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TYHEE DEVELOPMENT CORP REPORTS POSITIVE PRELIMINARY FEASIBILITY STUDY ON YELLOWKNIFE GOLD PROJECT.

VANCOUVER, B. C. Thursday July 22, 2010 - Tyhee Development Corp. (TSX-V , TDC) (the “Company”) is pleased to announce the completion of a Preliminary Feasibility Study on the Yellowknife Gold Project, located from 50 to 90 kilometres north of Yellowknife, NWT, Canada.

The Preliminary Feasibility Study (PFS) considers all aspects of the project including mining, processing, and related infrastructure. Gold mineralization from the Ormsby, Nicholas Lake Main and Clan Lake Main Zones are considered in this study. The Bruce Lake and Goodwin Lake Vad Zones along with all inferred resources are excluded from the economic model.

A combination of open pit mining at the Ormsby and Clan Lake Main Zones and underground mining at Nicholas Lake Main and Ormsby Zones feeding a 3,000 tonne per day conventional mill at the Ormsby Zone site is contemplated. The underground potential at Clan Lake was not considered as the deposit is in an early stage of assessment and its full lateral extent has not been established. A total of 7,560,000 tonnes grading 3.34 recovered grams per tonne over a 7½ year mine life including stockpiles will produce 811,200 ounces of gold. Potential for resource expansion occurs in all of the zones to depth, as well as along strike at the Clan Lake Main and Goodwin Lake Vad Zones. Additional gold zones at Clan Lake contribute to the overall resource potential of the project.

Dave Webb, President & CEO reports “We are very pleased to have demonstrated the economic viability of the Yellowknife Gold Project under the stated parameters. The project generates a discounted Net Present Value (NPV) of CAD$71.3 million with a base case scenario of US$950/ounce of gold and a 5% discount rate. At more current prices, the economics become very robust with a NPV exceeding $200 million and IRR exceeding 38%. Tyhee converted 52% of its Measured and Indicated Gold Resource into Proven and Probable Reserves (Ormsby, Nicholas Lake, and Clan Lake (within 105m of surface). The reduction in the PFS Internal Rate of Return (IRR) and NPV from the results of the Preliminary Assessment is attributed the exclusion of inferred resources (269,000 ounces of gold) all of the Bruce Lake Zone, only considering Proven and Probable Reserves, and the application of normal extraction rates”. Webb continues to point out that “this not only validates the findings from the Preliminary Assessment, the inclusion of Clan Lake, although only recently acquired, confirms the concept of one central mill treating ores from multiple open pit and underground sources. This greatly expands our ability to develop additional resources.”

Webb notes that “Archean Gold Deposits like the Yellowknife Gold Project are not easy to evaluate due to their limited lateral but significant vertical extent. Since it is usually more costly to explore to depth than along strike, these deposits can be expensive to develop to the limits of their mineralization, which may extend to depths of several thousands of metres. For example, mines such as those in Timmins, Val D’Or, Red Lake and Yellowknife characteristically started with only a short mine life but some have operated for several decades with the larger mines lasting for half a century or more.”

Preliminary Feasibility Economic Details
The base case considers a 3,000 tonne per day operation, initially as an open pit at Ormsby with underground operations at Nicholas Lake. In year 4 underground mining will commence at Ormsby and the open pit equipment moving to Clan Lake for start up in year 6. Production will be on average 108,000 ounces of gold per year for 7.5 years (total 811,200 ounces) at an average operating cost of US$541 per recovered ounce of gold. Initial capital costs are estimated to be CAD$170 million with a contingency of CAD$20 million. At a base case of US$950 per ounce of gold, and a 5% discount rate the project has an IRR of 16.1% and a NPV of CAD$71.3 million before taxes. The $US/$CAN rate is assumed to be 0.93.

Discount Before Tax NPV (4M)
0% 119.0
5% 71.3
7% 55.5
10%
34.5

Sensitivities

Gold Price US$
Before Tax NPV ($M)
IRR
750
-75.1 -7.7%
850 -1.7 4.7%
950 71.3 16.1%
1,050 144.6 27.3%
1,150 217.7 38.8%

The Ormsby open pit mine will extract 5.2 million tonnes of ore grading 3.20 gpt with an overall strip ratio of 14.2:1. The Nicholas Lake underground mine will extract 975 thousand tonnes grading 4.36 gpt concurrent with the Ormsby open pit. Underground operations at the Ormsby Zone will extract 976 thousand tonnes grading 5.60 gpt and commence upon completion of the Nicholas Lake component. Mining at Clan Lake will extract 441 thousand tonnes of ore grading 2.95 gpt from an open pit and commence near to the completion of the Ormsby open pit.

All ores are non-refractory and will be processed at a conventional crusher and grinding mill with separation utilizing gravity, flotation of the gravity tails, regrind of the flotation concentrate and cyanidation with Merrill Crowe recovery enabling Dore bars to be poured on site. Gold recoveries of 92% for Ormsby and Clan Lake ores and 90% for Nicholas Lake ores were established.

Power will be provided by a line connected to the electric grid at Yellowknife which proves to be better in the long term than the alternative of diesel generated power. Haul roads will connect the various gold zones to the main site at the Ormsby where all services, processing and warehousing will be established. The infrastructure will include a 150 man camp, 1,000 m airstrip (already installed), processing and waste treatment facilities.

Overall pit slope angles are estimated at 50 degrees but do vary according to geotechnical conditions.

Total capital costs are projected to be CAD$218 million over the life of the project including reclamation.

The financial model assumes 100% equity financing although alternative financial options exist including debt financing.

Yellowknife Gold Projects Mineral Resources1

Category Ormsby
Zone
Nicholas Lake
Main Zone
Bruce Lake
Zone
Clan Lake
Main Zone
Goodwin Lake
Vad Zone
Total
Resources
Measured            
Tonnes 3,003,00
1,249,000 -  - -
4,252,00
Grams Gold/Tonne 3.41 3.81 - - - 3.53
Troy Ounces, Gold          
             
             
             

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