667 mineralization, and geometallurgical response, together with QA/QC validation processes, compositing, and analysis. Based on this, resource quantification is performed using a block model, which is estimated through geostatistical techniques, including kriging, co-kriging, nearest neighbor, and indicator methods. Within the model, blocks are classified as Measured, Indicated, and Inferred Resources according to their level of confidence and geological continuity, with the objective of quantifying both the volume and the spatial distribution of metals 3.2 Conversion of Resources to Reserves through Modifying Factors To determine mining viability, modifying factors are applied, including mining parameters (slopes, methods, dilution, losses), metallurgical aspects (recoveries, penalties, constraints), and economic factors (metal prices, mining costs, processing, administrative costs, among others). Only blocks that meet these criteria are reclassified as Proven and Probable Reserves. 3.4 Traditional Definition of Cut-off Grade The cut-off grade is determined by comparing the economic value of the metal contained in each block with the marginal costs associated with its mining, processing, and commercialization. Under this criterion, a block is considered ore while its net value is positive and waste when it fails to cover those costs. This approach establishes an economic threshold that defines the inclusion of material in the mine plan and conditions the pit design, mining sequence, and final reserve estimation. ● Cut-off based on direct cost versus recovered metal value, expressed in %Cu or Cu-eq. ● Cut-off based on NSR, Net Smelter Return, which incorporates recoveries, prices, penalties, and smelting charges. 3.5 Pit Optimization and Final Reserve Calculation Once the cut-off grade is defined, optimization is performed using algorithms such as Lerchs– Grossmann, maximum flow, or pseudo-flow. This process determines the optimal pit that maximizes economic value, the final design with phases and ramps, and the mineable reserves, which include only blocks within the pit above cut-off grade, classified as Measured or Indicated and adjusted for dilution and losses. Figure 2 - Current Reserve Estimation Methodology Source: Own elaboration 4. OPTIMIZATION The traditional methodology for quantifying reserves presents limitations due to the application of a fixed cut-off grade, the absence of early preconcentration, and the requirement to process all material without prior selection. This excludes marginal blocks containing recoverable metal, as the cost per tonne
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