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Manantial Espejo (100% Ownership)

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Project Description and Location

The Manantial Espejo open pit and underground silver-gold mine is located in the Province of Santa Cruz, Argentina. The Manantial Espejo mine consists of 17 mineral concessions covering a total of 25,533 hectares and extending approximately 36 kilometres east-west and 19 kilometres north-south. The main access is via a wide gravel secondary road that connects the project with Puerto San Julian and Gobernador Gregores, the nearest major urban centers to the mine. Puerto San Julian is located 160 kilometres to the east on the Atlantic coast and Gobernador Gregores is located 60 kilometers to the west. Puerto San Julian has a population of approximately 5,500. The property is located in a remote area with a limited population but we have been able to attract and retain employees based on competitive benefits and wage rates, our community involvement, and by offering housing developed by us.


Reconnaissance exploration on the Manantial Espejo property was first carried out in the 1970s by the Argentinean government. Ownership passed through several individuals and corporations until Pan American became involved in the project in 2002, when we acquired a half share in the project. We assumed full ownership in 2006 and approved a project to construct and initiate operations of the Manantial Espejo mine. Simultaneously, we received approval of the EIS from the Santa Cruz Province of Argentina and signed an agreement with the Federal Government of Argentina and the Province of Santa Cruz to bring grid electrical power to the town of Gobernador Gregores with a sub-connection to Manantial Espejo.

In April 2006, following completion of a feasibility study, mine development activities were initiated and by 2008, mining operations had commenced in two open pits and two underground mines and a total of 239,900 tonnes of ore was stockpiled on site in preparation for plant operations. The commissioning of the Manantial Espejo plant began with dry commissioning activities in August 2008 and the mills, leach circuits, counter-current-decantation (“CCD”), Merrill Crowe and refinery were commissioned and commenced operations in mid-December 2008. Final completion and commissioning of the primary crusher, recycle pebble crusher and concentrate circuits were underway by mid-January 2009.

Pan American celebrated the official inauguration of the Manantial Espejo gold and silver mine on March 16, 2009. The first doré was poured in mid-December 2008 and the mine commenced commercial production in January 2009. The mine quickly achieved design capacities and produced 3.8 million ounces of silver and 72,000 ounces of gold during 2009.

Geology and Mineralization

Manantial Espejo lies near the southwestern end of the Deseado Massif, a large igneous province dominated by ignimbrites of the Chon Aike and La Matilde Formations and minor andesites and basaltic andesites of the Bajo Pobre Formation, covering an area of about 60,000 square kilometres. Rocks outcropping in the Deseado Massif range in age from Precambrian to Tertiary and only portions of the sequence occur at the mine. The project area consists of a volcanic complex related to a collapsed caldera that domed during the latest extrusive episode. The lithologies of the area consist mostly of sub-aerial volcanic extrusive sequences of Jurassic age.

Silver and base metal mineralization in the Manantial Espejo district is spatially and genetically related to the Deseado Massif. The older volcanics form the basement unit and are locally mineralized. The Chon-Aike and La Matilde Formations host mineralization, which occurs at the faulted contacts of volcanic facies as well as at contacts of volcanic stages.

The ore deposits at the Manantial Espejo mine are predominantly veins with short strike slip and larger down dip displacements. Styles of mineralization include massive quartz veins, vein breccias, sheeted and stockwork veining, and minor dissemination. Quartz is the main infill mineral.

Mineralization is interpreted as occurring at the intersection of west-northwest trending fault zones and arcuate structures that could be related to a possible volcanic center. Gold occurs mainly as electrum in pyrite while the silver occurs in a number of forms including argentiferous galena and silver sulphosalts. Sulphides account for up to 3% to 5% of the rock mass as veinlets and disseminations.

