Lumwana Project

Lumwana Overview

The Lumwana copper mine is located 220 kilometres west of the world-renowned Zambian Copperbelt.  The mine is of significant scale with measured and indicated resources of 342.5 million tonnes of ore grading 0.74% Cu, plus inferred resources of 563.1 million tonnes at 0.63% Cu.

At initial design capacity, Lumwana will process in excess of 20 million tonnes of ore each year, mined at an average mine strip ratio of 4.2:1 over a mine life of 37 years. Steady state initial design capacity is expected to be achieved in the second half of 2010.

Lumwana ore, which is predominantly sulphide, is treated through a large, yet conventional sulphide floatation plant, producing copper concentrate for smelting.

The project is making a significant positive impact on Zambia, being the largest new mine in a generation and the largest single capital investment in Zambian history.  At full capacity, it is expected that Lumwana will provide around 20 per cent of the country’s total metal copper output.

Lumwana is a major copper project which has established Equinox as one of the world’s top 20 copper producers.

Mining

During 2009 total mine material moved was 81.2 million dry metric tonnes.  The strip ratio averaged 5.2:1 and 13.1 million tonnes of ore were mined at an average head grade of 0.95% copper. Mining and stockpiling of uranium mineralization continued throughout the year.  At year end the uranium ore stockpile on the ROM pad was approximately 2.5 million tonnes of 1,000ppm uranium and 0.8% copper.

Lumwana’s mining activities were affected by a number of factors including an unusually severe wet season, lower than expected availability and productivity of the mining fleet, and the processing of a substantial proportion of transitional ore (mixed oxide and sulphide ores) which resulted in reduced copper metal recoveries.  Though further transitional ore will be encountered in the weathered zones of each new sub-pit to be developed at Lumwana, the proportion of transitional ore to sulphide ore is reducing as the mining operation deepens along the length of the ore body. In 2009 transitional material comprised around 30% of the process plant ore feed, whereas in 2010 it is expected to reduce to 15%. The Lumwana orebody comprises around 95% sulphide ore and 5% mixed transitional material.

In the latter half of the year Hitachi initiated measures to improve their maintenance performance of the mining fleet and agreed to mobilize an additional five EH4500 trucks to expedite recovery of lost availability of the existing fleet.  The additional trucks are expected to be available at Lumwana by mid 2010. The Company has extended the trolley assist infrastructure from the main ramp to the starter pit, enhancing trucking ramp speeds, reducing cycle times and lowering hybrid diesel-electric truck operating costs.

The Company also purchased additional mobile mining fleet equipment that included sixteen 40 tonne articulated dump trucks, five 100-tonne dump trucks, two excavators and three bulldozers. This equipment is primarily being used in pre-stripping weathered material.

Processing

The Lumwana processing plant commenced commercial production in April 2009 and a total of 13.7 million tonnes of ore were processed during the year.  The plant produced 109,413 tonnes of copper in concentrate in 2009 at a grade of 43% copper.  Copper recovery from the plant averaged 85%.  Metallurgical recoveries were impacted by the proportion of transitional ore being processed.  For Lumwana ore, recoveries in transitional material typically range between 50-60% whereas the sulphide recoveries typically range from 90-95%.

The plant performed well during the year and based upon achieved throughput rates in 2009, has demonstrated a capability to produce in excess of its 20 Mtpa design capacity.

Offtake

Lumwana has two primary offtake agreements in place, one with the Chambishi Copper Smelter Ltd. (CCS) and one with Konkola Copper Mines plc (KCM).

CCS has an agreement to take up to 230,000 dry tonnes of copper concentrate under a five-year take or pay arrangement.  During the year KCM entered into a five-year offtake agreement with LMC to treat 70-80,000 dry tonnes of copper concentrate at their recently commissioned Nchanga smelter.  The offtake agreement with Mopani Copper Mines Plc was terminated during the year. The CCS and KCM offtake agreements cover the majority of Lumwana production and any overflow is expected to be taken up by metal traders with logistics on the Copperbelt.

Outlook

The ramp up of production at Lumwana will continue through the first half of 2010, with a target of achieving a plant design throughput rate of 20 Mtpa for the mine and mill in the second half of the year.

The Company expects that it will produce 135,000 tonnes (297.6 million pounds) of copper metal in concentrates in 2010 at a C1 operating cost of $1.35 per pound.

