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1. Project Overview

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1. Project Overview 1. PROJECT OVERVIEW 1.1 INTRODUCTION This chapter of the Application for an Environmental Assessment Certificate (the Application) provides an overview of the Proponent, AuRico Metals Inc. (AuRico), and the proposed Kemess Underground Project (the Project). The chapter identifies the Project location and access, Project setting and history, mineral resources, geology and mineralization, project components and activities, project schedule, and project benefits. 1.2 PROPONENT DESCRIPTION 1.2.1 Proponent AuRico is a precious metals royalty and development company whose royalty assets include a 1.5% Net Smelter Royalty (NSR) on the Young-Davidson Gold Mine, a 0.25% NSR on the Williams Mine at Hemlo, and a 0.5% NSR on the Eagle River Mine – all located in Ontario, Canada. AuRico also has a 2% NSR on the Fosterville Mine, located in Victoria, Australia, and 100% ownership of the proposed Kemess Underground Project. The company was incorporated in Ontario (Corporation Number 1935481) on May 7, 2015 and registered in BC (Registration Number A0095422) on May 15, 2015, pursuant to the Business Corporations Act (2002a). On July 2, 2015 following the merger of AuRico Gold Inc. and Alamos Gold Inc., the Kemess Property was divested into the sole ownership of the newly formed AuRico Metals Inc. AuRico is listed on the Toronto Stock Exchange, and its trading symbol is TSX:AMI. 1.2.2 Corporate Governance AuRico is governed by a board of directors with eight members, including a chairman. The board of directors is responsible for governance and stewardship of the company. AuRico is managed under the direction of: Chris Richter, Chief Executive Officer John Fitzgerald, Chief Operating Officer Rob Chausse, Chief Financial Officer Chris Rockingham, Vice President, Development AuRico’s head office is in Toronto, Ontario, and also has an office in Smithers: 110 Yonge Street, Suite 1601 Toronto, ON M5C 1T4 Telephone: 416-216-2780 (switchboard) Facsimile: 416-216-2781 Internet: www.auricometals.ca AURICO METALS INC. Kemess Underground Project | 1-1 APPLICATION FOR AN ENVIRONMENTAL ASSESSMENT CERTIFICATE 1076 Main Street, Suite 2 PO Bag 3519 Smithers, BC V0J 2N0 Telephone: 250-877-7855 Facsimile: 888-501-4522 Communications regarding this Application should be directed to: John Fitzgerald, Chief Operating Officer Email: [email protected] Chris Rockingham, Vice President, Development Email: [email protected] Harold Bent, Director, Environment Email: [email protected] 1.2.3 Corporate Social Responsibility and Environmental Policies AuRico strives to be a good neighbour and understands the importance of supporting and contributing to the communities and regions where it operates while minimizing the company’s environmental footprint. AuRico’s Corporate Social Responsibility (CSR) Policy focuses on achieving a balance of economic prosperity, environmental stewardship and social responsibility through the consideration of employees and their families, communities where they work and the environment. Some of the keys commitments under the CSR include: • health and safety of workforce; • accountability, transparency, ethical behaviour and human rights; • sustainable development and performance; • minimizing environmental footprint; • building relationships within communities of operation; • supporting local suppliers; and • promoting a fair and positive outcome for all parties. AuRico’s Environmental Policy focuses on environmentally responsible practices to minimize the company’s environmental footprint. The policy includes commitment to environmental protection, obeying local laws, maintaining a high level of emergency preparedness as well as reducing the impact on natural resources. Additionally, Aurico’s Health and Safety Policy focuses on providing a safe and healthy work environment and maintaining a goal of zero injuries. 1-2 | Kemess Underground Project ERM | PROJ #0196303 | REV H.1 | MAY 2016 PROJECT OVERVIEW 1.2.4 Consultants ERM Consultants Canada Ltd. (ERM) has been retained by AuRico to manage the environmental assessment (EA) process for the Project, including preparation of documentation for the Application. ERM offers a wide range of scientific, engineering, and socio-economic services to the resource development industry. ERM contact information is provided below. ERM 15th Floor, 1111 West Hastings Street Vancouver, BC V6E 2J3 Telephone: 604-689-9460 Facsimile: 604-687-4277 Anne Currie, Partner in Charge Email: [email protected] Greg Norton, Project Manager Email: [email protected] 1.3 PURPOSE OF THE PROJECT The purpose of the Project is to develop the Kemess Underground copper-gold deposit to help meet world demand for gold and copper in a manner that benefits Aboriginal groups, local communities, and federal, provincial, and municipal governments, without compromising the ability of future generations to meet their own needs. The Project consists of the economic extraction of copper and gold ore from the