Overview

Country:	Peru
Ownership:	40% IMZ, 60% Hochschild
Land Position:	63 sq km

Property Description

The Pallancata silver-gold mine is located approximately 520 km southeast of Lima, approximately 180 km southwest of Cuzco and 240 km northwest of Arequipa. The Pallancata property comprises 6,280 hectares (approximately 63 sq km) in 17 mineral concessions. The Selene silver-gold mine, owned by Compania Minera Ares S.A.C. (Ares), a wholly-owned subsidiary of the Peruvian mining company, Hochschild Mining plc (Hochschild), is located approximately 20 km to the northeast.

The Pallancata mine is jointly-owned by IMZ (40%) and Hochschild (60%), with Ares as the mine operator. In September 2007, underground production commenced, utilizing cut and fill mining, at an initial rate of 500 tonnes per day (tpd). The mine is currently producing approximately 3,000 tpd. Ore is trucked to Hochschild’s Selene mill for toll processing to produce a silver-gold concentrate that is sold to smelters in North America and Europe.

Pallancata is a world top-10 primary silver producer. Production in 2008 was 4.2 million ounces of silver and 16,000 ounces of gold, with 40% attributable to IMZ.  IMZ's total cost per ounce of silver (net of gold credit) was US$6.24.  In 2009, production is expected to reach 7 million ounces of silver and 25,000 ounces of gold, making Pallancata the #5 or #6 primary silver mine in the world.

Under the terms of the joint venture agreement, Hochschild earned its 60% interest by paying for all construction and development capital costs through to a production level of 1,000 tpd. These costs were non-recoverable from IMZ’s share of cash flow.

A Technical Report (the "Pallancata Report") prepared  under NI 43-101 and dated June 26, 2009 can be accessed by clicking here: "2009 Technical Report".  The Pallancata Report is filed on SEDAR under IMZ’s name at www.sedar.com.

Exploration History

Prior to acquiring the Pallancata property in late 2002, IMZ carried out an initial sampling program over the Pallancata and San Javier veins which consisted of 60 rock panel and channel samples. Only two rock channel samples from an old surface working in the central part of the Pallancata Vein reported significant precious metal values. Following the acquisition of the property, IMZ collected a total of 231 surface and underground rock chip and channel samples from the vein and enclosing wall rocks. Values from these samples ranged from trace amounts to 4,380 g/t silver and 0.01 to 22.0 g/t gold.

Based on IMZ’s detailed geological mapping and surface and underground rock sampling program, a total of 17 angled core drill holes were completed in 2003 as part of the Phase 1 program. The assay results confirmed the high-grade, locally “bonanza-grade”, nature of the mineralization in the Pallancata Vein and identified a different style of high-grade silver-gold mineralization in the West Breccia zone that carried a noticeably higher gold content than that generally intersected in the central part of the Pallancata Vein.

IMZ conducted a Phase 2 drill program between August 2004 and June 2005. As in the Phase 1 program, drill hole intercepts with significant silver and gold values were reported, notably in the new drill holes in the West Breccia zone. This Phase 2 drilling in the western part of the Pallancata Vein indicated the possible presence of high-grade mineralized shoots at the intercept of north-south and northwest-southeast striking veins.

IMZ reported the first NI43-101 mineral resource estimation at Pallancata in September 2005: 2.7 million tonnes at an average grade of 445 g/t silver and 1.7g/t gold containing 38.6 million ounces of silver and 147,000 ounces of gold at a cut-off grade of 150 g/t silver.

In July 2006, IMZ finalized the joint venture agreement with Hochschild and commercial production commenced one year later in September 2007.

Current Proven and Probable Reserves (as of June 2009) are 4.3 million tonnes at an average grade of 366 g/t silver and 1.5 g/t gold, containing 506 million ounces of silver and 208,000 ounces of gold.

Exploration Outlook

Mine exploration is focused in the near-term on the excellent upside potential for reserve and resource additions in the Pallancata Vein. Brownfield exploration of other prospective veins on the property (including Mariana, Mercedes, Virgen del Carmen and San Cayetano) is currently underway.

Geology and Mineralization

Low sulfidation epithermal vein mineralization extends from the San Javier / Virgen del Carmen areas in the north for over 3km to the Pallancata Vein and up to 2km in an east-west direction, with a vertical extent of up to 500m. The Pallancata Vein is the principal target area and hosts a zone of complex multi-phase veining and faulting that generally has well-defined conduits that underwent major dilation. The known mineralized zone at the Pallancata Vein is over 2km long and is up to 40m wide, including the intensely silicified wall rocks. Individual veins or splays are more typically 0.5m-3.0m wide. The San Javier and Mariana zones display similar veining with high-grade silver and gold mineralization.

[top]

Qualified Person

The technical information reported here was supervised and reviewed by IMZ's Qualified Person, Technical Manager Nick Appleyard.