Copper market

The copper market recovered throughout the year, influenced by increasing Chinese demand, positive sentiment about future global economic expansion and continued constraints on the global supply of copper.  The copper price commenced the year at $1.38 per pound and was $3.33 per pound at December 31, 2009.  The average price of copper during 2009 was $2.34 per pound.

Management believes that the outlook for the copper market remains positive with the steady recovery in global markets, in particular China, and ongoing supply restrictions.

Zambian Taxation Legislation

In 2005 Equinox entered into a development agreement (the Lumwana Development Agreement) with the Government of the Republic of Zambia (GRZ) for the Lumwana project.  The Lumwana Development Agreement provided a ten year stability period for the regulatory and taxation regime and includes the right for independent arbitration in the event of a dispute.

In 2009, the GRZ enacted a number of changes to the Zambian taxation regime including increasing corporate tax from 25% to 30%, increasing the mining royalty from 0.6% to 3%, introducing a ‘variable profit tax’ and a 15% concentrate export tax. 

Following local and international legal advice, the Company believes that the Lumwana Development Agreement overrides the changes to the Zambian tax regime.  The Company is in discussion with the GRZ in relation to the application of its Development Agreement.

Uranium

In 2008, Equinox completed a uranium feasibility study (UFS) investigating the onsite treatment of discrete, high grade uranium mineralization contained within the Lumwana mine copper pitshells. The UFS confirmed the potential viability of onsite uranium treatment, producing about 2 million pounds of uranium per year over a six to seven year period.

Should Equinox be successful in negotiating viable uranium offtake agreements and securing the requisite project capital financing, the Company estimates plant construction to take approximately 18 to 24 months. 

Reserves and Resources

The Lumwana Project includes the Malundwe and Chimiwungo deposits. The Lumwana resource, estimated by Golder Associates Pty. Ltd. (‘Golder’) in accordance with the JORC Code and CIM Standards NI43-101, using a 0.2% copper cut-off and depleted for material mined to December 31, 2009 is estimated as follows: 

Lumwana Resources: Measured + Indicated + Inferred

Class	Tonnes (Mt)	Cu (%)	Co (ppm)	Au (g/t)
Measured	113.9	0.84	244	0.03
Indicated	228.6	0.68	153	0.02
Total (Measured and Indicated)	342.5	0.74	184	0.02
Inferred	563.1	0.63	46	0.01

Uranium within the Malundwe and Chimiwungo copper deposits occurs as discrete uranium-enriched zones that will be separately mined and stockpiled during the copper mining operation and as such, processing of the copper ore does not produce any uranium ‘contamination’ of resultant copper concentrate. The Lumwana uranium resource has been estimated using a 0.01% uranium cut-off grade as shown below:

Lumwana Uranium Mineral Resources (2008 UFS)

Class	Tonnes (Mt)	Grade U3O8 %	Contained Metal U3O8 % lbs
Indicated	4.7	0.095	9 920 000
Inferred	6.1	0.050	6 669 000

 

Lumwana Uranium Resources and Reserves within the Copper Pits (2008 UFS)

Class	Tonnes (Mt)	Grade U3O8 %	Contained Metal U3O8 % lbs
Probable	3.3	0.123	9 006 000
Inferred	2.4	0.078	4 093 000

 

Lumwana Sulphide Reserves and Resources within Designed Pits - Development Case

Class	Tonnes (Mt)	Cu (%)
Malundwe
Proved	29.5	1.05
Probable	76.3	0.79
Total Mineral Reserve	105.7	0.86
Inferred Resource	4.2	0.77
Chimiwungo
Proved	81.5	0.70
Probable	118.7	0.57
Total Mineral Reserve	200.2	0.62
Inferred Resource	413.0	0.60
Combined Malundwe + Chimiwungo
Proved	111.0	0.79
Probable	195.0	0.66
Total Mineral Reserve	305.9	0.70
Inferred Resource	417.2	0.60

^{Notes to Resources & Reserves Tables
The Mineral Reserve and Resource within engineered pits were determined by Golder on the basis of 12.5mx12.5mx4m block models, including mining dilution and recovery, and optimized by Whittle 4X software with associated pit designs generated using Vulcan software. The cut-offs applied were based on $1.20/lb Cu, resulting in sulphide cut-off grades of 0.16% for Malundwe and 0.21% for Chimiwungo. These pit designs constitute the Development Case. The copper reserves and resources within the engineered pits have been depleted to account for material mined and processed or stockpiled to December 31, 2009.}

