The capacity of Huancapeti plant was insufficient to treat the total production of the two mines, and a substantial part of the ore extracted had to be transported down to Alianza's second concentrator, Ticapampa, which is located 30 km from Hercules mine. The Ticapampa concentrator is located upstream from the town of Recuay, on the left bank and above the Rio Santa, at an altitude of 3 200 m. The Ticapampa plant was a new project built by Alianza in 1970–1971, above the site of the old treatment plant of the Anglo French company, which Alianza had used initially.
The respective capacities of treatment of the two plants in 1983 were as follows, in tonnes of ore per day:
The flowsheet of ore concentration was very similar in the two plants. However, the location of Ticapampa was obviously wrong, being far away (30 km), from the main mining operations, which imposed increased costs of production due to the costly transport of run of mine ore. The location proved to be fatal to Alianza shortly after commissioning of the plant (4 years), when the decrease in base metal and silver prices of the early 1980s dramatically reduced its operating profit.
The following table shows a typical break-up of the different products of the two plants combined: (source: Buenaventura Ingenieros Ltda's report of 1984).
NB: An equivalent silver content has been established in the perspective of this summary presentation, based on LME reference metal price, as shown in the table.
The table clearly shows that the main value of the production is in the lead concentrates, due to their high silver grade (76.11 oz/t). Expressed in equivalent silver grade at the above mentioned reference market prices, which may be considered as representative of long term trends, the silver grade of the lead concentrates is 151.62 oz/t (4 715 g/t), which is high and representative of a silver ore.
1.5. Growth and technological evolution of Alianza from 1968 till 1990
In its process of growth, Alianza first increased its treatment capacity, in 1970, by building a new and modern concentrator plant at Ticapampa, above the site of the old one that it had inherited from the Anglo-French company. In 1975, Alianza built the Huancapeti concentrator plant nearer to the operating mines. In the mid 1970s, it adopted modern underground mining methods by introducing a trackless mining system to mine, extract and transport the ore to the surface, by means of mobile tire wheel equipment and helicoidal ramps. The two mines and the two plants, in combination, produced and treated 385 000 t of ore in the year 1983, i.e. approx. 1 300 t/day.
The introduction of the trackless mining system had led to important changes of approach by Alianza's geological department. The new objective was to find and exploit thicker mineralizations in veins, or groupings of veins, or accumulations (cuerpos). When the trackless system was first introduced, it led to a significant decrease of minable reserves because of the minimum thickness criterion. This led to consider multiple and proximate veins in a different manner. Before, these veins were considered as separate bodies. The minimum thickness constraint of the trackless system led geologists to investigate whether the intermediate rock was also mineralized. If so, the multiple veins therefore formed a body (cuerpo), of lower average grade than each of the individual veins, but which nevertheless could be mined economically, thanks to the increased productivity of modern mining equipment. With new geological interpretations, minable reserves were recovered and they started increasing again with regular on-going exploration.
1.6. Personnel employed
Alianza's personnel was the following in 1982 and 1983.
1.7. Historical costs of production
Alianza's costs according to the annual reports were the following (see graph below):
2. History of the company till and after 1984
2.1. Brief history of Alianza
Having acquired the property from the Anglo French Ticapampa company in 1968, Alianza first went through a period of growth of its operations. Production culminated in 1983 with the extraction and treatment of 385 000t of ore from its two mines and concentrating plants. However, in 1983, because of inadequate financing of this growth, and a high cost of production in which the transport of ore from the mines to Ticapampa plant were a major cause, as well as a lack of organization and dedicated personnel of its own, Alianza ran into structural difficulties which, not surprisingly, also culminated in 1983.
In addition to this, at general management level of Alianza, there were unresolved differences of opinion of the owners, with regard to long term strategy and remedial measures to be adopted. Alianza was therefore in a crisis. This situation led the company to drastically start reducing its operations in 1984 (–20%), –86% in 1985; finally, operations were completely closed in 1990.
These events were the more unfortunate as Alianza definitely had, and still has, as will be explained later on, ore reserves and great mineral potential. But Alianza required to undertake a number of measures for reorganizing and restructuring itself. As mentioned before, the growth of the company's activities had not been completely absorbed. In particular, the introduction of the trackless mining system and equipment eight years earlier, was now causing problems of maintenance. Moreover, there were not enough machines to operate all the production faces independently from each other, in continuous cycles of working. Most of the machines wasted a lot of their productive time, transferring from one working face to another. Another important cause of problems was that the majority of operating personnel (80%), was provided by contractors and consequently personnel dedication to Alianza's goals and strategy was low.
Alianza therefore needed to reorganize and to make additional investments, in order to consolidate its growth, to increase its working capital, and to further improve its productivity. Indeed, sofar, much needed working capital had not been provided by the owners. The additional capital required at the end 1983 was estimated to be at least 7.9 M US$ (source: Buenaventura Ingenieros Ltd).
In view of the above mentioned structural difficulties, of the amount of capital required and of major differences of opinion of the owners on the strategy to be applied, it was decided to discontinue the operations and to wind up the company.
2.2. Physical assets as of today
On discontinuing its operations, Alianza has left two underground mines with a trackless mining system (Hercules and Coturcan), with proved and probable reserves of 2.7 Mt of ore, grading 15 oz/t Ag equivalent. There are also two concentrator plants, i.e. Ticapampa and Huancapeti, each with a tailings dump of 1.5 Mt with a gold content of about 1.2 g/t plus silver content of 30 g/t, which results from the losses of the process of concentration. In addition, there were exploration and mining equipment in the two mines, four small hydro–electric plants of totaling 5 MW in capacity, and various infrastructures at Ticapampa (Alianza's regional offices), and at the sites of Huancapeti, Coturcan and Hercules: i.e. offices, maintenance workshop, supplies shop, and personnel accommodation barracks, (most of them are at Hercules).
