the consensus long-term copper price of $US2.75/lb and would rank in the first half of the
projected 2020 C3 cost curve (28th percentile).
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Table 6-9 Year 2-16 C3 Costs ($US/lb)
Consensus LongTerm
Forward Curve
(declining to
consensus)
3-Year Trailing
Average (SEC
case)
C1
0.72
0.74
0.77
Depreciation and closure
0.50
0.60
0.62
Royalty and frontend taxes
0.14
0.16
0.18
Interest cost (third-party debt only)
0.04
0.04
0.04
C3: Debt Case
1.41
1.54
1.61
Metal stream sale adjustment*
0.13
0.15
0.16
Amortization of stream upfront payment**
-0.07
-0.07
-0.07
C3: Debt plus Stream Case
1.48
1.62
1.70
Cost Item
*Includes stream sale by-product credit adjustment and difference in the timing of depreciation expense incurred on capital assets
**Upfront payment is amortized on a unit-of-production basis on precious metals production
Table 6-10 Life of Mine C3 Costs ($US/lb)

Consensus LongTerm
Forward Curve
(declining to
consensus)
3-Year Trailing
Average (SEC
case)
C1
0.82
0.83
0.87
Depreciation and closure
0.48
0.48
0.48
Royalty and frontend taxes
0.14
0.15
0.18
Interest cost (third-party debt only)
0.03
0.03
0.03
C3: Debt Case
1.47
1.49
1.56
Metal stream sale adjustment*
0.13
0.13
0.14
Amortization of stream upfront payment **
-0.07
-0.07
-0.07
C3: Debt plus Stream Case
1.52
1.55
1.63
Cost Item
* Life of mine stream sale by-product credit adjustment

** Upfront payment is amortized on a unit-of-production basis on precious metals production
Page 98
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Minera Panama, S.A.

Figure 6-3 Comparison of Project C3 Costs on the Projected 2020 Brook Hunt Cost Curve
(1)
6.5
2020 Copper Cost League by Brook Hunt with Brook Hunts 2012 Q1 assumptions adjusted for metal prices and derived
input costs under the Consensus Long-Term Price Scenario
Net Smelter Returns
Cobre Panamas net revenues would be highly leveraged to copper prices, with copper providing
87% of net smelter returns (NSR). Current reserves yield payable metals of 17.5b lb copper,
199m lb of molybdenum, 2.5m oz of gold and 43m oz of silver. As illustrated in Table 6-11,
precious metals represent only a small portion (8%) of the Projects estimated total NSR. Figure
6-4 summarizes Cobre Panamas estimated annual payable copper production and C1 cash cost
over the projected life of the Project.
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Table 6-11 Life of Mine Revenues and NSR (Consensus LT Prices)
LOM Payable
Metal
Production
Gross
Revenue
($USm)
Realization
Costs
($USm)
NSR ($USm)
17.461b lb
48,017
(4,970)
43,047
199m lb
2,983
(303)
2,680
Gold
2.488m oz
3,111
(20)
3,090
Silver
43.109m oz
862
(24)
839
54,973
(5,317)
49,656
Copper
Molybdenum
Total
Figure 6-4 Payable Cu Production and C1 Cash Cost by Year (Consensus LT Prices Debt
Case)
Page 100
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Minera Panama, S.A.

6.6
Project Cash Flows
6.6.1
Debt Case
Figure 6-5 depicts the Projects cash flow profile under the Debt Case. As outlined in Table 6-12,
net sponsor funding during the construction period (up to and including 2016 Q1) is
approximately $US5.0b. The Project is projected to generate a total undiscounted cumulative
cash flow of approximately $US20b.
Figure 6-5 Project Life After-Tax Cash Flows (Debt Case)*
1,500
20
1,000
10
500
(500)
(10)
(1,000)
(20)
(1,500)
(30)
(2,000)
(2,500)
(40)
2012
2017
2022
2027
2032
Debt Case free cash flow to Inmet ($USm, LHS)
2037
2042
Cumulative cash flow ($USb, RHS)
*Based on Consensus Long-Term Prices
Table 6-12 Construction Period Funding Requirement Debt Case ($US)

Item
Amount ($USb)

Working capital**
Third party debt interest and fees
Third-party debt draw down
$6.2
$0.1
$0.3
($1.6)
Total
$US5.0b

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Minera Panama, S.A.

6.6.2
Debt plus Stream Case
The cash flow profile of the Debt plus Stream Case is shown in Figure 6-6. Net construction
period sponsor funding is approximately $US3.8b (see Table 6-13), and the Project would be
expected to generate a total undiscounted cumulative cash flow of approximately $US19b.
Figure 6-6
Project Life After-Tax Cash Flows (Debt + Stream Case)*
1,500
20
1,000
10
500
(500)
(10)
(1,000)
(20)
(1,500)
(30)
(2,000)
(2,500)
(40)
2012
2017
2022
2027
2032
Debt + Stream Case free cash flow to Inmet ($USm, LHS)
2037
2042
Cumulative cash flow ($USb, RHS)
*Based on Consensus Long-Term Prices
Table 6-13 Construction Period Funding Requirement Debt plus Stream Case ($US)
Item
Amount ($USb)

Working capital**
Third party debt interest and fees
Third-party debt draw down
Stream sale upfront payment
$6.2
$0.1
$0.3
($1.6)
($1.2)
Total
$US3.8b

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Minera Panama, S.A.

6.7
Upside of Resource Value Not Reflected in Traditional Discounted Cash Flow
Valuation
The static Discounted Cash Flow (DCF) valuation methodology employed in the analysis does
not fully capture the value of the optionality embedded in a long-life asset and any mineral
resources that may be incorporated into the mine plan in the future (see Section 1.7). As such,
the true, intrinsic value of Cobre Panama could be greater than the values indicated by the DCF
analyses presented herein.
One methodology to evaluate project resources is to apply a price per in-situ pound of copper
equivalent based on precedent market transactions. Employing this methodology to the
resources not included in the current mine plan results in potential resource value of $US0.9b to
$US1.8b. See Section 8 for more detail.
Page 103
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Minera Panama, S.A.

7
PROJECT FINANCING
Cobre Panama is owned 80% by Inmet and 20% by Korea Panama Mining Company (KPMC).
Each owner will fund its pro-rata share of the estimated $6.2b Project capital cost, as detailed in
Table 7-1.
Table 7-1 Independent Funding Breakdown
$USb
KPMC investment catch-up
$0.2
KMPC 20% of capital
$1.2
Inmet 80% of capital less KPMC investment catch-up
$4.8
Total
$6.2
KPMC is wholly owned by LS-Nikko Copper Inc. (LS-Nikko) and Korea Resources Corporation
(KORES). LS-Nikko owns and operates, among other business interests, the worlds second
largest smelter producing over 500 kt of blister copper annually. KORES is wholly-owned and
supported by the South Korean government and focuses on securing a long-term supply of basic
commodities for the South Korean economy.
Inmet is a Canadian based global mining company with three low cost operating mines in
geopolitically stable jurisdictions. It is listed on the Toronto Stock Exchange and has a market
capitalization of about $4b. Inmets funding plan is outlined in Table 7-2.
Table 7-2 Inmets Funding Plan
$USb
Cash on hand
$1.7
Senior Unsecured Notes
$1.0
Precious metals stream
$1.0
Expected cash flow 2012-2015*
$1.5
Total
$5.2
*Includes fees and debt servicing costs for the senior unsecured notes
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Inmet expects to authorize full Notice to Proceed for the Project upon receipt of proceeds from
the senior unsecured notes (the Senior Unsecured Notes). Inmet is conducting an offering of
$US1b principal amount of Senior Unsecured Notes.
Inmet has also commenced a process to consider a precious metals stream transaction. We are
currently engaged in discussions with interested parties to sell a portion of future gold and silver
production attributable to our 80% interest in Cobre Panama. If we are successful in completing
such precious metals stream transaction on acceptable terms, the stream transaction would
provide an additional approximately $US1 billion for our share of the capital cost of the project.
Additional funding of $US1.0b could be raised from a number of potential sources at the Inmet or
MPSA level:
Additional Senior Unsecured Notes
Bank debt such as a line of credit or revolving credit facility at the Inmet level
Equipment financing
The sale of an additional minority interest in MPSA to an off-take or strategic partner
The total Project funding plan along with the approximate proportion of funding in place is
outlined in Table 7-3 below.
Table 7-3 Total Project Funding
$USb
Capital estimate
% Financed
(cumulative)
$6.2
Funding sources:
KPMC
$1.4
23%
Inmet cash on hand
$1.7
50%
Inmet Senior Unsecured Notes
$1.0
66%
Inmet precious metals stream
$1.0
82%
Inmet cash flow from operating mines 2012 - 2015
$1.5
106%
Other
$1.0
123%
Total funding sources
$7.6
123%
As can be seen, in short duration the Project would be approximately 82% funded or 106%
considering Inmets future operating cash flow. Through the balance of 2012, rather than rely on
cash flow from its operating mines, Inmet would continue to work on creating additional financing
Page 105
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Minera Panama, S.A.

