Abacus Mining & Exploration Corp. - Ajax

Ajax

Overview Feasibility Study Mineral Resource & Reserve

Ajax

South Central British Columbia, Canada

Overview

Open Pit Ajax Mining Camp

The Ajax property comprises eight Crown grants including the historic Ajax East and West pits. The property is 100% owned by KGHM Ajax Mining Inc., a joint venture company owned 51% by KGHM Polska Miedz S.A. (KGHM) and 49% by Abacus Mining & Exploration Corp (Abacus). The Ajax project site is located at the southern extremity of the boundaries of the City of Kamloops and southeast along an existing haul road from the Afton mill, shop facilities, tailings area, and water rights which Abacus purchased in 2005 from Teck-Cominco.

In June 2009 Abacus completed a compliant positive preliminary economic analysis (PEA) on the Ajax property, after a series of successful drill programs from 2005-2008. The preliminary analysis on Ajax underscored the potential for a robust mining operation.

In May 2010 Abacus commissioned an independent Feasibility Study Technical Report on the Ajax Project prepared in accordance with National Instrument 43-101. The Study was led by Tetra Tech as the project's lead consultant, in conjunction with a team of globally recognized consultants comprising AMEC Americas Limited, Knight Piésold Ltd., Golder Associates Ltd. and BGC Engineering Inc., with test work by G&T Metallurgical Services Ltd. (G&T) and Krupp Polysius.

Highlights (All figures in US dollars and pre-tax)

Total proven & probable mineral reserves of 503 Mt grading 0.27% Cu and 0.17 g/t Au (0.37% Cu.Eq.) containing approximately 3 billion lbs of copper and 2.7 million ounces of gold (using $2.50 Cu and $1,085 Au)
Average annual production estimated at 106 million pounds of copper and 99,400 ounces of gold in concentrate
Net present value of $192.7 million discounted at 8%
Mine life of approximately 23 years
Return on initial capital expenditures of $535 million is 40.4%
Existing infrastructure including mill buildings, shop facilities, tailings area, haul road, water rights and related permits
Excellent exploration potential for expansion on strike and at depth

Ajax Copper/Gold Project - Feasibility Study, January 6, 2012

Feasibility Study

Prepared in accordance with National Instrument 43-101, the Ajax Project Feasibility Study (FS) was led by Tetra Tech as the project's lead consultant, in conjunction with a team of globally recognized consultants comprising AMEC Americas Limited, Knight Piésold Ltd., Golder Associates Ltd. and BGC Engineering Inc., with test work by G&T Metallurgical Services Ltd. (G&T) and Krupp Polysius.

The FS encompasses trade-off studies that were performed to optimize life-of-mine operations since the July 31, 2009 Preliminary Economic Assessment (PEA). Since the PEA level report was issued, further confirmatory metallurgical testing and variability analysis work have been completed. This FS builds on the results and premises of the previous findings, as well as the subsequent test work programs between 2009 and 2011. Some of the key optimizations from the trade-off studies include crushers and conveyors for in-pit crushing and conveying of both ore and waste, high pressure grinding rolls, and high density tailings deposition. These methods have had the effect of reducing costs and improving recoveries as well as location logistics to reduce the environmental footprint.

The Feasibility Study confirms the economic robustness of the Ajax Project at long term copper and gold prices.

Base Case Highlights: (all economic figures in US$)

Based on $2.50 Cu and $1,085 Au, total proven and probable mineral reserves of 3 billion lbs Cu and 2.7 million ozs Au at 0.27% Cu and 0.17 g/t Au
23 year mine life at a processing rate of 60,000 t/d or 21.9 million t/a at a LOM stripping ratio of 2.4:1
LOM production of 2.5 billion lbs Cu and 2.28 million ozs Au in concentrate
Initial capital costs of $795 million, including contingency of $87 million
Cash cost per lb of copper of $1.28 net of gold credits

Economic Analysis:

The pre-tax economic results for the base case and additional case scenarios are presented in the following table.

