Value Through Gold

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ADVANCING CONSTRUCTION OF THE HIGH-GRADE BRUCEJACK GOLD PROJECT
COMMERCIAL PRODUCTION TARGET 2017

Brucejack

Commercial production is targeted for 2017 for the high-grade underground Brucejack Gold Project. The Project is now fully funded, fully permitted and construction is well under way. Located in northwestern British Columbia, approximately 65 kilometers north of Stewart, BC the property consists of 122,133 hectares (over 301,798 acres).

The primary focus of the Project is the Valley of the Kings deposit which is comprised of high-grade visible gold within a lower grade gold quartz stockwork system. A feasibility study completed in June 2014 has outlined Proven and Probable mineral reserves in the Valley of the Kings of 6.9 million ounces of gold (13.6 million tonnes grading 15.7 grams per tonne gold).

All major federal and provincial regulatory permits required to begin development work towards commercial production at the Brucejack Project were received in 2015. Construction at the Brucejack Project commenced on September 5, 2015. Construction at the mine remains on schedule for expected commissioning in the third quarter of 2017.

2015/2016 Infill Drill Program

The Valley of the Kings infill drill program continued through 2015 and into the second quarter of 2016. The program has been planned to target stope areas in years 1 through 3 of the current mine plan (1320-meter level to 1200-meter level).

The planned drill program has been expanded to include extensions of Domain 20 which are adjacent to areas being mined in the early years of the 2014 Feasibility Mine Plan. Definition drilling from five underground drill stations is in progress and is expected to be completed in the second quarter of 2016. When completed, roughly 200 vertical meters over a strike length of 250 meters will have been drilled at 7.5 to 10-meter centers.

The primary purpose of the drilling is grade control, with the additional benefit of infill drilling inferred and non-stope indicated resources in the same area. Results from the program continue to confirm the style and grade distribution of the gold mineralization in the area being tested, which includes the intersection of high grade and visible gold. (See news release dated June 4, 2015 and April 5, 2016)

June 2014 Feasibility Study & February 2016 Capital Cost Update

A feasibility study for the Brucejack Project was completed in June 2014 for an underground mine with an operating rate of 2,700 tonnes per day using a mining method of long-hole stoping and cemented paste backfill (see news release dated June 19, 2014). Stopes will be mined using a combination of longitudinal and transverse mining, depending on zone width and orientation. Cemented paste tailings will be prepared in a paste plant located on surface near the mill and then pumped underground for distribution to the stopes.

Highlights of the June 2014 Brucejack feasibility study and capital cost update (see news release dated Feb 17, 2016). Using base case US$1,100/oz gold, US$14/oz silver and exchange rate of 0.75 US$/C$ include:

- Proven and Probable mineral reserves in the Valley of the Kings of 6.9 million ounces of gold (13.6 million tonnes grading 15.7 grams per tonne gold); 
- Base case pre-tax Net Present Value (5% discount) of US$2.36 billion;        
- Mine life of 18 years producing an estimated 7.3 million ounces of gold;
- Average annual production of 504,000 ounces of gold over the first 8 years and 404,000 ounces of gold over the life of mine;
- Base case pre-tax Internal Rate of Return of 33.0%, with payback estimated at 3.4 years;
- US$697 million estimated project capital cost, including contingencies and 3-months working capital;
​- Average operating costs of C$163.05/tonne milled over mine life.

Valley of the Kings High-Grade Gold Mineral Resources

The June 2014 Feasibility Study is based on the December 2013 Mineral Resource estimate for the Brucejack Project (see news release dated December 19, 2013).  The Mineral Resource estimate was completed by Snowden Mining Industry Consultants (“Snowden”). The high-grade gold resources in the Valley of the Kings (5.0 g/t gold-equivalent cut-off) total:

  • 8.7 million ounces of gold in the Measured and Indicated Resource categories (15.3 million tonnes grading 17.6 grams of gold per tonne); and
  • 4.9 million ounces of gold in the Inferred Mineral Resource category (5.9 million tonnes grading 25.6 grams of gold per tonne).

The input data for the Valley of the Kings estimate comprises 922 drillholes for 218,127 meters including 9 historical surface drillholes (579 meters), 24 surface drillholes completed since the previous November 2012 Mineral Resource (5,100 meters) and 409 underground exploration drillholes completed since the previous November 2012 Mineral Resource (38,829 meters).  These figures exclude intervals with no gold values and drillholes outside of the Valley of the King area.

2015 Regional Exploration Program

The 2015 grass-roots exploration program was comprised of prospecting, airborne EM, magnetic and radiometric surveys, and a surface drill program. The 2015 surface exploration drill program consisted of approximately 20,000 meters of drilling, which targeted porphyry/epithermal-style mineralization to the east of the Brucejack Project. The 2015 regional exploration program was successful in expanding the size of the hydrothermal system that includes the Valley of the Kings and confirming the potential for additional mineralized zones to the east. With the discovery of the Flow Dome Zone the program was successful in extending the strike length of the Valley of the Kings gold mineralization 1,000 meters to the east of the current Valley of the Kings Measured and Indicated Mineral Resource. Results from the 2015 program will be used to prioritize targets for follow-up regional exploration programs. (See news release dated December 15, 2015)

2013 Exploration Program

The Mineral Resource estimate has been informed by extensive work focused on the geological interpretation of the Valley of the Kings.  The high-grade mineralization in the Valley of the Kings is hosted in a broad deformed stockwork, and a key outcome from 2013’s 10,000-tonne Bulk Sample Program (the “Program”) was the underground confirmation of both lateral and vertical continuity of the vein systems comprising this stockwork, and the location of high-grade corridors of mineralization. The Valley of the Kings remains open to the east and west along strike and at depth.

The underground drilling completed in 2013 includes Program drilling (16,789 meters) and additional underground exploration drilling (22,041 meters).  Drill data, in conjunction with underground mapping and surface mapping, has resulted in a robust geological model for the Valley of the Kings with well-defined mineralized domains.

The excavation of the 10,000 tonnes of Program material was completed in late August, and a total of 5,865 ounces of gold was produced from processing (see news release dated December 13, 2013).

The underground drilling completed in 2013 includes Program drilling (16,789 meters) and additional underground exploration drilling (22,041 meters).  Drill data, in conjunction with underground mapping and surface mapping, has resulted in a robust geological model for the Valley of the Kings with well-defined mineralized domains.

The excavation of the 10,000 tonnes of Program material was completed in late August, and a total of 5,865 ounces of gold was produced from processing (see news release dated December 13, 2013).

Source:

Feasibility Study and Technical Report Update on the Brucejack Project, dated June 19, 2014 Brucejack capital cost update (see News Release dated February 17, 2016)

2015/2016 Underground Infill Drilling (see news release dated June 4, 2015 and April 5, 2016)

2015 Regional Exploration Program (see news release dated December 15, 2015)

2013 Exploration Program (see news release dated December 13, 2013)