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Climax Molybdenum <br />A Freeport- McMoRan Company <br />Date: <br />Memo To: <br />From: <br />Re: <br />January 17, 2014 <br />Raymond Lazuk, Environmental Manager <br />Chris Schmitz, Chief Mine Engineer <br />Underground Mine Material Disposal and OSF Stability <br />Climax Mine <br />Hwy 91 — Fremont Pass <br />Climax, CO 80429 <br />Phone (719) 486 -2150 <br />Fax (719) 486 -2251 <br />This memo is in response to your request for our mine geotechnical engineering staff to evaluate the <br />amount of underground waste that is expected to be encountered during open pit mining at Climax, <br />and the potential effects of mixing this material with other waste rock that is deposited in our <br />overburden stockpile facilities (OSFs). Based on our best professional judgment, given the very <br />small volume of mixed waste material relative to the overall volume of waste rock to be mined at <br />Climax, we do not believe that the mixed waste rock material will create any stability concerns <br />above those normally expected with unmixed waste rock. <br />We examined the types of underground materials likely to be encountered during the life of the mine <br />and estimated that there would be approximately 766,987 tons of underground materials as follows: <br />Concrete: <br />763,674 tons <br />Steel Rails: <br />1,317 tons <br />Wood Ties: <br />1,996 tons <br />These materials would comprise about 5.9% of the total expected 13,000,000 tons of mixed waste <br />rock that is blasted and mined from the former underground areas within the pit. Most of this <br />underground material is concrete, which would not behave any differently than waste rock. Only an <br />estimated 0.025% of the total 13,000,000 tons of mixed waste is steel or wood (rails and ties). If we <br />were to double that percentage to account for other steel or wood such as cribbing, rock bolts and <br />shotcrete mesh, there would still only be 0.050% of wood and steel in the 13,000,000 tons going to <br />the OSFs. <br />Climax anticipates mining approximately 262,660,000 tons of waste rock under the current life of <br />mine plan. If we were to calculate the underground wood and steel as a percentage of total material <br />in the OSFs, the doubled estimate of 0.050% becomes 0.0025% of the total 262,600,000 tons of <br />waste rock. <br />This very small amount of steel and wood, relative to the overall content of the OSF would not <br />materially affect the stability of the stockpile. To further eliminate any stability concerns, it is <br />recommended that the mixed waste rock and underground material not be segregated from other <br />waste rock so that it is more dispersed within the OSF. <br />