1. Kemess North Sustainable Mining Development

2. Presentation Objectives Communicate the alternatives assessment process and the results and conclusion of the process. Demonstrate why Duncan Lake is the only viable alternative for storage of acid generating mine waste. Communicate the environmental impact of using Duncan Lake and to demonstrate that viable aquatic compensation measures are available.

3. Alternatives Assessment Key Milestones October 2002: Kemess select Klohn Crippen to carry out an assessment of alternatives for mine waste disposal. Klohn Crippen Draft report presented in March 2003 and Final Pre- feasibility Report issued August 2003. Summer 2003: Site investigations (drilling, geophysics, etc. ) carried out for Feasibility Study of Duncan Lake alternative). October/November 2003 - Project Description Submitted to EAO/ First Agency Meeting held.

4. Alternatives Assessment Key Milestones December 2003/January 2004 – Pre-feasibility Alternatives Assessment Submitted to all of the Stakeholders and a Stakeholders Alternatives Meeting is held in Prince George. February – March 2004 – Feedback and reassessment of concepts from the workshop and preparation and submission of the Supplementary Alternatives Report. April 2004 – Agency Alternatives Workshop in Vancouver, in which the Option 1 (Duncan Lake) and Option 2 (on-land) were agreed upon.

5. Alternatives Assessment Key Milestones May 2004 – Draft Alternatives Summary Report that incorporated results of the April Agency Workshop and concluded that Option 1 (Duncan Lake) was the only viable alternative. March to August 2004 – Klohn Crippen completes Feasibility Study of Duncan Lake Alternatives for inclusion into Kemess Project Feasibility Assessment. Geochemistry Committee – Agency-technology meetings held in April, August and September.

6. Alternatives Assessment Process General guidelines for alternative assessment Description of civil layouts and components of all alternatives Summary of main alternatives and combinations of alternatives Comparison of alternatives (environment, cost and risk)

7. Guidelines for Alternatives ~415 Mt of potentially acid generating tailings ~335 Mt of potentially acid generating waste rock 75% to 90% of waste rock will be acid generating if not kept submerged under water. Minimize number of sites. Minimize heights and complexities of dams. Minimize water management, particularly on closure.

8. Guidelines for Alternatives (cont’d) Minimize footprint. Minimize aquatic and terrestrial impacts. Minimize metal leaching and ARD. Minimize long term closure risk. Sustainability. (Sustainable Development defined as development that meets the needs of the present, without compromising the ability of future generations to meet their own needs.) – continuation of economic benefits

9. Location of Potential Storage Sites

10. Waste Quantities Comparison (source: Minfile) Kemess North – need to dispose of >415 Mt PAG tailings, >235 Mt PAG waste rock and ~100 Mt AG waste rock. Kemess South – 90 Mt PAG waste rock, ~200 Mt PAG tailings Bell Copper – 70 Mt PAG tailings Huckleberry – 36 Mt PAG tailings Equity Silver – 33 Mt PAG tailings

11. What is Acid Rock Drainage (ARD) Acid Rock DrainageNO Acid Rock Drainage

12. Options to Control ARD Remove oxygen by submerging tailings and waste rock e.g. Voiseys Bay Tambogrande Equity Silver tailings Cover to reduce water inflow e.g. Equity Silver waste rock Treat runoff for hundreds of years ARD + Lime = Sludge + Clean Water e.g Inco, Elliot Lake, Britannia? Samatosum, Equity Silver ARD Control for waste rock is more difficult than tailings, which are conventionally stored in a saturated state.

13. ARD Prevention – Industry Accepted Methods Provincial ARD Guidelines – “the storage location must remain permanently flooded and geotechnically stable.” Natural Resources Canada and MEND – “The target is for new mines to open without long-term concerns about acidic drainage upon closure.”

