Kemess East

PEA Approach and Project Overview

The PEA for the KE project presents a stand-alone scenario that does not factor in or modify in any way the economics of the Feasibility stage KUG project located on the same property. The PEA does, however, assume that the KUG project is advanced ahead of KE, and hence a number of project components, most notably the access corridor connecting KUG to the KS process plant and the water treatment plants associated with KUG, are not duplicated in the capex for KE. Potential optimization opportunities such as economies of scale that might exist by advancing KE prior to depletion of KUG are not reflected in the PEA but are noted in the Project Enhancement Opportunities section below.

The location of KE in relation to the KUG project and the past producing KS mine is shown in Figure 1. The Kemess Property is located in north-central British Columbia, Canada, approximately 430 kilometres northwest of Prince George.

As with the KUG project, the KE project benefits from the brownfields nature of the Kemess property. Between 1998 and 2011, the KS mine produced approximately 3.0 million ounces of gold and 750 million pounds of copper from 218 Mt of ore. The KS Mine comprised a large open pit feeding gold-copper ore to a 52,000 (t/d) process plant. Open pit mining and processing ceased in March 2011 on depletion of the mineral reserves. The process plant and other facilities and equipment required to support an underground mining operation at the KE deposit are currently under care and maintenance (see Figure 2). Existing on-site infrastructure includes offices, warehouse, laydowns, maintenance facilities, a 400-person accommodation camp footprint, crushed ore stockpile and reclaim, access and service roads, airstrip, explosives magazines, and electrical sub-station. A Company-owned, 380 km power line originating in Mackenzie provides power to the mine site from the BC Hydro grid.

The PEA for KE is based on a mine plan for an underground panel cave with initial production beginning 4 years (KE year 4) following the start of development of the KE declines and ramping up to a steady-state production rate of 30,000 t/d in KE year 8. The KE resources are located approximately 800 m to 1,140 m below surface. The KUG extraction level is at elevation 1,140 m (above sea level), while the KE extraction level is at elevation 370 m and offset 900 m laterally to the east of KUG. The KE cave footprint is 400 m by 275 m and will be accessed and supported by a twin decline system for access and ore conveying. This twin decline system starts from the KUG decline (see Figure 3), utilizing 2.5 km of planned KUG development. A raise from surface supplies fresh air to the KE mine levels and is exhausted via the KE twin declines to the KUG exhaust ventilation system.

Following extraction from the KE cave and primary crushing underground, ore will be conveyed to the existing KS process plant where it will be processed at an average rate of 30,000 t/d (~11 Mt per year) using existing grinding, flotation, thickening, and concentrate handling facilities, and a grinding circuit of increased capacity included in the PEA design. Concentrate will be trucked to the AuRico-owned loadout facility in Mackenzie for subsequent rail transport to market.