underground deposit using panel caving techniques and processing approximately 9 million tonnes per year (Mt/year) (average 24,650 tonnes per day (tpd) equivalent) with an average annual production rate estimated at 105,000 ounces of gold and 44 million pounds of copper, for a total of 1.3 million ounces of gold and 563 million pounds of copper produced over a mine life of approximately 13 years. Copper is mainly used in building wiring and plumbing, but also in other applications such as automotives and telecommunications. The demand for copper drives world mine production and usage, which increased by 16% in 2009 and 28% in 2014 (ICSG 2015). In 2014, the largest mine production of copper by country included Chile with 5,800 thousand metric tonnes, China with 1,620 thousand metric tonnes, Peru with 1,400 thousand metric tonnes and the United States with 1,370 thousand metric tonnes (Investing News 2015a). Canada was in the ninth place with a total mine production of 680,000 tonnes, representing production growth of 8% over 2013. The current price of copper is above US$ 2 per pound, however, economic conditions including a stronger US dollar and a slowing demand growth in China have the potential to drive this price below this level (Investing News 2015b). The consumer market for gold is dominated by India and China, which together account for 60% of the global jewelry sector and as much as 50% of the total bar and coin demand. Most of the gold production in the province of BC is exported to other countries. In 2008, the top destination countries AURICO METALS INC. Kemess Underground Project | 1-3 APPLICATION FOR AN ENVIRONMENTAL ASSESSMENT CERTIFICATE for the export of gold, in its primary stage, included Japan (57%), South Korea (21%), and China (20%). The United States imports BC gold in a more refined stage that includes pure mineral, semi-finished and/or finished products (BC MEM Statistics 2013). The demand for gold is volatile and depends on gold prices and the state of the economy, that is, at lower prices the demand is higher (World Gold Council 2013). It is expected, therefore, that the Project will support industrial development needs, help to meet the overall global copper and gold demand, as well as contribute to the provincial total exports and economic growth. 1.4 PROJECT LOCATION AND ACCESS The Project is located at 57°0′N latitude by 126°45′W longitude, approximately 250 kilometres (km) north of Smithers, and 430 km northwest of Prince George (Figure 1.4-1). The Project is located on provincial Crown land in the Peace River Regional District (PRRD; UTM coordinates: Easting 636295 and Northing 6326428, NAD83). The Project is accessed via the existing Omineca Resource Access Road (ORAR) from Mackenzie. The closest communities to the Project by air are Kwadacha (Fort Ware; 79 km), Tsay Keh (111 km), and Takla Landing (182 km). The Project will use the existing airstrip, which serviced the past-producing Kemess South (KS) Mine (described in Section 1.5), to facilitate scheduled year-round flights from surrounding communities. 1.5 PROJECT HISTORY Mineral exploration has taken place in the Kemess area since 1889. A gold and copper deposit in the Kemess North area (the same area as the Kemess underground deposit) was first explored between 1966 and 1971 by Kennco Explorations (Canada) Ltd., who conducted soil, silt and bedrock geochemical sampling, drilling and geological mapping. In 1975 and 1976, Getty Mines Ltd. conducted further geotechnical mapping and limited geochemical work and drilling in the Kemess North area. In 1986, El Condor Resources optioned the property from Kennco, and completed electromagnetic surveys up to 1992 which led to the discovery of Kemess South (KS). In 1996 Royal Oak Mines acquired the KS property. A proven exploitable deposit identified to the south of Kemess North and named KS was pursued by Royal Oak Mines, and an environmental assessment certificate for the KS Project was received from the provincial government in 1996. In 2000, Northgate Minerals Exploration acquired a 95% royalty interest in the KS Mine and the associated Kemess North property following the bankruptcy of Royal Oak Mines. 1.5.1 Kemess South Mine Project Construction started in 1996 and the open pit mine operated from 1998 to 2011. The KS Mine’s average daily production rate was approximately 48,000 tonnes, for a total production of 3.0 million ounces of gold and 749 million pounds of copper from 218 Mt of ore. 1-4 | Kemess Underground Project ERM | PROJ #0196303 | REV H.1 | MAY 2016 Figure 1.4-1 Kemess Underground Project Location 130°0'0"W 125°0'0"W 120°0'0"W 115°0'0"W Great Slave Lake Northwest Territories Yukon 60°0'0"N ¤£1 60°0'0"N British Columbia Kemess Underground Kwadacha Alberta Project (Fort Ware) !. ¤£97 ^_ !. Tsay Keh ¤£37 Omineca Resource Alaska, Access Road Dawson Creek !. USA Takla !. Landing !. Mackenzie 55°0'0"N 55°0'0"N !. Smithers !. !. Fort St. Terrace James ¤£16 !. Prince George F r a ¤£16 s e r R i v e r Pacific Ocean ¤£97 Kemess Underground ^_ Project ¤£1 !.
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