flexibility and assess opportunities to optimize its ultimate ownership in the Project, balancing
financing, operational and development risk with exposure to this development asset.
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RISKS AND OPPORTUNITIES
8.1
Project Risk Management
Responsible risk management is a key foundation of Inmets corporate strategy to grow

responsibly as a base metals mining company, providing superior returns to shareholders. To
effectively and proactively manage the potential risks inherent in the execution of the Cobre
Panama Project, we have developed and implemented a Project-specific risk management
approach utilizing standardized processes, systems and tools across the entire Project. Through
regular interaction and input from the owners team and all major EPC/EPCM contractors, our
integrated risk management approach ensures that risks are continuously and consistently
identified, assessed, treated and monitored.
Risk Management Process and Tools
Effective risk management on the Cobre Panama Project is achieved through the consistent
application of a well-defined risk management process supported by a fully integrated webbased Risk Register, which has been developed specifically for this Project using a Microsoft
Dynamics database. The Risk Management process includes four stages:
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Cobre Panama Project Risk Register
The Cobre Panama Risk Register integrates risk information from Inmet, MPSA and all major
EPC/EPCM contractors including:
Infrastructure EPCM
Contractor: JVP
Power Plant EPC Contractor:

SK
Process Plant EPC

Contractor: (To Be
Determined)
Risk Identification
Risk Identification is achieved using a systematic approach including a number of different tools
and techniques such as Risk Workshops and HAZPOS, to identify both technical and nontechnical risks.
A three-tiered approach is used during the identification process including:
describing the potential risk (i.e. potential failure mode); identifying the risks potential initiating
event(s); and finally, identifying the risks potential resulting effect(s).
Risk Assessment
During the Risk Assessment stage, the likelihood and consequence of each identified risk is
assessed using the Projects predetermined scales, as defined by the Projects standardized
Likelihood and Consequence Table. Consequences are assessed in terms of economic and
non-economic criteria that have been developed and approved specifically for the Cobre
Panama Project in the areas of: Safety and Health; Environmental; Community; Security; Human
Rights; Reputation; Loss/Damage; Financial; Production/Schedule; and Business/Project Impact.
Once the Likelihood and Consequence scores have been agreed upon, the risks ranking is then
determined using the Projects 5x5 Risk Ranking matrix.
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For
each
risk,
three
separate risk rankings are

determined and tracked.
The Initial Risk Ranking
defines the inherent risk
that exists prior to any risk
treatment
undertaken.
actions
The
being
Actual
Risk Ranking represents

the current risk level that
exists taking into account
any existing controls that
have been implemented or risk treatment actions that have been completed to-date. Finally, the
Residual Risk Ranking represents the risk level that is anticipated to exist once all of the risk
treatment actions defined in the Risk Treatment Plan have been completed.
Risk Treatment
To effectively minimize the Projects risk exposure to an acceptable level, a Risk Treatment Plan
is developed and implemented for each risk, reflecting the control strategy requirements
corresponding to the risks Actual Risk Ranking. As part of the Risk Treatment Plan approval
process, the implementation cost of each plan is evaluated in comparison to its expected results.
Each Risk Treatment Plan is made up of distinct measurable action items, each with a clearly
defined action owner, start date and finish date.
Risk Monitoring and Control
Once the Risk Treatment Plans have been developed, approved and implemented, their
progress is then monitored and compared against documented milestones and targets. In the
case that a Risk Treatment Plan is not achieving its intended result, it is reviewed and revised to
improve its effectiveness. All Risk Treatment Plan information and progress details are recorded
and tracked in the Risk Register.
As the Project progresses, all risk and Risk Treatment Plan information would be regularly
reviewed and updated to reflect the inevitable changes that have occurred on a monthly basis.
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As Risk Treatment Plans are implemented the Actual Risk Ranking of each risk would be closely
monitored and updated accordingly. Through this continuous review and update process, our
team would have access to detailed real-time information on all currently known Project risks,
which would be accessed through an internet based Project Controls Dashboard tool.
8.1.1
Special Considerations
Cobre Panama stakeholder risks and opportunities were identified and risk mitigants put in place
as part of Basic Engineering.
Cost Escalation
Quotes to build the power plant and the process plant (together a significant component
of Project capital expenditures) were and are being written on a Lump Sum and Not to
Exceed basis in order to reduce the likelihood that these components will bring the
Project over budget. These quotes will be received from audited vendors with the
sophistication and balance sheet to manage costs and deliver on budget.
The advanced stage of engineering for the Project (currently 38% completed) in
combination with the large portion of firm bids received to-date (58%) should further
reduce the potential for unforeseen costs.
Panamas use of the US currency is another positive characteristic of the Project that
should reduce the potential for material cost escalation due to foreign exchange
fluctuation.
The manner in which the Request for Quotation process was conducted should reduce
the potential for cost overruns. The Projects EPC and EPCM contracts are designed to
incent contractors to stay on budget and on schedule.
We believe the quotes obtained are materially conservative in some cases the labour
multiplier (unit of work over unit of time) used for work on the Project is as high as three
times what would normally be employed and some of the quotes for individual work
packages have small overlaps in scope (which could potentially reduce costs).
By the end of 2012, 50% of the Project expenditures are expected to be committed
against firm quotes currently in hand.
Overall Project contingency is 9.6% (as a percentage of TIC). When owners costs (mine
preproduction, mine equipment and owners project management (PM)) and contingency
on owners costs are removed, the remaining contingency level is 11.2%. This
percentage is in line with what might be expected of an AACE Class 2 engineering
estimate.
The Project is actively considering early group purchase of bulk commodities (to lock in
some costs of steel, diesel, cement) for construction and passing out to suppliers.
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Low Cost Production from a Low Grade Mine
Cobre Panama is amenable to large scale, open pit mining methods that should result in
the efficient handling of ore and waste.
Mining costs should benefit from a very low strip ratio, roughly one fifth of the average
(0.58 vs 2.53 Source: Brook Hunt) for all open pit copper mines in 2011.
The Projects proximity to the coast and the low altitude of the Project would allow the
mine and the port to be located close together, thus decreasing linear maintenance and
allowing for integrated management of remote facilities.
The Project would have access to low-cost, self-generated power that takes advantage of
proximity to a coal source.
Management Depth
Inmet has developed three mines within the tenure of the current management; the Las
Cruces, ayeli and Troilus mines.
For this Project, Inmet has recruited a strong owners team (detailed in Section 9) that
has relevant experience in construction and operations. Further, reputable Engineering,
Procurement and Construction contractors with a proven history of quality have been
selected.
Potential for Government/Social dissatisfaction
Approval of the ESIA is in our view indicative of governmental support for the project.
Permits post-ESIA approval are being received.
Extensive engagement and cooperation at both the government and community levels
provide the best degree of control possible.
At the community level, the current level of support in the Project area indicates that
community engagement efforts are working and a recent study shows overwhelming
support for the Project (Section 3.3.3).
MPSA has received free prior and informed consent of the indigenous communities who
will be physically and economically displaced by the Project.
MPSA has continuous engagement with the local communities and a broad range of
stakeholders and is delivering employment to local residents.
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Table 8-1 Key Project Risks and Treatment Plans
Key Risks
Unplanned prolonged construction interruption due to
severe weather resulting in project delays.
Risk Treatment Plan - Summary

