Pascua-Lama (Project)

Pascua-Lama has proven and probable reserves of 18.0 million ounces of gold, and contains 731 million ounces of silver, and 662.5 million pounds of copper, within the gold reserves. It has an estimated mine life of about 20 years. Located on the border of Argentina and Chile, it is located in the Frontera district, within approximately 10 kilometers of our Veladero mine. The project is at an elevation of 3,800 to 5,200 meters.

In February 2006, the Pascua- Lama project was granted approval by Chilean environmental regulatory authorities. In December 2006, the Province of San Juan, Argentina issued its Declaration of Environmental Impact Assessment which approved the environmental permit submission to Argentina. The start of construction is contingent upon receipt of sectoral permits and resolution of cross-border regulatory and fiscal tax and royalty items, the timing of which is largely beyond our control. The project team is using this period to advance detailed construction planning and activities as well as supplier and contractor selection through competitive bidding.

Pascua-Lama’s average annual production in the first five years is expected to be 750,000-775,000 ounces of gold and 35 million ounces of silver. An open pit mine, the processing facilities envision a 45,000 ton per day processing facility. As at February 2007, pre-production capital costs were in the range of $2.3 to $2.4 billion and as of February 2008 updates pre-production capital costs are expected to be approximately 15% higher than this estimate primarily due to inflationary pressures and currency impacts.  Current silver prices are expected to have a positive impact on total cash costs for the project. An updated feasibility study will be prepared and the capital cost will be updated on the resolution of the cross-border regulatory, fiscal, tax and royalty items, and the granting of the remaining sectoral permits.

The Pascua-Lama project has strong support from local citizens and regional stakeholders in both countries. Pascua-Lama’s approval in Chile, for example, has some 400 conditions that will ensure it is an environmentally responsible project. One of our objectives is to help the people in the region find ways to grow their economy, skills and infrastructure for long-term benefit. As a result, this large, long-life mine will not only contribute low cost ounces to Company production, it will also offer jobs and community development in the region for many years to come.