TUG Deposit

Overview:

The TUG deposit is located within the Long Canyon Trend of Nevada/Utah which is part of the old Tecoma Mining District. To meet a 60% earn-in requirement with its partner, Newmont Mining Corp., West Kirkland has spent over $4 million at TUG to date. Subject to Newmont’s confirmation of the earn-in expenditures, the two companies will form a joint venture to advance the project.

Located on property within private, state lease and public mineral rights, spanning 50 km², TUG is a sediment hosted, Carlin style gold deposit that was extensively drilled by previous operators including Noranda, Western States Minerals and Fronteer Gold.

West Kirkland completed an initial NI 43-101 Resource estimate on the deposit, announced June 1, 2012. An updated NI 43-101 Resource Estimate and Preliminary Economic Assessment (PEA) by Roscoe Postle Associates USA Ltd. was later announced on August 1, 2013 and filed on SEDAR September 13, 2013.

 

TUG Deposit, Resource Estimate and PEA

The resource estimate and PEA were prepared in conformance with NI 43-101 by Roscoe Postle Associates USA Ltd. (RPA). The study predicts a 26% after-tax IRR and $9 million NPV(8%) at $1,525 gold/ $28 silver, and an in-pit indicated resource of 114,000 ounces gold plus 5.4 million ounces silver with an inferred resource of 3,000 ounces gold plus 298,000 ounces silver. Initial capital cost is projected to be $24 million. Note that all funds are stated in US$.

Highlights of the PEA

RPA’s economic assessment focused on the most economical part of the Mineral Resource, which is based on heap leach processing as outlined in Table 4.  The processing method selected for the PEA was determined by comparing the milling and heap leaching cash flow analyses.

Table 1  TUG PEA Preliminary Economic Assessment April 30, 2013
Gold Price	$1,525/oz
Silver Price	$28/oz
Total Rock	15.6 million tonnes
Waste Rock	11.4 million tonnes
Mineralized Material (non-diluted) Indicated	3.94 million tonnes
Mineralized Material (non-diluted) Inferred	0.26 million tonnes
Stripping Ratio	2.7:1 (waste to mineralized)
Average Processing Rate	3,000 tpd (heap leach)
Gold Recovery	58%
Silver Recovery	15%
Initial Capital (includes Contingency & Bonding)	$24 million
Contingency (25%)	$4.7 million
Environmental Bonding Estimate	$1.7 million
Cash Operating Cost per ounce Gold Equivalent	$902 per ounce (AuEq)
Mine Life	4 years
IRR (pre-tax)	33%
NPV (pre-tax, 8% discount rate)	$12 million
IRR (after-tax)	26%
NPV (after-tax, 8% discount rate)	$9 million

Note: Mineral Resources do not have any demonstrated economic viability and resources may never be upgraded to a higher category or be upgraded to reserves.

TUG In-Pit Resource


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NOTE: The economic analysis is based in part on Inferred Resources and is preliminary in nature.  Inferred Resources are considered too geologically speculative to have mining and economic considerations applied to them or to be categorized as Mineral Reserves.  There is no certainty that economic forecasts on which this Preliminary Economic Assessment is based will be realized.  

TUG Project Opportunities

RPA has identified several opportunities which have the potential to improve the TUG Project.  These include:

• Drilling more twinned drill holes to investigate whether gold and silver grades are under-reported in some of the historical reverse circulation drill;
• Re-assaying pulps from some historical drill holes that have a known low bias for silver;
• RPA recommends that a comprehensive metallurgical testing program be completed for the Project which might lead to improved recoveries;
• RPA recommends improving the accuracy of capital and operating cost estimates, optimizing the mining schedule, and investigating alternative crushing processes such as high pressure grinding rolls or vibration cone crushers, all of which have the potential to improve the project economics; and
• Investigate milling after the mine has operated with a heap leach, which would achieve higher gold and silver recoveries from mineralized material, potentially doubling the current economically mineable portion of the mineral resource, and allowing further recovery of gold and silver from leached material.