Sufficient slack has been built into the schedule to account for severe weather. Based on detailed
constructability reviews, work methodologies have been developed to maximize work progress
through periods of heavy rain.
Sediment levels (TSS, TDS) down stream of project exceed Robust sediment and erosion control procedures and processes have been developed and
allowable limits during construction.
implemented in conjunction with industry experts, using significant field tests including settling
rates, turbidity to TSS relationships, TSS runoff loading, toxicology analysis and geomorphologic
studies. The effectiveness of existing procedures and processes are carefully monitored using
stations set up at key locations both on and off the project footprint.
Loss of biodiversity in project footprint.
Flora and fauna rescue and relocation programs have been developed and implemented in
conjunction with biodiversity experts, ensuring that all endangered and threatened species are
conserved . Contractors flora and fauna conservation performance is carefully monitored through
regular inspections during rescue activities.
Inadequate health, emergency services, sanitation and

education infrastructure in local communities is
overwhelmed by increased local population resulting from
project induced in migration.
Analysis of existing local infrastructure has been conducted to identify any improvements and
expansions required to support the expected increase in local population. The development of
required upgrades is being coordinated with government agencies and supported through the
provision of technical assistance to authorities.
Inability to hire sufficient front-line workforce from

Local training program has been developed and implemented in conjunction with the EPCM
immediate local communities (i.e. 22 local communities) to contractor. Training has also been initiated with INADEH focused on construction and welding.
meet project commitments.
Local labour requirements and quantities have been clearly defined in subcontractor contracts.
Late arrival of materials/ equipment due to late delivery by
vendors, transportation and logistic issues, and/or custom
clearance delays.
Effective expediting organizations within MPSA and EPC/EPCM contractors as well as first class
customs brokers, are utilized to execute the projects procurement strategy including the proactive
expediting and monitoring of vendors based on the criticality of material/ equipment. Dedicated
EPC/EPCM procurement employees will manage custom clearance at port of Colon.
Lack of safety culture and behaviour by contractors due to

lack of qualified contractor supervision.
Comprehensive Safety Management plans and policies have been developed based on industry
best practices and implemented through extensive safety training including leadership and
supervisor training. Project safety goals and targets are clearly defined and safety performance is
carefully monitored across the entire project including all contractors working on site. Ratios of
qualified supervisors to workers has been predetermined and mandated for all project activities.
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8.2
Opportunities
Extended Mine Life and Expansion Opportunity

Mineral resources that have already been established on the Cobre Panama concession could
provide significant option value to the Project once it is built and operating. Currently there are
12b lb of contained copper in the measured and indicated mineral resource and some 19b lb of
copper in the inferred mineral resource that have not been exploited in the mine plan. Although
mineral resources do not have demonstrated economic viability, based on commonly used
market precedent, the value of these additional units of copper could be between $US0.03 and
$US0.06/lb in the ground. This would suggest an option value of those copper units of between
$US0.9b to $US1.8b.
If work progresses to move these resources into mineral reserves, they could provide
opportunities to:
extend mine life beyond the current 31 years; and/or
accelerate the third line, increasing production in Years 3 to 9; and/or
justify expanding the current operation beyond 240 ktpd throughput.
Figure 8-1 Plan of Distribution of Resources 2012
The installation and commissioning of a third line in Year 10 is part of the current Cobre Panama
design. The current preproduction capital provides for all of the civil work necessary for this third
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line. The original logic for bringing on the third line in Year 10 was to coincide with the decrease
in grade in the mine plan. Moving the third line forward could enhance the mill throughput by
approximately 50% in Years 3 to 9 of production and would make Cobre Panama one of the ten
largest copper mines in the world in terms of production. Disposal of tailings beyond the current
plan could potentially take advantage of what would be already exhausted pits. Further
engineering work to detail the plan to advance the third line is in progress.
There is an established mineral resource, exclusive of mineral reserves, that is largely near
surface and proximal to the planned plant. MPSA is currently pursuing additional technical
studies that could lead to the conversion of indicated resources at the Balboa and Brazo deposit
into reserves.
Table 8-2 Potential Reserves Should Indicated Resources at Balboa and Brazo be
Converted to Reserves
Category
Proven and
Tonnes
Cu
Au
Ag
Mo
Cu
Au
Ag
Mo
(x 1000)
g/t
g/t
(x1000)
(x1000)
(x1000)
(x1000)
tonnes
ounces
ounces
tonnes
2,319,000
0.40
0.07
1.4
0.007
9,258
5,167
104,028
169
845,000
0.36
0.10
1.2
0.002
3,041
2,586
33,261
21
3,164,000
0.39
0.08
1.3
0.006
12,299
7,753
137,289
190
Probable
Reserves
Indicated
Resources at
Balboa and Brazo
Total
With a substantial and growing resource base, the operation could justify working towards
expanding beyond the current design capacity. Much of the infrastructure such as the port,
power plant, roads and camp could be leveraged by expansions so these could be very
economic capacity additions.
Exploration Activities in the Concession
In late 2010, MPSA initiated its first modern, concession-wide exploration program by flying a
recently developed airborne geophysical survey. This survey identified the known shallow
mineralization and generated numerous additional similar targets. One of the first targets tested
in early 2011 was immediately west of Colina. This drilling resulted in the discovery of the Balboa
deposit. Within a year, this discovery had established an indicated resource of 602 mt at 0.36%
copper and 0.10 g/t Au and additional inferred resource of 301 mt at 0.31% Cu and 0.08 g/t Au.
On Balboa, two intersections drilled at the most north-westerly extent of Balboa returned some of
the best grades over good widths. Hole 11-116 returned 0.85% Cu, 0.26 g/t Au over 241
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metres and hole 11-095 returned 0.78% Cu, 0.31 g/t Au over 237 metres. The deposit remains
open to expansion in this direction (see Inmet press release dated March 5, 2012).
Figure 8-2 Plan of Distribution of Resources 2012
An extensive exploration program for 2012 is underway with some 36 holes testing additional
targets on the concession.
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PROJECT EXECUTION
9.1
Project Background
The Project execution plan describes the assumptions, challenges, keys to success, and
sequence of events over the Project development period from completion of the Basic
Engineering report through design to shipment of the first concentrate.
There would be several distinct and separate construction areas:
mine site, including the process plant site;
port site;
300 mW power plant;
TMF and associated infrastructure;
Botija pit;
230 kV overhead power line and upgrades from Llano Grande; and
Coast Road and pipelines.
The methodology applied during the Project quotation phase, which included the receipt of a
large portion of firm quotes, a significant degree of completion of overall engineering and the
contractual encouragement of EPC and EPCM contractors to meet budget and schedule, has
afforded the Project a relative degree of control over schedule and scope change.
9.2
Project Organization
The organization of the MPSA Project team is based on a matrix approach, commonly used in
the industry for development of major projects. The organization provides a single point
responsibility through MPSAs Project Director to the Inmet Project Sponsor. To facilitate
management, coordination and control, the Project is broken down into three major areas: Mine,
Port and Infrastructure; Power Plant; and Process Plant.
Each area is managed by a Project Manager who is accountable to the Project Director for the
planning and coordination of all work required to deliver their respective areas on schedule, on
budget and with the required level of quality, while ensuring that safety, environmental and other
organizational objectives are met.
In performing their responsibilities, the Project Managers interface across all functional Project
groups, including health and safety, engineering, construction, procurement, environment and
Project controls. These groups are led by function managers, who also report to the Project
Director. These function managers have the responsibility to ensure that Project standards are
applied uniformly throughout the Project, and to allocate the necessary resources to deliver the
work required to meet Project objectives. The members of the Project team report to their
respective function managers, while assuming accountabilities to the Project Managers.
Inmets project sponsor is Fernando Martinez-Caro. Mr. Martinez-Caro brings 22 years of
experience in the engineering and construction industry primarily working in the contractors side
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before joining Inmet four years ago. His experience includes large EPC projects in Canada, US,
UK and Spain working with Grupo Ferrovial.
MPSA has put together a world-class owners team that will provide leadership, oversight and
integration to the work delivered by the EPCMs. The team is comprised of 50 members and
would grow to include 107 at its peak in 2013. It is led by Cesar Inostroza (MPSA Project
Director), who brings to the project more than 23 years of experience in the mining, aluminum
and process industries and has worked both on the contractor and owner sides for companies
such as Rio Tinto, DuPont and SNC-Lavalin in locations around the world, including the Middle
East, North America and Western Africa.
Other key members of the MPSA team include:
Fernando Prochelle, Construction Director: Mr. Prochelle has 35 years of experience

