arctic deposit

Arctic Deposit – Overview & Development Highlights

The Arctic deposit is located in the Ambler Mining District of Alaska – a safe, mining friendly jurisdiction approximately 470 kilometers northwest of Fairbanks.

In 2013, we completed a Preliminary Economic Assessment (PEA) on Arctic that demonstrated robust economics for developing an open pit project based solely on the Arctic deposit. Current activities at Arctic are focussed on engineering and environmental site investigation studies that will form the basis for completing a future pre-feasibility study.

Highlights of the PEA include:

• Initial capital expenditure of $717.7 million and sustaining capital of $164.4 for total estimated capital expenditures of $882.1 million over the estimated 12-year mine life. In addition, closure and reclamation costs are estimated at $81.6 million.
• Pre-tax Net Present Value (NPV)8% of $927.7 million calculated at the beginning of the two-year construction period and an Internal Rate of Return ("IRR") of 22.8% for the base case.
• After-tax NPV8% of $537.2 million and after-tax IRR of 17.9% for the base case.
• Estimated, pre-tax, payback of initial capital in 4.6 years and 5.0 years after-tax.
• Minimum 12-year mine life supporting a maximum 10,000 tonne-per-day conventional grinding mill-and-flotation circuit to produce copper, zinc and lead concentrates containing significant gold and silver by-products.
• Life of mine strip ratio of 8.39 to 1.
• Average annual payable production projected to be 125 million pounds of copper, 152 million pounds of zinc, 24 million pounds of lead, 29,000 ounces of gold and 2.5 million ounces of silver for life of mine. On a copper equivalent basis, equates to 210 million pounds of copper per year.
• A capital intensity ratio on initial capital of $6,995 per tonne of average annual copper produced.
• Estimated cash costs of $0.62/lb of payable copper (C1 cash costs include on-site mining and processing costs, road tolls, transport, royalties and is net of by-product credits).
• Total "all-in" cash costs (initial/sustaining capital, operating, transportation, treatment and refining charges, road toll, and by-product metal credits) estimated at $1.26/lb of payable copper.
• Economic indicators justify moving forward with a pre-feasibility study.

Notes

Assumes base case metal prices: $2.90/lb copper, $0.85/lb zinc, $0.90/lb lead, $1,300/oz gold and $22.70/oz silver.

More information on the Arctic project can be found in the National Instrument 43-101 report titled, "Preliminary Economic Assessment Report on the Arctic Project, Ambler Mining District, Northwest Alaska” effective September 12, 2013.

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Property Description & Location

The Arctic deposit is located in the Ambler Mining District in the southern Brooks Range, in the NWAB of Alaska. The Property is geographically isolated with no current road access or nearby power infrastructure. The Property is located 270 kilometers east of the town of Kotzebue, 36 kilometers northeast of the village of Kobuk, and 260 kilometers west of the Dalton Highway, an all-weather state maintained highway.

Geology & Mineralization

On the Property, polymetallic volcanogenic massive sulphide (“VMS”) style deposits (including Arctic) and prospects are hosted in the Ambler Sequence, a group of Middle Devonian to Early Mississippian, metamorphosed, bimodal volcanic and volcaniclastic rocks with interbedded metasediments. VMS-style mineralization is found along the entire 110 kilometer strike length of the district.

Mineralization at Arctic occurs as semi-massive to massive sulphide beds within primarily graphitic and quartz mica (+/- chlorite) schists. The sulphide beds average 4 meters in thickness but vary from less than 1 meter up to as much as 18 meters in thickness. The bulk of the mineralization is within an area of roughly 1km2 with mineralization extending 250 meters below the surface. Mineralization is predominantly coarse-grained sulphides consisting mainly of chalcopyrite, sphalerite, galena, tetrahedrite, arsenopyrite, pyrite and pyrrhotite. Trace amounts of electrum and enargite are also present.

Maps & Cross Sections