Name of the Project
Kemess East (KE) gold/copper project.

Location
KE is part of AuRico Metal’s wholly owned Kemess property and is located about 1 km east of its Kemess underground (KUG) project and 6.5 km north of the existing Kemess South (KS) processing plant and infrastructure, in British Columbia, Canada.

Client
AuRico Metals.

Project Description
The preliminary economic assessment (PEA) results for KE have demonstrated the potential for a second large, long-life gold/copper mine with attractive economics.

AuRico’s January resource estimate was used as the resource base for the PEA. The total 101.9-million-tonne mineral resource, grading 0.34% copper, 0.42g/t gold and 1.76g/t silver, comprises the PEA production from the total indicated resource of 113.1-million tonnes and inferred resource of 63.8-million tonnes.

The KE PEA presents a standalone scenario, which does not incorporate the economics of the KUG project. A positive feasibility study for the KUG project was released on March 23, 2016. The PEA is based on a mine plan for an underground panel cave, with initial production beginning four years after the start of development of the KE declines, and ramping up to a steady-state production of 30 000 t/d in Year 8.

The KE resources are located about 800 m to 1 140 m below surface. The KUG extraction level is 1 140 m above sea level, while the KE extraction level is 370 m above sea level and offset 900 m laterally to the east of the KUG project. The KE cave footprint is 400 m × 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, using 2.5 km of planned KUG development. A raise from surface supplies fresh air to the KE mine levels and is exhausted through 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, or about 11-million tonnes a year, using existing grinding, flotation, thickening, and concentrate handling facilities, as well as a grinding circuit of increased capacity included in the PEA design. Concentrate will be trucked to the AuRico-owned load-out facility in Mackenzie for subsequent rail transport to market.

Total life-of-mine (LoM) production of 2.7-million ounces of gold equivalent has been estimated.

Jobs to Be Created
Not stated.

Net Present Value/Internal Rate of Return
The project has a pretax net present value, at a 5% discount rate, of C$670-million and an internal rate of return of 22.1%, with a payback of three years.

Value
Preproduction capital costs, including a 15% to 30% contingency, have been estimated at C$327-million.

Duration
Not stated.

Latest Developments
Based on the positive PEA results, AuRico plans to conduct a separate feasibility study, expected to be released in 2018, which will evaluate KUG and KE as part of an integrated development scenario.

The combined feasibility study is expected to reflect further in-fill and expansion drilling planned at KE and the resulting KE resource update expected in early 2018.

Key Contracts and Suppliers
Not stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
AuRico Metals, tel +1 416 216 2780, fax +1 416 216 2781 or email info@auricometals.ca.