in the construction industry working for Bechtel, Transfield, Minproc, BHP and Goldcorp
in Australia, Eastern Africa and South America.
Michel Germain. Project Controls Manager. Mr Germain has 35 years of experience in

project management and controls with Owners and EPC contractors working for Alstom,
KSH, Westinghouse and SNC-Lavalin in North America and the Middle East
David Madsen, Project Controls Manager Power Plant: Mr. Madsen has worked for 31
years in project control roles with such companies as Weyerhaeuser, Phelps Dodge,
Freeport McMoRan and Kinross in South and North America.
John Cederberg, Procurement and Logistics Manager: Mr. Cederberg has 22 years
of experience in field logistics and procurement working for Minproc, Drummond, Barrick,
Sumitomo and Washington Group, primarily in Latin America.
Leo Flanigan, Senior Engineering Manager: Mr. Flanigans engineering expertise has
been built over the past 31 years in positions with MIM Holdings, Minera Alumbrera, and
OK Tedi Mining in Latin America, Australia and Papua New Guinea.
Peter Erceg, Engineering Manager: Mr. Ercegs experience includes 22 years in

engineering roles at Morrison Hershfield, URS and AECOM in Australia and North
America.
Pierre Beland. Health and Safety Manager: Mr. Beland brings 28 years of HSE
experience on large capital projects and operation management in Canada, US, Mexico
and New Caledonia working for companies like Vale, Inco and Alcoa
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JVP, as prime EPCM in the Cobre Panama Project, has mobilized an equally qualified team of
154 members that would peak at 361 in October 2013. The team is led by SNC-Lavalins Pierre
Dubuc, a seasoned executive who brings 35 years of experience in delivering major mining and
metallurgy (M&M) and aluminum projects such as Goro Nickel in New Caledonia, Mozal
Aluminum Smelter in Mozambique, and several iron ore projects for Iron Ore Company of
Canada .
Other key members of the JVP EPCM team include:
John Whitaker, Construction Director: Mr. Whitaker brings to JVP 25 years of

experience in lead construction roles at Ambatovy Nickel in Madagascar, Goro Nickel in
New Caledonia, Mozal Aluminum in Mozambique and Tanjung Bin Power in Malaysia, to
name a few.
Elie Rizk, Engineering and Controls Director: Mr. Rizk has built his experience in
project management and design over 24 years in the pulp & paper and metals industries
on projects such as the Qatalum Smelter in Qatar and Alcan-Kitimat and AlcanShawinigan smelters in Canada.
9.3
Health and Safety
MPSAs goal is Zero Harm and it aspires to ensure that every employee and contractor goes
home healthy and safe every day. To achieve a zero harm workplace, MPSA is working to
establish a culture and an environment where incident-free work is the norm. It does this
through implementation of occupational health and safety standards, safe work procedures, and
incident reporting processes and tools.
In 2011, Inmets operations, projects, and exploration achieved the lowest lost time injury
frequency (LTIF) in the companys recorded history. There was also a significant improvement
in the quantity of leading indicators related to safety performance through the focus on field
leadership activities and planning work with risk assessment methodologies.
At MPSA, all work from engineering and design to on-the-ground work practices will align with
the Inmet approach. During detailed engineering and construction, each contractor will develop
its project-specific occupational health and safety program and management plans. These will
incorporate Inmet and MPSAs occupational health and safety standards and procedures, ESIA
commitments and ensure compliance with relevant Panamanian legislation.
9.4
Environmental Management Plan
We are committed to the highest standard of environmental and social responsibility for Cobre
Panama. It is a complex project in a sensitive environment. Integrating our work with
communities and the environment is an absolute necessity, and we are working with several
groups to develop innovative ways to unite the goals of conservation and sustainable
development, so that all stakeholders benefit. MPSAs vision for Cobre Panama is to create a
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model mining project that incorporates evolving international best practices and standards for
ecological protection, community relations, consultation and development.
The Environmental Management Plan calls for the establishment of an Environmental
Management System, or EMS, that will comply with ANAM (National Environment Authority of
Panama) requirements, the International Finance Corporation Performance Standards on Social
and Environmental Sustainability (IFC PS), and Inmets Corporate Responsibility (CR)
standards; with the design of respecting the Mesoamerican Development Corridor (MBC)
objectives; and to helping Panama achieve its Millennium Development Goals through the
realization of this Project.
The ESIA identified project-related effects and mitigation strategies that serve as the initial basis
for social and environmental management planning. The EMS focuses on the processes and
plans necessary to ensure that social, health and safety, and environmental commitments and
mitigations are implemented and re-evaluated throughout the Project life. It comprises several
detailed plans, including:
Environmental Education and Training Plan

Vegetation Disposal Plan
Waste Management Plan
Water Management Plan
Construction Environmental Mitigation and Control Procedures
Air Quality and Noise Control Plan
Port Management Plan
Environmental Monitoring Plan
Environmental Recovery and Abandonment Plan
Archaeological Resources Management Plan
Biodiversity Action Plan
Reforestation Plan
Flora and Fauna Rescue and Relocation Plan
Aquatic Life Management Plan
Offsets Management Plan
Hazardous Materials Management Plan
Spill Prevention and Control Plan
Key considerations among these plans include the following:

