AuRico Gold KEMESS UNDERGROUND PROJECT Project Description: Executive Summary ERM Rescan Rescan Building, Sixth Floor - 1111 West Hastings Street Vancouver, BC Canada V6E 2J3 February 2014 Tel: (604) 689-9460 Fax: (604) 687-4277 Executive Summary PROJECT OVERVIEW AND LOCATION AuRico Gold Inc. (AuRico) proposes to develop the Kemess Underground Project (the Project), an underground gold-copper mine located in a mountainous area of north-central British Columbia (BC), approximately 250 km north of Smithers, 430 km north-northwest of Prince George, and 6.5 km north of the past-producing Kemess South (KS) Mine (Figure 1). The Project is located in the traditional territories of the Takla Lake First Nation, Tsay Keh Dene First Nation, and the disputed area between the western provincial and federal boundaries of Treaty 8 (the ‘disputed area’). The project (coordinates: 57º0′N; 126º45′W) is situated on provincial Crown land within the Peace River Regional District (PRRD). AuRico holds 57 mineral claims totaling 29,285 ha and mining leases totaling 3,483 ha. The project is accessed from the Omineca Resource Access Road (ORAR). Mackenzie is the closest town by road to the Project. The KS Mine, a former open pit mine that produced 3.0 M ounces of gold and 749 M pounds of copper from 218 million tonnes (Mt) of ore, was owned and operated by Northgate Minerals, and acquired by AuRico Gold Inc. (AuRico) in 2011. The mine operated from 1988 to 2011 with an average daily production rate of 52,000 tonnes. The KS site is currently under care and maintenance. The new surface disturbance from the Project will be relatively small: approximately 65 ha (35 ha for the subsidence cone and 30 ha for infrastructure) compared to 1,900 ha of surface disturbance at the KS Mine, of which a substantial portion has since been reclaimed. The purpose of the proposed Project is the economic extraction of gold and copper ore from the underground deposit using block caving techniques and processing approximately 9 Mt/year (24,650 tonne per day (t/d) 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 over a mine life of approximately 12 years. Most of the KS mine infrastructure will be used for the Project, including the mill, KS open pit (which will be used for the tailings storage facility for the Project), and administrative/service complex/ accommodation. Only minor upgrades to KS mine infrastructure will be required for the Project. The Project will use the existing airstrip and road access to the site. Power will be provided by the existing 380 km, 230 kV transmission line. The underground deposit will be accessed using three declines. Mining will take place on a single extraction level that includes 640 drawpoints over a 540-m-wide and 230-m-long footprint. Ore will be recovered using load-haul-dump machines and delivered to the underground crusher, located immediately south of the ore body. Once material is crushed, it will be placed on conveyor belt which rises through one of the dedicated declines and transfers the ore to surface conveyor, which will transport the crushed material to the existing, reclaimed stockpile area, directly north of the existing KS mill. AURICO GOLD i PROJECT # 0196303-0001 GIS # KUG-15-005 December 23 2013 135°0'0"W 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 Alberta British Columbia Kemess Underground Fort Ware Project (Kwadacha) !. ¤£97 ^_ !( !. Tsay Keh Dene ¤£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 ¤£1 Kemess Underground ^_ Project !. Community/Settlement 50°0'0"N Kemess Underground ¤£97 50°0'0"N !( Project Airstrip ¤£3 Railway Vancouver !. Forest Service Road ¤£1 Highway Omineca Resource USA Access Road 1:8,000,000 0 100 200 Kilometres Projection: NAD 1983 BC Environment Albers Copyright:© 2013 Esri 130°0'0"W 125°0'0"W 120°0'0"W Figure 1 Kemess Underground Project Location EXECUTIVE SUMMARY The Project will be operated on a fly-in fly-out basis with the majority of workers operating on a cycle of two weeks on, two weeks off. The Project is expected to provide close to 4,000 person years of employment of which 1127 person years will be during the construction phase, and 2863 person years during the Project’s operation phase. The workforce will peak with approximately 400 people by Year-2 due to increased labour needs for development, production, maintenance, technical, and management- supervision. This level of workforce personnel is maintained through Year +4, after which development, undercutting, and drawbell opening ceases. Years 5 to 10 have total workforce complements ranging from 295 to 183, after which complements decline as the end of