14. Underwater Facilities Elliot Lake area tailings

15. Underwater/Lake Tailings Storage Louvicourt Tailings Pond Voiseys Bay Inco R-4 Meatbird Lake Musselwhite Louvicourt Inco Thompson

16. Underwater Facilities Eskay Creek Waste Rock Disposal – Albino Lake and Tom MacKay Lake

17. ARD Control – Covers & Treatment Equity Silver: Low permeability glacial till cover. Marginal improvement in ARD control. Cover concerns with: Freeze-thaw Plants (roots), animals Alternative groundwater paths Erosion Cover can minimize seepage but rarely provides an oxygen barrier to limit ARD. Water Treatment Plant: likely hundreds of years of liability.

18. Alternative Identification Considered all sites within about a 10 to 20 km radius, that could store some or all of the waste. Integrate/consider technology variations. Considered combinations of alternatives.

19. Screened Technologies Tailings Thickening & paste: reduced volume, however still requires a dam and saturation of sulphides. Dewatered: reduced volume & “dry” stack, however still need to compact “dam” support zone. ARD from partially saturated tailings. Co-disposal with waste rock: Only a portion of the tailings could be mixed. Concerns with mixing, and ARD from the final mixed product. Desulphidize Tailings: Used to produce construction sand from cycloned tailings. Can be used for capping.

20. Screened Technologies ARD Control Saturate under water: Preferred ARD control method. Base consideration for this project. Cover: Poor success rate (e.g. Equity Silver Mine); concern with long term integrity of cover and potential for “alternative” seepage paths. Water Treatment: Concerns with long term operation, maintenance of facility (hundreds of years) and sludge disposal. Need disposal site for sludge. Limestone mixing: Limited ability of lime to properly mix and balance ARD.

21. Screening Process 1.Layouts and cost estimates for all alternatives. 2.Risk Assessment using Failure Modes Effects Analysis (FMEA) procedures which are recommended by the Mining Association of Canada and adopted by numerous Regulatory Authorities in Canada and USA. 3.Environmental Comparison, including compensation potential.

22. Location Plan of Selected Screening Sites Tailing Alternatives (330 Mt) Raise existing tailings dam Infill existing open pit (25% of tailings) Raise open pit Sites L & M (close to Kemess South Mine) Site C and Kemess Lake Duncan Lake (25% of tailings) Waste Rock Alternatives (250 Mt) North & Northeast Dumps Site C Duncan Lake (50% of waste rock)

23. Screened Locations Existing Tailings Facility Advantages & Disadvantages Stores tailings only. Limited new disturbance. Dam safety risk due to very low foundation shear strength. Slopes 5.5H:1V + Toe of dam encroaches on Mill Creek. High pumping head. Project Components Dam raise from 145 m to 170+ m high. Pumping head 310 m New water diversion dams and diversion canals/pipelines. Continue to use de-sulphidized cycloned sand for construction of dam. Cost $400 million +

24. Raise Existing Tailings Storage Facility Alternative Main Risk Issues Dam stability (raise from 145 m to 185 m) Water management Removing sulphides from cyclone sand.

25. Screened Locations Open Pit - Tailings Advantages & Disadvantages Stores tailings only (max. 250 Mt) Limited new disturbance. Dam safety risk with 100 m high dam above the plantsite. Toe of dam “encroaches” on Kemess Creek. Project Components Construct 100 m high dam around the open pit. Use de-sulphidized cycloned sand for dam construction. Pumping head 120 m. Some potential for weak clay layers in the dam foundation. Cost: $200 million

26. Open Pit Raising – Tailings Alternative Main Risk Issues 100 m high dam stores 250 Mt (now need storage for +70 Mt) Removing sulphides from cycloned sand

27. Screened Locations Site L - Tailings Advantages & Disadvantages Stores tailings only ( 250 Mt +) Limited new disturbance. Very poor storage/dam ratio due to presence of mine waste rock and topography. Project Components Construct 100 m high dam in the vicinity of the existing waste dump. Use de-sulphidized cycloned sand for dam construction. Pumping head 120 m. Potential for weak clay layers in dam foundation. Cost: $785 million +