^{The Lumwana uranium resource estimate was based on ‘Leapfrog’TM 3D grade interpolation at a 0.01% uranium cut off. The Lumwana uranium resource and reserve estimate is based on a 0.02% uranium cut off. The uranium mineral resources and reserves have not been depleted; 2.51 million tonnes at an average grade of 1006ppm uranium and 0.82% copper have been mined and stockpiled to December 31, 2009.}

^{Competent Persons
The estimates of mineral resources and ore reserves were prepared in accordance with the standards set out in the Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves (The JORC Code) and in accordance with CIM standards as prescribed by National Instrument 43-101. Mineral resource and reserve data is based on information compiled by persons who are members of the Australasian Institute of Mining and Metallurgy or the Australian Institute of Geoscientists and who have the relevant experience as ‘competent persons’ as defined in the JORC Code and as a ‘Qualified Person’ in accordance with National Instrument 43-101 in relation to the mineralization being reported on.}

^{Cautionary Language and Forward-Looking Information
Certain information contained or incorporated by reference in this publication, including any information as to the Company’s strategy, projects, plans, prospects, future outlook, anticipated events or results or future financial or operating performance, constitutes “forward-looking statements” within the meaning of Canadian securities laws.  All statements, other than statements of historical fact, are forward-looking statements.  Forward-looking statements can often, but not always, be identified by the use of words such as “plans”, “expects”, “is expected”, “is expecting”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “predicts”, “potential”, “continue” or “believes”, or variation (including negative variations) of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “should”, “might”, “potential to”, or “will” be taken, occur or be achieved or other similar expressions concerning matters that are not historical facts.}

^{Forward-looking statements are necessarily based on a number of factors, estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Readers are cautioned that forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Equinox and/or its subsidiaries, including costs, production and returns, to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements and the forward-looking statements are not guarantees of future performance.}

^{Such factors, estimates and assumptions include, but are not limited to, risks inherent in the exploration and development of mineral deposits; operational risks inherent in the conduct of mining activities; risks relating to changes in copper and uranium prices; changes in demand and supply of copper and uranium; uncertainties inherent in the estimation of mineral reserves and resources; risks inherent in the estimation of future production and future production costs; the estimation of cash costs of copper production; risks related to the Company’s indebtedness including risks related to meeting its financial covenants; financing risks; risks related to interest rates; exchange rates; inflation or deflation; changes in the value of the U.S. dollar to foreign currencies; political and economic conditions of major copper producing countries; risks inherent in securing offtake arrangements and terms and/or enforcing such terms; insurance and uninsured risks; government regulation; titles, licences and permits; environmental risks; risks inherent  in the estimation of reclamation costs; risks related to the Company’s hedging activities; estimation of asset carrying values; litigation; competition; reliance on key personnel; global financial conditions.  While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.}

^{These risks are discussed in the Company’s Annual Information Form dated March 15, 2010 under the section entitled “Risks and Uncertainties” which can be found on the Company’s website at www.equinoxminerals.com  and if also filed on SEDAR at www.sedar.com.  All of the forward-looking statements made in this publication are qualified by these cautionary statements.}

^{Technical Information
Certain technical information in this publication is summarized or extracted from the ‘‘Technical Report on the Lumwana Project, North Western Province, Republic of Zambia’’ dated June 2008 as re-filed in April 2009 (the ‘‘Technical Report’’), prepared by Ross Bertinshaw, Principal, Golder Associates Pty Ltd Daniel Guibal, Corporate Consultant, SRK Consulting (Australasia) Pty Ltd, Andrew Daley, Director, Investor Resources Finance Pty Ltd, and Robert Rigo, Vice-President – Project Development, Equinox, each of whom is a ‘‘Qualified Person’’ in accordance with National Instrument 43-101 — Standards of Disclosure for Mineral Projects (“NI 43-101”).  Information of a scientific or technical nature contained in this publication arising since the date of the Technical Report is provided by Equinox management and was prepared under the supervision of Robert Rigo, Vice-President – Project Development or John Cooke, Exploration Manager, each of whom is a “Qualified Person” in accordance with NI 43-101.}

^{Readers are cautioned not to rely solely on the summary of such information contained in this publication, but should read the Technical Report which is posted on Equinox’s website at www.equinoxminerals.com and filed on SEDAR www.sedar.com and any future amendments to such report. Readers are also directed to the cautionary notices and disclaimers contained herein and therein.} 

Contacts

Email: equinox@equinoxminerals.com

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