the mine’s life is reached. The total life of mine capital cost is estimated to be $683 M. An estimated $236 million will be paid in provincial and federal taxes, including approximately $63.8 million in provincial corporate tax, $87 million in federal corporate tax, and $86 million in BC mineral tax pursuant to the Mineral Tax Act (1996d). These estimates are based upon US$1,300 per ounce gold and US$3.00 per pound copper, assuming the Canadian and US dollars are at parity. GENERAL INFORMATION AND CONTACTS AuRico Gold Inc. (AuRico) proposes to develop the Kemess Underground Project (the Project). AuRico is a Canadian gold producer with operating mines in Ontario (Young-Davidson) and Sonora, Mexico (El Chanate) and mineral exploration and development opportunities in Canada and Mexico. AuRico’s common shares are listed on the Toronto Stock Exchange (TSX: AUQ) and the New York Stock Exchange (NYSE: AUQ). Further information about AuRico Gold Inc. can be found in the AuRico’s regulatory filings, including its Annual Information Form, available on SEDAR at www.sedar.com, on EDGAR at www.sec.gov, and on AuRico’s website at www.auricogold.com. Principal contacts for the Project are provided below: Chris Rockingham Vice President, Exploration & Business Development 110 Yonge Street, Suite 1601 Toronto, ON M5C 1T4 Telephone: 647-260-8880 Facsimile: 647-260-8881 Internet: www.auricogold.com Email: [email protected] Harold Bent Director - Environment 1076 Main Street, Suite 2 PO Bag 3519 Smithers, BC V0J 2N0 Telephone: 250-877-7855 Facsimile: 250-877-7895 Email: [email protected] Mr. Bent is the principal contact for the purposes of this Project Description. AURICO GOLD iii PROJECT DESCRIPTION AuRico Project Management Team Toronto Office Scott Perry, President & Chief Executive Officer & Director [email protected] Peter MacPhail, Chief Operating Officer [email protected] Vancouver Office Susan Craig, Director Government Affairs & Community Relations 535 Thurlow Street., Suite 803 Vancouver, BC V6E 3L2 Telephone: 604-681-4004 Facsimile: 604-681-4003 Email: [email protected] Environmental Assessment Consultant ERM Rescan Sixth Floor, 1111 West Hastings Street Vancouver, BC V6E 2J3 Telephone: 604-689-9460, ext. 3351 Facsimile: 604-687-4277 Anne Currie, Partner Email: [email protected] Mark Branson, Project Manager Email: [email protected] Engineering Consultant SRK Consulting (Canada) Inc. Suite 2200-1066 West Hastings Street Vancouver, BC V6E 3X2 Telephone: 604-681-4196 Facsimile: 604-687-5532 Email: [email protected] The purpose of the Project is to develop the underground gold-copper deposit to help meet world demand for gold and copper in a manner that benefits Aboriginal groups, local communities, and local, provincial, and federal governments without compromising the ability of future generations to meet their own needs. AUTHORIZATIONS, PERMITS, AND LICENCES Under the British Columbia Environmental Assessment Act (BC EAA; 2002a), the Project will not trigger an environmental assessment (EA) pursuant to Section 8 (1) of the Reviewable Projects Regulation (BC Reg. 370/2002) for a modification to an existing facility because, although the production capacity exceeds the Regulation trigger of 75,000 t/y of mineral ore, it will not exceed the threshold of either 750 ha of new land disturbance or a 50% increase in land disturbance. However, AuRico has chosen to iv ERM RESCAN | PROJ#0196303-0001 | REV F.1 | FEBRUARY 2014 EXECUTIVE SUMMARY apply to the Executive Director of the BC Environmental Assessment Office under Section 7 of the BC Environmental Assessment Act (2002a) to request the Project be designated a reviewable project, and is submitting this Project Description for that purpose. Under the Canadian Environmental Assessment Act, 2012 (CEAA, 2012) the Project is considered a “designated project” pursuant to Section 16 (c) of the Schedule of the Regulations Designating Physical Activities (SOR/2012-147) as the production rate will exceed the threshold for a gold mine of 600 t/d. As such, a Project Description is required by the Canadian Environmental Assessment Agency, for the purposes of determining whether a federal environmental assessment (EA) is required. If a federal EA is required, AuRico is interested in pursuing substitution of the federal process by the provincial EA process, pursuant to Section 32 of CEAA, 2012. AuRico is planning to apply for concurrent review of provincial permits pursuant to the BC EAA (2002a) Concurrent Approvals Regulation (BC Reg. 371/2002). Under the Regulation, these permits would be reviewed at the same time as the EA Certificate Application.