TUG Conceptual Surface Layout

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Mineral Resource Estimate

RPA’s Mineral Resource estimate is based on an open pit mining scenario. A potentially minable Mineral Resource is reported at a $17/tonne net smelter return (NSR) cut-off within a preliminary Whittle pit shell.

Table 3 - Mineral Resource Estimate – April 30, 2013
Category	Tonnes	Gold	Silver	Gold	Silver
	t (000)	(g/t)	(g/t)	(oz)	(oz)
Indicated	4,850	0.84	40.4	131,000	6,303,000
Inferred	4,385	0.79	30.3	111,000	4,272,000

Notes:

1. Mineral resources that are not mineral reserves do not have demonstrated economic viability
2. CIM definitions are followed for classification of Mineral Resources
3. Mineral Resources are estimated using a gold price of $1,700 per ounce and a silver price of $29 per ounce
4. Gold and silver recovery factors of 90% and 60% respectively are used
5. High grade assays are capped at 10 g/t Au and 500 g/t Ag
6. Tonnage factor for mineralization was 2.55 t/m³
7. Resources are constrained by a Whittle shell and reported at a $17/t NSR cut-off
8. Totals may not represent the sum of the parts due to rounding
9. The Mineral Resource Estimate was prepared by Luke Evans, M.Sc, P.Eng, RPA, April 30, 2013

Table 4 - economically assessed Resource – April 30, 2013
Category	Tonnes	Gold	Ag	AuEq*	Gold	Ag
	t (000)	(g/t)	(g/t)	(g/t)	(oz)	(oz)
Indicated	3,944	0.90	42.8	1.69	114,000	5,427,000
Inferred	255	0.42	36.32	1.09	3,000	298,000

Notes:

1. CIM definitions are followed for classification of Mineral Resources within the pit used for the economic analysis
2. Mineral Resources are estimated using a gold price of $1,700 per ounce and a silver price of $29 per ounce
3. Heap Leaching gold and silver recovery factors of 58% and 15%, respectively are used
4. Tonnage factor for mineralization was 2.55 t/m³
5. No dilution applied to mineral resources, 97% mining recovery used
6. Resources are constrained by a Whittle shell and reported at a $8.05/t NSR cut-off for heap leaching
7. Totals may not represent the sum of the parts due to rounding
8. The Mineral Resource Estimate used in the economic analysis was prepared by Luke Evans, M.Sc, P.Eng, RPA, April 30, 2013
9. AuEq was calculated using the following formula: AuEq = Au grade + Ag Grade * 0.0183

Adjacent Properties

West Kirkland holds a large scale option position in the Long Canyon Trend of Nevada from Rubicon Minerals. The 12 Mile and Bandito drill targets held within the Rubicon option agreement area intersected oxide gold mineralization near surface similar to the TUG deposit and warrant further exploration. Surface exploration within the area is ongoing and further drilling will be considered as part of an overall TUG deposit and Long Canyon strategy that the Company has planned.

Authors and Qualified Persons Statement

*The PEA and Mineral Resource Estimate were prepared in conformance with NI 43-101 by Roscoe Postle Associates USA Ltd (RPA). The report, titled “Technical Report on the Tecoma Utah Gold Project Utah, USA” was prepared September 13, 2013 by Stuart Collins, P.E., Kathy Altman, P.E., Ph.D., and Luke Evans, P.Eng, each an independent "Qualified Person" under NI 43-101. Input for the PEA was provided by Newfields (civil and heap leach), Gault Group (environmental & permitting), and Hansen Allen & Luce (hydrogeology).

Michael G. Allen, Vice President of Exploration for West Kirkland, and a qualified person as defined by NI 43-101, has reviewed and approved the technical information stated above other than the inferred mineral resource estimate, including but not limited to the plans of the Company. He is the non-independent qualified person for the purpose of the information contained on this web page.

Updated August 12, 2014