Mineralization at Manantial Espejo is hosted in four main veins known as María, Karina/Unión, Melissa, and Concepción. The majority of the mineralization outlined to date is in the María Vein. The vein is a thick silica vein exposed on surface for more than one kilometre and has been intersected at a depth of up to 275 metres. This vein averages 7.8 metres in true width and ranges from 0.63 metres to 20 metres. The vein is open to the east and at depth. Ore grade mineralization of the vein is less continuous. Open pit ore grade zones measure tens to hundreds of metres in longitudinal dimension. Underground ore grade zones measure tens of metres in longitudinal dimension, with over 100 metres of vertical extent in the María West area.

The sulphide content at María is low and consists of primarily 3% to 5% pyrite. Minor amounts of galena, sphalerite, chalcopyrite, bornite, chalcocite and covellite have been observed. Silver occurs as electrum along with minor amounts of argentite, acanthite, sulfosalts, and proustite-pyrargyrite. Gold occurs as electrum inclusions contained in pyrite. Very minor visible gold has been observed in drill core along goethite-coated fractures.

The Karina/Unión Vein is exposed on surface for a distance of 850 metres and has been drilled to a depth of 150 metres. The host rocks, alteration, and mineralogy of the vein are similar to the María Vein. Several interconnected high grade silver-gold epithermal veins produce drill intersections in excess of 20 metre true widths.

The Melissa Vein has a faint surface expression that rarely outcrops. The mineralization and host geology is very similar to that encountered at the María Vein. Structurally, Melissa is thought to be the extensional component to the Maria shear system. The Melissa Vein has been defined by drill holes along a 300 metre strike length and 200 metres down dip and averages from between 1.5 metres and 2.5 metres wide.

The Concepción Vein is a single quartz vein. Mineralization occurs over a strike length of 600 metres and is open at depth and at both ends. The host rocks, mineralogy and alteration are similar to the other veins on the property.

Mineral Resource and Mineral Reserve Estimates

Pan American’s management estimates the mineral reserves at Manantial Espejo, as at December 31, 2012, are as follows:

Manantial Espejo Mineral Reserves 1, 2

Reserve Category Tonnes (Mt) Grams of Silver per tonne Grams of Gold per tonne
Proven 3.4 127 2.02
Probable 1.8 129 2.11
TOTAL 5.2 127 2.05


1. Estimated using prices of $25 per ounce of silver and $1,350 per ounce of gold.

2. Mineral Reserve estimates for Manantial Espejo were prepared under the supervision of, or were reviewed by Martin G. Wafforn, P.Eng., who is a Qualified Person as that term is defined in NI 43-101.

Pan American’s management estimates that mineral resources at Manantial Espejo, as at December 31, 2012, are as follows:

Manantial Espejo Mineral Resources 1, 2

Resource Category Tonnes (Mt) Grams of Silver per tonne Grams of Gold per tonne
Measured 2.9 119 143
Indicated 3.8 81 0.99
Inferred 1.6 89 1.07


1. These mineral resources are in addition to Manantial Espejo mineral reserves using prices of $25 per ounce of silver and $1,350 per ounce of gold.

2. Mineral resource estimates for Manantial Espejo were prepared under the supervision of, or were reviewed by, Michael Steinmann, P.Geo., who is a Qualified Person as that term is defined in NI 43 101.

Mineral reserve estimates are based on a number of assumptions that include metallurgical, taxation and economic parameters. Increasing costs or increasing taxation could have a negative impact on the estimation of mineral reserves. There are currently no known factors that may have a material negative impact on the estimate of mineral reserves or mineral resources at Manantial Espejo.

Mining and Processing Operations

Ore is mined at Manantial Espejo using a combination of conventional open pit and underground mining methods. The surface mining operations use 54 tonne trucks and front end loaders and track loading equipment. The open pits are being mined using five metre high, horizontal benches in ore and where possible ten metre high benches in waste. Ore and waste is transported out of the pits by truck haulage via ramps built into the walls of the pits. Truck haulage continues from the open pit ramp exit points on surface roads leading to waste dumps and the primary crusher ore feed stockpile. Open pits have been constructed for portions of the María, Karina-Unión, and Concepción deposits.