Table 1: Summary of Ajax Project Pre-Tax Economic Results

	Base Case Scenario	Alternate Case Scenario1	Alternate Case Scenario2
Cu US$/lb	$2.75	$3.00	$ 3.50
Au US$/oz	$1,085	$1,300	$1,700
Exchange Rate (US$:C$)	0.92	0.94	0.98
Pre-tax Internal Rate of Return	14.5%	19.5%	30.3%
Cash Cost per lb Cu (net of gold credits)	$1.28	$1.11	$0.79
Pre-Tax Net Present Value (8% discount rate)	$416 million	$818 million	$1,601 million
Payback Years	7.8	3.8	2.2

Using the foregoing base case copper and gold prices, the economic analysis produced by Tetra Tech projects a pre-tax net present value of $416 million (@ 8% discount rate) and internal rate of return of 14.5% based on pre-tax 100% equity financing. This compares very favorably to the leading copper projects being developed around the world given Ajax's long-life, location, open-pit mining and conventional processing. The Project's robustness is further accentuated in the alternate scenarios presented above thereby demonstrating the leverage impact on the Project's economics to increases in metal prices.

The delivery of the FS is a pivotal milestone for Abacus and advances the Ajax Project along the critical path towards production start-up being targeted for 2015. The Ajax mine area also represents a small portion of the 8,000 hectare copper-gold camp.

Mine Plan:

The mine plan is based on the extraction of 503 Mt of ore for processing during 23 years of operation at an overall stripping ratio of 2.4:1 waste to ore. Total material movement from the pit during the life of the mine is estimated at 1,701 Mt. The average head grade of process feed for the LOM is 0.267% Cu and 0.170 g/t Au equivalent to an NSR of 14.68 expressed in dollars per tonne.

The Ajax concentrator has been designed to process a nominal 21,900,000 t/a, or 60,000 t/d, of copper-gold porphyry ore from an open pit operation. The concentrator has been designed to produce a marketable copper concentrate of 25% Cu containing approximately 18 g/t Au.

Mining will be accomplished using a conventional truck and shovel operation, in conjunction with an in-pit crushing and conveying (IPCC) system. IPCC is a system where the mined material is reduced in size by crushing to make it suitable to be transported by belt conveyors out of the pit. After the PEA, IPCC was identified as a potential cost reduction implementation for the Ajax Project when compared with a truck-haul option only.

Capital and Operating Costs

The capital and operating cost estimates provided by AMEC, Tetra Tech and Golder indicate an initial estimated capital cost of approximately $795 million, inclusive of contingency of $87 million. The operating cost estimate will be $1.32/t for mining and in-pit crushing and conveying, $3.46/t milled for processing and tailings disposal and $0.53/t G&A cost.

Initial Estimated Capital	US$ '000
Site general and substation	46,280
Mine pre-stripping	34,443
Mining equipment	80,443
Crushing	25,700
Conveying	11,764
Ore storage and HPGR	89,614
Concentrator	144,815
Tailings storage	79,493
Site services & utilities	15,304
Ancillary buildings	18,639
Plant site mobile fleet	4,437
Water supply from Lake	14,805
Total Direct Initial Capital	565,737
Project indirect	107,176
Owners costs	34,500
Contingency	87,570
TOTAL INITIAL ESTIMATED CAPITAL	794,983

Sustaining Capital	US$ '000
Mining equipment	262,714
Crushing	62,400
Conveying	73,058
Stacking	57,987
Plant site	43,214
Tailings	104,642
TOTAL ESTIMATED SUSTAINING CAPITAL	604,015

Approximately $200 million is expected to be incurred in year 5 for in-pit crushing and conveying. Mineral Resource

Mineral Resources take into account geologic, mining, processing and economic constraints, and have been confined within appropriate LG pitshells, and therefore are classified in accordance with the 2010 CIM Definition Standards for Mineral Resources and Mineral Reserves. Mineral Resources are reported using a copper price of US $2.88/lb and a gold price of US$1,200/oz. AMEC reported the Mineral Resources at a Base Case CuEq grade of 0.20%.

Mineral Resource Estimate at Selected CuEq Cut-offs

Effective Date May 26, 2011, Timothy O. Kuhl, SME Registered Member

							Contained Metal
	Cutoff CuEq (%)	Tonnes	CuEq	Cu	Au	NSR	CuEq ('000 lb)	Cu	Au
	Cutoff CuEq (%)	(Mt)	(%)	(%)	(g/t)	(US$/t)	CuEq ('000 lb)	('000 lb)	(oz)
Measured	0.1	322.5	0.38	0.27	0.17	13.83	2,667,000	1,933,000	1,734,600
Measured	0.2	255.8	0.42	0.31	0.19	15.71	2,389,000	1,734,000	1,555,400
Indicated	0.1	336.2	0.36	0.26	0.17	16.7	2,665,000	1,897,000	1,818,100
Indicated	0.2	256.2	0.42	0.3	0.2	19.98	2,399,000	1,712,000	1,637,400
Measured + Indicated	0.1	658.7	0.37	0.26	0.17	15.3	5,331,000	3,830,000	3,552,600
Measured + Indicated	0.2	512	0.42	0.31	0.19	17.85	4,788,000	3,446,000	3,192,800
Inferred	0.1	115.7	0.3	0.21	0.13	13.39	753,000	538,000	499,200
Inferred	0.2	73.7	0.38	0.27	0.17	17.46	613,000	439,000	405,700

