Kemess Underground

The Kemess Underground Project is located approximately 5.5 km north of the past producing Kemess South mine in north-central British Columbia.  During its mine-life, the Kemess South mine produced close to 3 million ounces of gold and over 300 million pounds of copper.

In 2011, a Preliminary Economic Assessment for the Kemess Underground Project was completed, which outlined the development of an underground block/panel cave operation. Highlights of the Study include (employs base case commodity price assumptions of $1,100/oz gold; $2.80/lb copper and $20/oz silver and F/X US$/Cdn$1.00):

• Average annual production of 95,000 ounces of gold at a net cash cost of $115 per ounce.
• Average annual copper production of 41.4 million pounds.
• An approximate 12-year mine-life.

The envisaged Kemess Underground block cave operation would leverage the existing infrastructure and mill facilities at the Kemess South mine, currently on care and maintenance, including a permitted area for tailings storage in the Kemess South open pit. In addition, analysis of the geotechnical data compiled during the 2010 drill season and previous drill programs indicate that the orebody is well suited to block caving.

The Kemess Underground Project represents significant value opportunity for our company: an additional 12 years of mining at the Kemess camp, which would add to our robust growing production profile.

Based on the positive results of a Preliminary Assessment, a full Feasibility Study is underway, which is expected to be completed in 2012.

Geology

The Kemess Underground Project is located in a northwest-trending geological belt, known as the Quesnel Trough, which extends over a distance of approximately 1,200 km in British Columbia. This feature contains several gold-copper and copper-molybdenum deposits, including the Copper Mountain, Afton, Highland Valley and Brenda mines in the south and Gibralter, Mt. Polley and Mt. Milligan in the north.

The main rock units in the Kemess district are the Upper Triassic to Lower Jurassic Takla Group. These rocks are predominantly subaqueous volcanic strata consisting of basaltic lava flows with subordinate interbeds of tuff and volcanic breccia. Overlying the Takla Group are Lower Jurassic-Hazelton Group dacitic volcanic rocks dominated by flows and tuffs. Numerous stocks and dykes of Lower to Mid-Jurassic age intrude the Hazelton and Takla strata.

On the Kemess properties, the overlying Hazelton volcanic rocks have been removed by erosion, exposing several large monzonite intrusions with disseminated sulphide mineralization and associated hydrothermal alteration. The resulting disseminated sulphide system measures at least 9 km north-south and 5 km east-west. It contains both the Kemess South and Kemess North deposits (the Kemess Underground deposit is located at a depth of 300 – 500 m below surface within the Kemess North deposit).

Mineralization

The mineral deposits at Kemess are classic calc-alkaline porphyry gold-copper deposits. The deposits are generally tabular and hosted in or above sub-volcanic intrusive rocks, usually of tonalitic or quartz monzonitic composition.  The intrusive rocks and their associated fossil hydrothermal systems form the mineralization which at Kemess is centred on the upper portions of the causative intrusion and the adjacent country rock (Takla Group).  These intrusions are interpreted to be the source of the metals in the deposits and their volcanic products form the younger Hazelton volcanic rocks which dominate the regional geology north of Kemess.

At Kemess Underground, copper-gold mineralization is normally associated with stockworks, veins and disseminations of pyrite, chalcopyrite, and magnetite that form as replacements of earlier ferromagnesian silicate minerals.  Copper porphyry deposits often display multiple zones of hydrothermal alteration and sulphide mineralization and typically form in clusters; the deposits at Kemess are no exception.