Environmental Challenges
The Project would have a large footprint in the MBC, cleared over time, and we have made
commitments to landscape-scale conservation to enhance its biodiversity and deliver net positive
benefit.
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Waste and Water Management
The Project area has up to five metres of rainfall annually, so responsible water management is
critical to ensure that our activities do not harm the environment.
Erosion and Sediment Control
The Erosion and Sediment Control Plan will address the control and mitigation of water runoff
during the construction activities to ensure that discharge to the environment is within acceptable
limits.
9.5
Labour Relations, Training and Hiring
Labour Relations
JVP has signed Project Labour Agreements (PLAs) with the three main Panamanian
construction unions that will provide workers for the Project: SUNTRACS, SINTRAICO and
SINTICOPP. The PLAs set an industrial relations framework across the Project and establish
homogeneous labour conditions for all contractors and subcontractors working in the Cobre
Panama Project.
Training and Hiring
MPSA is committed to maximizing the economic
and social benefit of Cobre Panama to the local
communities and to Panama as a whole. As
such, it has an obligation to prioritize the hiring of
workers from the immediate Project area and
then prioritize workers from concentric locales
around the Project. To comply with this
commitment, JVP has launched the Programa de
Desarrollo y Capacitacion Local (PDCL).
The first stage of the program would focus
exclusively on locals from the 22 target
communities immediately adjacent to the Project,
and would be introduced to contractors as Nuestros Vecinos Primero (Our Neighbours First).
PDCL would work closely with contractors to identify and train low-skilled workers.
MPSA has been working with the Panamanian Ministry of Labour to open an immigration office
in Penonom dedicated exclusively to the Project for issuance of work visas. A recommendation
of how to set up this Visa Coordination Centre is currently being put forward to MPSA and is
under discussion.
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9.6
Sequence of Construction
9.6.1
EPCM Scope Under JVP
Early Works: Specific early works activities that have commenced in advance of full Notice to
Proceed include:
Llano Grande Road Upgrade;
Pioneer Road;
Molejon By-pass Road; and
La Pintada By-pass Road.
These activities will enhance the access to the Project from the existing road network south of
the mine site.
Site Capture: Flora and fauna rescue and relocation programs to ensure species-level
conservation would precede stripping and clearing of vegetation to allow for the start of
earthworks activities.
A detailed erosion, sedimentation and drainage plan would be deployed to ensure that the
Project construction meets its commitment to protect water resources.
At the port, site capture would start with the installation of a temporary landing system formed by
jacked-up barges that will facilitate access for equipment, materials and personnel shipped to
site from the port of Coln. Once the beach head is established, portable tent camps would
ensure proper accommodation in the early days.
Earthworks: Five work-fronts are planned for optimal distribution across the area:
Work-Front 1 Port Site Mass Earthworks & Coastal Road
Work-Front 2 - Coastal Road
Work-Front 3 Plant Site Mass Earthworks
Work-Front 4 Tailings Management Facility
Work-Front 5 Pre-stripping of Mine Site
Port Site facilities: These include port materials handling facilities (concentrate receiving and
the coal unloading facility), the filtration plant, a storage shed, conveying systems to berth and
shiploader, permanent port site facilities andmarine works (offshore).
Utility Corridor: As the Coastal Road becomes available, the utility corridor would be built and
would include three pipes: concentrate, diesel and filtered water return.
Transmission Line: Comprises two segments:
Llano Sanchez substation to Process Plant 230 kV switchyard and temporary power 230
kV/34 kV substation, and
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9.6.2
Process Plant switchyard to the Punta Rincon Power Plant switchyard built parallel to the
Coast Road over the forest canopy.
EPC Scope Yet to be Awarded
Process Plant: Built under a separate EPC Contract managed by MPSA, this contractor would
only mobilize on site once bulk earthworks have been completed by JVP.
9.6.3
EPC Scope Under SK E&C
Power Plant: In July 2011, MPSA signed an Engineer Procure Construct (EPC) Agreement with
SK Engineering & Construction (SK) of Korea, making SK responsible for the design of the
power plant facility, that would include 2 x 150 mW conventional subcritical pulverized coal-fired
boilers, under a lump sum turnkey arrangement. SKs scope of supply includes engineering
design, procurement, construction and installation of facilities, and commissioning of the units.
SK performed Basic Engineering services during the period prior to full Notice to Proceed with
the construction of the mine and its power plant.
The SK Project Management Team (PMT) would manage and oversee the work performed by its
subcontractors. Sargent and Lundy (S&L) have been subcontracted to provide complete
engineering services for the Project.
As defined in the EPC Agreement, the power plant is scheduled to be completed in 41 months
(first unit) and 44 months (second unit) from a full Notice to Proceed. Joint Venture Panama
(JVP) would provide rough grade platforms for the power plant facilities. The coal would be
imported through the marine facilities designed by JVP for delivery to the power plant.
9.7
Materials Management and Logistics
The logistics execution strategy has been designed to support construction activities for major
work on multiple fronts, many of which will be constructed concurrently.
As EPCM contractor, the scope of JVPs seven person Logistics and Materials Management
team includes the procurement and management of equipment and materials required to support
construction at 12 project sites.
A third-party logistics provider of both off-shore and on-shore services would work under the
direction of JVP to provide all professional and technical services, equipment, personnel and
supervision required to safely execute logistics operations from several worldwide origins to the
Project site.
9.7.1
Logistics Strategy
Materials and equipment procured off-shore is estimated at 477,000 freight tons distributed over
1,500 shipments to take place over an estimated period of 54 months, starting in the Q2 2012. It
is estimated that 75% of the cargo would enter Panama via the Port of Coln, with the rest
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entering via the Port of Balboa (with the exception of cargoes originating in Panama). Cargo
would reach the site either by truck through Coclecito, or by barge via Punta Rincn.
9.8
Procurement
During Basic Engineering, approximately 175 packages were developed. Sixty percent of these
have received firm proposals from subcontractors. The rest have received budget (indicative)
bids or were estimated in-house.
Firm contracts have been signed for the fabrication and delivery of the mills and motors
(currently in production), power plant under a Lump Sum Turnkey EPC Contract, design and
construction of the Transmission Line, site telecommunication, marine barges and temporary
and construction camps.
Site capture, earthworks, logistics support has been finalized and procurement contracts for the
intial phase of the Project will be placed shortly after full Notice to Proceed.
9.9
Security
The development of security plans, procedures and the operational structure will be based on
and aligned with:
Threat and Risk Assessments;
Vulnerability Security Assessments;
Security industry best practices;
Performance standards established by MPSA;
Applicable MPSA site and security plans/policies;
An integrated approach to security related aspects with all entities (Client security,
contractors, etc.); and
Incorporation of the Voluntary Principles on Human Rights into security planning and
training.
9.10 Project Master Schedule and Key Milestones
A Project Master Schedule has been developed that takes into account the status of Basic
Engineering completion and all aspects of the Project scope, including the power plant
execution. The schedule also considers the process plant that is to be delivered under an EPC
contract.
The Project schedule activity work breakdown structure (WBS) is paired with the WBS set out in
the capital cost estimate as are the activity resources. The Project site weather has been taken
into consideration in preparation of the schedule based on input from earthworks contractors and
their submitted production rates established during the pricing of the earthworks in the Basic
Engineering phase. The lead times of major plant equipment have been ascertained from the
numerous quotations that were obtained during Basic Engineering.
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The engineering and procurement sections of the schedule have been developed in support of
the construction schedule. The intent, wherever possible, is to allow construction to dictate when
engineering and procurement are required.
To ensure the quality and viability of the Project schedule, a number of allowances have been
made for certain variables. For example:
The Project site weather conditions are a source of concern, with daily rain expected and
an extreme rainy season in the region from October to January, resulting in poor soil
conditions. To take these conditions into consideration in the schedule, one lost day per
week is assumed during the construction phase.
It is assumed that the local work force will be supplemented by importation of skilled
construction trades to meet the demands of the schedule.
The lead times of major plant equipment has been ascertained and built into the Project
schedule.
Project milestones are provided in Table 9-1 and Figure 9-1
Table 9-1 Project Milestones
Milestone
Date
(Estimated)
Notice to Proceed
2Q12
Mine/Process Plant Construction Start
2Q12
Port Site Construction Camp Complete
4Q12
Process Plant Bulk Earthworks Complete
4Q13
Coast Road Open (Plant to Port Site)
4Q13
Port Dock Facility Construction Complete
2Q14
230 kV Power Transmission Line Construction Complete
3Q14
Tailings Starter Dam Construction Complete
3Q15
4Q15
4Q15
4Q15
4Q15
Start of Production
4Q15
Shipment of Concentrate
1Q16
Commercial Production
2Q16
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Figure 9-1 Project Schedule
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9.11 Independent Reviews
9.11.1 Independent Project Schedule Review
Legico-CHP Consultants were asked to conduct an independent review on behalf of MPSA of
the Project master schedule. More specifically, the review targeted the following items:
- methodology applied
- possible duplication of quantities and manhours
- basis and assumptions for schedule components
- areas where schedule might not have achieved Level 3 (deliverables required to achieve
the scope of work determined), and
- errors and omissions and any other factors that could have affected the precision and
quality of the final schedule.
The report concluded that:
- the logic and sequencing of activities are acceptable,
- weather has been considered in the construction duration and conservative productivities
seem adequate,
- the 2,991 activities in the schedule are representative of a Level 3 schedule,
- long duration of certain activities will require appropriate packaging,
- main activities have been levelled out and S curves for earthworks and concrete seem
appropriate, and
- the overall completion times for power and process plant are comparable to other similar
facilities that the reviewers have benchmarked.
9.11.2 Independent Project Readiness Assessment
Independent Project Analysis (IPA) conducted a study in March 2012 to evaluate team
functionality and the state of completeness and robustness of key project lead indicators, project
costs and schedule outcomes. The report concluded that the overall schedules for the process
and power plants are conservative, process plant capital costs are industry average, the front
end loading index is good and aligned with industry average (though lagging Best Practical
Range) and that the Project Controls strategy for execution is well developed. The report
highlights the immediate need to focus on team alignment, integration and further development
of owner and contractor teams, as the Project ramps up for execution phase activities.
9.11.3 Independent Project Controls Health Check
KPMG LLP (KPMG) was engaged by Inmet to conduct an independent assessment of the
Project governance, controls and management processes (the Healthcheck) for the Project. The
assessment analyzed select aspects of the Project strategy, organization and administration;
cost and financial management; procurement management; Project controls and risk
management; and schedule management.
During the course of the Healthcheck and the follow-up in 2012, KPMG conducted select
interviews with current Inmet, MPSA, and JVP employees; assessed organizational roles and
responsibilities, process flow diagrams, key controls and other information provided by Cobre
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Panama staff; reviewed and assessed current key Project policies, procedures and
documentation from each of Inmet, MPSA, and JVP; proposed monitoring approaches to help
Inmet ensure that these Project governance and management policies, procedures and control
systems operate as planned; assessed current fraud risk management controls; reviewed
planned compliance processes related to Law 9; and reviewed specific contracts and/or contract
work package template to identify any key risks.
The conclusion of the Healthcheck was that the design of the governance and project internal
control framework for the Cobre Panama Project would be sufficient to support full Notice to
Proceed.
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10
OPERATIONAL READINESS
Operational readiness is an important factor to ensure that the business does not incur value
leakage in the critical period of ramp-up and stabilizing the operation. This is a potential risk to
the Cobre Panama Project because large-scale mining operations are new to the country, the
environment is environmentally and socially challenging and the Project includes a variety of
disciplines over a significant geographic footprint.
Table 10-1 Elements of and Assurance of Operational Readiness
Element
Safety
Plan
Inmet's safety standards, procedures, and incident reporting processes will be
implemented
Contractor will develop project-specific safety programs
ESIA commitments and will ensure compliance with legislation
Additonal Info
9.3
People readiness
Detailed LOM manpower model completed

