1. Defining the Canadian-Class Gold Mine Michael Doggett Department of Geological Sciences and Geological Engineering, Queen’s University Jianping Zhang Minerals, Oil and Gas Sector Resources, Wildlife and Economic Development Government of the Northwest Territories PDAC Toronto 9 March 2004

2. Case Study: Canadian Gold Mining 228 gold mines operating in Canada from 1946-2000 Production profile for each mine Annual tonnage processed Annual average grade processed Annual processing recoveries Annual gold production Annual production costs

3. Canadian Gold Mining Production profiles include entire mine life plus reserves as of January 2001 Total ore processed – 1.1 billion tonnes Total gold produced – 7,700 tonnes Total production years – 3,500 years

4. Geological Attributes of Canadian Gold Mines Composite year-over-year statistics Totals and averages Mine-by-mine comparisons Geological size considerations

5. Year-over-Year Geological Attributes Number of mines Ore processed Total and average Grade of ore processed Gold Production Total and average

6. Trend in Number of Gold Mines, 1946-2000

7. Trend in Total Ore Milled, 1946-2000

8. Trend in Average Ore Milled, 1946-2000

9. Trend in Average Grade of Ore Milled, 1946-2000

10. Trend in Total Gold Production, 1946-2000

11. Trend in Average Gold Production, 1946-2000

12. Relationship Among Geologic Attributes Tonnage - grade Tonnage - gold Grade - gold

13. Tonnage-Grade Distribution of the 228 Mines

14. Total Ore Milled vs. Total Gold Production

15. Total Gold Production vs. Ore Grade

16. Geological Size Considerations Giant mines – containing more than 100 tonnes of recoverable gold Large mines – containing less than 100 tonnes and more than 10 tonnes of recoverable gold Small mines – containing less than 10 tonnes of recoverable gold

17. Cumulative Production and Number of Mines

18. Cumulative Coverage of Production by Number of Mines MinesProductionThreshold NumberPercentTonnesPercentTonnes Largest 10 mines 104%321541.7%204.3 Largest 10% of mines 2310%493564.0%89.6 Largest 20% of mines 4620%617280.0%37.0 Largest 25% of mines 5725%655785.0%33.1 Largest 50% of mines 11450%744796.6%6.8 Largest 75% of mines 17175%767499.5%1.6 Largest 90% of mines 20590%7707100.0%0.4

19. Geologically Giant Mines 22 mines (10% of total) 605 million tonnes of ore (55% of total) Average size of 30 million tonnes 4,845 tonnes of gold (63% of total) Average gold production 220 tonnes 8.58 grams per tonne average grade Average mine life of 50 years

20. Geologically Large Mines 78 mines (34% of total) 420 million tonnes of ore (39% of total) Average size of 5.4 million tonnes 2,494 tonnes of gold (32% of total) Average gold production 32 tonnes 6.27 grams per tonne average grade Average mine life of 25 years

21. Geologically Small Mines 128 mines (56% of total) 65 million tonnes of ore (6% of total) Average size of 0.6 million tonnes 371 tonnes of gold (5% of total) Average gold production 2.9 tonnes 6.23 grams per tonne average grade Average mine life of 6.2 years

22. Geological Attributes of the Giant, Large, and Small Mines Number of Mines Total/ Average Mine Life (years) Total Ore Tonnage (million tonnes) Total Gold Production (tonnes) Weighted Average Grade (gpt) Giant Mine22 Total1101.0604.64845.4 Average50.030.3220.28.58 Large Mine78 Total1908.0419.82493.9 Average24.55.832.06.27 Small Mine128 Total793.064.9371.5 Average6.20.62.96.23 Total228 Total3802.01089.27710.8 Average16.74.833.87.48

23. Comparison of Total Geological Attributes among Giant, Large, and Small Mines

24. Time Trends in Geological Size Attributes Number of mines Ore processed Annual Capacity Gold produced

25. Trend in Number of Giant, Large, and Small Mines

26. Trend of Ore Milled by Giant, Large, and Small Mines

27. Trend of Average Mine Capacity of Giant, Large, and Small Mines

28. Trend of Gold Production of Giant, Large, and Small Mines

29. Trend in Gold Production Share by Giant, Large, and Small Mines

30. Economic Quality of Canadian Gold Mines Which of the historical mines would be economic if found today Current technological and market outlook conditions Base case gold price - $325 US Base case exchange rate – 0.65 Base case cost of capital – 8%

31. Economic Attributes On a before-tax basis, 102 of the 228 historical mines in Canada would be economic to develop today These mines would generate approximately: $100 billion in total sales revenue $15 billion in net present value 45% average rate of return

32. Tonnage-Grade Relationship between Economic and Uneconomic Mines

33. Economic Size Considerations Giant mines – top 10% of mines based on NPV. Minimum size of $440 million Large mines – generate less than $440 million and more than $44 million in NPV Small mines – generate less than $44 million in NPV (1 to 10 ratio with giants)

34. Cumulative Net Present Value by Number of Mines

35. Cumulative Coverage of Net Present Value by Number of Mines Mines (Number) Cumulative NPV ($ million) Share of Cumulative NPV (%) Threshold ($ million) Largest 10% of mines107,14349.3%440 largest 20% of mines2010,47272.3%206 largest 25% of mines2611,33878.3%155 largest 50% of mines5113,46493.0%53 largest 75% of mines7714,27398.6%18 largest 90% of mines9214,44599.8%7

36. Economic Giant Mines 10 mines (10% of total) $47 billion total revenue (43% of total) Average revenue of $4.7 billion $7.1 billion in NPV (49% of total) Average rate of return of 50%

37. Economic Large Mines 42 mines (41% of total) $43 billion total revenue (40% of total) Average revenue of $1.02 billion $6.4 billion in NPV (44% of total) Average rate of return of 45%

38. Economic Small Mines 50 mines (49% of total) $18 billion total revenue (17% of total) Average revenue of $0.4 billion $1.0 billion in NPV (7% of total) Average rate of return of 27%

39. Comparison among the Giant, Large, and Small Mines

40. SUMMARY Breakdown of Economic and Uneconomic Mines by Recoverable Gold Recoverable Gold (Tonnes) Number of Geological Mines Likelihood of Economic Mines (%) Likelihood of Uneconomic Mines (%) Cumulative NPV (%) GiantLargeSmallTotal >200887.512.50.0100.00.039.9 150-200540.0 20.0100.00.051.7 100-15090.077.822.2100.00.066.2 50-100147.157.121.485.714.377.2 30-50260.057.723.180.819.290.7 10-30380.023.739.563.236.898.0 5-10370.0 51.4 48.699.9 1-5560.0 7.1 92.9100.0 <1350.0 100.0