Yellowknife Gold Project
Preliminary Assessment

The Preliminary Assessment utilized the current (2008) Measured and Indicated Resource of 11.2 million tonnes grading 3.52 gpt gold containing 1.27 million ounces of gold plus 3.6 million tonnes of Inferred Resources grading 3.21 gpt gold containing 374,000 ounces of gold.

  Average Gold Price US$ Pre-Tax Cash Flow (US$) Pre-Tax IRR Pre-Tax Discounted (5%) NPV
Low 650 133,750,222 14.79 72,028,327
Base 750 233,337,934 21.44 143,576,211
Current 900 382,091,361 25.96 239,073,552
High 1,000 502,224,605 32.70 328,602,488


A combined open pit and underground operation at 3,000 tpd will recover an average of 163,500 troy ounces of gold per annum for the first 7 years (total 1,115,000 ounces) at an average operating cost of $384 per ounce of gold with potential to expand the resource at depth and through further exploration.  Initial capital costs are estimated to be $150 million (including 30% contingency) with an additional $26 million required throughout the life of mine as sustaining capital. At a base case of $750 per ounce of gold, and a 5% discount rate the project has a pre-tax IRR of 21.3% and a pre-tax NPV of $145 million.

The base case considers a 3,000 tonne per day, initially as an open pit with underground
operations commencing in year two at Nicholas Lake and year 3 at Ormsby, recovering an average of 165,000 ounces of gold per year for 7 years (total 1,155,000 ounces) at an average operating cost of $384 per ounce of gold. Initial capital costs are projected to be $150 million.   At a base case of $750 per ounce of gold, and a 5% discount rate the project has an IRR of 21.3% and a NPV of $145 million. All cost estimates are at + 30% for accuracy. The $US/$CAN rate is assumed to be at par.

The Ormsby open pit mine would extract 2 million tonnes of ore grading 3.08 gpt with an overall strip ratio of 5.9, while the Nicholas Lake open pit mine would extract 470,000 tonnes grading 4.11 gpt with an overall strip ratio of 6.26. The underground operations using a 2.5 gpt cut-off would extract 3.8 million tonnes grading 5.55 gpt from the Ormsby Zone and 1.4 million tonnes grading 6.16 gpt from Nicholas Lake.

This assessment complies with NI 43-101 standards, is preliminary in nature and the economic analysis includes inferred resources that are considered too speculative geologically to have economic considerations applied to them to be categorized as mineral reserves. There is no certainty that the results of this Preliminary Assessment will be realized.

Preliminary Assessment of the Yellowknife Gold Project describes the preliminary economics of the Yellowknife Gold project. Readers are cautioned that the preliminary assessment is based upon mineral resources, mineral resources are not mineral reserves, and do not have demonstrated economic viability. The Preliminary Assessment is based on a number of assumptions which are set out in the Report. N.E. Fier, P.Eng, A. Winckers, P.Eng, J. Kaehne, Dipl.T., and V. Pratico, P. Geol. are QP within the meaning of NI 43-101.

Tyhee Gold Corp. All rights reserved.
Last updated November 12, 2011