Large operational and support team will be built up during construction, ready for
commisioning
By the time of commisioning operation people should be very familiar with system design
9.5
Legislative
Compliance
ESIA approval completed

Compliance register currently monitoring 12 EIS and various requirements of Law 9
Legal team will be comprised of existing team and permitting/land group to ensure intimate
familiarity
Current permitting and land group will be incorporated into the legal team.
9.4
License to Operate
Community relations and community development programs will continue seamlessly into
operations.
3.3
ERP (SAP) system already operational with development of additonal modules on-going.
Fixed Asset Managemet, HR and Payroll systems at MPSA already using SAP.
Plant Maintenance, Warehousing and reporting modules will be rolled out in preparation for
the operations.
Metallurgical accounting software to provide real-time tracking of metal production and
variance analysis
9.7
Microwave link between the mine and Penonome capable of delivering up to 300 Mbps of
bandwidth in place
Connection from Penonome to corporate headquarters provided by a third-party carrier
through a fibre-optic cable
MPSA planning to lay fibre optic cable between Port, Mine and Penonome during the
construction, this link will become the primary means of communication for the operations
phase - microwave link will remain in place as a backup
MPSA has already implemented live connected, on-stream water quality monitors and air
monitors will be implemented as part of the project.
2.1
System readiness
Services and
Infrastructure
readiness
Warehouse designed and will start out with a year's worth of supplies
Procurement and
supply chain readiness Will use a SAP system to track inventories and signal low levels
Critical capital spares identified and will be stored offsite
Equipment readiness
Will develop a commisioning schedule for each area

Will test contractual requirments and PLC Interlocks
Safety margins applied to esnure production targets met and verified by third party reports
10
10
Experience has shown that project teams have come to understand the capital project
assurance imperative, usually applying rigorous focus to the technical design and build aspects
of the project. A similar focus on operational readiness is often neglected from the outset,
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Minera Panama, S.A.

potentially leading to challenges in achieving the anticipated return on investment. The following
section describes the key measures MPSA has put into place to achieve operational readiness
in the Cobre Panama Project.
People Readiness
Recruitment and training programs for future Panamanian supervisors and operating personnel
have been active for some time, deploying best and next practice talent identification and
development methods.
During operations, the CEO and President of MPSA will have the following direct reports;
Operations Director, CFO, External Relations, Human Resources, Environment and Security.
With most of the team having already done similar work prior to joining MPSA and with their
years of tenure with MPSA prior to start-up, the team can be considered an operationally ready
cohesive unit.
The three phases of the start-up are; mine, power plant and process plant. Mining operations
with owner equipment would commence fifteen months prior to the start of production with owner
pre-stripping and the creation of an ore stockpile. With the start of the mine, a large operational
team and support would be in place to ensure that the support systems from Human Resources
and Accounting are in place to work out the kinks prior to commercial production.
Members of the operations team would have also participated in the Basic Engineering design of
the plant, tailings dam and infrastructure and would manage the development of the mine plan.
Operational personnel would participate in the Distributed Control System (DCS) programming
to ensure familiarity and compatibility with operational requirements. Furthermore, these
employees would be Panamanian and therefore should be long-term employees. This would
ensure familiarity and understanding of the design prior to hand-over after commissioning. It is
also anticipated that a portion of the Project team and possibly EPC and EPCM contractors will
carry over to the operational team. At the hourly worker level, they will be transferred prior to the
termination of the Project.
Labour Force
Cobre Panama would quickly ramp up personnel as required to ensure construction is not
delayed. A large component of the construction and operational staff would be drawn from
Panamas large and diverse workforce. As of 2011, Panamas workforce was estimated to be
1.5 million people (Source: Instituto Nacional de Estadistica y Censo Panama) and its current
population is estimated to be 3.5 million as of July 2012. Roughly 64% of Panamas population
is of working age and 62% have at least some high school education. The countrys literacy rate
is 92%.
It is widely accepted that there is an oversupply of unskilled labour and an undersupply of skilled
labour. The Projects training strategy would take advantage of the young labour pool by training
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Minera Panama, S.A.

