To: Goose94 who wrote (161 ) 11/18/2012 3:54:22 PM From: Goose94 Respond to Nov 15, '12 News Release The Highlights of the PEA are as follows; NPV of $454m and 15% IRR based on $1462 price of gold (3 year trailing average as of Nov 1st) NPV of $887m and 23% IRR based on SPOT price of Gold($1716 as of Nov 1st) 197K oz/y average production over 14.4 year life of mine 268k oz/y average production for first 3 years 2.8 million recoverable oz over life of mine Initial CAPEX requirement of $756m including $89m contingencies. 40,000 tonne per day operation Total cash cost per oz over LOM is $774 Total cash costs for year 1-3 is $526 Stip ratio is 2.3 for LOM and 1.3 for the first 3 years. Operating costs per tonne milled is $10.68 Payback is in 4.4 years(Base case) or 2.7 years (SPOT) All in all this is a strong PEA and demonstrates how robust this project actually is. The capex requirement for the project comes in at $756m which represents an increase of approximately 50% on the 2010 PEA which is consistent with world- wide trends and is not surprising. All mining costs have increased significantly since 2010 – fuel, concrete, steel, labor and equipment. Labor costs in particular have increased dramatically as the demand for skilled construction and operational employees is global in nature. Companies are not only competing for labor with other Canadian projects but also with project around the world. It has become highly evident that good construction teams in particular are very mobile. $756m is no small chunk of change, yet it’s not a billion dollar+ super project that we see these days. Also as this will be a 40,000 tonne(max capacity) operation from day one the sustaining capital requirement are relatively low in comparison to other staged scenarios. With an attractive LOM production of ~200k per year it stands to reason this project a take-over target for both mid-tier and “smaller” large-cap producers. This sort of yearly production cantip the needle for some of these producers and falls within the sweet spot for what many are currently looking for. A very favorable first few years of production is likely due to the nature of this deposit and the presence of high grade material close to surface. Average production for years 1-3 is 268k oz’s at a higher head grade of .7 g/t. This higher head grade and annual production provides the potential for a rapid payback period. Depending on your outlook for gold price, this project has the potential to produce substantial free cash flow resulting in 4.4 years payback at base case or 2.7 years based on spot. From a mining cost stand point this project falls in line with global averages. LOM cash costs per ounce are $774 with years 1-3 coming in at $526. These are some strong numbers considering this is a relatively low grade operation. The project benefits from cheap power (some of the cheapest in North America), significant infrastructure and an attractive strip ratio, which all have a positive impact on the economics of the project. Moving forward into 2013, the company will need to re-classify some of the inferred oz’s to M&I for inclusion in further economic studies. Should the company be successful, they can plan on a 15 year mine life (not including any new areas of mineralization identified during infill drilling). Also, from a permitting perspective the company is seemingly well ahead of the curve. They have been very active in the local communities and with First Nations (which is exemplified by the fact that they already have agreements signed with 3 separate bands). This sort of involvement and forward thinking can pay dividend when approaching a permitting decision. Not only has the company established positive economics it also has an experienced management and board to see this one through development finance. With notable names such as Don Coxe and Jim Rogers sitting on the board, this company can raise some eyebrows as they move this project towards production.