28. Screened Locations Site M - Tailings Advantages & Disadvantages Stores tailings only (max. 250 Mt +) Disturbance of terrestrial/forested areas and wetland. Loss of Dolly Varden habitat. Poor storage/dam ratio due to topography. Project Components Construct 100 m high dam in the vicinity of the existing airport and power line. Use de-sulphidized cycloned sand for dam construction. Pumping head 120 m. Potential for weak clay layers in dam foundation. Cost: $440 million +

29. Screened Locations Site F - Kemess Lake - Tailings Advantages & Disadvantages In-fills Kemess Lake. Loss of Rainbow trout habitat. Stores tailings only (max. 250 Mt). Disturbance of terrestrial/forested areas/wetland. Very difficult geotechnical conditions. Project Components Construct 150 m high dam across south end of Kemess Lake. Use de-sulphidized cycloned sand for dam construction. Pumping head 170 m. Weak foundation. Unstable bedrock geology in left bank of impoundment. Cost: $335 million

30. Screened Locations Site C - Tailings/Waste Rock Advantages & Disadvantages Could be raised 70 m to store mine waste rock. Disturbance of terrestrial/forested areas and wetland. Significant wildlife corridor. Long haul distance for mine waste rock and high pumping heads for tailings. Project Components Construct two 100 m high dams Use de-sulphidized cycloned sand for dam construction. Pumping head 260 m. Cost: $260 million + tailings; $775 million waste rock/tailings

31. Screened Locations Duncan Lake - Tailings and Waste Rock Advantages & Disadvantages Loss of Duncan Lake habitat. Disturbance of terrestrial values. Sustainable – allows for future use of regional resources. Most efficient site. Project Components Construct one 80 m high dam and two 20 m high dams to store all tailings and waste rock. Pumping head 160 m. Cost: $60 million tailings, $140 million waste rock/tailings

32. Duncan Lake Tailings and PAG Storage Option

33. 60 to 90 m high dam at north end. 10m and 30 m high dams at south end. Existing Lake would store 50% of waste rock or 25% of tailings Raise dams 40 m to store 100% more volume (future ore reserve potentials)

34. Screened Locations Attycelley - Tailings and Waste Rock Advantages & Disadvantages Loss of Attycelley stream habitat. Impact on terrestrial and wildlife corridor. Difficult geotechnical conditions and difficult seepage control. Large watershed increase closure water control risk. Project Components Construct 100 m high starter dam, raise to 160 m high. Pumping head 200 m. Foundation conditions expected to be complex. Dam use de-sulpidized cycloned sand. Cost: $625 million waste rock/tailings

35. Screened Locations NE Cirque – Waste Rock Advantages & Disadvantages Geotechnical risk of water dam. Long term risk of ARD from cover and treatment alternatives. Lowest haulage cost. Limited disturbance of terrestrial environment. Project Components 200 m high waste rock pile ARD controlled by: Water dam at downstream toe. Low permeability covers. Water treatment and sludge disposal. Costs $125 million+

36. North and North East Cirques – Waste Rock Dumps Main Risk Issues Long term integrity of low permeability soil cover for closure (minimize water inflow) Long term stability of 200 m+ high “Water” dam for closure (saturate to eliminate oxygen) Long term risk of water treatment and sludge disposal.