Since its definitive closure in 1990, most of the mining equipment and part of the concentrator equipment at Huancapeti, was sold to cover current debts of Alianza at closure. The rest of the mining equipment has been cannibalised. Most of the rest of plant and equipment at Huancapeti, has decayed and is no longer operative. Most of it will have to be scrapped.
As for the Ticapampa plant, it is in relatively good, even excellent, condition, after more than 10 years of stoppage. It was partially rehabilitated to retreat Ticapampa tailings in 1993–1994, in the framework of a pilot testing program to recover gold (see more on this later). The hydroelectric plants are in good to excellent condition, especially plant N°4 the capacity of which is 3 MW and which was commissioned in 1980.
The residual gold tailings can be recovered by setting up a special plant for retreating the dumps. The process of this plant would be reclamation of the tailings, regrinding to bring the liberation size below 30µ suitable for gold recovery, flotation of pyrites, cyanidation of pyrite concentrates in a series of tanks with material feed flowing in counter current, and adsorption of the gold dissolved in the cyanidation process by activated carbon. Desorption of the gold and its electro–deposition, and finally regeneration of the activated carbon. A metallurgical and pilot testing program has been undertaken in 1993–1994. This study involved pilot testing by Mimetal, using the Ticapampa plant mill to regrind the tailings, and its flotation cells to produce a pyrite concentrate. The pyrite concentrates were then treated in a pilot cyanidation plant, comprising of five tanks, with a capacity of 50 tonnes/day. The pilot testing program processed in total 1200 tonnes of reclaimed tails. The Ticapampa tailings dump was extensively measured and sampled for size, tonnage and gold grade, prior to the pilot testing.
2.3. Title to mineral resources
In addition to the above assets, Alianza owns priority legal title to a large number of mining properties. There are 117 titles in 12 000 hectares, which are grouped in seven accumulations. Alianza's obligations to retain title to these properties are to pay the annual tax of 2 Sols/hectare, to make an annual declaration of its work program to the Ministry of Mines, and to update the UTM coordinates grid for any work done during the year.
Figure 1 shows, schematically, the whole of Alianza's assets, as of June 1995. These are the assets which are proposed for sale, partially or totally.
Figure 2 shows the location and arrangement of the power generating sets and power distribution lines.
3. Geological reserves and resources
3.1. Existing reserves in veins, proven and probable
Existing and potential reserves in veins are good, as evidenced by the following considerations:
The reserve inventory as established by Alianza, based on the mining blocks inventory and data as of 31/12/1983, is shown below for veins Hercules and Coturcan only, in which vein thickness is higher than 2m, for application of trackless mining:
The 2.6 Mt of economic reserves compares to a slightly different figure as estimated by Alianza and DRH in 1995 and which is shown below.
However, the two estimations are consistent for the purpose of this presentation, the difference being due to the application of economic cut off grade concept.
3.2. Potential additional resources in veins
The following table shows potential additional resources in all veins known, as established by Alianza in 1984, and confirmed in 1995. These are resources that should be developed by means of regular on going exploration program.
Of the total 12.8 Mt, only those of Hercules and Coturcan, i.e. 5.2 Mt of ore, are considered suitable for relatively low cost trackless mining (thickness >2m). In the state of current information, the reserves in the other veins (7.6 Mt of ore), are of the order of 1 m thickness in average. If exploited as individual veins, they would be have to be mined by conventional methods, at relatively high cost.
The exploration effort associated with the total tonnage of 12.8 Mt was estimated in 1984 as 14 M US$, based on a cost of 20 US$/m3; it represents 0.7 million m3 of exploration work. Assuming an 14 m2 average section, this exploration corresponds to 50 000 m, and a ratio of 3.90 m/1000 t of ore proven.
Alianza has elaborated an exploration project for reactivating Hercules and Coturcan mines, after dewatering. The project aims to prove reserves, north and south of the old mine workings, as well as above and below the old main level 6 (3 950 m above SL). In total 4 610m of galleries are proposed to prove 1.45 Mt of ore, at a cost of 1.284 MUS$. This corresponds to approx. 3.20 m/1000 t. Additionally, from these exploration galleries, 300m of diamond drilling are proposed, at a cost of 150 US$/m. Alianza proposes to drive a 1 060m cross–cut from Hercules to Coturcan at level six, in order to investigate whether the mineralisation is continuous between the two veins, with the result that a whole zone may then be considered as a disseminated ore mass. High production and low cost mining of low grade polymetallic accumulations containing gold, may then perhaps be contemplated.
Considering the previous exploration and mining experience of Anglo French and of Alianza, the fact that regional and local geology suggest numerous sources of mineralisation in this area which is highly affected by volcanic activity, the probability that these potential resources in veins and between veins, may convert into reserves, is significant.
Figure 2 shows a schematic view of the geological potential of Alianza's property.
3.3. Other prospects for resources other than veins
Due to the high geological potential of the area, other polymetallic prospects are likely to be found in the area. This is suggested by regional and local geology, as well as by recent field investigations. Alianza is currently conducting exploration work in the NE part of its property; this work confirms the existence of possibly economically important porphyry orebodies, breccia pipes, tourmaline intrusions.
Figure 3 shows a principle geological schematic view, of Alianza's property.