Note 1. Mineral Resources are contained within a conceptual Measured, Indicated and Inferred optimized pitshell using the following assumptions: maximum copper recovery of 91.17% and maximum gold recovery of 86.49% based on the following equations: CuRec = (-74.812 x (Cu%^2))+(85.727xCu%) +66.668 and AuRec = 92.586 x Au(g/t)^0.064; assumed throughput rate of 60,000 t/d; Whittle constraining shell slopes between pit slope angles ranging from 38º to 49º, waste and processed material mining costs of US$1.08/t, fill waste mining costs of US$0.89/t, total processing costs including reclamation of US$3.23/t, general and administrative costs of US$0.52/t, gold price of US$1,200/oz, and copper price of US$2.88/lb.

Note 2. Copper equivalency was calculated using the formula CuEq = ([(%Cu) x (CuRec) x (22.0462) x ($lbCu) + (g/t/Au) x (AuRec) x (1/31.1035) x ($ozAu)]) ÷ ((CuRec) x (22.0462) x ($lbCu))).

Note 3. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content.

Note 4. Tonnage and grade measurements are in metric units. Contained gold and silver ounces are reported as troy ounces, contained copper pounds as Imperial pounds.

Mineral Reserve

The Proven and Probable Mineral Reserves as of October 31, 2011 consists of 503 million tonnes grading 0.27% Cu and 0.17 g/t Au (0.37% Cu.Eq.) containing approximately 3 billion lbs of copper and 2.7 million ounces of gold.

Confidence	Cut-Off		Average Grades		Copper Equivalent	Contained Metal
Category	Grade	Tonnes	Cu	Au	Cu.Eq.	Copper	Gold
	(US$/t)	(Mt)	(%)	(g/t)	(%)	(M lb)	(k oz)
Proven Mineral Reserve	4.53	279.5	0.27	0.17	0.38	1,680	1,520
Probable Mineral Reserve	4.53	223.5	0.26	0.17	0.37	1,280	1,230
Total Proven & Probable Mineral Reserves	4.53	503.0	0.27	0.17	0.37	2,960	2,750

Note 1. Mineral Reserves are estimated using a cut-off of US$4.53/t NSR, a copper price of US$2.50/lb, and a gold price of US$1,085/oz. The NSR is calculated by adding the NSR attributable to copper to the NSR attributable to gold and then subtracting the freight costs, which include land freight, port charges, ocean freight and miscellaneous costs. The attributable copper is calculated using the metallurgical recovery obtained by the formula: CuRec (%) = -74.812 * Cu(%)2 + 85.727 * Cu(%) + 66.668 with a maximum copper recovery of 91.17%. The attributable gold is calculated using metallurgical recovery obtained by the formula: AuRec (%) = 92.586 * Au(g/t)0.0649 with a maximum gold recovery of 86.49%.

Note 2. Mineral Reserves are constrained within a pit shell, optimized using assumptions of a weighted average mining cost of US$1.32/t (ranging from US$0.92/t to US$2.50/t for the different mining benches); a processing cost of US$3.38/t plus US$0.51/t general and administrative costs, and US$0.05/t allocation for closure costs; and pit slope angles that vary from 40º to 49º.

Note 3. A 0.5% mining loss factor was applied to account for dilution; diluted grades are estimated at 1.7% lower than the in-situ grades.

Note 4. The life of mine, waste to ore strip ratio is 2.40. The assumed life-of-mine throughput rate is 60 kt/d.

Note 5. The copper equivalency is calculated using the equation Cu.Eq. = [(%Cu) (CuRec)
(22.0462) ($lbCu) + (g/t/Au) (AuRec) (1/31.1035) ($ozAu)] ÷ [(CuRec) (22.0462) ($lbCu)].

Note 6. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content.

Note 7. Tonnage and grade measurements are in metric units. Contained gold ounces are reported as troy ounces; contained copper pounds are Imperial pounds.