Plan of Operation for 2008

The approach for 2008 is to develop the infrastructure and ore drives in the vein systems where we have the highest level of confidence in the resource. This will allow us to convert as much as possible of the ore resource from inferred to indicated and measured status. Continuity has been demonstrated between the old workings that are several kilometers apart and in some cases vein widths in excess of 4 meters. This is a vast improvement on the mining width used for the initial resource model and Apex believes there is strong upside for the future. Grades of ore above previously anticipated levels are being found in all development veins.

In the process of infrastructure development, large tracts of orebody have been opened in preparation for stoping so that development stays well ahead of the planned stoping.

At the same time, we are consolidating all of the existing geological and sampling data on these vein systems to identify which ore drives should be advanced outside the current plan as exploration drives and also to ensure that the current development follows the payable splits in the veins.

The focus on mining the ramps downdip to open up new levels will help to sustain and increase the production in 2008. The pushing of the exploratory ore drives on the block extremities and the large number of stoping blocks being prepared will help to ensure that the longer-term production targets are met.

For 2008 the 575 Maligaya Ramp 2 ore drift on the hangingwall vein is to be extended from the ramp position to 600 meters east of this to allow drilling of the lower extension of the Sandy vein system.

In addition, the 530 level haulage and drainage drift to Masarita is to be started from the Maligaya Ramp 1,and mined westward. This will provide drilling access to extensions of the Bonanza Vein downdip and to the west and to test for extensions of the Manganese Vein. The drive will also intersect and drive along the Masarita Vein to hole int the old workings for gravity discharge of water from the Masarita portal. This haulage will also be used to shorten the haulage route to the mill as well as improve water management.

On the cost and materials management side, the new management structure put in place at Maco Mine has established a number of systems to control expenditure and minimize wastage. These are already showing important improvements that indicate that Maco can be very successful as a low-cost producer with seemingly  lower tonnage throughput than originally envisaged but with both  higher grades and lower costs.

The initial off-site flotation testing with the aim of reducing reagent consumption has established the potential of extremely high financial returns by installing flotation up front to increase gold recovery and produce saleable copper and zinc concentrates. Experience during processing in 2007 and early 2008 has confirmed that the current 500 t/d plant can process up to 700 t/d with good recoveries. The 2008 phase of expansion requires minimal capital to upgrade certain pumps and lines to allow the second phase of 700 t/d to be achieved on a consistent basis.

Outlook beyond 2008

The third phase of process plant expansion  will be run in parallel to the increase in mining output. This is to upgrade the plant to between 1,000 t/d and 1,500 t/d, which mainly entails expansion to the crushing and grinding area. By then the studies on the flotation will be complete and the decision can be made to either expand the current trial flotation area or to increase the CIL capacity.

Underground the long-term focus is to increase overall tonnage and increase grades to establish a minimum of 10 to 15 years of resource life and a constant one to two years of reserve life for the mining operation.