them to ensure maximize the employment Panamanian labour. Specialized labour would be
brought into the country within the immigration framework.
Training for operations would include but will not be limited to:
Pre-screening system to understand potential employees skills, attitudes and tolerance
for risk before training.
Classroom, Classroom Based Training (CBT) and high fidelity Simulator training for
heavy equipment operations including dozers, graders, shovels and haul trucks.
Engineering Development Program (EDP) and Graduate Development Program (GDP)
students are obtaining North American engineering degrees and getting practical
experience at places like Metso Process Technology, Hazen Metallurgical Research and
Call & Nicholas Geotechnical before re-joining MPSA in middle management roles.
Panamanian Engineering Universities would be supplying the majority of the supervisor
level of management and these staff will undergo extensive leadership training prior to
start-up of the mine and concentrator.
A program completed by Chilean Centro Entrenamiento Industrial Minero (Industrial
Mining Training Centre or CEIM) for teaching mining skills to people without experience
will be introduced. This system was implemented in Chile as the industry does not have
enough workers available to address the expansion of the industry.
Approximately 4% of the operational workforce will be in continuous training programs.
This will give the mine the ability to train workers for different functions and have a ready
spare person in case of absenteeism.
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Minera Panama, S.A.

Equipment Readiness
The Project would implement a commissioning schedule for the different areas, in which there
will be an electrical and mechanical completion commissioning and then a wet circuit
commissioning.
Commissioning will test all performance criteria against contractual
requirements and test the DCS and Programmable Logic Controller (PLC) interlock systems.
All areas would start with a maintenance management system already in place. This is to ensure
sustainable operation from day one of operations.
Equipment has been designed with a safety margin to meet budget production targets. This has
been verified by independent third party reviews.
A detailed haul truck and shovel benchmarking study has been conducted and the conclusions
made offer the lowest Net Present Cost (NPC) for the LOM equipment asset.
The plant would start with a years supply of equipment spares and sufficient working capital of
three months for the plant consumables.
Warehouses would be designed to keep spares in good condition so there is no wastage or
damage which could affect operability when the equipment is installed.
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Minera Panama, S.A.

11 MARKETING AND MARINE TRANSPORT OF CONCENTRATE

11.1 Scope and Summary
Cobre Panama would produce a high demand clean concentrate accessible to both the Atlantic
and Pacific markets from a concentrate export-friendly country. The Project is expected to come
on line in a robust copper price environment.
This section provides an overview of net revenue by metal (Net Smelter Return or NSR), Inmets
perspective on the copper market and presents the marketing plan for Cobre Panama with an
emphasis on copper and the copper concentrate.
Assumptions are based on updated metallurgical data; ongoing discussions and negotiations for
long-term off-take copper concentrate contracts with potential customers; reports commissioned
from Base Metals Marketing Services Ltd and market studies from Wood Mackenzie and CRU.
11.2 Composition of Revenue and Price Assumptions

The NSR of Cobre Panama should be primarily driven by copper (87% of NSR). The gold (6%)
and silver (2%) are recovered from the copper concentrate (95% of NSR). Therefore the copper
market fundamentals and copper concentrate realization cost will be the emphasis of this
section.
Figure 11-1
Cobre Panama NSR by Metal Based on Long-term Consensus Prices
6%
2%
% NSR by Metal
5%
Copper
Molybdenum
Gold
87%
Silver
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Minera Panama, S.A.

11.3 Copper Prices and Trends
The Projects economic value was studied under three metal price scenarios. Further detail on
these scenarios can be found in Table 5-5 and Table 6-3 but they are, in summary:
Analyst consensus long-term prices;

Forward curves (for as long as they available and then long-term consensus); and
3-year trailing average metal price (as per SEC guidelines for regulatory filings).
These scenarios were chosen because they are transparent, objective and customary.
However, we believe copper prices should be more robust during the early years of Cobre
Panamas operations as a result of a forecasted need for new capacity additions.
A decline in production at existing mines combined with a modest demand growth of 3.4% (the
60 year trend) should lead to a significant shortfall of copper supply without significant capacity
addition (Figure 11-2).
Figure 11-2 Gap Between Base Case Mine Production and Demand that Needs to be
Filled with Capacity Additions
The history of capacity additions from 2003-2010 suggests that although in 2003 forecasters
believed 3.5 mt of capacity would come on line from new, probable mines by 2010, only 2.0 mt
actually did come on line. Projects then, like today were challenged by permitting, financing and
project execution issues. The supply plug that stopped a massive deficit during that time was
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Minera Panama, S.A.

unexpected sources of supply such as mine re-starts, tailings processing projects and possible
projects (Figure 11-3). Following a prolonged period of high copper prices and significant
availability of capital for copper projects, there is likely to be fewer unexpected sources of supply
going forward than there was in 2003 which was at the end of a period of really low copper
prices. There is debate amongst many forecasters about whether the copper market will be in
deficit or balance between now and 2020. However, most agree that even a balanced market will
be dependent on new capacity to stay balanced. Even a balanced market dependent on new
capacity to stay balanced should have robust prices.
Figure 11-3
Forecast vs Actual Sources of Supply 2003-2010
In the Projects estimated remaining 25+ years of operations prices could also be robust as
grade declines that have caused the high end (price support region) of the cost curve to inflate
on a real basis relative to the average producer are expected to continue. Producing mines
would continue to deplete and so long as there is some demand growth, there could be a
periodic need to incent new capacity. Since incentive prices have seen significant escalation and
new projects are even more removed from infrastructure, this should help long-term prices.
11.4 Concentrate Quality
The copper concentrates from Cobre Panama should be of good quality with no significant
deleterious constituents. The anticipated quality of the copper and molybdenum concentrates to
be produced is based on extensive metallurgical testing carried out by Lakefield Research for
the 1998 feasibility study and by G&T Metallurgical Services for this study, and is discussed in
Section 2.1.3 Metallurgy of this report.
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Minera Panama, S.A.

11.5 Summary of Copper Concentrate and Freight Market Expectations

Smelting Market Context
Over the 10-year period from 2002 to 2011, global mine production grew at a compound annual
growth rate of 1.67%. Smelter capacity, on the other hand, grew on average by 2.6 % per annum
between 2002 and 2011, with 96% of net growth occurring in China and India. The rapid
industrialization of China has played a key role in smelter capacity expanding faster than global
mine capacity. As a result of this dislocation, smelter capacity utilization dropped from 91% in
2002 to 86% by 2011 there were simply too many smelters competing for too little mine
production. Smelter capacity is forecast to expand further between 2012 and 2025 by around
3.2% per annum. Approximately 82% of this growth is again expected to be in China and India.
Any significant delays in mine project realization combined with the potential excess in smelter
capacity could lead to further reductions in smelter utilization rates, or even smelter closures.
Were these to occur, they would likely be in the industrialized countries, which have higher cost
structures and weaker demand expectations than developing nations.
Treatment and Refining Charges (TCRCs)
The key determinants for future treatment and refining charges are the supply/demand balance
for copper concentrates, smelter economics, and spot market activity. In recent years the market
structure has favoured concentrate producers. In the medium term, unless there is a significant
reduction in smelter capacity, there appears to be no fundamental reason for material increases
in TCRCs or changes in TCRC market dynamics. It is our view that future mine developments
will continue to be delayed and that rationalization in the smelting industry will take longer to
achieve because of the continuous addition of capacity in China and India.
The overall trend toward lower charges in real dollars is evident in Figure 11-6. Since 2000,
treatment and refining charges, excluding price participation, have averaged US18.1 per
payable pound of copper for a 26% grading copper concentrate, (corresponding to a treatment
charge of $US64/t and a refining charge of US6.4 per pound). In real dollar terms, the US18.1
becomes US16.0. The 13-year average including price participation amounted to US17.9 in
real terms. This includes 2006 when price participation peaked at US19.3 on the back of a
rapid rise in copper prices. After 2006, price participation was successfully negotiated out of
contracts.
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Minera Panama, S.A.