The considerable variation in dip and thickness of the various mineralized zones throughout the property require a number of different underground mining methods to be utilized to maximize the profitability and recovery of the mineral reserves. The underground mining operations consist of either long-hole, cut and fill, or shrinkage methods to accommodate the geometry and accessibility of the deposit. Underground mining equipment includes 20 tonne capacity low profile haul trucks, 1.5 to 4.6 cubic metre capacity scoop trams, development face and long hole drill jumbos, and service equipment.

Ore from the Manantial Espejo deposits is treated by conventional crushing, semi-autogenous/ball mill grinding, bulk gravity concentration, intensive gravity concentrate agitation leaching, thickening, agitated cyanide leaching of the gravity tailings slurry, counter current decantation thickening, Merrill Crowe zinc precipitation, sulphur dioxide cyanide neutralization, conventional pulp tailings disposal and conventional silver and gold doré bar production from melting of the Merrill Crowe precipitate. The nominal treatment rate at design capacity is 2,000 tonnes per day of ore on a 24 hour per day schedule. In 2012, we processed 734,335 tonnes of ore with metallurgical recoveries of 90% silver and 94% gold, producing 3.6 million ounces of silver and 43,300 ounces of gold. All production from the Manantial Espejo mine is in the form of doré bars, which is refined at arm’s length refineries prior to the sale of refined silver and gold to bullion banks and traders.

Capital expenditures at Manantial Espejo during 2012 totalled $15.9 million and consisted mainly of camp upgrades, mine development including capitalized stripping, mine and plant equipment upgrades, and mine exploration works.

Activities in 2013
Capital investments in 2013 are expected to total $20 million and include open pit pre-strip development and equipment acquisitions, which are expected to require $13.5 million, while another $2.5 million will be incurred in underground mine development. Expanding and improving the camp infrastructure and mill upgrades are both expected to require approximately $1.1 million each.

In 2013, we anticipate producing between 3.35 and 3.45 million ounces of silver, and between 53,500 and 57,500 ounces of gold. Approximately 64% of silver production and 81% of gold production at Manantial Espejo is expected to come from open pits in 2013, with the balance of production from underground areas.

In 2013, we anticipate spending $1.6 million on 12,000 metres of drilling to extend the known limits of mineral resources and to infill existing drillholes to upgrade the mineral resource and reserve confidence categories.


An EIA for the project as required under the laws of the Province of Santa Cruz and the Argentine Republic was prepared including mine design, tailing design, utility supply, water development studies, impact assessment and records of extensive public consultation. In March 2006, Pan American obtained approval of the EIA from the Province of Santa Cruz. The EIA is updated every two years with the most recent update being approved by the Province on 18 September, 2012.

No reclamation bond is currently required for mining operations in Argentina, however environmental reclamation insurance is required and Pan American holds a policy for Manantial Espejo. A preliminary reclamation plan was developed for the project and included in the EIS submitted to the Argentine government during 2006.

A closure cost estimate for Manantial Espejo was prepared according to State of Nevada approved SRCE methodology in 2011 and is updated every year. Pan American has estimated the present value of reclamation costs for the Manantial Espejo mine to be approximately $7.8 million.

Health and Safety

Formal safety audits were conducted in December 2008 and December 2009 at the Manantial Espejo mine by Pan American’s Director of Health and Safety and safety managers from some of Pan American’s other mines. During 2010, personnel employed at the mine attended 9,318 hours of safety training. The personnel at the Manantial Espejo mine worked the entire years of 2010 and 2011 without a LTI and were the recipients of Pan American’s Chairman’s Safety Award for both years. Personnel at Manantial Espejo attended 7,300 hours of training during 2012.

Operating highlights

2012 2011 2010
Tonnes milled 734,335 697,205 717,463
Silver million ounces 3.6 3.8 3.9
Gold thousand ounces 43.3 53.0 62.8
Cash costs 1 $14.65 $7.36 $1.61

1. Net of by-product credits. For purposes of estimating 2012′s cash costs, the Company assumed the following price levels for its by-product production: Au $1,600/oz.