37. SITE DESCRIPTION OR TECHNOLOGY CONSIDERED USEREASON FOR CONCERN Thutade LakeWaste rock disposalNo containment for controlling contaminant release or treating contaminants. Thutade LakeTailings disposalNo containment of contaminants. Valleys on far side of Thutade Lake Tailings disposalTailings pipeline across Thutade Lake is expensive and pipeline breaks cannot be contained. Mainstem Kemess Creek upstream of the plant site Waste rock and /or tailings disposalComplex and potentially weak foundations for a high dam. Complex water management for a large catchment area (>100 km 2 ) Site H, northeast of existing mine in the Kemess Creek watershed Potential option for containment of 250 Mt of tailings or waste rock Very high dam in relation to containment volume. Dam heights greater than 200 m Cirque immediately west of the open pit Temporarily store waste rock during operations and backfill in the North pit after closure 18% of the waste rock is already producing acid and the onset of ARD in 54% of waste rock is expected within the mine life; therefore, any temporary storage would have to be lined and have a drainage collection and treatment system Mini-pitReduced waste volumesNot economic since all ore reserves are at bottom of proposed pit. There is no reserve cut-off that could justify a smaller pit. North DumpDry cover land disposal of waste rock Dry covers have not had enough success in BC to ensure prevention of ARD given the extreme weather conditions. NE CirqueFlooded waste rock storageUnacceptable long-term risk for a 200m waste rock and water-retaining dam. Tailings Sulphides Removal( desulphurization ) Reduced ARD potential of tailingsSulphides can be removed from cycloned sand. Thickened tailingsReduced storage space requirements Thickened tailings could be considered in the future for optimizing the final design. Storage reduction could be ~10% but does not affect the overall alternatives assessment. Paste tailingsReduced storage space requirements No significant benefit in storage or dams. Process and transport costs are prohibitively high for paste tailings for this grade of ore. Limestone BlendingNeutralization of ARD for land disposal of waste rock ARD prevention is not effective, because blending is technically difficult and the limestone quickly loses its effectiveness.

38. Alternatives for Both Tailings and Waste Rock Final Alternatives A.Multi-Site On-Land B.Duncan Lake Supplementary Alternatives 1.Upper Attycelley 2.Open Pit/TSF/Site M 3.Duncan Lake Alternative Assessment 1.Site C 2.On-land dump w/treatment, open pit/TSF 3.Duncan Lake

39. Option 2 Multi-Storage Sites TAILINGS Raise existing TSF 25 m to store ~100 Mt. 70 m high dam at Site M to store ~ 220 Mt of desulfurized tailings. 15 m high dam around Kemess South Open Pit to store ~ 110 Mt. WASTE ROCK Northeast Cirque – 100 Mt AG waste rock: 110 m high water storage dam North Cirque – temporary storage of ~200 Mt PAG waste rock: On closure PAG rock is moved to the open pit

40. Option 1 Duncan Lake TAILINGS AND WASTE ROCK 60 m to 90 m high dam at North End 5 m to 30 m high dams at South End Storage of all tailings & waste rock

41. Risk Assessment Methodology Based on the failure modes effects analysis (FMEA). Quantification basis developed for US Forest Service : New World Mine EIS. Modified to address issues with Kemess

42. Risk Binning Example – Duncan Lake Tailings and PAG

43. Risk Binning Example – Multi-Storage Sites

44. Alternatives Summary of Risk Counts MAIN RISK ITEMS Multi-Storage Sites 100 m high water dam, 70 m high tailings dam, Increased dam height of TSF (final height 155 m). Re-handling PAG waste rock and residual contamination Duncan Lake Loss of aquatic habitat 90 m high tailings dam Contaminated seepage losses

45. Alternatives Summary of Risk Counts Closure Only MAIN RISK ITEMS -CLOSURE Multi-Storage Sites Maintenance of large dams Residual ARD contamination Water quality Duncan Lake North dam Water quality

46. Comparison of Alternatives Risk and Cost ALTERNATIVE Risk PointsCost $ Million Multi-Storage Sites4201,000 Duncan Lake286200 * Risk points weight risk levels with ½ order of magnitude factors

47. Environmental Comparison Criteria Aquatic effects Terrestrial effects Footprint of disturbance ARD prevention Contaminant control Dam stability Closure Sustainability Cost Risk Ability to compensate and mitigate

48. Kemess North Area

49. Kemess North Post Closure

50. Alternatives to the Project 1.Develop Kemess North Project with Duncan Lake 2. Close Kemess South in 2008 and cease mining. Developing Kemess North maximizes the use of the resources and infrastructure that already exist. Duncan Lake provides the greatest opportunity for sustaining mineral extraction in the regional area. Northgate has a responsibility to exploit the resource in an environmentally safe and profitable manner.