Figure 11-4
Historical Trends in Treatment and Refining Changes in Real 2011 Dollars
Some forecasts for new projects now contain price participation but with caps on the order of
US6.0/lb to avoid an extreme situation. Adjusting 2006 for a price participation cap of
US6.0/lb changes the last 13-year average, including price participation, to US16.9 for a 26%
copper concentrate. Based on the historical TCRC analysis as well as our analysis of the future
supply and demand balance, the average TCRC, to be used for copper concentrates from the
Cobre Panama Project should be $US70/dmt and US7.0/lb of payable copper (combined
US19.7/lb of payable copper for 26% copper concentrate) with no price participation.
Copper Concentrate Freight Rates
Concentrate bulk freight rates have been received for routes from Coln, Panama, to various
worldwide destinations. As with other costs in this report, these rates have been adjusted to the
prices of oil and copper.
Based on a forecast breakdown of shipping destinations and the $US2.75/lb copper price
scenario, we forecast average concentrate shipping rates to be $US41/t.
11.6 Preliminary Copper Concentrate Sales Plan
Based on discussions with potential partners and customers and with export credit agencies, as
well as an analysis of freight cost advantages, we estimate that the Cobre Panama concentrate
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Minera Panama, S.A.

would be sold to smelters in Europe (35%) and Asia (65%) on substantially the terms shown in
Table 11-1. The concentrate production schedule should mirror the mill plan shown in Table 2-3.
Based on current market consensus long-term pricing, gold and silver prices of $US1250/oz. and
$US20/oz., respectively, have been used to calculate the by-product credits.
Table 11-1 Forecast Copper Concentrate Commercial Terms
Item
Payable Copper
Treatment Charge
Refining Charges
Copper
Gold
Silver
Payable Gold
Payable Silver
Payment Terms:
Provisional
Final
Ocean Freight Real $ Adjusted
Sales terms
96.65 %, min deduction of 1 unit (10 kg)
$US70/dmt
US7/lb
$US5/oz
$US0.5/oz
92%
90%, if Ag>30 grams
90% 3 days after the arrival
10% 5 months after Departure
$US41/wmt
Note: All in $US
11.7 Summary of Molybdenum and Freight Market Expectations

Molybdenum price scenarios
We have used the Long-Term analyst consensus price of $US15.00/lb for Moly in price cases 1
& 2. In case 3 we used the 3 year trailing average price of $US14.68/lb. These price scenarios
are transparent, objective and customary. At this time we do not offer an Inmet perspective on
Moly price trends or forces at work.
Molybdenum NSR / price realization assumptions
Table 11-2 outlines the assumptions we have used in calculating the Moly Net Smelter
Returns. They are based on a market study performed by a concentrate marketing consultant.
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Table 11-2 Molybdenum Concentrate NSR Calculation*
Item
$US/dmt $US/lb Mo
Metal value
Process Deductions:
Leaching Fee for Copper
Processing Fee -6.5%
Metallurgical Loss -1%
17,196
15.00
(344)
(1,118)
(172)
(0.30)
(0.98)
(0.15)
Total Process Deductions for Conversion to Oxide

CIF Value
Ocean Freight
FOB Value
(1,634)
15,562
(74)
15,489
(1.43)
13.57
(0.06)
13.51
*Assumptions: Mo Content = 52%, Cu Content = 1.8%, Mo price: $US15/lb
Molybdenum Concentrate Sales Plan

Cobre Panama will produce a molybdenum concentrate, as opposed to any downstream
chemical products, and expects that the concentrates would be sold outright to roasters, as
opposed to being toll-roasted. It is anticipated that agreements for the entire production would be
negotiated with one or two roasting companies that have facilities to leach the high copper
content in the concentrates and to recover rhenium. Any potential, Rhenium credits have not yet
been included in our economics.
Page 139
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Minera Panama, S.A.

For questions or inquiries please contact Inmet at:

Inmet Mining Corporation
330 Bay Street
Suite 1000
Toronto, Ontario, Canada
M5H 2S8
Telephone: (416) 361-6400
Investor Relations
investor@inmetmining.com
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Mina de Cobre Panama

RESERVE & RESOURCE

Shovel-ready, ESIA approved December 2011

Products Cu-Au and Mo concentrates

Gyratory crushing, grinding, flotation

AVG ANNUAL PROD.

(resources inclusive of reserves)

AFTER TAX VALUATION

Financed Case 1: $US1.6b in debt drawn over 3.5 years

LT Consensus: Flat $2.75/lb Cu, $15/lb Mo, $1,250/oz Au, $20/oz Ag

COBRE PANAMA FACT SHEET - PG 1

UNIT COSTS ($US/t ORE MILLED) - LT CONSENSUS

3YR Trl. Avg.

Power($US/kWh) Y1-9 1,2

UNIT COSTS ($US/t ORE MILLED)

(resources inclusive of reserves)

RESOURCE NOT IN MINE PLAN

Measured and Indicated

Avg. Annual Avg. Annual

OTHER USEFUL INFORMATION

AVG LOM RECOVERIES

VARIANCE FROM FEED CAPEX

Minera Panama, S.A.

Cautionary statement regarding forward-looking statements

changes in national and local government legislation or regulations;

diminishing quantities or grades of reserves;

the possibility of temporary or permanent shutdown;

the actual costs of reclamation;

Minera Panama, S.A.

increased energy prices;

volatility of global financial conditions;

significant capital requirements and additional funding requirements;

risks associated with joint ventures;

dependence on transportation, electric and water facilities and infrastructure;

fluctuation in the cost of significant inputs including fuel;

delays or disruptions in supplies required for exploration, development, mining or processing,

disruptions arising from non-performance of off-take and other counterparties;

changes in environmental laws and regulations;

regulation of greenhouse gas emissions and climate change issues;

Minera Panama, S.A.

Market, ranking, industry data and forecasts

Minera Panama, S.A.

Minera Panama, S.A.

A Tier 1 Copper Asset ........................................................................................16

Concession, Permits and Socio-Environmental Commitments ......................19

Capital Costs ......................................................................................................19

Project Economics .............................................................................................21

Third Party Reviews ...........................................................................................22

Risks and Opportunities ....................................................................................23

Project Execution ...............................................................................................25

TECHNICAL SUMMARY ............................................................................................27

Geology and Mineral Resources ................................................................29

Mine Plan and Mineral Reserves ................................................................33

Mine Waste Management ............................................................................43

Solid and Hazardous Waste Disposal ........................................................44

Tailings Management Facility .....................................................................44

Water Management ......................................................................................46

Power Plant ..................................................................................................47

Project Infrastructure / Ancillary Facilities ................................................49

Balance of Plant ...........................................................................................52

Project Description .............................................................................................27

INDEPENDENT THIRD-PARTY REVIEWS ..........................................................52

Independent Tailings Review Board (ITRB) ...............................................52